<PAGE>
FOR TAX-EXEMPT INCOME
VOYAGEUR
Closed-End
Municipal Bond Funds
[various photos demonstrating service and guidance,
professional management and goals]
service and guidance
professional management
goals
1998
ANNUAL
REPORT
Minnesota Municipal Income Funds - I, II, III
Arizona Municipal Income Fund
Florida Insured Municipal Income Fund
Colorado Insured Municipal Income Fund
DELAWARE
INVESTMENTS
- -------------------
Philadelphia*London
<PAGE>
A TRADITION OF SOUND INVESTING
commitment
Investment Objectives
and Strategies
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 that enable its shares to be 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 has been the Fund's investment adviser since May
1, 1997. At a meeting on April 11, 1997, the shareholders of each Fund
approved a new investment advisory agreement with Delaware Management that
became effective May 1, 1997. On May 30, 1997, Voyageur Fund Managers, Inc.,
the Funds' prior investment adviser, merged into Delaware Management.
Delaware Management is a part of Lincoln Financial Group, one of America's
largest publicly held diversified financial services companies, with global
insurance operations and more than $120 billion in assets under management.
Delaware currently manages more than $45 billion for mutual fund
shareholders and institutional investors such as pension plans and foundations.
In addition, Delaware manages closed-end equity funds traded on the New York
Stock Exchange.
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 benefit any of the Funds.
Leveraging could result in a higher degree of volatility because the Fund's
net asset value could be more sensitive to fluctuations in short-term
interest rates and equity prices. Delaware believes this volatility risk is
reasonable given the benefits of higher income potential.
tax-exempt income
(photo of illustration from Tax-Exempt Income Brochure)
(photo of keyboard)
<PAGE>
April 13, 1998
for tax-exempt
income
1
DEAR SHAREHOLDER:
WE ARE DELIGHTED TO REPORT THAT EACH of the six Voyageur closed-end municipal
bond funds in this report outperformed its respective unmanaged index and peer
group average for fiscal 1998, as shown below.
The Funds' portfolio managers generally focused on higher quality and
longer term tax-exempt securities during the 12 months ended March 31, 1998.
Each Fund's manager also employed prudent leveraging to take advantage of what
they believed were the best municipal bond market opportunities available in
Minnesota, Arizona, Florida and Colorado.
Our results were exceptional. Each Fund outpaced its Lehman Brothers
benchmark by nearly 300 basis points (3%). We capitalized on a positive interest
rate environment and favorable federal tax legislation in fiscal 1998 to provide
unusual, equity-like returns. Still, five of the Funds traded at attractive
discounts to net asset value as of March 31, 1998.
The economic winds were at our back. The robust performance of the U.S.
economy has generated higher state tax revenues since April 1997. Meanwhile
inflation, as measured by the Consumer Price Index, fell to an annual rate of
just 1.4% as of the end of March.
We achieved success even as bond supply rose sharply in all four states and
the difference between short and long-term interest rates narrowed, a trend that
can sometimes reduce the advantages of using leverage.
IN OUR OPINION, THE BOND MARKET'S FUNDAMENTALS REMAIN ENTICING. MUNICIPAL
BOND CREDIT QUALITY IS THE STRONGEST IN MORE THAN A DECADE.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
- ---------------------------------------------------------------------------------------------------------
APRIL 1, 1997 TO MARCH 31, 1998
BASED ON PREMIUM/ ASE
NET ASSET VALUE DISCOUNT* SYMBOL
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minnesota Municipal Income Fund I +13.02% +2.02% VMN
Minnesota Municipal Income Fund II +15.51% -6.22% VMM
Minnesota Municipal Income Fund III +14.82% -2.76% VYM
Lipper Minnesota Municipal Fund Average (6 Funds) +12.25% -4.00%
- ---------------------------------------------------------------------------------------------------------
Arizona Municipal Income Fund +15.17% -2.66% VAZ
Lipper Arizona Municipal Fund Average (3 Funds) +14.09% -0.27%
- ---------------------------------------------------------------------------------------------------------
Florida Insured Municipal Income Fund +18.22% -6.47% VFL
Lipper Florida Insured Municipal Fund Average (12 Funds) +12.85% -1.66%
- ---------------------------------------------------------------------------------------------------------
Colorado Insured Municipal Income Fund +15.84% -6.17% VCF
Lipper Insured Municipal Debt Fund Average (21 Funds) +11.83% -4.17%
- ---------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +10.07%
Lehman Brothers Insured Municipal Bond Index +11.25%
- ---------------------------------------------------------------------------------------------------------
* As of March 31, 1998. All performance shown above assumes reinvestment of distributions. Past
performance does not guarantee future results.
</TABLE>
<PAGE>
for tax-exempt
income
2
As low interest rates have prompted many municipalities to refinance debt,
your Fund's managers have been highly selective in choosing bonds for each
Fund's portfolio.
Indeed, the first three months of calendar 1998 was a near record breaking
period for the issuance of municipal bonds with $68 billion in offerings - a 70%
increase over the same period last year, according to The Bond Buyer, a trade
publication. This came on the heels of calendar year 1997 being the third
highest year ever for the issuance of municipal bonds. We expect the surge in
municipal bond supply to slow in the coming months, due to limitations on how
many times issuers can refinance.
In our opinion, the bond market's fundamentals remain enticing. Municipal
bond credit quality is the strongest in more than a decade, according to Moody's
Investors Service, which upgraded a record 2,718 issues in calendar 1997.
As of March 31, triple A rated long-term municipal bonds offered yields
equal to about 86% of the yield of 30-year U.S. Treasuries. This was the highest
level in two years. Of course, interest and principal of municipal bonds are not
guaranteed by the U.S. government.
Contributing to the strength of the municipal bond market in fiscal 1998
were:
* the Federal Reserve Board's ability to fight inflation;
* Washington's commitment to keep the income provided by municipal bonds
generally exempt from Federal taxes; and
* the ability of many states to post substantial budget surpluses.
Each of these trends, in our opinion, remains intact for the coming year.
Municipal bonds remain one of the few ways investors can obtain monthly income
without increasing their income tax bill. In addition, history has shown that
tax-exempt securities can help temper the effect of potential equity market
volatility when included in a balanced investment portfolio.
WE EXPECT THE SURGE IN MUNICIPAL BOND SUPPLY TO SLOW IN THE COMING MONTHS, DUE
TO LIMITATIONS ON HOW MANY TIMES ISSUERS CAN REFINANCE.
On the pages that follow, the managers of each of the state specific funds
review the Funds' performance during the past fiscal year and provide an outlook
for the balance of calendar 1998. We thank you for being among the hundreds of
thousands of investors who have chosen to invest with the Delaware Investments
family of funds.
discipline
Sincerely,
/s/ Wayne A. Stork
- ------------------
Wayne A. Stork
Chairman
/s/ Jeffrey J. Nick
- -------------------
Jeffrey J. Nick
President and Chief Executive Officer
<PAGE>
for tax-exempt
income
3
PORTFOLIO MANAGERS' REVIEW
Minnesota Municipal Income Funds - I, II, III
MINNESOTA MUNICIPAL INCOME FUNDS BOND QUALITY AND PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
MARCH 31, 1998
FUND I FUND II FUND III
- --------------------------------------------------------------------------------
AAA 54.9% 54.8% 66.1%
AA 13.7% 16.9% 10.0%
A 20.8% 20.9% 12.5%
BB 0.0% 1.2% 6.7%
Unrated 10.6% 6.2% 4.7%
Average Quality AA3 AA2 AA2
Average Effective Maturity 10.1 years 7.9 years 7.8 years
Average Effective Duration 5.0 years 5.8 years 5.9 years
Current Yield at Market Price 5.92% 5.89% 5.66%
Amount of Leveraging (Millions) $20.0 $60.0 $15.0
- --------------------------------------------------------------------------------
Approximately 22.1%, 21.2% and 13.0% of the income generated by Minnesota
Municipal Income Funds - I, II and III for the 12 months ended March 31, 1998,
respectively, was subject to the federal alternative minimum tax.
YOUR FUNDS' PORTFOLIO MANAGERS
MITCHELL L. CONERY AND PATRICK P. COYNE manage Florida Insured
Municipal Income Fund. Mr. Conery holds an MBA from the State
University of New York at Albany. He managed a $5 billion municipal
bond portfolio at Travelers Group before coming to Delaware in January
1997. Mr. Coyne has managed fixed-income securities at Delaware
Management Company since 1990. He holds an MBA in finance from the
University of Pennsylvania's Wharton School of Business.
ELIZABETH H. HOWELL manages the three Minnesota Funds discussed in
this report. She has more than 13 years experience that includes
serving as a fixed-income portfolio manager at Windsor Financial Group
and investment management positions at Loomis Sayles & Co. and Eaton
Vance Management. Ms. Howell has an MBA from Babson College.
ANDREW M. MCCULLAGH JR. manages Arizona Municipal Income Fund and
Colorado Insured Municipal Income Fund. He has more than 23 years of
experience in municipal bond trading, underwriting and portfolio
management. He holds a graduate certificate in public finance from the
University of Michigan.
<PAGE>
for tax-exempt
income
4
MINNESOTA MUNICIPAL INCOME FUNDS
ASSET ALLOCATION
- --------------------------------------------------------------------------------
MARCH 31, 1998
FUND I FUND II FUND III
- --------------------------------------------------------------------------------
Housing 23.3% 21.7% 20.8%
Hospitals 15.1% 16.2% 19.3%
Power Authority 13.9% 8.0% 8.7%
General Obligation 8.4% 11.3% 5.3%
Higher Education 9.0% 9.7% 9.0%
Pre-Refunded 23.6% 20.5% 17.9%
Territorial 1.2% 3.7% 3.3%
Industrial Development 4.5% 4.8% 11.2%
Pollution Control 0.0% 3.1% 3.4%
Cash 1.0% 1.0% 1.1%
DELAWARE INVESTMENTS' THREE CLOSED-END Minnesota municipal bond funds provided a
total return between 290 and 550 basis points (2.9% to 5.5%) higher than the
unmanaged Lehman Brothers Municipal Bond Index for the 12 months ending March
31, 1998, as shown on page 1.
We attribute the Funds' strong performance to 1) a duration that was longer
than the average of each Fund's peers, and 2) prudent leveraging. As the bond
market rallied during the last half of the fiscal year, this relatively
aggressive position enabled the Funds to fully participate in the bond market's
total return potential. Duration measures a bond's sensitivity to interest rate
fluctuations.
Municipalities across Minnesota benefited from a credit quality upgrade in
fiscal 1998. Standard & Poor's, an independent bond rating agency, upgraded the
state's general obligation bond rating to AAA from AA+. Minnesota is one of only
eight states to obtain S&P's highest rating.
The net assets of each of the Minnesota Municipal Income Funds were
mostly allocated to the highest quality tiers of the state's municipal bond
market. However, Minnesota Municipal Income Funds II and III had slightly
longer durations than Minnesota Municipal Income
<PAGE>
STRATEGY
Fund I. We believe the longer durations enabled Funds II and III to achieve
higher returns than Fund I during fiscal 1998.
Bonds with a longer duration are more sensitive to interest rate changes
and investor perceptions regarding inflation. Thus, as inflation fears waned
during the last half of fiscal 1998, Minnesota Funds II and III benefited to a
greater extent.
We believe some investors' preference for relatively high current yield and
moderate duration explains why Minnesota Fund I sold at a premium to net asset
value while Funds II and III sold at modest discounts as of year's end. However,
as you can see by
MINNESOTA MUNICIPAL INCOME FUND I
MARKET PRICE VS. NET ASSET VALUE
- --------------------------------------------------------------------------------
APRIL 1, 1997 TO MARCH 31, 1998
DATE NET ASSET VALUE MARKET PRICE
- --------------------------------------------------------------------------------
4/01/97 $14.64 $14.69
4/25/97 $14.37 $14.63
5/30/97 $14.71 $14.69
6/27/97 $14.86 $15.19
7/25/97 $15.18 $15.38
8/29/97 $15.00 $15.44
9/26/97 $15.15 $15.63
10/24/97 $15.06 $15.38
11/28/97 $15.20 $15.38
12/31/97 $15.35 $15.44
1/30/98 $15.50 $15.63
2/27/98 $15.43 $16.06
3/31/98 $15.38 $15.69
- --------------------------------------------------------------------------------
Source: Bloomberg Business News. Past performance does not guarantee future
results.
<PAGE>
for tax-exempt
income
5
MINNESOTA MUNICIPAL INCOME FUND II
MARKET PRICE VS. NET ASSET VALUE
- --------------------------------------------------------------------------------
APRIL 1, 1997 TO MARCH 31, 1998
DATE NET ASSET VALUE MARKET PRICE
- --------------------------------------------------------------------------------
4/01/97 $13.52 $12.50
4/25/97 $13.51 $12.50
5/30/97 $13.95 $13.25
6/27/97 $14.12 $13.56
7/25/97 $14.70 $13.88
8/29/97 $14.30 $13.88
9/26/97 $14.46 $14.00
10/24/97 $14.39 $13.75
11/28/97 $14.56 $13.63
12/26/97 $14.78 $13.75
1/30/98 $14.91 $14.44
2/27/98 $14.83 $14.63
3/31/98 $14.80 $13.88
- --------------------------------------------------------------------------------
Source: Bloomberg Business News. Past performance does not guarantee future
results.
comparing the performance table on page 1 with the portfolio highlights table on
page 3, having a higher yield doesn't always generate a higher total return.
The amount of Minnesota bonds issued during the first quarter of calendar
1998 increased 132% compared to a year earlier, according to The Bond Buyer. We
believe this increase demonstrated many municipalities' desire to reduce
borrowing costs by refinancing. The low interest rate environment has made it
advantageous for Minnesota municipalities to advance refund bonds that were
issued at higher interest rates. Fortunately, Minnesota Municipal Income Funds
I, II and III were well-positioned for such an environment. Throughout the 1998
fiscal year, we focused on bonds that in our opinion offered good call
protection.
OUTLOOK
We expect the confluence of factors that helped produce a strong U.S. economy in
fiscal 1998 to continue in the coming months. Inflation appears to be benign
despite a strong statewide and national economy.
<PAGE>
MINNESOTA
Minnesota has employed stringent fiscal measures to balance the state
budget and this helped the state record a $2 billion budget surplus by the end
of the 1997 calendar year. The state government recently voted to apply surplus
revenues to property tax rebates and reductions along with infrastructure
improvements.
Minnesota's businesses added approximately 70,000 new jobs in the 1997
calendar year as the total payroll employment grew to nearly 2.6 million.
Personal income in the state is estimated to have grown at a 6.6% annual rate
during 1997 - well above the national average of 5.3%.
With increasing incomes and a state income tax among the highest in the
nation, we believe Minnesota residents will see the state's municipal bonds as
an attractive way to decrease their income tax bill in the coming year.
ELIZABETH H. HOWELL
Vice President
Senior Portfolio Manager
MINNESOTA MUNICIPAL INCOME FUND III
MARKET PRICE VS. NET ASSET VALUE
- --------------------------------------------------------------------------------
APRIL 1, 1997 TO MARCH 31, 1998
DATE NET ASSET VALUE MARKET PRICE
- --------------------------------------------------------------------------------
4/01/97 $12.66 $11.63
4/25/97 $12.66 $11.50
5/30/97 $13.04 $12.63
6/27/97 $13.20 $12.38
7/25/97 $13.50 $12.50
8/29/97 $13.34 $12.81
9/26/97 $13.49 $13.00
10/24/97 $13.41 $12.69
11/28/97 $13.59 $12.63
12/26/97 $13.79 $12.88
1/30/98 $13.90 $13.63
2/27/98 $13.82 $13.88
3/31/98 $13.76 $13.38
- --------------------------------------------------------------------------------
Source: Bloomberg Business News. Past performance does not guarantee future
results.
<PAGE>
for tax-exempt
income
6
ARIZONA MUNICIPAL INCOME FUND
ARIZONA MUNICIPAL INCOME FUND provided a strong total return of +15.17% (capital
change plus reinvestment of distributions) for the 12 months ended March 31,
1998. We outperformed the unmanaged Lehman Brothers Municipal Bond Index by more
than 500 basis points (5%) for the period, as shown on page 1.
We believe the Fund's superior performance is largely due to our success in
finding pockets of value within Arizona's municipal bond market. We did not
target particular sectors but sought specific bonds we thought had greater total
return potential than that offered by the aggregate pool of bonds issued by the
state's municipalities.
Arizona has many characteristics which we believe make municipal bonds
attractive. High technology industries are attracted to the state's relatively
skilled labor pool. Many retirees and others have been moving to Arizona,
generating a need for additional municipal services. Arizona has one of the
fastest growing populations in the nation according to the U.S. Census Bureau.
By the year 2001, the state is projected to have a population of 5 million, 8%
more than today.
Economic expansion has been greatest in Maricopa and Pima counties, the
state's largest issuers of general obligation bonds and home to Arizona's two
largest cities - Phoenix and Tucson. Phoenix' population of 1.2 million
represents 26% of Arizona residents, according to a state economic development
report.
For most of the year, we maintained a longer duration (a measurement of a
arizona
ARIZONA MUNICIPAL INCOME FUND
PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION
- ----------------------------------------------------------------
MARCH 31, 1998
Utility 4.0%
General Obligation 30.1%
Certificates of Participation 3.7%
Water/Sewer Bonds 15.5%
Power Authority 2.5%
Transportation 11.0%
Cash 1.4%
Hospitals 12.3%
Higher Education 3.1%
Housing 8.9%
Other Revenue 2.0%
Industrial Development 5.5%
Average Effective Maturity 7.1 years
Average Effective Duration 5.7 years
Average Quality AAA
Current Yield at Market Price 5.28%
Amount of Leveraging $25 million
- ----------------------------------------------------------------
Approximately 4.0% of the income generated by Arizona Municipal
Income Fund for the 12 months ended March 31, 1998, was subject
to the federal alternative minimum tax.
<PAGE>
for tax-exempt
income
7
bond's sensitivity to interest rates) than most of our competitors. This helped
your Fund benefit from rising bond prices during this past year's rally.
We allowed the Fund's duration to decline as interest rates declined during
the last six months of fiscal 1998. At year's end, your Fund's duration stood at
5.7 years, three quarters of a year lower than at mid-year.
OUTLOOK
We believe interest rates will remain stable in the coming months. Government
economic indicators appear to show that U.S. economic growth is slowing from its
torrid pace of 1997. First calendar quarter earnings have been lower than
expected for many companies listed in the Standard & Poor's 500 Index, and many
analysts believe this trend could continue for the balance of 1998, increasing
the attractiveness of bond investments relative to equities.
In the months ahead, investor demand for Arizona municipal bonds is likely
to remain strong. We believe the state's demographic profile suggests that many
residents will continue to seek income-oriented investments. For investors in
the highest federal income tax bracket (39.6%), the tax-equivalent yield on the
state's long-term bonds was an attractive 8.36% as of March 31.
Andrew M. McCullagh, Jr.
Vice President
Senior Portfolio Manager
ARIZONA MUNICIPAL INCOME FUND
MARKET PRICE VS. NET ASSET VALUE
- ----------------------------------------------------------
APRIL 1, 1997 TO MARCH 31, 1998
DATE NET ASSET VALUE MARKET PRICE
- ----------------------------------------------------------
4/01/97 $13.74 $12.88
4/25/97 $13.72 $13.00
5/30/97 $14.15 $13.44
6/27/97 $14.36 $13.81
7/25/97 $14.75 $14.25
8/29/97 $14.53 $14.13
9/26/97 $14.70 $14.44
10/24/97 $14.63 $14.00
11/28/97 $14.78 $13.81
12/26/97 $15.02 $14.38
1/30/98 $15.21 $14.38
2/27/98 $15.10 $14.50
3/31/98 $15.03 $14.63
- -------------------------------------------------------
Source: Bloomberg Business News. Past performance does
not guarantee future results.
<PAGE>
for tax-exempt
income
8
FLORIDA INSURED MUNICIPAL INCOME FUND
FLORIDA INSURED MUNICIPAL INCOME FUND performed exceptionally well throughout
the year - providing a total return of +18.22% (capital change plus reinvested
distributions at net asset value) for the 12 months ended March 31, 1998.
Your Fund handily outperformed both its benchmark - the Lehman Brothers
Insured Municipal Bond Index, and Lipper peer group average, which had total
returns of +11.25% and +12.85% respectively, as shown on page 1.
We achieved strong results while investing in the highest credit quality
tiers of Florida's municipal bond market. As of March 31, 1998, your Fund was
exclusively invested in bonds with a rating of AAA - the highest credit quality
available as judged by Standard & Poor's and Moody's Investors Service - two
independent bond rating agencies. The credit quality of many of Florida's bonds
is generally strong - more than 70% of the state's municipal bonds are protected
by private insurance.
The narrowing of the spread between short and long-term interest rates
during the year presented a challenge for the Fund. In order to increase the
Fund's income potential we maintained strong weighting in hospital bonds.
Hospital bonds provided higher yields than any other type of Florida
municipal bonds in the past year. Because of intense competition in the health
care industry, we invest only in hospitals that show a proven ability to
increase revenues over time.
Florida's municipal bond market has been bolstered by the underlying
strength of the state's economy. Aside from the traditionally strong travel and
tourism industry, Florida has become a gateway to
florida
FLORIDA INSURED MUNICIPAL INCOME FUND
PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION
- ----------------------------------------------------------------
MARCH 31, 1998
Hospitals 15.8%
Other Revenue Bonds 24.1%
Pre-Refunded 6.7%
General Obligation 4.3%
Cash 1.4%
Housing 11.8%
Certificates of Participation 12.6%
Transportation 4.7%
Water and Sewer 11.3%
Higher Education 5.0%
Utility 2.3%
Average Effective Maturity 8.9 years
Average Effective Duration 6.6 years
Average Quality AAA
Current Yield at Market Price 5.29%
Amount of Leveraging $20 million
- ----------------------------------------------------------------
Approximately 16.7% of the income generated by Florida Insured
Municipal Income Fund for the 12 months ended March 31, 1998,
was subject to the federal alternative minimum tax.
<PAGE>
for tax-exempt
income
9
international trade with Latin America. A constant influx of retirees and other
new residents generates a need for more roads, schools and water treatment
facilities.
OUTLOOK
If inflation remains low, we believe the Federal Reserve Board will be reluctant
to raise borrowing costs for the balance of calendar 1998. In this low interest
rate environment, we will seek bonds with a higher-than average income
potential.
Bonds issued by Dade County may provide such income opportunities. We
largely avoided bonds issued by the county after its aborted merger with the
city of Miami in 1997. Miami credit quality had suffered because of lax
municipal fiscal controls and we were concerned that Dade County would be
negatively affected. Remarkably, the credit quality of the county's bonds has
remained relatively high.
The U.S. Census Bureau projects that Florida's population will grow to 20.7
million people by the year 2025. This would represent a 40% increase in the
number of state residents. Given the infrastructure additions and improvements
needed to accommodate a growing population, we believe Florida's municipal bond
market can continue to offer attractive total return and income producing
opportunities.
outlook
Patrick P. Coyne
Vice President
Senior Portfolio Manager
Mitchell L. Conery
Vice President
Senior Portfolio Manager
FLORIDA INSURED MUNICIPAL INCOME FUND
MARKET PRICE VS. NET ASSET VALUE
- ----------------------------------------------------------
APRIL 1, 1997 TO MARCH 31, 1998
DATE NET ASSET VALUE MARKET PRICE
- ----------------------------------------------------------
4/01/97 $13.62 $12.38
4/25/97 $13.63 $12.63
5/30/97 $14.17 $13.13
6/27/97 $14.39 $13.63
7/25/97 $14.88 $13.19
8/29/97 $14.61 $13.75
9/26/97 $14.79 $13.75
10/24/97 $14.74 $13.75
11/28/97 $14.95 $13.94
12/26/97 $15.25 $14.38
1/30/98 $15.43 $14.69
2/27/98 $15.31 $14.38
3/31/98 $15.30 $14.31
- ----------------------------------------------------------
Source: Bloomberg Business News. Past performance does not
guarantee future results.
[photo of family on beach]
<PAGE>
for tax-exempt
income
10
COLORADO INSURED MUNICIPAL INCOME FUND
COLORADO INSURED MUNICIPAL INCOME Fund provided a robust total return of +15.84%
(at net asset value with distributions reinvested) for the twelve months ended
March 31, 1998. The Fund outperformed the Lehman Brothers Insured Municipal Bond
Index by a remarkable 459 basis points (4.59%).
The Fund capitalized on the state's diverse economy by seeking relative
value in the state's municipal bond market. We did not target broad sectors, but
focused on specific bonds we thought had greater total return potential than the
average bond issued in the state.
We reduced the Fund's average effective maturity modestly to 9.0 years as
of March 31, 1998. Due to the narrowing spread between short- and long-term
interest rates, we believed we could provide almost as much yield as the state's
long-term bonds but without the added price volatility.
The Fund's yield at market price was 5.25% as of March 31, 1998. For an
investor in the top federal tax bracket of 39.6%, and the highest state tax
bracket of 3.02%, the taxable equivalent yield is 9.14%.
Colorado serves as a key distribution and transportation center for the
growing Rocky Mountain region. We recently purchased a transportation bond for a
toll highway that begins just south of Denver and leads to Denver International
Airport. The Airport's popularity has exceeded expectations and we believe the
highway will benefit from the airport's success.
Colorado's growth as a regional medical center, which serves neighboring
states as well as its own population, is creating attractive income and total
return opportunities. We slightly increased the Fund's allocation to hospital
bonds. We focused on high quality bonds issued by hospitals that have
demonstrated
colorado
COLORADO INSURED MUNICIPAL INCOME FUND
PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION
- ----------------------------------------------------------------
MARCH 31, 1998
General Obligation 24.4%
Sales Tax Revenue 2.6%
Higher Education 14.0%
Certificates of Participation 1.9%
Cash 1.6%
Hospitals 13.1%
Pollution Control 1.4%
Transportation 15.4%
Pre-Refunded 12.5%
Housing 8.2%
Utility 4.9%
Average Effective Maturity 9.0 years
Average Effective Duration 6.7 years
Average Quality AAA
Current Yield at Market Price 5.25%
Amount of Leveraging $40 million
- ----------------------------------------------------------------
None of the income generated by Colorado Insured Municipal
Income Fund for the 12 months ended March 31, 1998, was
subject to the federal alternative minimum tax.
<PAGE>
for tax-exempt
income
11
the ability to expand revenues and maintain profitability.
OUTLOOK
Colorado's emergence as a communications and transportation hub in the Western
U.S. bodes well for the state's municipal bonds, in our opinion. The state's
strong economy has helped to improve the credit quality of its municipal bonds
over the past decade.
Adding to the attractiveness of Colorado's municipal bond market was the
passage of the Taxpayer Bill of Rights (TABOR amendment) which placed a
constitutional cap on spending and has led to what we believe is more
disciplined fiscal management.
The amendment requires voter consent in order for the state to issue many
types of general obligation bonds. Thus, we believe a larger percentage of the
state's municipal securities will be issued as revenue bonds. Such bonds are
supported by the revenue stream of a particular project - a toll road, a
hospital or a water treatment plant, rather than income tax dollars.
outlook
Andrew M. McCullagh, Jr.
Vice President
Senior Portfolio Manager
COLORADO INSURED MUNICIPAL INCOME FUND
MARKET PRICE VS. NET ASSET VALUE
- ----------------------------------------------------------
APRIL 1, 1997 TO MARCH 31, 1998
DATE NET ASSET VALUE MARKET PRICE
- ----------------------------------------------------------
4/01/97 $13.50 $12.63
4/25/97 $13.51 $12.88
5/30/97 $13.94 $13.38
6/27/97 $14.16 $13.69
7/25/97 $14.61 $13.75
8/29/97 $14.35 $13.50
9/26/97 $14.56 $13.38
10/24/97 $14.48 $13.50
11/28/97 $14.66 $13.81
12/26/97 $14.97 $14.13
1/30/98 $15.11 $14.44
2/27/98 $14.99 $14.31
3/31/98 $14.92 $14.00
- ----------------------------------------------------------
Source: Bloomberg Business News. Past performance does not
guarantee future results.
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.
<PAGE>
12 for tax-exempt income
FINANCIAL STATEMENTS
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
MARCH 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
MUNICIPAL BONDS - 98.87%
GENERAL OBLIGATION BONDS - 8.35%
Edina Recreational Facilities Bonds
Series 1992-A 6.00% 01/01/09 ............... $ 305,000 $ 321,330
Edina Recreational Facilities Bonds
Series 1992-A 6.00% 01/01/10 ............... 320,000 336,570
Minneapolis 6.00% 03/01/16 .................. 1,600,000 1,687,120
Minneapolis-St. Paul Metro Airport Commission
AMT 6.60% 01/01/11 ........................ 1,500,000 1,601,445
Rosemount Independent School District #196
5.70% 04/01/12 ............................ 1,000,000 1,057,130
----------
5,003,595
---------
HIGHER EDUCATION REVENUE BONDS - 9.01%
Minnesota Higher Education Facility
St. Thomas University Series 3-C
6.25% 09/01/16 ....................... 1,000,000 1,049,660
Minnesota Higher Education Facility
Macalester College Series 3-J
6.40% 03/01/22 ....................... 1,000,000 1,064,070
Minnesota State University Board Revenue
State University System Series A
6.05% 06/30/18 ....................... 250,000 261,548
Northfield St. Olaf College Revenue
6.30% 10/01/12 ....................... 1,075,000 1,155,958
Northfield St. Olaf College Revenue
6.40% 10/01/21 ....................... 1,750,000 1,868,247
---------
5,399,483
---------
HOSPITAL REVENUE BONDS - 15.04%
Bloomington Health Care Facilities
Masonic Home Care Center
5.875% 07/01/22 (AMBAC) ................. 1,000,000 1,041,990
Duluth Economic Development Authority
Health Care Revenue Duluth Clinic
Series 1992 6.30% 11/01/22 (AMBAC) ...... 1,270,000 1,380,426
Duluth Economic Development Authority
Health Care Revenue St. Luke's Hospital
Series 1992-B 6.40% 05/01/18 (Connie Lee) 1,000,000 1,079,690
Duluth Economic Development Authority
Health Care Revenue St. Mary's Hospital
Series 1993-C 6.00% 02/15/20(Connie Lee) 1,000,000 1,065,990
Minneapolis Hospital System Revenue
Fairview Hospital Series 1991-A
6.50% 01/01/11 (MBIA) ................... 2,210,000 2,402,756
Minneapolis Hospital System Revenue
Fairview Hospital Series 1993-A
5.25% 11/15/19 (MBIA) ................... 1,500,000 1,507,380
Minneapolis/St. Paul HRA HealthOne
6.75% 08/15/14 (MBIA) ................... 500,000 535,470
---------
9,013,702
---------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
MUNICIPAL BONDS (CONTINUED)
HOUSING REVENUE BONDS - 23.28%
Brooklyn Center Multifamily Housing Revenue
Four Courts AMT 7.50% 06/01/25 ............... $1,800,000 $1,857,402
Minneapolis Community Housing Revenue
Series-5 5.70% 12/01/27 ..................... 200,000 205,666
Minnesota Housing Finance Agency
Single Family Mortgage Revenue
Series 1991-A AMT 7.45% 07/01/22 (FHA) ....... 1,385,000 1,470,053
Minnesota Housing Finance Agency
Single Family Mortgage Revenue
Series 1992-G 6.50% 07/01/06365,000390,864
Minnetonka Senior Housing Project
(Presbyterian Homes Guaranteed)
7.70% 06/01/25 .............................. 2,725,000 2,939,648
New Brighton Multifamily Mortgage Revenue
Polynesian Village Apartments
Series 1995-A 7.60% 04/01/251,400,0001,493,814
St. Anthony Multifamily Housing Development
6.875% 07/01/22 (Asset Guaranty) ............. 2,265,000 2,427,876
St. Paul HRA Multifamily Housing Revenue
Pointe of St. Paul Project
Series 1992 6.60% 10/01/12 (FNMA) ............ 2,950,000 3,162,931
---------
13,948,254
---------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 4.48%
Bass Brook PCR Minnesota Power and Light
6.00% 07/01/22................................ 2,575,000 2,681,991
---------
2,681,991
---------
POWER AUTHORITY REVENUE BONDS - 13.88%
Anoka County Solid Waste Disposal
National Rural Co-Op Utility AMT
6.95% 12/01/08 .............................. 1,000,000 1,069,710
Northern Minnesota Municipal Power Agency
Electric System Revenue Series A
5.00% 01/01/21 .............................. 1,500,000 1,442,715
Northern Minnesota Municipal Power Agency
Electric System Revenue Series B
5.50% 01/01/18 (AMBAC) ...................... 1,250,000 1,278,125
Southern Minnesota Municipal Power Agency
5.00% 01/01/16 (FGIC) ....................... 580,000 569,247
Southern Minnesota Municipal Power Agency
5.50% 01/01/15 (AMBAC) ...................... 610,000 627,580
Southern Minnesota Municipal Power Agency
5.75% 01/01/11 (FGIC) ....................... 1,000,000 1,052,920
Western Minnesota Municipal Power Agency
5.50% 01/01/15 (MBIA) ....................... 2,275,000 2,278,686
---------
8,318,983
---------
<PAGE>
for tax-exempt income 13
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED BONDS/ESCROWED TO MATURITY -
23.64%
Carver County Series 1992-A
5.875% 02/01/14-02 ............................ $1,000,000 $1,049,930
Dakota & Washington Counties HRA
Single Family Mortgage Revenue
Bloomington AMT 8.375% 09/01/21(GNMA)
(Escrowed to Maturity) ........................ 2,555,000 3,592,790
Duluth Economic Development Authority
Health Care Revenue Duluth Clinic Series 1992
6.30% 11/01/22-04 (AMBAC) ...................... 730,000 815,060
Metropolitan Council Sports Facilities Commission
Hubert H. Humphrey Metrodome
6.00% 10/01/09 (Escrowed to Maturity) .......... 1,750,000 1,875,492
Minnesota Public Facilities Authority
Water Pollution Control Revenue
Series 1992 6.50% 03/01/14-02 .................. 1,500,000 1,651,530
Puerto Rico Commonwealth
6.00% 07/01/26-07 ............................. 2,000,000 2,277,180
St. Cloud Hospital Revenue
6.75% 07/01/15-01 (AMBAC) ...................... 1,000,000 1,097,180
St. Francis Independent School District #15
6.30% 02/01/11-06 (FSA) ....................... 1,250,000 1,394,350
Southern Minnesota Municipal Power Agency
5.50% 01/01/15 (AMBAC)
(Escrowed to Maturity) ........................ 390,000 404,953
----------
14,158,465
----------
TRANSPORTATION REVENUE BONDS - 1.19%
Puerto Rico Commonwealth Highway & Transportation
Authority 5.50% 07/01/26........................ 700,000 715,337
----------
715,337
----------
TOTAL MUNICIPAL BONDS (COST $54,727,125) 59,239,810
----------
TOTAL MARKET VALUE OF SECURITIES - 98.87%
(COST $54,727,125)** .......................... $ 59,239,810
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.13% ..................... 675,227
------------
TOTAL NET ASSETS - 100.00% ..................... $ 59,915,037
LIQUIDATION VALUE OF PREFERRED STOCK ............ (20,000,000)
------------
NET ASSETS APPLICABLE TO 2,594,700 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING ................... $ 39,915,037
============
NET ASSET VALUE PER COMMON SHARE
($39,915,037 / 2,594,700 SHARES) .............. $ 15.38
=====
<PAGE>
_____________________
* For Pre-Refunded Bonds, the stated maturity is followed by the year in
which each bond is pre-refunded.
** Also cost for federal income tax purposes.
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - 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 Corporation
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
<TABLE>
<CAPTION>
COMPONENTS OF NET ASSETS AT MARCH 31, 1998:
<S> <C>
Common stock, $.01 par value, 200 million shares authorized
to the Fund ............................................... $ 35,455,037
Preferred stock, $.01 par value, 1 million shares authorized
to the Fund ............................................... 20,000,000
Distributions in excess of net investment income ........... (51,780)
Accumulated net realized loss on investments ............... (905)
Net unrealized appreciation on investments ................. 4,512,685
------------
Total net assets ........................................... $ 59,915,037
============
</TABLE>
See accompanying notes
VOYAGEUR MINNESOTA
MUNICIPAL INCOME FUND II, INC.
STATEMENT OF NET ASSETS
MARCH 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
MUNICIPAL BONDS - 99.02%
GENERAL OBLIGATION BONDS - 11.26%
Becker AMT 6.25% 08/01/15 (MBIA) ............ $ 3,700,000 $ 3,987,379
Buffalo Independent School District
6.15% 02/01/22 (FSA) ...................... 4,030,000 4,233,313
Hawley Independent School District
5.75% 02/01/17 (FSA) ...................... 1,000,000 1,047,350
Melrose Independent School District #740
Series A 5.625% 02/01/13 (FSA) ............. 3,225,000 3,309,979
Minneapolis Convention Center Facilities
5.40% 04/01/12 ............................ 2,000,000 2,058,700
Minnesota State 5.375% 08/01/11 ............. 1,000,000 1,031,410
Rosemount Independent School District #196
5.70% 04/01/12 ............................ 1,270,000 1,342,555
Stewartville Independent School District #534
5.75% 02/01/17 ............................ 1,705,000 1,827,931
----------
18,838,617
----------
<PAGE>
14 for tax-exempt income
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
MUNICIPAL BONDS (CONTINUED)
HIGHER EDUCATION REVENUE BONDS - 9.66%
<S> <C> <C>
Minnesota Higher Education Facility
Macalster College 5.55% 03/01/16................... $1,250,000 $1,295,600
Minnesota Higher Education Facility
St. Thomas University Series 4A-1
5.625% 10/01/21 .................................. 1,000,000 1,030,260
Minnesota State Higher Education Facility
St. Thomas University Series R1
5.60% 10/01/15 ................................... 1,050,000 1,088,966
Minnesota State Higher Education Facility
St. Thomas University Series R2
5.60% 09/01/14 ................................... 275,000 285,890
Minnesota State University Board Revenue
Series 1993-A State University System
6.10% 06/30/23 ................................... 1,150,000 1,205,304
Minnesota State University Board Revenue
Series 1993-C State University System
5.60% 06/30/16 (MBIA) ............................ 4,115,000 4,232,977
Minnesota State University Board Revenue
Series 1993-C State University System
5.60% 06/30/19 (MBIA) ............................ 3,720,000 3,818,022
University of Minnesota Series A
5.50% 07/01/21 ................................... 3,000,000 3,200,250
----------
16,157,269
----------
HOSPITAL REVENUE BONDS - 16.20%
Bloomington Health Care Facilities
Masonic Home Care Center
5.875% 07/01/22 (AMBAC) .......................... 4,000,000 4,167,960
Brainerd Evangelical Lutheran Health Care Facilities
Series A 6.65% 03/01/17 (FSA) ..................... 1,195,000 1,301,259
Detroit Lakes Benedictine Health Systems
St. Mary's Hospital
6.00% 02/15/19 (Connie Lee) ....................... 1,250,000 1,332,488
Duluth Economic Development Authority
Health Care Facilities Revenue Duluth Clinic
6.20% 11/01/12 (AMBAC) ........................... 720,000 779,659
Duluth Economic Development Authority
Health Care Facilities Revenue Duluth Clinic
Series 1992 6.30% 11/01/22 (AMBAC) ................ 3,890,000 4,228,236
Duluth Economic Development Authority
Health Care Facilities Revenue St. Mary's Hospital
Series 1993-C 6.00% 02/15/20 (Connie Lee) ......... 6,000,000 6,395,940
Minnesota Agricultural and Economic Development
Health Care System Fairview Hospital Series A
5.75% 11/15/26 (MBIA) ............................ 4,800,000 5,079,264
Minneapolis-St. Paul HRA Childrens Health Care
5.50% 08/15/25 (FSA) ............................. 1,500,000 1,537,395
Minneapolis-St. Paul HRA HealthOne
7.40% 08/15/11 (MBIA) ............................ 2,105,000 2,288,261
----------
27,110,462
----------
HOUSING REVENUE BONDS - 21.66%
Chanhassen Multifamily Housing Heritage Park
Project AMT 6.20% 07/01/30 (FHA) 1,105,000 1,169,764
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
MUNICIPAL BONDS (CONTINUED)
HOUSING REVENUE BONDS (CONTINUED)
<S> <C> <C>
Dakota County HRA Multifamily Mortgage Revenue
Imperial Ridge Project Series 1993-A
6.10% 12/15/28 (GNMA) .......................... $1,875,000 $1,972,800
Harmony Minnesota Multifamily Revenue
Zedakah Foundation Project Series A
5.95% 09/01/20 ................................. 1,000,000 1,036,840
Minnesota Housing Finance Agency
Multifamily Rental Housing
Series D 5.90% 02/01/14 ........................ 1,115,000 1,161,953
Minnesota Housing Finance Agency
Multifamily Rental Housing
Series D 6.00% 08/01/22 ........................ 2,295,000 2,389,875
Minnesota Housing Finance Agency
Single Family Housing Revenue
Series 1994-F 6.30% 07/01/25 .................... 1,545,000 1,643,957
Minnesota Housing Finance Agency
Single Family Mortgage Revenue AMT
7.05% 07/01/22 ................................. 1,710,000 1,802,785
Minnesota Housing Finance Agency
Single Family Mortgage Revenue
Series 1992-B2 AMT 6.15% 01/01/26 ............... 3,885,000 4,050,307
Minnesota Housing Finance Agency
Single Family Mortgage Revenue
Series 1992-C2 AMT 6.15% 07/01/23 ............... 3,935,000 4,088,111
Minnesota Housing Finance Agency
Single Family Mortgage Revenue
Series 1994-J AMT 6.95% 07/01/26 ................ 3,655,000 3,952,956
Minnetonka Senior Housing Project
(Presbyterian Homes of Minnesota Guaranteed)
7.25% 06/01/09 ................................. 1,225,000 1,309,966
Minnetonka Senior Housing Project
(Presbyterian Homes of Minnesota Guaranteed)
7.50% 06/01/14 ................................. 760,000 820,298
Minnetonka Senior Housing Project
(Presbyterian Homes of Minnesota Guaranteed)
7.55% 06/01/19 ................................. 2,365,000 2,545,993
New Brighton Multifamily Mortgage Revenue
Polynesian Village Apartments
Series 1995-A 7.60% 04/01/25 .................... 3,820,000 4,075,978
St. Cloud Housing Redevelopment Authority
Northway Manor, Section 8 Housing
5.35% 12/01/18 ................................. 565,000 560,836
St. Paul HRA Single Family Mortgage Revenue
6.40% 03/01/21 (FNMA) .......................... 1,935,000 2,066,096
Stillwater, Minnesota Multifamily Mortgage Revenue
(Stillwater Cottages) AMT 7.25% 11/01/27 ........ 1,540,000 1,594,131
----------
36,242,646
----------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 4.77%
Bass Brook PCR Minnesota Power and Light
6.00% 07/01/22................................... 7,660,000 7,978,273
----------
7,978,273
----------
</TABLE>
<PAGE>
for tax-exempt income 15
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
MUNICIPAL BONDS (CONTINUED)
POLLUTION CONTROL REVENUE BONDS - 3.14%
<S> <C> <C>
Cloquet, Minnesota Pollution Control Revenue
Potlatch Corporation Project 5.90% 10/01/26.. $5,000,000 $5,259,650
----------
5,259,650
----------
POWER AUTHORITY REVENUE BONDS - 8.03%
Northern Minnesota Municipal Power Agency
Electric System Revenue Series B
5.50% 01/01/18 (AMBAC) ........................ 5,955,000 6,088,988
Puerto Rico Electric Power Authority
5.25% 07/01/21 ................................ 2,000,000 2,005,800
Southern Minnesota Municipal Power Agency
5.75% 01/01/18 (FGIC) ......................... 3,565,000 3,728,598
Western Minnesota Municipal Power Agency
5.50% 01/01/15 (MBIA) ......................... 1,605,000 1,607,600
----------
13,430,986
----------
*PRE-REFUNDED BONDS/ESCROWED TO MATURITY -
20.49%
Dakota & Washington Counties HRA
Single Family Mortgage Revenue
Bloomington AMT 8.375% 09/01/21(GNMA)
(Escrowed to Maturity) ........................ 5,500,000 7,733,990
Duluth Economic Development Authority
Hospital Facilities Revenue Duluth Clinic
6.20% 11/01/12-04 (AMBAC) ...................... 280,000 311,032
Duluth Economic Development Authority
Health Care Facilities Revenue
6.30% 11/01/22-04 (AMBAC) ...................... 960,000 1,071,859
Esko Independent School District
5.65% 04/01/12-05 (FSA) ....................... 550,000 586,910
Metropolitan Council Sports Facilities Commission
Hubert H. Humphrey Metrodome
6.00% 10/01/09 (Escrowed to Maturity) .......... 2,360,000 2,529,236
Minnesota Public Facilities Authority
Water Pollution Control Revenue
6.25% 03/01/16-05 ............................. 1,000,000 1,115,470
Minnesota Public Facilities Authority
Water Pollution Control Revenue
Series 1992 6.50% 03/01/14-05 .................. 3,300,000 3,633,366
Red Wing Independent School District #256
Series 1993-A 5.70% 02/01/12-03 ................ 2,925,000 3,100,295
Red Wing Independent School District #256
Series 1993-A 5.70% 02/01/13-03 ................ 1,625,000 1,722,386
St. Paul HRA Sales Tax Revenue Civic Center
5.55% 11/01/23 (MBIA)
(Escrowed to Maturity) ........................ 4,200,000 4,352,040
St. Paul HRA Sales Tax Revenue Civic Center
5.55% 11/01/23 (Escrowed to Maturity) .......... 2,300,000 2,383,260
Southern Minnesota Municipal Power Agency
5.75% 01/01/18-16 ............................. 3,715,000 3,957,924
Western Minnesota Municipal Power Agency
6.625% 01/01/16 (Escrowed to Maturity) ......... 1,535,000 1,791,406
---------
34,289,174
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
MUNICIPAL BONDS (CONTINUED)
TRANSPORTATION REVENUE BONDS - 3.66%
<S> <C> <C>
Puerto Rico Commonwealth Highway & Transportation
Authority 5.50% 07/01/26.......................... $6,000,000 $6,131,460
------------
6,131,460
------------
OTHER REVENUE BONDS - 0.15%
Minneapolis Community Development Authority
5.50% 06/01/12.................................... 250,000 254,725
------------
254,725
------------
TOTAL MUNICIPAL BONDS (COST $156,047,703).......... 165,693,262
------------
TOTAL MARKET VALUE OF SECURITIES - 99.02 %
(COST $156,047,703)**............................. $165,693,262
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.98%......................... 1,639,870
------------
TOTAL NET ASSETS - 100.00%......................... $167,333,132
LIQUIDATION VALUE OF PREFERRED STOCK............... (60,000,000)
------------
NET ASSETS APPLICABLE TO 7,252,200 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING...................... $107,333,132
============
NET ASSET VALUE PER COMMON SHARE
($107,333,132 / 7,252,200 SHARES)................. 14.80
=====
</TABLE>
- ---------------------
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
** Cost for federal income tax purposes is $156,086,937.
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Subject to Alternative Minimum Tax
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Corporation
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
<TABLE>
<CAPTION>
COMPONENTS OF NET ASSETS AT MARCH 31, 1998:
<S> <C>
Common stock, $.01 par value, 200 million shares authorized
to the Fund................................................. $99,710,002
Preferred stock, $.01 par value, 1 million shares authorized
to the Fund................................................. 60,000,000
Undistributed net investment income.......................... 728,355
Accumulated net realized loss on investments................. (2,750,784)
Net unrealized appreciation on investments................... 9,645,559
------------
Total net assets............................................. $167,333,132
============
</TABLE>
See accompanying notes
<PAGE>
16 for tax-exempt income
VOYAGEUR MINNESOTA
MUNICIPAL INCOME FUND III, INC.
STATEMENT OF NET ASSETS
MARCH 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS - 98.99%
CERTIFICATES OF PARTICIPATION - 0.26%
Anoka County Community Action Program
5.50% 06/01/13........................... $ 100,000 $ 103,213
----------
103,213
----------
GENERAL OBLIGATION BONDS - 5.31%
Brooklyn Park Minnesota Series A
5.50% 02/01/19........................... 1,075,000 1,103,638
North Branch Independent School District
5.625% 02/01/17 (FGIC)................... 1,000,000 1,034,530
----------
2,138,168
----------
HIGHER EDUCATION REVENUE BONDS - 9.00%
Minnesota Higher Education Facilities
Authorities Revenue
St. Thomas University Series 4-A1
5.625% 10/01/21.......................... 1,010,000 1,040,562
Minnesota Higher Education Facilities
Macalester College
Series 4-C 5.50% 03/01/12................ 200,000 208,858
Minnesota Higher Education Facilities
St. Benedict College
Series 3-W 6.375% 03/01/20............... 1,275,000 1,337,768
Minnesota Higher Education Facilities
St. Mary's College
Series 3-Q 6.15% 10/01/23................ 1,000,000 1,038,360
----------
3,625,548
----------
HOSPITAL REVENUE BONDS - 19.28%
Duluth Economic Development Authority
Hospital Facilities Revenue Duluth Clinic
6.20% 11/01/12 (AMBAC)................... 1,080,000 1,169,489
Minnesota Agricultural and Economic
Development Health Care System Fairview
Hospital Series A 5.75% 11/15/26 (MBIA).. 2,000,000 2,116,360
Princeton Fairview Hospital Revenue
Series 1991-C 6.25% 01/01/21 (MBIA)...... 2,000,000 2,135,160
Robbinsdale North Memorial Medical Center
Series 1993-B 5.50% 05/15/23 (AMBAC)..... 1,500,000 1,527,270
Wadena County Health Care Facilities
Revenue 7.75% 09/01/24................... 750,000 818,145
----------
7,766,424
----------
HOUSING REVENUE BONDS - 20.75%
Brooklyn Center Multifamily Housing Revenue
Four Courts AMT 7.50% 06/01/25........... 1,000,000 1,031,890
Burnsville Multifamily Mortgage Revenue
Series A 7.10% 01/01/30 (FSA)............ 2,000,000 2,232,220
Edina HRA Edina Park Plaza
7.70% 12/01/28 (FHA)..................... 1,000,000 1,043,530
Minneapolis Community Development Agency
5.70% 12/01/27........................... 475,000 488,457
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
HOUSING REVENUE BONDS (CONTINUED)
Minneapolis Multifamily Housing Revenue
Olsen Townhomes AMT 6.00% 12/01/19...... $1,875,000 $1,930,444
Minnesota HFA Single Family Mortgage Revenue
Series 1991-A AMT 7.45% 07/01/22 (FHA).. 1,540,000 1,634,571
----------
8,361,112
----------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 11.17%
Bass Brook PCR Minnesota Power and Light
6.00% 07/01/22.......................... 1,505,000 1,567,533
Minnesota Public Facility Authority Water
Pollution Control 5.40% 03/01/15........ 2,820,000 2,932,039
----------
4,499,572
----------
POLLUTION CONTROL REVENUE BONDS - 3.37%
Cloquet, Minnesota Pollution Control
Revenue Potlatch Corporation Project
5.90% 10/01/26.......................... 1,000,000 1,051,930
International Falls Pollution Control
Revenue Boise Cascade Corporation Project
5.65% 12/01/22.......................... 300,000 304,842
----------
1,356,772
----------
POWER AUTHORITY REVENUE BONDS - 8.66%
Moorhead Public Utilities Revenue
6.25% 11/01/12 (MBIA)................... 1,500,000 1,605,510
Southern Minnesota Municipal Power Agency
5.75% 01/01/18 (FGIC)................... 1,800,000 1,882,602
----------
3,488,112
----------
*PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 17.89%
Duluth Economic Development Authority
Hospital Facilities Revenue Duluth Clinic
6.20% 11/01/12-04 (AMBAC)............... 420,000 466,549
Esko Independent School District
5.75% 04/01/17-05 (FSA)................. 2,145,000 2,301,692
St. Paul HRA Sales Tax Revenue Civic Center
5.55% 11/01/23 (MBIA)
(Escrowed to Maturity).................. 1,300,000 1,347,060
University of Minnesota Hospital
6.75% 12/01/16 (Escrowed to Maturity)... 2,580,000 3,092,517
----------
7,207,818
----------
TRANSPORTATION REVENUE BONDS - 3.30%
Puerto Rico Commonwealth Highway &
Transportation Authority 5.50%
07/01/26................................ 1,300,000 1,328,483
----------
1,328,483
----------
TOTAL MUNICIPAL BONDS (COST $37,174,892).. 39,875,222
----------
<PAGE>
for tax-exempt income 17
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
VALUE
------
TOTAL MARKET VALUE OF SECURITIES - 98.99%
(COST $37,174,892)**..................................... $39,875,222
RECEIVABLES AND OTHER ASSETS NET OF
LIABILITIES - 1.01%...................................... 408,054
-----------
TOTAL NET ASSETS - 100.00%................................. $40,283,276
LIQUIDATION VALUE OF PREFERRED STOCK....................... (15,000,000)
-----------
NET ASSETS APPLICABLE TO 1,837,200 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING............................. $25,283,276
===========
NET ASSET VALUE PER COMMON SHARE
($25,283,276/1,837,200 SHARES)........................... $13.76
======
_____________________
* For Pre-Refunded Bonds, the stated maturity is followed by
the year in which each bond is pre-refunded.
** Also cost for federal income tax purposes.
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Subject to 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 MARCH 31, 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........................ 174,306
Accumulated net realized loss on investments............... (2,838,090)
Net unrealized appreciation on investments................. 2,700,330
-----------
Total net assets........................................... $40,283,276
===========
See accompanying notes
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
MARCH 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS - 98.45%
GENERAL OBLIGATION BONDS - 30.08%
Eagle Mountain Community Facility
District A2 6.40% 07/01/17............... $1,500,000 $1,642,320
Maricopa County Alhambra Elementary
School District #68
5.625% 07/01/13 (AMBAC).................. 3,400,000 3,600,940
Maricopa County Unified School
District #4 5.55% 07/01/10 (FGIC)........ 1,900,000 2,021,277
Maricopa County Unified School
District #11 5.50% 07/01/10.............. 3,000,000 3,133,020
Maricopa County Unified School
District #41 5.00% 07/01/17 (FSA)........ 500,000 491,470
<PAGE>
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
GENERAL OBLIGATION BONDS (CONTINUED)
Maricopa County Unified School
District #41 6.25% 07/01/15 (FSA)........ $1,500,000 $1,665,270
Maricopa County Washington Elementary
Unified School District #6
5.375% 07/01/14 (AMBAC).................. 1,000,000 1,027,400
Mesa General Obligation Project of 1987
5.70% 07/01/08 (MBIA).................... 1,800,000 1,947,474
Mohave County Unified School District #1
5.90% 07/01/15 (FGIC).................... 1,500,000 1,614,900
Pima County Unified School District #6
5.75% 07/01/12 (FGIC).................... 2,000,000 2,126,480
Pinal County Unified School District
5.80% 07/01/11 (FGIC).................... 1,000,000 1,093,400
Santa Cruz Valley Unified School District #35
5.80% 07/01/09 (AMBAC)................... 600,000 637,026
----------
21,000,977
----------
HIGHER EDUCATION REVENUE BONDS - 3.10%
University of Arizona
6.25% 06/01/11........................... 1,000,000 1,077,920
University of Arizona
6.35% 06/01/14........................... 1,000,000 1,083,830
----------
2,161,750
----------
HOSPITAL REVENUE BONDS - 12.26%
Arizona Hospital Health Facilities Authority
6.25% 09/01/11 (MBIA).................... 1,500,000 1,635,270
Maricopa County Health Facilities
Catholic Health Care West Series A
5.75% 07/01/11 (MBIA).................... 1,750,000 1,858,290
Maricopa County Health Facilities
Catholic Health Care West Series A
6.00% 07/01/21 (MBIA).................... 1,100,000 1,175,042
Maricopa County Industrial Development
Authority Baptist Hospital
5.50% 09/01/13 (MBIA).................... 300,000 313,725
Mohave County Industrial Development
Authority Baptist Hospital
5.50% 09/01/21 (MBIA).................... 500,000 514,750
Mohave County Industrial Development
Authority Baptist Hospital
5.75% 09/01/26 (MBIA).................... 150,000 158,040
Phoenix Industrial Development Authority
John C. Lincoln Hospital
5.50% 12/01/13 (FSA)..................... 1,100,000 1,156,254
Scottsdale Industrial Development Authority
Scottsdale Memorial Hospital
5.25% 09/01/18 (AMBAC)................... 1,000,000 1,001,770
University of Arizona Medical Center
6.25% 07/01/16 (MBIA).................... 700,000 749,658
----------
8,562,799
----------
HOUSING REVENUE BONDS - 8.90%
Peoria Multifamily Housing Mortgage
Revenue 7.30% 02/20/28 (GNMA)............ 1,230,000 1,361,708
<PAGE>
18 for tax-exempt income
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
HOUSING REVENUE BONDS (CONTINUED)
Phoenix Industrial Development Authority
Multifamily Mortgage Revenue
6.80% 11/01/25 (FHA).................... $500,000 $527,580
Pima County Industrial Development Authority
Multifamily Mortgage Revenue
5.40% 03/01/15 (Asset Guaranty)......... 380,000 381,535
Pima County Industrial Development Authority
Single Family Mortgage Revenue Series A
6.25% 11/01/30 (GNMA)................... 1,405,000 1,492,672
Tempe Industrial Development Authority
Multifamily Mortgage Revenue
6.125% 06/01/10 (FHA)................... 2,305,000 2,450,699
----------
6,214,194
----------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 5.52%
Coconino County Pollution Control Corporation
5.80% 11/01/32.......................... 1,000,000 1,019,080
Maricopa County Stadium District
5.50% 07/01/13 (MBIA)................... 1,750,000 1,814,312
Navajo County Pollution Control Corporation
5.50% 08/15/28 (AMBAC).................. 1,000,000 1,019,930
----------
3,853,322
----------
LEASES/CERTIFICATES OF PARTICIPATION - 3.65%
Scottsdale Municipal Property Corporation
6.25% 11/01/14 (FGIC)................... 1,300,000 1,402,024
Tucson 5.60% 07/01/11..................... 1,100,000 1,145,804
----------
2,547,828
----------
POWER AUTHORITY REVENUE BONDS - 2.51%
Salt River Project Electric System Revenue
6.25% 01/01/27.......................... 1,635,000 1,751,919
----------
1,751,919
----------
*PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 0.57%
Salt River Project Electric System Revenue
Series D, 6.25% 01/01/27-02............. 365,000 396,894
----------
396,894
----------
TRANSPORTATION REVENUE BONDS - 11.00%
Arizona State Transportation Board
5.25% 07/01/09.......................... 1,000,000 1,032,120
City of Phoenix Junior Lien Street & Highway
6.25% 07/01/11 (FGIC)................... 1,300,000 1,413,698
Tucson Airport Authority Revenue
5.70% 06/01/13 (MBIA)................... 2,000,000 2,105,360
Tucson Street & Highway Revenue
5.50% 07/01/12 (MBIA)................... 3,000,000 3,126,960
----------
7,678,138
----------
UTILITY REVENUE BONDS - 3.97%
Mesa Utility System Revenue
5.25% 07/01/16 (FGIC)................... 2,730,000 2,773,817
----------
2,773,817
----------
WATER AND SEWER REVENUE BONDS - 15.47%
Chandler Water & Sewer Revenue
5.00% 07/01/09 (FGIC)................... 1,000,000 1,022,480
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
WATER AND SEWER REVENUE BONDS (CONTINUED)
Phoenix Civic Improvement Corporation
5.50% 07/01/21 (AMBAC)................... $2,000,000 $2,042,320
Phoenix Civic Improvement Corporation
Water System Revenue Junior Lien
5.375% 07/01/22 (MBIA)................... 1,000,000 1,017,770
Phoenix Civic Improvement Corporation
Water System Revenue Junior Lien
5.60% 07/01/18........................... 1,000,000 1,037,990
Phoenix Water System Revenue
5.50% 07/01/22........................... 2,000,000 2,045,340
Tucson Water Revenue Refunding Series A
5.75% 07/01/18 (AMBAC)................... 3,500,000 3,633,280
-----------
10,799,180
-----------
OTHER REVENUE BONDS - 1.42%
Guam Government Series A
5.00% 11/01/17........................... 1,000,000 992,550
-----------
992,550
-----------
TOTAL MUNICIPAL BONDS (COST $64,486,598)... 68,733,368
-----------
TOTAL MARKET VALUE OF SECURITIES - 98.45%
(COST $64,486,598)**..................... $68,733,368
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.55%................. 1,079,888
-----------
TOTAL NET ASSETS - 100.00%................. $69,813,256
LIQUIDATION VALUE OF PREFERRED STOCK....... (25,000,000)
-----------
NET ASSETS APPLICABLE TO 2,982,200 COMMON SHARES
($.01 Par Value) Outstanding............. $44,813,256
===========
NET ASSET VALUE PER COMMON SHARE
($44,813,256 / 2,982,200 SHARES)......... $15.03
======
_____________________
* For Pre-Refunded Bonds, the stated maturity is followed
by the year in which the bond is pre-refunded.
** Also cost for federal income tax purposes.
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 MARCH 31, 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........................ 389,925
Accumulated net realized loss on investments............... (662,332)
Net unrealized appreciation on investments................. 4,246,770
-----------
Total net assets........................................... $69,813,256
===========
See accompanying notes
<PAGE>
for tax-exempt income 19
VOYAGEUR FLORIDA
INSURED MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS
MARCH 31, 1998
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------------
MUNICIPAL BONDS - 98.57%
CERTIFICATES OF PARTICIPATION - 12.63%
Dade County School Board Lease
5.60% 08/01/17 (AMBAC) .................... $1,000,000 $1,040,430
Escambia County School Board Lease
5.50% 02/01/22 (MBIA)...................... 5,000,000 5,156,600
St. Lucie County School Board Lease
5.375% 07/01/19 (FSA)...................... 1,000,000 1,012,170
---------
7,209,200
---------
GENERAL OBLIGATION BONDS - 4.28%
Reedy Creek Improvement-Sports Complex
5.75% 06/01/13 (MBIA)...................... 2,300,000 2,445,245
---------
2,445,245
---------
HIGHER EDUCATION REVENUE BONDS - 5.03%
Florida Agricultural & Mechanical
University/Student Apartment Facility
5.625% 07/01/21 (MBIA)..................... 1,250,000 1,304,337
Volusia Education Facilities Authority
Revenue Stetson University
5.50% 06/01/17 (MBIA)...................... 1,500,000 1,563,930
---------
2,868,267
---------
HOSPITAL REVENUE BONDS - 15.76%
Lakeland Hospital System Revenue
Lakeland Regional Medical Center
5.75% 11/15/15 (FGIC)...................... 2,500,000 2,612,950
Orange County Health Facilities Authority
Revenue Adventist Health System
5.75% 11/15/25 (AMBAC)..................... 1,500,000 1,574,445
Orange County Health Facilities Authority
Revenue Orlando Regional Health
6.25% 10/01/18 (MBIA)...................... 2,000,000 2,295,860
Venice Health Care Revenue
Bon Secours Health System Project
5.60% 08/15/16 (MBIA)...................... 2,405,000 2,510,555
---------
8,993,810
---------
HOUSING REVENUE BONDS - 11.79%
Florida Housing Finance Agency
Homeowner Mortgage Series 2 AMT
5.90% 07/01/29 (MBIA)...................... 1,250,000 1,296,700
Florida State Housing Revenue
Leigh Meadows Project Series N AMT
6.30% 09/01/36 (AMBAC)..................... 2,510,000 2,663,311
Florida State Housing Revenue
Woodbridge Project Series L AMT
6.05% 12/01/16 (AMBAC)..................... 1,120,000 1,181,107
Florida State Housing Revenue
Woodbridge Project Series L AMT
6.25% 06/01/36 (AMBAC)..................... 1,500,000 1,587,210
---------
6,728,328
---------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 6.73%
Dade County Seaport
6.25% 10/01/21-01 (AMBAC).................. $1,000,000 $1,078,010
Sunrise Utility System Revenue Series A
5.75% 10/01/26-06 (AMBAC).................. 2,500,000 2,763,675
---------
3,841,685
---------
TRANSPORTATION REVENUE BONDS - 4.70%
Dade County Aviation Revenue Series B
5.60% 10/01/26 (MBIA)...................... 1,000,000 1,034,480
Hillsborough County Aviation Authority
Revenue Tampa International Airport
Series B 5.60% 10/01/19 (FGIC)............. 1,600,000 1,650,304
---------
2,684,784
---------
UTILITY REVENUE BONDS - 2.28%
Florida State Municipal Power
Agency Revenue St. Lucie Project
5.70% 10/01/16 (FGIC)...................... 1,250,000 1,298,000
---------
1,298,000
---------
WATER AND SEWER REVENUE BONDS - 11.28%
City of Panama Beach Water & Sewer
5.50% 06/01/18 (AMBAC)..................... 1,000,000 1,020,310
Dade County Water & Sewer
5.50% 10/01/25 (FGIC)...................... 1,100,000 1,136,960
Florida Keys Aqueduct Water Revenue
5.25% 09/01/21 (AMBAC)..................... 1,700,000 1,706,120
Indian River County Water & Sewer Revenue
5.50% 09/01/16 (FGIC)...................... 1,000,000 1,043,450
Sarasota County Utility System Revenue
5.50% 10/01/22 (FGIC)...................... 1,500,000 1,529,490
---------
6,436,330
---------
OTHER REVENUE BONDS - 24.09%
Boca Raton Community Redevelopment Tax
Increment Revenue Mizner Park Project
5.875% 03/01/13 (FGIC)..................... 1,500,000 1,586,685
Dade County Professional Sports Franchise
Facilities Revenue 6.00% 10/01/22 (FGIC) 1,000,000 1,070,590
Florida Ports Financing Commission Revenue
AMT 5.375% 06/01/27 (MBIA)................. 2,250,000 2,265,773
Hillsborough County Industrial Development
Authority Revenue Alleghany Health System
Knox Village 5.75% 12/01/21 (MBIA) 1,000,000 1,059,210
Miami Beach Resort Tax Revenue
5.50% 10/01/16 (AMBAC)..................... 1,000,000 1,043,760
Orange County Public Service Tax Revenue
6.00% 10/01/24 (FGIC)...................... 3,000,000 3,252,540
Orange County Sales Tax Revenue
6.125% 01/01/19 (FGIC)..................... 1,000,000 1,042,810
Saint John's County Industrial Development
Authority Revenue Pro Golf Hall of Fame
5.50% 03/01/17 (MBIA)...................... 250,000 255,775
<PAGE>
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------------
MUNICIPAL BONDS (CONTINUED)
OTHER REVENUE BONDS (CONTINUED)
Tampa Utilities Tax Revenue
6.00% 10/01/15 (AMBAC)..................... $1,000,000 $1,051,300
Village Center Community Development
District Revenue Series A
5.85% 11/01/16 (MBIA)...................... 1,000,000 1,120,220
----------
13,748,663
----------
TOTAL MUNICIPAL BONDS (COST $52,552,720) 56,254,312
----------
TOTAL MARKET VALUE OF SECURITIES - 98.57%
(COST $52,552,720)**....................... $56,254,312
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.43%................... 816,298
----------
TOTAL NET ASSETS - 100.00%................... $57,070,610
LIQUIDATION VALUE OF PREFERRED STOCK (20,000,000)
----------
NET ASSETS APPLICABLE TO 2,422,200 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING................. $37,070,610
==========
NET ASSET VALUE PER COMMON SHARE
($37,070,610 / 2,422,200 shares)............. $ 15.30
==========
_______________
* For Pre-Refunded Bonds, the stated maturity is followed by the
year in which each bond is pre-refunded.
** Also cost for federal income tax purposes.
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Corporation
FSA - Insured by the Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT MARCH 31, 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 403,229
Accumulated net realized loss on investments (395,600)
Net unrealized appreciation on investments 3,701,592
----------
Total net assets ........................ $57,070,610
==========
See accompanying notes
<PAGE>
20 for tax-exempt income
VOYAGEUR COLORADO
INSURED MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS
MARCH 31, 1998
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------------
MUNICIPAL BONDS - 98.50%
CERTIFICATES OF PARTICIPATION - 1.90%
Arapahoe County Colorado Library District
5.70% 12/15/10 (MBIA). . . $2,000,000 $2,136,880
---------
2,136,880
---------
GENERAL OBLIGATION BONDS - 24.43%
Adams County School District #12,
Five Star 5.40% 12/15/15 (FGIC).......... 1,250,000 1,294,087
Adams County School District #12,
Five Star 5.40% 12/15/16 (FGIC).......... 2,000,000 2,062,160
Archuleta & Hinsdale Counties School
District #50JT 5.50% 12/01/14 (MBIA)....... 1,000,000 1,031,670
Archuleta & Hinsdale Counties School
District #50JT 5.55% 12/01/20 (MBIA)..... 4,000,000 4,093,400
Eagle Garfield & Routt Counties School
District #Re-50J 6.30% 12/01/12 (FGIC)... 1,000,000 1,114,330
El Paso County School District #20
5.625% 12/15/16 (MBIA)................... 1,000,000 1,048,600
El Paso County School District #20
5.625% 12/15/16 (AMBAC).................. 3,000,000 3,145,800
Jefferson County School District #R-001
Series A 5.00% 12/15/17 (FGIC) 1,850,000 1,817,995
Larimer & Weld Counties School District
#Re-5J 5.75% 11/15/20 (MBIA)............. 1,700,000 1,792,310
Larimer, Weld & Boulder Counties School
District #R-2J Thompson 5.45% 12/15/16 (FGIC) 1,250,000 1,288,175
Mesa County Colorado Valley School
District #51 Grand Junction
5.50% 12/01/15 (MBIA).................. 1,000,000 1,042,530
Mesa County Colorado Valley School District
#51 Grand Junction 5.50% 12/01/16 (MBIA) 1,100,000 1,147,652
Piney Creek Colorado Metropolitan District
5.65% 12/01/17 (FGIC).................. 2,100,000 2,198,490
Pueblo County 5.80% 06/01/11 (MBIA)...... 1,405,000 1,497,871
Stonegate Village Metropolitan District
Refunding and Improvement
Series A 5.50% 12/01/21 (FSA).......... 2,750,000 2,832,528
---------
27,407,598
---------
HIGHER EDUCATION REVENUE BONDS - 13.97%
Aurora Educational Development Revenue
6.00% 10/15/15 (Connie Lee)............ 2,500,000 2,648,825
Colorado Mountain College Residence Hall
Authority Revenue 5.75% 06/01/23 (MBIA) 1,000,000 1,054,500
Colorado Postsecondary Education Facility
Authority Revenue Refunding & Improvement
- University of Denver Project
5.375% 3/01/18 (MBIA).................. 3,500,000 3,573,955
Colorado Postsecondary Education Facility
Authority Revenue, University of Denver
Project 6.00% 03/01/16 (Connie Lee).... 4,000,000 4,255,520
<PAGE>
for tax-exempt income 21
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------------
MUNICIPAL BONDS (CONTINUED)
HIGHER EDUCATION REVENUE BONDS (CONTINUED)
Colorado State Board of Agriculture State University
Revenue Refunding & Improvement -
Auxiliary Facilities 5.125% 3/01/17 (AMBAC) $1,000,000 $1,001,100
Colorado State Colleges Board of Trustees,
Adams State College
Series A 5.75% 05/15/19 (MBIA)............. 2,000,000 2,089,640
University of Northern Colorado Revenue
Auxiliary Facilities System 5.60%
06/01/24 (MBIA).............................. 1,000,000 1,045,830
----------
15,669,370
----------
HOSPITAL REVENUE BONDS - 13.12%
Colorado Health Facilities Authority Revenue,
Boulder Community Hospital Project
Series B 5.875% 10/01/23 (MBIA)............ 2,625,000 2,767,511
Colorado Health Facilities Authority Revenue,
North Colorado Medical Center
5.95% 05/15/12 (MBIA)...................... 2,000,000 2,132,620
Colorado Health Facilities Authority Revenue,
North Colorado Medical Center
6.00% 05/15/20 (MBIA)...................... 1,000,000 1,068,080
Colorado Springs Memorial Hospital Revenue
6.00% 12/15/24 (MBIA)...................... 2,250,000 2,447,055
Logan County Health Care Facilities Revenue,
Western Health Network Inc.
5.90% 01/01/19 (MBIA)...................... 2,510,000 2,621,695
University of Colorado Hospital Authority
Revenue Refunding
Series A 5.20% 11/15/17 (AMBAC) 3,695,000 3,681,255
----------
14,718,216
----------
HOUSING REVENUE BONDS - 8.19%
Colorado Housing Finance Authority -
Single-Family Housing,
Series AA 5.625% 11/01/23 (MBIA) 5,000,000 5,081,450
Denver Colorado City and County
Multi-Family Housing, Revenue Mortgage Loan
Garden Court 5.40% 07/01/39 (FHA) 2,000,000 1,996,200
Snowmass Village Multi-Family Housing,
Revenue Refunding Essential Function Housing
6.25% 12/15/16 (FSA). . . . 2,000,000 2,110,400
---------
9,188,050
---------
MISCELLANEOUS AND SALES TAX REVENUE BONDS - 2.59%
Castle Rock Sales & Use Tax Revenue
5.90% 06/01/16 (FSA). . . . 1,755,000 1,860,844
Douglas County Sales & Use Tax Revenue
5.50% 10/15/11 (MBIA). . . 1,000,000 1,049,950
---------
2,910,794
---------
POLLUTION CONTROL REVENUE BONDS - 1.41%
Adams County Pollution Control Revenue Refunding,
Public Service Company Project,
Series A 5.875% 04/01/14 (MBIA) 1,500,000 1,581,315
---------
1,581,315
---------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED BONDS - 12.52%
City of Westminster County Sales &
Use Tax Revenue Refunding,
Series A 6.25% 12/01/12-02 (FGIC) $5,000,000 $ 5,440,500
Jefferson County School District #R-001
6.00% 12/15/12-02 (AMBAC) 1,575,000 1,711,127
Jefferson County School District #R-001
6.25% 12/15/12-02 (AMBAC) 2,435,000 2,671,195
Regional Transportation District Colorado
Sales Tax Revenue
6.25% 11/01/12-02 (FGIC) 3,855,000 4,221,148
---------
14,043,970
---------
Transportation Revenue Bonds - 15.44%
Arapahoe County Capital Improvements Highway
Revenue 6.05% 08/31/15 (MBIA)................ 4,700,000 5,164,830
Denver City & County Airport Revenue,
Series A 5.70% 11/15/25 (MBIA)............... 1,000,000 1,046,640
Denver City & County Airport Revenue,
Series E 5.25% 11/15/23 (MBIA)............... 8,000,000 7,999,440
E-470 Public Highway Authority Revenue
SR Series A 5.00% 9/01/26 (MBIA)............. 2,500,000 2,415,275
Regional Transportation District Colorado
Sales Tax Revenue 6.25% 11/01/12 (FGIC)...... 645,000 695,626
------------
17,321,811
------------
UTILITY REVENUE BONDS - 4.93%
Platte River Power Authority Colorado Power Revenue
Series DD 5.375% 06/01/17 (MBIA)........... 2,250,000 2,313,562
Municipal Subdistrict of Northern Colorado
Water Conservancy District Revenue
Series F 6.50% 12/01/12 (AMBAC)............ 2,800,000 3,216,248
------------
5,529,810
------------
TOTAL MUNICIPAL BONDS (COST $105,673,126) 110,507,814
------------
TOTAL MARKET VALUE OF SECURITIES - 98.50%
(COST $105,673,126)**...................... $110,507,814
RECEIVABLES AND OTHER ASSETS NET OF
LIABILITIES - 1.50% 1,679,101
------------
TOTAL NET ASSETS - 100.00% .................. 112,186,915
LIQUIDATION VALUE OF PREFERRED STOCK (40,000,000)
------------
NET ASSETS APPLICABLE TO 4,837,100 COMMON SHARES
($.01 PAR VALUE) OUTSTANDING ................ $ 72,186,915
============
NET ASSET VALUE PER COMMON SHARE
($72,186,915 / 4,837,100 shares)............. $ 14.92
============
<PAGE>
22 for tax-exempt income
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
_____________________
* For Pre-Refunded Bonds, the stated maturity is followed by the
year in which each bond is pre-refunded.
** Also cost for federal income tax purposes.
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
MARKET
VALUE
COMPONENTS OF NET ASSETS AT MARCH 31, 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 749,281
Accumulated net realized loss on investments (635,164)
Net unrealized appreciation on investments 4,834,688
------------
_______________
Total net assets.......................... $112,186,915
============
See accompanying notes
THE VOYAGEUR FUNDS
STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
FLORIDA COLORADO
MINNESOTA MINNESOTA MINNESOTA ARIZONA INSURED INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
INCOME INCOME INCOME INCOME INCOME INCOME
FUND, INC. FUND II, INC. FUND III, INC. FUND, INC. FUND FUND, INC.
---------------------------------------------------------------------------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C> <C>
Interest..................................... $3,517,857 $9,430,385 $2,265,260 $3,785,138 $3,082,463 $6,010,087
--------- --------- --------- ------- ------ ------
EXPENSES:
Management fees ............................. 235,855 657,638 158,622 274,603 222,903 439,768
Administration fees ......................... 100,000 246,614 59,483 102,976 83,589 164,944
Remarketing agent fees ...................... 50,000 150,000 37,500 62,500 50,000 106,000
Transfer agent and custodian fees and expenses 24,846 44,920 12,962 20,198 17,942 31,692
Professional fees ........................... 8,199 32,318 19,800 23,338 20,798 28,584
Directors'/Trustees' fees 5,444 7,028 5,151 5,591 3,998 7,482
Other ........................................ 30,348 104,166 36,173 59,351 49,080 44,559
--------- --------- --------- ------- ------ ------
Total Expenses 454,692 1,242,684 329,691 548,557 448,310 823,029
NET INVESTMENT INCOME ........................ 3,063,165 8,187,701 1,935,569 3,236,581 2,634,153 5,187,058
--------- --------- --------- ------- ------ ------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain (loss) on investments (905) (99,452 51,297 233,414 71,462 974,269
Net change in unrealized appreciation/depreciation
of investments
2,515,951 8,807,600 1,892,300 3,450,141 3,818,631 5,313,456
--------- --------- --------- ------- ------ ------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 2,515,046 8,708,148 1,943,597 3,683,555 3,890,093 6,287,725
--------- --------- --------- ------- ------ ------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$5,578,211 $16,895,849 $3,879,166 $6,920,136 $6,524,246 $11,474,783
========== =========== ========== ========== ========== ===========
</TABLE>
See accompanying notes
<PAGE>
for tax-exempt income 23
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA MUNICIPAL MINNESOTA MUNICIPAL MINNESOTA MUNICIPAL
INCOME FUND, INC. INCOME FUND II, INC. INCOME FUND III, INC.
----------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/98 3/31/97 3/31/98 3/31/97 3/31/98 3/31/97
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ............................ $ 3,063,165 $ 2,753,370 $ 8,187,701 $ 8,173,422 $ 1,935,569 $ 1,978,163
Net realized gain (loss) on investments .......... (905) 101,820 (99,452) (122,342) 51,297 (485,545)
Net change in unrealized
appreciation/depreciation of investments ........ 2,515,951 374,814 8,807,600 732,771 1,892,300 752,657
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations ................................. 5,578,211 3,230,004 16,895,849 8,783,851 3,879,166 2,245,275
----------- ----------- ----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO:
Common shareholders from net investment income ... (2,413,072) (2,413,073) (5,928,674) (5,860,687) (1,391,679) (1,374,458)
Preferred shareholders from net
investment income ............................... (720,894) (702,068) (2,206,092) (2,106,108) (552,111) (569,220)
Common shareholders from net realized gain
on investments .................................. (56,857) -- -- -- -- --
Preferred shareholders from net realized gain
on investments .................................. (16,542) -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
(3,207,365) (3,115,141) (8,134,766) (7,966,795) (1,943,790) (1,943,678)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS ............ 2,370,846 114,863 8,761,083 817,056 1,935,376 301,597
NET ASSETS:
Beginning of year ................................ 57,544,191 57,429,328 158,572,049 157,754,993 38,347,900 38,046,303
----------- ----------- ----------- ----------- ----------- -----------
End of year ...................................... $59,915,037 $57,544,191 $167,333,132 $158,572,049 $40,283,276 $38,347,900
=========== =========== ============ ============ =========== ===========
ARIZONA MUNICIPAL FLORIDA INSURED MUNICIPAL COLORADO INSURED MUNICIPAL
INCOME FUND, INC. INCOME FUND INCOME FUND, INC.
----------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/98 3/31/97 3/31/98 3/31/97 3/31/98 3/31/97
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ............................ $ 3,236,581 $ 3,219,712 $ 2,634,153 $ 2,625,869 $ 5,187,058 $ 5,058,004
Net realized gain (loss) on investments .......... 233,414 (169,429) 71,462 55,988 974,269 (1,395,905)
Net change in unrealized
appreciation/depreciation of investments ........ 3,450,141 192,773 3,818,631 (263,919) 5,313,456 1,100,880
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations ................................. 6,920,136 3,243,056 6,524,246 2,417,938 11,474,783 4,762,979
----------- ----------- ----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO:
Common shareholders from net investment
income .......................................... (2,303,750) (2,275,793) (1,834,817) (1,812,111) (3,555,272) (3,509,923)
Preferred shareholders from net investment
income .......................................... (905,587) (854,450) (728,766) (702,830) (1,419,308) (1,409,304)
----------- ----------- ----------- ----------- ----------- -----------
(3,209,337) (3,130,243) (2,563,583) (2,514,941) (4,974,580) (4,919,227)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS ............ 3,710,799 112,813 3,960,663 (97,003) 6,500,203 (156,248)
NET ASSETS:
Beginning of year ................................ 66,102,457 65,989,644 53,109,947 53,206,950 105,686,712 105,842,960
----------- ----------- ----------- ----------- ----------- -----------
End of year ...................................... $69,813,256 $66,102,457 $57,070,610 $53,109,947 $112,186,915 $105,686,712
=========== =========== =========== =========== ============ ============
</TABLE>
See accompanying notes
<PAGE>
24 for tax-exempt income
THE VOYAGEUR FUNDS FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Selected data for each common share of the Fund outstanding throughout each year
was as follows:
MINNESOTA MUNICIPAL INCOME FUND, INC.
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
3/31/98(6) 3/31/97 3/31/96 3/31/95 3/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........................................ $14.47 $14.43 $14.21 $13.89 $14.67
Income from investment operations:
Net investment income ................................................... 1.18 1.06 1.18 1.21 1.20
Net realized and unrealized gain (loss) on investments .................. 0.97 0.18 0.26 0.34 (0.68)
------ ------ ------ ------ ------
Total from investment operations ........................................ 2.15 1.24 1.44 1.55 0.52
------ ------ ------ ------ ------
Less dividends and distributions to:
Common shareholders from net investment income .......................... (0.93) (0.93) (0.93) (0.93) (0.93)
Preferred shareholders from net investment income ....................... (0.28) (0.27) (0.29) (0.27) (0.18)
Common shareholders from net realized gain on investments ............... (0.02) -- -- (0.02) (0.16)
Preferred shareholders from net realized gain on investments ............ (0.01) -- -- (0.01) (0.03)
------ ------ ------ ------ ------
Total dividends and distributions ....................................... (1.24) (1.20) (1.22) (1.23) (1.30)
------ ------ ------ ------ ------
Net asset value, end of year .............................................. $15.38 $14.47 $14.43 $14.21 $13.89
====== ====== ====== ====== ======
Market value, end of year ................................................. $15.69 $14.38 $15.00 $14.50 $15.63
====== ====== ====== ====== ======
Total investment return based on:(1)
Market value ............................................................ 16.04% 2.01% 10.31% (0.71%) 4.28%
Net asset value ......................................................... 13.02% 6.90% 8.20% 9.72% 1.63%
Ratios and supplemental data:
Net assets applicable to capital shares, end of year (000 omitted) ...... $59,915 $57,544 $57,429 $56,881 $56,034
Ratio of expenses to average net assets(2/3) ............................ 0.77% 0.81% 0.82% 0.85% 0.78%
Ratio of expenses to average net assets applicable to common shares(3) .. 1.17% 1.24% 1.24% 1.33% 1.17%
Ratio of net investment income to average net assets(2) ................. 5.20% 4.78% 5.28% 5.66% 5.22%
Ratio of net investment income to average net assets applicable to
common shares(4) ....................................................... 6.01% 5.45% 6.04% 6.93% 6.68%
Portfolio turnover ...................................................... 0% 5% 7% 13% 11%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) ..................... $20,000 $20,000 $20,000 $20,000 $20,000
Net asset coverage per share of preferred shares, end of year ........... $149,788 $143,860 $143,573 $142,201 $140,086
Liquidation value per share of preferred shares(5) ...................... $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
- ---------------
(1) 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.
(2) 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.
(3) In the years ended March 31, 1996 and 1997, the expense ratio reflects the
effect of gross expenses attributable to earnings credits on uninvested cash
balances received by the Fund. Prior year expense ratios have not been
adjusted.
(4) 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.
(5) Excluding any accumulated but unpaid dividends.
(6) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
See accompanying notes
<PAGE>
Financial Highlights (Continued)
- -------------------------------------------------------------------------------
Selected data for each common share of the Fund outstanding throughout each year
was as follows:
<TABLE>
<CAPTION>
Minnesota Municipal Income Fund II, Inc.
--------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
3/31/98(6) 3/31/97 3/31/96 3/31/95 3/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $13.59 $13.48 $13.12 $12.73 $13.84
Income from investment operations:
Net investment income .................................... 1.13 1.13 1.10 1.11 0.98
Net realized and unrealized gain (loss) on investments.... 1.20 0.08 0.38 0.39 (0.96)
------ ------ ------ ------ ------
Total from investment operations ......................... 2.33 1.21 1.48 1.50 0.02
------ ------ ------ ------ ------
Less dividends and distributions to:
Common shareholders from net investment income ........... (0.82) (0.81) (0.80) (0.83) (0.76)
Preferred shareholders from net investment income ........ (0.30) (0.29) (0.32) (0.28) (0.18)
Common shareholders from net realized gain on investments. -- -- -- -- (0.02)
------ ------ ------ ------ ------
Total dividends and distributions ........................ (1.12) (1.10) (1.12) (1.11) (0.96)
------ ------ ------ ------ ------
Capital share transactions:
Capital charge with respect to issuance of shares ........ -- -- -- -- (0.17)
------ ------ ------ ------ ------
Net asset value, end of year ............................... $14.80 $13.59 $13.48 $13.12 $12.73
====== ====== ====== ====== ======
Market value, end of year .................................. $13.88 $12.63 $13.25 $12.38 $14.63
====== ====== ====== ====== ======
Total investment return based on:(1)
Market value ............................................. 16.56% 1.47% 14.16% (9.59%) 1.71%
Net asset value........................................... 15.51% 6.97% 8.88% 10.16% (2.93%)
Ratios and supplemental data:
Net assets applicable to capital shares, end of year
(000 omitted) ........................................... $167,333 $158,572 $157,755 $155,139 $152,326
Ratio of expenses to average net assets(2/3).............. 0.76% 0.74% 0.77% 0.77% 0.76%
Ratio of expenses to average net assets applicable to
common shares(3)......................................... 1.19% 1.19% 1.23% 1.28% 1.15%
Ratio of net investment income to average net assets(2)... 4.98% 5.15% 5.03% 5.39% 4.54%
Ratio of net investment income to average net assets
applicable to common shares.............................. 45.73% 6.15% 5.76% 6.69% 5.58%
Portfolio turnover ....................................... 4% 20% 11% 32% 27%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) ...... $60,000 $60,000 $60,000 $60,000 $60,000
Net asset coverage per share of preferred shares,
end of year ............................................. $139,444 $132,143 $131,462 $129,283 $126,938
Liquidation value per share of preferred shares(5)........ $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
- ---------------
(1) 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.
(2) 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.
(3) In the years ended March 31, 1996 and 1997, the expense ratio reflects the
effect of gross expenses attributable to earnings credits on uninvested cash
balances received by the Fund. Prior year expense ratios have not been
adjusted.
(4) 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.
(5) Excluding any accumulated but unpaid dividends.
(6) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
See accompanying notes
<PAGE>
Financial Highlights (Continued)
- -------------------------------------------------------------------------------
Selected data for each common share of the Fund outstanding throughout each
period was as follows:
<TABLE>
<CAPTION>
Minnesota Municipal Income Fund III, Inc.
--------------------------------------------------------------
Year Year Year Year
Ended Ended Ended Ended 10/29/93* to
3/31/98(6) 3/31/97 3/31/96 3/31/95 3/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $12.71 $12.54 $12.20 $11.86 $14.03
Income (loss) from investment operations:
Net investment income .................................... 1.05 1.08 1.05 1.06 0.32
Net realized and unrealized gain (loss) on investments.... 1.06 0.15 0.33 0.28 (1.88)
------ ------ ------ ------ ------
Total from investment operations............................ 2.11 1.23 1.38 1.34 (1.56)
------ ------ ------ ------ ------
Less dividends and distributions to:
Common shareholders from net investment income ........... (0.76) (0.75) (0.72) (0.73) (0.25)
Preferred shareholders from net investment income ........ (0.30) (0.31) (0.32) (0.28) (0.06)
------ ------ ------ ------ ------
Total dividends and distributions ........................ (1.06) (1.06) (1.04) (1.01) (0.31)
Capital share transactions:
Capital charge with respect to issuance of shares ....... -- -- -- 0.01 (0.30)
------ ------ ------ ------ ------
Net asset value, end of period ............................. $13.76 $12.71 $12.54 $12.20 $11.86
====== ====== ====== ====== ======
Market value, end of period ................................ $13.38 $12.25 $12.00 $11.25 $14.00
====== ====== ====== ====== ======
Total investment return based on:(1)
Market value ............................................. 15.80% 8.62% 13.51% (14.27%) 1.53%
Net asset value .......................................... 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)............................................ $40,283 $38,348 $38,046 $37,418 $36,785
Ratio of expenses to average net assets(2/3).............. 0.83% 0.81% 0.81% 0.82% 0.90%**
Ratio of expenses to average net assets applicable to
common shares(3)........................................ 1.34% 1.33% 1.33% 1.40% 1.30%**
Ratio of net investment income to average net assets(2)... 4.88% 5.17% 5.05% 5.37% 3.95%**
Ratio of net investment income to average net assets
applicable to common shares............................. 45.61% 6.05% 5.81% 6.79% 4.62%**
Portfolio turnover ....................................... 9% 39% 35% 47% 21%
Leverage analysis:
Value of preferred shares outstanding (000 omitted)....... $15,000 $15,000 $15,000 $15,000 $15,000
Net asset coverage per share of preferred shared,
end of period .......................................... $134,278 $127,826 $126,821 $124,728 $122,616
Liquidation value per share of preferred shares(5)........ $50,000 $50,000 $50,000 $50,000 $50,000
</TABLE>
- -------------
* Commencement of operations.
** Annualized.
(1) 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 period 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 periods 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 periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods 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 periods. The total investment returns
calculated based on market value and net asset value for a period of less
than one year have not been annualized.
(2) 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.
(3) In the years ended March 31, 1996 and 1997, the expense ratio reflects the
effect of gross expenses attributable to earnings credits on uninvested cash
balances received by the Fund. Prior period expense ratios have not been
adjusted.
(4) 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.
(5) Excluding any accumulated but unpaid dividends.
(6) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
See accompanying notes
<PAGE>
for tax-exempt income 27
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Selected data for each common share of the Fund outstanding throughout each year was as follows:
ARIZONA MUNICIPAL INCOME FUND, INC.
----------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
3/31/98(6) 3/31/97 3/31/96 3/31/95 3/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ...................................... $13.78 $13.74 $13.22 $12.70 $13.77
Income from investment operations:
Net investment income ................................................. 1.09 1.08 1.09 1.08 0.95
Net realized and unrealized gain (loss) on investments ................ 1.23 0.01 0.47 0.56 (0.79)
------ ------ ------ ------ ------
Total from investment operations ...................................... 2.32 1.09 1.56 1.64 0.16
------ ------ ------ ------ ------
Less dividends and distributions to:
Common shareholders from net investment income ........................ (0.77) (0.76) (0.73) (0.78) (0.75)
Preferred shareholders from net investment income ..................... (0.30) (0.29) (0.31) (0.28) (0.18)
Common shareholders from net realized gain on investments ............. -- -- -- (0.05) (0.09)
Preferred shareholders from net realized gain on investments .......... -- -- -- (0.01) (0.02)
------ ------ ------ ------ ------
Total dividends and distributions ..................................... (1.07) (1.05) (1.04) (1.12) (1.04)
------ ------ ------ ------ ------
Capital share transactions:
Capital charge with respect to issuance of shares ..................... -- -- -- -- (0.19)
------ ------ ------ ------ ------
Net asset value, end of year ............................................ $15.03 $13.78 $13.74 $13.22 $12.70
====== ====== ====== ====== ======
Market value, end of year ............................................... $14.63 $13.00 $12.75 $12.13 $13.88
====== ====== ====== ====== ======
Total investment return based on:(1)
Market value .......................................................... 18.79% 8.20% 11.52% (6.43%) (2.91%)
Net asset value ....................................................... 15.17% 5.94% 9.55% 11.29% (2.20%)
Ratios and supplemental data:
Net assets applicable to capital shares, end of year (000 omitted) .... $69,813 $66,102 $65,990 $64,438 $62,881
Ratio of expenses to average net assets(2/3). 0.80% .78% 0.78% 0.79% 0.82%
Ratio of expenses to average net assets applicable to common shares(3). 1.26% 1.25% 1.26% 1.32% 1.24%
Ratio of net investment income to average net assets(2) ............... 4.71% 4.85% 4.88% 5.19% 4.41%
Ratio of net investment income to average net assets applicable to
common shares(4) ..................................................... 45.34% 5.71% 5.57% 6.42% 5.45%
Portfolio turnover .................................................... 22% 31% 30% 18% 15%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) ................... $25,000 $25,000 $25,000 $25,000 $25,000
Net asset coverage per share of preferred shares, end of year .........$139,627 $132,205 $131,979 $128,877 $125,762
Liquidation value per share of preferred shares(5) .................... $50,000 $50,000 $50,000 $50,000 $50,000
_____________________
(1) 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 dayof 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.
(2) 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.
(3) In the years ended March 31, 1996 and 1997, the expense ratio reflects the effect of gross expenses attributable to earnings
credits on uninvested cash balances received by the Fund. Prior year expense ratios have not been adjusted.
(4) 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.
(5) Excluding any accumulated but unpaid dividends.
(6) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager.
See accompanying notes
</TABLE>
<PAGE>
28 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Selected data for each common share of the Fund outstanding throughout each year was as follows:
FLORIDA INSURED MUNICIPAL INCOME FUND
------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
3/31/98(6) 3/31/97 3/31/96 3/31/95 3/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ....................................... $13.67 $13.71 $13.17 $12.46 $13.73
Income (loss) from investment operations:
Net investment income ................................................... 1.09 1.08 1.06 1.07 0.96
Net realized and unrealized gain (loss) on investments .................. 1.60 (0.08) 0.51 0.69 (1.10)
------ ------ ------ ------ ------
Total from investment operations ........................................ 2.69 1.00 1.57 1.76 (0.14)
------ ------ ------ ------ ------
Less dividends and distributions to:
Common shareholders from net investment income .......................... (0.76) (0.75) (0.72) (0.77) (0.74)
Preferred shareholders from net investment income ....................... (0.30) (0.29) (0.31) (0.28) (0.19)
------ ------ ------ ------ ------
Total dividends and distributions ....................................... (1.06) (1.04) (1.03) (1.05) (0.93)
------ ------ ------ ------ ------
Capital share transactions:
Capital charge with respect to issuance of shares ....................... -- -- -- -- (0.20)
------ ------ ------ ------ ------
Net asset value, end of year ............................................. $15.30 $13.67 $13.71 $13.17 $12.46
====== ====== ====== ====== ======
Market value, end of year ................................................ $14.31 $12.50 $12.75 $12.25 $12.50
====== ====== ====== ====== ======
Total investment return based on:(1)
Market value ............................................................ 20.94% 3.94% 10.39% 4.69% (13.04%)
Net asset value ......................................................... 18.22% 5.23% 9.66% 12.56% (4.40%)
Ratios and supplemental data:
Net assets applicable to capital shares, end of year (000 omitted) ...... $57,071 $53,110 $53,207 $51,891 $50,189
Ratio of expenses to average net assets(2/3) ............................ 0.80% .78% 0.80% 0.81% 0.85%
Ratio of expenses to average net assets applicable to common shares(3) .. 1.25% 1.25% 1.27% 1.35% 1.28%
Ratio of net investment income to average net assets(2) ................. 4.73% 4.91% 4.82% 5.21% 4.49%
Ratio of net investment income to average net assets applicable to
common shares(4) ....................................................... 5.33% 5.74% 5.45% 6.37% 5.46%
Portfolio turnover ...................................................... 5% 68% 22% 10% 20%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) ..................... $20,000 $20,000 $20,000 $20,000 $20,000
Net asset coverage per share of preferred shares, end of year ........... $142,677 $132,775 $133,017 $129,728 $125,473
Liquidation value per share of preferred shares5 ........................ $50,000 $50,000 $50,000 $50,000 $50,000
_____________________
(1) 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.
(2) 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.
(3) In the years ended March 31, 1996 and 1997, the expense ratio reflects the effect of gross expenses attributable to earnings
credits on uninvested cash balances received by the Fund. Prior year expense ratios have not been adjusted.
(4) 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.
(5) Excluding any accumulated but unpaid dividends.
(6) Commencing May 1, 1997 Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager.
See accompanying notes
</TABLE>
<PAGE>
for tax-exempt income 29
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Selected data for each common share of the Fund outstanding throughout each period was as follows:
COLORADO INSURED MUNICIPAL INCOME FUND, INC.
-----------------------------------------------------
YEAR YEAR YEAR YEAR 7/29/93*
ENDED ENDED ENDED ENDED TO
3/31/98(6) 3/31/97 3/31/96 3/31/95 3/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................................... $13.58 $13.61 $13.19 $12.80 $14.10
Income from investment operations:
Net investment income .................................................... 1.07 1.05 1.03 1.02 0.59
Net realized and unrealized gain (loss) on investments ................... 1.30 (0.06) 0.41 0.44 (1.19)
------ ------ ------ ------ ------
Total from investment operations ......................................... 2.37 0.99 1.44 1.46 (0.60)
------ ------ ------ ------ ------
Less dividends and distributions to:
Common shareholders from net investment income ........................... (0.74) (0.73) (0.70) (0.76) (0.39)
Preferred shareholders from net investment income ........................ (0.29) (0.29) (0.32) (0.27) (0.11)
Common shareholders from net realized gain on security transactions ...... -- -- -- -- (0.03)
Preferred shareholders from net realized gain on security transactions .. -- -- -- -- (0.01)
------ ------ ------ ------ ------
Total dividends and distributions ......................................... (1.03) (1.02) (1.02) (1.07) (0.50)
------ ------ ------ ------ ------
Capital share transactions:
Capital charge with respect to issuance of shares ........................ -- -- -- -- (0.20)
------ ------ ------ ------ ------
Net asset value, end of period ............................................ $14.92 $13.58 $13.61 $13.19 $12.80
====== ====== ====== ====== ======
Market value, end of period ............................................... $14.00 $12.50 $12.63 $12.25 $14.50
====== ====== ====== ====== ======
Total investment return based on:(1)
Market value ............................................................. 18.09% 4.77% 8.99% (10.05%) 5.52%
Net asset value .......................................................... 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) ..... $112,187 $105,687 $105,843 $103,781 $101,923
Ratio of expenses to average net assets(2/3). ............................ 0.75% 0.77% 0.75% 0.76% 0.78%**
Ratio of expenses to average net assets applicable to commonshares(3) .... 1.18% 1.23% 1.21% 1.27% 1.13%**
Ratio of net investment income to average net assets(2) .................. 4.72% 4.76% 4.68% 4.88% 4.26%**
Ratio of net investment income to average net assets applicable to
common shares(4) ........................................................ 5.38% 5.51% 5.18% 5.88% 5.02%**
Portfolio turnover ...................................................... 39% 88% 39% 7% 3%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) ...................... $40,000 $40,000 $40,000 $40,000 $40,000
Net asset coverage per share of preferred shares, end of period .......... $140,234 $132,109 $132,304 $129,727 $127,404
Liquidation value per share of preferred shares(5) ....................... $50,000 $50,000 $50,000 $50,000 $50,000
_____________________
* Commencement of operations.
** Annualized.
(1) 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 period reported. Dividends and distributions, if any, are assumed for the purposes of this
calculation, to be reinvested. Generally, total investment return based on net asset value will be higher than total
investment return based on market value in periods 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 periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on market value in periods 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 periods. The total investment returns calculated based on market value and net asset value for a period of less
than one year have not been annualized.
(2) 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.
(3) In the years ended March 31, 1996 and 1997, the expense ratio reflects the effect of gross expenses attributable to earnings
credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted.
(4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided
by average net assets applicable to common stock.
(5) Excluding any accumulated but unpaid dividends.
(6) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager.
See accompanying notes
</TABLE>
<PAGE>
30 for tax-exempt income
THE VOYAGEUR FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
Voyageur Minnesota Municipal Income Fund, Inc. ("Minnesota Municipal Fund");
Voyageur Minnesota Municipal Income Fund II, Inc. ("Minnesota Municipal II
Fund"); Voyageur Minnesota Municipal Income Fund III, Inc. ("Minnesota Municipal
III Fund"); Voyageur Arizona Municipal Income Fund, Inc. ("Arizona Municipal
Income Fund"); Voyageur Florida Insured Municipal Income ("Florida Insured
Municipal 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 III 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.
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
Commencing May 1, 1997, and 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 daily net assets of each Fund, including assets attributable to any
preferred stock that may be outstanding.
Prior to May 1, 1997, the Funds had an Investment Advisory and Management
Agreement with Voyageur. Voyageur received a fee for its Investment Advisory and
Management services based upon the average daily net assets of the Funds,
including assets attributable to any preferred stock that was outstanding, at an
annual rate of 0.40% for each Fund.
At March 31, 1998 the Funds had Administrative Agreements with Mitchell Hutchins
Asset Management Inc. and Princeton Administrators, L.P. (Colorado Insured
Municipal Fund only) (the "Administrators"). The Administration Agreements
provide the Administrators with a monthly fee computed at an annual rate of .15%
of each Fund's average daily net assets, including assets attributable to any
preferred stock that may be outstanding. Certain Funds have minimum annual fees
payable to the Administrators. The Minnesota Municipal Fund paid the minimum fee
for the year ended March 31, 1998.
<PAGE>
On March 31, 1998, the Funds had payables to affiliates as follows:
MINNESOTA MINNESOTA MINNESOTA
MUNICIPAL MUNICIPAL II MUNICIPAL III
FUND FUND FUND
----------------------------------------------
Investment Management
fee payable to DMC ..... $20,326 $56,787 $13,683
ARIZONA FLORIDA COLORADO
MUNICIPAL INSURED INSURED
INCOME MUNICIPAL MUNICIPAL
FUND FUND FUND
----------------------------------------------
Investment Management
fee payable to DMC ..... $23,719 $19,377 $75,027
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 year ended March 31, 1998, the Funds made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
MINNESOTA MINNESOTA MINNESOTA
MUNICIPAL MUNICIPAL II MUNICIPAL III
FUND FUND FUND
----------------------------------------------
Purchases ............... $989,218 $6,958,264 $4,122,251
Sales ................... $240,000 $6,365,360 $3,397,319
ARIZONA FLORIDA COLORADO
MUNICIPAL INSURED INSURED
INCOME MUNICIPAL MUNICIPAL
FUND FUND FUND
----------------------------------------------
Purchases ............... $15,082,091 $3,075,319 $42,843,224
Sales ................... $15,235,898 $2,658,608 $42,253,580
<PAGE>
for tax-exempt income 31
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENTS (CONTINUED)
At March 31, 1998, the aggregate unrealized appreciation (depreciation) of
securities for federal income tax purposes for each Fund were as follows:
MINNESOTA MINNESOTA MINNESOTA
MUNICIPAL MUNICIPAL II MUNICIPAL III
FUND FUND FUND
----------------------------------------------
Aggregate
unrealized appreciation ... $4,512,685 $9,606,325 $2,700,330
Aggregate
unrealized depreciation ... -- -- --
---------- ---------- ----------
Net
unrealized appreciation ... $4,512,685 $9,606,325 $2,700,330
========== ========== ==========
ARIZONA FLORIDA COLORADO
MUNICIPAL INSURED INSURED
INCOME MUNICIPAL MUNICIPAL
FUND FUND FUND
----------------------------------------------
Aggregate
unrealized appreciation ... $4,252,222 $3,701,592 $4,841,704
Aggregate
unrealized depreciation ... 5,452 -- 7,016
---------- ---------- ----------
Net
unrealized appreciation ... $4,246,770 $3,701,592 $4,834,688
========== ========== ==========
For federal income tax purposes, as of March 31, 1998, the Funds had capital
loss carryforwards expiring in the following years:
<TABLE>
<CAPTION>
FUND 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>
On the statement of net assets, as a result of permanent book-to-tax
differences, reclassification adjustments have been made to decrease
distributions in excess of net investment income and decrease additional paid-in
capital by $23,028 for the Minnesota Municipal Fund.
5. CAPITAL STOCK
Pursuant to their articles of incorporation, Minnesota Municipal Fund, Minnesota
Municipal II Fund, Minnesota Municipal III Fund, Arizona Municipal Fund and
Colorado Insured Municipal Fund each have 200 million shares of $0.01 par value
common shares authorized. Florida Insured Municipal has been authorized to issue
an unlimited amount of $0.01 par value common shares.
For the years ended March 31, 1998 and March 31, 1997, the Funds did not have
any transactions in common shares.
<PAGE>
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 II Fund, Arizona Municipal Fund and
Florida Insured Municipal Fund issued 1,200, 500 and 400 preferred shares,
respectively. On December 10, 1993, Minnesota Municipal III Fund 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. Dividends rates (adjusted for any
capital gain distributions) ranged from 3.40% to 4.25% on Minnesota Municipal
Fund, from 3.45% to 4.30% on Minnesota Municipal II Fund, from 3.50% to 3.85% on
Minnesota Municipal III Fund, from 3.35% to 4.10% on Arizona Municipal Fund,
from 3.45% to 3.99% on Florida Insured Municipal Fund and from 3.43% to 4.25% on
Colorado Insured Municipal Fund during the year ended March 31, 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, 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.
<PAGE>
32 for tax-exempt income
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 its 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 (UNAUDITED)
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 issu e 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.
THE VOYAGEUR FUNDS
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
We have audited the accompanying statements of net assets of Voyageur Minnesota
Municipal Income Fund, Inc., Voyageur Minnesota Municipal Income Fund II, Inc.,
Voyageur Minnesota Municipal Income Fund III, Inc., Voyageur Arizona Municipal
Income Fund, Inc., Voyageur Florida Insured Municipal Income Fund, and Voyageur
Colorado Insured Municipal Income Fund, Inc. (the "Funds") as of March 31, 1998,
and the related statements of operations, the statements of changes in net
assets and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The statements of
changes in net assets for the year ended March 31, 1997 and the financial
highlights for the periods presented through March 31, 1997 were audited by
other auditors whose report thereon dated May 9, 1997 expressed an unqualified
opinion on those statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of March 31, 1998, by correspon dence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the 1998 financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
respective Funds at March 31, 1998, and the results of their operations, the
changes in their net assets and their financial highlights for the year then
ended, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
April 29, 1998
<PAGE>
THIS ANNUAL REPORT IS FOR THE INFORMATION OF SHAREHOLDERS OF VOYAGEUR
CLOSED-END MUNICIPAL BOND FUNDS.
It sets forth details about charges, expenses, investment objectives and
operating policies of each Fund. You should read it carefully before you
invest. The return and principal value of an investment in each Fund will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
BOARD OF DIRECTORS
WAYNE A. STORK
Chairman
Delaware Investments Family of Funds
Philadelphia, PA
JEFFREY J. NICK
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA
WALTER P. BABICH
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
ANTHONY D. KNERR
Consultant, Anthony Knerr & Associates
New York, NY
ANN R. LEVEN
Treasurer, National Gallery of Art
Washington, DC
W. THACHER LONGSTRETH
City Councilman
Philadelphia, PA
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
CHARLES E. PECK
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA
EXECUTIVE OFFICERS
DAVID K. DOWNES
Executive Vice President, Chief Financial Officer and
Chief Operating Officer
Delaware Investments Family of Funds
Philadelphia, PA
GEORGE M. CHAMBERLAIN, JR.
Senior Vice President, Secretary
and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
BRUCE D. BARTON
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
directors
& officers
INVESTMENT MANAGER
Delaware Management Company
Philadelphia, Pennsylvania
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England
PRINCIPAL OFFICE OF THE FUND
1818 Market Street
Philadelphia, PA 19103-3682
INDEPENDENT AUDITORS
Ernst & Young LLP
2001 Market Street
Philadelphia, PA
<PAGE>
REGISTRAR AND
STOCK TRANSFER AGENT
Norwest Bank Minnesota, NA
P.O. Box 64851
St. Paul, Minnesota 55164-0854
1.800.468.9716
FOR SECURITIES DEALERS
1.800.362.7500
FINANCIAL INSTITUTIONS
REPRESENTATIVES ONLY
1.800.659.2265
www.delawarefunds.com
The Delaware Investments family 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 1.800.523.4640. Read the prospectus
carefully before investing. 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.
NUMBER OF RECORDHOLDERS AS OF MARCH 31, 1998:
Minnesota Municipal Income Fund I 514
Minnesota Municipal Income Fund II 872
Minnesota Municipal Income Fund III 217
Arizona Municipal Income Fund 182
Florida Insured Municipal Income Fund 325
Colorado Insured Municipal Income Fund 283
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
Printed in the USA
on recycled paper
(674)
VOY-CEAR[3/98]TKO5/98
