<PAGE>
DELAWARE
INVESTMENTS
===========
Voyageur Closed-End Municipal Bond Funds:
Minnesota Municipal Income Funds I, II and III
Arizona Municipal Income Fund
Florida Insured Municipal Income Fund
Colorado Insured Municipal Income Fund
Tax-Exempt Income
(Tax-Exempt Income Artwork)
2000 ANNUAL REPORT
<PAGE>
A TRADITION OF SOUND INVESTING SINCE 1929
TABLE OF CONTENTS
Letter to Shareholders 1
Portfolio Management
Review 3
Financial Statements
Statements of Net Assets 11
Statements of Operations 24
Statements of Changes in
Net Assets 25
Financial Highlights 26
Notes to Financial
Statements 32
Report of Independent
Auditors 35
Investment Objectives and Strategies
Each of the six Funds in this report is a closed-end management investment
company whose shares trade on the American Stock Exchange (ASE) in New York.
Each Fund seeks to provide current income exempt from both regular 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
tangible 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 (Delaware Management) has been the Funds' investment
adviser since May 1, 1997. 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 $141 billion in assets
under management as of March 31, 2000.
As of March 31, 2000, Delaware Management manages approximately $46 billion for
mutual fund shareholders and institutional investors such as pension plans and
foundations. In addition to the six closed-end funds in this report, Delaware
Management also 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-ended 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.
<PAGE>
Dear Shareholder
May 12, 2000
Recap of Events - Economic activity in the United States continues to move along
ahead of expectations. An improving global economic outlook further enhances the
prospect of continued strong economic growth in the U.S. During the last 12
months, U.S. interest rates, as measured by the short and intermediate Treasury
bond market, rose and Treasury bond prices fell significantly. Interest rates
rose for two reasons. First, there was a perception that inflation would
increase. Second, the Federal Reserve was actively raising short-term interest
rates in an effort to thwart inflation. Each time Federal Reserve Chairman Alan
Greenspan addressed the media and spoke of a more restrictive monetary policy,
it tended to rattle the bond markets further.
The booming stock market created a strong wealth effect (the tendency to spend
more when your stocks are rising) during this period. Alan Greenspan commented
recently that the wealth effect has mitigated the effects of the interest rate
hikes the Fed has initiated. While inflation has remained low, concerns persist
about the long term. The Fed's primary goal is to keep inflation under control.
The U.S. economy, as measured by the Gross domestic product (GDP), grew at an
annual rate of 5.4% in the first quarter 2000 (Source: Bloomberg). We believe
the Fed will continue to increase short-term interest rates until the economy
slows to an annual growth rate of between 3.0% and 3.5%, diminishing the risk of
inflation.
Municipal bonds weathered the turbulence in the fixed-income arena somewhat
better than U.S. Treasury securities during the past 12 months. Municipal bond
yields steadily increased throughout this time period, but municipal bond prices
fluctuated less than U.S. Treasury securities (Source: Bloomberg).
The bond market improved substantially in March of 2000. Bonds rallied strongly,
pushing prices higher and yields lower. The rally was most pronounced in the
Treasury market, though municipal bonds experienced an improvement as well. The
weakness and extreme volatility in the Nasdaq Composite Index (the index that
includes many younger technology and small capitalization companies) and
technology stocks prompted some investors to seek a safe haven in Treasuries and
municipal bonds.
Despite the rally in March, municipal bonds in general, like most fixed-income
securities, lost value for the 12 months ended March 31, 2000. Our Closed-End
Municipal Bond Funds were no exception - all six Funds were down for the last 12
months. Please see the Portfolio Management Review for a discussion of each
Fund's performance.
1
<PAGE>
"We believe fixed-income investments play an important role in well-balanced
portfolios, even as stocks continue to capture more attention and a larger share
of investors' assets."
(Tax-Exempt Income Artwork)
Market Outlook - We believe fixed-income investments play an important role in
well-balanced portfolios, even as stocks continue to capture more attention and
a larger share of investors' assets. Looking forward, if the Fed succeeds in
slowing economic growth to what it believes is a sustainable pace, we believe
income from bonds will begin to look more attractive to investors. In our
opinion, tax-exempt municipal bonds, which your Funds hold, continue to offer
investors a range of benefits, including:
o Attractive current income that is free from federal, and in some cases,
state and local taxes.*
o A high likelihood that interest and principal payments will be made as
scheduled.
We realize that the past 12 months have been a difficult period for fixed-income
investors. We applaud you for remaining committed to your investment plan. Thank
you for your continued confidence in Delaware Investments.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
------------------------------------ --------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Family of Funds Delaware Investments Family of Funds
Total Returns
For One-Year Period Ended
March 31, 2000
<TABLE>
<CAPTION>
Total Return Total Return Premium (+)/
at At Discount (-)
Net Asset Market As of ASE
Value Value March, 31, 2000 Symbol
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Minnesota Municipal Income Fund I -2.56% -12.39% -3.54% VMN
-------------------------------------------------------------------------------------------------------------
Minnesota Municipal Income Fund II -3.43% -12.28% -8.48% VMM
-------------------------------------------------------------------------------------------------------------
Minnesota Municipal Income Fund III -4.57% -11.70% -6.45% VYM
-------------------------------------------------------------------------------------------------------------
Lipper Minnesota Closed-End Municipal
Debt Fund Average (6 funds) -2.44%
-------------------------------------------------------------------------------------------------------------
Arizona Municipal Income Fund -3.10% -11.65% -9.82% VAZ
-------------------------------------------------------------------------------------------------------------
Colorado Insured Municipal
Income Fund -3.62% -11.05% -9.43% VCF
-------------------------------------------------------------------------------------------------------------
Lipper Other States Closed-End Municipal
Debt Fund Average (19 funds) -4.74%
-------------------------------------------------------------------------------------------------------------
Florida Insured Municipal Income Fund -3.01% -15.57% -18.06% VFL
-------------------------------------------------------------------------------------------------------------
Lipper Florida Closed-End Municipal
Debt Fund Average (13 funds) -4.32%
-------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index -0.25%
Lehman Brothers Insured Municipal
Bond Index -0.66%
-------------------------------------------------------------------------------------------------------------
All performance shown above assumes reinvestment of distributions. The Lipper categories represent the
average returns of municipal bond funds with similar investment objectives tracked by Lipper Analytical.
Source: Lipper Analytical Services, Inc. The unmanaged Lehman Brothers Indexes are composed of bonds with a
variety of quality ratings from many states. You cannot invest directly in an index. Past performance does
not guarantee future results.
-------------------------------------------------------------------------------------------------------------
* A portion of the income from tax-exempt funds may be subject to the alternative minimum tax.
</TABLE>
2
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
Elizabeth H. Howell
Senior Portfolio Manager
Minnesota Municipal Income Funds I, II, III
Andrew M. McCullagh, Jr.
Senior Portfolio Manager
Arizona Municipal Income Fund
Colorado Insured Municipal
Income Fund
Patrick P. Coyne and
Mitchell L. Conery
Senior Portfolio Managers
Florida Insured Municipal
Income Fund
May 12, 2000
Overview
Over the last 12 months, we have witnessed a combination of market events that
have pushed municipal bond yields higher and prices lower. Concerns related to
year 2000 computer issues helped to reduce the amount of municipal bonds being
issued toward the end of 1999. Most municipalities issued bonds earlier in the
year and sat out the end of the year. In addition, investors' interest in
municipal bonds was minimal compared to their intense attention to the equity
markets.
In spite of the reduced supply of new bonds at year-end, the total supply of
municipal bonds was ample and that gave us the opportunity to select bonds for
our funds that have solid credit ratings and the potential for future price
appreciation. Based on value measures, the relationship of municipal bonds to
Treasury bonds vacillated throughout the year. In our view, municipal bonds
offered better relative value for much of the time.
Portfolio Highlights
Minnesota Municipal Income Funds I, II and III performed less favorably than
both the unmanaged Lehman Brothers Municipal Bond Index and the average return
of funds in the Lipper Minnesota Closed-End Municipal Fund Average.
During the year, we set out to improve the call protection of the portfolios,
which protects us against bonds being redeemed early by their issuers. We
believe the Funds are well positioned to benefit should long-term interest rates
decline. Interest rates for longer term Treasury bonds, which are determined by
market demand rather than the Fed, fell during the first quarter of 2000. We
expect to see a continuation of this trend, as the Fed succeeds in slowing the
U.S. economic growth rate. We believe such an environment would be very
favorable for bond investors.
We believe the bonds that we selected have the potential to improve total return
and provide a competitive income stream. The majority of the Funds' assets were
invested in high-quality healthcare, housing and power authority issues. Within
these categories, we focused on bonds with strong credit ratings that were
selling for less than their face value.
3
<PAGE>
As of March 31, a significant portion of each Fund's holdings were invested in
what are called pre-refunded/escrowed to maturity bonds (27% of Minnesota
Municipal Income Fund I; 30% of Minnesota Municipal Income Fund II; 24% of
Minnesota Municipal Income Fund III). Issuers often pre-refund their bonds when
interest rates are low in order to reduce their interest costs. Pre-refunded
bonds help the Fund because:
o The credit quality of the bonds typically increases because of the high
quality of the escrow account.
o The price usually increases because the bond is now backed by U.S.
Treasuries and will be retired before its stated maturity date.
o In general, prices for these bonds are less sensitive to interest rate
fluctuations because of their shorter duration.
In most cases, once a bond is pre-refunded we continue to hold it. This normally
allows the Fund to collect an attractive level of current income and benefit
from better protection of principal. Pre-refunded bonds performed especially
well in the rising interest rate environment that we've experienced over the
last six months.
Investor concerns about bond returns have kept demand for bonds low for most of
our fiscal period. In addition, the extraordinary returns available in the
equity markets continue to draw investors' attention, diverting investment
dollars from bond investors. In this environment, all three Minnesota funds
traded at a discount to net asset value as of March 31, 2000 - Fund I at a 3.54%
discount, Fund II at a 8.48% discount, and Fund III at a 6.45% discount.
Our credit outlook for Minnesota's municipal bonds remains positive. The
Minnesota economy continues to steam ahead and is one of the strongest and most
diverse in the nation. Minnesota has maintained growth in many traditional
sectors and is experiencing strong growth in several emerging industries. For
example, Minnesota's Medical Alley is the home to many thriving medical
technology companies, including 3M, Medtronic, St. Jude, Guidant/CPI, and SciMed
Life. The municipal bonds in our three Funds continue to look financially sound
and we believe will continue to be able to pay their interest as a result of the
state's economic strength.
Going forward, we continue to manage the Minnesota Municipal Income Funds for
the long term. We remain committed to purchasing high quality bonds and striving
to achieve strong long-term total returns.
4
<PAGE>
MINNESOTA MUNICIPAL INCOME FUNDS I, II, III
-------------------------------------------
FUND BASICS
-----------
Fund Objectives
The Funds seek to provide current income exempt from both regular federal income
tax and Minnesota state personal income tax, consistent with the preservation of
capital.
Total Fund Assets
Fund I $56.49 million
Fund II $158.57 million
Fund III $38.07 million
Number of Holdings
Fund I 42
Fund II 69
Fund III 29
Fund Start Date
Fund I: May 1, 1992
Fund II: February 26, 1993
Fund III: October 29, 1993
Your Fund Manager
Elizabeth H. Howell joined Delaware Investments via its acquisition of Voyageur
Fund Managers in 1997. She previously held management positions at Windsor
Financial Group, Loomis Sayles and Eaton Vance Management. She holds a
bachelor's degree from Skidmore College, an MBA from Babson College and is a
member of the Twin Cities Securities Analysts Society.
Bond Quality and Portfolio Highlights
March 31, 2000 Fund I Fund II Fund III
-------------------------------------------------------------------------------
AAA 58.17% 48.39% 58.75%
AA 9.88% 19.18% 5.80%
A 14.24% 17.20% 21.39%
BBB 3.08% 4.31% 5.39%
Unrated 14.63% 10.92% 8.67%
-------------------------------------------------------------------------------
Average Quality AA AA AA
Average Effective Maturity 14.61% 19.92 years 22.99 years
Average Effective Duration 10.02% 12.32 years 14.73 years
Current Yield at Market Price 9.57% 9.69% 9.88%
Amount of Leveraging (Millions) $20 million $60 million $15 million
-------------------------------------------------------------------------------
Approximately 18.93%, 19.75% and 10.74% of the income generated by Minnesota
Municipal Income Funds - I, II and III respectively, for the 12 months ended
March 31, 2000, was subject to the federal alternative minimum tax.
Asset Mix
March 31, 2000 Fund I Fund II Fund III
-------------------------------------------------------------------------------
Housing 20.95% 21.17% 14.43%
-------------------------------------------------------------------------------
Pre-Refunded
Bonds/Escrowed to Maturity 26.85% 30.15% 24.17%
-------------------------------------------------------------------------------
Power Authority 16.60% 10.40% 8.51%
-------------------------------------------------------------------------------
Hospitals 15.84% 14.27% 20.30%
-------------------------------------------------------------------------------
General Obligation 5.60% 4.05% 1.84%
-------------------------------------------------------------------------------
Higher Education 7.38% 9.15% 6.12%
-------------------------------------------------------------------------------
Water & Sewer 5.81% 2.22% 10.81%
-------------------------------------------------------------------------------
Transportation - 3.60% 4.90%
-------------------------------------------------------------------------------
Pollution Control - 2.87% 2.39%
-------------------------------------------------------------------------------
City Agency - 0.22% 2.30%
-------------------------------------------------------------------------------
Continuing Care/Retirement - - 2.71%
-------------------------------------------------------------------------------
Other Assets 0.97% 1.90% 1.52%
-------------------------------------------------------------------------------
5
<PAGE>
Arizona Municipal Income Fund
Asset Mix as of March 31, 2000
Pre-Refunded Bonds/Escrowed to Maturity 6.01%
Territorial 4.53%
Leases/Certificates of Participation 3.66%
Highway 3.58%
Power Authority 2.49%
Industrial Development 2.04%
Higher Education 1.56%
Other Assets 1.34%
Housing 24.30%
General Obligation 13.69%
[GRAPHIC OMITTED]
Hospitals 9.86%
Miscellaneous 9.58%
Water & Sewer 8.93%
Transportation 8.43%
FUND BASICS
-----------
Fund Objectives
The Fund seeks to provide current income exempt from both regular federal income
tax and from Arizona state personal income tax, consistent with the preservation
of capital.
Total Fund Assets
$66.76 million
Number of Holdings
43
Fund Start Date
February 26, 1993
Your Fund Manager
Andrew M. McCullagh earned a bachelor of science degree at Washington College
and a graduate certificate in public finance from the University of Michigan. He
joined Delaware Investments via its acquisition of Voyageur Fund Managers in
1997. Previously he was the founder and executive vice president of the Colorado
Double Tax-Exempt Fund.
<PAGE>
Arizona Municipal Income Fund
The Arizona State economy continued to grow throughout the last 12 months.
Arizona is projected to remain the second fastest growing state in the nation
through 2003. The state boasts a diverse and expanding economy with rapid
population and employment growth, a strong credit rating and moderately low debt
(Source: Standard & Poor's).
The job growth rate in Arizona was the highest in the nation as of February,
2000 (Source: Standard & Poor's). This economic expansion, along with an
increasing need for schools, roads and housing, sets an attractive stage for
Arizona municipal bond investors throughout the year 2000.
Throughout the first half of fiscal 2000, we lengthened Arizona Municipal Income
Fund's duration. Duration is a common measure of a bond or bond fund's
sensitivity to interest rates. The longer the duration, the more the bond's
price will change for a given increase or decrease in interest rates. Our goal
was to increase the Fund's income potential to the greatest extent consistent
with preservation of capital. Funds with a longer average duration, in our
opinion, should perform well over the coming year. Even though we may experience
short-term interest rate increases in the next six months, we expect overall
long-term interest rates, which are determined by market demand and not the
Federal Reserve, to stabilize or decline as compared to the last few months,
when interest rates on long-term 30-year U.S. Treasury bonds reached a high of
6.75% on January 18, 2000.
Arizona has traditionally had scarce bond issuance compared to other states. We
expect to see even fewer new bond issues in the coming months. As a result, we
have had a very limited universe from which to choose. Most of the portfolio is
made up of securities issued by two counties: Pima and Maricopa. The municipal
bonds in our portfolio continue to look financially sound and we believe they
will continue to be able to pay their interest as a result of the state's
economic strength. Despite the strength of our portfolio, demand for tax-exempt
bonds in Arizona remains low, depressing our share price. In this environment,
Arizona Municipal Income Fund returned a disappointing -3.10% at net asset value
for the 12-month period ended March 31, 2000.
Portfolio Characteristics
As of March 31, 2000
Current Yield at Market Price 9.22%
--------------------------------------------------------------------------------
Average Effective Duration 11.97 years
--------------------------------------------------------------------------------
Average Effective Maturity 19.96 years
--------------------------------------------------------------------------------
Approximately 16.19% of the income generated by Arizona Municipal Income Fund
for the 12 months ended March 31, 2000 was subject to the federal alternative
minimum tax.
6
<PAGE>
FUND BASICS
-----------
Fund Objective
The Fund seeks to provide current income exempt from both regular federal income
tax consistent with the preservation of capital. The Fund will also seek to
maintain its portfolio so that the Fund's shares will be exempt from the Florida
intangible personal property tax.
Total Fund Assets
$54.73 million
Number of Holdings
34
Fund Start Date
February 26, 1993
Your Fund Managers
Patrick P. Coyne received a bachelor's degree from Harvard University and an MBA
in Finance from the University of Pennsylvania's Wharton School. He began his
career with Kidder, Peabody & Co., where he managed the firm's trading desk for
four years. He joined Delaware Investments' fixed-income department in 1989.
Mitchell L. Conery received a bachelor's degree from Boston University and an
MBA in Finance from the State University of New York in Albany. Prior to joining
Delaware Investments in 1997, he served as a Municipal Bond Investment Officer
with the Travelers Group. Before that, he held positions at CS First Boston
Corporation, MBIA Corporation, Thomson McKinnon Securities, Ovest Financial
Services, and Merrill Lynch.
Florida Insured Municipal Income Fund had a total return of -3.01% at net asset
value (capital change with reinvested dividends) for the 12-month period ended
March 31, 2000. During this difficult period, we succeeded in preserving capital
to a greater degree than the Fund's peer group, represented by the Lipper
Florida Closed-End Municipal Debt Fund Average, which had a -4.32% average
return for the same 12-month period. The Fund, however, did not keep pace with
its benchmark, the Lehman Brothers Insured Municipal Bond Index, which returned
-0.66%.
Over the last 12 months, Florida Insured Municipal Income Fund's average
duration increased from 5.9 years to 12.2 years. Duration is a common measure of
a bond or bond fund's sensitivity to interest rates. The longer the duration,
the more the bond's price will change for a given increase or decrease in
interest rates. Duration increased for two reasons: We added more discount bonds
to the portfolio in order to preserve income in a rising interest rate
environment. The increased duration was also a function of the higher interest
rates. In the lower interest rate environment of 1999, most of the securities in
the Fund were priced as premium bonds with shorter duration. As interest rates
rose throughout the year, prices of these securities declined and the bonds were
priced at their face value or below. Discount bonds have longer durations than
premium bonds because they have longer effective maturities and are less likely
to be retired before their stated maturity.
As mandated by the Fund's investment policies, Florida Insured Municipal Income
Fund continues to invest exclusively in insured municipal bonds rated AAA by
Moody's or Standard & Poor's, the highest credit rating available.
As of December 31, 1999, approximately 54% of all new municipal bonds issued in
Florida were insured, more than in most states (Source: The Bond Buyer). This
provides us with a large pool of securities from which to select your Fund's
issues. Demand for insured municipal bonds, which guarantee the payment of
principal and interest, remained strong in Florida over the past 12 months.
We also continue to leverage this Fund. Although leveraging exposes the Fund to
a higher degree of interest rate risk, it also increases the Fund's income
potential when interest rates remain relatively stable. We expect interest rates
to increase only slightly over the coming months. This trend should, in our
opinion, create a positive scenario for the Fund in the coming months.
7
<PAGE>
Florida Insured Municipal
Income Fund
Asset Mix
March 31, 2000
Higher Education 5.00%
Airports 4.71%
General Obligations 3.40%
Power Authority 2.30%
Other Assets 1.79%
Pre-Refunded Bonds/
Escrowed to Maturity 21.92%
[GRAPHIC OMITTED]
Other Revenue 19.27%
Housing 11.70%
Hospitals 11.04%
School District 10.61%
Water & Sewer 8.26%
During the year, we increased our holdings in higher coupon bonds and reduced
our exposure to bonds with 5.25% to 5.5% coupons. Holding bonds with a higher
coupon increases total income and reduces price sensitivity. We also purchased
bonds issued by the Florida Board of Education, a Florida general obligation
bond, increasing the Fund's holdings of general obligation issues to 3.40%.
We continue to hold a large portion of the Fund's assets in pre-refunded bonds.
Pre-refunded bonds, which are issued by municipalities to refinance existing
debt at lower interest rates, are generally rated AAA and are backed by U.S.
government bonds held in escrow. We held onto these bonds because they continue
to generate high levels of income for the Fund. As they approach their maturity
date, we will sell them and seek to replace them with comparable yielding bonds.
As of March 31, 2000, pre-refunded bonds accounted for 21.9% of net assets.
Portfolio Characteristics
As of March 31, 2000
Current Yield at Market Price 8.87%
--------------------------------------------------------------------------------
Average Effective Duration 12.20 years
--------------------------------------------------------------------------------
Average Effective Maturity 19.09 years
--------------------------------------------------------------------------------
Approximately 16.58% of the income generated by Florida Insured Municipal Income
Fund for the 12 months ended March 31, 2000 was subject to the federal
alternative minimum tax.
8
<PAGE>
Colorado Insured Municipal
Income Fund
Asset Mix
March 31, 2000
Leases/Certificates of Participation 10.43%
Water & Sewer 4.73%
Pre-Refunded Bonds/
Escrowed to Maturity 1.89%
Utility 1.82%
Pollution 1.42%
Other Assets 1.36%
Transportation 23.21%
[GRAPHIC OMITTED]
Higher Education 17.45%
General Obligation 16.28%
Hospitals 10.90%
Housing 10.51%
FUND BASICS
-----------
Fund Objectives
The Fund seeks to provide current income exempt from both regular federal income
tax and from Colorado state income tax, consistent with the preservation of
capital.
Total Fund Assets
$107.09 million
Number of Holdings
43
Fund Start Date
July 29, 1993
Your Fund Manager
Andrew M. McCullagh
<PAGE>
Colorado Insured Municipal Income Fund
Colorado's robust economy helped fuel a growth rate that was twice the national
rate. The third fastest growing state in the nation, Colorado exhibits strong
personal income growth, large job gains and healthy residential construction
(Source: Colorado Economic Chronicle).
Hospital revenue bonds have been a strong focus for this Fund over the past
few years. Historically, hospital and other medical bonds tend to perform well
during a healthy economy. Recently, however, this has not been the case. As the
U.S. government cuts funding for medical programs, hospital revenues have begun
to decline. For this reason, over the past few months we have reduced our
exposure to these securities and increased the Fund's holdings of transportation
revenue bonds.
We restructured the portfolio by consolidating our positions of certain holdings
and by reducing our holdings of bonds that were likely to be called in the near
future. We replaced those bonds with others that had 10-year call protection,
meaning the issuer cannot redeem them for 10 years.
Base on net asset value, Colorado Insured Municipal Income Fund was able to
preserve capital to a greater extent than its peers in the Lipper Other States
Closed-End Municipal Debt Fund Average for the 12-month period ended March 31,
2000.
Consistent with its investment strategy, the Fund invests exclusively in
Colorado insured municipal bonds rated AAA by Moody's or Standard & Poor's, the
highest credit quality available. As always, we strive to seek a high level of
current income free of federal and state income taxes for residents of Colorado.
When selecting new securities, we utilize the following strategies for the Fund:
o A bottom-up, research-intensive strategy - We start by evaluating specific
bonds rather than focusing on bond sectors, and
o A value-oriented focus - We strive to select specific bonds that are selling
below fair market value.
Portfolio Characteristics
As of March 31, 2000
Current Yield at Market Price 9.04%
--------------------------------------------------------------------------------
Average Effective Duration 15.11 years
--------------------------------------------------------------------------------
Average Effective Maturity 25.19 years
--------------------------------------------------------------------------------
None of the income generated by Colorado Insured Municipal Income Fund for the
12 months ended March 31, 2000 was subject to the federal alternative minimum
tax.
9
<PAGE>
"REGARDLESS OF MARKET CONDITIONS, MUNICIPAL BOND FUNDS HAVE THE POTENTIAL TO
OFFER VALUABLE ASSET ALLOCATION BENEFITS WITHOUT ADDING TO
YOUR TAXABLE INVESTMENT INCOME."
Outlook
The U.S. seems to be the engine of growth for the entire world at this time. We
believe strong forward momentum for the U.S. economy is likely to result in
solid growth for the remainder of this year. We don't think this will create an
inflationary environment if labor productivity can maintain respectable gains.
The Federal Reserve has been on a path of increasing short-term interest rates.
There have been five one-quarter point increases in short-term interest rates
since June 1999. Clearly, the Federal Reserve's goal is to slow the pace of the
U.S. economic climate to what it believes is a non-inflationary rate of growth.
We have seen some slowdown in the economy and the equity markets, as evidenced
by a decline in the Dow Jones Industrial Average, which is down -0.44% since
June, 1999 when the Fed began raising interest rates. If equity markets remain
subdued we think longer term bonds--including municipal bonds--could begin to
attract investors' attention once again and potentially increase in price.
Regardless of market conditions, municipal bond funds have the potential to
offer valuable asset allocation benefits without adding to your taxable
investment income. In our view, investors seeking to diversify their portfolios
will continue to find attractive opportunities in municipal bonds and municipal
bond funds in the years to come.
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.
10
<PAGE>
Statements of Net Assets
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
----------------------------------------------
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 99.03%
General Obligation Bonds - 5.60%
Minneapolis Refunding (Laurel Village)
6.00% 3/1/16 .................................... $1,600,000 $1,621,648
Minneapolis St. Paul Metro Airport
Commission 6.60% 1/1/11 (AMT) ................... 1,500,000 1,541,355
----------
3,163,003
----------
Higher Education Revenue Bonds - 7.38%
Minnesota Higher Education Facility
(St.Thomas University) Series 3-C
6.25% 9/1/16 .................................... 1,000,000 1,010,080
Minnesota State University Board
(State University System) Series A
6.05% 6/30/18 ................................... 250,000 251,318
Northfield, Minnesota (St. Olaf College)
6.30% 10/1/12 ................................... 1,075,000 1,120,053
6.40% 10/1/21 ................................... 1,750,000 1,788,885
----------
4,170,336
----------
Hospital Revenue Bonds- 15.84%
Bloomington Health Care Facilities
(Masonic Home Care Center)
5.875% 7/1/22 ................................... 1,000,000 1,000,450
Duluth Economic Development Authority
Health Care (Benedictine Health System
St. Mary's Hospital) Series 1993-C
6.00% 2/15/20 (Connie Lee) ...................... 1,000,000 1,006,600
Duluth Economic Development Authority
Health Care (St. Luke's Hospital)
Series 1992-B
6.40% 5/1/18 (Connie Lee) ....................... 1,000,000 1,029,450
Minneapolis Health Care Facility
(Fairview Hospital) Series 1993-A
5.25% 11/15/19 (MBIA) ........................... 1,500,000 1,407,345
Minneapolis Hospital System (Fairview
Hospital) Series 1991-A
6.50% 1/1/11 (MBIA) ............................. 2,210,000 2,311,329
St. Cloud Hospital Facilities Revenue
for St. Cloud Hospital
5.30% 10/1/20 (AMBAC) ........................... 1,500,000 1,409,040
St. Paul Housing & Redevelopment
Authority Health Care Facility
(Regions Hospital Project)
5.30% 5/15/28 ................................... 1,000,000 783,820
----------
8,948,034
----------
Housing Revenue Bonds - 20.95%
Brooklyn Center Multifamily Housing
(Four Courts Apartments)
7.50% 6/1/25 (AMT) .............................. 1,800,000 1,761,912
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Minnesota Housing Finance Agency Single
Family Mortgage Series 1992-G
7.45% 7/1/22 (AMT) (FHA) ....................... $ 480,000 $ 493,483
Minnetonka Housing Facilities
(Beacon Hill Project) 7.70% 6/1/25 ............. 2,725,000 2,744,402
New Brighton Multifamily Mortgage
(Polynesian Village Apartments)
Series 1995-A 7.60% 4/1/25 (AMT) ............... 1,400,000 1,418,844
St. Anthony Multifamily Housing
Development (Autumn Woods Project)
6.875% 7/1/22 (Asset Guaranty) ................. 2,265,000 2,347,333
St. Paul Housing & Redevelopment
Authority Multifamily Housing
(Pointe of St. Paul Project)
Series 1992 6.60% 10/1/12 (FNMA) ............... 2,950,000 3,068,000
----------
11,833,974
----------
Power Authority Revenue Bonds - 16.60%
Bass Brook, Minnesota Power & Light
6.00% 7/1/22 ................................... 2,575,000 2,456,344
Northern Minnesota Municipal Power
Agency Electric System
Series A 5.00% 1/1/21 .......................... 1,500,000 1,339,560
Series B 5.50% 1/1/18 (AMBAC) .................. 1,250,000 1,226,300
Puerto Rico Electric Power Authority
Series EE 4.75% 7/1/24 ......................... 1,100,000 940,830
Southern Minnesota Municipal Power Agency
5.00% 1/1/16 (FGIC) ............................ 580,000 534,731
5.50% 1/1/15 (AMBAC) ........................... 610,000 609,945
Western Minnesota Municipal Power
Agency Series A 5.50% 1/1/15 (MBIA) ............ 2,275,000 2,270,245
----------
9,377,955
----------
*Pre-Refunded Bonds / Escrowed to Maturity - 26.85%
Dakota & Washington Counties Housing
& Redevelopment Authority Single
Family Mortgage Revenue
8.375% 9/1/21 (Escrowed to
Maturity) (AMT) (GNMA) ......................... 2,555,000 3,337,724
Duluth Economic Development Authority
Health Care (Duluth Clinic) Series 1992
6.30% 11/1/22-02 (AMBAC) ....................... 1,270,000 1,340,231
6.30% 11/1/22-04 (AMBAC) ....................... 730,000 772,909
Edina Recreational Facilities Series 1992-A
6.00% 1/1/09-02 ................................ 305,000 310,347
6.00% 1/1/10-02 ................................ 320,000 325,610
Minneapolis & St. Paul Housing &
Redevelopment Authority Health Care
6.75% 8/15/14 .................................. 500,000 514,410
11
<PAGE>
Statements of Net Assets (continued)
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded Bonds / Escrowed to Maturity (continued)
Minnesota Higher Education Revenue
Series 3-J (Macalester College)
6.40% 3/1/22-02 ................................. $1,000,000 $1,029,120
Minnesota Public Facilities Authority
(Water Pollution Control) Series 1992
6.50% 3/1/14-02 ................................. 1,500,000 1,576,605
Puerto Rico Commonwealth
6.00% 7/1/26-07 ................................. 2,000,000 2,171,540
St. Cloud Hospital
6.75% 7/1/15-01 (AMBAC) ......................... 1,000,000 1,045,650
St. Francis Independent School District #15
6.30% 2/1/11-06 (FSA) ........................... 1,250,000 1,312,438
Southern Minnesota Municipal Power Agency
5.50% 1/1/15 (AMBAC)
(Escrowed to Maturity) .......................... 390,000 395,966
5.75% 1/1/11 (FGIC)
(Escrowed to Maturity) .......................... 1,000,000 1,031,640
----------
15,164,190
----------
Water & Sewer Revenue Bonds - 5.81%
Anoka County Solid Waste Disposal
National Rural Co-op Utility
6.95% 12/1/08 (AMT) ............................. 1,000,000 1,023,140
**Minnesota Public Facilities Authority Water
Pollution Control Revenue, Inverse Floaters
5.01% 3/1/16 .................................... 1,000,000 792,020
5.16% 3/1/17 .................................... 1,855,000 1,469,865
----------
3,285,025
----------
Total Municipal Bonds
(cost $54,485,277) .............................. 55,942,517
----------
<PAGE>
Market
Value
--------------------------------------------------------------------------------
Total Market Value of Securities - 99.03%
(cost $54,485,277) .............................. $55,942,517
Receivables and Other Assets
Net of Liabilities - 0.97% ...................... 545,778
-----------
Total Net Assets - 100.00% ......................... 56,488,295
Liquidation Value of Preferred Stock ............... (20,000,000)
-----------
Net Assets Applicable to 2,594,700
Common Shares ($0.01 Par Value)
Outstanding ..................................... $36,488,295
===========
Net Asset Value per Common Share
($36,488,295 / 2,594,700 shares) ................ $14.06
-----------
----------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floaters represent a security that pays interest at rates that
increase (decrease) with a decrease (increase) in a specific index. Interest
rates disclosed are in effect March 31, 2000.
Summary of Abbreviations:
AMBAC - Insured by the American Municipal Bond Assurance 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 Company
FHA - Insured by the Federal Housing Authority
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
Components of Net Assets at March 31, 2000:
Common stock, $0.01 par value, 200 million
shares authorized to the Fund .................. $35,426,740
Preferred stock, $0.01 par value, 1 million
shares authorized to the Fund ................... 20,000,000
Distributions in excess of net
investment income ............................... (60,604)
Accumulated net realized loss
on investments .................................. (335,081)
Net unrealized appreciation
of investments .................................. 1,457,240
-----------
Total net assets ................................... $56,488,295
===========
See accompanying notes
12
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.98
City Agencies - 0.22%
Minneapolis Community Development
Agency - Supported Development
Revenue Limited Tax
Common Bond Fund Series 5
5.70% 12/1/27 ................................... $ 375,000 $ 352,665
----------
352,665
----------
General Obligation Bonds - 4.05%
Becker Refunding Tax Increment Series D
6.25% 8/1/15 (AMT)(MBIA) ........................ 3,700,000 3,777,367
**Minnesota State Public Facilities Authority
Water Pollution Control Revenue,
Inverse Floater 5.794% 11/1/17 .................. 570,000 496,185
Rosemount Independent School
District #196 Series A 5.70% 4/1/12 ............. 1,270,000 1,307,567
St. Paul Tax Increment (Block 39 Project)
Series A 4.75% 2/1/25 ........................... 1,000,000 846,820
----------
6,427,939
----------
Higher Education Revenue Bonds - 9.15%
Minnesota Higher Education Facility
(Macalester College) Series C
5.55% 3/1/16 .................................... 1,250,000 1,250,988
Minnesota State Higher Education
Facility (St. Thomas University)
Series 3-R2 5.60% 9/1/14 ........................ 275,000 276,254
Series B 3-R1 5.60% 10/1/15 ..................... 1,050,000 1,049,990
Series 4A-1 5.625% 10/1/21 ...................... 1,000,000 975,060
Minnesota State University Board
(State University System)
Series 1993-C 5.60% 6/30/16 (MBIA) .............. 3,115,000 3,122,009
Series 1993-C 5.60% 6/30/19 (MBIA) .............. 3,720,000 3,693,662
Series 1993-A 6.10% 6/30/23 ..................... 1,150,000 1,156,061
University of Minnesota Series A
5.50% 7/1/21 .................................... 3,000,000 2,992,260
----------
14,516,284
----------
Hospital Revenue Bonds - 14.27%
Bloomington Health Care Facilities
(Masonic Home Care Center)
5.875% 7/1/22 (AMBAC) ........................... 4,000,000 4,001,800
Brainerd Evangelical Lutheran Health
Care Facilities Series A
6.65% 3/1/17 (FSA) .............................. 1,195,000 1,242,561
Duluth Economic Development Authority
Benedictine Health Systems
(St. Mary's Hospital) Series C
6.00% 2/15/20 (Connie Lee) ...................... 6,000,000 6,039,600
Minneapolis Health Care Facility
(Jones-Harrison Residence Project)
6.00% 10/1/27 ................................... 2,000,000 1,656,820
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds (continued)
Minneapolis, St. Paul Housing &
Redevelopment Authority (Children's
Health Care) 5.50% 8/15/25 (FSA) ................ $1,500,000 $ 1,419,570
Minnesota Agricultural & Economic
Development Health Care System
(Fairview Hospital) Series A
5.75% 11/15/26 (MBIA) ........................... 4,800,000 4,735,296
Rochester Health Care Facilities
(Mayo Foundation) Series B
5.50% 11/15/27 .................................. 3,365,000 3,213,272
St. Paul Housing & Redevelopment
Authority Health Care Facility Revenue
(Regions Hospital Project)
5.30% 5/15/28 ................................... 400,000 313,528
-----------
22,622,447
-----------
Housing Revenue Bonds - 21.17%
Chanhassen Multifamily Housing
Heritage Park Project
6.20% 7/1/30 (AMT)(FHA) ......................... 1,105,000 1,120,481
Dakota County Housing & Redevelopment
Authority Multifamily Mortgage
(Imperial Ridge Project) Series 1993-A
6.10% 12/15/28 (GNMA) ........................... 1,870,000 1,890,495
Harmony Multifamily Housing (Section 8)
(Zedakah Foundation Project) Series A
5.95% 9/1/20 .................................... 1,000,000 992,930
Minnesota Housing Finance Agency
Multifamily Rental Housing
Series D 5.90% 2/1/14 ........................... 1,115,000 1,126,540
Series D 6.00% 8/1/22 ........................... 2,295,000 2,307,209
Minnesota Housing Finance Agency
Single Family Housing
Series 1991-A 7.05% 7/1/22 (AMT) ................ 1,240,000 1,270,082
Series 1992-B 6.15% 1/1/26 (AMT) ................ 3,530,000 3,535,825
Series 1992-C2 6.15% 7/1/23 (AMT) ............... 3,575,000 3,584,081
Series 1994-F 6.30% 7/1/25 ...................... 1,495,000 1,518,501
Series 1994-J 6.95% 7/1/26 (AMT) ................ 2,780,000 2,874,993
Minnetonka Housing Facilities
(Beacon Hill Project)
7.25% 6/1/09 .................................... 1,225,000 1,217,577
7.50% 6/1/14 .................................... 760,000 765,457
7.55% 6/1/19 .................................... 2,365,000 2,376,163
Moorhead Economic Development
Authority Multifamily Housing
Development (Eventide)
Series B 6.00% 6/1/18 ........................... 1,000,000 873,880
New Brighton Multifamily Mortgage
(Polynesian Village Apartments)
Series 1995-A 7.60% 4/1/25 ...................... 3,820,000 3,871,415
13
<PAGE>
Statements of Net Assets (continued)
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
St. Paul Housing & Redevelopment
Authority Single Family Mortgage
6.40% 3/1/21 (FNMA) ............................. $1,320,000 $ 1,353,145
Stillwater Multifamily Mortgage
(Stillwater Cottages)
7.25% 11/1/27 (AMT) ............................. 1,540,000 1,466,126
Waconia Health Care Facilities Revenue
(Ridgeview Medical Center) Series A
6.10% 1/1/19 .................................... 1,405,000 1,422,324
-----------
33,567,224
-----------
Pollution Control Revenue Bonds - 2.87%
Cloquet, Minnesota Pollution Control
(Potlatch Corporation Project)
5.90% 10/1/26 ................................... 5,000,000 4,552,450
-----------
4,552,450
-----------
Power Authority Revenue Bonds - 10.40%
Bass Brook Pollution Control Revenue for
Minnesota Power & Light
6.00% 7/1/22 .................................... 7,560,000 7,211,635
Northern Minnesota Municipal Power
Agency Electric System Series B
5.50% 1/1/18 (AMBAC) ............................ 5,955,000 5,842,093
Puerto Rico Electric Power Authority
5.25% 7/1/21 .................................... 2,000,000 1,836,760
Western Minnesota Municipal
Power Agency 5.50% 1/1/15 (MBIA) ................ 1,605,000 1,601,646
-----------
16,492,134
-----------
*Pre-Refunded Bonds / Escrowed To Maturity - 30.15%
Buffalo Independent School District
6.15% 2/1/22-03 (FSA) ........................... 4,030,000 4,142,759
Dakota & Washington Counties Housing
& Redevelopment Authority
Single Family Mortgage
8.375% 9/1/21 (AMT) (GNMA)
(Escrowed to Maturity) .......................... 5,500,000 7,184,924
Detroit Lakes Benedictine Health
Systems (St. Mary's Hospital)
6.00% 2/15/19-03 (Connie Lee) ................... 1,250,000 1,312,088
Duluth Economic Development Authority
Health Care Facilities (Duluth Clinic)
6.20% 11/1/12-02 (AMBAC) ........................ 720,000 758,088
6.20% 11/1/12-04 (AMBAC) ........................ 280,000 295,322
6.30% 11/1/22-02 (AMBAC) ........................ 3,890,000 4,105,117
6.30% 11/1/22-04 (AMBAC) ........................ 960,000 1,016,429
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded Bonds / Escrowed To Maturity (continued)
Esko Independent School District
5.65% 4/1/12-05 (FSA) ........................... $ 550,000 $ 560,511
Hawley Independent School District
5.75% 2/1/17-06 (FSA) ........................... 1,000,000 1,022,710
Metropolitan Council Sports Facility
Commission (Hubert H. Humphrey
Metrodome) 6.00% 10/1/09
(Escrowed to Maturity) .......................... 2,360,000 2,464,288
Minneapolis & St. Paul Housing &
Redevelopment Authority (HealthOne)
7.40% 8/15/11-00 (MBIA) ......................... 2,105,000 2,170,508
Minnesota Public Facilities Authority
Water Pollution Control
6.25% 3/1/16-05 ................................. 1,000,000 1,058,630
Minnesota Public Facilities Authority
Water Pollution Control Series 1992
6.50% 3/1/14-02 ................................. 3,300,000 3,468,531
Red Wing Independent School
District #256
Series 1993-A 5.70% 2/1/12-03 ................... 2,925,000 2,970,338
Series 1993-A 5.70% 2/1/13-03 ................... 1,625,000 1,650,188
St. Paul Housing & Redevelopment
Authority Sales Tax (Civic Center)
5.55% 11/1/23 (Escrowed
To Maturity) .................................... 2,300,000 2,264,235
5.55% 11/1/23 (MBIA) (Escrowed
To Maturity) .................................... 4,200,000 4,161,654
Southern Minnesota Municipal
Power Agency 5.75% 1/1/18-16 .................... 3,715,000 3,763,889
Stewartville Independent School
District #534 5.75% 2/1/17-05 ................... 1,705,000 1,740,038
Western Minnesota Municipal
Power Agency 6.625% 1/1/16
(Escrowed To Maturity) .......................... 1,535,000 1,697,986
-----------
47,808,233
-----------
Transportation Revenue Bonds - 3.60%
Puerto Rico Commonwealth Highway
& Transportation Authority
5.50% 7/1/26 .................................... 6,000,000 5,704,080
-----------
5,704,080
-----------
Water & Sewer Revenue Bonds - 2.22%
**Minnesota Public Facilities Authority
Water Pollution Control
Revenue, Inverse Floaters
5.16% 3/1/17 .................................... 1,145,000 907,275
5.26% 3/1/18 .................................... 1,360,000 1,073,910
5.26% 3/1/19 .................................... 2,000,000 1,535,920
-----------
3,517,105
-----------
14
<PAGE>
Statements of Net Assets (continued)
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Other Revenue Bonds - 0.88%
Burnsville Commercial Development
Refunding (Holiday Inn Project)
5.90% 4/1/08 .................................... $1,430,000 $ 1,396,252
------------
1,396,252
------------
Total Municipal Bonds
(cost $156,788,115) ............................. 156,956,813
------------
Total Market Value of Securities - 98.98%
(cost $156,788,115) ............................. 156,956,813
Receivables and Other Assets
Net of Liabilities - 1.02% ...................... 1,616,904
------------
Total Net Assets - 100.00% ........................ 158,573,717
Liquidation Value of Preferred Stock .............. (60,000,000)
------------
Net Assets Applicable to 7,252,200
Common Shares ($0.01 Par Value)
Outstanding ..................................... $ 98,573,717
============
Net Asset Value per Common Share
($98,573,717 / 7,252,200 shares) ................ $13.59
------------
----------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floaters represent a security that pays interest at rates that
increase (decrease) with a decrease (increase) in a specific index. Interest
rates disclosed are in effect at March 31, 2000.
Summary of Abbreviations:
AMBAC - Insured by the American Municipal Bond Assurance Corporation
AMT - Subject to Alternative Minimum Tax
Connie Lee - Insured by the College Construction Insurance Association
FHA - Insured by the Federal Housing Authority
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets at March 31, 2000:
Common stock, $0.01 par value, 200 million
shares authorized to the Fund ................... $ 99,710,002
Preferred stock, $0.01 par value, 1 million
shares authorized to the Fund ................... 60,000,000
Undistributed net investment income ................ 1,477,527
Accumulated net realized loss
on investments .................................. (2,782,510)
Net unrealized appreciation
of investments .................................. 168,698
------------
Total net assets ................................... $158,573,717
============
See accompanying notes
15
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
--------------------------------------------------
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.48%
City Agency Revenue Bonds - 2.30%
Minneapolis Community Development Agency
Supported Development 6.75% 12/1/25 ............. $ 865,000 $ 873,754
----------
873,754
----------
Continuing Care/Retirement Center Revenue Bonds - 2.71%
Minnesota Agricultural & Economic
Development Health Care System
(Benedictine Care) 5.75% 2/1/29 ................. 1,300,000 1,032,837
----------
1,032,837
----------
General Obligation Bonds - 1.84%
Minneapolis Sports Arena Project
5.125% 10/1/20 .................................. 750,000 699,113
----------
699,113
----------
Higher Education Revenue Bonds - 6.12%
Minnesota State Higher Educational
Facilities Authority Unrefunded
Balance Series 3-W 6.375% 3/1/20 ................ 345,000 348,108
Minnesota State Higher Educational
Facilities Authority (St. Mary's College)
Series 3Q 6.15% 10/1/23 ......................... 1,000,000 998,760
Minnesota State Higher Educational
Facilities Authority (St. Thomas
University) Series 4-A1 5.625% 10/1/21 .......... 1,010,000 984,811
----------
2,331,679
----------
Hospital Revenue Bonds - 20.30%
Minnesota Agricultural & Economic
Development Health Care System
(Fairview Hospital) Series A
5.75% 11/15/26 (MBIA) ........................... 2,000,000 1,973,040
Princeton Fairview Hospital Series
1991-C 6.25% 1/1/21 (MBIA) ...................... 2,000,000 2,027,640
Robbinsdale North Memorial
Medical Center Series 1993-B
5.50% 5/15/23 (AMBAC) ........................... 1,500,000 1,432,005
Rochester Health Care Facilities (Mayo
Foundation) Series B 5.50% 11/15/27 ............. 1,700,000 1,623,347
St. Paul Housing & Redevelopment
Authority Health Care Facility (Regions
Hospital Project) 5.30% 5/15/28 ................. 600,000 470,292
St. Paul Housing & Redevelopment
Authority (Healtheast Hospital)
5.85% 11/1/17 ................................... 250,000 202,750
----------
7,729,074
----------
Housing Revenue Bonds - 14.43%
Brooklyn Center Multifamily Housing
(Four Courts Apartments)
7.50% 6/1/25 (AMT) .............................. 1,000,000 978,840
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Burnsville Multifamily Mortgage
Series A 7.10% 1/1/30 (FSA) ..................... $2,000,000 $2,131,500
Minneapolis Multifamily Housing
(Olson Townhomes)
6.00% 12/1/19 (AMT) ............................. 1,875,000 1,832,550
Minnesota HFA Single Family Mortgage
Series 1991-A 7.45% 7/1/22
(AMT) (FHA) ..................................... 535,000 550,028
----------
5,492,918
----------
Pollution Control Revenue Bonds - 2.39%
Cloquet, Minnesota Pollution Control
(Potlatch Corporation Project)
5.90% 10/1/26 ................................... 1,000,000 910,490
----------
910,490
----------
Power Authority Revenue Bonds - 8.51%
Bass Brook Pollution Control Revenue
for Minnesota Power & Light
6.00% 7/1/22 .................................... 1,505,000 1,435,650
Southern Minnesota Municipal Power
Agency 5.75% 1/1/18 (FGIC) ...................... 1,800,000 1,805,724
----------
3,241,374
----------
*Pre-Refunded Bonds / Escrowed to Maturity - 24.17%
Duluth, Minnesota Economic
Development Authority Hospital
Facilities (Duluth Clinic)
6.20% 11/1/12-02 ................................ 1,080,000 1,137,132
6.20% 11/1/12-04 ................................ 420,000 442,982
Esko Independent School District
5.75% 4/1/17-05 (FSA) ........................... 2,145,000 2,195,300
Minnesota State Higher Education
Facilities Authority (Saint Benedict)
Series 3-W 6.375% 3/1/20-04 ..................... 930,000 978,174
Moorhead Public Utilities
6.25% 11/1/12-02 ................................ 1,500,000 1,546,485
University of Minnesota Hospital
6.75% 12/1/16 (Escrowed to Maturity) ............ 2,580,000 2,902,886
----------
9,202,959
----------
Transportation Revenue Bonds - 4.90%
Minneapolis Airport 5.125% 1/1/25 .................. 1,000,000 915,490
Puerto Rico Commonwealth Highway
& Transportation Authority (Highway
Improvements) Series Y 5.50% 7/1/26 ............. 1,000,000 950,680
----------
1,866,170
----------
Water & Sewer Revenue Bonds - 10.81%
Minnesota Public Facility Authority
Water Pollution Control 5.40% 3/1/15 ............ 2,820,000 2,819,859
16
<PAGE>
Statements of Net Assets (continued)
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Water & Sewer Revenue Bonds (continued)
**Minnesota Public Facilities Authority Water
Pollution Control, Inverse Floater
5.26% 3/1/18 ..................................... $1,640,000 $ 1,295,010
-----------
4,114,869
-----------
Total Municipal Bonds
(cost $37,144,586) ............................... 37,495,237
-----------
Total Market Value of Securities - 98.48%
(cost $37,144,586) ............................... 37,495,237
Receivables and Other Assets
Net of Liabilities - 1.52% ....................... 579,624
-----------
Total Net Assets - 100% .......................... 38,074,861
Liquidation Value of Preferred Stock ............. (15,000,000)
-----------
Net Assets Applicable to 1,837,200
Common Shares ($0.01 Par Value)
Outstanding ...................................... $23,074,861
===========
Net Asset Value per Common Share
($23,074,861 / 1,837,200 shares) ................. $12.56
------
----------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floaters represent a security that pays interest at rates that
increase (decrease) with a decrease (increase) in a specific index. Interest
rates disclosed are in effect March 31, 2000.
Summary of Abbreviations:
AMBAC - Insured by the American Municipal Bond Assurance 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 Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets at March 31, 2000:
Common stock, $0.01 par value, 200 million
shares authorized to the Fund ................... $25,246,730
Preferred stock, $0.01 par value, 1 million
shares authorized to the Fund ................... 15,000,000
Undistributed net investment income ................ 182,451
Accumulated net realized loss
on investments .................................. (2,704,971)
Net unrealized appreciation of investments ......... 350,651
-----------
Total net assets ................................... $38,074,861
===========
See accompanying notes
17
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
--------------------------------------------
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.66%
General Obligation Bonds - 13.69%
Eagle Mountain Community Facility
District A2 6.40% 7/1/17 ........................ $1,500,000 $1,565,010
Maricopa County Unified School
District #11 5.50% 7/1/10 ....................... 2,750,000 2,791,772
Maricopa County Unified School
District #40 6.30% 7/1/11 ....................... 500,000 527,535
Maricopa County Unified School
District #41 6.25% 7/1/15 (FSA) ................. 1,500,000 1,580,685
Mohave County Unified School
District #1 5.90% 7/1/15 (FGIC) ................. 1,500,000 1,544,175
Pima County Unified School
District #6 5.75% 7/1/12 (FGIC) ................. 500,000 511,505
Santa Cruz Valley Unified School
District #35 5.80% 7/1/09 (AMBAC) ............... 600,000 617,436
----------
9,138,118
----------
Higher Education Revenue Bonds - 1.56%
University of Arizona 6.25% 6/1/11 ................. 1,000,000 1,043,770
----------
1,043,770
----------
Highway Revenue Bonds - 3.58%
Arizona State Transportation Board
Highway 5.75% 7/1/18 ............................ 2,350,000 2,386,777
----------
2,386,777
----------
Hospital Revenue Bonds - 9.86%
Maricopa County Health Facilities
(Catholic Health Care West) Series A
5.75% 7/1/11 (MBIA) ............................. 1,750,000 1,786,697
6.00% 7/1/21 (MBIA) ............................. 1,100,000 1,110,923
Mohave County Industrial Development
Authority (Baptist Hospital)
5.50% 9/1/21 (MBIA) ............................. 500,000 484,690
Show Low Industrial Development
Authority Hospital (Navapache
Regional Medical Center) Series A
5.50% 12/1/17 (ACA) ............................. 2,600,000 2,481,180
University of Arizona Medical Center
6.25% 7/1/16 (MBIA) ............................. 700,000 720,069
----------
6,583,559
----------
Housing Revenue Bonds - 24.30%
Maricopa County Industrial Development
Authority Multifamily (Camelback
Apartments Project A)
5.45% 5/1/28 (Asset Guaranty) ................... 1,250,000 1,171,612
Maricopa County Industrial Development
Authority Single Family Housing Revenue
6.625% 7/1/21 (GNMA/FNMA) ....................... 1,500,000 1,539,825
Peoria Industrial Development Authority
Multifamily Revenue
7.30% 2/20/28 (GNMA) ............................ 1,230,000 1,304,661
<PAGE>
Market
Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Phoenix Industrial Development Authority
(Chris Ridge) 6.80% 11/1/25 (FHA) ............... $ 500,000 $ 513,550
Phoenix Industrial Development Authority
Single Family Mortgage
5.30% 4/1/20 (GNMA) ............................. 2,500,000 2,300,550
5.35% 6/1/20 (GNMA) ............................. 3,295,000 3,065,470
Pima County Industrial Development
Authority (Single Family Mortgage
Revenue) 6.10% 5/1/31 (GNMA) .................... 2,500,000 2,496,400
Pima County Industrial Development
Authority (Single Family Mortgage
Revenue) Series A
5.20% 5/1/31 (GNMA) ............................. 1,450,000 1,266,793
6.25% 11/1/30 (GNMA) ............................ 1,125,000 1,135,778
Yavapai County Industrial Development
Authority Residential Care Facilities
5.40% 2/20/38 (GNMA) ............................ 1,585,000 1,423,584
----------
16,218,223
----------
Industrial Development Revenue Bonds - 2.04%
Coconino County (Nevada Power) Pollution
Control Corporation Series B
5.80% 11/1/32 ................................... 1,000,000 874,320
Navajo County (Arizona Public Service)
Pollution Control Corporation
5.50% 8/15/28 (AMBAC) ........................... 500,000 485,980
----------
1,360,300
----------
Leases/Certificates of Participation - 3.66%
Scottsdale Municipal Property Corporation
Lease 6.25% 11/1/14 (FGIC) ...................... 1,300,000 1,329,900
Tuscon Certificates of Participation
5.60% 7/1/11 .................................... 1,100,000 1,115,565
----------
2,445,465
----------
Power Authority Revenue Bonds - 2.49%
Salt River Project Electric System Revenue
Series D 6.25% 1/1/27 ........................... 1,635,000 1,663,629
----------
1,663,629
----------
*Pre-Refunded Bonds / Escrowed to Maturity - 6.01%
Arizona Health Facility Authority Phoenix
Baptist Hospital & Medical Center
6.25% 9/1/11 (MBIA) (Escrowed
to Maturity) .................................... 1,500,000 1,574,715
City of Phoenix Street & Highway Junior
Lien 6.25% 7/1/11-02 (FGIC) ..................... 1,300,000 1,364,818
University of Arizona 6.35% 6/1/14-04 .............. 1,000,000 1,073,330
----------
4,012,863
----------
Territorial Revenue Bonds - 4.53%
Virgin Islands, Public Finance Authority
Revenue Series A 6.125% 10/1/29 ................. 3,000,000 3,023,340
----------
3,023,340
----------
18
<PAGE>
Statements of Net Assets (continued)
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Transportation Revenue Bonds - 8.43%
Phoenix Civic Improvement Airport Revenue
Senior Lien Series A
5.00% 7/1/25 (FSA) .............................. $1,000,000 $ 896,790
Tucson Airport Authority
5.70% 6/1/13 (MBIA) ............................. 1,900,000 1,939,748
Tucson Street & Highway
5.50% 7/1/12 (MBIA) ............................. 2,750,000 2,788,418
----------
5,624,956
----------
Water & Sewer Revenue Bonds - 8.93%
Phoenix Civic Improvement Wastewater
Systems Revenue
5.375% 7/1/22 (MBIA) ............................ 1,000,000 962,880
Phoenix Water System
5.50% 7/1/22 .................................... 1,000,000 972,410
Tucson Water Refunding Series A
5.75% 7/1/18 (AMBAC) ............................ 4,000,000 4,029,440
----------
5,964,730
----------
Other Revenue Bonds - 9.58%
Arizona Student Loan Acquisition Authority
5.90% 5/1/24 .................................... 1,500,000 1,490,385
Maricopa County Stadium District
5.50% 7/1/13 (MBIA) ............................. 1,500,000 1,518,225
Phoenix Civic Improvement Corporation
Excise Tax Revenue
5.25% 7/1/24 .................................... 1,250,000 1,171,800
5.375% 7/1/29 ................................... 2,350,000 2,216,238
----------
6,396,648
----------
Total Municipal Bonds
(cost $65,494,059) 65,862,378
----------
<PAGE>
Market
Value
--------------------------------------------------------------------------------
Total Market Value of Securities - 98.66%
(cost $65,494,059) .............................. $65,862,378
Receivables and Other Assets
Net of Liabilities - 1.34% ...................... 895,734
----------
Total Net Assets - 100.00% ......................... 66,758,112
Liquidation Value of Preferred Stock ............... (25,000,000)
----------
Net Assets Applicable to 2,982,200
Common Shares ($0.01 Par Value)
Outstanding ..................................... $41,758,112
===========
Net Asset Value per Common Share
($41,758,112 / 2,982,200 shares) ................ $14.00
------
----------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
Summary of Abbreviations:
ACA - Insured by American Capital Access
AMBAC - Insured by the American Municipal Bond Assurance 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
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
Components of Net Assets at March 31, 2000:
Common stock, $0.01 par value, 200 million
shares authorized to the Fund ................... $40,838,893
Preferred stock, $0.01 par value, 1 million
shares authorized to the Fund ................... 25,000,000
Undistributed net investment income ................ 692,289
Accumulated net realized loss
on investments .................................. (141,389)
Net unrealized appreciation
of investments .................................. 368,319
----------
Total net assets ................................... $66,758,112
===========
See accompanying notes
19
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.21%
Airport Revenue Bonds - 4.71%
Dade County Aviation-96B
5.60% 10/1/26 (MBIA) .............................. $1,000,000 $ 981,050
Hillsboro-Tampa Airport
5.60% 10/1/19 (FGIC) .............................. 1,600,000 1,596,224
----------
2,577,274
----------
General Obligations - 3.40%
Florida Board of Education Capital Outlay
6.00% 6/1/21 (FGIC) ............................... 1,825,000 1,860,514
----------
1,860,514
----------
Higher Education Revenue Bonds - 5.00%
Florida Agriculture & Mechanical University
(Student Apartment Facility)
5.625% 7/1/21 (MBIA) .............................. 1,250,000 1,239,937
Volusia Educational Facilities
5.50% 6/1/17 (MBIA) ............................... 1,500,000 1,496,580
----------
2,736,517
----------
Hospital Revenue Bonds - 11.04%
Orange County Health Facilities
(Adventist Health Center)
5.75% 11/15/25 (AMBAC) ............................ 1,500,000 1,484,040
Orange County Health Facilities (Orlando
Regional Health) 6.25% 10/1/18 (MBIA) ............. 2,000,000 2,150,920
Venice Health Care (Bon Secours Health
System) 5.60% 8/15/16 (MBIA) ...................... 2,405,000 2,409,594
----------
6,044,554
----------
Housing Revenue Bonds - 11.70%
Florida Housing Finance Agency
(Woodbridge) 6.05% 12/1/16 (AMBAC) ................ 1,120,000 1,137,976
Florida Housing Finance Agency
Homeowner Mortgage Series 2
5.90% 7/1/29 (MBIA) (AMT) ......................... 1,240,000 1,199,663
Florida State Housing Finance Agency
Leigh Meadows Apartments Section 8
Series N 6.30% 9/1/36 (AMBAC)
(AMT) (LOC) ....................................... 2,510,000 2,544,086
Florida State Housing Finance Agency
Woodbridge Apartments Series L
6.25% 6/1/36 (AMBAC) (AMT) (LOC) .................. 1,500,000 1,519,830
----------
6,401,555
----------
Power Authority Revenue Bonds - 2.30%
Florida State Municipal Power Agency
5.70% 10/1/16 (FGIC) .............................. 1,250,000 1,261,300
----------
1,261,300
----------
*Pre-Refunded Bonds / Escrowed To Maturity - 21.92%
Boca Raton Community Redevelopment
Agency 5.875% 3/1/13-02 (FGIC) .................... 1,500,000 1,561,110
Dade County Professional Sports
Franchise Facilities
6.00% 10/1/22-02 (FGIC) ........................... 1,000,000 1,044,040
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded Bonds / Escrowed To Maturity (continued)
Dade County School Board
5.60% 8/1/17-06 (AMBAC) .......................... $1,000,000 $ 1,045,510
Dade County Seaport
6.25% 10/1/21-01 (AMBAC) ......................... 1,000,000 1,034,280
Hillsboro County Industrial Development
Authority (Knox Village)
5.75% 12/1/21-01 (MBIA)
(Escrowed to Maturity) ........................... 1,000,000 1,000,560
Lakeland Hospital System Revenue
5.75% 11/15/15-02 (FGIC) ......................... 2,500,000 2,609,200
Sunrise Utility System Series A
5.75% 10/1/26-06 (AMBAC) ......................... 2,500,000 2,636,575
Village Center Community Development
5.85% 11/1/16-06 (MBIA) .......................... 1,000,000 1,067,920
----------
11,999,195
----------
School District Revenue Bonds - 10.61%
Escambia County School Board Lease
5.50% 2/1/22 (MBIA) .............................. 5,000,000 4,839,200
St. Lucie County School COP
5.375% 7/1/19 (FSA) .............................. 1,000,000 965,620
----------
5,804,820
----------
Water & Sewer Revenue Bonds - 8.26%
City of Panama Beach Water & Sewer
5.50% 6/1/18 (AMBAC) ............................. 1,000,000 991,990
Dade County Water & Sewer System
5.50% 10/1/25 (FGIC) ............................. 1,100,000 1,066,296
Indian River County Water & Sewer
5.50% 9/1/16 (FGIC) .............................. 1,000,000 1,001,940
Sarasota County Utility System
5.50% 10/1/22 (FGIC) ............................. 1,500,000 1,460,370
----------
4,520,596
----------
Other Revenue Bonds - 19.27%
Florida Ports Financing Commission
Transportation Trust Fund
5.375% 6/1/27 (AMT) (MBIA) ....................... 2,250,000 2,093,760
Miami Beach Resort Tax
5.50% 10/1/16 (AMBAC) ............................ 1,000,000 1,002,010
Orange County Public Service Tax
6.00% 10/1/24 (FGIC) ............................. 3,000,000 3,048,750
Reedy Creek Improvement (Sports Complex)
5.75% 6/1/13 (MBIA) .............................. 2,300,000 2,352,210
Tampa Utility Tax
6.00% 10/1/15 (AMBAC) ............................ 1,000,000 1,007,330
Tampa Utility Tax & Special Revenue
6.125% 10/1/19 ................................... 1,000,000 1,039,600
----------
10,543,660
----------
Total Municipal Bonds
(cost $52,554,158) ............................... 53,749,985
----------
20
<PAGE>
Statements of Net Assets (continued)
Number Market
March 31, 2000 of Shares Value
--------------------------------------------------------------------------------
Short-Term Investments - 0.05%
Wells Fargo National Tax-Free Money
Market Fund ......................................... 25,931 $ 25,931
------------
Total Short-Term Investments
(cost $25,931) ...................................... 25,931
------------
Total Market Value of Securities - 98.26%
(cost $52,580,089) .................................. 53,775,916
Receivables and Other Assets
Net of Liabilities - 1.74% .......................... 954,192
------------
Total Net Assets - 100.00% ............................. 54,730,108
Liquidation Value of Preferred Stock ................... (20,000,000)
------------
Net Assets Applicable to 2,422,200
Common Shares ($0.01 Par Value)
Outstanding ......................................... $ 34,730,108
============
Net Asset Value per Common Share
($34,730,108 / 2,422,200 shares) .................... $14.34
------
-------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
Summary of Abbreviations:
AMBAC - Insured by the American Municipal Bond Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
LOC - Letter of Credit by First Union National Bank of North Carolina
MBIA - Insured by the Municipal Bond Insurance Association
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets at March 31, 2000:
Common stock, $0.01 par value, unlimited
shares authorized to the Fund ........................ $33,361,389
Preferred stock $0.01 par value, unlimited
shares authorized to the Fund ........................ 20,000,000
Undistributed net investment income ..................... 686,205
Accumulated net realized loss
on investments ....................................... (513,313)
Net unrealized appreciation of investments .............. 1,195,827
-----------
Total net assets ........................................ $54,730,108
===========
See accompanying notes
21
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.64%
General Obligation Bonds - 16.28%
Adams County School District #12 (Five Star)
5.40% 12/15/16 (FGIC) ............................ $2,000,000 $ 1,965,300
Archuleta & Hinsdale Counties
School District #50JT
5.50% 12/1/14 (MBIA) ............................. 1,000,000 1,010,900
5.55% 12/1/20 (MBIA) ............................. 4,000,000 3,936,920
El Paso County, Colorado School District #20
5.625% 12/15/16 (AMBAC) .......................... 3,000,000 3,010,500
5.625% 12/15/16 (MBIA) ........................... 1,000,000 1,003,500
G V R Metropolitan District Colorado
5.75% 12/1/19 (AMBAC) ............................ 1,000,000 1,002,850
Pueblo, Colorado
5.80% 6/1/11 (MBIA) .............................. 1,405,000 1,445,829
Pueblo County, Colorado
5.80% 11/1/19 (AMBAC) ............................ 1,395,000 1,404,095
Stonegate Village Metropolitan District
Refunding & Improvement Series A
5.50% 12/1/21 (FSA) .............................. 2,750,000 2,652,045
-----------
17,431,939
-----------
Higher Education Revenue Bonds - 17.45%
Aurora Educational Development
6.00% 10/15/15 (Connie Lee) ...................... 2,500,000 2,556,450
Colorado Mountain College Residence Hall
Authority 5.75% 6/1/23 (MBIA) .................... 1,000,000 987,310
Colorado Postsecondary Education Facility
(Auraria Fund Project)
6.00% 9/1/15 (FSA) ............................... 1,000,000 1,022,110
Colorado Postsecondary Education Facility
Authority (University of Denver Project)
6.00% 3/1/16 (Connie Lee) ........................ 4,000,000 4,059,000
Colorado School Mines Auxiliary Facilities
Revenue 5.00% 12/1/28 (MBIA) ..................... 1,700,000 1,485,647
Colorado Springs, Colorado (Colorado
College) 5.375% 6/1/32 (MBIA) ................... 5,000,000 4,670,850
Colorado State Board Agriculture State
University Refunding & Improvement
Auxiliary Facilities
5.125% 3/1/17 (AMBAC) ............................ 1,000,000 941,180
Colorado State Colleges Board of Trustees
(Adams State College) Series A
5.75% 5/15/19 (MBIA) ............................. 2,000,000 2,003,940
University of Northern Colorado Auxiliary
Facilities System 5.60% 6/1/24 (MBIA) ............ 1,000,000 966,540
-----------
18,693,027
-----------
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds - 10.90%
Colorado Health Facilities Authority
(Boulder Community Hospital Project)
Series B 5.875% 10/1/23 (MBIA) ................... $2,625,000 $ 2,616,679
Colorado Health Facilities Authority
(North Colorado Medical Center)
5.95% 5/15/12 (MBIA) ............................. 2,000,000 2,060,120
6.00% 5/15/20 (MBIA) ............................. 1,000,000 1,009,100
Logan County Health Care Facilities
(Western Health Network)
5.90% 1/1/19 (MBIA) .............................. 2,510,000 2,518,986
University of Colorado Hospital
Authority Refunding Series A
5.20% 11/15/17 (AMBAC) ........................... 3,695,000 3,463,804
-----------
11,668,689
-----------
Housing Revenue Bonds - 10.51%
Burlingame, Colorado Multi-Family Housing
Income 6.00% 11/1/29 (MBIA) ...................... 2,540,000 2,536,368
Colorado Housing Finance Authority
(Single Family Housing) Series AA
5.625% 11/1/23 (MBIA) ............................ 5,000,000 4,850,600
Denver, Colorado City & County
Multi-Family Housing Mortgage Loan
(Garden Court) 5.40% 7/1/39 (FHA) ................ 2,000,000 1,825,040
Snowmass Village Multi-Family Housing
Refunding (Essential Function Housing)
6.25% 12/15/16 (FSA) ............................. 2,000,000 2,047,840
-----------
11,259,848
-----------
Leases/Certificates of Participation - 10.43%
Arapahoe County, Colorado Library District
5.70% 12/15/10 (MBIA) ............................ 2,000,000 2,068,320
Auraria, Colorado Higher Education Center
(Administrative Office Facility Project)
5.125% 5/1/28 (AMBAC) ............................ 5,750,000 5,156,543
Broomfield, Colorado Public Improvements
5.75% 12/1/24 (AMBAC) ............................ 1,500,000 1,478,490
Eagle County, Colorado Public Improvements
5.40% 12/1/18 (MBIA) ............................. 1,300,000 1,259,804
Garfield County, Colorado Building
Improvements 5.75% 12/1/19 (AMBAC) ............... 1,200,000 1,203,684
-----------
11,166,841
-----------
Pollution Control Revenue Bonds - 1.42%
Adams County Pollution Control Refunding
(Public Service Company Project) Series A
5.875% 4/1/14 (MBIA) ............................. 1,500,000 1,524,720
-----------
1,524,720
-----------
22
<PAGE>
Statements of Net Assets (continued)
Principal Market
March 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded Bonds - 1.89%
Jefferson County School District #R-001
6.25% 12/15/12-02 (AMBAC) ...................... $1,935,000 $ 2,025,481
-----------
2,025,481
-----------
Transportation Revenue Bonds - 23.21%
Arapahoe County Capital Improvements
Highway 6.05% 8/31/15 (MBIA) ................... 4,700,000 4,865,440
Denver, Colorado City & County Airport
Series E 5.25% 11/15/23 (MBIA) ................. 8,500,000 7,851,110
E-470 Public Highway Authority
Series A 5.00% 9/1/21 (MBIA) ................... 5,270,000 4,708,745
Series A 4.75% 9/1/23 (MBIA) ................... 4,000,000 3,408,640
Series A 5.00% 9/1/26 (MBIA) ................... 3,795,000 3,349,125
Regional Transportation District (Colorado
Sales Tax) 6.25% 11/1/12 (FGIC) ................ 645,000 672,580
-----------
24,855,640
-----------
Utility Revenue Bonds - 1.82%
Platte River Power Authority
(Colorado Power) Series DD
5.375% 6/1/17 (MBIA) ........................... 2,000,000 1,946,340
-----------
1,946,340
-----------
Water & Sewer Revenue Bonds - 4.73%
Colorado Water Resources & Power
Development Authority (Small Water
Resources) 5.80% 11/1/20 (FGIC) ................ 2,000,000 2,023,540
Municipal Subdistrict of Northern Colorado
Water Conservancy District Series F
6.50% 12/1/12 (AMBAC) .......................... 2,800,000 3,045,448
-----------
5,068,988
-----------
Total Municipal Bonds
(cost $106,582,451) ............................ 105,641,513
-----------
<PAGE>
Market
Value
--------------------------------------------------------------------------------
Total Market Value of Securities - 98.64%
(cost $106,582,451) ..................................... $105,641,513
Receivables and Other Assets
Net of Liabilities - 1.36% .............................. 1,451,790
------------
Total Net Assets - 100.00% ................................. 107,093,303
Liquidation Value of Preferred Stock ....................... (40,000,000)
------------
Net Assets Applicable to 4,837,100
Common Shares ($0.01 Par Value)
Outstanding ............................................. $ 67,093,303
============
Net Asset Value per Common Share
($67,093,303 / 4,837,100 shares) ........................ $13.87
------
--------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
Summary of Abbreviations:
AMBAC - Insured by the 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 Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
Components of Net Assets at March 31, 2000:
Common stock, $0.01 par value, 200 million
shares authorized to the Fund ........................... $67,238,110
Preferred stock, $0.01 par value, 1 million
shares authorized to the Fund ........................... 40,000,000
Undistributed net investment income ........................ 1,244,816
Accumulated net realized loss
on investments .......................................... (448,685)
Net unrealized depreciation of investments ................. (940,938)
------------
Total net assets ........................................... $107,093,303
============
See accompanying notes
23
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Voyageur Voyageur Voyageur Voyageur Voyageur Voyageur
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado
Municipal Municipal Municipal Municipal Municipal Insured
Income Income Income Income Income Municipal
Year Ended March 31, 2000 Fund, Inc. Fund II, Inc. Fund III, Inc. Fund, Inc. Fund Income Fund, Inc.
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest .......................... $3,524,307 $9,525,549 $2,288,931 $3,836,926 $3,108,046 $6,053,554
-------------------------------------------------------------------------------------------
Expenses:
Management fees ................... 230,050 642,896 154,538 268,773 221,444 431,667
Transfer agent fees
and expenses ................... 40,200 29,781 7,200 21,055 10,638 29,250
Registration fees ................. 1,300 4,800 1,850 600 3,200 -
Reports and statements
to shareholders ................ 11,400 24,150 6,000 9,000 10,700 23,500
Accounting and administration ..... 90,216 72,982 60,842 84,943 88,035 87,988
Remarketing Agent fees ............ 56,104 156,309 43,577 68,157 50,103 101,285
Professional fees ................. 28,000 16,600 21,950 27,600 56,100 25,000
Custodian fees .................... 2,600 7,100 2,400 1,200 2,400 6,000
Directors'/Trustees' fees ......... 9,600 4,900 4,800 2,400 4,500 8,400
Rating Agency fees ................ 8,100 6,900 3,650 6,000 8,500 4,000
Taxes (other than taxes
on income) ..................... 5,071 13,000 4,600 8,700 1,000 15,000
Interest expense .................. 270 915 24 1,297 802 1,694
Other ............................. 27,311 20,889 4,264 14,658 6,053 5,479
-------------------------------------------------------------------------------------------
510,222 1,001,222 315,695 514,383 463,475 739,263
Less expenses paid indirectly ..... (1,321) (3,702) (890) (1,550) (1,272) (2,479)
-------------------------------------------------------------------------------------------
Total expenses .................... 508,901 997,520 314,805 512,833 462,203 736,784
-------------------------------------------------------------------------------------------
Net Investment Income ............. 3,015,406 8,528,029 1,974,126 3,324,093 2,645,843 5,316,770
-------------------------------------------------------------------------------------------
Net Realized and Unrealized Loss
on Investments:
Net realized loss
on investments ................. (334,960) (464,436) (96,382) (71,401) (117,369) (57,053)
Net change in unrealized
appreciation/depreciation
of investments ................. (2,882,079) (9,792,251) (2,521,519) (3,885,205) (3,202,108) (6,772,294)
-------------------------------------------------------------------------------------------
Net Realized and Unrealized
Loss on Investments ............ (3,217,039) (10,256,687) (2,617,901) (3,956,606) (3,319,477) (6,829,347)
-------------------------------------------------------------------------------------------
Net Decrease in Net Assets
Resulting from
Operations ..................... $ (201,633) $(1,728,658) $(643,775) $(632,513) $(673,634) $(1,512,577)
============================================================================================
</TABLE>
See accompanying notes
24
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Voyageur Minnesota Voyageur Minnesota Voyageur Minnesota
Municipal Income Municipal Income Municipal Income
Fund, Inc. Fund II, Inc. Fund III, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
3/31/00 3/31/99 3/31/00 3/31/99 3/31/00 3/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations:
Net investment income ............................. $ 3,015,406 $ 3,081,482 $ 8,528,029$ 8,367,621 $ 1,974,126 $ 1,883,956
Net realized gain (loss) on investments ........... (334,960) 188,073 (464,436) 432,710 (96,382) 229,501
Net change in unrealized appreciation/
depreciation of investments .................... (2,882,079) (173,366) (9,792,251) 315,390 (2,521,519) 171,840
-------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations ...................... (201,633) 3,096,189 (1,728,658) 9,115,721 (643,775) 2,285,297
-------------------------------------------------------------------------------
Dividends and Distributions to:
Common shareholders from net
investment income .............................. (2,354,690) (2,413,071) (5,928,674) (5,928,674) (1,391,679) (1,391,680)
Preferred shareholders from net
investment income .............................. (705,125) (679,203) (2,224,962) (2,064,168) (554,400) (512,178)
Common shareholders from net realized
gain on investments ............................ (132,070) - - - - -
Preferred shareholders from net realized
gain on investments ............................ (37,139) - - - - -
-------------------------------------------------------------------------------
(3,229,024) (3,092,274) (8,153,636) (7,992,842) (1,946,079) (1,903,858)
-------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets ............. (3,430,657) 3,915 (9,882,294) 1,122,879 (2,589,854) 381,439
Net Assets:
Beginning of year ................................. 59,918,952 59,915,037 168,456,011 167,333,132 40,664,715 40,283,276
-------------------------------------------------------------------------------
End of year ....................................... $ 56,488,295 $59,918,952 $158,573,717 $168,456,011 $ 38,074,861 $ 40,664,715
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
Voyageur Arizona Voyageur Florida Voyageur Colorado
Municipal Income Insured Municipal Insured Municipal
Fund, Inc. Income Fund Income Fund, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
3/31/00 3/31/99 3/31/00 3/31/99 3/31/00 3/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations:
Net investment income ............................. $ 3,324,093 $ 3,303,402 $ 2,645,843 $ 2,695,600 $ 5,316,770 $ 5,222,755
Net realized gain (loss) on investments ........... (71,401) 592,344 (117,369) (344) (57,053) 243,532
Net change in unrealized appreciation/
depreciation of investments .................... (3,885,205) 6,754 (3,202,108) 696,343 (6,772,294) 996,668
-------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations ...................... (632,513) 3,902,500 (673,634) 3,391,599 (1,512,577) 6,462,955
-------------------------------------------------------------------------------
Dividends to:
Common shareholders from net
investment income .............................. (2,303,750) (2,303,751) (1,834,817) (1,834,817) (3,555,269) (3,555,269)
Preferred shareholders from net
investment income .............................. (891,850) (825,780) (717,050) (671,783) (1,437,124) (1,496,328)
-------------------------------------------------------------------------------
(3,195,600) (3,129,531) (2,551,867) (2,506,600) (4,992,393) (5,051,597)
Net Increase (Decrease) in Net Assets ............. (3,828,113) 772,969 (3,225,501) 884,999 (6,504,970) 1,411,358
Net Assets:
Beginning of year ................................. 70,586,225 69,813,256 57,955,609 57,070,610 113,598,273 112,186,915
-------------------------------------------------------------------------------
End of year ....................................... $ 66,758,112 $70,586,225 $ 54,730,108 $57,955,609 $107,093,303 $113,598,273
===============================================================================
</TABLE>
See accompanying notes
25
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each common share of the Fund outstanding
throughout each period was as follows: Voyageur Minnesota Municipal Income Fund, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ...................................... $15.380 $15.380 $14.470 $14.430 $14.210
Income (loss) from investment operations:
Net investment income ................................................ 1.180 1.188 1.180 1.060 1.180
Net realized and unrealized gain (loss) on investments ............... (1.256) 0.004 0.970 0.180 0.260
--------------------------------------------------------
Total from investment operations ..................................... (0.076) 1.192 2.150 1.240 1.440
--------------------------------------------------------
Less dividends and distributions to:
Common shareholders from net investment income ....................... (0.907) (0.930) (0.930) (0.930) (0.930)
Preferred shareholders from net investment income .................... (0.272) (0.262) (0.280) (0.270) (0.290)
Common shareholders from net realized gain on investments ............ (0.051) - (0.020) - -
Preferred shareholders from net realized gain on investments ......... (0.014) - (0.010) - -
--------------------------------------------------------
Total dividends and distributions .................................... (1.244) (1.192) (1.240) (1.200) (1.220)
--------------------------------------------------------
Net asset value, end of year ............................................ $14.060 $15.380 $15.380 $14.470 $14.430
========================================================
Market value, end of year ............................................... $13.563 $16.500 $15.690 $14.380 $15.000
========================================================
Total investment return based on:(1)
Market value ......................................................... (12.39%) 11.29% 16.04% 2.01% 10.31%
Net asset value ...................................................... (2.56%) 5.88% 13.02% 6.90% 8.20%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of year (000 omitted) ......................................... $56,488 $59,919 $59,915 $57,544 $57,429
Ratio of expenses to average net assets(3) ........................... 0.89% 0.81% 0.77% 0.81% 0.82%
Ratio of expenses to average net assets
applicable to common shares ....................................... 1.36% 1.21% 1.17% 1.24% 1.24%
Ratio of net investment income to average net assets(3) .............. 5.25% 5.13% 5.20% 4.78% 5.28%
Ratio of net investment income to average net assets
applicable to common shares(4) .................................... 6.17% 5.99% 6.01% 5.45% 6.04%
Portfolio turnover ................................................... 12% 15% 0% 5% 7%
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 ........ $141,221 $149,797 $149,788 $143,860 $143,573
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) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(3) 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.
(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.
See accompanying notes
26
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each common share of the Fund outstanding
throughout each period was as follows: Voyageur Minnesota Municipal Income Fund II, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ...................................... $14.950 $14.800 $13.590 $13.480 $13.120
Income (loss) from investment operations:
Net investment income ................................................ 1.176 1.154 1.130 1.130 1.100
Net realized and unrealized gain (loss) on investments ............... (1.411) 0.099 1.200 0.080 0.380
-------------------------------------------------------
Total from investment operations ..................................... (0.235) 1.253 2.330 1.210 1.480
-------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ....................... (0.818) (0.818) (0.820) (0.810) (0.800)
Preferred shareholders from net investment income .................... (0.307) (0.285) (0.300) (0.290) (0.320)
-------------------------------------------------------
Total dividends ...................................................... (1.125) (1.103) (1.120) (1.100) (1.120)
-------------------------------------------------------
Net asset value, end of year ............................................ $13.590 $14.950 $14.800 $13.590 $13.480
=======================================================
Market value, end of year ............................................... $12.438 $15.060 $13.880 $12.630 $13.250
=======================================================
Total investment return based on:(1)
Market value ......................................................... (12.28%) 14.73% 16.56% 1.47% 14.16%
Net asset value ...................................................... (3.43%) 6.76% 15.51% 6.97% 8.88%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of year (000 omitted) ......................................... $158,574 $168,456 $167,333 $158,572 $157,755
Ratio of expenses to average net assets(3) ........................... 0.62% 0.64% 0.76% 0.74% 0.77%
Ratio of expenses to average net assets applicable
to common shares .................................................. 0.99% 1.00% 1.19% 1.19% 1.23%
Ratio of net investment income to average net assets(3) .............. 5.30% 4.96% 4.98% 5.15% 5.03%
Ratio of net investment income to average net assets applicable
to common shares(4) ............................................... 6.24% 5.80% 5.73% 6.15% 5.76%
Portfolio turnover ................................................... 4% 15% 4% 20% 11%
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 ........ $132,145 $140,380 $139,444 $132,143 $131,462
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) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(3) 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.
(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.
See accompanying notes
27
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each common share of the Fund outstanding
throughout each period was as follows: Voyageur Minnesota Municipal Income Fund III, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.970 $13.760 $12.710 $12.540 $12.200
Income (loss) from investment operations:
Net investment income ................................................ 1.075 1.025 1.050 1.080 1.050
Net realized and unrealized gain (loss) on investments ............... (1.425) 0.222 1.060 0.150 0.330
--------------------------------------------------------
Total from investment operations ..................................... (0.350) 1.247 2.110 1.230 1.380
--------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ....................... (0.758) (0.758) (0.760) (0.750) (0.720)
Preferred shareholders from net investment income .................... (0.302) (0.279) (0.300) (0.310) (0.320)
--------------------------------------------------------
Total dividends ...................................................... (1.060) (1.037) (1.060) (1.060) (1.040)
--------------------------------------------------------
Net asset value, end of year ............................................ $12.560 $13.970 $13.760 $12.710 $12.540
========================================================
Market value, end of year ............................................... $11.750 $14.125 $13.380 $12.250 $12.000
========================================================
Total investment return based on:(1)
Market value ......................................................... (11.70%) 11.59% 15.80% 8.62% 13.51%
Net asset value ...................................................... (4.57%) 7.28% 14.82% 7.50% 8.79%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of year (000 omitted) ......................................... $38,075 $40,665 $40,283 $38,348 $38,046
Ratio of expenses to average net assets(3) ........................... 0.81% 0.77% 0.83% 0.81% 0.81%
Ratio of expenses to average net assets applicable
to common shares .................................................. 1.33% 1.22% 1.34% 1.33% 1.33%
Ratio of net investment income to average net assets(3) .............. 5.10% 4.64% 4.88% 5.17% 5.05%
Ratio of net investment income to average net assets applicable
to common shares(4) ............................................... 5.99% 5.35% 5.61% 6.05% 5.81%
Portfolio turnover ................................................... 16% 15% 9% 39% 35%
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 shares, end of year ........ $126,916 $135,549 $134,278 $127,826 $126,821
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) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(3) 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.
(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.
See accompanying notes
28
<PAGE>
Financial Highlights (continued)
Selected data for each common share of the Fund outstanding
throughout each period was as follows:
<TABLE>
<CAPTION>
Voyageur Arizona Municipal Income Fund, Inc.
-------------------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................................ $15.290 $15.030 $13.780 $13.740 $13.220
Income (loss) from investment operations:
Net investment income .......................................... 1.115 1.108 1.090 1.080 1.090
Net realized and unrealized gain (loss) on investments ......... (1.333) 0.202 1.230 0.010 0.470
----------------------------------------------------------
Total from investment operations ............................... (0.218) 1.310 2.320 1.090 1.560
----------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ................. (0.773) (0.773) (0.770) (0.760) (0.730)
Preferred shareholders from net investment income .............. (0.299) (0.277) (0.300) (0.290) (0.310)
----------------------------------------------------------
Total dividends ................................................ (1.072) (1.050) (1.070) (1.050) (1.040)
----------------------------------------------------------
Net asset value, end of year ...................................... $14.000 $15.290 $15.030 $13.780 $13.740
==========================================================
Market value, end of year ......................................... $12.625 $15.125 $14.630 $13.000 $12.750
==========================================================
Total investment return based on:(1)
Market value ................................................... (11.65%) 8.84% 18.79% 8.20% 11.52%
Net asset value ................................................ (3.10%) 7.07% 15.17% 5.94% 9.55%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of year (000 omitted) .................................... $66,758 $70,586 $69,813 $66,102 $65,990
Ratio of expenses to average net assets(3)...................... 0.76% 0.74% 0.80% 0.78% 0.78%
Ratio of expenses to average net assets applicable
to common shares ............................................. 1.21% 1.15% 1.26% 1.25% 1.26%
Ratio of net investment income to average net assets(3) ........ 4.93% 4.69% 4.71% 4.85% 4.88%
Ratio of net investment income to average net assets applicable
to common shares(4) .......................................... 5.74% 5.46% 5.34% 5.71% 5.57%
Portfolio turnover ............................................. 41% 46% 22% 31% 30%
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 .. $133,516 $141,172 $139,627 $132,205 $131,979
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) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(3) 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.
(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.
See accompanying notes
29
<PAGE>
Financial Highlights (continued)
Selected data for each common share of the Fund outstanding
throughout each period was as follows:
<TABLE>
<CAPTION>
Voyageur Florida Insured Municipal Income Fund
------------------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............................... $15.670 $15.300 $13.670 $13.710 $13.170
Income (loss) from investment operations:
Net investment income ......................................... 1.092 1.113 1.090 1.080 1.060
Net realized and unrealized gain (loss) on investments ........ (1.368) 0.292 1.600 (0.080) 0.510
----------------------------------------------------------
Total from investment operations .............................. (0.276) 1.405 2.690 1.000 1.570
----------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ................ (0.758) (0.758) (0.760) (0.750) (0.720)
Preferred shareholders from net investment income ............. (0.296) (0.277) (0.300) (0.290) (0.310)
----------------------------------------------------------
Total dividends ............................................... (1.054) (1.035) (1.060) (1.040) (1.030)
----------------------------------------------------------
Net asset value, end of year ..................................... $14.340 $15.670 $15.300 $13.670 $13.710
==========================================================
Market value, end of year ........................................ $11.750 $14.750 $14.310 $12.500 $12.750
==========================================================
Total investment return based on:(1)
Market value .................................................. (15.57%) 8.47% 20.94% 3.94% 10.39%
Net asset value ............................................... (3.01%) 7.80% 18.22% 5.23% 9.66%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of year (000 omitted) ................................... $54,730 $57,956 $57,071 $53,110 $53,207
Ratio of expenses to average net assets(3) .................... 0.83% 0.75% 0.80% 0.78% 0.80%
Ratio of expenses to average net assets
applicable to common shares ................................. 1.31% 1.14% 1.25% 1.25% 1.27%
Ratio of net investment income to average net assets(3) ....... 4.79% 4.67% 4.73% 4.91% 4.82%
Ratio of net investment income to average net assets
applicable to common shares(4) .............................. 5.47% 5.37% 5.33% 5.74% 5.45%
Portfolio turnover ............................................ 6% 0% 5% 68% 22%
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 . $136,825 $144,889 $142,677 $132,775 $133,017
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) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
(3) 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.
(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.
See accompanying notes
30
<PAGE>
Financial Highlights (continued)
Selected data for each common share of the Fund outstanding
throughout each period was as follows:
<TABLE>
<CAPTION>
Voyageur Colorado Insured Municipal Income Fund, Inc.
-------------------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................................ $15.220 $14.920 $13.580 $13.610 $13.190
Income (loss) from investment operations:
Net investment income .......................................... 1.099 1.080 1.070 1.050 1.030
Net realized and unrealized gain (loss) on investments ......... (1.417) 0.264 1.300 (0.060) 0.410
----------------------------------------------------------
Total from investment operations ............................... (0.318) 1.344 2.370 0.990 1.440
----------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ................. (0.735) (0.735) (0.740) (0.730) (0.700)
Preferred shareholders from net investment income .............. (0.297) (0.309) (0.290) (0.290) (0.320)
----------------------------------------------------------
Total dividends ................................................ (1.032) (1.044) (1.030) (1.020) (1.020)
----------------------------------------------------------
Net asset value, end of year ...................................... $13.870 $15.220 $14.920 $13.580 $13.610
==========================================================
Market value, end of year ......................................... $12.563 $14.938 $14.000 $12.500 $12.630
==========================================================
Total investment return based on:(1)
Market value ................................................... (11.05%) 12.13% 18.09% 4.77% 8.99%
Net asset value ................................................ (3.62%) 7.21% 15.84% 5.19% 8.55%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of year (000 omitted) .................................... $107,093 $113,598 $112,187 $105,687 $105,843
Ratio of expenses to average net assets(3) ..................... 0.68% 0.69% 0.75% 0.77% 0.75%
Ratio of expenses to average net assets
applicable to common shares .................................. 1.08% 1.06% 1.18% 1.23% 1.21%
Ratio of net investment income to average net assets(3) ........ 4.93% 4.61% 4.72% 4.76% 4.68%
Ratio of net investment income to average net assets
applicable to common shares(4) ............................... 5.72% 5.08% 5.38% 5.51% 5.18%
Portfolio turnover ............................................. 37% 18% 39% 88% 39%
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 year .. $133,867 $141,998 $140,234 $132,109 $132,304
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) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(3) 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.
(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.
See accompanying notes
31
<PAGE>
Notes to Financial Statements
March 31, 2000
--------------------------------------------------------------------------------
Voyageur Minnesota Municipal Income Fund, Inc. ("Minnesota Municipal Fund");
Voyageur Minnesota Municipal Income Fund II, Inc. ("Minnesota Municipal Fund
II"); Voyageur Minnesota Municipal Income Fund III, Inc. ("Minnesota Municipal
Fund III"); Voyageur Arizona Municipal Income Fund, Inc. ("Arizona Municipal
Fund"); Voyageur Florida Insured Municipal Income Fund ("Florida Insured
Municipal Fund"); and Voyageur Colorado Insured Municipal Income Fund, Inc.
("Colorado Insured Municipal Fund") (each referred to as a "Fund" and
collectively 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. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Funds.
Security Valuation - Long-term debt securities are valued by an
independent pricing service and such prices are believed to reflect the fair
value of such securities. Money market instruments having less than 60 days to
maturity are valued at amortized cost which approximates market value. Other
securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Funds' Board of Directors.
Federal Income Taxes - Each Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from accounting
principles generally accepted in the United States.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting year. Actual results could
differ from those estimates.
Other - Expenses common to all funds are allocated amongst the funds within the
Delaware Investments Family of 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. Each Fund intends to pay monthly dividends from net
investment income. Capital gains, if any, are distributed annually.
Certain expenses of the Funds are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The expenses
paid under the above arrangements are included in their respective expense
captions in the Statements of Operations with the corresponding offset shown as
"expenses paid indirectly". The amount of these expenses for the year ended
March 31, 2000 were:
Minnesota Minnesota Minnesota
Municipal Municipal Municipal
Fund Fund II Fund III
--------- ---------- ----------
Commission Expenses ................. $1,321 $3,702 $890
Arizona Florida Colorado
Municipal Insured Insured
Fund Municipal Fund Municipal Fund
--------- -------------- --------------
Commission Expenses ................. $1,550 $1,272 $2,479
32
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
2. Investment Management and Transactions with Affiliates
In accordance with the terms of their respective Investment Management
Agreements, each Fund pays Delaware Management Company ("DMC"), the Investment
Manager, an annual fee of 0.40% of average net assets, which is calculated
daily, including assets attributable to any preferred stock that may be
outstanding. The Funds have engaged Delaware Services Company, Inc., ("DSC"), an
affiliate of DMC, to provide accounting and administration services which are
paid on a monthly basis, and subject to certain minimums.
On March 31, 2000, the Funds had payables to affiliates as follows:
<TABLE>
<CAPTION>
Minnesota Minnesota Minnesota Arizona Florida Colorado
Municipal Municipal Municipal Municipal Insured Insured Municipal
Fund Fund II Fund III Fund Municipal Fund Fund
---------- --------- --------- --------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Investment management and
other expenses payable
to DMC and affiliates ............. $21,962 $58,180 $21,357 $25,526 $21,366 $63,054
Administration and
accounting fees and other
expenses payable to DSC ........... 16,564 20,327 10,826 12,384 12,949 14,580
</TABLE>
Certain officers of DMC and DSC are officers, directors, trustees and/or
employees of the Funds. These officers, directors, trustees, and employees are
not compensated by the Funds.
3. Investments
During the year ended March 31, 2000, the Funds made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
<TABLE>
<CAPTION>
Minnesota Minnesota Minnesota Arizona Florida Colorado
Municipal Municipal Municipal Municipal Insured Insured
Fund Fund II Fund III Fund Municipal Fund Municipal Fund
---------- ---------- ----------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Purchases .................. $6,996,937 $7,240,868 $6,045,946 $27,440,288 $3,011,870 $40,291,620
Sales ...................... 6,656,622 6,778,003 6,010,957 27,474,119 3,324,383 40,014,716
</TABLE>
At March 31, 2000, the aggregate cost of investments and unrealized appreciation
(depreciation) of securities for federal income tax purposes for each Fund were
as follows:
<TABLE>
<CAPTION>
Aggregate Aggregate Net Unrealized
Cost of Unrealized Unrealized Appreciation/
Investments Appreciation Depreciation (Depreciation)
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Minnesota Municipal Fund ....................... $ 54,485,277 $1,940,645 $ (483,405) $1,457,240
Minnesota Municipal Fund II .................... 156,807,302 2,467,146 (2,317,635) 149,511
Minnesota Municipal Fund III ................... 37,144,586 1,071,243 (720,592) 350,651
Arizona Municipal Fund ......................... 65,494,059 1,541,742 (1,173,423) 368,319
Florida Insured Municipal Fund ................. 52,580,089 1,288,842 (93,015) 1,195,827
Colorado Insured Municipal Fund ................ 106,582,451 1,007,689 (1,948,627) (940,938)
</TABLE>
For federal income tax purposes, as of March 31, 2000, the Funds had capital
loss carryforwards expiring in the following years:
<TABLE>
<CAPTION>
2003 2004 2005 2006 2008 Total
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Minnesota Municipal Fund I ........... $ - $ - $ - $ - $265,111 $ 265,111
Minnesota Municipal Fund II .......... 952,440 1,143,840 89,665 132,129 437,162 2,755,236
Minnesota Municipal Fund III ......... 866,889 1,279,495 455,666 6,539 56,856 2,665,445
Arizona Municipal Fund ............... - - 47,185 - 66,924 114,109
Florida Insured Municipal Fund ....... 212,501 183,099 - - 98,928 494,528
Colorado Insured Municipal Fund ...... - - 391,632 - 57,053 448,685
</TABLE>
33
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
4. Capital Stock
Pursuant to their articles of incorporation, Minnesota Municipal Fund, Minnesota
Municipal Fund II, Minnesota Municipal Fund III, Arizona Municipal Fund and
Colorado Insured Municipal Fund each have 200 million shares of $0.01 par value
common shares authorized. Florida Insured Municipal Fund has been authorized to
issue an unlimited amount of $0.01 par value common shares.
For the years ended March 31, 2000 and March 31, 1999, the Funds did not have
any transactions in common shares.
The Funds each have one million shares of $0.01 par value preferred shares
authorized, except for Florida Insured Municipal Fund which has an unlimited
amount of $0.01 par value preferred shares authorized. Under resolutions adopted
by the Board of Directors/Trustees, Minnesota Municipal Fund is allowed to issue
up to 400 preferred shares, of which the entire amount was issued on August 6,
1992. On May 14, 1993, Minnesota Municipal Fund II, Arizona Municipal Fund and
Florida Insured Municipal Fund issued 1,200, 500 and 400 preferred shares,
respectively. On December 10, 1993, Minnesota Municipal Fund III issued 300
preferred shares and on September 23, 1993, Colorado Insured Municipal Fund
issued 800 preferred shares. The preferred shares of each Fund have a
liquidation preference of $50,000 per share plus an amount equal to accumulated
but unpaid dividends.
Dividends for the outstanding preferred shares of each Fund are cumulative at a
rate established at the initial public offering and are typically reset every 28
days based on the results of an auction. Dividend rates (adjusted for any
capital gain distributions) ranged from 3.20% to 3.95% on Minnesota Municipal
Fund, from 3.00% to 4.80% on Minnesota Municipal Fund II, from 3.30% to 4.25% on
Minnesota Municipal Fund III, from 2.95% to 4.75% on Arizona Municipal Fund,
from 3.00% to 4.75% on Florida Insured Municipal Fund and from 3.00% to 4.30% on
Colorado Insured Municipal Fund during the year ended March 31, 2000. Salomon
Smith Barney, Inc. and Merrill Lynch Pierce, Fenner & Smith Inc. (Colorado
Insured Municipal Fund only), as the remarketing agents, receive an annual fee
from each of the Funds of 0.25% 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. 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.
5. Market and Credit Risks
The Funds concentrate their investments in securities issued by each specific
state's municipalities. 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.
<PAGE>
6. Tax Information (Unaudited)
The information set forth is for the Fund's fiscal year as required by federal
laws. Shareholders, however, must report distributions on a calendar year basis
for income tax purposes, which may include distributions for portions of two
fiscal years of a fund. Accordingly, the information needed by shareholders for
income tax purposes will be sent to them in early 2001. Please consult your tax
advisor for proper treatment of the information.
For the fiscal year ended March 31, 2000, each Fund designates as long term
capital gains, ordinary income, and tax-exempt income distributions paid during
the year as follows:
<TABLE>
<CAPTION>
Long Term Ordinary Tax Total
Capital Gains Income Exempt Distributions
Distributions Distributions Income (Tax Basis)
-------------- ------------- ------ --------------
<S> <C> <C> <C> <C>
Minnesota Municipal Fund I ............ 5% - 95% 100%
Minnesota Municipal Fund II ........... - - 100% 100%
Minnesota Municipal Fund III .......... - - 100% 100%
Arizona Municipal Fund ................ - - 100% 100%
Florida Insured Municipal Fund ........ - - 100% 100%
Colorado Insured Municipal Fund ....... - - 100% 100%
</TABLE>
34
<PAGE>
Report of Independent Auditors
--------------------------------------------------------------------------------
To the Shareholders and Board of Directors/Trustees
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, 2000,
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the three years in the period 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 financial
highlights for the periods presented through March 31, 1997 were audited by
other auditors whose report dated May 9, 1997 expressed an unqualified opinion
on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures include
confirmation of securities owned as of March 31, 2000, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds at March 31, 2000, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended, and their financial highlights for each of the three
years in the period then ended, in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young LLP
----------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
May 5, 2000
35
<PAGE>
Proxy Results (Unaudited)
--------------------------------------------------------------------------------
Shareholders of the 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. voted on the following proposals at the annual meeting of
shareholders on November 1, 1999, as adjourned. The description of each proposal
and number of shares voted are as follows:
<TABLE>
<CAPTION>
Common Shareholders Preferred Shareholders
Shares Shares Shares Shares Shares Shares
Voted Voted Voted Voted Voted Voted
For Against Abstain For Against Abstain
--- ------- ------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1. To elect the Fund's Board of Directors/Trustees:
Voyageur Minnesota Municipal Income Fund, Inc:
Wayne A. Stork .................................... 2,333,400 5,319 - - - -
David K. Downes ................................... 2,333,400 5,319 - - - -
Walter P. Babich .................................. 2,331,537 7,182 - - - -
John H. Durham .................................... N/A N/A N/A - - -
Anthony D. Knerr .................................. 2,333,400 5,319 - - - -
Ann R. Leven ...................................... 2,333,557 5,162 - - - -
Thomas F. Madison ................................. N/A N/A N/A 273 - -
Charles E. Peck ................................... 2,331,537 7,182 - - - -
Janet L. Yeomans .................................. N/A N/A N/A 273 - -
Voyageur Minnesota Municipal Income Fund II, Inc:
Wayne A. Stork .................................... 6,525,983 24,657 - - - -
David K. Downes ................................... 6,525,983 24,657 - - - -
Walter P. Babich .................................. 6,525,779 24,861 - - - -
John H. Durham .................................... N/A N/A N/A - - -
Anthony D. Knerr .................................. 6,525,783 24,857 - - - -
Ann R. Leven ...................................... 6,525,237 25,403 - - - -
Thomas F. Madison ................................. N/A N/A N/A 1,157 - -
Charles E. Peck ................................... 6,524,579 26,061 - - - -
Janet L. Yeomans .................................. N/A N/A N/A 1,157 - -
Voyageur Minnesota Municipal Income Fund III, Inc:
Wayne A. Stork .................................... 1,654,790 14,938 - - - -
David K. Downes ................................... 1,654,790 14,938 - - - -
Walter P. Babich .................................. 1,651,290 18,438 - - - -
John H. Durham .................................... N/A N/A N/A - - -
Anthony D. Knerr .................................. 1,654,790 14,938 - - - -
Ann R. Leven ...................................... 1,654,790 14,938 - - - -
Thomas F. Madison ................................. N/A N/A N/A 252 - -
Charles E. Peck ................................... 1,651,290 18,438 - - - -
Janet L. Yeomans .................................. N/A N/A N/A 252 - -
Voyageur Arizona Municipal Income Fund, Inc:
Wayne A. Stork .................................... 2,923,839 3,439 - - - -
David K. Downes ................................... 2,923,839 3,439 - - - -
Walter P. Babich .................................. 2,923,839 3,439 - - - -
John H. Durham .................................... N/A N/A N/A - - -
Anthony D. Knerr .................................. 2,923,839 3,439 - - - -
Ann R. Leven ...................................... 2,922,339 4,939 - - - -
Thomas F. Madison ................................. N/A N/A N/A 448 - -
Charles E. Peck ................................... 2,922,139 5,139 - - - -
Janet L. Yeomans .................................. N/A N/A N/A 448 - -
</TABLE>
36
<PAGE>
Proxy Results (continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Common Shareholders Preferred Shareholders
Shares Shares Shares Shares Shares Shares
Voted Voted Voted Voted Voted Voted
For Against Abstain For Against Abstain
--- ------- ------- --- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1. To elect the Fund's Board of Directors/Trustees:
Voyageur Florida Insured Municipal Income Fund:
Wayne A. Stork ........................................ 2,113,694 8,879 - - - -
David K. Downes ....................................... 2,113,694 8,879 - - - -
Walter P. Babich ...................................... 2,111,894 10,679 - - - -
John H. Durham ........................................ N/A N/A N/A - - -
Anthony D. Knerr ...................................... 2,113,694 8,879 - - - -
Ann R. Leven .......................................... 2,113,294 9,279 - - - -
Thomas F. Madison ..................................... N/A N/A N/A 400 - -
Charles E. Peck ....................................... 2,112,894 9,679 - - - -
Janet L. Yeomans ...................................... N/A N/A N/A 400 - -
Voyageur Colorado Insured Municipal Income Fund, Inc:
Wayne A. Stork ........................................ 4,237,498 17,953 - - - -
David K. Downes ....................................... 4,237,498 17,953 - - - -
Walter P. Babich ...................................... 4,237,970 17,482 - - - -
John H. Durham ........................................ N/A N/A N/A - - -
Anthony D. Knerr ...................................... 4,248,646 6,805 - - - -
Ann R. Leven .......................................... 4,248,646 6,805 - - - -
Thomas F. Madison ..................................... N/A N/A N/A 788 - -
Charles E. Peck ....................................... 4,240,310 15,142 - - - -
Janet L. Yeomans ...................................... N/A N/A N/A 788 - -
</TABLE>
2. To ratify the selection of Ernst & Young LLP, as the independent auditors
for the Fund.
<TABLE>
<CAPTION>
Common Shareholders
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Voyageur Minnesota Municipal Income Fund, Inc. ....................... 2,320,650 7,139 10,929
Voyageur Minnesota Municipal Income Fund II, Inc. .................... 6,532,773 4,740 13,127
Voyageur Minnesota Municipal Income Fund III, Inc. ................... 1,652,818 2,495 14,416
Voyageur Arizona Municipal Income Fund, Inc. ......................... 2,924,745 - 2,533
Voyageur Florida Insured Municipal Income Fund ....................... 2,099,763 5,590 17,220
Voyageur Colorado Insured Municipal Income Fund, Inc. ................ 4,236,085 2,596 16,771
</TABLE>
37
<PAGE>
DELAWARE Registrar and Stock Transfer Agent
INVESTMENTS Norwest Bank Minnesota, N.A.
----------- P.O. Box 64851
St. Paul, MN 55164
1.800.468.9716
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This annual report is for the information of 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.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BOARD OF DIRECTORS/ AFFILIATED OFFICERS Investment Manager
TRUSTEES Delaware Management Company
Philadelphia, PA
Wayne A. Stork Charles E. Haldeman, Jr.
Chairman President and Chief Executive Officer International Affiliate
Delaware Investments Family of Funds Delaware Management Holdings, Inc. Delaware International Advisers Ltd.
Philadelphia, PA Philadelphia, PA London, England
Walter P. Babich Richard J. Flannery Principal Office of the Fund
Board Chairman Executive Vice President 1818 Market Street
Citadel Constructors, Inc. and General Counsel Philadelphia, PA 19103-3682
King of Prussia, PA Delaware Investments
Philadelphia, PA Independent Auditors
David K. Downes Ernst & Young LLP
President and Chief Executive Officer Bruce D. Barton 2001 Market Street
Delaware Investments Family of Funds President and Chief Executive Officer Philadelphia, PA
Philadelphia, PA Delaware Distributors, L.P.
Philadelphia, PA Number of Recordholders as of
Anthony D. Knerr March 31, 2000
Consultant, Anthony Knerr & Associates
New York, NY Minnesota Municipal Income Fund I 436
Minnesota Municipal Income Fund II 735
Ann R. Leven Minnesota Municipal Income Fund III 180
Former Treasurer, National Gallery of Art Arizona Municipal
Washington, DC Income Fund 137
Florida Insured Municipal
Thomas F. Madison Thomas F. Madison and Janet L. Yeomans Income Fund 252
President and Chief Executive Officer were elected by the preferred Shareholders Colorado Insured Municipal
MLM Partners, Inc. of the Voyageur Closed-End Municipal Income Fund 236
Minneapolis, MN Bond Funds.
Charles E. Peck
Retired
Fredericksburg, VA
Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN
(3113) Printed in the USA
VOY-CEAR [3/00] PPL 5/00 (J5870)
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