<PAGE>
FOR TAX-EXEMPT INCOME
VOYAGEUR
Closed-End Municipal
Bond Funds
[photo of illustration from Tax Exempt Income Brochure]
service and guidance
professional management
goals
1999
Semi-Annual
Report
MINNESOTA MUNICIPAL INCOME FUNDS I, II, III
ARIZONA MUNICIPAL INCOME FUND
FLORIDA INSURED MUNICIPAL INCOME FUND
COLORADO INSURED MUNICIPAL INCOME FUND
DELAWARE(SM)
INVESTMENTS
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Philadelphia o London
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A TRADITION OF SOUND INVESTING
Each of the six Funds in this report are closed-end management investment
companies whose shares trade on the American Stock Exchange (ASE) in New York.
Each Fund seeks 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, Florida Insured Municipal Income Fund
seeks investments exempt from Florida's intangible personal property tax. Each
Fund seeks to achieve its objective by investing at least 80% of its net assets
in investment grade, tax-exempt municipal obligations.
Investment Adviser
Delaware Management Company is each Fund's investment adviser. Our tradition of
money management dates back to 1929 and we currently manage more than $40
billion for mutual fund shareholders and institutional investors. In addition,
Delaware manages closed-end equity funds traded on the New York Stock Exchange.
Investment
Strategies and
Objectives
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[photo of glasses, pen & keyboard]
Leveraging
Each of the six funds in this report uses leveraging, a tool that is not usually
used by open-end mutual funds and one that can be an important contributor to
each Fund's income and capital appreciation potential. Of course, there is no
guarantee that leveraging will help generate positive return. Leveraging may
result in higher share price volatility because each Fund's net asset value may
be more sensitive to fluctuations in short-term interest rates. Delaware
believes this volatility risk is reasonable given the benefits of higher income
potential.
Table of Contents
Letter to Shareholders Page 1
Portfolio Managers' Reviews
Minnesota Municipal Income Funds Page 3
Arizona Municipal Income Fund Page 6
Florida Insured Municipal
Income Fund Page 8
Colorado Insured Municipal
Income Fund Page 9
Statements of Net Assets Page 11
Financial Highlights Page 25
commitment
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1
October 16, 1998
Dear Shareholder:
DELAWARE INVESTMENTS' SIX CLOSED-END municipal bond funds provided attractive
results midway through the 1999 fiscal year. Five Funds outperformed their
respective unmanaged benchmarks for the six months ended September 30, 1998, as
shown below.
We attribute the Funds' results to a bottom-up research strategy. We sought
bonds of high relative quality with strong income and total return potential.
U.S. economic expansion and low interest rates have provided a fertile
environment for municipal bonds' credit quality since March. In our view, tax
revenues in Minnesota, Arizona, Florida and Colorado are likely to grow as each
state's economy expands.
During the first nine months of calendar 1998, many municipalities refinanced
old issues and rushed to obtain funding for new projects. Municipal bond
issuance increased substantially in Arizona, Florida and Minnesota compared to
the same period a year earlier. Colorado slowed issuance after a near record
level in calendar 1997.
We expect each of the four states in this report to post a budget surplus for
its current fiscal year.
U.S. ECONOMIC EXPANSION AND LOW INTEREST RATES HAVE PROVIDED A FERTILE
ENVIRONMENT FOR MUNICIPAL BONDS SINCE MARCH.
CUMULATIVE TOTAL RETURN
- --------------------------------------------------------------------------------
APRIL 1, 1998 TO SEPTEMBER 30, 1998
Based On Premium/ AMEX
Net Asset Value Discount* Symbol
- --------------------------------------------------------------------------------
Minnesota Municipal Income Fund I +4.58% +5.60% VMN
Minnesota Municipal Income Fund II +5.15% -3.90% VMM
Minnesota Municipal Income Fund III +5.72% -1.90% VYM
Lipper Minnesota Closed-End Municipal
Fund Average (6 Funds) +4.80% -1.42%
- --------------------------------------------------------------------------------
Arizona Municipal Income Fund +5.53% -4.10% VAZ
Colorado Insured Municipal Income Fund +5.91% -2.30% VCF
Lipper Closed-End Municipal Debt Fund
Average (18 Funds) +5.29% +3.63%
- --------------------------------------------------------------------------------
Florida Insured Municipal Income Fund +5.71% -5.60% VFL
Lipper Florida Closed-End Municipal
Debt Fund Average (14 Funds) +5.40% -1.30%
- --------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +4.64%
Lehman Brothers Insured Municipal Bond Index +5.00%
* As of September 30, 1998. All performance shown above assumes reinvestment
of distributions. Past performance does not guarantee future results.
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2
Since the summer of 1997, Asian, Russian and Latin American economic problems
have increased foreign demand for U.S. Treasury bonds.
Municipal bonds have participated in the bond market rally, but to a lesser
extent than U.S. Treasuries.
In order to sustain U.S. economic growth amid international financial
instability, the Federal Reserve Board lowered the Federal Funds rate (the
interest rate banks charge each other for overnight loans) by 50 basis points
(0.50%) as of mid-October. This fueled a further rise in bond prices causing
yields to fall.
As of September 30, 1998, long-term municipal bonds offered yields that were
virtually identical to the yield offered by long-term U.S. Treasury bonds. This
is up from an average of 88% of Treasuries 12 months earlier. The only other
time municipal bonds yielded as much as Treasuries was in 1986 when a proposal
from Senator Robert Packwood would have eliminated the tax-exempt status of
municipal bonds.
Given the turmoil in global stock markets over the past few months, we
believe municipal bonds can help lessen the volatility in an equity portfolio.
We strongly encourage you to meet with your financial adviser to review your
investment portfolio.
Sincerely,
/s/ Wayne A. Stork
- ------------------
WAYNE A. STORK
Chairman
/s/ Jeffrey J. Nick
- -------------------
JEFFREY J. NICK
President and Chief Executive Officer
MUNICIPAL BOND FUND YIELDS* vs. U.S. TREASURIES
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INCOME POTENTIAL AFTER TAXES, SEPTEMBER 30, 1998
30-Year Treasuries After Taxes 3.12%
Minnesota Municipal Income Fund I 5.64%
Minnesota Municipal Income Fund II 5.61%
Minnesota Municipal Income Fund III 5.46%
Arizona Municipal Income Fund 5.22%
Florida Insured Municipal Income Fund 5.09%
Colorado Insured Municipal Income Fund 4.88%
* The 30-day SEC yields for each Fund on September 30, 1998. Unlike U.S.
Treasuries, municipal bonds' principal and interest payments are not
guaranteed by the U.S. government. Yields fluctuate and are not guaranteed.
Treasury yields after taxes are calculated based on the 39.6% federal
income tax bracket.
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3
Portfolio Managers' Review
MINNESOTA MUNICIPAL INCOME FUNDS - I, II, III
By Elizabeth H. Howell
Vice President/Senior Portfolio Manager
October 16, 1998
Falling interest rates helped Delaware Investments' three Minnesota Municipal
Income Funds provide total returns as much as 92 basis points (0.92%) higher
than the Funds' unmanaged benchmark - the Lehman Brothers Municipal Bond Index -
for the six months ended September 30, 1998, as shown on page 1.
Each Fund's performance was also competitive with its Lipper peer group
average, also on page 1. We attribute the Funds' strong performance to a
slightly higher-than-average duration (a measurement of a bond's sensitivity to
interest rates) - relative to each Fund's benchmark.
The difference in performance between the three Minnesota Funds can also be
attributed to duration. As of September 30, 1998, Funds II and III each had a
duration of 5.5 years - approximately one full year longer than the duration for
Fund I. Funds with a longer than average duration are more sensitive to interest
rate changes. As inflation fears waned during the first half of fiscal 1998, the
total return of Minnesota Funds II and III benefited to a greater extent because
of lower duration.
Minnesota Fund I offered modestly higher income potential than either Funds
II or III during the fiscal period. As of September 30, Fund I had a 30-day
yield of 5.64%, as measured by Securities and Exchange Commission (SEC)
guidelines, slightly higher than the SEC yield for Funds II and III. We believe
the higher income potential offered by Minnesota Fund I is attributable to the
older age of the Portfolio. Minnesota Fund I bought bonds - and locked in yields
- - in 1992 when rates were somewhat higher than today.
MINNESOTA MUNICIPAL INCOME FUNDS
BOND QUALITY AND PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
Fund I Fund II Fund III
- --------------------------------------------------------------------------------
AAA 55.2% 49.6% 60.0%
AA 11.6% 17.2% 4.0%
A 13.2% 18.0% 22.0%
BBB 9.1% 6.3% 3.2%
BB 0.0% 0.0% 3.5%
Unrated 10.9% 8.9% 7.3%
Average Quality AA3 AA2 AA2
Average Maturity 6.1 years 7.5 years 10.4 years
Average Duration 4.5 years 5.5 years 5.5 years
Current Yield at Market Price 5.64% 5.61% 5.46%
AMT Income* 20.12% 20.99% 12.36%
Amount of Leveraging (Millions) $20 $60 $15
* Percentage of income generated for the six months ended September 30, 1998
that was subject to the federal alternative minimum tax.
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4
We believe some investors' preference for relatively high current yield
explains why Minnesota Income Fund I sold at a premium to net asset value while
Funds II and III sold at modest discounts at fiscal mid year.
The low interest rate environment during the first half of the fiscal year
brought a torrent of municipal bond refinancing in Minnesota. The state issued
over $3.7 billion in bonds during the first nine months of 1998, according to
The Bond Buyer. This was a 41.8% increase from the same period in 1997.
The increase in supply allowed us to be more selective with our investment
decisions. We seized what we believed to be the most attractive investment
opportunities offered by Minnesota municipalities. We focused on bonds selling
at a discount to face value and with good call protection features and strong
credit characteristics.
Minnesota's economy performed better than many other states during the fiscal
period while the state's unemployment rate remained below 3%, less than the
national average.
The state's robust economic growth led to select credit upgrades in fiscal
1998. As of September 30, Minnesota was one of only eight states to enjoy a AAA
general obligation bond rating, the highest rating available according to
Standard & Poor's. Each Minnesota Income Fund had approximately half of its net
assets allocated to AAA-rated bonds as of September 30.
Housing bonds, one of the largest components of each Minnesota Fund,
increased each Fund's income potential during the first half of 1998.
We sought to avoid the prepayment risks involved with some housing bonds
during the period by investing in multifamily housing bond projects. Multifamily
bonds have a much lower prepayment risk than single family project bonds. We
believe housing bonds are poised to make a continued positive contribution to
each Fund's results in the coming months.
WE FOCUSED ON BONDS SELLING AT A DISCOUNT TO FACE VALUE WITH GOOD CALL
PROTECTION FEATURES AND STRONG CREDIT CHARACTERISTICS.
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5
OUTLOOK
Minnesota's economy has remained resilient in the face of international economic
upheaval in Asia and Russia. The state's exports depend much more on demand from
North America and Europe.
The Northwest Airlines strike, which ended in early September, resulted in
subtantial losses for the airline and related businesses, but does not appear to
have had a major impact on regional economic growth, in our view.
Minnesota's personal income tax ranges from 6% to 8.5% and is one of the
highest in the nation. We believe the state's municipal bond market presents
compelling opportunities for residents seeking to reduce their income tax
burden.
MARKET PRICE VS. NET ASSET VALUE
- --------------------------------------------------------------------------------
APRIL 1, 1998 TO SEPTEMBER 30, 1998
MINNESOTA MUNICIPAL MINNESOTA MUNICIPAL MINNESOTA MUNICIPAL
INCOME FUND I INCOME FUND II INCOME FUND III
- --------------------------------------------------------------------------------
Date Net Asset Market Net Asset Market Net Asset Market
Value Price Value Price Value Price
3/31/98 $15.37 $15.69 $14.80 $13.88 $13.76 $13.38
4/24/98 $15.26 $15.81 $14.68 $14.06 $13.67 $13.38
5/29/98 $15.40 $15.75 $14.83 $14.25 $13.79 $13.19
6/26/98 $15.40 $15.88 $14.86 $14.00 $13.81 $13.19
7/31/98 $15.40 $16.19 $14.86 $14.25 $13.82 $13.31
8/28/98 $15.51 $16.38 $15.03 $14.69 $14.00 $13.50
9/30/98 $15.62 $16.50 $15.16 $14.56 $14.14 $13.88
STATES AT A GLANCE
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
Per Capita* Unemployment** Existing Single Family***
Income Rate Home Sales
- --------------------------------------------------------------------------------
Arizona $22,364 4.3% -4.3%
Colorado $27,051 3.5% +6.5%
Florida $25,255 4.2% +4.1%
Minnesota $26,797 2.4% +11.7%
* As of December 31, 1997
** As of September 30,1998
*** 2nd quarter change from 1st quarter for 1998
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6
ARIZONA MUNICIPAL
INCOME FUND
By Andrew McCullagh
Vice President/Senior Portfolio Manager
October 16, 1998
Arizona Municipal Income Fund provided a strong total return of +5.53% (capital
change plus reinvestment of distributions at net asset value) for the six months
ended September 30, 1998. The Fund outpaced its benchmark - the Lehman Brothers
Municipal Bond Index - and its Lipper peer group, as shown on page 1.
Our research-oriented approach to Arizona's municipal bond market pointed the
way to select housing and hospital bonds which offered attractive total return
prospects. Approximately one-third of the Fund's net assets were allocated to
the two sectors at fiscal mid-year.
We were careful not to let mortgage prepayments - spurred by low interest
rates - negatively affect the Fund's housing bonds. Most of our housing bonds
had call protection that prevented them from being refinanced.
The value of Arizona Municipal Income Fund's hospital bonds rose because of
consolidation within the health care industry. Merger activity is starting to
slow, in our view, and we may reduce the Fund's weighting in hospital bonds if
we find more attractive opportunities in other sectors.
Arizona issued over $3.3 billion in bonds during the first nine months of the
1998 calendar year compared to $2.2 billion in the same period last year. This
was an increase of almost 50%. Fortunately, supply was met by strong demand from
investors seeking alternatives to volatile equity markets.
While many U.S. investors recognize Arizona's economic potential, the state
is also attracting the attention of the international business community. In the
April 1998 issue of Capital, a German business magazine, Phoenix was ranked the
#1 location in the U.S. to conduct business.
OUR RESEARCH-ORIENTED APPROACH TO ARIZONA'S MUNICIPAL BOND MARKET POINTED THE
WAY TO SELECT HOUSING AND HOSPITAL BONDS WHICH OFFERED ATTRACTIVE TOTAL RETURN
PROSPECTS.
BOND QUALITY AND PORTFOLIO HIGHLIGHTS
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SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Arizona Colorado Insured Florida Insured
Municipal Income Fund Municipal Income Fund Municipal Income Fund
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA 73.0% 95.7% 100.0%
AA 16.5% 4.3% 0.0%
A 9.0% 0.0% 0.0%
BBB 1.5% 0.0% 0.0%
Average Quality AAA AAA AAA
Average Maturity 7.0 years 7.6 years 12.1 years
Average Duration 5.6 years 6.0 years 6.2 years
Current Yield at Market Price 5.22% 4.88% 5.09%
AMT Income* 8.20% none 16.63%
Amount of Leveraging (Millions) $25 $40 $20
</TABLE>
* Percentage of income generated for the six months ended September 30, 1998
that was subject to the federal alternative minimum tax.
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7
OUTLOOK
Western states such as Arizona, which helped pace U.S. economic growth over the
past few years, may be more affected by the Asian economic crises than other
regions across the nation.
We believe slackening Asian demand for technology, forestry and agricultural
products may cause short-term disruptions in Arizona's economy. However, we do
not believe the crises will have a long-lasting impact as economic growth across
the state is still robust.
We share the U.S. Commerce Department's positive outlook. The agency expects
economic growth in Arizona to continue through the year 2000. The Commerce
Department also projected that personal income, jobs and population are likely
to grow faster in Arizona and Nevada than anywhere else in the U.S. through the
end of the millennium.
We believe this bodes well for Arizona's municipal bond market. A growing
need for schools, roads and homes may increase the issuance of the state's
municipal bonds and an expanding tax base may increase demand among the state's
investors.
ARIZONA MUNICIPAL INCOME FUND
MARKET PRICE VS. NET ASSET VALUE
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APRIL 1, 1998 TO SEPTEMBER 30, 1998
Date Net Asset Value Market Price
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3/31/98 $15.03 $14.63
4/24/98 $14.89 $13.88
5/29/98 $15.09 $14.31
6/26/98 $15.10 $14.81
7/31/98 $15.07 $14.50
8/28/98 $15.25 $14.88
9/30/98 $15.45 $14.81
DIVIDEND REINVESTMENT PLANS
Each Fund offers an automatic dividend reinvestment program. If Fund shares are
registered in your name and you are not already reinvesting dividends but would
like to do so, contact the dividend plan agent, Norwest Bank, Minnesota, NA at
1.800.468.9716. You will be asked to put your request in writing. If you have
shares registered in "street" name, contact your financial adviser or the
broker/dealer holding the shares.
Under the Funds' current policies, all distributions of net investment
income and capital gains to common stock shareholders are automatically
reinvested in additional shares unless shareholders elect to receive all
dividends and other distributions in cash paid by check mailed directly to the
shareholders by the dividend plan agent.
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 in the open market on the American Stock
Exchange. The Funds will not issue any new shares in connection with the plan.
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FLORIDA INSURED MUNICIPAL INCOME FUND
By Patrick P. Coyne and Mitchell L. Conery
Vice Presidents/Senior Portfolio Managers
October 16, 1998
Florida Insured Municipal Income Fund provided a total return of +5.71% (capital
change plus reinvestment of distributions at net asset value) for the six months
ended September 30, 1998. The Fund's return outpaced both its benchmark, the
Lehman Brothers Insured Municipal Bond Index, and the average of the Fund's peer
group as shown on page 1.
The first half of fiscal 1998 presented challenges to insured municipal bond
investors in Florida. Many older insured bonds commanded premium prices as
interest rates fell. This diminished opportunities to employ the Fund's
value-oriented bond selection strategy.
We focused instead on higher coupon bonds that helped generate a steady
stream of current income. This boosted the Fund's total return as interest rates
declined this past summer.
Our research indicated that hospital bonds had some of the highest coupons in
Florida's insured municipal bond market. We concentrated on this sector during
the period and as of September 30, approximately 16% of the Fund's net assets
were invested in hospital bonds.
Because of intense competition within the state's health care industry,
involving mergers and acquisitions, we invested only in hospitals with a
relatively low level of debt and a proven ability to increase revenues over
time.
Your Fund invests exclusively in insured bonds rated AAA at the time of
purchase. During the first half of fiscal 1998, this helped us provide an
attractive level of income with minimal risk of issuer default. Insured Florida
bonds generally outperformed bonds without the backing of private default
insurance.
For the six months ended September 30, 1998, the Lehman Brothers Insured
Municipal Bond Index provided a total return of +5.00% vs. +4.64% for the Lehman
Brothers Municipal Bond Index.
WE FOCUSED ON HIGHER COUPON BONDS THAT HELPED IN GENERATING A STEADY STREAM OF
CURRENT INCOME. THIS BOOSTED FLORIDA INSURED MUNICIPAL INCOME FUND'S TOTAL
RETURN.
FLORIDA INSURED MUNICIPAL INCOME FUND
MARKET PRICE VS. NET ASSET VALUE
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APRIL 1, 1998 TO SEPTEMBER 30, 1998
Date Net Asset Value Market Price
- --------------------------------------------------------------------------------
3/31/98 $15.30 $14.31
4/24/98 $15.16 $14.13
5/29/98 $15.37 $14.38
6/26/98 $15.37 $14.44
7/31/98 $15.37 $14.44
8/28/98 $15.61 $14.75
9/30/98 $15.76 $14.88
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9
OUTLOOK
Although Florida has substantially increased the issuance of municipal bonds
during the past two years, investor demand has risen at a proportionate pace. We
believe investors are attracted to the state's virtually unsurpassed credit
quality. Some 70% of all new bond issues in Florida were insured, a
substantially higher percentage than most other states.
Since the IRS limits how frequently municipalities can issue pre-refunded
bonds, we expect the supply of new municipal bonds to decrease in the coming
year. We believe this bodes well for the state's municipal bond market provided
demand remains strong.
Since global demand for commodities has fallen because of economic problems
in many regions, we plan to avoid municipal bonds issued by commodity based
producers. Such bonds include development bonds issued by the agricultural and
mining industries, which have been particularly hard hit by declining prices.
COLORADO INSURED MUNICIPAL INCOME FUND
BY ANDREW MCCULLAGH
Vice President/Senior Portfolio Manager
October 16, 1998
Colorado Insured Municipal Income Fund provided a robust total return of +5.91%
(capital change plus reinvestment of dividends) for the six months ended
September 30, 1998. We handily outperformed both the average of our peers and
the Fund's unmanaged benchmark - the Lehman Brothers Insured Municipal Bond
Index - by 103 and 91 basis points (1.03% and 0.91%), respectively, for the
fiscal period.
A sharp price rise on some of the Fund's hospital bonds was the primary
reason for the Fund's strong performance, in our opinion. Hospital bonds were
your Fund's largest sector and accounted for approximately 14% of net assets as
of September 30, 1998. This is an increase of approximately 6 percentage points
from March.
COLORADO INSURED MUNICIPAL INCOME FUND
MARKET PRICE VS. NET ASSET VALUE
- --------------------------------------------------------------------------------
APRIL 1, 1998 TO SEPTEMBER 30, 1998
Date Net Asset Value Market Price
- --------------------------------------------------------------------------------
3/31/98 $14.92 $14.00
4/24/98 $14.77 $14.13
5/29/98 $14.98 $14.50
6/26/98 $15.01 $14.75
7/31/98 $14.96 $14.69
8/28/98 $15.19 $14.63
9/30/98 $15.41 $15.06
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Our hospital bonds benefited from consolidation by Colorado's health care
industry. The state is a regional medical services hub. We expect further
hospital consolidation in the year ahead, and in our view this could lead to
credit upgrades among selected bonds during fiscal 1999.
Contributing to the Fund's performance was our position in housing bonds,
which accounted for approximately 11% of the Fund's net assets as of September
30, 1998. Colorado had one of the strongest housing markets in the western U.S.
during the fiscal period because many professionals are moving to the state from
other parts of the country as well as from overseas.
The state generated many high paying jobs in engineering, law and
architecture throughout the 1990s. Since 1990, the number of Colorado households
earning more than $100,000 per year has increased by approximately one-third,
according to Acxicom Corporation, a data analysis business. The company also
reported that six-figure incomes are Colorado's fastest growing income category.
We believe this trend may increase demand for municipal bonds as more residents
seek to invest in municipal bonds to shelter income from taxes.
OUTLOOK
Of the four states in this report, Colorado may be most affected by the Asian
economic crises. The Colorado Legislative Council reported last September that
Asia has traditionally been the destination for one-third of Colorado's exports
of technology products, medical equipment and agricultural products.
Still, even with declines to some export markets, the Business Research
Division at the Colorado College of Business and Administration projects the
state will export $4.8 billion of manufactured products in 1998 - a record
level. Colorado's aggressive pursuit of new markets - particularly in Europe -
apparently has yielded new business.
Colorado's population has grown at a relatively rapid annual rate of 2.5%
since 1990. Some 33% of the state's residents are college graduates compared to
a national average of 23%. Aside from the strong job growth over the past few
years, residents are also attracted to Colorado's wealth of recreational
activities.
We believe continued strong job growth, coupled with appealing natural
surroundings, bodes well for continued long-term economic growth and state tax
revenues.
SINCE 1990, THE NUMBER OF COLORADO HOUSEHOLDS EARNING MORE THAN $100,000 PER
YEAR HAS INCREASED BY APPROXIMATELY ONE-THIRD. SIX FIGURE INCOMES ARE COLORADO'S
FASTEST GROWING INCOME CATEGORY.
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Financial Statements
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
Principal Market
Amount Value
--------- ------
MUNICIPAL BONDS - 98.28%
GENERAL OBLIGATION BONDS - 8.35%
Edina Recreation Facilities Series 1992-A
6.00% 1/1/09 ...................................... $ 305,000 $ 322,861
Edina Recreation Facilities Series 1992-A
6.00% 1/1/10 ...................................... 320,000 338,442
Minneapolis, Minnesota Refunding-Laurel Village
6.00% 3/1/16 ...................................... 1,600,000 1,700,304
Minneapolis-St. Paul Metro Airport Commission
(AMT) 6.60% 1/1/11 ................................ 1,500,000 1,608,300
Rosemount Independent School District #196
5.70% 4/1/12 ...................................... 1,000,000 1,086,160
----------
5,056,067
----------
HIGHER EDUCATION REVENUE BONDS - 7.19%
Minnesota Higher Education Facility-St. Thomas
University Series 3-C 6.25% 9/1/16 ................ 1,000,000 1,046,730
Minnesota State University Board-State
University System Series A 6.05% 6/30/18 .......... 250,000 262,905
Northfield, Minnesota-St. Olaf College
6.30% 10/1/12 ..................................... 1,075,000 1,163,752
Northfield, Minnesota-St. Olaf College
6.40% 10/1/21 ..................................... 1,750,000 1,880,830
----------
4,354,217
----------
HOSPITAL REVENUE BONDS - 15.03%
Bloomington Health Care Facilities-Masonic Home
Care Center (AMBAC)
5.875% 7/1/22 ..................................... 1,000,000 1,064,400
Duluth Economic Development Authority Health Care-
Duluth Clinic Series 1992 (AMBAC)
6.30% 11/1/22 ..................................... 1,270,000 1,391,272
Duluth Economic Development Authority Health Care-
St. Luke's Hospital Series 1992-B (Connie Lee)
6.40% 5/1/18 ...................................... 1,000,000 1,087,730
Duluth Economic Development Authority Health Care-
Benedictine Health System St. Mary's Hospital
Series 1993-C (Connie Lee)
6.00% 2/15/20 ..................................... 1,000,000 1,077,690
Minneapolis Hospital System-Fairview Hospital
Series 1991-A (MBIA) 6.50% 1/1/11 ................. 2,210,000 2,412,171
Minneapolis Hospital System-Fairview Hospital
Series 1993-A (MBIA) 5.25% 11/15/19 ............... 1,500,000 1,533,840
Minneapolis, St. Paul HRA HealthOne (MBIA)
6.75% 8/15/14 ..................................... 500,000 534,990
----------
9,102,093
----------
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PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
HOUSING REVENUE BONDS - 22.54%
Brooklyn Center Multifamily Housing-
Four Courts (AMT) 7.50% 6/1/25 .................. $ 1,800,000 $ 1,905,300
Minnesota Housing Finance Agency Single Family
Mortgage Series 1992-G (AMT)
(FHA) 7.45% 7/1/22 .............................. 1,355,000 1,442,736
Minnesota Housing Finance Agency Single Family
Mortgage Series 1991-A (AMT)
6.50% 7/1/06 .................................... 205,000 219,920
Minnetonka Housing Facilities-Beacon Hill Project
(Presbyterian Homes Guaranteed)
7.70% 6/1/25 .................................... 2,725,000 2,954,391
New Brighton Multifamily Mortgage-
Polynesian Village Apartments
Series 1995-A (AMT) 7.60% 4/1/25 ................ 1,400,000 1,514,422
St. Anthony Multifamily Housing Development-
Autumn Woods Project (Asset Guaranty)
6.875% 7/1/22 ................................... 2,265,000 2,430,367
St. Paul Housing & Redevelopment Authority
Multifamily Housing-Pointe of St. Paul Project
Series 1992 (FNMA) 6.60% 10/1/12 ................ 2,950,000 3,178,330
-----------
13,645,466
-----------
POWER AUTHORITY REVENUE BONDS - 11.13%
Northern Minnesota Municipal Power Agency Electric
System Series A 5.00% 1/1/21 .................... 1,500,000 1,499,834
Northern Minnesota Municipal Power Agency Electric
System Series B (AMBAC) 5.50% 1/1/18 ............ 1,250,000 1,300,013
Southern Minnesota Municipal Power Agency (FGIC)
5.75% 1/1/11 .................................... 1,000,000 1,076,720
Southern Minnesota Municipal Power Agency (FGIC)
5.00% 1/1/16 .................................... 580,000 580,273
Western Minnesota Municipal Power Agency (MBIA)
5.50% 1/1/15 .................................... 2,275,000 2,280,414
-----------
6,737,254
-----------
*PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 26.20%
Carver County Series 1992-A
5.875% 2/1/14-02 ................................ 1,000,000 1,051,370
Dakota & Washington Counties HRA Single Family
Mortgage-Bloomington (AMT)
(Escrowed to maturity) (GNMA)
8.375% 9/1/21 ................................... 2,555,000 3,728,001
Duluth Economic Development Authority Health Care-
Duluth Clinic Series 1992 (AMBAC)
6.30% 11/1/22-04 ................................ 730,000 825,995
<PAGE>
12 for tax-exempt income
Statement of Net Assets (Continued)
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED BONDS/ESCROWED TO MATURITY (CONTINUED)
Metropolitan Council Sports Facilities Commission
Hubert H. Humphrey Metrodome
(Escrowed to Maturity) 6.00% 10/1/09 .............. $ 1,525,000 $ 1,654,212
Minnesota Higher Education Facility-McAlester
College Series 3-J 6.40% 3/1/22-02 ................ 1,000,000 1,066,470
Minnesota Public Facilities Authority-Water Pollution
Control Series 1992 6.50% 3/1/14-02 ............... 1,500,000 1,657,095
Puerto Rico Commonwealth 6.00% 7/1/26-07 ............ 2,000,000 2,321,680
St. Cloud Hospital (AMBAC) 6.75% 7/1/15-01 .......... 1,000,000 1,096,760
St. Francis Independent School District #15
(FSA) 6.30% 2/1/11-06 ............................. 1,250,000 1,406,363
Southern Minnesota Municipal Power Agency
(Escrowed to Maturity) (AMBAC)
5.50% 1/1/15 ...................................... 390,000 409,473
Southern Minnesota Municipal Power Agency
(Escrowed to Maturity) (AMBAC)
5.50% 1/1/15 ...................................... 610,000 638,091
----------
15,855,510
----------
POLLUTUTION CONTROL REVENUE BONDS - 4.51%
Bass Brook PCR Minnesota Power & Light
6.00% 7/1/22 ...................................... 2,575,000 2,728,882
----------
2,728,882
----------
TRANSPORTATION REVENUE BONDS - 1.22%
Puerto Rico Commonwealth Highway & Transportation
Authority 5.50% 7/1/26 ............................ 700,000 736,036
----------
736,036
----------
WATER & SEWER REVENUE BONDS - 1.76%
Anoka County Solid Waste Disposal National Rural
Co-op Utility (AMT) 6.95% 12/1/08 ................. 1,000,000 1,063,960
----------
1,063,960
----------
OTHER REVENUE BONDS - 0.35%
Minneapolis, Minnesota Community
Development Agency-Supported Development
Limited Tax Common Bond Fund Series 5
5.70% 12/1/27 ..................................... 200,000 210,170
----------
210,170
----------
Total Municipal Bonds
(cost $54,361,683) ................................ 59,489,655
----------
<PAGE>
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
Short Term Investments - 0.23%
Federated Minnesota Municipal Cash Trust ....... 137,495 $ 137,495
-----------
Total Short Term Investments
(cost of $137,495 ) .......................... 137,495
-----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 98.51%
(COST $54,499,178) ........................... $ 59,627,150
RECEIVABLES AND OTHER ASSETS NET OF
LIABILITIES - 1.49% .......................... 901,140
-----------
TOTAL NET ASSETS - 100.00% ..................... 60,528,290
LIQUIDATION VALUE OF PREFERRED STOCK ........... (20,000,000)
-----------
NET ASSETS APPLICABLE TO 2,594,700 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING ................. $ 40,528,290
============
NET ASSET VALUE PER COMMON SHARE
($40,528,290 / 2,594,700 SHARES) ............. $15.62
======
- ----------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
AMBAC -Insured by the AMBAC Indemnity Corporation
AMT -Bonds subject to Alternative Minimum Tax
Asset Guaranty -Insured by the Asset Guaranty Insurance Company
Connie Lee -Insured by the College Construction Insurance Association
FGIC -Insured by the Financial Guaranty Insurance Company
FHA -Insured by the Federal Housing Authority
FNMA -Insured by the Federal National Mortgage Association
FSA -Insured by Financial Security Assurance
GNMA -Insured by the Government National Mortgage Association
MBIA -Insured by the Municipal Bond Insurance Association
Components of Net Assets At September 30, 1998:
Common stock, $.01 par value unlimited shares
authorized to the Fund......................... $35,455,037
Preferred stock $.01 par value unlimited shares
authorized to the Fund......................... 20,000,000
Distribution in excess of net investment income.. (72,367)
Accumulated net realized gain on investments..... 17,648
Net unrealized appreciation of investments....... 5,127,972
-----------
Total Net Assets.................................. $60,528,290
===========
See accompanying notes
<PAGE>
for tax-exempt income 13
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS - 98.81%
GENERAL OBLIGATION BONDS - 6.93%
Becker (AMT) (MBIA) 6.25% 8/1/15 ................... $ 3,700,000 $ 4,034,073
Buffalo Independent School District
(FSA) 6.15% 2/1/22 .............................. 4,030,000 4,317,661
Hawley Independent School District (FSA)
5.75% 2/1/17 .................................... 1,000,000 1,076,530
Rosemount Independent School District # 196
5.70% 4/1/12 .................................... 1,270,000 1,379,423
St. Paul, Minnesota Tax Increment-Block 39
Project A 4.75% 2/1/25 .......................... 1,000,000 976,440
-----------
11,784,127
-----------
HIGHER EDUCATION REVENUE BONDS - 9.65%
Minnesota Higher Education Facility-
Macalster College 5.55% 3/1/16 .................. 1,250,000 1,302,513
Minnesota Higher Education Facility-
St. Thomas University Series 4A-1
5.625% 10/1/21 .................................. 1,000,000 1,042,080
Minnesota State Higher Education Facility-
St. Thomas University Series 3-R1
5.60% 10/1/15 ................................... 1,050,000 1,096,106
Minnesota State Higher Education Facility-
St. Thomas University Series 3-R2
5.60% 9/1/14 .................................... 275,000 286,924
Minnesota State University Board Series 1993-A
State University System 6.10% 6/30/23 ........... 1,150,000 1,209,306
Minnesota State University Board Series 1993-C
State University System (MBIA)
5.60% 6/30/16 ................................... 4,115,000 4,291,575
Minnesota State University Board Series 1993-C
State University System (MBIA)
5.60% 6/30/19 ................................... 3,720,000 3,873,190
University of Minnesota Series A 5.50% 7/1/21 ...... 3,000,000 3,306,120
-----------
16,407,814
-----------
HOSPITAL REVENUE BONDS - 18.79%
Bloomington Health Care Facilities-Masonic Home
Care Center (AMBAC) 5.875% 7/1/22 ............... 4,000,000 4,257,600
Brainerd Evangelical Lutheran Health Care Facilities
Series A (FSA) 6.65% 3/1/17 ..................... 1,195,000 1,312,504
Detroit Lakes Benedictine Health Systems-St. Mary's
Hospital (Connie Lee) 6.00% 2/15/19 ............. 1,250,000 1,345,037
Duluth Economic Development Authority Health Care
Facilities-Duluth Clinic (AMBAC)
6.20% 11/1/12 ................................... 720,000 789,494
Duluth Economic Development Authority Health Care
Facilities-Duluth Clinic Series 1992 (AMBAC)
6.30% 11/1/22 ................................... 3,890,000 4,261,456
Duluth Economic Development Authority Benedictine
Health Systems-St. Mary's Hospital (Connie Lee)
6.00% 2/15/20 ................................... 6,000,000 6,466,140
Minneapolis Health Care Facility-Jones-Harrison
Residence Project 6.00% 10/1/27 ................. 2,000,000 2,037,640
<PAGE>
- -------------------------------------------------------------------------------
Principal Market
Amount Value
- -------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
HOSPITAL REVENUE BONDS (CONTINUED)
Minneapolis-St. Paul HRA Childrens Health Care
(FSA) 5.50% 8/15/25 ......................... $ 1,500,000 $ 1,567,260
Minneapolis-St. Paul HRA HealthOne (MBIA)
7.40% 8/15/11 ............................... 2,105,000 2,275,463
Minnesota Agricultural & Economic Development
Health Care System-Fairview Hospital Series A
(MBIA) 5.75% 11/15/26 ....................... 4,800,000 5,240,160
Rochester, Minnesota Health Care Facilities-Mayo
Foundation-Series B 5.50% 11/15/27 .......... 2,265,000 2,392,995
-----------
31,945,749
-----------
HOUSING REVENUE BONDS - 21.53%
Chanhassen Multifamily Housing Heritage Park
Project (AMT) (FHA) 6.20% 7/1/30 ............ 1,105,000 1,191,765
Dakota County HRA Multifamily Mortgage-Imperial
Ridge Project Series 1993-A (GNMA)
6.10% 12/15/28 .............................. 1,870,000 1,988,670
Harmony, Minnesota Multifamily Housing-Zedakah
Foundation Project Series A 5.95% 9/1/20 .... 1,000,000 1,058,360
Minnesota Housing Finance Agency Multifamily
Rental Housing Series D 5.90% 2/1/14 ........ 1,115,000 1,177,585
Minnesota Housing Finance Agency Multifamily
Rental Housing Series D 6.00% 8/1/22 ........ 2,295,000 2,420,673
Minnesota Housing Finance Agency Single Family
Housing Series 1994-F 6.30% 7/1/25 .......... 1,540,000 1,649,740
Minnesota Housing Finance Agency Single Family
Mortgage (AMT) 7.05% 7/1/22 ................. 1,680,000 1,769,897
Minnesota Housing Finance Agency Single Family
Mortgage Series 1992-B (AMT)
6.15% 1/1/26 ................................ 3,795,000 3,999,588
Minnesota Housing Finance Agency Single Family
Mortgage Series 1992-C2 (AMT)
6.15% 7/1/23 ................................ 3,845,000 4,041,133
Minnesota Housing Finance Agency Single Family
Mortgage Series 1994-J (AMT)
6.95% 7/1/26 ................................ 3,470,000 3,766,373
Minnetonka Senior Housing Project (Presbyterian
Homes of Minnesota Guaranteed)
7.25% 6/1/09 ................................ 1,225,000 1,320,440
Minnetonka Senior Housing Project (Presbyterian
Homes of Minnesota Guaranteed)
7.50% 6/1/14 ................................ 760,000 824,402
Minnetonka Senior Housing Project (Presbyterian
Homes of Minnesota Guaranteed)
7.55% 6/1/19 ................................ 2,365,000 2,559,167
Moorhead, Minnesota Economic Development
Authority Multifamily Refunding & Improvement
Housing Development-Eventide B
6.00% 6/1/18 ................................ 1,000,000 1,008,790
<PAGE>
14 for tax-exempt income
Statement of Net Assets (Continued)
- -------------------------------------------------------------------------------
Principal Market
Amount Value
--------- ------
MUNICIPAL BONDS (CONTINUED)
HOUSING REVENUE BONDS (CONTINUED)
New Brighton Multifamily Mortgage-Polynesian
Village Apartments Series 1995-A
7.60% 4/1/25 ................................... $ 3,820,000 $ 4,132,209
St. Paul HRA Single Family Mortgage
(FNMA) 6.40% 3/1/21 ............................ 1,935,000 2,083,473
Stillwater, Minnesota Multifamily Mortgage-
Stillwater Cottages (AMT) 7.25% 11/1/27 ........ 1,540,000 1,606,020
-----------
36,598,285
-----------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - .86%
Burnsville, Minnesota Commonweath Development
Refunding-Holiday Inn Project
5.90% 4/1/08 ................................... 1,430,000 1,464,477
-----------
1,464,477
-----------
POLLUTION CONTROL REVENUE BONDS - 7.94%
Bass Brook PCR Minnesota Power & Light
6.00% 7/1/22 ................................... 7,660,000 8,117,762
Cloquet, Minnesota Pollution Control-Potlatch
Corporation Project 5.90% 10/1/26 .............. 5,000,000 5,378,900
-----------
13,496,662
-----------
POWER AUTHORITY REVENUE BONDS - 5.79%
Northern Minnesota Municipal Power Agency Electric
System Series B (AMBAC) 5.50% 1/1/18 ........... 5,955,000 6,193,260
Puerto Rico Electric Power Authority
5.25% 7/1/21 ................................... 2,000,000 2,036,160
Western Minnesota Municipal Power Agency (MBIA)
5.50% 1/1/15 ................................... 1,605,000 1,608,820
-----------
9,838,240
-----------
*PRE-REFUNDED / ESCROWED TO MATURITY - 23.60%
Dakota & Washington Counties HRA Single Family
Mortgage-Bloomington (AMT)
(Escrowed to Maturity) (GNMA)
8.375% 9/1/21 .................................. 5,500,000 8,025,050
Duluth Economic Development Authority Health Care
Facilities (AMBAC) 6.30% 11/1/22-04 ............ 960,000 1,086,240
Duluth Economic Development Authority Hospital
Facilities-Duluth Clinic (AMBAC)
6.20% 11/1/12-04 ............................... 280,000 315,316
<PAGE>
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED / ESCROWED TO MATURITY (CONTINUED)
Esko Independent School District (FSA)
5.65% 4/1/12-05 ................................. $ 550,000 $ 592,295
Melrose Independent School District # 740
Series A (FSA) 5.625% 2/1/13 -02 ................ 3,225,000 3,370,995
Metropolitan Council Sports Facility Commision-
Hubert H. Humphrey Metrodome
(Escrowed to Maturity) 6.00% 10/1/09 ............ 2,360,000 2,559,963
Minnesota Public Facilities Authority Water
Pollution Control 6.25% 3/1/16-05 ............... 1,000,000 1,132,020
Minnesota Public Facilities Authority Water
Pollution Control Series 1992
6.50% 3/1/14-05 ................................. 3,300,000 3,645,609
Red Wing Independent School District # 256
Series 1993-A 5.70% 2/1/12-03 ................... 2,925,000 3,112,025
Red Wing Independent School District # 256
Series 1993-A 5.70% 2/1/13-03 ................... 1,625,000 1,728,903
St. Paul HRA Sales Tax-Civic Center
(Escrowed To Maturity) 5.55% 11/1/23 ............ 2,300,000 2,407,939
St. Paul HRA Sales Tax-Civic Center
(Escrowed To Maturity) (MBIA)
5.55% 11/1/23 ................................... 4,200,000 4,397,106
Southern Minnesota Municipal Power Agency
5.75% 1/1/18-16 ................................. 3,715,000 4,051,615
Stewartville Independent School District # 534
5.75% 2/1/17-05 ................................. 1,705,000 1,843,412
Western Minnesota Municipal Power Agency
(Escrowed To Maturity) 6.625% 1/1/16 ............ 1,535,000 1,827,909
-------------
40,096,397
-------------
TRANSPORTATION REVENUE BONDS - 3.72%
Puerto Rico Commonwealth Highway & Transportation
Authority 5.50% 7/1/26 .......................... 6,000,000 6,308,880
-------------
6,308,880
-------------
Total Municipal Bonds
(cost $155,849,183) ............................. 167,940,631
-------------
<PAGE>
for tax-exempt income 15
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
Total Market Value of SecUrities - 98.81%
(cost $155,849,183) ...................................... $167,940,631
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.19% ............................... 2,030,736
------------
TOTAL NET ASSETS - 100.00% .................................. 169,971,367
LIQUIDATION VALUE OF PREFERRED STOCK ........................ (60,000,000)
------------
NET ASSETS APPLICABLE TO 7,252,000 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING ............................. $109,971,367
============
NET ASSET VALUE PER COMMON SHARE
($109,971,367 / 7,252,200 SHARES) ........................ $15.16
======
- ------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Authority
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by the Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1998:
Common stock, $.01 par value, 200 million shares
authorized to the Fund ................................. $99,710,124
Preferred stock, $.01 par value, 1 million shares
authorized to the Fund ................................ 60,000,000
Undistributed net investment income ....................... 744,466
Accumulated net realized loss on investments .............. (2,574,671)
Net unrealized appreciation of investments ................ 12,091,448
------------
Total net assets ......................................... $169,971,367
============
<PAGE>
VOYAGEUR MINNESOTA
MUNICIPAL INCOME FUND III, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS - 98.46%
GENERAL OBLIGATION BONDS - 5.34%
Brooklyn Park, Minnesota Series A
5.50% 02/01/19 ................................... $1,075,000 $1,133,598
North Branch Independent School District
(FGIC) 5.625% 02/01/17 ........................... 1,000,000 1,057,850
----------
2,191,448
----------
HIGHER EDUCATION REVENUE BONDS - 6.53%
Minnesota Higher Education Facilities Authority-
Macalester College Series 4-C
5.50% 03/01/12 ................................... 200,000 210,106
Minnesota Higher Education Facilities Authority-
St. Benedict College Series 3-W
6.375% 03/01/20 .................................. 345,000 370,244
Minnesota Higher Education Facilities Authority-
St. Mary's College Series 3-Q
6.15% 10/01/23 ................................... 1,000,000 1,045,430
Minnesota Higher Education Facilities Authority-
St. Thomas University Series 4-A1
5.625% 10/01/21 .................................. 1,010,000 1,052,501
----------
2,678,281
----------
HOSPITAL REVENUE BONDS - 19.93%
Duluth Economic Development Authority
Hospital Facilities-Duluth Clinic (AMBAC)
6.20% 11/01/12 ................................... 1,080,000 1,184,242
Minnesota Agricultural & Economic Development
Health Care System-Fairview Hospital
Series A (MBIA) 5.75% 11/15/26 ................... 2,000,000 2,183,399
Princeton Fairview Hospital Series 1991-C
(MBIA) 6.25% 01/01/21 ............................ 2,000,000 2,149,540
Robbinsdale North Memorial Medical Center Series
1993-B (AMBAC) 5.50% 05/15/23 .................... 1,500,000 1,556,220
St. Paul, Minnesota Housing & Redevelopment
for Healtheast Authority Hospital
5.85% 11/01/17 ................................... 250,000 257,383
Wadena County Health Care Facilities
7.75% 09/01/24 ................................... 750,000 836,085
----------
8,166,869
----------
HOUSING REVENUE BONDS - 19.31%
Brooklyn Center Multifamily Housing-Four Courts (AMT)
7.50% 06/01/25 ................................... 1,000,000 1,058,500
Burnsville Mulifamily Mortgage Series A (FSA)
7.10% 01/01/30 ................................... 2,000,000 2,248,479
Edina HRA-Edina Park Plaza
(FHA) 7.70% 12/01/28 ............................. 1,000,000 1,038,980
Minneapolis Multifamily Housing-
Olsen Townhomes (AMT) 6.00% 12/01/19 ............. 1,875,000 1,957,838
Minnesota HFA Single Family Mortgage Series
1991-A (AMT) (FHA) 7.45% 07/01/22 ................ 1,510,000 1,607,773
----------
7,911,570
----------
<PAGE>
16 for tax-exempt income
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
POLLUTION CONTROL REVENUE BONDS - 6.52%
Bass Brook PCR Minnesota Power & Light
6.00% 07/01/22 .....................................$ 1,505,000 $ 1,594,939
Cloquet, Minnesota Pollution Control-
Potlatch Corporation Project
5.90% 10/01/26 ..................................... 1,000,000 1,075,780
-----------
2,670,719
-----------
POWER AUTHORITY REVENUE BONDS - 4.68%
Southern Minnesota Municipal Power Agency
(FGIC) 5.75% 01/01/18 .............................. 1,800,000 1,917,792
-----------
1,917,792
-----------
*PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 24.35%
Duluth Economic Development Authority Hospital
Facilities-Duluth Clinic (AMBAC) 6.20% 11/01/12-04.. 420,000 472,975
Esko Independent School District
(FSA) 5.75% 04/01/17-05 ............................ 2,145,000 2,322,005
Minnesota Higher Education Facilities Authority Series
3-W 6.375% 03/01/20-04 ............................. 930,000 1,041,163
Moorhead Public Utilities
(MBIA) 6.25% 11/01/12-02 ........................... 1,500,000 1,622,100
St. Paul HRA Sales Tax-Civic Center (MBIA)
(Escrow to Maturity) 5.55% 11/01/23 ................ 1,300,000 1,361,009
University of Minnesota Hospital (Escrow to Maturity)
6.75% 12/01/16 ..................................... 2,580,000 3,157,145
-----------
9,976,397
-----------
TRANSPORTATION REVENUE BONDS - 3.34%
Puerto Rico Commonwealth Highway &
Transportation Authority 5.50% 07/01/26 ............ 1,300,000 1,366,924
-----------
1,366,924
-----------
WATER & SEWAGE REVENUE BONDS - 7.24%
Minnesota Public Facility Authority Water Pollution Co
5.40% 03/01/15 ..................................... 2,820,000 2,967,345
-----------
2,967,345
-----------
OTHER REVENUE BONDS - 1.22%
Minneapolis Community Development Agency
5.70% 12/01/27 ..................................... 475,000 499,154
-----------
499,154
-----------
Total Municipal Bonds (cost $36,993,788) ............. 40,346,499
-----------
NUMBER
OF SHARES
---------
SHORT TERM INVESTMENTS - 0.07%
Federated Minnesota Municipal Cash Trust ............. 29,455 29,455
-----------
TOTAL SHORT TERM INVESTMENTS
(cost of $29,455) .................................. 29,455
-----------
<PAGE>
- --------------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES - 98.53%
(cost $37,023,243) ......................................... $40,375,954
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.47%.................................. 603,271
TOTAL NET ASSETS - 100.00% .................................... 40,979,225
LIQUIDATION VALUE OF PREFERRED STOCK .......................... (15,000,000)
-----------
NET ASSETS APPLICABLE TO 1,837,200 COMMON
SHARES ($.01 PAR VALUE) OUTSTANDING ........................ $25,979,225
===========
NET ASSET VALUE PER COMMON SHARE
($25,979,225/1,837,200 SHARES) ............................. $14.14
======
- -------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Corporation
FHA - Insured by the Federal Housing Authority
FSA - Insured by the Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1998:
Common stock, $.01 par value, 200 million shares
authorized to the Fund ...................................... $25,246,730
Preferred stock, $.01 par value, 1 million shares
authorized to the Fund ...................................... 15,000,000
Undistributed net investment income ............................ 221,875
Accumulated net realized loss on investments ................... (2,842,091)
Net unrealized appreciation of investments ..................... 3,352,711
-----------
Total net assets ............................................... $40,979,225
===========
See accompanying notes
<PAGE>
for tax-exempt income 17
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 98.74%
General Obligation Bonds - 24.00%
Eagle Mountain Community Facility District
A2 6.40% 07/01/17 ............................... $1,500,000 $1,673,655
Goodyear, Arizona Community Facilities Utility
District #1 (Asset Guaranty)
4.90% 07/15/18 .................................. 500,000 501,625
Goodyear, Arizona Community Facilities Utility
District #1 (Asset Guaranty)
5.00% 07/15/23 .................................. 1,775,000 1,757,445
Maricopa County Alhambra Elementary School
District #68 (AMBAC) 5.625% 07/01/13 ............ 2,500,000 2,658,025
Maricopa County Unified School District #11
5.50% 07/01/10 .................................. 3,000,000 3,209,190
Maricopa County Unified School District #41 (FSA)
6.25% 07/01/15 ................................. 1,500,000 1,721,610
Maricopa County Washington Elementary
Unified School District #6 (AMBAC)
5.375% 07/01/14 ................................. 1,000,000 1,055,180
Mohave County Unified School District #1
(FGIC) 5.90% 07/01/15 ........................... 1,500,000 1,649,565
Pima County Unified School District #6 (FGIC)
5.75% 07/01/12 .................................. 2,000,000 2,184,280
Santa Cruz Valley Unified School District #35
(AMBAC) 5.80% 07/01/09 .......................... 600,000 647,898
----------
17,058,473
----------
HIGHER EDUCATION REVENUE BONDS - 1.52%
University of Arizona 6.25% 06/01/11 ............... 1,000,000 1,082,370
----------
1,082,370
----------
HOSPITAL REVENUE BONDS - 11.01%
Maricopa County Health Facilities-Catholic Health
Care West Series A (MBIA)
5.75% 07/01/11 .................................. 1,750,000 1,876,578
Maricopa County Health Facilities-Catholic Health
Care West Series A (MBIA)
6.00% 07/01/21 .................................. 1,100,000 1,183,028
Maricopa County Industrial Development Authority-
Baptist Hospital (MBIA) 5.50% 09/01/13 .......... 300,000 318,546
Mohave County Industrial Development Authority-
Baptist Hospital (MBIA) 5.50% 09/01/21 .......... 500,000 527,310
Mohave County Industrial Development Authority-
Baptist Hospital (MBIA) 5.75% 09/01/26 .......... 150,000 161,982
Phoenix Industrial Development Authority-
John C. Lincoln Hospital (FSA)
5.50% 12/01/13 .................................. 1,100,000 1,183,039
Pima County Development Authority-Health Partners
Series A (MBIA) 5.625% 04/01/14 ................. 500,000 545,805
Show Low, Arizona Industrial Development Authority-
Navapache Regional Medical Center Series A (ACA)
5.50% 12/01/17 .................................. 250,000 260,788
University of Arizona Medical Center (MBIA)
6.25% 07/01/16 .................................. 700,000 755,783
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
HOSPITAL REVENUE BONDS (CONTINUED)
Yavapai County, Arizona Industrial Development
Authority Residential Care Facilities (GNMA)
5.40% 02/20/38 ................................... $1,000,000 $1,012,530
----------
7,825,389
----------
HOUSING REVENUE BONDS - 21.94%
Maricopa County, Arizona Industrial Development Authority
Multifamily-Camelback Apartments Project A
(Asset Guaranty) 5.45% 05/01/28 .................. 1,250,000 1,275,775
Peoria Multifamily Housing Mortgage (GNMA)
7.30% 02/20/28 ................................... 1,230,000 1,367,612
Phoenix Industrial Development Authority
Multifamily Mortgage (FHA)
6.80% 11/01/25 ................................... 500,000 530,410
Phoenix Industrial Development Authority-
Single Family Mortgage (GNMA)
5.35% 06/01/20 ................................... 3,345,000 3,426,116
Phoenix Industrial Development Authority-Single
Family Mortgage (GNMA) 5.30% 04/01/20 ............ 2,500,000 2,534,125
Pima County Industrial Development Authority
Multifamily Mortgage (Asset Guaranty)
5.40% 03/01/15 ................................... 380,000 389,929
Pima County Industrial Development
Authority Multifamily Mortgage (GNMA)
5.20% 12/20/31 ................................... 2,370,000 2,389,173
Pima County Industrial Development Authority
Single Family Mortgage Series A (GNMA)
6.25% 11/01/30 ................................... 1,125,000 1,209,656
Tempe Industrial Development Authority Multifamily
Mortgage (FHA) 6.125% 06/01/10 ................... 2,305,000 2,469,854
----------
15,592,650
----------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 2.90%
Coconino County (Nevada Power) Pollution Control
Corporation 5.80% 11/01/32 ....................... 1,000,000 1,024,580
Navajo County (Arizona Public Service)
Pollution Control Corporation (AMBAC)
5.50% 08/15/28 ................................... 1,000,000 1,039,260
-----------
2,063,840
-----------
Leases/Certificates of Participation - 1.66%
Tucson, Arizona Certificate of Participation
5.60% 07/01/11 ................................... 1,100,000 1,178,342
----------
1,178,342
----------
Power Authority Revenue Bonds - 2.49%
Salt River Project Electric System
6.25% 01/01/27 ................................... 1,635,000 1,769,675
----------
1,769,675
----------
<PAGE>
18 for tax-exempt income
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED BONDS / ESCROWED TO MATURITY - 6.03%
Arizona Hospital Facilities Authority (Escrowed to
Maturity) (MBIA) 6.25% 09/01/11 ................... 1,500,000 $1,647,510
Phoenix Civic Improvement Coproration Water System
Junior Lien 5.60% 07/01/18-06 ..................... 1,000,000 1,102,030
Salt River Project Electric System Series D,
6.25% 01/01/27-02 ................................. 365,000 399,033
University of Arizona 6.35% 06/01/14-04 .............. 1,000,000 1,139,280
----------
4,287,853
----------
TRANSPORTATION REVENUE BONDS - 9.50%
City of Phoenix, Arizona Street & Highway Junior Lien
(FGIC) 6.25% 07/01/11 ............................. 1,300,000 1,423,916
Tucson Airport Authority (MBIA)
5.70% 06/01/13 .................................... 2,000,000 2,139,160
Tucson Street & Highway (MBIA)
5.50% 07/01/12 .................................... 3,000,000 3,188,370
----------
6,751,446
----------
WATER & SEWER REVENUE BONDS - 12.51%
Phoenix Civic Improvement Corporation (AMBAC)
5.50% 07/01/21 .................................... 2,000,000 2,096,040
Phoenix Civic Improvement Corporation
Water System Junior Lien (MBIA)
5.375% 07/01/22 ................................... 1,000,000 1,041,290
Phoenix Water System 5.50% 07/01/22 .................. 2,000,000 2,070,220
Tucson Water Refunding Series A (AMBAC)
5.75% 07/01/18 .................................... 3,500,000 3,685,675
----------
8,893,225
----------
OTHER REVENUE BONDS - 5.18%
Greater Arizona Development Authority (MBIA)
4.75% 08/01/16 .................................... 420,000 416,325
Maricopa County Stadium District (MBIA)
5.50% 07/01/13 .................................... 1,750,000 1,851,675
Scottsdale Municipal Property Corporation (FGIC)
6.25% 11/01/14 .................................... 1,300,000 1,411,917
----------
3,679,917
----------
TOTAL Municipal Bonds (Cost $65,390,983) ............. 70,183,180
----------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES - 98.74%
(COST $65,390,983) ...................................... $ 70,183,180
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.26% ................................. 897,031
------------
TOTAL NET ASSETS - 100.00% ................................. 71,080,211
LIQUIDATION VALUE OF PREFERRED STOCK ....................... (25,000,000)
------------
NET ASSETS APPLICABLE TO 2,982,200 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING ............................ 46,080,211
------------
NET ASSET VALUE PER COMMON SHARE
($46,080,211 / 2,982,200 SHARES) ........................ $15.45
======
- ------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded
ACA - Insured by the American Capital Access Corporation
AMBAC - Insured by the AMBAC Indemnity Corporation
Asset Guaranty - Insured by the Asset Guaranty Insurance Company
FGIC - Insured by the Financial Guaranty Insurance Corporation
FHA - Insured by the Federal Housing Authority
FSA - Insured by the Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1998:
Common stock, $.01 par value, 200 million shares
authorized to the fund ....................................... $40,838,893
Preferred stock, $.01 par value, 1 million shares authorized
to the fund .................................................. 25,000,000
Undistributed net investment income ............................. 500,250
Accumulated net realized loss on investments .................... (51,129)
Net unrealized appreciation of investments ...................... 4,792,197
------------
Total Net Assets ................................................ $71,080,211
------------
See accompanying notes
<PAGE>
for tax-exempt income 19
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 98.91%
HIGHER EDUCATION REVENUE BONDS - 5.02%
Florida Agricultural & Mechanical University/Student
Apartment Facility (MBIA) 5.625% 7/1/21 ........... $1,250,000 $1,319,150
Volusia Education Facilities Authority-Stetson
University (MBIA) 5.50% 6/1/17 .................... 1,500,000 1,601,790
----------
2,920,940
----------
HOSPITAL REVENUE BONDS - 15.86%
Lakeland Hospital System-Lakeland Regional
Medical Center (FGIC) 5.75% 11/15/15 .............. 2,500,000 2,677,125
Orange County Health Facilities Authority-
Adventist Health System
(AMBAC) 5.75% 11/15/25 ............................ 1,500,000 1,597,245
Orange County Health Facilities Authority-
Orlando Regional Health (MBIA)
6.25% 10/1/18 ..................................... 2,000,000 2,384,440
Venice Health Care-Bon Secours Health System
Project (MBIA) 5.60% 8/15/16 ...................... 2,405,000 2,570,175
----------
9,228,985
----------
HOUSING REVENUE BONDS - 11.77%
Florida Housing Finance Agency
Homeowner Mortgage Series 2 (AMT)
(MBIA) 5.90% 7/1/29 ............................... 1,245,000 1,314,857
Florida State Housing-Leigh Meadows
Project Series N (AMT) (AMBAC)
6.30% 9/1/36 ...................................... 2,510,000 2,711,402
Florida State Housing-Woodbridge Project Series L
(AMT) (AMBAC) 6.05% 12/1/16 ....................... 1,120,000 1,204,358
Florida State Housing-Woodbridge Project Series L
(AMT) (AMBAC) 6.25% 6/1/36 ........................ 1,500,000 1,616,790
----------
6,847,407
----------
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED/ESCROWED TO MATURITY - 12.39%
Dade County Seaport (AMBAC)
6.25% 10/1/21-01 .................................. $1,000,000 $1,080,490
Dade County Professional Sports Franchise
Facilities (FGIC) 6.00% 10/1/22-02 ................ 1,000,000 1,095,570
Hillsborough County Industrial Development Authority
Alleghany Health System Knox Village (Escrowed
to Maturity) (MBIA) 5.75% 12/1/21 ................. 1,000,000 1,088,090
Sunrise Utility System Series A
(AMBAC) 5.75% 10/1/26-06 .......................... 2,500,000 2,805,750
Village Center Community Development District
Series A (MBIA) 5.85% 11/1/16-06 .................. 1,000,000 1,141,050
----------
7,210,950
----------
SCHOOL DISTRICT REVENUE BONDS - 12.58%
Dade County School Board Lease
(AMBAC) 5.60% 8/1/17 .............................. 1,000,000 1,062,830
Escambia County School Board Lease
(MBIA) 5.50% 2/1/22 ............................... 5,000,000 5,225,800
St. Lucie County School Board Lease
(FSA) 5.375% 7/1/19 ............................... 1,000,000 1,026,330
----------
7,314,960
----------
TRANSPORTATION REVENUE BONDS - 8.68%
Dade County Aviation Series B
(MBIA) 5.60% 10/1/26 .............................. 1,000,000 1,058,820
Florida Ports Financing Commission
(AMT) (MBIA) 5.375% 6/1/27 ........................ 2,250,000 2,307,668
Hillsborough County Aviation Authority-
Tampa International Airport Series B
(FGIC) 5.60% 10/1/19 .............................. 1,600,000 1,683,952
----------
5,050,440
----------
<PAGE>
20 for tax-exempt income
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
UTILITIES REVENUE BONDS - 2.30%
Florida State Municipal Power Agency-
St. Lucie Project (FGIC) 5.70% 10/1/16 .............. $1,250,000 $1,336,988
----------
1,336,988
----------
Water & Sewer Revenue Bonds - 11.22%
City of Panama Beach Water & Sewer (AMBAC)
5.50% 6/1/18 ........................................ 1,000,000 1,034,740
Dade County Water & Sewer (FGIC)
5.50% 10/1/25 ....................................... 1,100,000 1,154,857
Florida Keys Aqueduct Water
(AMBAC) 5.25% 9/1/21 ................................ 1,700,000 1,728,441
Indian River County Water & Sewer
(FGIC) 5.50% 9/1/16 ................................. 1,000,000 1,061,100
Sarasota County Utility System
(FGIC) 5.50% 10/1/22 ................................ 1,500,000 1,550,925
----------
6,530,063
----------
Other Revenue Bonds - 19.09%
Boca Raton Community Redevelopment Tax Increment-
Mizner Park Project (FGIC) 5.875% 3/1/13 ............ 1,500,000 1,609,890
Miami Beach Resort Tax
(AMBAC) 5.50% 10/1/16 ............................... 1,000,000 1,059,910
Orange County Public Service Tax
(FGIC) 6.00% 10/1/24 ................................ 3,000,000 3,305,520
Orange County Sales Tax
(FGIC) 6.125% 1/1/19 ................................ 1,000,000 1,044,160
Reedy Creek Improvement-Sports Complex
(MBIA) 5.75% 6/1/13 ................................. 2,300,000 2,488,347
Saint John's County Industrial Development Authority-
Pro Golf Hall of Fame (MBIA) 5.50% 3/1/17 ......... 250,000 266,513
Tampa Utilities Tax (AMBAC) 6.00% 10/1/15 .............. 1,000,000 1,053,220
Village Center Community Development District
Series A (MBIA) 5.50% 11/1/10 ....................... 250,000 280,522
----------
11,108,082
----------
Total Municipal Bonds (Cost $52,848,955) ............... 57,548,815
----------
<PAGE>
TOTAL MARKET VALUE OF SECURITIES OWNED - 98.91%
(COST $52,848,955) ............................................ $57,548,815
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.09% .................................... 633,852
-----------
TOTAL NET ASSETS - 100.00% ....................................... $58,182,667
LIQUIDATION VALUE OF PREFERRED STOCK ............................. (20,000,000)
-----------
NET ASSETS APPLICABLE TO 2,422,200 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING .................................. $38,182,667
===========
NET ASSET VALUE PER COMMON SHARE
($38,182,667 / 2,422,000 SHARES) .............................. $15.76
======
- -------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1998:
Common stock, $.01 par value unlimited shares
authorized to the Fund ........................................ $33,361,389
Preferred stock $.01 par value unlimited shares authorized
to the Fund ................................................... 20,000,000
Undistributed net investment income .............................. 517,018
Accumulated net realized loss on investments ..................... (395,600)
Net unrealized appreciation of investments ....................... 4,699,860
-----------
Total Net Assets ................................................. $58,182,667
===========
See accompanying notes
<PAGE>
for tax-exempt income 21
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 98.39%
CERTIFICATES OF PARTICIPATION - 9.44%
Arapahoe County, Colorado Library District
(MBIA) 5.70% 12/15/10 ........................... $ 2,000,000 $ 2,185,740
Auraria, Colorado Higher Education Center-
Administrative Office Facility Project
(AMBAC) 5.125% 05/01/28 ......................... 6,500,000 6,590,610
Fort Collins, Colorado Lease Certificates of
Participation Civic Center Facilities Project
(MBIA) 5.125% 12/01/18 .......................... 1,000,000 1,020,170
Thorton, Colorado Certificates of Participation
(AMBAC) 5.10% 12/01/17 .......................... 1,000,000 1,021,410
-----------
10,817,930
-----------
GENERAL OBLIGATION BONDS - 23.20%
Adams County School District #12 Five Star
(FGIC) 5.40% 12/15/15 ........................... 1,250,000 1,323,250
Adams County School District #12 Five Star (FGIC)
5.40% 12/15/16 .................................. 2,000,000 2,110,560
Archuleta & Hinsdale Counties School District #50JT
(MBIA) 5.50% 12/01/14 ........................... 1,000,000 1,066,060
Archuleta & Hinsdale Counties School District
#50JT (MBIA) 5.55% 12/01/20 ..................... 4,000,000 4,227,400
Eagle, Garfield & Routt Counties School District
#Re-50J(FGIC) 6.30% 12/01/12 .................... 1,000,000 1,132,960
El Paso County School District #20
(MBIA) 5.625% 12/15/16 .......................... 1,000,000 1,072,070
El Paso County School District #20
(AMBAC) 5.625% 12/15/16 ......................... 3,000,000 3,216,210
Larimer & Weld Counties School District #Re-5J
(MBIA) 5.75% 11/15/20 ........................... 1,700,000 1,840,862
Larimer, Weld & Boulder Counties School District
#R-2J Thompson (FGIC) 5.45% 12/15/16 ............ 1,000,000 1,055,870
Mesa County, Colorado Valley School District #51
Grand Junction (MBIA) 5.50% 12/01/15 ............ 1,000,000 1,065,030
Mesa County, Colorado Valley School District #51
Grand Junction (MBIA) 5.50% 12/01/16 ............ 1,100,000 1,168,156
Mountain Village Metro District San Miguel County,
Colorado Refunding & Improvement (MBIA)
5.00% 12/01/17 .................................. 585,000 591,932
Piney Creek, Colorado Metropolitan District (FGIC)
5.65% 12/01/17 .................................. 2,100,000 2,258,235
Pueblo, Colorado (MBIA) 5.80% 06/01/11 ............. 1,405,000 1,535,398
Stonegate Village Metropolitan District Refunding
& Improvement Series A (FSA)
5.50% 12/01/21 .................................. 2,750,000 2,910,518
-----------
26,574,511
-----------
HIGHER EDUCATION REVENUE BONDS - 13.95%
Aurora Educational Development
(Connie Lee) 6.00% 10/15/15 ..................... 2,500,000 2,697,300
Colorado Mountain College Residence Hall
Authority (MBIA) 5.75% 06/01/23 ................. 1,000,000 1,077,810
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
HIGHER EDUCATION REVENUE BONDS (CONTINUED)
Colorado Postsecondary Education Facility
Authority Refunding & Improvement-
University of Denver Project (MBIA)
5.375% 03/01/18 ................................. $ 3,500,000 $ 3,675,070
Colorado Postsecondary Education Facility
Authority-University of Denver Project
(Connie Lee) 6.00% 03/01/16 ..................... 4,000,000 4,303,240
Colorado State Board Agriculture-State University
Refunding & Improvement-Auxiliary Facilities
(AMBAC) 5.125% 03/01/17 ......................... 1,000,000 1,029,660
Colorado State Colleges Board of Trustees-
Adams State College Series A (MBIA)
5.75% 05/15/19 .................................. 2,000,000 2,120,860
University of Northern Colorado Auxiliary
Facilities System (MBIA) 5.60% 06/01/24 ......... 1,000,000 1,069,940
-----------
15,973,880
-----------
HOSPITAL REVENUE BONDS - 13.99%
Colorado Health Facilities Authority-Boulder
Community Hospital Project Series B
(MBIA) 5.875% 10/01/23 .......................... 2,625,000 2,821,271
Colorado Health Facilities Authority-North Colorado
Medical Center (MBIA) 5.95% 05/15/12 ............ 2,000,000 2,159,860
Colorado Health Facilities Authority-North Colorado
Medical Center (MBIA) 6.00% 05/15/20 ............ 1,000,000 1,079,380
Colorado Health Facilities Authority-
Sisters of Charity Leavenworth (MBIA)
5.00% 12/01/25 .................................. 1,000,000 1,006,510
Colorado Springs Memorial Hospital
(MBIA) 6.00% 12/15/24 ........................... 2,250,000 2,490,908
Logan County Health Care Facilities-Western Health
Network, Inc. (MBIA) 5.90% 01/01/19 ............. 2,510,000 2,660,575
University of Colorado Hospital Authority-Refunding
Series A (AMBAC) 5.20% 11/15/17 ................. 3,695,000 3,804,889
-----------
16,023,393
-----------
HOUSING REVENUE BONDS - 8.17%
Colorado Housing Finance Authority-Single Family
Housing, Series AA (MBIA)
5.625% 11/01/23 ................................. 5,000,000 5,180,650
Denver, Colorado City & County Multi-Family Housing
Mortgage Loan-Garden Court (FHA)
5.40% 07/01/39 .................................. 2,000,000 2,045,060
Snowmass Village Multi-Family Housing Refunding-
Essential Function Housing (FSA)
6.25% 12/15/16 .................................. 2,000,000 2,127,440
-----------
9,353,150
-----------
MISCELLANEOUS & SALES TAX REVENUE BONDS - 2.60%
Castle Rock Sales & Use Tax (FSA)
5.90% 06/01/16 .................................. 1,755,000 1,903,052
Douglas County Sales & Use Tax (MBIA)
5.50% 10/15/11 .................................. 1,000,000 1,074,400
---------
2,977,452
---------
<PAGE>
22 for tax-exempt income
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
POLLUTION CONTROL REVENUE BONDS - 1.40%
Adams County Pollution Control Refunding-Public
Service Company Project Series A
(MBIA) 5.875% 04/01/14 .......................... $1,500,000 $ 1,600,935
-----------
1,600,935
-----------
*PRE-REFUNDED BONDS - 12.35%
City of Westminster County Sales &
Use Tax Refunding Series A (FGIC)
6.25% 12/01/12-02 ............................... 5,000,000 5,476,550
Jefferson County School District #R-001
(AMBAC) 6.00% 12/15/12-02 ....................... 1,575,000 1,724,735
Jefferson County School District #R-001
(AMBAC) 6.25% 12/15/12-02 ....................... 2,435,000 2,689,920
Regional Transportation District-Colorado Sales Tax
(FGIC) 6.25% 11/01/12-02 ........................ 3,855,000 4,248,827
-----------
14,140,032
-----------
TRANSPORTATION REVENUE BONDS - 8.56%
Arapahoe County Capital Improvements Highway
(MBIA) 6.05% 08/31/15 ........................... 4,700,000 5,267,713
Denver City & County Airport Series E
(MBIA) 5.25% 11/15/23 ........................... 2,250,000 2,326,478
E-470 Public Highway Authority Series A
(MBIA) 5.00% 09/01/26 ........................... 1,500,000 1,503,690
Regional Transportation District-Colorado
Sales Tax (FGIC) 6.25% 11/01/12 ................. 645,000 701,463
-----------
9,799,344
-----------
UTILITY REVENUE BONDS - 1.86%
Platte River Power Authority-Colorado Power
Series DD (MBIA) 5.375% 06/01/17 ................ 2,000,000 2,127,540
-----------
2,127,540
-----------
Water & Sewer Revenue Bonds - 2.87%
Municipal Subdistrict of Northern Colorado
Water Conservancy District Series F (AMBAC)
6.50% 12/01/12 .................................. 2,800,000 3,284,792
-----------
3,284,792
-----------
Total Municipal Bonds (Cost $105,490,844) 112,672,959
-----------
NUMBER
OF SHARES
---------
Short Term Investments - 0.24%
Norwest Advantage Municipal
Money Market Fund ................................ 269,411 269,411
--------------
Total Sort Term Investments (Cost $269,411) ........ 269,411
--------------
<PAGE>
- --------------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES - 98.63%
(COST $105,760,255) ....................................... $112,942,370
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.37% ...... 1,573,263
------------
TOTAL NET ASSETS - 100.00% ................................... 114,515,633
LIQUIDATION VALUE OF PREFERRED STOCK ......................... (40,000,000)
------------
NET ASSETS APPLICABLE TO 4,837,100 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING .............................. $ 74,515,633
============
NET ASSET VALUE PER COMMON SHARE
($74,515,633 / 4,837,100 shares) .......................... $15.41
======
- -------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
AMBAC - Insured by the American Municipal Bond Assurance Corporation
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Authority
FSA - Insured by the Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1998:
Common stock, $.01 par value, 200 million shares
authorized to the Fund ....................................... $67,238,110
Preferred stock, $.01, par value, 1 million shares
authorized to the Fund ....................................... 40,000,000
Undistributed net investment income ............................. 724,652
Accumulated net realized loss on investments .................... (629,244)
Net unrealized appreciation of investments ...................... 7,182,115
------------
Total net assets ................................................ $114,515,633
------------
See accompanying notes
<PAGE>
for tax-exempt income 23
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
MINNESOTA MINNESOTA MINNESOTA ARIZONA FLORIDA COLORADO INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL INSURED MUNICIPAL
INCOME FUND, INCOME FUND II, INCOME FUND III, INCOME FUND, MUNICIPAL INCOME FUND,
INC. INC. INC. INC. INCOME FUND INC.
------------ --------------- ---------------- ------------ ----------- ---------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED 9/30/98 ENDED 9/30/98 ENDED 9/30/98 ENDED 9/30/98 ENDED 9/30/98 ENDED 9/30/98
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest .................................. $ 1,810,552 $ 4,712,153 $ 1,151,773 $ 1,922,235 $ 1,574,450 $ 2,992,907
----------- ----------- ----------- ----------- ----------- -----------
EXPENSES:
Management fees ........................... 120,263 336,537 81,040 140,424 114,843 226,343
Transfer agent fees and expenses .......... 12,200 15,000 3,000 4,200 6,600 3,300
Registration fees ......................... 3,000 2,400 1,405 3,000 2,346 3,183
Reports and statements to shareholders .... 5,700 9,600 3,000 12,600 5,400 13,500
Accounting and Administration ............. 42,936 105,136 27,595 45,719 37,851 71,723
Remarketing Agent Fees .................... 25,068 75,206 18,801 31,506 25,068 50,160
Professional fees ......................... 10,872 7,890 13,000 13,800 10,450 15,500
Custodian fees ............................ -- 4,000 1,200 1,800 1,900 2,500
Directors' fees ........................... 3,300 6,000 2,400 2,400 3,000 2,800
Rating Agency Fees ........................ 6,000 6,000 3,000 3,500 4,500 3,500
Taxes (other than taxes on income) ........ 4,500 3,000 2,400 3,000 3,000 10,200
Other ..................................... -- -- -- 1,581 -- 1,792
----------- ----------- ----------- ----------- ----------- -----------
Total expenses ............................ 233,839 570,769 156,841 263,530 214,958 404,501
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME ..................... 1,576,713 4,141,384 994,932 1,658,705 1,359,492 2,588,406
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ... 18,553 176,113 (4,001) 611,203 -- 5,920
Net change in unrealized
appreciation/depreciation of investments 615,287 2,445,889 652,381 545,427 998,268 2,347,427
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS: ........................ 633,840 2,622,002 648,380 1,156,630 998,268 2,353,347
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................ $ 2,210,553 $ 6,763,386 $ 1,643,312 $ 2,815,335 $ 2,357,760 $ 4,941,753
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes
<PAGE>
24 for tax-exempt income
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL MINNESOTA MUNICIPAL MINNESOTA MUNICIPAL
INCOME FUND, INC. INCOME FUND II, INC. INCOME FUND III, INC.
-------------------- -------------------- ---------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 9/30/98 ENDED ENDED 9/30/98 ENDED ENDED 9/30/98 ENDED
(UNAUDITED) 3/31/98 (UNAUDITED) 3/31/98 (UNAUDITED) 3/31/98
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income .................... $ 1,576,713 $ 3,063,165 $ 4,141,384 $ 8,187,701 $ 994,932 $ 1,935,569
Net realized gain (loss) on investments .. 18,553 (905) 176,113 (99,452) (4,001) 51,297
Net change in unrealized appreciation/
depreciation of investments ........... 615,287 2,515,951 2,445,889 8,807,600 652,381 1,892,300
----------- ----------- ------------ ------------ ------------ -----------
Net increase in net assets resulting from
operations ............................ 2,210,553 5,578,211 6,763,386 16,895,849 1,643,312 3,879,166
----------- ----------- ------------ ------------ ------------ -----------
DIVIDENDS AND DISTRIBUTION TO:
Common shareholders from net investment
income ................................. (1,206,536) (2,413,072) (2,964,337) (5,928,674) (695,840) (1,391,679)
Preferred shareholders from net investment
income ................................. (390,764) (720,894) (1,160,814) (2,206,092) (251,523) (552,111)
Common shareholders from realized gains on
investments ............................ -- (56,857) -- -- -- --
Preferred shareholders from realized gains
on investments ......................... -- (16,542) -- -- -- --
----------- ----------- ------------ ------------ ------------ -----------
(1,597,300) (3,207,365) (4,125,151) (8,134,766) (947,363) (1,943,790)
----------- ----------- ------------ ------------ ------------ -----------
NET INCREASE IN NET ASSETS ............... 613,253 2,370,846 2,638,235 8,761,083 695,949 1,935,376
NET ASSETS:
Beginning of period ...................... 59,915,037 57,544,191 167,333,132 158,572,049 40,283,276 38,347,900
----------- ----------- ------------ ------------ ------------ -----------
End of period ............................ $60,528,290 $59,915,037 $169,971,367 $167,333,132 $ 40,979,225 $40,283,276
=========== =========== ============ ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
ARIZONA MUNICIPAL FLORIDA INSURED MUNICIPAL COLORADO INSURED MUNICIPAL
INCOME FUND, INC. INCOME FUND INCOME FUND, INC.
----------------------- ------------------------- -------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 9/30/98 ENDED ENDED 9/30/98 ENDED ENDED 9/30/98 ENDED
(UNAUDITED) 3/31/98 (UNAUDITED) 3/31/98 (UNAUDITED) 3/31/98
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income .................... $ 1,658,705 $ 3,236,581 $ 1,359,492 $ 2,634,153 $ 2,588,406 $ 5,187,058
Net realized gain (loss) on investments .. 611,203 233,414 -- 71,462 5,920 974,269
Net change in unrealized appreciation/
depreciation of investments ........... 545,427 3,450,141 998,268 3,818,631 2,347,427 5,313,456
----------- ----------- ------------ ----------- ------------ -----------
Net increase in net assets resulting from
operations ............................. 2,815,335 6,920,136 2,357,760 6,524,246 4,941,753 11,474,783
----------- ----------- ------------ ----------- ------------ -----------
DIVIDENDS AND DISTRIBUTION TO:
Common shareholders from net investment
income ................................. (1,151,875) (2,303,750) (917,409) (1,834,817) (1,777,634) (3,555,272)
Preferred shareholders from net investment
income ................................. (396,505) (905,587) (328,294) (728,766) (835,401) (1,419,308)
----------- ----------- ------------ ----------- ------------ -----------
(1,548,380) (3,209,337) (1,245,703) (2,563,583) (2,613,035) (4,974,580)
----------- ----------- ------------ ----------- ------------ -----------
NET INCREASE IN NET ASSETS ............... 1,266,955 3,710,799 1,112,057 3,960,663 2,328,718 6,500,203
NET ASSETS:
Beginning of period ...................... 69,813,256 66,102,457 57,070,610 53,109,947 112,186,915 105,686,712
----------- ----------- ------------ ----------- ------------ -----------
End of period ............................ $71,080,211 $69,813,256 $ 58,182,667 $57,070,610 $114,515,633 $112,186,915
=========== =========== ============ =========== ============ ============
</TABLE>
See accompanying notes
<PAGE>
for tax-exempt income 25
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Minnesota Municipal Income Fund, Inc.
---------------------------------------------------------------------------
Six Months
Ended 9/30/98(1) Year Ended Year Ended Year Ended Year Ended Year Ended
(Unaudited) 3/31/98(3) 3/31/97 3/31/96 3/31/95 3/31/94
Net asset value, beginning of period......................... $15.380 $14.470 $14.430 $14.210 $13.890 $14.670
<S> <C> <C> <C> <C> <C> <C>
Income from investment operations:
Net investment income .................................... 0.608 1.180 1.060 1.180 1.210 1.200
Net realized and unrealized gain (loss) from investments . 0.248 0.970 0.180 0.260 0.340 (0.680)
------ ------- ------- ------ ------ ------
Net change in net assets from investment operations ...... 0.856 2.150 1.240 1.440 1.550 0.520
------ ------- ------- ------ ------ ------
Less dividends and distributions to:
Common shareholders from net investment income ........... (0.465) (0.930) (0.930) (0.930) (0.930) (0.930)
Preferred shareholders from net investment income ........ (0.151) (0.280) (0.270) (0.290) (0.270) (0.180)
Common shareholders from realized gains on investments ... -- (0.020) -- -- (0.020) (0.160)
Preferred shareholders from realized gains on investments -- (0.010) -- -- (0.010) (0.030)
------ ------- ------- ------ ------ ------
Total dividends and distributions ........................ (0.616) (1.240) (1.200) (1.220) (1.230) (1.300)
------ ------- ------- ------ ------ ------
Net asset value, end of period .............................. 15.620 15.380 14.470 14.430 14.210 13.890
====== ======= ======= ====== ====== ======
Market value, end of period ................................. $ 15.62 $ 15.69 $ 14.38 $ 15.00 $ 14.50 $ 15.63
====== ======= ======= ====== ====== ======
Total investment return based on:(2)
Market value ............................................. 8.24% 16.04% 2.01% 10.31% (0.71%) 4.28%
Net asset value .......................................... 4.58% 13.02% 6.90% 8.20% 9.72% 1.63%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) ............................ $60,528 $59,915 $57,544 $57,429 $56,881 $56,034
Ratio of expenses to average net assets(4) ............... 0.78% 0.77% 0.81% 0.82% 85.00% 0.78%
Ratio of expenses to average net assets applicable
to common shares(5) .................................... 1.17% 1.17% 1.24% 1.24% 1.33% 1.17%
Ratio of net investment income to average net assets(4) .. 5.24% 5.20% 4.78% 5.28% 5.66% 5.22%
Ratio of net investment income to average
net assets applicable to common shares(5) .............. 6.23% 6.01% 5.45% 6.04% 6.93% 6.68%
Portfolio turnover ....................................... 0% 0% 5% 7% 13% 11%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) ...... $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Net asset coverage per share of preferred shares,
end of year ............................................$151,321 $149,788 $143,860 $143,573 $142,201 $140,086
Liquidation value per share of preferred shares(6) ....... $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
(1) Ratios have been annualized and total returns have not been annualized.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each year reported. Dividends and distributions, if any, are assumed for the
purposes of this calculation, to be reinvested at prices obtained
under the Fund's dividend reinvestment plan. Generally, total
investment return based on net asset value will be higher than total
investment return based on market value in years where there is an increase
in the discount or a decrease in the premium of the market value to the net
asset value from the beginning to the end of such years. Conversely,
total investment return based on net asset value will be lower than total
investment return based on market value in years where there is a decrease
in the discount or an increase in the premium of the market value to the
net asset value from the beginning to the end of such years.
(3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(4) Ratios were 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.
(5) Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
(6) Excluding any accumulated but unpaid dividends.
See accompanying notes
<PAGE>
26 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Minnesota Municipal Income Fund II, Inc.
Six Months
Ended 9/30/981 Year Ended Year Ended Year Ended Year Ended Year Ended
(Unaudited) 3/31/983 3/31/97 3/31/96 3/31/95 3/31/94
Net asset value, beginning of period ................... $14.800 $13.590 $13.480 $13.120 $12.730 $13.840
<S> <C> <C> <C> <C> <C> <C>
Income from investment operations:
Net investment income ............................... 0.571 1.130 1.130 1.100 1.110 0.980
Net realized and unrealized gain (loss)
from investments .................................. 0.358 1.200 0.080 0.380 0.390 (0.960)
------- ------- ------- ------- ------- -------
Net change in net assets from investment operations . 0.929 2.330 1.210 1.480 1.500 0.020
------- ------- ------- ------- ------- -------
Less dividends and distributions to:
Common shareholders from net investment income ...... (0.409) (0.820) (0.810) (0.800) (0.830) (0.760)
Preferred shareholders from net investment income ... (0.160) (0.300) (0.290) (0.320) (0.280) (0.180)
Common shareholders from realized gains on
investments ....................................... - - - - - (0.020)
Preferred shareholders from realized
gains on investments............................... - - - - - -
------- ------- ------- ------- ------- -------
Total dividends and distributions ................... (0.569) (1.120) (1.100) (1.120) (1.110) (0.960)
------- ------- ------- ------- ------- -------
Capital share transactions:
Capital charge with respect to issuance of shares ... - - - - - (0.170)
Net asset value, end of period ......................... 15.160 14.800 13.590 13.480 13.120 12.730
------- ------- ------- ------- ------- -------
Market value, end of period ............................ $14.69 $13.88 $12.63 $13.25 $12.38 $14.63
Total investment return based on:(2)
Market value ........................................ 2.42% 16.56% 1.47% 14.16% (9.59%) 1.71%
Net asset value ..................................... 5.15% 15.51% 6.97% 8.88% 10.16% (2.93%)
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) ......................... $169,971 $167,333 $158,572 $157,755 $155,139 $152,326
Ratio of expenses to average net assets(4)........... 0.68% 0.76% 0.74% 0.77% 0.77% 0.76%
Ratio of expenses to average net assets
applicable to common shares5 ........................ 1.05% 1.19% 1.19% 1.23% 1.28% 1.15%
Ratio of net investment income to average
net assets(4) ..................................... 4.91% 4.98% 5.15% 5.03% 5.39% 4.54%
Ratio of net investment income to average net
assets applicable to common shares(5)................ 5.50% 5.73% 6.15% 5.76% 6.69% 5.58%
Portfolio turnover .................................. 5% 4% 20% 11% 32% 27%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) . $60,000 $60,000 $60,000 $60,000 $60,000 $60,000
Net asset coverage per share of preferred shares,
end of year ......................................... $141,643 $139,444 $132,143 $131,462 $129,283 $126,938
Liquidation value per share of preferred shares(6)... $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
(1) Ratios have been annualized and total returns have not been annualized.
(2) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of each year reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in years where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such years. Conversely, total investment return
based on net asset value will be lower than total investment return based
on market value in years where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such years.
(3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(4) Ratios were 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.
(5) Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders. 6 Excluding any accumulated but unpaid
dividends.
See accompanying notes
for tax-exempt income 27
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL INCOME FUND III, INC.
-----------------------------------------------------------------------------
SIX MONTHS
ENDED 9/30/98(1) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 10/29/93(2)
(UNAUDITED) 3/31/984 3/31/97 3/31/96 3/31/95 TO 3/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............. $13.760 $12.710 $12.540 $12.200 $11.860 $14.030
Income from investment operations:
Net investment income .......................... 0.542 1.050 1.080 1.050 1.060 0.320
Net realized and unrealized gain (loss) from
investments .................................. 0.354 1.060 0.150 0.330 0.280 (1.880)
------- ------- ------- ------- ------- -------
Net change in net assets from investment
operations ................................... 0.896 2.110 1.230 1.380 1.340 (1.560)
------- ------- ------- ------- ------- -------
Less dividends and distributions to:
Common shareholders from net investment income . (0.379) (0.760) (0.750) (0.720) (0.730) (0.250)
Preferred shareholders from net investment
income ....................................... (0.137) (0.300) (0.310) (0.320) (0.280) (0.060)
------- ------- ------- ------- ------- -------
Total dividends and distributions .............. (0.516) (1.060) (1.060) (1.040) (1.010) (0.310)
------- ------- ------- ------- ------- -------
Capital share transactions:
Capital charge with respect to issuance of
shares ....................................... - - - - 0.010 (0.300)
------- ------- ------- ------- ------- -------
Net asset value, end of period .................... 14.140 13.760 12.710 12.540 12.200 11.860
======= ======= ======= ======= ======= =======
Market value, end of period ....................... $ 13.86 $ 13.38 $ 12.25 $ 12.00 $ 11.25 $ 14.00
======= ======= ======= ======= ======= =======
Total investment return based on:(3)
Market value ................................... 6.72% 15.80% 8.62% 13.51% (14.27%) 1.53%
Net asset value ................................ 5.72% 14.82% 7.50% 8.79% 9.55% (13.85%)
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) .................. $40,979 $40,283 $38,348 $38,046 $37,418 $36,785
Ratio of expenses to average net assets(5) ..... 0.77% 0.83% 0.81% 0.81% 0.82% 0.90%(8)
Ratio of expenses to average net assets
applicable to common shares(6) ............... 1.23% 1.34% 1.33% 1.33% 1.40% 1.30%(8)
Ratio of net investment income to average net
assets(5) .................................... 5.91% 4.88% 5.17% 5.05% 5.37% 3.95%(8)
Ratio of net investment income to average
net assets applicable to common shares(6) .... 5.83% 5.61% 6.05% 5.81% 6.79% 4.62%(8)
Portfolio turnover ............................. 1% 9% 39% 35% 47% 21%
Leverage analysis:
Value of preferred shares outstanding
(000 omitted) ................................ $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Net asset coverage per share of preferred
shares, end of year .......................... $136,597 $134,278 $127,826 $126,821 $124,728 $122,616
Liquidation value per share of preferred shares(7) $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
<PAGE>
- ----------
1 Ratios have been annualized and total returns have not been annualized.
2 Commencement of operations
3 Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of each
year reported. Dividends and distributions, if any, are assumed for the
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in years where there is an increase in the discount or a decrease in the
premium of the market value to the net asset value from the beginning to the
end of such years. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
years where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such years.
4 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
5 Ratios were 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.
6 Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
7 Excluding any accumulated but unpaid dividends.
8 Annualized
See accompanying notes
<PAGE>
28 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
ARIZONA MUNICIPAL INCOME FUND, INC.
---------------------------------------------------------------------------
SIX MONTHS
ENDED 9/30/98(1) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 3/31/983 3/31/97 3/31/96 3/31/95 3/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $15.030 $13.780 $13.740 $13.220 $12.700 $13.770
Income from investment operations:
Net investment income .............................. 0.556 1.090 1.080 1.090 1.080 0.950
Net realized and unrealized gain (loss) from
investments ...................................... 0.383 1.230 0.010 0.470 0.560 (0.790)
------- ------- ------- ------- ------- -------
Net change in net assets from investment
operations ....................................... 0.939 2.320 1.090 1.560 1.640 0.160
------- ------- ------- ------- ------- -------
Less dividends and distributions to:
Common shareholders from net investment income ..... (0.386) (0.770) (0.760) (0.730) (0.780) (0.750)
Preferred shareholders from net investment income .. (0.133) (0.300) (0.290) (0.310) (0.280) (0.180)
Common shareholders from realized gains on
investments ...................................... - - - - (0.050) (0.090)
Preferred shareholders from realized gains on
investments ...................................... - - - - (0.010) (0.020)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.519) (1.070) (1.050) (1.040) (1.120) (1.040)
------- ------- ------- ------- ------- -------
Capital share transactions:
Capital charge with respect to issuance of shares .. - - - - - (0.190)
------- ------- ------- ------- ------- -------
Net asset value, end of period ........................ 15.450 15.030 13.780 13.740 13.220 12.700
======= ======= ======= ======= ======= =======
Market value, end of period ........................... $ 14.81 $ 14.63 $ 13.00 $ 12.75 $ 12.13 $ 13.88
======= ======= ======= ======= ======= =======
Total investment return based on:(2)
Market value ....................................... 3.97% 18.79% 8.20% 11.52% (6.43%) (2.91%)
Net asset value .................................... 5.53% 15.17% 5.94% 9.55% 11.29% (2.20%)
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) ...................... $71,080 $69,813 $66,102 $65,990 $64,438 $62,881
Ratio of expenses to average net assets(4) ......... 0.75% 0.80% 0.78% 0.78% 0.79% 0.82%
Ratio of expenses to average net assets
applicable to common shares(5) ................... 1.17% 1.26% 1.25% 1.26% 1.32% 1.24%
Ratio of net investment income to average net
assets(4) ........................................ 4.72% 4.71% 4.85% 4.88% 5.19% 4.41%
Ratio of net investment income to average net
assets applicable to common shares(5) ............ 5.59% 5.34% 5.71% 5.57% 6.42% 5.45%
Portfolio turnover ................................. 36% 22% 31% 30% 18% 15%
Leverage analysis:
Value of preferred shares outstanding (000 omitted). $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Net asset coverage per share of preferred shares,
end of year ...................................... $142,160 $139,627 $132,205 $131,979 $128,877 $125,762
Liquidation value per share of preferred shares(6) . $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
<PAGE>
- ----------
1 Ratios have been annualized and total returns have not been annualized.
2 Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of each
year reported. Dividends and distributions, if any, are assumed for the
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in years where there is an increase in the discount or a decrease in the
premium of the market value to the net asset value from the beginning to the
end of such years. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
years where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such years.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
4 Ratios were 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.
5 Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
6 Excluding any accumulated but unpaid dividends.
See accompanying notes
<PAGE>
for tax-exempt income 29
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
FLORIDA INSURED MUNICIPAL INCOME FUND
-----------------------------------------------------------------------------
SIX MONTHS
ENDED 9/30/98(1) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 3/31/983 3/31/97 3/31/96 3/31/95 3/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $15.300 $13.670 $13.710 $13.170 $12.460 $13.730
Income from investment operations:
Net investment income ............................. 0.561 1.090 1.080 1.060 1.070 0.960
Net realized and unrealized gain (loss) from
investments ..................................... 0.414 1.600 (0.080) 0.510 0.690 (1.100)
------- ------- ------- ------- ------- -------
Net change in net assets from investment
operations ...................................... 0.975 2.690 1.000 1.570 1.760 (0.140)
------- ------- ------- ------- ------- -------
Less dividends and distributions to:
Common shareholders from net investment income .... (0.379) (0.760) (0.750) (0.720) (0.770) (0.740)
Preferred shareholders from net investment
income .......................................... (0.136) (0.300) (0.290) (0.310) (0.280) (0.190)
------- ------- ------- ------- ------- -------
Total dividends and distributions ................. (0.515) (1.060) (1.040) (1.030) (1.050) (0.930)
------- ------- ------- ------- ------- -------
Capital share transactions:
Capital charge with respect to issuance of
shares .......................................... - - - - - (0.200)
------- ------- ------- ------- ------- -------
Net asset value, end of period .................... 15.760 15.300 13.670 13.710 13.170 12.460
======= ======= ======= ======= ======= =======
Market value, end of period ....................... $ 14.88 $ 14.31 $ 12.50 $ 12.75 $ 12.25 $ 12.50
======= ======= ======= ======= ======= =======
Total investment return based on:(2)
Market value ...................................... 6.66% 20.94% 3.94% 10.39% 4.69% (13.04%)
Net asset value ................................... 5.71% 18.22% 5.23% 9.66% 12.56% (4.40%)
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) ..................... $58,183 $57,071 $53,110 $53,207 $51,891 $50,189
Ratio of expenses to average net assets(4) ........ 0.75% 0.80% 0.78% 0.80% 0.81% 0.85%
Ratio of expenses to average net assets
applicable to common shares(5) .................... 1.15% 1.25% 1.25% 1.27% 1.35% 1.28%
Ratio of net investment income to average net
assets(4) ....................................... 4.73% 4.73% 4.91% 4.82% 5.21% 4.49%
Ratio of net investment income to average net
assets applicable to common shares(5) ........... 5.52% 5.33% 5.74% 5.45% 6.37% 5.46%
Portfolio turnover ................................ 0% 5% 68% 22% 10% 20%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Net asset coverage per share of preferred shares,
end of year ..................................... $145,457 $142,677 $132,775 $133,017 $129,728 $125,473
Liquidation value per share of preferred shares(6). $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
<PAGE>
- ----------
1 Ratios have been annualized and total returns have not been annualized.
2 Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of each
year reported. Dividends and distributions, if any, are assumed for the
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in years where there is an increase in the discount or a decrease in the
premium of the market value to the net asset value from the beginning to the
end of such years. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
years where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such years.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
4 Ratios were 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.
5 Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
6 Excluding any accumulated but unpaid dividends.
See accompanying notes
<PAGE>
30 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
COLORADO INSURED MUNICIPAL INCOME FUND, INC.
-------------------------------------------------------------------------
SIX MONTHS
ENDED 9/30/98(1) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 7/29/93(2)
(UNAUDITED) 3/31/98(4) 3/31/97 3/31/96 3/31/95 TO 3/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................ $14.920 $13.580 $13.610 $13.190 $12.800 $14.100
Income from investment operations:
Net investment income ............................ 0.535 1.070 1.050 1.030 1.020 0.590
Net realized and unrealized gain (loss) from
investments .................................... 0.495 1.300 (0.060) 0.410 0.440 (1.190)
------- ------- ------- ------- ------- -------
Net change in net assets from investment
operations ..................................... 1.030 2.370 0.990 1.440 1.460 (0.600)
------- ------- ------- ------- ------- -------
Less dividends and distributions to:
Common shareholders from net investment income ... (0.367) (0.740) (0.730) (0.700) (0.760) (0.390)
Preferred shareholders from net investment
income ......................................... (0.173) (0.290) (0.290) (0.320) (0.270) (0.110)
Common shareholders from realized gains on
investments .................................... - - - - (0.030) -
Preferred shareholders from realized gains on
investments .................................... - - - - (0.010) -
------- ------- ------- ------- ------- -------
Total dividends and distributions ................ (0.540) (1.030) (1.020) (1.020) (1.070) (0.500)
------- ------- ------- ------- ------- -------
Capital share transactions:
Capital charge with respect to issuance of
shares ......................................... - - - - - (0.200)
------- ------- ------- ------- ------- -------
Net asset value, end of period ...................... 15.410 14.920 13.580 13.610 13.190 12.800
======= ======= ======= ======= ======= =======
Market value, end of period ......................... $ 15.06 $ 14.00 $ 12.50 $ 12.63 $ 12.25 $ 14.50
======= ======= ======= ======= ======= =======
Total investment return based on:(3)
Market value ..................................... 10.33% 18.09% 4.77% 8.99% (10.05%) 5.52%
Net asset value .................................. 5.91% 15.84% 5.19% 8.55% 9.67% (6.66%)
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) .................... $114,516 $112,187 $105,687 $105,843 $103,781 $101,923
Ratio of expenses to average net assets(5) ....... 0.72% 0.75% 0.77% 0.75% 0.76% 0.78%(8)
Ratio of expenses to average net assets
applicable to common shares(6) ................. 1.11% 1.18% 1.23% 1.21% 1.27% 1.13%(8)
Ratio of net investment income to average net
assets(5) ...................................... 4.58% 4.72% 4.76% 4.68% 4.88% 4.26%(8)
Ratio of net investment income to average net
assets applicable to common shares(6) .......... 4.81% 5.38% 5.51% 5.18% 5.88% 5.02%(8)
Portfolio turnover 12% 39% 88% 39% 7% 3%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
Net asset coverage per share of preferred shares,
end of year .................................... $143,145 $140,234 $132,109 $132,304 $129,727 $127,404
Liquidation value per share of preferred shares(7) $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
<PAGE>
- ----------
1 Ratios have been annualized and total returns have not been annualized.
2 Commencement of operations
3 Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of each
year reported. Dividends and distributions, if any, are assumed for the
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in years where there is an increase in the discount or a decrease in the
premium of the market value to the net asset value from the beginning to the
end of such years. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
years where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such years.
4 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
5 Ratios were 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.
6 Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
7 Excluding any accumulated but unpaid dividends.
8 Annualized
See accompanying notes
<PAGE>
for tax-exempt income 31
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
Voyageur Minnesota Municipal Income Fund, Inc. ("Minnesota Municipal Fund");
Voyageur Minnesota Municipal Income Fund II, Inc. ("Minnesota Municipal Fund
II"); Voyageur Minnesota Municipal Income Fund III, Inc. ("Minnesota Municipal
Fund III"); Voyageur Arizona Municipal Income Fund, Inc. ("Arizona Municipal
Fund"); Voyageur Florida Insured Municipal Income Fund ("Florida Insured
Municipal Income Fund"); and Voyageur Colorado Insured Municipal Income Fund,
Inc. ("Colorado Insured Municipal Fund") (collectively referred to as the
"Funds") are registered under the Investment Company Act of 1940 ("1940 Act")(as
amended) as closed-end management investment companies. The Minnesota Municipal
II, Florida Insured Municipal and Arizona Municipal Funds are registered as
diversified funds. The Minnesota Municipal, Minnesota Municipal II and Colorado
Insured Municipal Funds are registered as non-diversified funds. The Funds'
shares trade on the American Stock Exchange.
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. Florida Insured Municipal 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 of its net assets in
investment grade, tax-exempt municipal obligations of its respective state.
1. Fund Reorganization
On April 30, 1997, Lincoln National Corporation ("LNC") acquired Voyageur Fund
Manager Inc.'s ("Voyageur") parent, Dougherty Financial Group, Inc. ("DFG"),
pursuant to an agreement and plan of merger dated January 15, 1997, in which LNC
acquired DFG, including the mutual fund investment advisory business of DFG
conducted by Voyageur. Upon completion of the acquisition, Delaware Management
Company ("DMC") became the Investment Manager to the Funds.
2. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Money market instruments having less than 60 days to maturity are
valued at amortized cost which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Funds' Board
of Directors/Trustees.
<PAGE>
Federal Income Taxes - Each Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles.
Other - Expenses common to all Funds are allocated amongst the Funds on the
basis of average net assets. Security transactions are recorded on the date the
securities are purchased or sold (trade date). Costs used in calculating
realized gains and losses on the sale of investment securities are those of the
specific securities sold. Interest income is recorded on the accrual basis.
Original issue discounts and market premiums are amortized to interest income
over the lives of the respective securities. The Funds intend to pay monthly
dividends from net investment income. Capital gains, if any, are distributed
annually.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
3. Investment Management, Administration and Transactions with Affiliates
In accordance with the terms of their respective Investment Management
Agreements, the Funds pay DMC, the Investment Manager of each Fund, an annual
fee of .40% which is calculated daily based upon the average net assets of each
Fund, including assets attributable to any preferred stock that may be
outstanding.
Commencing August 1, 1998 (July 1, 1998 for Colorado Insured Municipal Fund) the
Funds have engaged DSC, an affiliate of DMC, to provide administration and
accounting services for the Funds. For the period August 1, 1998 to September
30, 1998 (for the period July 1, 1998 to September 30, 1998 for Colorado Insured
Municipal Income Fund), the amounts expensed for each Fund were as follows:
<PAGE>
32 for tax-exempt income
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA COLORADO
MINNESOTA MINNESOTA MINNESOTA ARIZONA INSURED INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
FUND FUND II FUND III FUND FUND FUND
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Accounting and administration fees ................... $6,511 $18,242 $4,393 $7,705 $6,226 $26,564
</TABLE>
Prior to August 1, 1998 (July 1, 1998 for Colorado Insured Municipal Fund) the
Funds paid a fee to Mitchell Hutchins Asset Management Inc. and Princeton
Administrators, L.P. (Colorado Insured Municipal Fund only) for acting as the
Funds' Administrators.
On September 30, 1998, the Funds had payables to affiliates as follows:
<TABLE>
<CAPTION>
FLORIDA COLORADO
MINNESOTA MINNESOTA MINNESOTA ARIZONA INSURED INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
FUND FUND II FUND III FUND FUND FUND
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment management fee payable to DMC ............. $20,621 $57,976 $13,970 $24,203 $19,793 $76,601
Administration fees, accounting fees and other
expenses payable to DSC and affiliates ............ 20,847 17,058 12,440 17,116 14,658 25,551
</TABLE>
Certain officers of DMC are officers, Directors/Trustees and/or employees of the
Funds. These officers, Directors/Trustees and employees are not compensated by
the Funds.
4. Investments
During the six months ended September 30, 1998, the Funds made purchases and
sales of investment securities other than U.S. government securities and
temporary cash investments as follows:
<TABLE>
<CAPTION>
FLORIDA COLORADO
MINNESOTA MINNESOTA MINNESOTA ARIZONA INSURED INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
FUND FUND II FUND III FUND FUND FUND
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Purchases ............................................ $ - $7,617,585 $253,253 $25,213,409 $270,995 $12,794,060
Sales ................................................ 432,030 7,953,917 429,234 24,954,213 5,000 12,966,541
</TABLE>
<PAGE>
At September 30, 1998, the aggregate cost of securities and unrealized
appreciation (depreciation) of securities for federal income tax purposes for
each Fund were as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
COST OF UNREALIZED UNREALIZED NET UNREALIZED
INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
----------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Minnesota Municipal Fund ....................... $54,499,178 $5,127,972 $ - $5,127,972
Minnesota Municipal Fund II .................... 155,849,183 12,091,448 - 12,091,448
Minnesota Municipal Fund III ................... 37,023,243 3,352,711 - 3,352,711
Arizona Municipal Fund ......................... 65,390,983 4,792,197 - 4,792,197
Florida Insured Municipal Fund ................. 52,848,955 4,699,860 - 4,699,860
Colorado Insured Municipal Fund ................ 105,760,255 7,182,115 - 7,182,115
</TABLE>
For federal income tax purposes, as of March 31, 1998, the Funds had capital
loss carryforwards expiring in the following years:
<TABLE>
<CAPTION>
2003 2004 2005 2006 Total
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Minnesota Municipal Fund .......................... $102 $102
Minnesota Municipal Fund II ....................... $1,345,916 $1,143,840 $89,665 131,614 2,711,035
Minnesota Municipal Fund III ...................... 1,096,390 1,279,495 455,666 3,930 2,835,481
Arizona Municipal Fund ............................ 492,903 169,429 662,332
Florida Insured Municipal Fund .................... 212,501 183,099 395,600
Colorado Insured Municipal Fund ................... 635,164 635,164
</TABLE>
<PAGE>
for tax-exempt income 33
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. Capital Stock
Pursuant to their articles of incorporation, Minnesota Municipal Fund, Minnesota
Municipal Fund II, Minnesota Municipal Fund III, Arizona Municipal Fund and
Colorado Insured Municipal Fund each have 200 million shares of $0.01 par value
common shares authorized. Florida Insured Municipal Fund had been authorized to
issue an unlimited amount of $0.01 par value common shares.
For the six months ended September 30, 1998 and the year ended March 31, 1998,
the Funds did not have any transactions in common shares.
The Funds each have one million shares of $0.01 par value preferred shares
authorized, except for Florida Insured Municipal Fund which has an unlimited
amount of $0.01 par value preferred shares authorized. Under resolutions adopted
by the Board of Directors/Trustees, Minnesota Municipal Fund 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 Fund II, Arizona Municipal Fund and
Florida Insured Municipal Fund issued 1,200, 500 and 400 preferred shares,
respectively. On December 10, 1993, Minnesota Municipal Fund III issued 300
preferred shares and on September 23, 1993, Colorado Insured Municipal Fund
issued 800 preferred shares. The preferred shares of each Fund 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 any
capital gain distributions) ranged from 3.50% to 3.70% on Minnesota Municipal
Fund, from 3.40% to 3.80% on Minnesota Municipal Fund II, from 3.45% to 3.80% on
Minnesota Municipal Fund III, from 2.95% to 3.70% on Arizona Municipal Fund,
from 3.40% to 3.70% on Florida Insured Municipal Fund and from 3.47% to 3.90% on
Colorado Insured Municipal Fund during the six months ended September 30, 1998.
Salomon Smith Barney Inc. and Merrill Lynch Pierce, Fenner & Smith Inc. (on
Colorado Insured Municipal Fund 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%. The preferred shares are
redeemable at the option of the Funds, 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,
<PAGE>
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/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 of 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. Credit and Market Risks
The Funds concentrate their investments in limited geographical areas. The value
of these investments may be adversely affected by new legislation within the
state, regional or local economic conditions, and differing levels of supply and
demand for municipal bonds. Many municipalities insure repayment for their
obligations. Although bond insurance reduces the risk of loss due to default by
an issuer, such bonds remain subject to the risk that the market may fluctuate
for other reasons and there is no assurance that the insurance company will meet
its obligations. These securities have been identified in the Statement of Net
Assets.
The Funds may invest up to 15% of their total assets in illiquid securities
which may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Funds' ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities. These securities, if any, have been
identified in the Statement of Net Assets.
7. Year 2000
Like other investment companies, financial and business organizations and
individuals around the world, the Funds could be adversely affected if computer
systems used by the Investment Manager and other service providers do not
properly process and calculate date-related information and data on and after
January 1, 2000. The Funds are taking steps to obtain satisfactory assurances
that the Investment Manager and other major service providers are taking steps
reasonably designed to address the Year 2000 issue with respect to the computer
systems that such service providers use. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Funds.
<PAGE>
Delaware Investments includes open-end and closed-end funds with a wide range of
investment objectives. Stock funds, income funds, tax-exempt funds, money market
funds and closed-end funds give investors the ability to create a portfolio that
fits their personal financial goals. For a prospectus of any open-end fund from
Delaware Investments, contact your financial adviser or call Delaware
Investments at 1.800.523.1918. Read the prospectus carefully before investing or
sending money. Notice is hereby given in accordance with Section 23(c) of the
Investment Company Act of 1940 that the Funds included herein may from time to
time purchase shares of their common stock in the open market.
(photo of globe)
REGISTRAR AND STOCK
TRANSFER AGENT
Norwest Bank Minnesota, NA
P.O. Box 64851
St. Paul, Minnesota 55164-0854
1.800.468.9716
NUMBER OF RECORDHOLDERS
AS OF SEPTEMBER 30, 1998
Minnesota Municipal Income Fund I 500
Minnesota Municipal Income Fund II 842
Minnesota Municipal Income Fund III 213
Arizona Municipal Income Fund 168
Florida Insured Municipal
Income Fund 303
Colorado Insured Municipal
Income Fund 267
FOR SECURITIES DEALERS
1.800.362.7500
FINANCIAL INSTITUTIONS
REPRESENTATIVES ONLY
1.800.659.2265
www.delawarefunds.com
DELAWARE
INVESTMENTS
- ----------------------
Philadelphia o London
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Funds are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Funds are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
Printed in the USA
on recycled paper
(1219)
VOY-CESA [9/98] PP11/98
