<PAGE>
DELAWARE(SM)
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
2001 SEMI-ANNUAL REPORT
(Tax-Exempt Income Artwork)
<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 10
Statements of Operations 23
Statements of Changes in
Net Assets 24
Financial Highlights 25
Notes to Financial
Statements 31
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 high current income exempt from federal income tax
and from the personal income tax of its state, if any, consistent with the
preservation of capital. In addition, Florida Insured Municipal Income Fund
seeks investments that enable its shares to be exempt from Florida's 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 $103 billion in assets
under management as of September 30, 2000.
As of September 30, 2000, Delaware Management currently manages more than $44
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>
"WE BELIEVE RISING
TREASURY PRICES
LEFT MUNICIPAL BONDS IN
A POSITION OF
RELATIVE VALUE."
Dear Shareholder
November 6, 2000
Recap of Events - Throughout most of the six-month period that ended September
30, 2000, rising interest rates and inflation worries contributed to extreme
volatility in the U.S. stock markets. Somewhat uncertain market conditions,
combined with the U.S. Treasury buyback program, led to a marked increase in
demand for the safety of U.S. Treasury securities. We believe rising Treasury
prices, however, left municipal bonds in a position of relative value. Investors
began to recognize this value as Treasury yields dropped and AAA-rated municipal
bond yields exceeded 6% in March (Source: Bloomberg). Since then, we have
generally seen demand for municipal bonds on the upswing.*
Increased tax revenue resulting from the strong economy and higher borrowing
costs resulting from rising interest rates caused many state and local
governments to reduce the number of municipal bonds they issued during the year.
This caused demand to exceed supply as we ended our reporting period (Source:
Moody's Investors Service Inc.).
The flip-flop between supply and demand in the municipal markets happened
gradually throughout 2000. The Fed's latest interest rate hike in May supported
that trend. In August, as the end of our reporting period approached, demand for
municipal bonds remained high while municipal bond issuance year-to-date
declined by about 19%, a reduction of about $33 billion from the same period one
year prior (Source: Thomson Financial).
<TABLE>
<CAPTION>
Total Return
Total Return Total Return Premium (+)/
at Net at Market Discount (-) ASE
For the Six-Month Period Ended September 30, 2000 Asset Value Value as of 9/30/00 Symbol
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Minnesota Municipal Income Fund I +4.13% +6.89% -0.99% VMN
---------------------------------------------------------------------------------------------------------------
Minnesota Municipal Income Fund II +4.34% +8.85% -3.57% VMM
---------------------------------------------------------------------------------------------------------------
Minnesota Municipal Income Fund III +4.15% +10.28% -0.93% VYM
---------------------------------------------------------------------------------------------------------------
Lipper Minnesota Closed-End Municipal
Debt Funds Average (6 funds) +4.25%
---------------------------------------------------------------------------------------------------------------
Arizona Municipal Income Fund +4.09% +13.14% -2.01% VAZ
---------------------------------------------------------------------------------------------------------------
Colorado Insured Municipal Income Fund +4.51% +9.99% -4.70% VCF
---------------------------------------------------------------------------------------------------------------
Lipper Other States Closed-End
Municipal Debt Funds Average (19 funds) +4.66%
---------------------------------------------------------------------------------------------------------------
Florida Insured Municipal Income Fund +4.73% +8.68% -15.01% VFL
---------------------------------------------------------------------------------------------------------------
Lipper Florida Closed-End Municipal
Debt Funds Average (13 funds) +4.30%
---------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +3.97%
Lehman Brothers Insured Municipal Bond Index +4.18%
---------------------------------------------------------------------------------------------------------------
</TABLE>
All performance shown above assumes reinvestment of all distributions. The
Lipper categories represent the average returns of municipal bond funds with
similar investment objectives tracked by Lipper (Source: Lipper 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 is not a guarantee of future results.
*Unlike Treasuries, the U.S. government does not guarantee the payment of
principal and interest on municipal bonds.
1
<PAGE>
"WE ARE ENCOURAGED BY
THE CURRENT MARKET
ENVIRONMENT."
Market Outlook - We are encouraged by the current municipal market environment.
As of this writing, the predominant opinion on Wall Street is that the Fed is
firmly in a holding pattern with regard to its actions on interest rates.
Evident slowing in the U.S. economy, which has prompted the Fed to leave rates
untouched at its last two meetings, could eventually lead to lesser revenues for
states and municipalities. In our opinion, this would likely lead to a general
increase in the issuance of municipal bonds.
We believe that municipal bonds will continue to play a role in investors'
well-diversified portfolios. In addition, we believe that in an environment
where interest rates trend downward, investing in municipal bond funds will be
more attractive to investors than buying individual bonds. In such an
environment, municipal bond funds like Delaware's are holding slightly older
bonds -- many of which were issued with more attractive rates than most new
issues coming to market.
Thank you for your continued confidence and your commitment to 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
(Tax-Exempt Income Artwork)
2
<PAGE>
Elizabeth H. Howell
Senior Portfolio Manager
Minnesota Municipal
Income Funds I, II, III
Andrew M. McCullagh
Senior Portfolio Manager
Arizona Municipal Income Fund,
Colorado Insured Municipal
Income Fund
Mitchell L. Conery
Patrick P. Coyne
Senior Portfolio Managers
Florida Insured Municipal
Income Fund
November 6, 2000
PORTFOLIO MANAGEMENT REVIEW
---------------------------
The Funds' Results
During the six-month period ended September 30, 2000, the broad-based decline in
the stock market led to renewed investor interest in the relative stability of
bonds. As money flowed into fixed-income investments, we began to see strong
performance in municipal markets despite changes in interest rates.
The six months were characterized by continued diminishing of municipal bond
supply, as states, counties and municipalities issued fewer bonds, likely due to
strong local economies and tax bases. Although bonds in the healthcare sector
showed weakness, bond issues for public projects such as transportation and
higher education often exhibited strength. Credit upgrades for bonds were also
substantial -- especially among tax-backed bonds (Source: Moody's Investors
Service).
Portfolio Highlights
Minnesota Municipal Income Funds I, II and III
During the six-month period ended September 30, 2000, economic growth in
Minnesota continued to be robust. In June 2000, Moody's Investors Service, an
independent credit rating agency, made the following observation about
Minnesota: "A diverse economy, favorable demographic trends, and healthy income
growth and employment trends all contribute to a strong state economy. While
more heavily represented in certain areas, the spread among sectors closely
mirrors the employment mix in the country overall, making for one of the more
diverse economies among the states." Moody's also noted that Minnesota has
particular strength in manufacturing even though manufacturing has declined in
other areas of the country. Manufacturing in Minnesota is strong in areas such
as instruments and industrial machinery, as well as in resource-related sectors
such as paper and food.
In all three Minnesota Municipal Income Funds, we maintained a significant
portion of 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 by Standard & Poor's, which is the highest credit rating available,
and are backed by U.S. government securities. We held onto these bonds because
they continue to generate high levels of income for the Funds. As they approach
their maturity date, we will sell them and seek to replace them with comparable
yielding bonds. As of September 30, 2000, pre-refunded bonds accounted for
approximately 27% of net assets in Minnesota Municipal Income Fund I, 30% of net
assets in Minnesota Municipal Income Fund II and 24% of net assets in Minnesota
Municipal Income Fund III.
3
<PAGE>
"THE SUCCESS OF OUR
SHORTER DURATION
STRATEGY IS EVIDENT IN
THE PERFORMANCE OF
ALMOST ALL OF THE
MINNESOTA FUNDS."
Beginning in May 2000, long-term interest rates began declining even as the
Federal Reserve Board was considering more short-term interest rate increases.
Because we anticipated this situation, we took a conservative approach and kept
the duration of the Fund slightly shorter than that of its competitors. A
shorter duration makes the Fund's bond prices less susceptible to interest rate
movements. By shortening duration in a period of lower long-term rates, we were
able to increase the Fund's income in a manner that is consistent with
preservation of capital.
The success of our shorter duration strategy is evident in the performance of
almost all of the Minnesota Funds. Minnesota Municipal Income Fund II returned
+4.34% and Minnesota Municipal Income Fund III returned +4.15% -- both at net
asset value (capital change with reinvested dividends) for the six-month period
ended September 30, 2000. In comparison, the Funds' benchmarks, the Lehman
Brothers Municipal Bond Index and the Lipper Minnesota Closed-End Municipal Debt
Funds peer group, returned +3.97% and +4.25%, respectively.
The +4.13% return at net asset value (capital change with reinvested dividends)
of the Minnesota Municipal Income Fund I lagged that of its peer group, as
measured by the Lipper Minnesota Closed-End Municipal Debt Funds Average, which
returned +4.25% for the same period. Because Minnesota Municipal Debt Income
Fund I is an older Fund, many of the bonds in its portfolio have relatively
short-term maturities. The Federal Reserve Board's short-term interest rate
hikes during the period had a more negative impact on this Fund. As a result,
the Fund did not perform as well as the other Minnesota Funds.
(Tax-Exempt Income Artwork)
4
<PAGE>
FUND BASICS
-----------
Fund Objectives
The Funds seek to provide current income exempt from both regular federal income
tax and Minnesota personal income tax, consistent with preservation of capital.
Total Fund Assets
As of September 30, 2000
Fund I $56.69 million
Fund II $159.61 million
Fund III $38.30 million
Number of Holdings
Fund I 42
Fund II 70
Fund III 30
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 degree from Babson College and
is a member of the Twin Cities Securities Analysts Society.
MINNESOTA MUNICIPAL INCOME FUNDS I, II, III
-------------------------------------------
<TABLE>
<CAPTION>
Bond Quality and Portfolio Highlights
September 30, 2000 Fund I Fund II Fund III
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA 62.85% 54.02% 56.06%
AA 6.70% 16.92% 5.48%
A 14.50% 14.38% 21.87%
BBB 1.44% 3.17% 7.34%
Unrated 14.51% 11.51% 9.25%
----------------------------------------------------------------------------------------------------------
Average Credit Quality AAA AAA AAA
Average Effective Maturity 13.96 years 19.86 years 21.61 years
Average Duration 5.78 years 7.47 years 8.02 years
Current Yield at Market Price 6.64% 6.17% 6.03%
Amount or Leveraging (millions) $20 million $60 million $15 million
-----------------------------------------------------------------------------------------------------------
</TABLE>
Approximately 18.39%, 19.27% and 11.97% of the income generated by Minnesota
Municipal Income Funds - I, II and III, respectively, for the six months ended
September 30, 2000 was subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
Sector Allocation
September 30, 2000 Fund I Fund II Fund III
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pre-Refunded Bonds/Escrowed to Maturity 26.99% 30.21% 24.20%
----------------------------------------------------------------------------------------------------------
Housing 21.27% 20.70% 14.03%
----------------------------------------------------------------------------------------------------------
Power Authority 15.92% 9.47% 8.56%
----------------------------------------------------------------------------------------------------------
Hospitals 16.01% 15.60% 23.07%
----------------------------------------------------------------------------------------------------------
General Obligation 5.56% 3.71% 1.85%
----------------------------------------------------------------------------------------------------------
Higher Education 7.36% 8.81% 6.40%
----------------------------------------------------------------------------------------------------------
Water & Sewer 5.76% 2.49% 10.71%
----------------------------------------------------------------------------------------------------------
Transportation -- 3.67% 4.96%
----------------------------------------------------------------------------------------------------------
Pollution Control -- 2.93% 2.44%
----------------------------------------------------------------------------------------------------------
Miscellaneous 1.13% 2.41% 3.78%
----------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
FUND BASICS
-----------
Fund Objective
The Fund seeks to provide current income exempt from both regular federal income
tax and from Arizona personal income tax, consistent with preservation of
capital.
Total Fund Assets
As of September 30, 2000
$67.22 million
Number of Holdings
42
Fund Start Date
February 26, 1993
Your Fund Manager
Andrew M. McCullagh joined Delaware Investments in 1997, after holding
investment management positions at Kirchner, Moore & Co. He holds a bachelor's
degree from Washington College and a graduate certificate in public finance from
the University of Michigan.
Arizona Municipal Income Fund
Sector Allocation
September 30, 2000
Hospitals 12.05%
Water & Sewer 7.47%
Lease/Certificates
of Participation 3.65%
Power Authority 2.51%
Miscellaneous 7.86%
Territory 12.88%
Transportation 13.77%
General Obligation 16.56%
Housing 23.25%
Arizona Municipal Income Fund
Arizona has a diverse economy, which continued to grow throughout the six-month
period ended September 30, 2000. According to a recent report from the U.S.
Commerce Department, Arizona ranked highest in the nation for economic growth.
During the period ended September 30, 2000, consumer spending and a surging
housing market helped Arizona grow at an annual rate of 7.5% -- surpassing the
national average of 3.9% (Source: The Denver Post). Arizona is also experiencing
rapid employment and population growth, which have heightened the need for
schools, roads and housing (Source: Arizona's Economy-Eller School of Business
and Public Administration). Considering these impressive economic factors, and
the state's strong credit rating and moderately low debt, financial conditions
in Arizona are very favorable.
Because we anticipated a decline in long-term interest rates, we adopted a
strategy of purchasing bonds with a call protection. We moved out of
intermediate-term bonds with relatively short call periods and into longer-term
bonds with 10-year call protection. By strengthening its call protection, we
eliminated the possibility that holdings that carry relatively high yields will
be called in a declining interest-rate environment. Issuers must wait 10 years
before redeeming bonds with a 10-year call protection.
We restructured the portfolio by upgrading and consolidating certain positions
and eliminating other positions. For example, we sold all of the Fund's
healthcare bonds. During the six months, the healthcare area of the municipal
bond market faced significant pressure, possibly because of the uncertain future
of Medicaid and Medicare during this Presidential election year. We replaced the
healthcare bonds in the portfolio with airport bonds, general obligation bonds
and stadium bonds.
During the six-month period, new issuance of Arizona municipal bonds was
relatively low. As a result, we supplemented the Fund's investments with
territorial bonds issued by Puerto Rico. In Puerto Rico, we favored attractively
priced single-family housing bonds with AAA ratings. These bonds not only
offered dual tax exemption but also provided an element of diversification for
the Fund.
For the six-month period ended September 30, 2000, the +4.09% total return at
net asset value (capital change with reinvested dividends) of the Arizona
Municipal Income Fund outperformed its benchmark, the Lehman Brothers Municipal
Bond Index, which posted +3.97% for the same period. Unfortunately, the Fund's
total return lagged the +4.66% return of the average fund in the Lipper Other
States Closed-End Municipal Debt Funds peer group.
<PAGE>
Portfolio Characteristics
September 30, 2000
--------------------------------------------------------------------------------
Current Yield at Market Price 5.57%
--------------------------------------------------------------------------------
Average Duration* 7.80 years
--------------------------------------------------------------------------------
Average Effective Maturity** 25.16 years
--------------------------------------------------------------------------------
Average Credit Quality AAA
--------------------------------------------------------------------------------
*Duration is a common measure of a bond or bond fund's sensitivity to interest
rate changes.
**Average effective maturity is the average time remaining until scheduled
repayment by issuers of portfolio securities.
Approximately 21.25% of the income generated by Arizona Municipal Income Fund
for the six months ended September 30, 2000 was subject to the federal
alternative minimum tax.
6
<PAGE>
FUND BASICS
-----------
Fund Objective
The Fund seeks to provide current income exempt from regular federal income tax
consistent with 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
As of September 30, 2000
$55.26 million
Number of Holdings
33
Fund Start Date
February 26, 1993
Your Fund Managers
Mitchell L. Conery received a bachelor's degree from Boston University and an
MBA in Finance from the State University of New York at Albany. Prior to joining
Delaware Investments in 1997, he served as an 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.
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 1990.
Florida Insured Municipal Income Fund had a total return of +4.73% at net asset
value (capital change with reinvested dividends) for the six-month period ended
September 30, 2000. The Fund outperformed both the Lehman Brothers Insured
Municipal Bond Index, which posted a +4.18% return, and the Lipper Florida
Closed-End Municipal Debt Funds peer group, which returned +4.30% for the
period.
In managing the Fund during the period, we maintained our conservative
investment strategy. The Fund invested exclusively in insured, AAA-rated
municipal bonds that are backed by secondary issuers. We focused on providing
the most amount of income possible that is consistent with preservation of
principal. Because long-term interest rates declined during the period, we
shortened the Fund's duration from 12.20 years to 7.44 years. A shorter duration
makes the Fund's bond prices less susceptible to interest rate movements.
While the Fund is well diversified among economic sectors, we limited its
exposure to the healthcare sector. In general, healthcare bonds performed poorly
during the period. We believe that the cloudy outlook for the future of Medicaid
and Medicare may have been among the reasons that municipal bonds in this sector
faced pressures. At 17% of net assets, pre-refunded bonds composed the largest
segment of the Fund. Issuers often pre-refund their bonds when interest rates
are declining in order to reduce their interest costs. 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.
On a positive note for Florida-based investors, the state legislature has
enacted changes to limit the intangibles tax, an annual tax imposed on residents
for all intangible personal property -- such as stocks, bonds and other
securities. The state of Florida continues to benefit from a strong economy and
a conservative fiscal policy, and we believe that the reduction of the
intangibles tax should benefit the economy.
Portfolio Characteristics
September 30, 2000
--------------------------------------------------------------------------------
Current Yield at Market Price 6.12%
--------------------------------------------------------------------------------
Average Duration* 7.44 years
--------------------------------------------------------------------------------
Average Effective Maturity** 18.43 years
--------------------------------------------------------------------------------
Average Credit Quality AAA
--------------------------------------------------------------------------------
*Duration is a common measure of a bond or bond fund's sensitivity to interest
rate changes.
**Average effective maturity is the average time remaining until scheduled
repayment by issuers of portfolio securities.
Approximately 16.54% of the income generated by Florida Insured Municipal
Income Fund for the six months ended September 30, 2000 was subject to the
federal alternative minimum tax.
<PAGE>
Fund Sector Allocation
September 30, 2000
--------------------------------------------------------------------------------
Miscellaneous 23.26%
--------------------------------------------------------------------------------
Pre-Refunded/Escrowed to Maturity 17.07%
--------------------------------------------------------------------------------
Hospitals 15.78%
--------------------------------------------------------------------------------
Housing 11.75%
--------------------------------------------------------------------------------
Lease/Certificates of Participation 10.63%
--------------------------------------------------------------------------------
Water & Sewer 8.25%
--------------------------------------------------------------------------------
Higher Education 4.99%
--------------------------------------------------------------------------------
Airport 4.70%
--------------------------------------------------------------------------------
General Obligation 3.57%
--------------------------------------------------------------------------------
7
<PAGE>
FUND BASICS
-----------
Fund Objective
The Fund seeks to provide current income exempt from both regular federal income
tax and Colorado personal income tax, consistent with preservation of capital.
Total Fund Assets
As of September 30, 2000
$108.20 million
Number of Holdings
46
Fund Start Date
July 29, 1993
Your Fund Manager
Andrew M. McCullagh
Colorado Insured
Municipal Income Fund
Sector Allocation
September 30, 2000
Miscellaneous 4.45%
Transportation 27.18%
General Obligation 16.10%
Water & Sewer 6.83%
Housing 10.50%
Hospitals 10.74%
Higher Education 11.38%
Lease/Certificates of Participation 12.82%
(Tax-Exempt Income Artwork)
Colorado Insured Municipal Income Fund
As a result of Colorado's robust economy, the state ranked fifth in the nation
for economic growth for the period ended September 30, 2000 (Source: Denver
Post). According to a recent report produced by the Corporation for Economic
Development, Colorado received straight A's for its economic performance,
business vitality and development capacity (Source: Rocky Mountain News).
Colorado can attribute its strong performance to a low poverty rate, rapid
employment growth, and a healthy residential construction industry.
Colorado's growing population has lead to congestion on the state's highways,
leading the Colorado legislature to approve billions of dollars in highway bonds
to expand both roads and mass transit systems (Source: Standard & Poor's). We
saw the issuance of these new highway bonds as an opportunity to upgrade the
transportation sector within the Fund. We sold older transportation bonds at a
profit and replaced them with new issues that, we believe, were attractively
priced and carried relatively high yields. At more than 27% of assets,
transportation bonds accounted for the Fund's largest sector weighting.
In a move to consolidate and upgrade the portfolio, we eliminated all of the
Fund's healthcare bonds, excluding bonds issued by hospitals. We believe,
uncertainty about the future of Medicaid and Medicare during this Presidential
election year has had a negative effect on healthcare bonds. We sold
intermediate-term bonds that were likely to be called in the near future and
replaced them with longer-term bonds that had 10-year call protection, meaning
the issuer cannot redeem them for 10 years.
As long-term interest rates declined, we shortened the Fund's duration in an
effort to earn the highest amount of income possible that is consistent with
preservation of principal. Consistent with its investment strategy, the Fund
invested exclusively in insured municipal bonds rated AAA by Moody's or Standard
& Poor's -- the highest credit quality available.
For the six-month period ended September 30, 2000, the +4.51% total return of
Colorado Insured Municipal Income Fund at net asset value (capital change with
reinvested dividends) outperformed the +4.18% total return of the Lehman
Brothers Insured Municipal Bond Index. Unfortunately, the Fund underperformed
the +4.66% return of the Lipper Other States Closed-End Municipal Debt Funds
peer group.
<PAGE>
Portfolio Characteristics
September 30, 2000
--------------------------------------------------------------------------------
Current Yield at Market Price 5.47%
--------------------------------------------------------------------------------
Average Duration* 9.53 years
--------------------------------------------------------------------------------
Average Effective Maturity** 26.51 years
--------------------------------------------------------------------------------
Average Credit Quality AAA
--------------------------------------------------------------------------------
*Duration is a common measure of a bond or bond fund's sensitivity to interest
rate changes.
**Average effective maturity is the average time remaining until scheduled
repayment by issuers of portfolio securities.
None of the income generated by Colorado Insured Municipal Income Fund for the
six months ended September 30, 2000 was subject to the federal alternative
minimum tax.
8
<PAGE>
Outlook
In the months ahead, we anticipate a positive environment for municipal bonds.
We think it is possible that the strong performance seen in the first half of
2000 could continue throughout the fall.
As always with municipal bonds, this depends largely on interest rate trends, as
well as supply and demand in the municipal markets. The Federal Reserve Board
has promised to remain vigilant about keeping inflation under control and could
resume its interest rate increases in the future. As of this writing, however,
many analysts and investors seem to believe that the Fed may be finished with
increases -- at least for the rest of this year. Long-term interest rates,
meanwhile, are generally trending downward (Source: Bloomberg).
We believe a non-inflationary U.S. economy that has less-robust growth is likely
to boost the demand for capital funding. This would be positive for municipal
bonds and for the Funds. In our opinion, municipal bond funds will continue to
be an important investment vehicle -- which can provide excellent
diversification for an investor's overall portfolio, as well allowing individual
investors the potential opportunity to preserve their own capital and generate
non-taxable income.*
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, ChaseMellon Shareholder
Services, L.L.C. at 1.800.851.9677. 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 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.
Effective December 8, 2000 ChaseMellon Shareholder Services, L.L.C. will become
the transfer and dividend disbursing agent, registrar and dividend reinvestment
agent for the Voyageur Closed-End Municipal Bond Funds. You can contact
ChaseMellon at:
ChaseMellon Shareholder Services, L.L.C.
Dividend Reinvestment Department
Overpeck Centre
85 - Challenger Road
Ridgefield, NJ 07660
1.800.851.9677
*A portion of the income from tax-exempt funds may be subject to the alternative
minimum tax.
9
<PAGE>
Statements of Net Assets
Voyageur Minnesota Municipal Income Fund, Inc.
----------------------------------------------
Principal Market
September 30, 2000 (Unaudited) Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.87%
General Obligation Bonds - 5.56%
Minneapolis Refunding (Laurel Village)
6.00% 3/1/16 ................................ $1,600,000 $ 1,621,712
Minneapolis St. Paul Metro Airport
Commission 6.60% 1/1/11 (AMT) ............... 1,500,000 1,532,385
-----------
3,154,097
-----------
Higher Education Revenue Bonds - 7.36%
Minnesota Higher Education Facility
(St. Thomas University) Series 3-C
6.25% 9/1/16 ................................ 1,000,000 1,007,820
Minnesota State University Board
(State University System) Series A
6.05% 6/30/18 ............................... 250,000 251,567
Northfield (St. Olaf College)
6.30% 10/1/12 ............................... 1,075,000 1,119,204
6.40% 10/1/21 ............................... 1,750,000 1,793,802
-----------
4,172,393
-----------
Hospital Revenue Bonds - 16.01%
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 1,011,360
Duluth Economic Development Authority
Health Care (St. Luke's Hospital)
Series 1992-B 6.40% 5/1/18 (Connie Lee) ..... 1,000,000 1,030,430
Minneapolis Health Care Facility
(Fairview Hospital) Series 1993-A
5.25% 11/15/19 (MBIA) ....................... 1,500,000 1,425,270
Minneapolis Hospital System
(Fairview Hospital) Series 1991-A
6.50% 1/1/11 (MBIA) ......................... 2,210,000 2,293,781
Minnesota Agricultural & Economic
Development Board Health Care System
Series A (Fairview Hospital)
6.375% 11/15/29 ............................. 2,500,000 2,504,725
St. Paul Housing & Redevelopment Authority
Health Care Facility (Regions Hospital)
5.30% 5/15/28 ............................... 1,000,000 807,400
-----------
9,072,966
-----------
Housing Revenue Bonds - 21.27%
Brooklyn Center Multifamily Housing (Four
Courts Apartments) 7.50% 6/1/25 (AMT) ....... 1,800,000 1,771,938
Dakota County Housing & Redevelopment
Authority Single Family Mortgage Revenue
5.85% 10/1/30 (GNMA) (FNMA) (AMT) ........... 349,000 344,142
Minnesota Housing Finance Agency Single
Family Mortgage Series 1992-G
7.45% 7/1/22 (AMT) (FHA) .................... 375,000 383,284
Minnetonka Housing Facilities (Beacon Hill
Project) Presbyterian Home Guaranteed
7.70% 6/1/25 ................................ 2,725,000 2,738,162
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
New Brighton Multifamily Mortgage
(Polynesian Village Apartments)
Series 1995-A 7.60% 4/1/25 (AMT) ............ $1,400,000 $ 1,377,096
St. Anthony Multifamily Housing
Development (Autumn Woods Project)
6.875% 7/1/22 (ASSET GTY) ................... 2,265,000 2,349,349
St. Paul Housing & Redevelopment
Authority Multifamily Housing
(Pointe of St. Paul Project) Series 1992
6.60% 10/1/12 (FNMA) ........................ 2,950,000 3,096,261
-----------
12,060,232
-----------
Power Authority Revenue Bonds - 15.92%
Bass Brook (Minnesota Power & Light)
6.00% 7/1/22 ................................ 2,100,000 2,047,542
Northern Minnesota Municipal Power
Agency Electric System Revenue Bonds
Series A 5.00% 1/1/21 ....................... 1,500,000 1,353,045
Series B 5.50% 1/1/18 (AMBAC) ............... 1,250,000 1,225,350
Puerto Rico Electric Power Authority
Series EE 4.75% 7/1/24 ...................... 1,100,000 962,269
Southern Minnesota Municipal Power Agency
5.00% 1/1/16 (FGIC) ......................... 580,000 548,570
5.50% 1/1/15 (AMBAC) ........................ 610,000 611,769
Western Minnesota Municipal Power Agency
Series A 5.50% 1/1/15 (MBIA) ................ 2,275,000 2,275,023
-----------
9,023,568
-----------
*Pre-Refunded Bonds /
Escrowed to Maturity - 26.99%
Dakota & Washington Counties Housing &
Redevelopment Authority Single Family
Mortgage 8.375% 9/1/21
(Escrowed to Maturity) (AMT) (GNMA) ......... 2,555,000 3,433,511
Duluth Economic Development Authority
Health Care (Duluth Clinic) Series 1992
6.30% 11/1/22-02 (AMBAC) .................... 1,270,000 1,338,694
6.30% 11/1/22-04 (AMBAC) .................... 730,000 776,165
Edina Recreational Facilities Series 1992-A
6.00% 1/1/09-02 ............................. 305,000 309,740
6.00% 1/1/10-02 ............................. 320,000 324,973
Minneapolis & St. Paul Housing &
Redevelopment Authority Health Care
(Health One) 6.75% 8/15/14-02 ............... 500,000 513,015
Minnesota Higher Education Revenue
Series 3-J (Macalester College)
6.40% 3/1/22-02 ............................. 1,000,000 1,024,630
Minnesota Public Facilities Authority
(Water Pollution Control) Series 1992
6.50% 3/1/14-02 ............................. 1,500,000 1,569,225
Puerto Rico Commonwealth
6.00% 7/1/26-07 ............................. 2,000,000 2,210,860
10
<PAGE>
Statements of Net Assets (continued)
Principal Market
Voyageur Minnesota Municipal Income Fund, Inc. Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded Bonds /
Escrowed to Maturity (continued)
St. Cloud Hospital
6.75% 7/1/15-01 (AMBAC) .................... $1,000,000 $ 1,036,610
St. Francis Independent School District #15
6.30% 2/1/11-06 (FSA) ...................... 1,250,000 1,333,462
Southern Minnesota Municipal Power Agency
5.50% 1/1/15 (AMBAC)
(Escrowed to Maturity) ..................... 390,000 394,961
5.75% 1/1/11 (FGIC)
(Escrowed to Maturity) ..................... 1,000,000 1,033,270
-----------
15,299,116
-----------
Water & Sewer Revenue Bonds - 5.76%
Anoka County Solid Waste Disposal
National Rural Co-op Utility
6.95% 12/1/08 (AMT) ........................ 1,000,000 1,023,360
**Minnesota Public Facilities Authority Water
Pollution Control Revenue,
Inverse Floater ROLS
3.50% 3/1/16 ............................... 1,000,000 786,160
3.65% 3/1/17 ............................... 1,855,000 1,458,067
-----------
3,267,587
-----------
Total Municipal Bonds (cost $54,345,718) ..... 56,049,959
-----------
Total Market Value of Securities - 98.87%
(cost $54,345,718) ......................... $56,049,959
Receivables and Other Assets
Net of Liabilities - 1.13% ................. 638,784
-----------
Total Net Assets - 100.00% ................... 56,688,743
Liquidation Value of Preferred Stock ......... (20,000,000)
-----------
Net Assets Applicable to 2,594,700
Common Shares ($0.01 Par Value)
Outstanding ................................ $36,688,743
===========
Net Asset Value Per Common Share
($36,688,743 / 2,594,700 Shares) ........... $14.14
------
---------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floater represents a security that pays interest at a rate that
increases (decreases) with a decrease (increase) in a specific index. Interest
rate disclosed is in effect as of September 30, 2000.
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets At September 30, 2000:
Common Stock, $0.01 par value unlimited
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 ............................... (113,085)
Accumulated net realized loss
on investments .................................. (329,153)
Net unrealized appreciation of investments ........ 1,704,241
-----------
Total net assets .................................. $56,688,743
===========
------------------
Summary of Abbreviations:
AMBAC - Insured by the American Municipal Bond Assurance Corporation
AMT - Alternative Minimum Tax
ASSET GTY - 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
See accompanying notes
11
<PAGE>
Statements of Net Assets (continued)
Voyageur Minnesota Municipal Income Fund II, Inc.
-------------------------------------------------
Principal Market
September 30, 2000 (Unaudited) Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.69%
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 $ 354,235
------------
354,235
------------
General Obligation Bonds - 3.71%
Becker Refunding Tax Increment Series D
6.25% 8/1/15 (AMT) (MBIA) ................... 3,700,000 3,763,751
Rosemount Independent School
District #196 Series A 5.70% 4/1/12 ......... 1,270,000 1,313,459
St. Paul Tax Increment (Block 39 Project)
Series A 4.75% 2/1/25 ....................... 1,000,000 847,860
------------
5,925,070
------------
Higher Education Revenue Bonds - 8.81%
Minnesota Higher Education Facility
(Macalester College) Series C
5.55% 3/1/16 ................................ 850,000 853,570
Minnesota State Higher Education
Facility (St. Thomas University)
Series 3-R2 5.60% 9/1/14 .................... 175,000 176,257
Series B 3-R1 5.60% 10/1/15 ................. 1,050,000 1,054,526
Series 4A-1 5.625% 10/1/21 .................. 1,000,000 983,670
Minnesota State University Board
(State University System)
Series 1993-A 6.10% 6/30/23 ................. 1,150,000 1,156,636
Series 1993-C 5.60% 6/30/16 (MBIA) .......... 3,115,000 3,127,242
Series 1993-C 5.60% 6/30/19 (MBIA) .......... 3,720,000 3,720,558
University of Minnesota Series A
5.50% 7/1/21 ................................ 3,000,000 2,988,690
------------
14,061,149
------------
Hospital Revenue Bonds - 15.60%
Bloomington Health Care Facilities
(Masonic Home Care Center)
5.875% 7/1/22 (AMBAC) ....................... 1,200,000 1,206,468
Brainerd Health Care (Evangelical Lutheran
Health Care Facilities) Series A
6.65% 3/1/17 (FSA) .......................... 1,195,000 1,238,904
Duluth Economic Development Authority
Benedictine Health Systems
(St. Mary's Hospital) Series C
6.00% 2/15/20 (Connie Lee) .................. 6,000,000 6,068,160
Minneapolis Health Care Facility
(Jones-Harrison Residence Project)
6.00% 10/1/27 ............................... 2,000,000 1,650,840
Minneapolis, St. Paul Housing &
Redevelopment Authority (Children's
Health Care) 5.50% 8/15/25 (FSA) ............ 1,500,000 1,435,320
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds (continued)
Minnesota Agricultural & Economic
Development Health Care System
(Fairview Hospital) Series A
5.75% 11/15/26 (MBIA) ....................... $5,550,000 $ 5,483,067
Minnesota Agricultural Board (Fairview
Hospitals) 6.375% 11/15/29 .................. 2,800,000 2,805,292
Rochester Health Care Facilities (Mayo
Foundation) Series B 5.50% 11/15/27 ......... 3,365,000 3,249,917
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue (Regions
Hospital) 5.30% 5/15/28 ..................... 400,000 322,960
Waconia Health Care Facility Revenue
6.10% 1/1/19 ................................ 1,405,000 1,440,729
-----------
24,901,657
-----------
Housing Revenue Bonds - 20.70%
Chanhassen Multifamily Housing Heritage
Park Project 6.20% 7/1/30 (AMT) (FHA) ....... 1,105,000 1,126,271
Dakota County Housing & Redevelopment
Authority Multifamily Mortgage
(Imperial Ridge Project) Series 1993-A
6.10% 12/15/28 (GNMA) ....................... 1,865,000 1,896,705
Harmony Multifamily Housing (Section 8)
(Zedakah Foundation Project) Series A
5.95% 9/1/20 ................................ 1,000,000 976,370
Minnesota Housing Finance Agency
Multifamily Rental Housing
Series D 5.90% 2/1/14 ....................... 1,115,000 1,136,887
Series D 6.00% 8/1/22 ....................... 2,295,000 2,321,553
Minnesota Housing Finance Agency
Single Family Housing
Series 1991-A 7.05% 7/1/22 (AMT) ............ 1,240,000 1,267,627
Series 1992-B 6.15% 1/1/26 (AMT) ............ 3,455,000 3,475,730
Series 1992-C2 6.15% 7/1/23 (AMT) ........... 3,500,000 3,523,870
Series 1994-F 6.30% 7/1/25 .................. 1,495,000 1,526,171
Series 1994-J 6.95% 7/1/26 (AMT) ............ 2,615,000 2,710,735
Minnesota Housing Finance Agency Single
Family Housing Rental
5.95% 2/1/18 (MBIA) ......................... 1,300,000 1,323,829
Minnetonka Housing Facilities
(Beacon Hill Project)
7.25% 6/1/09 ................................ 1,225,000 1,224,057
7.50% 6/1/14 ................................ 760,000 763,701
7.55% 6/1/19 ................................ 2,365,000 2,371,102
Moorhead Economic Development Authority
Multifamily Housing Development
(Eventide) Series B 6.00% 6/1/18 ............ 1,000,000 872,900
New Brighton Multifamily
(Polynesian Village Apartments)
Series 1995-A 7.60% 4/1/25 .................. 3,820,000 3,757,505
12
<PAGE>
Statements of Net Assets (continued)
Principal Market
Voyageur Minnesota Municipal Income Fund II, Inc. Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
St. Paul Housing & Redevelopment
Authority Single Family Mortgage
6.40% 3/1/21 (FNMA) ............................... $1,245,000 $ 1,285,774
Stillwater Multifamily Mortgage (Stillwater
Cottages) 7.25% 11/1/27 (AMT) ..................... 1,540,000 1,476,660
-----------
33,037,447
-----------
Pollution Control Revenue Bonds - 2.93%
Cloquet Pollution Control (Potlach
Corporation Project) 5.90% 10/1/26 ................ 5,000,000 4,673,350
-----------
4,673,350
-----------
Power Authority Revenue Bonds - 9.47%
Bass Brook Pollution Control Revenue
(Minnesota Power & Light)
6.00% 7/1/22 ...................................... 7,560,000 7,371,151
Northern Minnesota Municipal Power
Agency Electric System Series B
5.50% 1/1/18 (AMBAC) .............................. 5,955,000 5,837,567
Puerto Rico Electric Power Authority
5.25% 7/1/21 ...................................... 2,000,000 1,902,800
-----------
15,111,518
-----------
*Pre-Refunded Bonds /
Escrowed To Maturity - 30.21%
Buffalo Independent School District
6.15% 2/1/22-03 (FSA) ............................. 4,030,000 4,157,872
Dakota & Washington Counties Housing &
Redevelopment Authority Single Family
Mortgage 8.375% 9/1/21 (AMT) (GNMA)
(Escrowed to Maturity) ............................ 5,500,000 7,391,119
Detroit Lakes Benedictine Health Systems
(St. Mary's Hospital)
6.00% 2/15/19-03 (Connie Lee) ..................... 1,250,000 1,312,875
Duluth Economic Development Authority
Health Care Facilities (Duluth Clinic)
6.20% 11/1/12-02 (AMBAC) .......................... 720,000 757,534
6.20% 11/1/12-04 (AMBAC) .......................... 280,000 296,677
6.30% 11/1/22-02 (AMBAC) .......................... 3,890,000 4,100,410
6.30% 11/1/22-04 (AMBAC) .......................... 960,000 1,020,710
Esko Independent School District
5.65% 4/1/12-05 (FSA) ............................. 550,000 568,684
Hawley Independent School District
5.75% 2/1/17-06 (FSA) ............................. 1,000,000 1,041,240
Metropolitan Council Sports Facility
Commission (Hubert H. Humphery
Metrodome) 6.00% 10/1/09
(Escrowed to Maturity) ............................ 2,360,000 2,460,253
Minneapolis & St. Paul Housing &
Redevelopment Authority (HealthOne)
7.40% 8/15/11-02 (MBIA) ........................... 2,105,000 2,164,971
Minnesota Public Facilities Authority Water
Pollution Control 6.25% 3/1/16-05 ................. 1,000,000 1,064,290
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded Bonds /
Escrowed to Maturity (continued)
Minnesota Public Facilities Authority Water
Pollution Control Series 1992
6.50% 3/1/14-02 ................................ $3,300,000 $ 3,452,295
Red Wing Independent School District #256
Series 1993-A 5.70% 2/1/12-03 .................. 2,925,000 2,979,464
Series 1993-A 5.70% 2/1/13-03 .................. 1,625,000 1,655,258
St. Paul Housing & Redevelopment Authority
Sales Tax (Civic Center)
5.55% 11/1/23 (Escrowed to Maturity) ........... 2,300,000 2,273,343
5.55% 11/1/23 (MBIA)
(Escrowed to Maturity) ......................... 4,200,000 4,172,784
Southern Minnesota Municipal Power
Agency 5.75% 1/1/18-16 ......................... 3,715,000 3,842,499
Stewartville Independent School
District #534 5.75% 2/1/17-05 .................. 1,705,000 1,767,454
Western Minnesota Municipal Power Agency
6.625% 1/1/16 (Escrowed to Maturity) ........... 1,535,000 1,726,660
------------
48,206,392
------------
Transportation - 3.67%
Puerto Rico Commonwealth Highway &
Transportation Authority 5.50% 7/1/26 .......... 6,000,000 5,862,180
------------
5,862,180
------------
Water & Sewer Revenue Bonds - 2.49%
**Minnesota Public Facilities Authority Water
Pollution Control Revenue,
Inverse Floater ROLS
3.65% 3/1/17 ................................... 1,145,000 899,993
3.75% 3/1/18 ................................... 1,360,000 1,058,175
3.75% 3/1/19 ................................... 2,000,000 1,522,180
4.22% 11/1/17 .................................. 570,000 497,051
------------
3,977,399
------------
Other Revenue Bonds - 0.88%
Burnsville Commercial Development
Refunding (Holiday Inn Project)
5.90% 4/1/08 ................................... 1,430,000 1,405,433
------------
1,405,433
------------
Total Municipal Bonds
(cost $156,127,962) ............................ 157,515,830
------------
13
<PAGE>
Statements of Net Assets (continued)
Market
Voyageur Minnesota Municipal Income Fund II, Inc. Value
--------------------------------------------------------------------------------
Total Market Value of Securities - 98.69%
(cost $156,127,962) .............................. $157,515,830
Receivables and Other Assets
Net of Liabilities - 1.31% ....................... 2,097,453
------------
Total Net Assets - 100.00% ......................... 159,613,283
Liquidation Value of Preferred Stock ............... (60,000,000)
------------
Net Assets Applicable To 7,252,200
Common Shares ($0.01 Par Value)
Outstanding ...................................... $ 99,613,283
============
Net Asset Value per Common Share
($99,613,283 / 7,252,200 Shares) ................. $13.74
------
-----------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floater represents a security that pays interest at a rate that
increases (decreases) with a decrease (increase) in a specific index. Interest
rate disclosed is in effect as of September 30, 2000.
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets at September 30, 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 .................. 1,465,618
Accumulated net realized loss
on investments ..................................... (2,950,205)
Net unrealized appreciation of investments ........... 1,387,868
------------
Total net assets ..................................... $159,613,283
============
-------------------
Summary of Abbreviations:
AMBAC - Insured by the American Municipal Bond Assurance Corporation
AMT - 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
See accompanying notes
14
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
===================================================
Principal Market
September 30, 2000 (Unaudited) Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.51%
City Agency Revenue Bonds - 2.29%
Minneapolis Community Development
Agency Supported Development
6.75% 12/1/25 .................................... $ 865,000 $ 877,759
-----------
877,759
-----------
General Obligation Bonds - 1.85%
Minneapolis Sports Arena Project
5.125% 10/1/20 ................................... 750,000 705,750
-----------
705,750
-----------
Higher Education Revenue Bonds - 6.40%
Minnesota State Higher Educational Facilities
Authority (College of St. Benedict)
6.375% 3/1/20 .................................... 345,000 348,912
Minnesota State Higher Educational
Facilities Authority (Gustavus Adolphus
College) Series 4-X 4.80% 10/1/21 ................ 125,000 106,230
Minnesota State Higher Educational
Facilities Authority (St. Mary's College)
Series 3Q 6.15% 10/1/23 .......................... 1,000,000 1,002,540
Minnesota State Higher Educational
Facilities Authority (St. Thomas University)
Series 4-A1 5.625% 10/1/21 ....................... 1,010,000 993,507
-----------
2,451,189
-----------
Hospital Revenue Bonds - 23.07%
Minnesota Agriculture & Economic
Development Health Care System
(Benedictine Health System)
5.75% 2/1/29 ..................................... 1,300,000 1,029,145
Minnesota Agriculture & Economic
Development Health Care System (Fairview
Hospital) Series A 6.375% 11/15/29 ............... 2,000,000 2,003,780
Princeton Hospital Systems
(Fairview Hospital & Healthcare)
Series C 6.25% 1/1/21 (MBIA) ..................... 2,000,000 2,033,700
Robbinsdale North Memorial Medical Center
Series 1993-B 5.50% 5/15/23 (AMBAC) .............. 1,500,000 1,443,600
Rochester Health Care Facilities (Mayo
Foundation) Series B 5.50% 11/15/27 .............. 1,700,000 1,641,860
St. Paul Housing & Redevelopment Authority
Health Care Facility (Regions Hospital)
5.30% 5/15/28 .................................... 600,000 484,440
St. Paul Housing & Redevelopment Authority
(Healtheast Hospital) 5.85% 11/1/17 .............. 250,000 200,595
-----------
8,837,120
-----------
Housing Revenue Bonds - 14.03%
Brooklyn Center Multifamily Housing (Four
Courts Apartments) 7.50% 6/1/25 (AMT) ............ 1,000,000 984,410
Burnsville Multifamily Mortgage
Series A 7.10% 1/1/30 (FSA) ...................... 2,000,000 2,138,420
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Minneapolis Multifamily Housing (Olson
Townhomes) 6.00% 12/1/19 (AMT) ................. $1,875,000 $ 1,826,963
Minnesota State Housing Finance Agency
Single Family Mortgage Series A
7.45% 7/1/22 (AMT) (FHA) ....................... 415,000 424,167
-----------
5,373,960
-----------
Pollution Control Revenue Bonds - 2.44%
Cloquet Pollution Control (Potlatch
Corporation Project) 5.90% 10/1/26 ............. 1,000,000 934,670
-----------
934,670
-----------
Power Authority Revenue Bonds - 8.56%
Bass Brook Pollution Control Revenue
(Minnesota Power & Light)
6.00% 7/1/22 ................................... 1,505,000 1,467,405
Southern Minnesota Municipal Power
Agency 5.75% 1/1/18 (FGIC) ..................... 1,800,000 1,811,916
-----------
3,279,321
-----------
*Pre-Refunded Bonds/
Escrowed to Maturity - 24.20%
Duluth Economic Development Authority
Hospital Facilities (Duluth Clinic)
6.20% 11/1/12-02 ............................... 1,080,000 1,136,300
6.20% 11/1/12-04 ............................... 420,000 445,015
Esko Independent School District
5.75% 4/1/17-05 (FSA) .......................... 2,145,000 2,229,084
Minnesota State Higher Education Facilities
Authority (Saint Benedict) Series 3-W
6.375% 3/1/20-04 ............................... 930,000 980,583
Moorhead Public Utilities Series A
6.25% 11/1/12-02 (MBIA) ........................ 1,500,000 1,545,690
University of Minnesota Hospital
6.75% 12/1/16 (Escrowed to Maturity) ........... 2,580,000 2,931,035
-----------
9,267,707
-----------
Transportation Revenue Bonds - 4.96%
Minneapolis Airport 5.125% 1/1/25 ................ 1,000,000 923,630
Puerto Rico Commonwealth Highway &
Transportation Authority (Highway
Improvements) Series Y 5.50% 7/1/26 ............ 1,000,000 977,030
-----------
1,900,660
-----------
Water & Sewer Revenue Bonds - 10.71%
Minnesota Public Facility Authority Water
Pollution Control Series B 5.40% 3/1/15 ........ 2,820,000 2,826,401
**Minnesota Public Facilities Authority Water
Pollution Control, Inverse Floater ROLS
3.75% 3/1/18 ................................... 1,640,000 1,276,035
-----------
4,102,436
-----------
Total Municipal Bonds (cost $36,995,803) .......... 37,730,572
-----------
15
<PAGE>
Statements of Net Assets (continued)
Market
Voyageur Minnesota Municipal Income Fund III, Inc. Value
--------------------------------------------------------------------------------
Total Market Value of Securities - 98.51%
(cost $36,995,803) ........................................... $37,730,572
Receivables and Other Assets
Net of Liabilities - 1.49% ................................... 569,869
-----------
Total Net Assets - 100.00% ..................................... 38,300,441
Liquidation Value of Preferred Stock ........................... (15,000,000)
-----------
Net Assets Applicable to 1,837,200
Common Shares ($0.01 Par Value)
Outstanding .................................................. $23,300,441
===========
Net Asset Value per Common Share
($23,300,441 / 1,837,200 Shares) ............................. $12.68
------
----------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floater represents a security that pays interest at a rate that
increases (decreases) with a decrease (increase) in a specific index. Interest
rate disclosed is in effect as of September 30, 2000.
--------------------------------------------------------------------------------
Components of Net Assets at September 30, 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 ............................ 173,636
Accumulated net realized loss
on investments ............................................... (2,854,694)
Net unrealized appreciation of investments ..................... 734,769
-----------
Total net assets ............................................... $38,300,441
===========
------------------
Summary of Abbreviations:
AMBAC - Insured by the American Municipal Bond Assurance Corporation
AMT - Alternative Minimum Tax
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
See accompanying notes
16
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
============================================
Principal Market
September 30, 2000 (Unaudited) Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 106.34%
General Obligation Bonds - 16.56%
Eagle Mountain Community Facility District A2
6.40% 7/1/17 ...................................... $1,500,000 $ 1,584,540
Maricopa County Unified School District #11
5.50% 7/1/10 ...................................... 2,750,000 2,806,650
Maricopa County Unified School District #40
6.30% 7/1/11 ...................................... 500,000 531,265
Maricopa County Unified School District #41
6.25% 7/1/15 (FSA) ................................ 1,500,000 1,588,410
Mohave County Unified School District #1
5.90% 7/1/15 (FGIC) ............................... 1,500,000 1,554,270
Phoenix 5.375% 7/1/25 ............................... 2,000,000 1,934,760
Pima County Unified School District #6
5.75% 7/1/12 (FGIC) ............................... 500,000 513,820
Santa Cruz Valley Unified School District #35
5.80% 7/1/09 (AMBAC) .............................. 600,000 620,772
-----------
11,134,487
-----------
Higher Education Revenue Bonds - 1.55%
University of Arizona 6.25% 6/1/11 .................. 1,000,000 1,041,910
-----------
1,041,910
-----------
Hospital Revenue Bonds - 12.05%
Maricopa County Health Facilities
(Catholic Health Care West) Series A
5.75% 7/1/11 (MBIA) ............................... 1,750,000 1,788,150
6.00% 7/1/21 (MBIA) ............................... 1,100,000 1,121,615
Mohave County Industrial Development
Authority (Baptist Hospital)
5.50% 9/1/21 (MBIA) ............................... 500,000 530,135
Show Low Industrial Development Authority
Hospital (Navapache Regional Medical
Center) Series A 5.50% 12/1/17 (ACA) .............. 2,600,000 2,480,400
University of Arizona Medical Center
6.25% 7/1/16 (MBIA) ............................... 700,000 722,953
Yavapai County Industrial Development
Authority Residential Care Facilities
(Margaret T. Morris Center) Series A
5.40% 2/20/38 (GNMA) .............................. 1,575,000 1,456,607
-----------
8,099,860
-----------
Housing Revenue Bonds - 23.25%
Maricopa County Industrial Development
Authority Multifamily (Avalon Apartments
Project) Series A 6.35% 4/1/30 (Asset Gty) ........ 1,610,000 1,637,563
Maricopa County Industrial Development
Authority Multifamily (Camelback Apartments
Project A) 5.45% 5/1/28 (Asset Gty) ............... 1,250,000 1,167,350
Maricopa County Industrial Development
Authority Single Family Housing Revenue
6.625% 7/1/21 (GNMA/FNMA) ......................... 1,500,000 1,565,700
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Peoria Industrial Development Authority
Multifamily Revenue
7.30% 2/20/28 (GNMA) .............................. $1,230,000 $ 1,317,244
Phoenix Industrial Development Authority
(Chris Ridge) 6.80% 11/1/25 (FHA) ................. 500,000 514,250
Phoenix Industrial Development Authority
Single Family Mortgage
5.30% 4/1/20 (GNMA) ............................... 2,485,000 2,325,836
5.35% 6/1/20 (GNMA) ............................... 3,295,000 3,151,931
Pima County Industrial Development Authority
(Single Family Mortgage Revenue) Series A
5.20% 5/1/31 (GNMA) ............................... 1,450,000 1,288,789
6.25% 11/1/30 (GNMA) .............................. 1,125,000 1,148,861
Pima County Industrial Development Authority
(Single Family Mortgage Revenue)
6.125% 11/1/33 (GNMA/FNMA/FHLMC) .................. 1,495,000 1,510,563
-----------
15,628,087
-----------
Lease / Certificates of Participation - 3.65%
Scottsdale Municipal Property Corporation
Lease 6.25% 11/1/14 (FGIC) ........................ 1,300,000 1,328,249
Tucson Certificates of Participation
5.60% 7/1/11 ...................................... 1,100,000 1,125,278
-----------
2,453,527
-----------
Pollution Control Revenue Bonds - 1.33%
Coconino County (Nevada Power) Pollution
Control Corporation Series B 5.80% 11/1/32 ........ 1,000,000 895,920
-----------
895,920
-----------
Power Authority Revenue Bonds - 2.51%
Salt River Project Electric System Revenue
Series D 6.25% 1/1/27 ............................. 1,635,000 1,686,699
-----------
1,686,699
-----------
Territorial Revenue Bonds - 12.88%
Puerto Rico Commonwealth Infrastructure
Financing Authority Series A 5.50% 10/1/40 ........ 5,250,000 5,158,283
Virgin Islands Public Finance Authority
Revenue Series A 6.125% 10/1/29 ................... 3,450,000 3,506,511
-----------
8,664,794
-----------
Transportation Revenue Bonds - 13.77%
Arizona State Transportation Board Highway
5.75% 7/1/18 ...................................... 2,350,000 2,395,003
Phoenix Civic Improvement Airport Revenue
Senior Lien Series A 5.00% 7/1/25 (FSA) ........... 1,000,000 908,280
Phoenix Street & Highway Junior Lien
6.25% 7/1/11 (FGIC) ............................... 1,300,000 1,354,950
Tucson Airport Authority 5.70% 6/1/13 (MBIA) ........ 3,250,000 3,322,963
Tucson Street & Highway 5.50% 7/1/12 (MBIA) ......... 1,250,000 1,275,988
-----------
9,257,184
-----------
17
<PAGE>
Statements of Net Assets (continued)
Principal Market
Voyageur Arizona Municipal Income Fund, Inc. Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Water & Sewer Revenue Bonds - 7.47%
Phoenix Water System 5.50% 7/1/22 ................... $1,000,000 $ 980,040
Tucson Water Refunding Series A
5.75% 7/1/18 (AMBAC) .............................. 4,000,000 4,038,400
-----------
5,018,440
-----------
Other Revenue Bonds - 11.32%
Arizona Student Loan Acquisition Authority
Revenue 5.90% 5/1/24 .............................. 1,500,000 1,514,490
Maricopa County Stadium District
5.50% 7/1/13 (MBIA) ............................... 2,650,000 2,688,345
Phoenix Civic Improvement Corporation
Excise Tax Revenue
5.25% 7/1/24 ...................................... 1,250,000 1,174,100
5.375% 7/1/29 ..................................... 2,350,000 2,229,727
-----------
7,606,662
-----------
Total Municipal Bonds (cost $70,762,236) ............ 71,487,570
-----------
Total Market Value of Securities - 106.34%
(cost $70,762,236) ................................ $71,487,570
Liabilities Net of Receivables
and Other Assets - (6.34)% ........................ (4,263,947)
-----------
Total Net Assets - 100.00% .......................... 67,223,623
Liquidation Value of Preferred Stock ................ (25,000,000)
-----------
Net Assets Applicable to 2,982,200
Common Shares ($0.01 Par Value)
Outstanding ....................................... $42,223,623
===========
Net Asset Value per Common Share
($42,223,623 / 2,982,200 Shares) .................. $14.16
------
--------------------------------------------------------------------------------
Components Of Net Assets at September 30, 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 688,873
Accumulated net realized loss on investments (29,477)
Net unrealized appreciation of investments 725,334
-----------
Total net assets $67,223,623
===========
--------------------
Summary of Abbreviations:
ACA - Insured by the American Capital Access Corporation
AMBAC - Insured by the American Municipal Bond Assurance Corporation
ASSET GTY - Insured by the Asset Guaranty Insurance Company
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
See accompanying notes
18
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
----------------------------------------------
Principal Market
September 30, 2000 (Unaudited) Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.28%
Airport Revenue Bonds - 4.70%
Dade County Aviation Series B
5.60% 10/1/26 (MBIA) ........................... $1,000,000 $ 990,530
Hillsborough County Aviation Authority
(Tampa International Airport) Series B
5.60% 10/1/19 (FGIC) ........................... 1,600,000 1,604,128
-----------
2,594,658
------------
General Obligation Bonds - 3.57%
Florida Board of Education Capital Outlay
Public Education Series C
6.00% 6/1/21 (FGIC) ............................ 1,890,000 1,973,047
------------
1,973,047
------------
Higher Education Revenue Bonds - 4.99%
Florida Agriculture & Mechanical University
(Student Apartment Facility)
5.625% 7/1/21 (MBIA) ........................... 1,250,000 1,250,925
Volusia County Educational Facilities Authority
(Stetson University Project) Series A
5.50% 6/1/17 (MBIA) ............................ 1,500,000 1,504,530
------------
2,755,455
------------
Hospital Revenue Bonds - 15.78%
Escambia County Health Facilities Authority
(Florida Health Care Facility Loan-VHA
Program) 5.95% 7/1/20 (AMBAC) .................. 2,550,000 2,624,689
Orange County Health Facilities Authority
(Adventist Health Center)
5.75% 11/15/25 (AMBAC) ......................... 1,500,000 1,502,490
(Orlando Regional Health) Series A
6.25% 10/1/18 (MBIA) ........................... 2,000,000 2,172,360
Venice Health Care (Bon Secours
Health System) 5.60% 8/15/16 (MBIA) ............ 2,405,000 2,418,492
------------
8,718,031
------------
Housing Revenue Bonds - 11.75%
Florida Housing Finance Agency
(Woodbridge Apartments) Series L
6.05% 12/6/16 (AMBAC) .......................... 1,120,000 1,155,504
6.25% 6/1/36 (AMBAC) (AMT) ..................... 1,500,000 1,536,390
(Homeowner Mortgage) Series 2
5.90% 7/1/29 (MBIA) (AMT) ...................... 1,235,000 1,226,417
(Leigh Meadows Apartments Section 8)
Series N 6.30% 9/1/36 (AMBAC) (AMT) ............ 2,510,000 2,577,343
------------
6,495,654
------------
Power Authority Revenue Bonds - 2.29%
Florida State Municipal Power Agency
(St. Lucie Project) 5.70% 10/1/16 (FGIC) ....... 1,250,000 1,262,850
------------
1,262,850
------------
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded / Escrowed to
Maturity Bonds - 17.07%
Boca Raton Community Redevelopment
Agency Tax Increment (Mizner Park Project)
5.875% 3/1/13-02 (FGIC) ........................ $1,500,000 $ 1,557,615
Dade County Professional Sports Franchise
Facilities Series B
6.00% 10/1/22-02 (FGIC) ........................ 1,000,000 1,043,550
Dade County School Board Certificates of
Participation Series B
5.60% 8/1/17-06 (AMBAC) ........................ 1,000,000 1,057,140
Dade County Seaport
6.25% 10/1/21-01 (AMBAC) ....................... 1,000,000 1,028,320
Hillsborough County Industrial Development
Authority (Allegany Health System-John
Knox Village) 5.75% 12/1/21 (MBIA)
(Escrowed to Maturity) ......................... 1,000,000 1,004,200
Sunrise Utility System Series A
5.75% 10/1/26-06 (AMBAC) ....................... 2,500,000 2,665,400
Village Center Community Development
District Recreational Revenue Series A
5.85% 11/1/16-06 (MBIA) ........................ 1,000,000 1,079,620
------------
9,435,845
------------
Lease / Certificates of Participation - 10.63%
Escambia County School Board Certificates of
Participation Series 2
5.50% 2/1/22 (MBIA) ............................ 5,000,000 4,901,200
St. Lucie County School Board Certificates of
Participation 5.375% 7/1/19 (FSA) .............. 1,000,000 975,130
------------
5,876,330
------------
Water & Sewer Revenue Bonds - 8.25%
Dade County Water & Sewer System
5.50% 10/1/25 (FGIC) ........................... 1,100,000 1,072,302
Indian River County Water & Sewer
5.50% 9/1/16 (FGIC) ............................ 1,000,000 1,006,310
Panama City Beach Water & Sewer Revenue
5.50% 6/1/18 (AMBAC) ........................... 1,000,000 999,920
Sarasota County Utility System
5.50% 10/1/22 (FGIC) ........................... 1,500,000 1,479,285
------------
4,557,817
------------
Other Revenue Bonds - 19.25%
Florida Ports Financing Commission State
Transportation Trust Fund
5.375% 6/1/27 (MBIA) (AMT) ..................... 2,250,000 2,123,753
Miami Beach Resort Tax
5.50% 10/1/16 (AMBAC) .......................... 1,000,000 1,005,770
Orange County Public Service Tax
6.00% 10/1/24 (FGIC) ........................... 3,000,000 3,089,580
Reedy Creek Improvement District (Sports
Complex) Series A 5.75% 6/1/13 (MBIA) .......... 2,300,000 2,360,168
19
<PAGE>
Statements of Net Assets (continued)
Principal Market
Voyageur Florida Insured Municipal Income Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Other Revenue Bonds (continued)
Tampa Utility Tax
6.00% 10/1/15 (AMBAC) .......................... $1,000,000 $ 1,007,530
Series A 6.125% 10/1/19 (AMBAC) ................ 1,000,000 1,053,840
-----------
10,640,641
-----------
Total Municipal Bonds (cost $52,672,707) ......... 54,310,328
-----------
Total Market Value of Securities - 98.28%
(cost $52,672,707) ............................. $54,310,328
Receivables and Other Assets
Net of Liabilities - 1.72% ..................... 953,128
-----------
Total Net Assets - 100.00% ....................... 55,263,456
Liquidation Value of Preferred Stock ............. (20,000,000)
-----------
Net Assets Applicable to 2,422,200
Common Shares ($0.01 Par Value)
Outstanding .................................... $35,263,456
===========
Net Asset Value per Common Share
($35,263,456 / 2,422,200 Shares) ............... $14.56
------
------------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in
which each bond is pre-refunded.
--------------------------------------------------------------------------------
Components of Net Assets at September 30, 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 .............. 669,812
Accumulated net realized loss
on investments ................................. (405,366)
Net unrealized appreciation of investments ....... 1,637,621
-----------
Total net assets ................................. $55,263,456
===========
--------------------
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
MBIA - Insured by the Municipal Bond Insurance Association
See accompanying notes
20
<PAGE>
Statements of Net Assets (continued)
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
-----------------------------------------------------
Principal Market
September 30, 2000 (Unaudited) Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.60%
General Obligation Bonds - 16.10%
Adams County School District #12 (Five Star)
5.40% 12/15/16 (FGIC) .......................... $2,000,000 $ 1,991,280
Archuleta & Hinsdale Counties
School Districts #50JT
5.50% 12/1/14 (MBIA) ........................... 1,000,000 1,014,350
5.55% 12/1/20 (MBIA) ........................... 4,000,000 3,970,920
El Paso County School District #20
5.625% 12/15/16 (AMBAC) ........................ 3,000,000 3,028,590
5.625% 12/15/16 (MBIA) ......................... 1,000,000 1,009,530
G V R Metropolitan District
5.75% 12/1/19 (AMBAC) .......................... 1,000,000 1,016,280
Pueblo 5.80% 6/1/11 (MBIA) ....................... 1,405,000 1,461,804
Pueblo County (Library District)
5.80% 11/1/19 (AMBAC) .......................... 1,395,000 1,422,523
Stonegate Village Metropolitan District
Refunding & Improvement Series A
5.50% 12/1/21 (FSA) ............................ 2,550,000 2,506,012
------------
17,421,289
------------
Higher Education Revenue Bonds - 11.38%
Aurora Educational Development
6.00% 10/15/15 (Connie Lee) .................... 1,500,000 1,537,830
Colorado Postsecondary Education Facilities
(Auraria Fund Project) 6.00% 9/1/15 (FSA) ...... 1,000,000 1,030,280
Colorado School Mines Auxiliary Facilities
Revenue 5.00% 12/1/28 (MBIA) ................... 1,200,000 1,059,120
Colorado Springs (Colorado College)
5.375% 6/1/32 (MBIA) ........................... 5,000,000 4,734,650
Colorado State Board Agriculture State
University Refunding & Improvement
Auxiliary Facilities
5.125% 3/1/17 (AMBAC) .......................... 1,000,000 957,670
Colorado State Colleges Board of Trustees
(Adams State College) Series A
5.75% 5/15/19 (MBIA) ........................... 2,000,000 2,021,820
University of Northern Colorado Auxiliary
Facilities System 5.60% 6/1/24 (MBIA) .......... 500,000 494,145
University of Puerto Rico Series O
5.375% 6/1/30 (MBIA) ........................... 500,000 482,375
------------
12,317,890
------------
Hospital Revenue Bonds - 10.74%
Colorado Health Facilities Authority (Boulder
Community Hospital Project) Series B
5.875% 10/1/23 (MBIA) .......................... 1,925,000 1,934,144
Colorado Health Facilities Authority
(North Colorado Medical Center)
5.95% 5/15/12 (MBIA) ........................... 2,000,000 2,068,160
6.00% 5/15/20 (MBIA) ........................... 1,000,000 1,011,540
Colorado Health Facilities Authority (Sisters
of Charity) 5.00% 12/1/25 (MBIA) ............... 2,000,000 1,768,300
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds (continued)
Logan County Health Care Facilities (Western
Health Network) 5.90% 1/1/19 (MBIA) ............ $2,000,000 $ 2,015,420
University of Colorado Hospital Authority
Refunding Series A
5.20% 11/15/17 (AMBAC) ......................... 2,945,000 2,822,458
------------
11,620,022
------------
Housing Revenue Bonds - 10.50%
Burlingame Multi-Family Housing Income
6.00% 11/1/29 (MBIA) ........................... 2,540,000 2,574,341
Colorado Housing Finance Authority
(Single Family Housing) Series AA
5.625% 11/1/23 (MBIA) .......................... 5,000,000 4,889,200
Denver City & County Multi-Family Housing
Mortgage Loan (Garden Court)
5.40% 7/1/39 (FHA) ............................. 2,000,000 1,839,620
Snowmass Village Multi-Family Housing
Refunding (Essential Function Housing)
6.25% 12/15/16 (FSA) ........................... 2,000,000 2,059,860
------------
11,363,021
------------
Lease / Certificates of Participation - 12.82%
Arapahoe County Library District
5.70% 12/15/10 (MBIA) .......................... 2,000,000 2,082,300
Auraria Higher Education Center
(Administrative Office Facility Project)
5.125% 5/1/28 (AMBAC) .......................... 5,100,000 4,654,974
Aurora Certificates of Participation
5.50% 12/1/30 (AMBAC) .......................... 2,500,000 2,414,225
Broomfield Public Improvements
5.75% 12/1/24 (AMBAC) .......................... 1,500,000 1,511,550
Eagle County Public Improvements
5.40% 12/1/18 (MBIA) ........................... 1,300,000 1,277,757
Lakewood Certificates of Participation
5.375% 12/1/22 (MBIA) .......................... 2,000,000 1,928,360
------------
13,869,166
------------
Pollution Control Revenue Bonds - 1.18%
Adams County Pollution Control Refunding
(Public Service Company Project) Series A
5.875% 4/1/14 (MBIA) ........................... 1,250,000 1,273,825
------------
1,273,825
------------
* Pre-Refunded Bonds - 1.87%
Jefferson County School District #R-001
6.25% 12/15/12-02 (AMBAC) ...................... 1,935,000 2,023,720
------------
2,023,720
------------
Transportation Revenue Bonds - 27.18%
Arapahoe County Capital Improvements
Highway 6.05% 8/31/15 (MBIA) ................... 4,700,000 4,928,138
Denver City & County Airport Series E
5.25% 11/15/23 (MBIA) .......................... 8,000,000 7,472,080
21
<PAGE>
Statements of Net Assets (continued)
Principal Market
Voyageur Colorado Insured Municipal Income Fund, Inc. Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Transportation Revenue Bonds (continued)
E-470 Public Highway Authority
Series A 4.75% 9/1/23 (MBIA) ................... $4,000,000 $ 3,428,640
Series A 5.00% 9/1/21 (MBIA) ................... 5,270,000 4,810,351
Series A 5.00% 9/1/26 (MBIA) ................... 3,795,000 3,390,339
Series A 5.75% 9/1/29 (MBIA) ................... 3,000,000 3,010,080
Series A 5.75% 9/1/35 (MBIA) ................... 1,700,000 1,697,348
Regional Transportation District (Colorado
Sales Tax) 6.25% 11/1/12 (FGIC) ................ 645,000 669,594
------------
29,406,570
------------
Water & Sewer Revenue Bonds - 6.83%
Colorado Water Resources & Power
Development Authority (Small Water
Resources) 5.80% 11/1/20 (FGIC) ................ 2,000,000 2,036,540
Municipal Subdistrict of Northern Colorado
Water Conservancy District Series F
6.50% 12/1/12 (AMBAC) .......................... 2,800,000 3,062,920
Utility Water Conservancy District Water
Revenue 5.75% 6/15/20 (MBIA) ................... 2,255,000 2,288,983
------------
7,388,443
------------
Total Municipal Bonds
(cost $106,357,281) ............................ 106,683,946
------------
Total Market Value of Securities - 98.60%
(cost $106,357,281) ............................ $106,683,946
Receivables and Other Assets
Net of Liabilities - 1.40% ..................... 1,520,240
------------
Total Net Assets - 100.00% ....................... 108,204,186
Liquidation Value of Preferred Stock ............. (40,000,000)
------------
Net Assets Applicable to 4,837,100
Common Shares ($0.01 par value)
Outstanding .................................... $ 68,204,186
============
Net Asset Value per Common Share
($68,204,186 / 4,837,100 Shares) ............... $14.10
------
-------------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
--------------------------------------------------------------------------------
Components of Net Assets at September 30, 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 .............. 1,260,781
Accumulated net realized loss
on investments ................................. (621,370)
Net unrealized appreciation of investments ....... 326,665
------------
Total net assets ................................. $108,204,186
============
---------------------
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
See accompanying notes
22
<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
Six Months Ended September 30, 2000 (Unaudited) Fund, Inc. Fund II, Inc. Fund III, Inc. Fund, Inc. Fund Income Fund, Inc.
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest $1,746,479 $4,743,495 $1,143,052 $1,933,903 $1,555,600 $3,032,331
---------- ---------- ---------- ---------- ---------- ----------
Expenses:
Management fees 112,421 315,135 76,152 133,260 109,284 214,583
Transfer agent fees and expenses 11,075 8,137 2,975 1,791 3,900 2,273
Registration fees 2,196 -- 1,090 -- -- 330
Reports and statements to shareholders 13,585 12,925 8,030 17,110 11,100 20,729
Accounting and administration 42,615 42,613 30,958 42,584 42,951 42,500
Remarketing Agent fees 28,207 78,622 21,803 33,602 27,434 54,820
Professional fees 13,967 16,273 10,731 12,580 27,272 19,428
Custodian fees 1,500 4,500 380 4,025 700 2,400
Directors'/Trustees' fees 3,100 2,451 2,400 4,250 1,800 1,600
Rating Agency fees 2,250 3,000 2,750 3,500 2,500 2,000
Taxes (other than taxes on income) 2,725 5,170 2,075 865 1,200 3,300
Interest expense 12 26 -- -- -- --
Other 8,237 7,478 2,094 501 1,610 3,667
---------- ---------- ---------- ---------- ---------- ----------
241,890 496,330 161,438 254,068 229,751 367,630
Less expenses paid indirectly (648) (1,821) (437) (766) (630) (1,235)
---------- ---------- ---------- ---------- ---------- ----------
Total expenses 241,242 494,509 161,001 253,302 229,121 366,395
---------- ---------- ---------- ---------- ---------- ----------
Net Investment Income 1,505,237 4,248,986 982,051 1,680,601 1,326,479 2,665,936
---------- ---------- ---------- ---------- ---------- ----------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain (loss) on investments 5,928 (167,695) (149,723) 111,912 107,947 (172,685)
Net change in unrealized appreciation
of investments 247,001 1,219,170 384,118 357,015 441,794 1,267,603
---------- ---------- ---------- ---------- ---------- ----------
Net Realized and Unrealized
Gain on Investments 252,929 1,051,475 234,395 468,927 549,741 1,094,918
---------- ---------- ---------- ---------- ---------- ----------
Net Increase in Net Assets
Resulting from Operations $1,758,166 $5,300,461 $1,216,446 $2,149,528 $1,876,220 $3,760,854
========== ========== ========== ========== ========== ==========
</TABLE>
See accompanying notes
23
<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.
------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended Six Months Year Ended Six Months Year Ended
Ended 9/30/00 3/31/00 Ended 9/30/00 3/31/00 Ended 9/30/00 3/31/00
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations:
Net investment income $ 1,505,237 $ 3,015,406 $ 4,248,986 $ 8,528,029 $ 982,051 $ 1,974,126
Net realized gain (loss) on investments 5,928 (334,960) (167,695) (464,436) (149,723) (96,382)
Net change in unrealized appreciation/
depreciation of investments 247,001 (2,882,079) 1,219,170 (9,792,251) 384,118 (2,521,519)
----------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 1,758,166 (201,633) 5,300,461 (1,728,658) 1,216,446 (643,775)
----------------------------------------------------------------------------------------
Dividends and Distributions to:
Common shareholders from net investment
income (1,089,774) (2,354,690) (2,964,337) (5,928,674) (695,840) (1,391,679)
Preferred shareholders from net
investment income (467,944) (705,125) (1,296,558) (2,224,962) (295,026) (554,400)
Common shareholders from net realized
gain on investments -- (132,070) -- -- -- --
Preferred shareholders from net realized
gain on investments -- (37,139) -- -- -- --
----------------------------------------------------------------------------------------
(1,557,718) (3,229,024) (4,260,895) (8,153,636) (990,866) (1,946,079)
----------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets 200,448 (3,430,657) 1,039,566 (9,882,294) 225,580 (2,589,854)
Net Assets:
Beginning of period 56,488,295 59,918,952 158,573,717 168,456,011 38,074,861 40,664,715
----------------------------------------------------------------------------------------
End of period $56,688,743 $56,488,295 $159,613,283 $158,573,717 $38,300,441 $38,074,861
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Voyageur Arizona Voyageur Florida Voyageur Colorado
Municipal Income Insured Municipal Insured Municipal
Fund, Inc. Income Fund Income Fund, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended Six Months Year Ended Six Months Year Ended
Ended 9/30/00 3/31/00 Ended 9/30/00 3/31/00 Ended 9/30/00 3/31/00
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations:
Net investment income $ 1,680,601 $ 3,324,093 $ 1,326,479 $ 2,645,843 $ 2,665,936 $ 5,316,770
Net realized gain (loss) on investments 111,912 (71,401) 107,947 (117,369) (172,685) (57,053)
Net change in unrealized appreciation/
depreciation of investments 357,015 (3,885,205) 441,794 (3,202,108) 1,267,603 (6,772,294)
----------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 2,149,528 (632,513) 1,876,220 (673,634) 3,760,854 (1,512,577)
----------------------------------------------------------------------------------------
Dividends and Distributions to:
Common shareholders from net investment
income (1,151,875) (2,303,750) (917,408) (1,834,817) (1,777,634) (3,555,269)
Preferred shareholders from net
investment income (532,142) (891,850) (425,464) (717,050) (872,337) (1,437,124)
----------------------------------------------------------------------------------------
(1,684,017) (3,195,600) (1,342,872) (2,551,867) (2,649,971) (4,992,393)
----------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets 465,511 (3,828,113) 533,348 (3,225,501) 1,110,883 (6,504,970)
Net Assets:
Beginning of period 66,758,112 70,586,225 54,730,108 57,955,609 107,093,303 113,598,273
----------------------------------------------------------------------------------------
End of period $67,223,623 $66,758,112 $55,263,456 $54,730,108 $108,204,186 $107,093,303
========================================================================================
</TABLE>
See accompanying notes
24
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each common share of the Fund outstanding
throughout each period were as follows: Voyageur Minnesota Municipal Income Fund, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended Year Ended Year Ended Year Ended Year Ended
Ended 9/30/00 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
(Unaudited)(6)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $14.060 $15.380 $15.380 $14.470 $14.430 $14.210
Income (loss) from investment operations:
Net investment income ..................................... 0.580 1.180 1.188 1.180 1.060 1.180
Net realized and unrealized gain (loss) on investments .... 0.100 (1.256) 0.004 0.970 0.180 0.260
-----------------------------------------------------------------
Total from investment operations .......................... 0.680 (0.076) 1.192 2.150 1.240 1.440
-----------------------------------------------------------------
Less dividends and distributions to:
Common shareholders from net investment income ............ (0.420) (0.907) (0.930) (0.930) (0.930) (0.930)
Preferred shareholders from net investment income ......... (0.180) (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 ......................... (0.600) (1.244) (1.192) (1.240) (1.200) (1.220)
-----------------------------------------------------------------
Net asset value, end of period .............................. $14.140 $14.060 $15.380 $15.380 $14.470 $14.430
=================================================================
Market value, end of period ................................. $14.000 $13.563 $16.500 $15.690 $14.380 $15.000
=================================================================
Total investment return based on:(1)
Market value .............................................. 6.89% (12.39%) 11.29% 16.04% 2.01% 10.31%
Net asset value ........................................... 4.13% (2.56%) 5.88% 13.02% 6.90% 8.20%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) ............................. $56,689 $56,488 $59,919 $59,915 $57,544 $57,429
Ratio of expenses to average net assets(3) ................ 0.85% 0.89% 0.81% 0.77% 0.81% 0.82%
Ratio of expenses to average net assets
applicable to common shares ............................. 1.32% 1.36% 1.21% 1.17% 1.24% 1.24%
Ratio of net investment income to average net assets(3) ... 5.33% 5.25% 5.13% 5.20% 4.78% 5.28%
Ratio of net investment income to average net assets
applicable to common shares(4) .......................... 5.70% 6.17% 5.99% 6.01% 5.45% 6.04%
Portfolio turnover ........................................ 10% 12% 15% 0% 5% 7%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) ....... $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Net asset coverage per share of preferred shares, end
of period ............................................... $141,722 $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 $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 period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(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.
(6) Ratio have been annualized and total return has not been annualized.
See accompanying notes
25
<PAGE>
Financial Highlights (continued)
Selected data for each common share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Voyageur Minnesota Municipal Income Fund II, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended Year Ended Year Ended Year Ended Year Ended
Ended 9/30/00 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
(Unaudited)(6)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $13.590 $14.950 $14.800 $13.590 $13.480 $13.120
Income (loss) from investment operations:
Net investment income ..................................... 0.586 1.176 1.154 1.130 1.130 1.100
Net realized and unrealized gain (loss) on investments .... 0.152 (1.411) 0.099 1.200 0.080 0.380
-----------------------------------------------------------------
Total from investment operations .......................... 0.738 (0.235) 1.253 2.330 1.210 1.480
-----------------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ............ (0.409) (0.818) (0.818) (0.820) (0.810) (0.800)
Preferred shareholders from net investment income ......... (0.179) (0.307) (0.285) (0.300) (0.290) (0.320)
-----------------------------------------------------------------
Total dividends ........................................... (0.588) (1.125) (1.103) (1.120) (1.100) (1.120)
-----------------------------------------------------------------
Net asset value, end of period .............................. $13.740 $13.590 $14.950 $14.800 $13.590 $13.480
=================================================================
Market value, end of period ................................. $13.250 $12.438 $15.060 $13.880 $12.630 $13.250
=================================================================
Total investment return based on:(1)
Market value .............................................. 8.85% (12.28%) 14.73% 16.56% 1.47% 14.16%
Net asset value ........................................... 4.34% (3.43%) 6.76% 15.51% 6.97% 8.88%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) ............................. $159,613 $158,574 $168,456 $167,333 $158,572 $157,755
Ratio of expenses to average net assets(3) ................ 0.62% 0.62% 0.64% 0.76% 0.74% 0.77%
Ratio of expenses to average net assets
applicable to common shares ............................. 1.00% 0.99% 1.00% 1.19% 1.19% 1.23%
Ratio of net investment income to average net assets(3) ... 5.35% 5.30% 4.96% 4.98% 5.15% 5.03%
Ratio of net investment income to average net assets
applicable to common shares(4) ........................... 5.99% 6.24% 5.80% 5.73% 6.15% 5.76%
Portfolio turnover ........................................ 6% 4% 15% 4% 20% 11%
Leverage analysis:
Value of preferred shares outstanding (000 omitted) ....... $60,000 $60,000 $60,000 $60,000 $60,000 $60,000
Net asset coverage per share of preferred shares, end
of period ............................................... $133,011 $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 $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 period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(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.
(6) Ratio have been annualized and total return has not been annualized.
See accompanying notes
26
<PAGE>
Financial Highlights (continued)
Selected data for each common share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION> Voyageur Minnesota Municipal Income Fund III, Inc.
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Six Months Year Ended Year Ended Year Ended Year Ended Year Ended
Ended 9/30/00 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
(Unaudited)(6)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $12.560 $13.970 $13.760 $12.710 $12.540 $12.200
Income (loss) from investment operations:
Net investment income ............................ 0.535 1.075 1.025 1.050 1.080 1.050
Net realized and unrealized gain (loss) on
investments .................................... 0.125 (1.425) 0.222 1.060 0.150 0.330
------------------------------------------------------------------------
Total from investment operations ................. 0.660 (0.350) 1.247 2.110 1.230 1.380
------------------------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ... (0.379) (0.758) (0.758) (0.760) (0.750) (0.720)
Preferred shareholders from net investment income (0.161) (0.302) (0.279) (0.300) (0.310) (0.320)
------------------------------------------------------------------------
Total dividends .................................. (0.540) (1.060) (1.037) (1.060) (1.060) (1.040)
------------------------------------------------------------------------
Net asset value, end of period ..................... $12.680 $12.560 $13.970 $13.760 $12.710 $12.540
========================================================================
Market value, end of period ........................ $12.560 $11.750 $14.125 $13.380 $12.250 $12.000
========================================================================
Total investment return based on:(1)
Market value ..................................... 10.28% (11.70%) 11.59% 15.80% 8.62% 13.51%
Net asset value .................................. 4.15% (4.57%) 7.28% 14.82% 7.50% 8.79%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) .................... $38,300 $38,075 $40,665 $40,283 $38,348 $38,046
Ratio of expenses to average net assets(3) ....... 0.85% 0.81% 0.77% 0.83% 0.81% 0.81%
Ratio of expenses to average net assets
applicable to common shares .................... 1.40% 1.33% 1.22% 1.34% 1.33% 1.33%
Ratio of net investment income to average
net assets(3) .................................. 5.15% 5.10% 4.64% 4.88% 5.17% 5.05%
Ratio of net investment income to average
net assets applicable to common shares(4) ...... 5.96% 5.99% 5.35% 5.61% 6.05% 5.81%
Portfolio turnover ............................... 11% 16% 15% 9% 39% 35%
Leverage analysis:
Value of preferred shares outstanding (000
omitted) ....................................... $15,000 $15,000 $15,000 $15,000 $15,000 $15,000
Net asset coverage per share of preferred
shares, end of period .......................... $127,668 $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 $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 period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(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.
(6) Ratio have been annualized and total return has not been annualized.
See accompanying notes
27
<PAGE>
Financial Highlights (continued)
Selected data for each common share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Voyageur Arizona Municipal Income Fund, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended Year Ended Year Ended Year Ended Year Ended
Ended 9/30/00 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
(Unaudited)(6)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $14.000 $15.290 $15.030 $13.780 $13.740 $13.220
Income (loss) from investment operations:
Net investment income ............................ 0.564 1.115 1.108 1.090 1.080 1.090
Net realized and unrealized gain (loss) on
investments .................................... 0.160 (1.333) 0.202 1.230 0.010 0.470
-------------------------------------------------------------------------
Total from investment operations ................. 0.724 (0.218) 1.310 2.320 1.090 1.560
-------------------------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ... (0.386) (0.773) (0.773) (0.770) (0.760) (0.730)
Preferred shareholders from net investment
income ......................................... (0.178) (0.299) (0.277) (0.300) (0.290) (0.310)
-------------------------------------------------------------------------
Total dividends .................................. (0.564) (1.072) (1.050) (1.070) (1.050) (1.040)
-------------------------------------------------------------------------
Net asset value, end of period ..................... $14.160 $14.000 $15.290 $15.030 $13.780 $13.740
=========================================================================
Market value, end of period ........................ $13.875 $12.625 $15.125 $14.630 $13.000 $12.750
=========================================================================
Total investment return based on:(1)
Market value ..................................... 13.14% (11.65%) 8.84% 18.79% 8.20% 11.52%
Net asset value .................................. 4.09% (3.10%) 7.07% 15.17% 5.94% 9.55%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) .................... $67,224 $66,758 $70,586 $69,813 $66,102 $65,990
Ratio of expenses to average net assets(3) ....... 0.76% 0.76% 0.74% 0.80% 0.78% 0.78%
Ratio of expenses to average net assets
applicable to common shares .................... 1.21% 1.21% 1.15% 1.26% 1.25% 1.26%
Ratio of net investment income to average
net assets(3) .................................. 5.03% 4.93% 4.69% 4.71% 4.85% 4.88%
Ratio of net investment income to average
net assets applicable to common shares(4) ...... 5.50% 5.74% 5.46% 5.34% 5.71% 5.57%
Portfolio turnover ............................... 25% 41% 46% 22% 31% 30%
Leverage analysis:
Value of preferred shares outstanding (000
omitted) ....................................... $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Net asset coverage per share of preferred
shares, end of period .......................... $134,447 $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 $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 period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(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.
(6) Ratio have been annualized and total return has not been annualized.
See accompanying notes
28
<PAGE>
Financial Highlights (continued)
Selected data for each common share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Voyageur Florida Insured Municipal Income Fund
-----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended Year Ended Year Ended Year Ended Year Ended
Ended 9/30/00 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
(Unaudited)(6)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $14.340 $15.670 $15.300 $13.670 $13.710 $13.170
Income (loss) from investment operations:
Net investment income .............................. 0.547 1.092 1.113 1.090 1.080 1.060
Net realized and unrealized gain (loss) on
investments ...................................... 0.227 (1.368) 0.292 1.600 (0.080) 0.510
------------------------------------------------------------------------
Total from investment operations ................... 0.774 (0.276) 1.405 2.690 1.000 1.570
------------------------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ..... (0.379) (0.758) (0.758) (0.760) (0.750) (0.720)
Preferred shareholders from net investment
income ........................................... (0.175) (0.296) (0.277) (0.300) (0.290) (0.310)
------------------------------------------------------------------------
Total dividends .................................... (0.554) (1.054) (1.035) (1.060) (1.040) (1.030)
------------------------------------------------------------------------
Net asset value, end of period ....................... $14.560 $14.340 $15.670 $15.300 $13.670 $13.710
========================================================================
Market value, end of period .......................... $12.375 $11.750 $14.750 $14.310 $12.500 $12.750
========================================================================
Total investment return based on:(1)
Market value ....................................... 8.68% (15.57%) 8.47% 20.94% 3.94% 10.39%
Net asset value .................................... 4.73% (3.01%) 7.80% 18.22% 5.23% 9.66%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) ...................... $55,263 $54,730 $57,956 $57,071 $53,110 $53,207
Ratio of expenses to average net assets(3) ......... 0.83% 0.83% 0.75% 0.80% 0.78% 0.80%
Ratio of expenses to average net assets
applicable to common shares ...................... 1.31% 1.31% 1.14% 1.25% 1.25% 1.27%
Ratio of net investment income to average net
assets(3) ........................................ 4.83% 4.79% 4.67% 4.73% 4.91% 4.82%
Ratio of net investment income to average net
assets applicable to common shares(4) ............ 5.17% 5.47% 5.37% 5.33% 5.74% 5.45%
Portfolio turnover ................................. 11% 6% 0% 5% 68% 22%
Leverage analysis:
Value of preferred shares outstanding (000
omitted) ......................................... $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Net asset coverage per share of preferred
shares, end of period ............................ $138,158 $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 $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 period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(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.
(6) Ratio have been annualized and total return has not been annualized.
See accompanying notes
29
<PAGE>
Financial Highlights (continued)
Selected data for each common share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Voyageur Colorado Insured Municipal Income Fund, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended Year Ended Year Ended Year Ended Year Ended
Ended 9/30/00 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96
(Unaudited)(6)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................... $13.870 $15.220 $14.920 $13.580 $13.610 $13.190
Income (loss) from investment operations:
Net investment income ................................ 0.551 1.099 1.080 1.070 1.050 1.030
Net realized and unrealized gain (loss) on
investments ........................................ 0.227 (1.417) 0.264 1.300 (0.060) 0.410
-----------------------------------------------------------------------
Total from investment operations ..................... 0.778 (0.318) 1.344 2.370 0.990 1.440
-----------------------------------------------------------------------
Less dividends to:
Common shareholders from net investment income ....... (0.368) (0.735) (0.735) (0.740) (0.730) (0.700)
Preferred shareholders from net investment income .... (0.180) (0.297) (0.309) (0.290) (0.290) (0.320)
-----------------------------------------------------------------------
Total dividends ...................................... (0.548) (1.032) (1.044) (1.030) (1.020) (1.020)
-----------------------------------------------------------------------
Net asset value, end of period ......................... $14.100 $13.870 $15.220 $14.920 $13.580 $13.610
=======================================================================
Market value, end of period ............................ $14.438 $12.563 $14.938 $14.000 $12.500 $12.630
=======================================================================
Total investment return based on:(1)
Market value ......................................... 9.99% (11.05%) 12.13% 18.09% 4.77% 8.99%
Net asset value ...................................... 4.51% (3.62%) 7.21% 15.84% 5.19% 8.55%
Ratios and supplemental data:
Net assets applicable to capital shares,
end of period (000 omitted) ........................ $108,204 $107,093 $113,598 $112,187 $105,687 $105,843
Ratio of expenses to average net assets(3) ........... 0.68% 0.68% 0.69% 0.75% 0.77% 0.75%
Ratio of expenses to average net assets
applicable to common shares ........................ 1.09% 1.08% 1.06% 1.18% 1.23% 1.21%
Ratio of net investment income to average net
assets(3) .......................................... 4.96% 4.93% 4.61% 4.72% 4.76% 4.68%
Ratio of net investment income to average net
assets applicable to common shares(4) .............. 5.31% 5.72% 5.08% 5.38% 5.51% 5.18%
Portfolio turnover ................................... 37% 37% 18% 39% 88% 39%
Leverage analysis:
Value of preferred shares outstanding (000
omitted) ........................................... $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
Net asset coverage per share of preferred shares,
end of period ...................................... $135,255 $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 $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 period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(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.
(6) Ratio have been annualized and total return has not been annualized.
See accompanying notes
30
<PAGE>
Notes to Financial Statements
September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Voyageur Minnesota Municipal Income Fund, Inc. ("Minnesota Municipal Fund");
Voyageur Minnesota Municipal Income Fund II, Inc. ("Minnesota Municipal Fund
II"); Voyageur Minnesota Municipal Income Fund III, Inc. ("Minnesota Municipal
Fund III"); Voyageur Arizona Municipal Income Fund, Inc. ("Arizona Municipal
Fund"); Voyageur Florida Insured Municipal Income Fund ("Florida Insured
Municipal 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, 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.
<PAGE>
--------------------------------------------------------------------------------
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 the expense caption in the
Statement of Operations with the corresponding offset shown as "expenses paid
indirectly". The amount of these expenses for the period ended September 30,
2000 were approximately:
Minnesota Minnesota Minnesota
Municipal Municipal Municipal
Fund Fund II Fund III
--------- --------- ---------
Commission Expenses ............. $648 $1,821 $437
Florida Colorado
Arizona Insured Insured
Municipal Municipal Municipal
Fund Fund Fund
--------- --------- ---------
Commission Expenses ............. $766 $630 $1,235
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 based on
average net assets and paid on a monthly basis, subject to certain minimums.
31
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
2. Investment Management and Transactions with Affiliates (continued)
On September 30, 2000, the Funds had payables to affiliates as follows:
<TABLE>
<CAPTION>
Florida Colorado
Minnesota Minnesota Minnesota Arizona Insured Insured
Municipal Municipal Municipal Municipal Municipal Municipal
Fund Fund II Fund III Fund Fund Fund
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment management fees payable to DMC ... $18,982 $53,496 $12,846 $22,525 $18,521 $36,390
Dividend disbursing, transfer agent fees,
accounting fee and other expenses
payable to DSC ............................ 15,771 17,566 8,737 10,917 12,859 18,704
Other expenses payable
to DMC and affiliates ..................... 3,816 4,660 3,745 4,922 4,885 4,363
</TABLE>
Certain officers of DMC and DSC are officers, directors/trustees and/or
employees of the Funds. These officers, directors, and employees are not
compensated by the Funds.
3. Investments During the period ended September 30, 2000, the Funds made
purchases and sales of investment securities other than temporary cash
investments as follows:
<TABLE>
<CAPTION>
Florida Colorado
Minnesota Minnesota Minnesota Arizona Insured Insured
Municipal Municipal Municipal Municipal Municipal Municipal
Fund Fund II Fund III Fund Fund Fund
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Purchases ................................... $2,726,730 $4,732,151 $2,016,616 $13,614,166 $3,031,431 $19,414,495
Sales ....................................... 2,877,282 5,204,200 2,016,840 8,466,503 3,027,341 19,685,258
</TABLE>
At September 30, 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>
Florida Colorado
Minnesota Minnesota Minnesota Arizona Insured Insured
Municipal Municipal Municipal Municipal Municipal Municipal
Fund Fund II Fund III Fund Fund Fund
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cost of investments ......................... $54,345,718 $156,127,962 $36,995,803 $70,762,236 $52,672,707 $106,357,281
===============================================================================
Aggregate unrealized
appreciation .............................. $ 2,129,193 $ 3,320,481 $ 1,345,135 $ 1,632,660 $ 1,663,742 $ 1,692,752
Aggregate unrealized
depreciation .............................. (424,952) (1,932,613) (610,366) (907,326) (26,121) (1,366,087)
--------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation) ............................ $ 1,704,241 $ 1,387,868 $ 734,769 $ 725,334 $ 1,637,621 $ 326,665
===============================================================================
</TABLE>
32
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
3. Investments (continued)
For federal income tax purposes, as of September 30, 2000, the Funds had capital
loss carryforwards expiring in the following years:
<TABLE>
<CAPTION>
Florida Colorado
Minnesota Minnesota Minnesota Arizona Insured Insured
Municipal Municipal Municipal Municipal Municipal Municipal
Fund Fund II Fund III Fund Fund Fund
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2003 ........................................ $ -- $ 952,440 $ 866,889 $ -- $212,501 $ --
2004 ........................................ -- 1,143,840 1,279,495 -- 183,099 --
2005 ........................................ -- 89,665 455,666 47,185 -- 391,632
2006 ........................................ -- 132,129 6,539 -- -- --
2008 ........................................ 265,111 437,162 56,856 66,924 98,928 57,053
----------------------------------------------------------------------------
$265,111 $2,755,236 $2,665,445 $114,109 $494,528 $448,685
============================================================================
</TABLE>
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 period ended September 30, 2000 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 3.95% to 4.85% on Minnesota Municipal
Fund, from 4.00% to 4.40% on Minnesota Municipal Fund II, from 4.10% to 4.70% on
Minnesota Municipal Fund III, from 3.75% to 4.85 % on Arizona Municipal Fund,
from 4.10% to 4.85% on Florida Insured Municipal Fund and from 3.98% to 5.25% on
Colorado Insured Municipal Fund during the period ended September 30, 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.
33
<PAGE>
DELAWARE(SM)
INVESTMENTS
-----------------------
Philadelphia [ ] London
Registrar and Stock Transfer Agent
ChaseMellon Shareholder Services, L.L.C.
Overpeck Centre
85 - Challenger Road
Ridgefield Park, NJ 07660
1.800.851.9677
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This semi-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 the
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/ Charles E. Peck Investment Manager
TRUSTEES Retired Delaware Management Company
Fredericksburg, VA Philadelphia, PA
Wayne A. Stork
Chairman Janet L. Yeomans International Affiliate
Delaware Investments Family of Funds Vice President and Treasurer Delaware International Advisers Ltd.
Philadelphia, PA 3M Corporation London, England
St. Paul, MN
Walter P. Babich Principal Office of the Fund
Board Chairman 2005 Market Street
Citadel Constructors, Inc. Philadelphia, PA 19103-3682
King of Prussia, PA AFFILIATED OFFICERS
Independent Auditors
David K. Downes Charles E. Haldeman, Jr. Ernst & Young LLP
President and Chief Executive Officer President and Chief Executive Officer 2001 Market Street
Delaware Investments Family of Funds Delaware Management Holdings, Inc. Philadelphia, PA
Philadelphia, PA Philadelphia, PA
Number of Recordholders as of
Anthony D. Knerr Richard J. Flannery September 30, 2000
Consultant, Anthony Knerr & Associates Executive Vice President
New York, NY and General Counsel
Delaware Investments Family of Funds Minnesota Municipal Income Fund I 420
Ann R. Leven Philadelphia, PA Minnesota Municipal Income Fund II 699
Former Treasurer, National Gallery of Art Minnesota Municipal Income Fund III 174
Washington, DC Bruce D. Barton Arizona Municipal Income Fund 127
President and Chief Executive Officer Florida Insured Municipal
Thomas F. Madison Delaware Distributors, L.P. Income Fund 237
President and Chief Executive Officer Philadelphia, PA Colorado Insured Municipal
MLM Partners, Inc. Income Fund 227
Minneapolis, MN
Thomas F. Madison and Janet L. Yeomans
were elected by the preferred Shareholders
of the Voyageur Closed-End Municipal
Bond Funds.
</TABLE>
(3975) Printed in the USA
VOY-CESA [9/00] PP 11/00 (J6484)
