-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CpbkaUFiuS3nMCCI4GS9sZbCorHiO/FG04Mx3gVz3ohpSx1Nj83014ZUj+Uj1+zY WMQFHe3lFI1aXK7cC883Tw== 0000928816-98-000247.txt : 19980901 0000928816-98-000247.hdr.sgml : 19980901 ACCESSION NUMBER: 0000928816-98-000247 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980831 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR TAX FREE FUNDS INC CENTRAL INDEX KEY: 0000733362 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03910 FILM NUMBER: 98701487 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET STREET 2: SUITE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 6123767000 MAIL ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET STREET 2: SUITE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: VOYAGEUR MINNESOTA TAX FREE FUNDS INC DATE OF NAME CHANGE: 19910226 FORMER COMPANY: FORMER CONFORMED NAME: DOUBLE EXEMPT FLEX FUND INC DATE OF NAME CHANGE: 19900131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR INTERMEDIATE TAX FREE FUNDS INC CENTRAL INDEX KEY: 0000773675 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04364 FILM NUMBER: 98701488 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET STREET 2: SUITE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 6123718684 MAIL ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET STREET 2: SUITE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: VOYAGEUR MINNESOTA INTERMEDIATE TAX FREE FUNDS INC DATE OF NAME CHANGE: 19920305 FORMER COMPANY: FORMER CONFORMED NAME: DOUBLE EXEMPT CAPITAL CONSERVATION FUND INC DATE OF NAME CHANGE: 19900131 FORMER COMPANY: FORMER CONFORMED NAME: DOUBLE EXEMPT INTERMEDIATE TERM FUND INC DATE OF NAME CHANGE: 19860310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR INSURED FUNDS INC CENTRAL INDEX KEY: 0000809064 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04973 FILM NUMBER: 98701489 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET STREET 2: SUITE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 6123718684 MAIL ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET STREET 2: SUITE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: VOYAGEUR MINNESOTA INSURED FUNDS INC DATE OF NAME CHANGE: 19910926 FORMER COMPANY: FORMER CONFORMED NAME: MINNESOTA INSURED FUND INC DATE OF NAME CHANGE: 19900131 FORMER COMPANY: FORMER CONFORMED NAME: MINNESOTA ALTERNATIVE FUND INC DATE OF NAME CHANGE: 19881227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR MUTUAL FUNDS INC CENTRAL INDEX KEY: 0000906236 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411756458 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07742 FILM NUMBER: 98701490 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4115 BUSINESS PHONE: 6123767129 MAIL ADDRESS: STREET 1: 90 SOUTH SEVENTH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4115 N-30D 1 SEMI-ANNUAL REPORT MINNESOTA MUNICIPAL BOND FUNDS [GRAPHIC OMITTED: ILLUSTRATION OF BUILDINGS, BRIDGE, AIRPLANES] FOR TAX-EXEMPT INCOME service and guidance professional management goals 1998 Semi-Annual Report TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND TAX-FREE MINNESOTA INTERMEDIATE FUND MINNESOTA HIGH YIELD MUNICIPAL BOND FUND [GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS ---------------------------- Philadelphia * London] JULY 13, 1998 DEAR SHAREHOLDER: DELAWARE INVESTMENTS' FOUR Minnesota municipal bond funds each provided attractive results for the first half of fiscal 1998 as long-term interest rates fell to record lows. Minnesota's booming economy helped the state post its fifth consecutive budget surplus, boosting investor confidence in the state's bond market. Each Fund outperformed the average of its peers for the six months ended June 30, 1998, as shown below. Tax-Free Minnesota Fund and Minnesota High Yield Municipal Bond Fund also outpaced the unmanaged Lehman Brothers Municipal Bond Index for the period. Minnesota municipalities issued 85.9% more bonds between January and June 1998 than a year earlier according to The Bond Buyer, a trade publication. The state's leaders took advantage of record low interest rates to refinance old debt and start new projects. This huge increase in supply gave your Funds' portfolio manager - Elizabeth H. Howell - ample opportunity to select new bonds. MINNESOTA MUNICIPALITIES ISSUED 85.9% MORE BONDS BETWEEN JANUARY AND JUNE 1998 THAN A YEAR EARLIER. THE STATE LEADERS TOOK ADVANTAGE OF RECORD LOW INTEREST RATES TO REFINANCE OLD DEBT AND START NEW PROJECTS. CUMULATIVE TOTAL RETURN Six Months Ended June 30, 1998 Tax-Free Minnesota Fund A Class +2.70% Lipper Minnesota Municipal Debt Fund Average (47 funds) +2.36% Lehman Brothers Municipal Bond Index +2.69% Minnesota Insured Fund A Class +2.50% Lehman Brothers Insured Municipal Bond Index +2.69% Tax-Free Minnesota Intermediate Fund A Class +2.08% Lipper Intermediate Municipal Debt Fund Average (81 funds) +1.92% Merrill Lynch Three-to-Seven Year Municipal Bond Index +2.29% Minnesota High Yield Municipal Bond Fund A Class +3.51% Lipper High-Yield Municipal Debt Fund Average (52 funds) +2.88% All performance shown above is at net asset value with distributions reinvested. Past performance does not guarantee future results. Performance of other Fund classes vary due to different charges and expenses. The unmanaged Lehman Brothers and Merrill Lynch Indexes are composed of bonds with a variety of quality ratings from many states. Complete performance information for all funds can be found on pages 7 and 8. Strong investor demand helped absorb the bonanza of new issuance, enabling Minnesota bonds to generally outperform those in many other states. Still, income was the primary component of total return during the first half of 1998. We view the municipal debt market's current prospects as compelling, especially when viewed against taxable fixed-income alternatives. Yields on longer term Minnesota municipal bonds averaged more than 91.5% of U.S. Treasury bond yields as of June 30, a level not seen since the ill-fated flat tax debate in Washington two years ago. This occurred because of the large increase in municipal bond supply, a condition we view as temporary. For taxpayers willing to accept higher risks, high-yield Minnesota municipal bonds offered yields as of mid-year that were even higher than U.S. Treasury bond yields. Cash flows in bond mutual funds have accelerated in recent months as some equity investors have sought to diversify their portfolios and minimize their federal income tax burden. We are pleased to report that Minnesota High Yield Municipal Bond Fund maintained an attractive SEC yield (see below) even as assets grew 44% during the first half of fiscal 1998. On the pages that follow, Ms. Howell reviews each Fund's performance for the first half of fiscal 1998 and outlines her approach for the balance of the year. As you review your portfolio with your financial adviser, keep in mind that Delaware Investments has a broad array of equity and bond fund options for tax-sensitive investors. Sincerely, /S/Wayne A. Stork WAYNE A. STORK Chairman /S/Jeffrey J. Nick JEFFREY J. NICK President and Chief Executive Officer
PORTFOLIO HIGHLIGHTS AND QUALITY JUNE 30, 1998 Tax-Free Minnesota Tax-Free Minn. Minnesota High Minnesota Insured Intermediate Yield Municipal Fund Fund Fund Bond Fund AAA 42.2% 100% 39.6% 7.0% AA 9.9% 0.0% 8.4% 6.8% A 19.4% 0.0% 9.1% 15.8% BBB 6.4% 0.0% 23.7% 18.0% B & Unrated 17.1% 0.0% 19.2% 52.5% Average Effective Maturity 9.0 years 9.3 years 5.1 years 11.4 years Average Effective Duration 7.2 years 6.8 years 4.2 years 7.6 years AMT Income* None 21.92% None 15.78% Current 30-Day SEC Yield (A Class) 4.19% 3.96% 3.91% 5.01% Current 30-Day SEC Yield (B and C Classes) 3.61%** 3.37%*** 3.17% 4.45% * Percentage of income generated for the six months ended June 30, 1998 that was subject to the federal alternative minimum tax. ** 3.60% for Class C shares. *** 3.36% for Class C shares.
PORTFOLIO MANAGER'S REVIEW AS OF MID-JULY, MINNESOTA WAS expected to generate $10.3 billion in revenue during its 1998 fiscal year, 3.2% more than state officials anticipated when the year began. The state's treasury is projected to have a $317 million surplus for the year, the fifth in a row. This was great news for the state's general obligation municipal bonds, which enjoy a AAA credit rating from Standard & Poor's, the highest rating available. Prices of many securities have risen modestly since January as interest rates have fallen nationwide and inflation has been negligible. Minnesota bonds did not rally as much as Treasuries during the first half of fiscal 1998 because of the huge increase in state bond issuance. The yield on 30-year U.S. Treasury bonds fell to 5.65% as of June 30, the lowest level in a generation. Still, real yields after inflation remain high. If one subtracts the U.S. Consumer Price Index (1.7%) from 10-year Treasury bond yields, the pre-tax yield is nearly 4%, the highest level since late 1994. For income-oriented Minnesota residents in high tax brackets, keeping what you earn requires a tax-savvy investment strategy. officials said in July that more than two-thirds of the state's surplus came from individual investors in the form of taxes on investment income and capital gains. We think such figures make a compelling argument for tax-exempt investing. FOR MINNESOTA INVESTORS IN THE HIGHEST FEDERAL TAX BRACKET (39.6%), MEDIUM-QUALITY, 30-YEAR GENERAL OBLIGATION MUNICIPAL BONDS PROVIDED A TAXABLE EQUIVALENT YIELD OF 9.32% AS OF JUNE 30. Given the probable tempering effects of the Asian slump on the U.S. economy, the Federal Reserve Board is likely to maintain its current interest rate policy, in our view. This makes a solid case for bonds' income and total return potential, especially for tax- sensitive investors seeking to diversify their portfolios. We anticipate that favorable economic conditions can drive long-term interest rates even lower through 1999. ASSET MIX June 30, 1998 Minnesota Tax-Free Minnesota Tax-Free Minn. High Yield Minnesota Insured Intermediate Municipal Fund Fund Fund Bond Fund Housing 19.1% 19.4% 7.2% 33.4% Health Care 21.5% 20.7% 14.4% 29.2% General Obligation 12.4% 20.3% 2.5% 5.0% Power Authority 17.5% 9.5% 6.0% 2.8% Pre-Refunded 12.9% 29.8% 31.3% 0.0% Education 4.9% 0.0% 6.6% 5.1% Industrial 8.2% 0.0% 23.4% 11.6% Cash & Other Revenue Bonds 3.5% 0.3% 8.6% 12.9% For Minnesota investors in the highest federal tax bracket (39.6%), medium-quality, 30-year general obligation bonds provided a taxable equivalent yield of 9.32% as of June 30. After factoring out inflation, long-term tax-exempt debt provided an attractive annualized real rate of return of 7.5%. That compares to an after- inflation, after tax yield of 1.72% on 30-year Treasuries for investors in the highest tax bracket. STRATEGIC POSITIONING Since January, we positioned each of the Minnesota Funds to benefit from gradually declining long-term interest rates. The average effective duration of Tax-Free Minnesota, Minnesota Insured and Minnesota High Yield Municipal Bond Fund were kept slightly longer than that of the average of each fund's peers, enabling each Fund to benefit from the rise in bond prices. Minnesota We took a somewhat more conservative approach to interest rate risk with Tax-Free Minnesota Intermediate Fund, keeping our duration slightly lower than that of the Fund's unmanaged benchmark. As occurred last year, the difference in yield between bonds maturing in two to 10 years and bonds with longer maturities has narrowed since January. Still, despite our conservative stance, the Fund's SEC yield (see page 3) was higher than the average of its 80 peers in the Lipper Intermediate Municipal Debt Fund Average as of June 30. SINCE JANUARY, WE POSITIONED EACH OF THE MINNESOTA FUNDS TO BENEFIT FROM GRADUALLY DECLINING LONG-TERM INTEREST RATES. Lower quality bonds tended to outperform bonds with AAA ratings during the first half of 1998 as a strong economy helped municipalities meet their obligations and led to selected credit upgrades. Hence, the total returns of Tax-Free Minnesota Fund and Minnesota High Yield Municipal Bond Fund outpaced that of Minnesota Insured Fund, which invests primarily in bonds rated AAA. Minnesota High Yield Municipal Bond Fund invests in higher risk bonds as well as more liquid, investment grade rated bonds. As of June 30, a majority of the Fund's net assets were invested in bonds rated BBB or higher while the balance was invested in unrated securities that in our view show underlying financial strength. In managing each Fund, we seek good structure - an effective combination of average coupon, call date, and effective maturity that represent each portfolio's mathematical underpinnings. As interest rates fall, we also believe it is important to structure the portfolio to benefit from a possible interest rate decline. OUTLOOK Prospects for Minnesota's economy remain strong, according to the Mid-America Business Conditions Index, a monthly measure of regional purchasing manager activity compiled by Creighton University in Nebraska. Although export orders from Minnesota to Asia appear to be declining, domestic demand remains firm, according to the Index. As of mid-year, Minnesota's unemployment rate of 2.7% was among the five lowest in the country, government statistics show. Outlook In St. Paul in April, the State Demographic Center released a report that says Minnesota's population of 4.7 million, including the population of rural counties, is growing faster than anticipated. The state is expected to add more than 600,000 people by the year 2025, and many economists believe that should help fuel long-term economic growth. We believe Minnesota's municipalities will continue to show positive credit characteristics, provide attractive income and offer relatively competitive total return opportunities in the months ahead. While some of the state's large multinational corporations such as 3M face sluggish earnings because of slumping sales in Asia, our view is that the diversity of the state's economy should allow it to weather the fallout from the financial problems of the Pacific Rim. THE DIVERSITY OF THE STATE'S ECONOMY SHOULD ALLOW IT TO WEATHER THE FALLOUT FROM THE FINANCIAL PROBLEMS OF THE PACIFIC RIM. Historically, Minnesota municipal bond yields have averaged between 80% and 85% of Treasury yields, making the current environment - with yields averaging more than 91.5% - unusually attractive. We believe this investment opportunity is being driven by the temporary increase in bond supply, a situation that will not, in our opinion, persist indefinitely. ELIZABETH H. HOWELL Vice President/Senior Portfolio Manager July 13, 1998 [PHOTO OF KEYBOARD] TAX-FREE MINNESOTA FUND PERFORMANCE AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime Ten Years Five Years One Year Class A (Est. 2/29/84) Excluding Sales Charge +8.95% +7.65% +6.00% +8.97% Including Sales Charge +8.66% +7.23% +5.19% +4.85% Class B (Est. 3/11/95) Excluding Sales Charge +7.25% +8.19% Including Sales Charge +6.47% +4.19% Class C (Est. 5/4/94) Excluding Sales Charge +6.57% +8.32% Including Sales Charge +6.57% +7.32% MINNESOTA INSURED FUND PERFORMANCE AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime Ten Years Five Years One Year Class A (Est. 5/1/87) Excluding Sales Charge +7.52% +7.64% +5.66% +8.28% Including Sales Charge +7.16% +7.23% +4.85% +4.26% Class B (Est. 3/7/95) Excluding Sales Charge +6.77% +7.49% Including Sales Charge +5.98% +3.49% Class C (Est. 5/4/94) Excluding Sales Charge +6.09% +7.48% Including Sales Charge +6.09% +6.48% All performance includes reinvestment of distributions and applicable sales charges as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than the original cost. Past performance does not guarantee future results. Performance for Class B and C shares excluding sales charge assumes either contingent sales charges did not apply or the investment was not redeemed. Returns reflect a voluntary expense limitation in effect at the time. Returns would have been lower without the limitation. Class A shares of each Fund have a 3.75% maximum front-end sales charge except Tax-Free Minnesota Intermediate Fund, which has a 2.75% maximum front-end sales charge. All Funds have a 12b-1 fee. Class B shares do not have a front-end sales charge, but are subject to a 1% annual distribution and service fee. They are also subject to a deferred sales charge of up to 4% if redeemed before the end of the sixth year for each Fund except Tax-Free Minnesota Intermediate Fund, which is subject to a deferred sales charge of 2% if redeemed before the end of the third year. Class C shares have a 1% annual distribution and service fee. If shares are redeemed within 12 months, a 1% contingent deferred sales charge applies. TAX-FREE MINNESOTA INTERMEDIATE FUND PERFORMANCE AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime Ten Years Five Years One Year Class A (Est. 10/27/85) Excluding Sales Charge +6.15% +5.98% +4.90% +6.27% Including Sales Charge +5.92% +5.68% +4.32% +3.36% Class B (Est. 8/15/95) Excluding Sales Charge +4.73% +5.49% Including Sales Charge +4.41% +3.49% Class C (Est. 4/30/94) Excluding Sales Charge +4.83% +5.39% Including Sales Charge +4.83% +4.39% MINNESOTA HIGH YIELD MUNICIPAL BOND FUND PERFORMANCE AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime One Year Class A (Est. 6/4/96) Excluding Sales Charge +9.79% +10.75% Including Sales Charge +7.78% +6.60% Class B (Est. 6/12/96) Excluding Sales Charge +10.20% +9.84% Including Sales Charge +8.87% +5.84% Class C (Est. 6/7/96) Excluding Sales Charge +9.05% +9.95% Including Sales Charge +9.05% +8.95% Please turn to page 7 for important additional information. All performance includes reinvestment of distributions. Past performance is not a guarantee of future results.
FINANCIAL STATEMENTS VOYAGEUR TAX FREE FUNDS, INC. DELAWARE - VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) PRINCIPAL MARKET AMOUNT VALUE --------- --------- MUNICIPAL BONDS - 100.00% GENERAL OBLIGATION BONDS - 12.43% Farmington Independent School District Number 192 Capital Appreciation Series B Zero Coupon 2/1/21 $2,500,000 $ 760,025 Farmington Minnesota Independent School District Number 192 Capital Appreciation Series B Zero Coupon 2/1/20 2,650,000 850,836 Hennepin County 5.75% 10/1/10 7,990,000 8,522,134 Hutchinson Independent School District Series A (MN School District Enhanced) 5.85% 2/1/18 1,700,000 1,830,203 Lakeville Independent School District #194, Inverse Floater 6.47% 2/1/15 (MBIA) 4,250,000 4,349,280 Lakeville Minnesota Independent School District #194 Capital Appreciation Series B Zero Coupon 2/1/19 8,000,000 2,680,240 Mahtomedi Independent School District #832 Series B Zero Coupon 2/1/14 (MBIA) 1,540,000 715,992 Minneapolis Convention Center Facilities, Inverse Floater 7.07% 4/1/14 850,000 909,696 Minneapolis Sports Arena Project, Inverse Floater 6.42% 10/1/20 4,220,000 4,305,750 Minneapolis Sports Arena Project, Inverse Floater 6.37% 4/1/14 580,000 610,183 Minneapolis Unlimited Tax Series 1992 6.30% 10/1/08 1,750,000 1,900,588 Minnetonka Independent School District #276 5.75% 2/1/22 (FSA) 4,550,000 4,838,834 North St. Paul, Maplewood Independent School District #622, Inverse Floater 6.42% 2/1/20 2,250,000 2,265,795 Pine Island Independent School District #255 6.625% 6/1/12 (FSA) 240,000 254,791 Pine Island Independent School District #255 6.625% 6/1/13 (FSA) 310,000 329,976 Pine Island Independent School District #255 6.625% 6/1/14 (FSA) 330,000 351,265 Pine Island Independent School District #255 6.625% 6/1/15 (FSA) 355,000 377,479 Pine Island Independent School District #255 6.625% 6/1/16 (FSA) 380,000 403,742 Richfield Minnesota Independent School District #280 Series C, Inverse Floater 6.65% 2/1/15 1,365,000 1,415,164 Rochester Tax Increment 6.50% 12/1/04 1,000,000 1,010,530 Rosemount - Apple Valley Independent School District #196 Inverse Floater 7.92% 4/1/15 (FSA) 4,000,000 4,502,480 Rosemount Independent School District #196 Series B Zero Coupon 4/1/11(FSA) 2,600,000 1,424,592 Rosemount Independent School District #196 Zero Coupon 4/1/12 (FSA) 1,850,000 953,990 Rosemount Independent School District #196 Zero Coupon 4/1/13 (FSA) 1,915,000 934,290 Rosemount Independent School District #196, Inverse Floater 5.875% 4/1/15 1,375,000 1,475,884 Sartell Independent School District #748 Zero Coupon 2/1/13 (MBIA) 540,000 265,599 Sartell Independent School District #748 Zero Coupon 2/1/15 (MBIA) 1,075,000 472,742 Sartell Independent School District #748 Zero Coupon 2/1/16 (MBIA) 1,750,000 718,673 Sartell Independent School District #748 Zero Coupon 2/1/17 (MBIA) 1,600,000 626,880 Spring Lake Park Independent School District #16, Inverse Floater 6.67% 2/1/17 (MBIA) 1,000,000 1,043,150 Washington County 5.90% 2/1/10 1,680,000 1,758,943 ------------ 52,859,726 ------------ HIGHER EDUCATION REVENUE BONDS - 4.89% Minnesota Higher Education Augsburg College Series 4F1 6.25% 5/1/23 1,000,000 1,067,960 Minnesota Higher Education Carleton College 5.75% 11/1/12 4,000,000 4,285,360 Minnesota Higher Education Facilities Revenue - Hamline University 6.00% 10/1/12 1,250,000 1,333,425 Minnesota Higher Education Facilities Revenue - Hamline University 6.00% 10/1/16 1,790,000 1,890,902 Minnesota Higher Education St. Benedicts College 6.20% 3/1/16 1,000,000 1,043,150 Minnesota Higher Education St. Thomas University Series R2 5.60% 9/1/14 1,000,000 1,034,640 University Of Minnesota Series A 5.50% 7/1/21 9,500,000 10,158,065 ------------ 20,813,502 ------------ HOSPITAL REVENUE BONDS - 21.49% Bemidji Hospital Facilities Revenue North County Health 6.05% 9/1/16 600,000 634,122 Bemidji Hospital Facilities Revenue North County Health 6.05% 9/1/24 1,825,000 1,916,524 Brainerd Benedictine Health Care Systems for St. Joseph's Hospital 6.00% 2/15/12 (Connie Lee) 2,250,000 2,409,998 Duluth Economic Development Authority Benedictine for St. Luke's Hospital 6.40% 5/1/18 (Connie Lee) 3,295,000 3,559,325 Duluth Economic Development Authority St. Luke's Hospital 6.00% 2/15/20 (Connie Lee) 9,450,000 10,093,545 Little Canada Health Care 1992 (Presbyterian Homes Guaranteed) 7.25% 7/1/12 1,000,000 1,043,520 Minneapolis Fairview Hospital Series 91B 6.50% 1/1/11 (MBIA) 3,000,000 3,254,100 Minneapolis Health Care-American Baptist Homes 8.70% 11/1/09 2,485,000 2,747,689 Minneapolis/St. Paul HRA Children's Hospital Health Care, Inverse Floater 7.17% 8/15/25 6,500,000 6,895,330 Minneapolis/St. Paul HRA HealthOne 7.40% 8/15/11 (MBIA) 1,360,000 1,470,609 Minneapolis/St. Paul HRA Health Care System for Healthspan Series A 4.75% 11/15/18 (AMBAC) 11,030,000 10,584,278 Robbinsdale North Memorial Medical 5.50% 5/15/23 (AMBAC) 10,725,000 10,988,513 Rochester Health Care Facilities Revenue Ref IRS Series H for Mayo Clinic, Inverse Floater 7.915% 11/15/15 3,500,000 4,054,960 Rochester Minnesota Health Care Facilities Revenue Mayo Foundation - Series B 5.50% 11/15/27 2,000,000 2,066,780 Springfield St. John's Lutheran Home Revenue 8.50% 11/1/19 600,000 632,484 Spring Park Twin Birch Health Care Center (Guarantor: Presbyterian Homes of Minnesota) 8.25% 8/1/11 600,000 641,892 St. Cloud Hospital Facilities Revenue for St. Cloud Hospital 5.30% 10/1/20 (AMBAC) 7,250,000 7,344,975 St. Louis Park Commercial Development Revenue for G & N, L P Project (Methodist Hospital Guaranteed) 7.25% 6/1/13 1,120,000 1,202,533 St. Louis Park Methodist Hospital 5.20% 7/1/23 (AMBAC) 10,220,000 10,237,681 St. Paul Housing & Redevelopment Hospital Revenue for Health East Series A 6.625% 11/1/17 8,900,000 9,617,340 ------------ 91,396,198 ------------ HOUSING REVENUE BONDS - 19.11% Austin Housing & Redevelopment Authority Courtyard Residence Series 95A 7.25% 1/1/26 500,000 553,250 Bloomington Housing & Redevelopment Authority Senior Summerhouse Bloomington Project 6.125% 5/1/35 3,420,000 3,471,266 Brooklyn Center Multifamily Housing Revenue Bonds Family Housing Project - (Section 8) 5.90% 1/1/20 2,250,000 2,338,133 Burnsville Multifamily - Bridgeway Apartments 7.625% 2/1/24 (FHA) 3,370,000 3,528,053 Burnsville Multifamily - Coventry Court Apartments Project 7.50% 9/1/17 (FHA) 1,000,000 1,040,720 Carver County Housing & Redevelopment Authority Multifamily Revenue Lake Grace Apartments 6.00% 7/1/28 1,435,000 1,500,780 Dakota County Housing & Redevelopment Authority Single Family 8.10% 3/1/16 (GNMA) 115,000 118,594 Eagan Forest Ridge Apartments Project 7.50% 9/1/17 (FHA) 1,000,000 1,034,690 Eden Prairie Multifamily Revenue, Eden Investments 7.40% 8/1/25 (FHA) 400,000 421,720 Eden Prairie Multifamily Windslope Apartments - (Section 8) Housing 7.10% 11/1/17 1,585,000 1,685,790 Eden Prarie Multifamily Homes, Tanager Creek 8.05% 6/20/31 (GNMA) 7,605,000 8,929,335 Edina Park Plaza Multifamily Housing 7.50% 12/1/09 (FHA) 1,490,000 1,561,952 Edina Park Plaza Multifamily Housing 7.70% 12/1/28 (FHA) 1,250,000 1,301,250 Hopkins Renaissance Multifamily Housing - (Section 8) 6.375% 4/1/20 1,000,000 1,064,280 Little Canada Multifamily Housing Revenue, Housing Alternative Development Company Project Series A 6.10% 12/1/17 1,700,000 1,720,961 Little Canada Multifamily Housing Revenue, Housing Alternative Development Company Project Series A 6.25% 12/1/27 2,900,000 2,935,728 Minneapolis Housing Facility Revenue 1993 for Augustana Chapel View Project 7.00% 4/1/18 1,000,000 1,029,040 Minneapolis Multifamily Mortgage for Seward Towers Project 7.375% 12/20/30 (GNMA) 4,000,000 4,212,160 Minneapolis-Nicollet Towers Multifamily Housing 6.00% 12/1/19 2,000,000 2,120,580 Minnesota Housing Finance Agency Multifamily Housing 6.95% 2/1/14 1,500,000 1,591,935 Minnesota Housing Finance Agency Multifamily Housing Series 92A 6.95% 8/1/17 745,000 795,563 Minnesota Housing Finance Agency Rental Housing Series B 6.25% 8/1/22 985,000 995,411 Minnesota Housing Finance Agency Single Family Mortgage 86 Series B 7.25% 7/1/16 900,000 901,917 Minnesota Housing Finance Agency Single Family Mortgage Series B 7.30% 7/1/10 150,000 155,282 Minnesota Housing Finance Agency Single Family Mortgage Series D 7.30% 7/1/09 325,000 336,762 Minnesota Housing Finance Agency Single Family Mortgage Series C 7.65% 7/1/08 395,000 416,026 Minnesota Housing Finance Agency Single Family Mortgage Series 91C 7.10% 7/1/11 1,010,000 1,073,681 Minnetonka Multifamily - Beacon Hill Project (Presbyterian Homes Guaranteed) 7.70% 6/1/25 2,000,000 2,167,920 Oakdale,Minnesota Housing-Oak Meadows Project 7.00% 4/1/27 6,800,000 7,167,200 Park Rapids Minnesota Multifamily Revenue The Court Apartments Project - (Section 8) 6.30% 2/1/20 3,275,000 3,348,131 Red Wing Housing & Redevelopment Agency Jordan Tower - (Section 8) Series 92 7.00% 1/1/19 1,500,000 1,595,790 St. Cloud Germain Towers Housing Series 1993 - (Section 8) 5.90% 9/1/20 2,000,000 2,074,120 St. Louis Park Residential Mortgage Revenue for Single Family 7.25% 4/20/23 (GNMA) 1,625,000 1,721,444 St. Louis Park Multifamily Housing Revenue Community Housing 6.25% 12/1/28 (FHA) 3,855,000 4,120,263 St. Louis Park Multifamily Westwind Apartments Housing 5.75% 1/1/29 (GNMA) 3,865,000 4,002,633 St. Paul Housing & Redevelopment Agency (Executive Life G.I.C.) Como Lake Project 7.50% 3/1/26 (FHA) 1,000,000 935,000 St. Paul Housing & Redevelopment Single Family Mortgage 6.90% 12/1/21 (FNMA) 1,650,000 1,756,062 St. Paul Housing & Redevelopment Single Family Mortgage 6.90% 12/1/11 (FNMA) 59,000 60,948 Stillwater Multifamily Housing Stillwater Cottages 7.00% 11/1/27 1,000,000 1,037,040 Wadena Housing & Redevelopment Agency Humphrey Manor - (Section 8) 6.00% 2/1/19 2,130,000 2,220,674 Wells Housing & Redevelopment Agency Broadway Apartment Project - (Section 8) 7.00% 1/1/19 1,070,000 1,156,681 Willmar Housing & Redevelopment Agency Highland Apartments - (Section 8) 5.85% 6/1/19 1,050,000 1,088,819 ------------ 81,287,584 ------------ INDUSTRIAL DEVELOPMENT BONDS - 8.20% Andover Development Revenue - Downtown Center Project - Series A 7.00% 12/1/12 1,000,000 1,025,970 Anoka Resource Recovery Revenue for NSP Series 85 7.15% 12/1/08 1,000,000 1,058,590 Becker Pollution Control Revenue for NSP Series 89A 6.80% 4/1/07 2,000,000 2,081,580 Cloquet Pollution Control Revenue for Potlatch Corporation 5.90% 10/1/26 15,000,000 15,823,800 East Grand Forks for American Crystal Sugar Pollution Control Revenue 7.75% 4/1/18 1,230,000 1,346,789 Richfield CDR for Richfield Shoppes 8.375% 10/1/13 2,200,000 2,543,024 Seaway Port Authority Duluth Industrial Development Dock & Wharf Revenue (Cargill Project) Series E 6.125% 11/1/14 4,500,000 4,934,250 St. Cloud CDR for Northwest Center Association 7.50% 8/1/12 4,433,971 4,730,870 St. Paul Port Authority CDR Fort Rd Medical 7.50% 9/1/02 (Asset Gty) 1,300,000 1,332,877 ------------ 34,877,750 ------------ LEASE/CERTIFICATES OF PARTICIPATION - 0.67% Beltrami County Housing & Redevelopment Authority Revenue 6.20% 2/1/14 1,010,000 1,066,701 West St. Paul Commercial Mortgage K-Mart Lease 7.00% 11/1/07 1,616,913 1,784,296 ------------ 2,850,997 ------------ POLLUTION CONTROL REVENUE BONDS - 0.36% International Falls Pollution Control Revenue - Boise Cascade Project 5.65% 12/1/22 1,500,000 1,530,240 ------------ 1,530,240 ------------ POWER AUTHORITY REVENUE BONDS - 17.45% Northern Municipal Power Agency Minnesota Electric Systems Revenue 5.40% 1/1/15 2,000,000 2,064,220 Bass Brook Pollution Control Revenue for Minnesota Power & Light 6.00% 7/1/22 17,490,000 18,384,955 Bass Brook Pollution Control Revenue for Minnesota Power & Light Company 6.00% 7/1/22 (MBIA) 1,750,000 1,864,835 Northern Minnesota Municipal Power Agency 5.25% 1/1/13 (FSA) 4,000,000 4,103,200 Northern Minnesota Municipal Power Agency Electric System Revenue 5.50% 1/1/18 (AMBAC) 9,200,000 9,462,292 Northern Minnesota Municipal Power Agency Zero Coupon 1/1/09 (AMBAC) 3,815,000 2,358,280 Puerto Rico Electric Power Authority 5.25% 7/1/21 1,500,000 1,508,685 Puerto Rico Electric Power Authority Power Revenue Series DD 4.50% 7/1/19 (FSA) 4,000,000 3,746,800 Puerto Rico Electric Power Authority Series EE 4.75% 7/1/24 3,900,000 3,672,513 Puerto Rico Electric Power Authority Series X 5.50% 7/1/25 2,930,000 2,984,322 Southern Minnesota Municipal Power Agency 5.75% 1/1/18 (FGIC) 2,000,000 2,105,940 Southern Minnesota Municipal Power Agency 4.75% 1/1/16 (MBIA) 7,200,000 6,894,576 Southern Minnesota Municipal Power Agency 5.75% 1/1/18 (MBIA) 7,770,000 8,181,577 Southern Minnesota Municipal Power Agency Supply System 5.50% 1/1/15 (AMBAC) 1,560,000 1,609,702 Southern Minnesota Municipal Power Agency Zero Coupon 1/1/19 (MBIA) 4,785,000 1,698,579 Southern Minnesota Municipal Power Agency Zero Coupon 1/1/21 (MBIA) 5,000,000 1,583,250 Virgin Islands Water & Power Authority Electric System Revenue 5.30% 7/1/18 500,000 495,130 Virgin Islands Water & Power Authority Electric Systems Revenue 5.30% 7/1/21 1,000,000 986,910 Western Municipal Power Agency Revenue 6.125% 1/1/16 525,000 527,342 ------------ 74,233,108 ------------ *PRE-REFUNDED BONDS / ESCROWED TO MATURITY - 12.87% Albert Lea St. John's Lutheran Home Project (Pre-Refunded) 8.50% 11/1/19-99 1,000,000 1,088,380 Anoka County Capital Improvement (Pre-Refunded) 7.20% 2/1/08-99 1,000,000 1,016,770 Blaine IDR (Ball Corp.) (Escrowed to Maturity) 8.25% 12/1/00 300,000 328,914 Blaine IDR (Ball Corp.) (Escrowed to Maturity) 8.25% 12/1/99 250,000 265,043 Bloomington Tax Increment (Escrowed to Maturity) 9.75% 2/1/08 500,000 652,815 Brainerd Independent School District #181 (Pre-Refunded) 7.00% 6/1/11-01 390,000 416,668 Edina Fairview Hospital Revenue (Pre-Refunded) 7.125% 7/1/19-99 2,500,000 2,616,625 Faribault Independent School District #656 (MN School District Credit Enhanced) 6.10% 6/1/10-04 1,000,000 1,078,320 Glencoe/McLeod County Health Care (Pre-Refunded) 8.50% 12/1/15-00 500,000 551,025 Kenyon Wanamingo Independent School District 6.00% 2/1/18-05 (MBIA) 2,350,000 2,548,458 Maplewood Independent School District #622 7.10% 2/1/25-05 (FSA) 10,000,000 11,618,300 Minnesota Public Facilities Authority (Water Pollution Control) Series 90A (Pre-Refunded) 7.10% 3/1/12-00 1,990,000 2,129,161 Minnesota Public Facilities Authority Water Pollution Control (Pre-Refunded) 6.95% 3/1/13-01 5,220,000 5,697,526 Minnesota Public Facilities Authority Water Pollution Control 6.25% 3/1/16-05 4,400,000 4,904,988 Northern Minnesota Municipal Power Agency Series 89A 7.25% 1/1/16-99 5,875,000 6,091,318 Owatanna Public Utilities (Pre-Refunded) 6.75% 1/1/16-01 1,000,000 1,063,240 Plainview Independent School District #810 6.70% 2/1/06-03 385,000 420,443 Plainview Independent School District #810 6.75% 2/1/08-03 445,000 486,879 Plainview Independent School District #811 6.75% 2/1/07-03 420,000 459,526 St. Cloud Housing & Redevelopment Agency Northway A&B Project - (Section 8) 7.50% 12/1/18-00 2,045,000 2,244,490 St. Louis Park Methodist Hospital 7.25% 7/1/18-00 (AMBAC) 775,000 838,504 Southern Minnesota Municipal Power Agency Revenue (Escrowed to Maturity) 5.75% 1/1/18 (MBIA) 1,000,000 1,060,030 Southern Minnesota Municipal Power Agency Supply System (Escrowed to Maturity) 5.50% 1/1/15 (AMBAC) 990,000 1,028,768 Stillwater Independent School District #834 5.75% 2/1/15-05 (MBIA) 2,000,000 2,133,720 University Of Minnesota Series A (Escrowed to Maturity) 6.00% 2/1/11 1,500,000 1,501,980 Wayzata Independent School District #284 (Pre-Refunded) 7.05% 2/1/06-99 625,000 635,206 Wayzata Independent School District #284 (Pre-Refunded) 7.10% 2/1/08-99 1,000,000 1,016,610 Wayzata Independent School District #284 (Pre-Refunded) 7.10% 2/1/09-99 560,000 569,302 Western Minnesota Municipal Power Agency Revenue (Escrowed to Maturity) 9.75% 1/1/16 185,000 282,038 ------------ 54,745,047 ------------ ------------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. WATER & SEWER REVENUE BONDS - 1.16% Puerto Rico Aqueduct & Sewer Authority 5.00% 7/1/15 2,000,000 1,988,660 Puerto Rico Aqueduct & Sewer Authority 5.00% 7/1/19 3,000,000 2,961,570 ------------ 4,950,230 ------------ OTHER REVENUE BONDS - 1.37% Minneapolis Community Development Agency Common Bond Fund 7.95% 12/1/11 855,000 956,309 Minneapolis Community Development Agency Common Bond Fund 7.40% 12/1/21 795,000 870,549 Minneapolis Community Development Agency Common Bond Fund 1991-4 Opportunity Workshop Project 7.125% 12/1/05 510,000 556,272 Minneapolis Community Development Agency Tax Increment Revenue Zero Coupon 9/1/09 5,750,000 3,447,355 ------------ 5,830,485 ------------ Total Municipal Bonds (cost $391,418,398) 425,374,867 ------------ NUMBER OF SHARES ------------ SHORT TERM INVESTMENTS - 0.16% Federated Minnesota Muncipal Money Market Fund 669,968 669,968 ------------ Total Short Term Investments (cost $669,968) 669,968 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 100.16% (COST $392,088,366) $426,044,835 LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.16%) (691,173) ============ NET ASSETS APPLICABLE TO 32,890,358 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% $425,353,662 ============ NET ASSET VALUE - TAX FREE MINNESOTA FUND A CLASS ($411,657,137 / 31,831,741 SHARES) $12.93 ======= NET ASSET VALUE - TAX FREE MINNESOTA FUND B CLASS ($9,240,265 / 714,395 SHARES) $12.93 ======= NET ASSET VALUE - TAX FREE MINNESOTA FUND C CLASS ($4,456,260 / 344,222 SHARES) $12.95 ======= ------------------- AMBAC - Insured by the Ambac Indemnity Corporation Asset Gty - Insured by the Asset Guaranty Insurance Company Connie Lee - Insured by College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by the Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common stock $.01 par value, 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Tax Free Minnesota Fund A Class, 1,000,000,000 shares allocated to Tax Free Minnesota Fund B Class, and 1,000,000,000 shares allocated to Tax Free Minnesota Fund C Class $389,730,261 Accumulated net realized gain on investments 1,666,932 Net unrealized appreciation of investments 33,956,469 ------------ Total net assets $425,353,662 ============ NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE MINNESOTA FUND A CLASS Net asset value per share (A) $12.93 Sales charge (3.75% of offering price or 3.87% of amount invested per share) (B) 0.50 ------- Offering price $13.43 ======= ------------------------ (A) Net asset value per share illusted is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more for Tax Free Minnesota Fund Class A. See accompanying notes
VOYAGEUR INSURED FUNDS, INC. DELAWARE - VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) PRINCIPAL MARKET AMOUNT VALUE --------- --------- MUNICIPAL BONDS - 100.34% GENERAL OBLIGATION BONDS - 20.26% Anoka County, Minnesota Capital Improvement Series C 5.90% 2/1/11 (FGIC) $8,045,000 $8,388,039 Becker Minnesota 6.25% 8/1/15 (MBIA) (AMT) 6,300,000 6,782,643 Becker Wastewater Treatment Facility Series A 5.95% 2/1/14 (MBIA) 500,000 530,545 Buffalo Independent School District #887 6.30% 2/1/13 (FSA) 1,775,000 1,091,666 Dakota County 6.40% 2/1/08 (AMBAC) 1,135,000 1,175,293 Dakota County 6.45% 2/1/09 (AMBAC) 1,000,000 1,035,480 Dakota County 6.45% 2/1/10 (AMBAC) 2,500,000 2,588,700 Eden Prairie Minnesota Independent School District #272 Inverse Floater 6.42% 2/1/14 (FGIC) 1,125,000 1,175,513 Eden Prairie Independent School District #272 5.85% 2/1/13 (FGIC) 2,500,000 2,594,175 Eden Prairie Independent School District #272 5.65% 2/1/13 (MBIA) 3,200,000 3,299,744 Eden Prairie Independent School District #272, Inverse Floater 6.42% 2/1/15 (MBIA) 1,000,000 1,036,200 Elk River Independent School District #728 Series 92 B 6.00% 2/1/09 (AMBAC) 3,950,000 4,193,755 Farmington Independent School District #192 6.80% 2/1/11(MBIA) 850,000 904,970 Hennepin County 5.75% 10/1/10 (MBIA) 1,800,000 1,909,098 Hopkins Independent School District #270 4.875% 2/1/14 (MBIA) 1,875,000 1,873,913 Lakeville Minnesota Independent School District #194 Capital Appreciation Series B Zero Coupon 2/1/15 2,455,000 1,043,179 Lakeville Minnesota School District #194 Capital Appreciation Series B Zero Coupon 2/1/17 2,490,000 941,469 North Branch Independent School District #138, Inverse Floater 7.17% 2/1/11 965,000 1,058,123 Prior Lake Independent School District #719, Inverse Floater 6.17% 2/1/14 (FGIC) 1,000,000 1,045,710 Rosemount Independent School District #196 Series B Zero Coupon 4/1/10 (FSA) 2,240,000 1,301,530 Rosemount Independent School District #196 Zero Coupon 4/1/09 (FSA) 1,860,000 1,143,844 South Washington County Independent School District #883 6.125% 6/1/09 (FGIC) 1,430,000 1,498,840 South Washington County Independent School District #883 6.125% 6/1/11 (FGIC) 2,720,000 2,847,160 Spring Lake Park Independent School District #16, Inverse Floater 6.67% 2/1/14 (MBIA) 2,175,000 2,293,668 St. Cloud Independent School District #742 6.05% 2/1/09 (FGIC) 1,000,000 1,063,760 St. Francis Independent School District #15 5.90% 4/1/10 (FGIC) 1,845,000 1,950,700 Stillwater Independent School District #834 5.50% 2/1/10 (FGIC) 2,995,000 3,083,682 Western Lake Superior Series A 6.00% 10/1/08 (MBIA) (AMT) 400,000 435,644 Western Lake Superior Series A 6.10% 10/1/09 (MBIA) (AMT) 425,000 462,732 Western Lake Superior Series A 6.20% 10/1/10 (MBIA) (AMT) 450,000 492,692 Western Lake Superior Series A 6.20% 10/1/11 (MBIA) (AMT) 475,000 515,508 ------------ 59,757,975 ------------ HOSPITAL REVENUE BONDS - 20.67% Bloomington Masonic Home Care Center 5.90% 7/1/09 (AMBAC) 1,250,000 1,336,975 Brainerd Benedictine Health Care Systems for St. Joseph's Hospital 6.00% 2/15/12 (Connie Lee) 1,500,000 1,606,665 Brainerd Benedictine Health Care Systems for St. Joseph's Hospital 6.00% 2/15/20 (Connie Lee) 2,000,000 2,131,900 Detroit Lakes Benedictine Health for St. Mary's Hospital 6.00% 2/15/12 (Connie Lee) 1,630,000 1,745,909 Detroit Lakes Benedictine Health for St. Mary's Hospital 6.00% 2/15/19 (Connie Lee) 1,000,000 1,065,950 Duluth Economic Development Authority Benedictine for St. Luke's Hospital 6.40% 5/1/18 (Connie Lee) 500,000 540,110 Duluth Economic Development Authority Health Care Duluth Clinic 6.30% 11/1/22 (AMBAC) 2,690,000 2,928,980 Duluth Economic Development Authority Health Care Revenue for St. Mary's Hospital, Inverse Floater 8.22% 2/15/17 5,000,000 5,640,800 Duluth Economic Development Authority St. Luke's Hospital 6.00% 2/15/20 (Connie Lee) 1,300,000 1,388,530 Duluth Economic Development Authority St. Luke's Hospital 6.40% 5/1/10 (Connie Lee) 3,335,000 3,618,442 Minneapolis Fairview Hospital Series 91B 6.50% 1/1/11 (MBIA) 3,000,000 3,254,100 Minneapolis Minnesota Health Care Facility Revenue Fairview Hospital & Healthcare Series A 5.25% 11/15/19 (MBIA) 2,750,000 2,778,215 Minneapolis/St. Paul HRA - Childrens Hospital, Inverse Floater 7.57% 8/15/16 (FSA) 1,310,000 1,450,615 Minneapolis/St. Paul HRA Health Care System for Healthspan Series 93A 5.00% 11/15/13 (FSA) 6,490,000 6,525,306 Minneapolis/St. Paul HRA HealthOne 7.40% 8/15/05 (MBIA) 600,000 649,182 Minneapolis/St. Paul HRA HealthOne 7.40% 8/15/11 (MBIA) 2,370,000 2,562,752 Minneapolis/St. Paul Minnesota HRA Health Care System for Healthspan Series A 4.75% 11/15/18 (AMBAC) 4,000,000 3,838,360 Minnesota Agricultural & Economic Development Fairview Hospital Series 97A 5.75% 11/15/26 8,250,000 8,824,943 Robbinsdale North Memorial Medical 5.50% 5/15/23 (AMBAC) 5,400,000 5,532,678 St. Louis Park Health Care for Methodist Hospital, Inverse Floater 6.32% 7/1/23 2,500,000 2,523,200 St. Paul Ramsey Medical 5.50% 5/15/13 (AMBAC) 1,000,000 1,036,880 ------------ 60,980,492 ------------ HOUSING REVENUE BONDS - 19.41% Chaska Waters Edge Multifamily Revenue 7.30% 1/20/30 (GNMA) 3,257,000 3,654,061 Dakota County HRA Single Family Mortgage Revenue 6.70% 10/1/17 (FNMA) 5,040,000 5,419,462 Dakota County HRA Single Family Mortgage Revenue 5.85% 10/1/30 (GNMA/FNMA) 7,000,000 7,274,050 Dakota, Washington and Stearns Counties HRA Single Family Mortgage Revenue 7.85% 12/1/30 (MBIA) 150,000 157,197 Eagan Multifamily Revenue Woodridge Apartments 5.90% 8/1/20 (GNMA) 1,000,000 1,061,330 Hopkins Multifamily Housing-Auburn Apartments 8.05% 6/20/31 (GNMA) 3,790,000 4,347,206 Minneapolis/St. Paul Housing Finance Board Single Family Mortgage Revenue 8.30% 8/1/21 (GNMA) 105,000 107,162 Minneapolis/St. Paul Housing Finance Board Single Family Mortgage Revenue 8.125% 12/1/14 (GNMA) 135,000 139,976 Minneapolis/St. Paul Housing Finance Board Housing Project Phase IX 7.25% 8/1/21 (GNMA) 1,160,000 1,238,799 Minneapolis/St. Paul Housing Finance Board Housing Project Phase IX 7.30% 8/1/31 (GNMA) 775,000 822,686 Minneapolis/St. Paul Housing Finance Board Housing Project Phase V 8.875% 11/1/18 (GNMA) 65,000 66,658 Minneapolis/St. Paul Minnesota Housing Finance Board Single Family Mortgage - Project Phase XI 5.80% 11/1/30 (GNMA) 2,705,000 2,800,135 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series B 7.25% 7/1/06 (MBIA) 140,000 140,298 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series A 7.95% 7/1/22 (MBIA) 305,000 319,878 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series 7.45% 7/1/22 (AMBAC) 1,395,000 1,469,772 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series 7.05% 7/1/22 (AMBAC) 505,000 533,952 Minnesota Housing Finance Agency Single Family Housing Rental 5.95% 2/1/15 (AMBAC) 2,480,000 2,621,236 Minnesota Housing Finance Agency Single Family Housing Rental 5.95% 2/1/18 (MBIA) 6,950,000 7,311,331 Minnesota Housing Finance Agency Single Family Housing Rental Series A 5.875% 8/1/28 (AMT) 2,610,000 2,734,340 Minnesota State Housing Finance Agency Single Family Mortgage Series D 5.80% 7/1/21 (AMT) 4,185,000 4,382,490 Minnetonka Multifamily Housing Cedar Hills Project Cedar Hills East 7.50% 12/1/27 (FHA) 500,000 519,785 Minnetonka Multifamily Housing Cedar Hills Project Cedar Hills East 7.50% 12/1/17 (FHA) 400,000 418,412 Scott County, Minnesota Housing & Redevelopment Authority Facility Lease Revenue - Justice Center Project 5.50% 12/1/15 1,755,000 1,830,798 South St. Paul, HRA Single Family Housing Mortgage Series 93 5.75% 9/1/20 (FNMA) 2,410,000 2,492,639 St. Paul HRA Multifamily Housing 6.60% 10/1/12 (FHA) 4,000,000 4,291,800 White Bear Lake Multifamily Housing Lake Square 5.875% 2/1/15 (FHA) 1,055,000 1,112,983 ------------ 57,268,436 ------------ LEASE/CERTIFICATES OF PARTICIPATION - 0.70% Stearns County HRA Courthouse Project 7.00% 2/1/11 (AMBAC) 2,000,000 2,059,480 ------------ 2,059,480 ------------ *PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 29.81% Alexandria Independent School District #206 6.30% 2/1/13 Crossover Refunded to 2-1-03 @ 100 (MBIA) 1,775,000 1,915,438 Brainerd Independent School District #181 7.00% 6/1/09-01 (FGIC) 515,000 551,663 Brainerd Independent School District #181 7.00% 6/1/10-01 (FGIC) 550,000 589,155 Carver County HRA Jail Facility Crossover Refunded to 2/01/02 @ 100 (MBIA) 515,000 548,485 Carver County HRA Jail Facility Crossover Refunded to 2/01/02 @ 100 (MBIA) 550,000 585,761 Carver County HRA Jail Facility Crossover Refunded to 2/01/02 @ 100 (MBIA) 585,000 623,037 Carver County HRA Jail Facility Crossover Refunded to 2/01/02 @ 100 (MBIA) 625,000 665,638 Carver County HRA Jail Facility Crossover Refunded to 2/01/02 @ 100 (MBIA) 670,000 713,563 Centennial Independent School District #12 7.10% 2/1/09-00 (FSA) 200,000 209,736 Centennial Independent School District #12 7.15% 2/1/11-00 (FSA) 450,000 472,248 Centennial Independent School District #12 7.15% 2/1/12-00 (FSA) 250,000 262,360 Dakota & Washington Counties HRA Single Family Mortgage Revenue (Escrowed to maturity) 8.375% 9/1/21 (GNMA) 14,115,000 19,815,343 Dakota & Washington Counties HRA Single Family Mortgage Revenue (Escrowed to maturity) 8.15% 9/1/16 (MBIA) 405,000 537,334 Dakota, Washington & Anoka Counties HRA Single Family Housing (Escrowed to maturity) 8.45% 9/1/19 (GNMA) 9,000,000 12,550,050 Delano Independent School District #879 7.25% 2/1/10-01 (AMBAC) 500,000 535,370 Duluth EDA Health Care - Duluth Clinic 6.30% 11/1/22-04 (AMBAC) 1,060,000 1,182,345 Elk River Independent School District 7.00% 2/1/10-00 (FSA) 200,000 208,380 Elk River Independent School District #728 6.30% 2/1/14-02 (FSA) 500,000 531,720 Elk River Independent School District #728 6.30% 2/1/15-02 (FSA) 665,000 707,188 Ellendale Geneva Independent School District #762 6.00% 2/1/10-03 (AMBAC) 230,000 245,171 Ellendale Geneva Independent School District #762 6.00% 2/1/11-03 (AMBAC) 245,000 261,160 Ellendale Geneva Independent School District #762 6.00% 2/1/12-03 (AMBAC) 265,000 282,479 Ellendale Geneva Independent School District #762 6.00% 2/1/13-03 (AMBAC) 280,000 298,469 Ellendale Geneva Independent School District #762 6.00% 2/1/14-03 (AMBAC) 300,000 319,788 Ellendale Geneva Independent School District #762 6.00% 2/1/15-03 (AMBAC) 320,000 341,107 Lake Of The Woods Independent School District #390 7.35% 2/1/15-99 (AMBAC) 200,000 203,658 Lake Of The Woods Independent School District #390 7.35% 2/1/16-99 (AMBAC) 250,000 254,573 Maplewood Independent School District #622 7.10% 2/1/25-05 (FSA) 11,525,000 13,390,091 Maplewood Independent School District #622 7.10% 2/1/19-05 (MBIA) 5,935,000 6,895,461 Minnesota Public Facilities Authority Water Pollution Control Revenue Pre-Refunded 3-1-02 @ 102 (MBIA) 1,500,000 1,648,350 Minnesota State University System 7.40% 6/30/19-99 (MBIA) 760,000 787,649 Moorhead Minnesota Independent School District #152 5.90% 2/1/10 Crossover Refunded to 2/01/01 @ 100 (AMBAC) 475,000 493,164 Moorhead Minnesota Independent School District #152 5.90% 2/1/11 Crossover Refunded to 2/01/01 @ 100 (AMBAC) 505,000 524,310 Moorhead Minnesota Independent School District #152 5.90% 2/1/12 Crossover Refunded to 2/01/01 @ 100 (AMBAC) 540,000 560,650 Moorhead Minnesota Independent School District #152 6.00% 2/1/13 Crossover Refunded to 2/01/01 @ 100 (AMBAC) 575,000 598,373 Moorhead Minnesota Public Utilities 6.25% 11/1/12 Crossover Refunded to 11/1/02 @ 100 (AMBAC) 735,000 789,699 Mora Series A 6.85% 2/1/10 Pre-Refunded 2/1/00 @ 100 (AMBAC) 245,000 256,003 Mora Series A 6.85% 2/1/11 Pre-Refunded 2/1/00 @ 100 (AMBAC) 265,000 276,901 Northern Minnesota Municipal Power Agency Series B 5.90% 1/1/08-03 (AMBAC) 700,000 761,312 Roseau Independent School District #682 7.00% 2/1/16 Crossover Refunded to 2/01/00 @ 100 (AMBAC) 500,000 520,950 South St. Paul Independent School District #6 6.45% 2/1/11 (FGIC) 500,000 516,815 South St. Paul Independent School District #6 6.45% 2/1/12 (FGIC) 300,000 310,089 South St. Paul Independent School District #6 6.25% 2/1/10 Crossover Refunded to 2/01/00 @ 100 (FGIC) 625,000 644,143 South Washington County Independent School District #883 6.875% 6/1/11-00 (FGIC) 520,000 545,053 Southern Minnesota Municipal Power Agency Revenue (Escrowed to maturity) 5.75% 1/1/18 (MBIA) 3,790,000 4,017,513 Southern Minnesota Municipal Power Agency Revenue (Escrowed to maturity) 5.75% 1/1/18 (AMBAC) 670,000 710,220 St. Cloud Hospital Facility Revenue 6.75% 7/1/11-01 (AMBAC) 400,000 438,372 St. Cloud Hospital Facility Revenue 6.75% 7/1/15-01 (AMBAC) 500,000 547,220 St. Cloud Hospital Facility Revenue 7.00% 7/1/07-01 (AMBAC) 500,000 550,705 St. Louis Park Methodist Hospital 7.25% 7/1/18-00 (AMBAC) 500,000 540,970 Stillwater Independent School District #834 6.75% 2/1/10-99 (FGIC) 1,000,000 1,014,660 Warroad Independent School District #690 6.85% 2/1/13-00 (AMBAC) 500,000 519,820 Washington County HRA Jail Facilities 7.00% 2/1/12-02 (MBIA) 500,000 548,195 Western Minnesota Municipal Power Agency Revenue (Escrowed to Maturity) 9.75% 1/1/16 530,000 808,000 Western Municipal Power Agency Series A (Escrowed to maturity) 6.60% 1/1/10 (MBIA) 2,000,000 2,273,280 Wright County 7.20% 12/1/12-99 (FSA) (AMT) 1,000,000 1,044,570 ------------ 87,943,757 ------------ POWER AUTHORITY REVENUE BONDS - 9.49% Bass Brook Pollution Control Revenue for Minnesota Power & Light Company 6.00% 7/1/22 (MBIA) 2,000,000 2,131,240 Marshall Utility Revenue 6.45% 7/1/10 (FSA) 500,000 546,840 Marshall Utility Revenue 6.45% 7/1/11 (FSA) 100,000 109,133 Marshall Utility Revenue 6.50% 7/1/12 (FSA) 500,000 546,310 Marshall Utility Revenue 6.50% 7/1/13 (FSA) 500,000 547,480 Northern Minnesota Municipal Power Agency 5.25% 1/1/13 (FSA) 4,750,000 4,872,550 Northern Minnesota Municipal Power Agency Electric System Revenue 5.50% 1/1/18 (AMBAC) 4,200,000 4,319,741 Puerto Rico Electric Power Authority Power Revenue Series DD 4.50% 7/1/19 (FSA) 4,000,000 3,746,800 Puerto Rico Commonwealth Highway & Transportation Authority Revenue Series A Zero Coupon 7/1/18 5,000,000 1,845,350 Southern Minnesota Municipal Power Agency 5.75% 1/1/18 (FGIC) 4,570,000 4,812,072 Southern Minnesota Municipal Power Agency 4.75% 1/1/16 (MBIA) 2,400,000 2,298,191 Southern Minnesota Municipal Power Agency Revenue 5.75% 1/1/18 (AMBAC) 1,330,000 1,400,450 Power Authority Revenue Bonds - (Continued) Southern Minnesota Municipal Power Agency, Inverse Floater 7.67% 1/1/18 750,000 808,350 ------------ 27,984,507 ------------ Total Municipal Bonds (cost $ 273,536,618) 295,994,647 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 100.34% (COST $273,536,618) $295,994,647 LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (.34%) (1,012,042) ============ NET ASSETS APPLICABLE TO 26,946,914 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% $294,982,605 ============ NET ASSETS VALUE - MINNESOTA INSURED FUND A CLASS ($282,301,136 / 25,787,793 SHARES) $10.95 ====== NET ASSETS VALUE - MINNESOTA INSURED FUND B CLASS ($9,573,586 / 875,287 SHARES) $10.94 ====== NET ASSETS VALUE - MINNESOTA INSURED FUND C CLASS ($3,107,883 / 283,834 SHARES) $10.95 ====== COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $ .01 par value, 10,000,000 shares authorized to the Fund with 1,000,000 shares allocated to Minnesota Insured Fund A Class, 1,000,000,000 shares allocated to Minnesota Insured Fund B Class and 1,000,000,000 shares allocated to Minnesota Insured Fund C Class $279,017,981 Accumulated net realized loss on investments (6,493,405) Net unrealized appreciation on investments 22,458,029 ------------ Total Net Assets $294,982,605 ============ NET ASSET VALUE AND OFFERING PRICE FOR TAX - FREE MINNESOTA INSURED FUND A CLASS Net asset value per share (A) $10.95 Sales charge ( 3.75% of offering price or 3.93% of amount invested per share)(B) 0.43 ------ Offering price $11.38 ====== ------------------------ (A) Net asset value per share illustrated is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more for Minnesota Insured Fund Class A. AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Alternative Minimum Tax Connie Lee - Insured by the College Construction Insurance Asscociation FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by the Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association See accompanying notes
VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC. DELAWARE - VOYAGEUR TAX FREE MINNESOTA INTERMEDIATE FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) PRINCIPAL MARKET AMOUNT VALUE --------- --------- MUNICIPAL BONDS - 97.79% GENERAL OBLIGATION BONDS - 2.50% Olmstead County Resource Recovery Series A 5.90% 2/1/05 $ 1,175,000 $ 1,239,331 Western Lake Superior Sanitation District 6.10% 10/1/00 225,000 226,312 ------------ 1,465,643 ------------ HIGHER EDUCATION REVENUE BONDS - 6.57% Minnesota Higher Education Facility Authority Augsburg College Series 4F2 5.75% 5/1/16 3,700,000 3,852,625 ------------ 3,852,625 ------------ HEALTH CARE/HOSPITAL REVENUE BONDS - 14.37% Fergus Falls Health Care Facility Broen Memorial Home Project 6.20% 11/1/05 100,000 104,467 Fergus Falls Health Care Facility Broen Memorial Home Project 6.30% 11/1/06 200,000 209,866 Fergus Falls Health Care Facility Broen Memorial Home Project 6.40% 11/1/07 200,000 209,826 Fergus Falls Health Care Facility Broen Memorial Home Project 6.60% 11/1/09 240,000 251,698 Fergus Falls Health Care Facility Broen Memorial Home Project 6.70% 11/1/10 260,000 272,620 Maplewood Healthcare Facility For Healtheast 5.70% 11/15/02 1,000,000 1,046,140 Maplewood Healthcare Facility For Healtheast 5.95% 11/15/06 2,200,000 2,313,564 Minneapolis Minnesota Health Care Facilities Jones - Harrison Residence Project 5.90% 10/1/16 125,000 124,986 Rochester Nursing Home & Multifamily Housing Revenue Samaritan Bethany, Inc. 6.00% 5/1/04 300,000 306,270 Rochester Nursing Home & Multifamily Housing Revenue Samaritan Bethany, Inc. 6.10% 5/1/05 250,000 255,215 St. Paul Minnesota Housing & Redevelopment for Healtheast Authority Hospital Revenue 5.70% 11/1/15 2,100,000 2,143,722 St. Paul Minnesota Housing & Redevelopment for Healtheast Authority Hospital Revenue 5.85% 11/1/17 1,160,000 1,188,849 ------------ 8,427,223 ------------ HOUSING REVENUE BONDS - 7.16% Burnsville Multifamily Housing Revenue Burnsville Apts. Project, (LOC:TCF) Mandatory Put 9/1/99 @ 100 7.00% 9/1/19 580,000 582,175 Minnesota HFA Single Family Mortgage Revenue Series C 6.30% 1/1/99 70,000 70,425 Oakdale Minnesota Elderly Housing Revenue PHM/Oakdale Project 5.75% 3/1/18 1,400,000 1,413,160 Oakdale, Minnesota Housing - Oak Meadows Project 6.50% 4/1/10 295,000 308,989 Oakdale, Minnesota Housing - Oak Meadows Project 6.20% 4/1/07 150,000 157,191 Oakdale, Minnesota Housing - Oak Meadows Project 6.30% 4/1/08 260,000 272,420 Park Rapids, Minnesota Multifamily Revenue The Court Apartments Project (Section 8) 6.05% 8/1/12 1,175,000 1,193,882 St. Paul HRA Minnesota Public Radio, (LOC: First Bank) 6.60% 6/1/99 100,000 101,574 St. Paul Housing & Redevelopment Single Family Mortgage 6.90% 12/1/21 (FNMA) 95,000 101,107 ------------ 4,200,923 ------------ INDUSTRIAL DEVELOPMENT REVENUE BONDS - 23.36% Andover, Minnesota Development Revenue Downtown Center Project-Series A 6.50% 12/1/06 1,795,000 1,842,478 Brooklyn Center CDR Brookdale Association Mandatory Put 6/1/01 @ 100 5.70% 12/1/07 (NWNL Guaranteed) 1,000,000 1,047,780 Duluth Gross Revenue Bond - Duluth Entertainment Project 6.00% 12/1/98 275,000 277,063 Duluth Gross Revenue Bond - Duluth Entertainment Project 7.00% 12/1/03 1,250,000 1,380,050 Duluth Gross Revenue Bond - Duluth Entertainment Project 7.30% 12/1/06 250,000 283,635 Metropolitan Council HHH Metrodome Sports Facility Revenue Series 92 6.00% 10/1/09 3,520,000 3,773,933 Minnesota Public Facilities Authority Pollution Control Revenue Series A 6.55% 3/1/03 1,720,000 1,852,956 Richfield Shoppes CDR - Richfield Shoppes Project 7.50% 10/01/04 1,070,000 1,192,290 St. Paul Minnesota Port Authority CDR Fort Rd Medical 7.50% 9/1/02 (Asset Gty) 2,000,000 2,050,580 ------------ 13,700,765 ------------ LEASE/CERTIFICATES OF PARTICIPATION - 2.83% Beltrami County Housing & Redevelopment Authority Revenue 5.90% 2/1/08 355,000 376,151 Beltrami County Housing & Redevelopment Authority Revenue 6.00% 2/1/09 380,000 402,564 Beltrami County Housing & Redevelopment Authority Revenue 6.00% 2/1/10 405,000 426,728 Beltrami County Housing & Redevelopment Authority Revenue 6.10% 2/1/11 430,000 454,218 ------------ 1,659,661 ------------ *PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 31.25% Austin Independent School District #492 6.875% 2/1/12-01 (MBIA) 1,205,000 1,279,361 Braham Independent School District #314 6.30% 2/1/19-01 (AMBAC) 3,015,000 3,159,328 Duluth EDA St. Mary's Hospital (Escrowed to Maturity) 7.90% 2/15/99 150,000 153,837 Eden Valley Watkins Independent School District #463 6.55% 2/1/11-02 (FSA) 250,000 267,905 Eden Valley Watkins Independent School District #463 6.60% 2/1/16-02 (FSA) 615,000 660,055 Mankato Independent School District #77 6.35% 2/1/13-02 (FSA) (MBIA) 1,750,000 1,863,890 Minneapolis/St. Paul HealthOne Series B (Escrowed to Maturity) 7.55% 8/15/00 325,000 348,767 Minneapolis/St. Paul HealthOne Series C (Escrowed to Maturity) 7.45% 8/15/99 400,000 416,116 Minnesota State 6.25% 8/1/10-02 4,000,000 4,323,840 Olmstead County 6.85% 2/1/02-01 800,000 855,112 Olmstead County 6.90% 2/1/03-01 900,000 963,090 Olmstead County 6.95% 2/1/04-01 950,000 1,017,745 St. Cloud Hospital Facility Revenue 7.00% 7/1/20-01 (AMBAC) 2,740,000 3,013,780 ------------ 18,322,826 ------------ POWER AUTHORITY REVENUE BONDS - 6.04% Eveleth IDR for Minnesota Power & Light Company 6.125% 1/1/04 2,500,000 2,665,525 Northern Minnesota Municipal Power Agency 7.20% 1/1/99 860,000 874,981 ------------ 3,540,506 ------------ OTHER REVENUE BONDS - 2.93% Hibbing Economic Development Authority Revenue 6.10% 2/1/08 650,000 678,587 Richfield Minnesota Independent School District #280 Series C, Inverse Floater 6.65% 2/1/15 1,000,000 1,036,750 ------------ 1,715,337 ------------ TERRITORIAL REVENUE BONDS - 0.78% Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 500,000 457,225 ------------ 457,225 ------------ Total Municipal Bonds (cost $54,877,673) 57,342,734 ------------ NUMBER OF SHARES --------- SHORT TERM INVESTMENTS - 2.38% Federated Minnesota Municipal Money Market Fund 1,398,518 1,398,518 ------------ Total Short Term Investments (cost $1,398,518) 1,398,518 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 100.17% (COST $56,276,191) $58,741,252 LIABILITIES NET OF RECEIVABLES AND OTHER ASSSETS - (.017%) (101,552) ------------ NET ASSETS APPLICABLE TO 5,270,132 SHARES ($.01 PAR VALUE) OUTSTANDING - 100% $58,639,700 ============ NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND A CLASS ($55,905,263 / 5,024,501 SHARES) $11.13 ====== NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND B CLASS ($1,160,508 / 104,204 SHARES) $11.14 ====== NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND C CLASS ($1,573,929 / 141,427 SHARES) $11.13 ====== COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $.01 par value, 10,000,000,000 shares authorized to the fund with 1,000,000,000 shares allocated to Tax-Free Minnesota Intermediate Fund A Class, 1,000,000,000 shares allocated to Tax-Free Minnesota Intermediate Fund B Class, and 1,000,000,000 shares allocated to Tax-Free Minnesota Intermediate Fund C Class $56,237,508 Distributions in excess of net investment income (887) Accumulated net realized loss on investments (61,982) Net unrealized appreciation of investments 2,465,061 ------------ Total Net Assets $58,639,700 ============ NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE MINNESOTA INTERMEDIATE FUND A CLASS Net asset value per share (A) $11.13 Sales charge (2.75% of offering price or 2.79% of amount invested per share) (B) 0.31 ------ Offering price $11.44 ====== ------------------------ (A) Net asset value per share illustrated is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more for Minnesota Intermediate Fund A Class. AMBAC - Insured by the AMBAC Indemnity Corporation Asset Gty - Insured by the Asset Guaranty Insurance Company FNMA - Insured by the Federal National Mortgage Association FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association NWNL - Insured by the Northwestern National Life Insurance Company ------------------------ *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. See accompanying notes
VOYAGEUR MUTUAL FUNDS, INC. DELAWARE - VOYAGEUR MINNESOTA HIGH YIELD MUNICIPAL BOND FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) PRINCIPAL MARKET AMOUNT VALUE --------- --------- MUNICIPAL BONDS - 102.65% GENERAL OBLIGATION BONDS - 5.01% Esko Independent School District #99 5.75% 4/1/17 (FSA) $ 100,000 $ 106,827 Inver Grove Heights - MN School District Enhanced Series A 5.75% 2/1/13 100,000 107,211 Puerto Rico Commonwealth 5.375% 7/1/25 500,000 505,140 Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 1,370,000 1,252,797 Stewartville Independent School District - MN School District Enhanced Series A 5.75% 2/1/12 100,000 106,744 Waconia Independent School District Series 93A 5.45% 2/1/15 (FSA) 100,000 102,992 ------------ 2,181,711 ------------ HIGHER EDUCATION REVENUE BONDS - 5.08% Minnesota State Higher Education Facility Macalester College 4C 5.50% 3/1/12 100,000 104,228 Minnesota State Higher Education Facility St. Mary's College Series 3Q 6.15% 10/1/23 900,000 932,985 Minnesota State University System Revenue Bonds 93A 6.10% 6/30/23 100,000 104,661 University Of Minnesota Series A 5.50% 7/1/21 1,000,000 1,069,270 ------------ 2,211,144 ------------ HOSPITAL REVENUE BONDS - 29.20% Cambridge Healthcare Facility Revenue - Grandview Christian Home 7.25% 9/1/26 125,000 131,636 Cannon Falls Nursing Home - Franciscan Health Community Project 7.25% 7/1/21 100,000 103,089 Duluth Econ BSM - A - MN 5.875% 12/1/28 500,000 501,890 Duluth, Minnesota Economic Development Authority Health Care Facilities - St. Francis Health Care Facility 6.75% 12/1/17 325,000 343,558 Fergus Falls Health Care Facility Revenue - Lake Region Hospital 6.50% 9/1/18 750,000 821,085 Glencoe Minnesota Health Care Revenue 6.40% 12/1/15 275,000 284,204 Little Canada Senior Facility Residence 92 - (Presbyterian Homes Guaranteed) 7.25% 7/1/12 250,000 260,880 Mankato Health Facilities Revenue Series A - Lutheran Homes 6.875% 10/1/26 300,000 312,867 Minneapolis Health Care - American Baptist Homes 8.70% 11/1/09 150,000 165,857 Minneapolis Minnesota Health Care Facility Revenue Jones-Harrison Residence Project 6.00% 10/1/27 1,565,000 1,564,812 Minneapolis, Minnesota Housing & Health Care Facility Revenue (Augustana Chapel View Homes) 6.50% 6/1/17 1,370,000 1,415,977 Northfield Minnesota Health Care Facilities Revenue Refunding & Improvement Retirement Center Series A 6.00% 5/1/28 1,405,000 1,423,658 Perham Minnesota Hospital District Congregate Housing Facilities Briarwood Project 6.25% 2/1/22 620,000 630,875 Robbinsdale North Memorial Medical 5.50% 5/15/23 (AMBAC) 100,000 102,457 Rochester Health Care Facilities Revenue Reg IRS Series H for Mayo Clinic, Inverse Floater 7.92% 11/15/15 1,500,000 1,737,840 Springfield St. John's Lutheran Home Revenue 8.50% 11/1/19 150,000 158,121 St. Paul Housing & Redevelopment Hospital Revenue for Health East Series B 6.625% 11/1/17 500,000 540,300 St. Paul Housing & Redevelopment Hospital Revenue for Health East Series A 6.625% 11/1/17 250,000 270,150 Waconia Housing & Redevelopment Revenue for the Envangelical Lutheran Good Samaritan Series A 6.00% 6/1/14 660,000 685,601 Wadena County Health Care Facility Gross Revenue Series B 7.75% 9/1/24 250,000 273,055 Washington County Minnesota Housing & Redevelopment Authority Hospital Facilities 5.50% 11/15/27 1,000,000 975,040 ------------ 12,702,952 ------------ HOUSING REVENUE BONDS - 33.42% Brooklyn Center Four Court Multifamily Housing 7.50% 6/1/25 370,000 383,305 Carver Multifamily Housing Lake Grace 6.25% 7/1/28 330,000 344,939 Carver Multifamily Housing Lake Grace 8.00% 7/1/28 200,000 206,032 Chanhassen Multifamily Housing Heritage Park 6.20% 7/1/30 300,000 319,269 Coon Rapids Minnesota Multifamily Revenue - Margaret Place Series A 6.50% 5/1/25 500,000 510,450 Eden Prairie Minnesota Health Care Facilties Revenue Ref - Castle Ridge Care Center 5.70% 7/1/28 1,555,000 1,518,069 Eden Prairie Multifamily Housing Subordinated - Tanager Creek 8.00% 6/20/31 780,000 816,426 Minneapolis Multifamily Housing - Olson Townhomes 6.00% 12/1/19 800,000 826,952 Minneapolis - Nicollet Towers Multifamily Housing 6.00% 12/1/19 300,000 318,087 Minnesota Housing Finance Authority Single Family Mortgage Series E 6.25% 1/1/23 90,000 95,551 Minnesota Housing Finance Authority Single Family Housing 5.875% 1/1/17 100,000 105,852 Minnesota State Housing Finance Agency Single Family Mortgage Series K 5.75% 1/1/26 1,000,000 1,030,380 Minnetonka Multifamily Housing Beacon Hill Senior Housing Project 7.55% 6/1/19 200,000 216,362 Minnetonka, Minnesota Senior Housing Revenue - Westridge Senior Housing Project 6.30% 9/1/08 110,000 112,317 Minnetonka, Minnesota Senior Housing Revenue - Westridge Senior Housing Project 6.50% 9/1/12 285,000 290,965 Minnetonka, Minnesota Westridge Housing Revenue - Westridge Senior Housing Project 7.00% 9/1/27 1,275,000 1,298,358 Moorhead Minnesota Economic Development Authority Multifamily Revenue Reference & Improvement Housing Development Eventide B 6.00% 6/1/18 870,000 875,446 New Brighton Multifamily Polynesian Village 7.60% 4/1/25 300,000 321,069 Oakdale Minnesota Elderly Housing Revenue PHM/ Oakdale Project 6.00% 3/1/28 1,800,000 1,828,944 Oakdale,Minnesota Housing-Oak Meadows Project 6.75% 4/1/15 1,500,000 1,581,720 St. Anthony Multifamily Housing Chandler 6.05% 11/20/16 (GNMA) 135,000 144,408 St. Louis Park Multifamily Mortgage Revenue Tamarind Project 5.50% 11/1/13 (FNMA) 125,000 128,243 Stillwater Multifamily Housing Stillwater Cottages 6.75% 11/1/11 205,000 211,535 Stillwater Multifamily Housing Stillwater Cottages 7.00% 11/1/27 340,000 352,594 Stillwater Multifamily Housing Stillwater Cottages 7.00% 11/1/16 680,000 705,187 ------------ 14,542,460 ------------ INDUSTRIAL DEVELOPMENT REVENUE BONDS - 11.60% Andover, Minnesota Development Revenue - Downtown Center Project-Series A 7.00% 12/1/12 1,640,000 1,682,591 International Falls Minnesota Pollution Control Revenue - Boise Cascade Project 5.65% 12/1/22 3,000,000 3,060,480 Red Wing Industrial Development Revenue Kmart (First Mortgage) 5.50% 7/1/08 300,000 303,279 ------------ 5,046,350 ------------ LEASE/CERTIFICATES OF PARTICIPATION - 6.39% Beltrami County, Minnesota Housing & Redevelopment Authority Revenue Lease 6.10% 2/1/12 460,000 484,596 Rice County, Minnesota - Certificate of Participation 6.00% 12/1/21 125,000 132,515 Saint Cloud, Minnesota Certificate of Participation 5.90% 12/1/17 400,000 410,572 Stearns County Minnesota Housing & Redevelopment Authority Lease Revenue Administration Building Project Series A 5.15% 2/1/11 1,705,000 1,751,615 ------------ 2,779,298 ------------ POWER AUTHORITY REVENUE BONDS - 2.84% Bass Brook Pollution Control Revenue for Minnesota Power & Light 6.00% 7/1/22 805,000 846,192 Southern Minnesota Municipal Power Agency 5.75% 1/1/18 (FGIC) 100,000 105,297 Western Municipal Power Agency Revenue 6.125% 1/1/16 285,000 286,271 ------------ 1,237,760 ------------ OTHER REVENUE BONDS - 9.11% Hibbing Economic Development Authority 6.40% 2/1/12 530,000 553,023 Minneapolis Minnesota Community Development Agency Revenue - Holiday Inn Metrodome Project 6.00% 12/1/01 1,100,000 1,110,428 Minneapolis, Minnesota Community Development Agency(Common Bond Fund - Series 2) 6.20% 6/1/17 750,000 802,365 Minneapolis, Minnesota Community Development Agency Revenue Limited Tax - Series 4 6.20% 6/1/17 1,055,000 1,111,675 Woodbury Golf Course Revenue 6.75% 2/1/22 365,000 385,064 ------------ 3,962,555 ------------ Total Municipal Bonds (cost $43,169,084) 44,664,230 ------------ SHORT TERM INVESTMENTS - 3.07% Norwest Federated Municipal Money Market Fund 1,334,368 1,334,368 ------------ Total Short Term Investments (cost $1,334,368) 1,334,368 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 105.72% (COST $44,503,452) 45,998,598 LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (5.72%) (2,489,485) ------------ NET ASSETS APPLICABLE TO 4,058,844 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% $43,509,113 ============ NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND A CLASS ($26,641,744 / 2,485,976 SHARES) $10.72 ====== NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND B CLASS ($12,359,485 / 1,152,403 SHARES) $10.72 ====== NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND C CLASS ($4,507,884 / 420,465 SHARES) $10.72 ====== ------------------------ AMBAC - Insured by the Ambac Indemnity Corporation FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association FNMA - Insured by the Federal National Mortgage Association COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $.01 par value, 100,000,000,000 shares authorized to the Fund with 10,000,000,000 shares allocated to Minnesota High Yield Municipal Bond Fund A Class 10,000,000,000 shares allocated to Minnesota High Yield Municipal Bond Fund B Class 10,000,000,000 shares allocated to Minnesota High Yield Municipal Fund C Class $42,002,374 Underdistributed net investment income 23,400 Accumulated net realized loss on investments (11,807) Net unrealized appreciation of investments 1,495,146 ------------ Total Net Assets $43,509,113 ============ NET ASSET VALUE AND OFFERING PRICE FOR MINNESOTA HIGH YIELD MUNICIPAL BOND FUND A CLASS Net asset value per share (A) $10.72 Sales charge (3.75% of offering price or 3.92% of amount invested per share) (B) 0.42 ------- Offering price $11.14 ======= ------------------------ (A) Net asset value per share illustrated is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more for Minnesota High Yield Municipal Bond Fund Class A. See accompanying notes
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30,1998 (UNAUDITED) TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA INSURED INTERMEDIATE MUNICIPAL FUND FUND FUND BOND FUND - -------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $12,549,985 $8,459,311 $1,676,068 $1,070,550 ----------- ---------- ---------- ---------- EXPENSES: Management fees 1,065,240 740,396 117,522 117,681 Distribution expense 578,922 415,986 55,001 98,938 Dividend disbursing and transfer agent fees and expenses 163,920 91,350 20,040 19,286 Registration fees 6,738 6,900 7,260 13,939 Reports and statements to shareholders 20,475 23,220 9,000 11,677 Accounting and administration 103,977 90,930 17,736 8,726 Professional fees 27,257 11,520 7,774 8,316 Custodian fees 746 8,550 4,590 5,600 Taxes (other than taxes on income) 20,750 12,550 2,790 2,780 Directors' fees 4,210 3,540 3,300 459 Other 39,845 47,682 7,115 1,142 ----------- ---------- ---------- ---------- 2,032,080 1,452,624 252,128 288,544 Less expenses waived or absorbed (86,757) (39,455) -- (171,914) ----------- ---------- ---------- ---------- Total net expenses 1,945,323 1,413,169 252,128 116,630 ----------- ---------- ---------- ---------- NET INVESTMENT INCOME 10,604,662 7,046,142 1,423,940 953,920 ----------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 954,826 33,297 88,998 (664) Net change in unrealized appreciation/ depreciation of investments (127,667) 200,934 (295,762) 240,205 ----------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 827,159 234,231 (206,764) 239,541 ----------- ---------- ---------- ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $11,431,821 $7,280,373 $1,217,176 $1,193,461 =========== ========== ========== ========== See accompanying notes
STATEMENT OF CHANGES IN NET ASSETS TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND ------------------------------------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED 6/30/98 12/31/97 6/30/98 12/31/97 (UNAUDITED) (UNAUDITED) INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income $ 10,604,662 $ 22,233,984 $ 7,046,142 $ 14,992,728 ------------ ------------ ------------ ------------ Net realized gain (loss) on investments 954,826 3,216,993 33,297 1,476,574 Net change in unrealized appreciation/ depreciation of investments (127,667) 13,746,414 200,934 7,964,819 ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations 11,431,821 39,197,391 7,280,373 24,434,121 ------------ ------------ ------------ ------------ DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income: A Class (10,395,371) (21,801,997) (6,830,136) (14,559,667) B Class (186,350) (342,308) (185,615) (326,611) C Class (78,644) (121,569) (62,764) (135,307) ------------ ------------ ------------ ------------ (10,660,365) (22,265,874) (7,078,515) (15,021,585) ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class 11,445,013 30,690,547 6,597,334 16,105,669 B Class 1,166,722 2,901,401 959,009 2,803,647 C Class 1,657,419 1,258,502 213,307 726,891 Net asset value of shares issued upon reinvestment of dividends from net investment income A Class 6,844,430 14,861,153 4,592,925 10,480,178 B Class 140,484 265,963 129,774 249,513 C Class 66,035 108,591 48,712 114,902 ------------ ------------ ------------ ------------ 21,320,103 50,086,157 12,541,061 30,480,800 ------------ ------------ ------------ ------------ Cost of shares repurchased: A Class (24,737,471) (73,076,182) (17,577,317) (52,017,149) B Class (300,127) (1,502,411) (447,107) (1,207,521) C Class (362,562) (1,472,994) (251,406) (973,441) ------------ ------------ ------------ ------------ (25,400,160) (76,051,587) (18,275,830) (54,198,111) ------------ ------------ ------------ ------------ Decrease in net assets derived from capital share transactions (4,080,057) (25,965,430) (5,734,769) (23,717,311) ------------ ------------ ------------ ------------ NET DECREASE IN NET ASSETS (3,308,601) (9,033,913) (5,532,911) (14,304,775) NET ASSETS: Beginning of period 428,662,263 437,696,176 300,515,516 314,820,291 ------------ ------------ ------------ ------------ End of period $425,353,662 $428,662,263 $294,982,605 $300,515,516 ============ ============ ============ ============ See accompanying notes
STATEMENT OF CHANGES IN NET ASSETS TAX-FREE MINNESOTA MINNESOTA HIGH YIELD INTERMEDIATE FUND MUNICIPAL BOND FUND ------------------------------------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED 6/30/98 12/31/97 6/30/98 12/31/97 (UNAUDITED) (UNAUDITED) INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income $ 1,423,940 $ 2,988,988 $ 953,920 $ 1,229,469 Net realized gain (loss) on investments 88,998 638,280 (664) (4,334) Net change in unrealized appreciation/ depreciation of investments (295,762) 321,114 240,205 1,166,080 ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations 1,217,176 3,948,382 1,193,461 2,391,215 ------------ ------------ ------------ ------------ DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income: A Class (1,372,804) (2,915,016) (609,543) (783,576) B Class (20,795) (26,474) (253,746) (312,756) C Class (31,227) (52,600) (93,626) (109,945) ------------ ------------ ------------ ------------ (1,424,826) (2,994,090) (956,915) (1,206,277) ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class 3,328,324 7,081,491 9,207,831 12,612,422 B Class 397,513 669,318 4,487,801 5,453,844 C Class 485,959 810,790 1,606,643 2,470,327 Net asset value of shares issued upon reinvestment of dividends from net investment income A Class 1,035,207 2,185,735 416,033 503,798 B Class 17,737 23,336 142,114 160,239 C Class 28,558 52,025 70,902 89,364 ------------ ------------ ------------ ------------ 5,293,298 10,822,695 15,931,324 21,289,994 ------------ ------------ ------------ ------------ Cost of Shares Repurchased: A Class (5,785,104) (18,684,272) (2,146,554) (903,309) B Class (160,569) (205,353) (536,123) (475,668) C Class (446,631) (510,897) (372,119) (405,467) ------------ ------------ ------------ ------------ (6,392,304) (19,400,522) (3,054,796) (1,784,444) ------------ ------------ ------------ ------------ Increase/decrease in net assets derived from capital share transactions (1,099,006) (8,577,827) 12,876,528 19,505,550 ------------ ------------ ------------ ------------ NET INCREASE/DECREASE IN NET ASSETS (1,306,656) (7,623,535) 13,113,074 20,690,488 NET ASSETS: Beginning of period 59,946,356 67,569,891 30,396,039 9,705,551 ------------ ------------ ------------ ------------ End of period $58,639,700 $59,946,356 $43,509,113 $30,396,039 ============ ============ ============ ============ See accompanying notes
FINANCIAL HIGHLIGHTS Selected data for each share of the Fund outstanding throughout each period were as follows: TAX-FREE MINNESOTA FUND - CLASS A ---------------------------------------------------------------- SIX MONTHS YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 12/31/93 (UNAUDITED) Net asset value, beginning of period $12.910 $12.400 $12.630 $11.330 $12.850 $12.210 Income from investment operations: Net investment income 0.325 0.654 0.630 0.620 0.630 0.640 Net realized and unrealized gain (loss) on investment transactions 0.022 0.511 (0.230) 1.320 (1.480) 0.870 -------- -------- -------- -------- -------- -------- Total from investment operations 0.347 1.165 0.400 1.940 (0.850) 1.510 -------- -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income (0.327) (0.655) (0.630) (0.640) (0.610) (0.640) Distributions from net realized gain on investments -- -- -- -- (0.050) (0.230) In excess of net realized gains -- -- -- -- (0.010) -- -------- -------- -------- -------- -------- -------- Total dividends and distributions (0.327) (0.655) (0.630) (0.640) (0.670) (0.870) -------- -------- -------- -------- -------- -------- Net asset value, end of period $12.930 $12.910 $12.400 $12.630 $11.330 $12.850 ======== ======== ======== ======== ======== ======== Total Return2 2.70% 9.68% 3.33% 17.49% (6.73%) 12.70% Ratios and supplemental data: Net assets, end of period (000 omitted) $411,658 $417,365 $428,380 $455,220 $406,497 $458,145 Ratio of expenses to average net assets 0.90% 0.91% 0.92% 0.93% 0.90% 1.02% Ratio of expenses to average net assets prior to expense limitation 0.94% 0.95% 0.92% 0.93% 0.90% 1.02% Ratio of net investment income to average net assets 5.04% 5.22% 5.13% 5.11% 5.29% 5.02% Ratio of net investment income to average net assets prior to expense limitation 5.00% 5.18% 5.13% 5.11% 5.29% 5.02% Portfolio turnover 14% 19% 28% 51% 24% 32% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. See accompanying notes
TAX-FREE MINNESOTA FUND - CLASS B ------------------------------------------- PERIOD FROM SIX MONTHS YEAR YEAR 8/15/954 ENDED ENDED ENDED TO 6/30/981 12/31/973 12/31/96 12/31/95 (UNAUDITED) Net asset value, beginning of period $12.910 $12.400 $12.620 $11.900 Income from investment operations: Net investment income 0.274 0.574 0.560 0.450 Net realized and unrealized gain (loss) on investment transactions 0.025 0.508 (0.220) 0.710 -------- -------- -------- -------- Total from investment operations 0.299 1.082 0.340 1.160 -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income (0.279) (0.572) (0.560) (0.440) -------- -------- -------- -------- Total dividends and distributions (0.279) (0.572) (0.560) (0.440) -------- -------- -------- -------- Net asset value, end of period $12.930 $12.910 $12.400 $12.620 ======== ======== ======== ======== Total Return2 2.32% 8.95% 2.83% 9.95% Ratios and supplemental data: Net assets, end of period (000 omitted) $9,240 $8,215 $6,233 $2,701 Ratio of expenses to average net assets 1.65% 1.56% 1.50% 1.38%5 Ratio of expenses to average net assets prior to expense limitation 1.69% 1.60% 1.67% 1.63%5 Ratio of net investment income to average net assets 4.29% 4.57% 4.53% 4.43%5 Ratio of net investment income to average net assets prior to expense limitation 4.25% 4.53% 4.36% 4.18%5 Portfolio turnover 14% 19% 28% 51% - ----------------- 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. 4 Commencement of operations. 5 Annualized. See accompanying notes
TAX-FREE MINNESOTA FUND - CLASS C ----------------------------------------------------- PERIOD FROM SIX MONTHS YEAR YEAR YEAR 5/4/944 ENDED ENDED ENDED ENDED TO 6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 (UNAUDITED) Net asset value, beginning of period $12.920 $12.410 $12.630 $11.330 $11.960 Income from investment operations: Net investment income 0.277 0.564 0.540 0.530 0.340 Net realized and unrealized gain (loss) on investment transactions 0.032 0.508 (0.220) 1.320 (0.610) -------- -------- -------- -------- -------- Total from investment operations 0.309 1.072 0.320 1.850 (0.270) -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income (0.279) (0.562) (0.540) (0.550) (0.320) Distributions from net realized gain on investments -- -- -- -- (0.040) -------- -------- -------- -------- -------- Total dividends and distributions (0.279) (0.562) (0.540) (0.550) (0.360) -------- -------- -------- -------- -------- Net asset value, end of period $12.950 $12.920 $12.410 $12.630 $11.330 ======== ======== ======== ======== ======== Total Return2 2.39% 8.82% 2.64% 16.62% (2.30%) Ratios and supplemental data: Net assets, end of period (000 omitted) $4,456 $3,083 $3,083 $2,319 $1,061 Ratio of expenses to average net assets 1.65% 1.65% 1.67% 1.67% 1.72%5 Ratio of expenses to average net assets prior to expense limitation 1.69% 1.69% 1.67% 1.67% 1.72%5 Ratio of net investment income to average net assets 4.29% 4.48% 4.38% 4.33% 4.56%5 Ratio of net investment income to average net assets prior to expense limitation 4.25% 4.44% 4.38% 4.33% 4.56%5 Portfolio turnover 14% 19% 28% 51% 24% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. 4 Commencement of operations. 5 Annualized. See accompanying notes
MINNESOTA INSURED FUND - CLASS A ----------------------------------------------------------------- SIX MONTHS YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 12/31/93 (UNAUDITED) Net asset value, beginning of period $10.940 $10.600 $10.730 $ 9.610 $11.020 $10.270 Income from investment operations: Net investment income 0.260 0.533 0.520 0.510 0.540 0.540 Net realized and unrealized gain (loss) on investment transactions 0.011 0.341 (0.130) 1.140 (1.390) 0.840 -------- -------- -------- -------- -------- -------- Total from investment operations 0.271 0.874 0.390 1.650 (0.850) 1.380 -------- -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income (0.261) (0.534) (0.520) (0.530) (0.520) (0.540) Distributions from net realized gain on investments -- -- -- -- (0.040) (0.090) -------- -------- -------- -------- -------- -------- Total dividends and distributions (0.261) (0.534) (0.520) (0.530) (0.560) (0.630) -------- -------- -------- -------- -------- -------- Net asset value, end of period $10.950 $10.940 $10.600 $10.730 $9.610 $11.020 ======== ======== ======== ======== ======== ======== Total Return2 2.50% 8.49% 3.75% 17.52% (7.88%) 13.80% Ratios and supplemental data: Net assets, end of period (000 omitted) $282,300 $288,494 $304,877 $307,734 $284,132 $311,187 Ratio of expenses to average net assets 0.92% 0.92% 0.92% 0.87% 0.61% 0.70% Ratio of expenses to average net assets prior to expense limitation 0.95% 0.94% 0.92% 0.92% 0.94% 1.02% Ratio of net investment income to average net assets 4.79% 5.01% 4.93% 4.92% 5.29% 4.93% Ratio of net investment income to average net assets prior to expense limitation 4.76% 4.99% 4.93% 4.87% 4.96% 4.61% Portfolio turnover 7% 21% 14% 54% 25% 18% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. See accompanying notes
MINNESOTA INSURED FUND - CLASS B ------------------------------------------ SIX MONTHS YEAR YEAR YEAR ENDED ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 12/31/95 (UNAUDITED) Net asset value, beginning of period $10.930 $10.580 $10.720 $10.140 Income from investment operations: Net investment income 0.219 0.454 0.450 0.380 Net realized and unrealized gain (loss) on investment transactions 0.011 0.348 (0.140) 0.580 -------- -------- -------- -------- Total from investment operations 0.230 0.802 0.310 0.960 -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income (0.220) (0.452) (0.450) (0.380) -------- -------- -------- -------- Total dividends and distributions (0.220) (0.452) (0.450) (0.380) -------- -------- -------- -------- Net asset value, end of period $10.940 $10.930 $10.580 $10.720 ======== ======== ======== ======== Total Return2 2.13% 7.77% 3.03% 9.59% Ratios and supplemental data: Net assets, end of period (000 omitted) $9,574 $8,926 $6,817 $4,655 Ratio of expenses to average net assets 1.67% 1.67% 1.56% 1.34%5 Ratio of expenses to average net assets prior to expense limitation 1.70% 1.69% 1.68% 1.64%5 Ratio of net investment income to average net assets 4.04% 4.26% 4.29% 4.15%5 Ratio of net investment income to average net assets prior to expense limitation 4.01% 4.24% 4.17% 3.85%5 Portfolio turnover 7% 21% 14% 54% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. 4 Commencement of operations. 5 Annualized. See accompanying notes
MINNESOTA INSURED FUND - CLASS C ----------------------------------------------------- SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 (UNAUDITED) Net asset value, beginning of period $10.940 $10.600 $10.730 $ 9.610 $10.230 Income from investment operations: Net investment income 0.219 0.454 0.440 0.430 0.300 Net realized and unrealized gain (loss) on investment transactions 0.011 0.338 (0.130) 1.140 (0.620) -------- -------- -------- -------- -------- Total from investment operations 0.230 0.792 0.310 1.570 (0.320) -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income (0.220) (0.452) (0.440) (0.450) (0.280) Distributions from net realized gain on investments -- -- -- -- (0.020) -------- -------- -------- -------- -------- Total dividends and distributions (0.220) (0.452) (0.440) (0.450) (0.300) -------- -------- -------- -------- -------- Net asset value, end of period $10.950 $10.940 $10.600 $10.730 $9.610 -------- -------- -------- -------- -------- Total Return2 2.13% 7.66% 2.98% 16.63% (3.14%) Ratios and supplemental data: Net assets, end of period (000 omitted) $3,108 $3,096 $3,126 $3,166 $1,525 Ratio of expenses to average net assets 1.67% 1.67% 1.68% 1.66% 1.36%5 Ratio of expenses to average net assets prior to expense limitation 1.70% 1.69% 1.68% 1.67% 1.68%5 Ratio of net investment income to average net assets 4.04% 4.26% 4.18% 4.11% 4.68%5 Ratio of net investment income to average net assets prior to expense limitation 4.01% 4.24% 4.18% 4.10% 4.36%5 Portfolio turnover 7% 21% 14% 54% 25% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. 4 Commencement of operations. 5 Annualized. See accompanying notes
TAX-FREE MINNESOTA INTERMEDIATE FUND - CLASS A --------------------------------------------------------------- SIX MONTHS YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 12/31/93 (UNAUDITED) Net asset value, beginning of period $11.170 $10.990 $11.140 $10.500 $11.160 $10.830 Income from investment operations: Net investment income 0.270 0.535 0.510 0.510 0.450 0.470 Net realized and unrealized gain (loss) on investment transactions (0.040) 0.180 (0.150) 0.640 (0.660) 0.370 -------- -------- -------- -------- -------- -------- Total from investment operations 0.230 0.715 0.360 1.150 (0.210) 0.840 -------- -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income (0.270) (0.535) (0.510) (0.510) (0.450) (0.470) Distributions from net realized gain on investments -- -- -- -- -- (0.040) -------- -------- -------- -------- -------- -------- Total dividends and distributions (0.270) (0.535) (0.510) (0.510) (0.450) (0.510) -------- -------- -------- -------- -------- -------- Net asset value, end of period $11.130 $11.170 $10.990 $11.140 $10.500 $11.160 ======== ======== ======== ======== ======== ======== Total Return2 2.08% 6.69% 3.46% 11.00% (1.91%) 7.88% Ratios and supplemental data: Net assets, end of period (000 omitted) $55,905 $57,524 $66,024 $72,405 $84,168 $75,374 Ratio of expenses to average net assets 0.82% 0.91% 0.89% 0.91% 0.92% 0.99% Ratio of expenses to average net assets prior to expense limitation 0.82% 0.95% 0.89% 0.91% 0.92% 0.99% Ratio of net investment income to average net assets 4.89% 4.86% 4.69% 4.61% 4.18% 4.18% Ratio of net investment income to average net assets prior to expense limitation 4.89% 4.82% 4.69% 4.61% 4.18% 4.18% Portfolio turnover 15% 21% 28% 40% 42% 19% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. See accompanying notes
TAX-FREE MINNESOTA INTERMEDIATE FUND - CLASS B ------------------------------------------ SIX MONTHS YEAR YEAR YEAR ENDED ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 12/31/95 (UNAUDITED) Net asset value, beginning of period $11.170 $10.990 $11.140 $10.950 -------- -------- -------- -------- Income from investment operations: Net investment income 0.225 0.437 0.440 0.170 Net realized and unrealized gain (loss) on investment transactions (0.032) 0.190 (0.150) 0.190 -------- -------- -------- -------- Total from investment operations 0.193 0.627 0.290 0.360 -------- -------- -------- -------- Less dividends: Dividends from net investment income (0.223) (0.447) (0.440) (0.170) -------- -------- -------- -------- Total dividends (0.223) (0.447) (0.440) (0.170) -------- -------- -------- -------- Net asset value, end of period $11.140 $11.170 $10.990 $11.140 ======== ======== ======== ======== Total Return2 1.75% 5.84% 2.74% 3.26% Ratios and supplemental data: Net assets, end of period (000 omitted) $1,161 $910 $408 $27 Ratio of expenses to average net assets 1.67% 1.81% 1.56% 1.30%5 Ratio of expenses to average net assets prior to expense limitation 1.67% 1.85% 1.62% 1.55%5 Ratio of net investment income to average net assets 4.04% 3.96% 3.99% 3.93%5 Ratio of net investment income to average net assets prior to expense limitation 4.04% 3.92% 3.93% 3.68%5 Portfolio turnover 15% 21% 28% 40% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. 4 Commencement of operations. 5 Annualized. See accompanying notes
TAX-FREE MINNESOTA INTERMEDIATE FUND - CLASS C ----------------------------------------------------- SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 (UNAUDITED) Net asset value, beginning of period $11.170 $10.990 $11.130 $10.500 $10.740 Income from investment operations: Net investment income 0.224 0.440 0.430 0.420 0.240 Net realized and unrealized gain (loss) on investment transactions (0.041) 0.187 (0.140) 0.630 (0.240) -------- -------- -------- -------- -------- Total from investment operations 0.183 0.627 0.290 1.050 -- -------- -------- -------- -------- -------- Less dividends: Dividends from net investment income (0.223) (0.447) (0.430) (0.420) (0.240) -------- -------- -------- -------- -------- Total dividends (0.223) (0.447) (0.430) (0.420) (0.240) -------- -------- -------- -------- -------- Net asset value, end of period $11.130 $11.170 $10.990 $11.130 $10.500 ======== ======== ======== ======== ======== Total Return2 1.66% 5.84% 2.69% 10.18% (0.03%) Ratios and supplemental data: Net assets, end of period (000 omitted) $1,574 $1,512 $1,137 $694 $341 Ratio of expenses to average net assets 1.67% 1.77% 1.64% 1.63% 1.71%5 Ratio of expenses to average net assets prior to expense limitation 1.67% 1.81% 1.64% 1.63% 1.71%5 Ratio of net investment income to average net assets 4.04% 4.00% 3.94% 3.82% 3.35%5 Ratio of net investment income to average net assets prior to expense limitation 4.04% 3.96% 3.94% 3.82% 3.35%5 Portfolio turnover 15% 21% 28% 40% 42% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. 4 Commencement of operations. 5 Annualized. See accompanying notes
MINNESOTA HIGH YIELD MINNESOTA HIGH YIELD MUNICIPAL BOND FUND - CLASS A MUNICIPAL BOND FUND - CLASS B -------------------------------- ------------------------------- SIX MONTHS YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 12/31/93 (UNAUDITED) Net asset value, beginning of period $10.650 $10.180 $10.000 $10.660 $10.190 $ 9.780 Income from investment operations: Net investment income 0.297 0.643 0.350 0.262 0.557 0.290 Net realized and unrealized gain on investment transactions 0.074 0.463 0.180 0.062 0.470 0.410 -------- -------- -------- -------- -------- -------- Total from investment operations 0.371 1.106 0.530 0.324 1.027 0.700 -------- -------- -------- -------- -------- -------- Less dividends: Dividends from net investment income (0.301) (0.636) (0.350) (0.264) (0.557) (0.290) -------- -------- -------- -------- -------- -------- Total dividends: (0.301) (0.636) (0.350) (0.264) (0.557) (0.290) -------- -------- -------- -------- -------- -------- Net asset value, end of period $10.720 $10.650 $10.180 $10.720 $10.660 $10.190 ======== ======== ======== ======== ======== ======== Total Return2 3.51% 11.26% 5.40% 3.04% 10.41% 7.29% Ratios and supplemental data: Net assets, end of period (000 omitted) $26,642 $19,017 $6,068 $12,359 $8,201 $2,738 Ratio of expenses to average net assets 0.36% 0.09% 0.24%5 1.11% 0.85% 0.95%5 Ratio of expenses to average net assets prior to expense limitation 1.32% 1.24% 1.25%5 2.07% 2.00% 2.00%5 Ratio of net investment income to average net assets 5.60% 6.16% 5.78%5 4.85% 5.40% 5.14%5 Ratio of net investment income to average net assets prior to expense limitation 4.64% 5.01% 4.77%5 3.89% 4.25% 4.09%5 Portfolio turnover 5% 23% 15% 5% 23% 15% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. 4 Commencement of operations. 5 Annualized. See accompanying notes
MINNESOTA HIGH YIELD MUNICIPAL BOND FUND - CLASS C -------------------------------- SIX MONTHS YEAR YEAR ENDED ENDED ENDED 6/30/981 12/31/973 12/31/96 (UNAUDITED) Net asset value, beginning of period $10.650 $10.180 $ 9.990 Income from investment operations: Net investment income 0.269 0.572 0.300 Net realized and unrealized gain from investment transactions 0.063 0.455 0.190 -------- -------- -------- Total from investment operations 0.332 1.027 0.490 -------- -------- -------- Less dividends: Dividends from net investment income (0.262) (0.557) (0.300) -------- -------- -------- Total dividends: (0.262) (0.557) (0.300) -------- -------- -------- Net asset value, end of period $10.720 $10.650 $10.180 ======== ======== ======== Total Return2 3.14% 10.41% 5.02% Ratios and supplemental data: Net assets, end of period (000 omitted) $4,508 $3,178 $900 Ratio of expenses to average net assets 1.11% 0.83% 0.99%5 Ratio of expenses to average net assets prior to expense limitation 2.07% 1.98% 2.00%5 Ratio of net investment income to average net assets 4.85% 5.42% 4.90%5 Ratio of net investment income to average net assets prior to expense limitation 3.89% 4.27% 3.89%5 Portfolio turnover 5% 23% 15% - ------------------------ 1 Ratios have been annualized and total return has not been annualized. 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. 3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. 4 Commencement of operations. 5 Annualized. See accompanying notes
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 (UNAUDITED) Delaware-Voyageur Tax-Free Minnesota Fund (formerly Voyageur Minnesota Tax Free Fund) ("Tax-Free Minnesota Fund"), a series of the Voyageur Tax Free Funds, Inc.; Delaware-Voyageur Minnesota Insured Fund (formerly Voyageur Minnesota Insured Fund)("Minnesota Insured Fund"), a series of the Voyageur Insured Funds, Inc.; Delaware- Voyageur Tax-Free Minnesota Intermediate Fund (formerly Voyageur Minnesota Limited Term Tax Free Fund)("Tax-Free Minnesota Intermediate Fund"), a series of the Voyageur Intermediate Tax Free Funds, Inc.; and Delaware-Voyageur Minnesota High Yield Municipal Bond Fund (formerly Voyageur Minnesota High Yield Municipal Bond Fund)("Minnesota High Yield Municipal Bond Fund") a series of Voyageur Mutual Funds, Inc., (each referred to as a "Fund" or collectively as the "Funds") are registered under the Investment Company Act of 1940 (as amended) as open-end management investment companies. The Tax-Free Minnesota Fund, Minnesota Insured Fund, and Tax-Free Minnesota Intermediate Fund are registered as diversified funds. The Minnesota High Yield Municipal Bond Fund is registered as a non-diversified fund. The Tax-Free Minnesota Fund seeks high current income free from both federal and state income taxes by investing in investment grade municipal bonds. Minnesota Insured Fund seeks high current income free from both federal and state income taxes with the added safety of an insured portfolio by investing in insured municipal bonds. The Tax-Free Minnesota Intermediate Fund seeks to preserve original investment principal while providing income free from both federal and state income taxes by investing in intermediate term investment grade municipal bonds. The Minnesota High Yield Municipal Bond Fund seeks high current income free from both federal and state income taxes by investing in medium and lower-grade municipal bonds. The Funds each offer 3 classes of shares. 1. Fund Reorganization On April 30, 1997, Lincoln National Corporation ("LNC") acquired Voyageur Fund Manager Inc.'s ("Voyageur") parent, Dougherty Financial Group, Inc. ("DFG") pursuant to an agreement and plan of merger dated January 15, 1997, in which LNC would acquire DFG including the mutual fund investment advisory business of DFG conducted by Voyageur. Upon completion of the acquisition, Delaware Management Company ("DMC") became the investment adviser to the Funds, Delaware Distributors, L.P. ("DDLP") became the distributor for the Funds, Delaware Service Company, Inc. ("DSC") became the transfer, dividend-disbursing, shareholder servicing agent and accounting service agent for the Funds. 2. Significant Accounting Policies The following accounting policies are in accordance with generally accepted accounting principles and are consistently followed by the Funds. Security Valuation - Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Money market instruments having less than 60 days to maturity are valued at amortized cost which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Fund's 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 generally accepted accounting principles. Class Accounting - Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Other - Expenses common to all Funds within the Delaware Investments Family of Funds are allocated amongst the Funds on the basis of average net assets. Security transactions are recorded on the date the securities are purchased or sold (trade date). Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Original issue discounts and market premium are amortized to interest income over the lives of the respective securities. The Funds declare dividends from net investment income daily and pay them monthly. Capital gains, if any, are distributed annually. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. Investment Management and Other Transactions with Affiliates In accordance with the terms of the Investment Management Agreement, the Fund pays DMC the Investment Manager of each Fund, an annual fee, which is calculated daily on the average daily net assets of each Fund. DMC has elected to waive their fees and reimburse each Fund to the extent that annual operating expenses exclusive of taxes, interest, brokerage commissions, distribution expenses and extraordinary expenses do not exceed the following percentages of average daily net assets through December 31, 1998. TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA INSURED INTERMEDIATE MUNICIPAL FUND FUND FUND BOND FUND ------------------------------------------------ Management fee as a percentage of average daily net assets (per annum) 0.50% 0.50% 0.40% 0.65% Operating expense limitation as a percentage of average daily net assets (per annum) 0.69% 0.71% 0.75% 0.25% Expenses absorbed by DMC $86,757 $39,455 $-- $171,914 The Funds have engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC, to serve as dividend disbursing, transfer agent and accounting and administration agent for each Fund. For the six-months ended June 30, 1998, the amounts expensed for each Fund were as follows: TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA INSURED INTERMEDIATE MUNICIPAL FUND FUND FUND BOND FUND ------------------------------------------------ Dividend disbursing, transfer agent fees and other expenses $163,920 $91,350 $20,040 $19,286 Accounting and administration services $103,977 $90,930 $17,736 $ 8,726 On June 30, 1998, the Funds had payables to affiliates as follows: TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA INSURED INTERMEDIATE MUNICIPAL FUND FUND FUND BOND FUND ------------------------------------------------ Investment Management fee Payable to DMC $349,973 $254,300 $38,849 $ -- Dividend Disbursing, transfer agent fees, accounting fees and other expenses payable to DSC $ 48,041 $ 32,724 $ 7,111 $ 7,365 Other expenses payable to DMC $116,477 $ 84,150 $11,137 $19,583 Pursuant to the Distribution Agreement, the Funds pay DDLP, the Distributor and an affiliate of DMC, an annual fee not to exceed 0.25% of the average daily net assets of the A Class for the Tax-Free Minnesota Fund, the Minnesota Insured Fund and the Minnesota High Yield Municipal Bond Fund and 0.15% of the average daily net assets of the Tax-Free Minnesota Intermediate Fund A Class and 1.00% of the average daily net assets of the B and C Class for each Series. For the six-months ended June 30, 1998, DDLP earned commissions on sales of the Fund A Class shares for each Fund as follows: TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA INSURED INTERMEDIATE MUNICIPAL FUND FUND FUND BOND FUND ------------------------------------------------ DDLP earned commissions on sales of the Fund A class shares $34,157 $23,282 $3,842 $17,532 Certain officers of DMC, DSC and DDLP are officers, directors and/or employees of the Funds. These officers, directors and employees are paid no compensation by the Funds. 4. Investments During the six months ended June 30, 1998 the Funds made purchases and sales of investment securities other than U.S. government securities and temporary cash investments for each Fund as follows: TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA INSURED INTERMEDIATE MUNICIPAL FUND FUND FUND BOND FUND ------------------------------------------------------ Purchases $30,562,514 $10,324,760 $4,230,275 $14,835,972 Sales $36,229,238 $13,534,260 $5,144,415 $ 939,020 At June 30, 1998, the aggregate cost of securities and unrealized appreciation (depreciation) for federal income tax purposes for each Fund were as follows: TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA INSURED INTERMEDIATE MUNICIPAL FUND FUND FUND BOND FUND ------------------------------------------------------ Cost of Investments $392,088,366 $273,536,618 $56,276,191 $44,503,452 ------------ ------------ ----------- ----------- Aggregate unrealized appreciation $ 34,035,174 $ 22,458,029 $ 2,465,200 $ 1,495,146 Aggregate unrealized depreciation $ 78,705 $ -- $ 139 $ -- ------------ ------------ ----------- ----------- Net unrealized appreciation $ 33,956,469 $ 22,458,029 $ 2,465,061 $ 1,495,146 For federal income tax purposes, as of December 31, 1997, Minnesota Insured Fund had a capital loss carryover of $6,053,203 that will expire in 2001, through 2003, Tax Free Minnesota Intermediate Fund had had a capital loss carryover of $11,494 that will expire in 2004, and Minnesota High Yield Municipal Bond Fund had a capital loss carryover of $11,143 that will expire in 2004 and 2005. 5. Capital Stock Transactions in Capital Stock were as follows: TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND ------------------------------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED 6/30/98 12/31/97 6/30/98 12/31/97 (UNAUDITED) (UNAUDITED) Shares sold: A Class 877,686 2,445,000 602,866 1,511,145 B Class 90,471 230,517 87,885 262,553 C Class 128,516 99,577 19,471 68,641 Shares issued upon reinvestment of dividends from net investment income: A Class 529,112 1,191,155 419,496 983,624 B Class 10,872 21,253 11,863 23,426 C Class 5,109 8,668 4,449 10,782 --------- --------- --------- --------- 1,641,766 3,996,170 1,146,030 2,860,171 --------- --------- --------- --------- Shares repurchased: A Class (1,908,966) (5,840,279) (1,607,475) (4,894,549) B Class (23,298) (118,151) (41,146) (113,408) C Class (28,056) (118,065) (23,031) (91,495) --------- --------- --------- --------- (1,960,320) (6,076,495) (1,671,652) (5,099,452) --------- --------- --------- --------- Net Increase (Decrease) (318,554) (2,080,325) (525,622) (2,239,281) --------- --------- --------- --------- TAX-FREE MINNESOTA MINNESOTA HIGH YIELD INTERMEDIATE FUND MUNICIPAL BOND FUND - ------------------------------------------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED 6/30/98 12/31/97 6/30/98 12/31/97 (UNAUDITED) (UNAUDITED) Shares sold: A Class 298,502 642,232 861,998 1,228,700 B Class 35,564 60,795 419,640 531,417 C Class 43,564 73,831 150,367 240,090 Shares issued upon reinvestment of dividends from net investment income: A Class 92,774 198,390 38,930 48,680 B Class 1,588 2,115 13,289 15,493 C Class 2,560 4,721 6,633 8,637 --------- --------- --------- --------- 474,552 982,084 1,490,857 2,073,017 --------- --------- --------- --------- Shares repurchased: A Class (518,576) (1,698,909) (200,803) (87,722) B Class (14,411) (18,602) (50,163) (46,061) C Class (40,077) (46,700) (34,876) (38,834) --------- --------- --------- --------- (573,064) (1,764,211) (285,842) (172,617) --------- --------- --------- --------- Net Increase (Decrease) (98,512) (782,127) 1,205,015 1,900,400 --------- --------- --------- --------- 6. Credit and Market Risk The Funds concentrate their investments in securities issued by municipalities, mainly in Minnesota. The value of these investments may be adversely affected by new legislation within the states, 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 market value 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. DELAWARE INVESTMENTS FAMILY OF FUNDS FOR GROWTH OF CAPITAL Aggressive Growth Fund Trend Fund DelCap Fund Small Cap Value Fund U.S. Growth Fund Growth Stock Fund Tax-Efficient Equity Fund FOR TOTAL RETURN Social Awareness Fund Blue Chip Fund Devon Fund Decatur Total Return Fund Decatur Income Fund REIT Fund Delaware Fund FOR INTERNATIONAL DIVERSIFICATION Emerging Markets Fund New Pacific Fund Overseas Equity Fund International Equity Fund Global Equity Fund Global Bond Fund FOR CURRENT INCOME Delchester Fund High-Yield Opportunities Fund Strategic Income Fund U.S. Government Fund Delaware-Voyageur U.S. Government Securities Fund Limited-Term Government Fund FOR TAX-EXEMPT INCOME National High Yield Municipal Bond Fund Tax-Free USA Fund Tax-Free Insured Fund Tax-Free USA Intermediate Fund State Tax-Free Funds* MONEY MARKET FUNDS Delaware Cash Reserve Tax-Free Money Fund ASSET ALLOCATION FUNDS Growth Portfolio Balanced Portfolio Income Portfolio * Available for the following states: Arizona, California, Colorado, Florida, Idaho, Iowa, Kansas, Minnesota, Missouri, North Dakota, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Utah, Washington, Wisconsin. Insured and intermediate bond funds are available in selected states. Complete information on any fund offered by Delaware Investments can be found in each fund's current prospectus. Prospectuses for all funds offered by Delaware Investments are available from your financial adviser. Please read the prospectus carefully before you invest or send money. [GRAPHIC OMITTED: PHOTO OF KEYBOARD] THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF SHAREHOLDERS OF THE MINNESOTA MUNICIPAL BOND FUNDS, BUT IT MAY be used with prospective investors when preceded or accompanied by a current Prospectus for Minnesota Funds, which sets forth details about charges, expenses, investment objectives and operating policies of each Fund. You should read the prospectus carefully before you invest. Summary investment results are documented in each Fund's current Statement of Additional Information. The figures in this report represent past results which are not a guarantee of future results. 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. INVESTMENT MANAGER Delaware Management Company Philadelphia NATIONAL DISTRIBUTOR Delaware Distributors, L.P. Philadelphia SHAREHOLDER SERVICING, DIVIDEND DISBURSING AND TRANSFER AGENT Delaware Service Company, Inc. Philadelphia 1818 Market Street Philadelphia, PA 19103-3682 For Shareholders 1.800.523.1918 For Securities Dealers 1.800.362.7500 For Financial Institutions Representatives Only 1.800.659.2265 www.delawarefunds.com Be sure to consult your financial adviser when making investments. Mutual funds can be a valuable part of your financial plan; however, shares of the Fund are not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union, and involve investment risk, including the possible loss of the principal. Shares of the Fund are not bank or credit union deposits. [copyright] Delaware Distributors, L.P. [PHOTO OMITTED: ASSORTED GLOBES] [GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS ---------------------------- Philadelphia * London] Printed in the USA on recycled paper SA-MNALL [6/98] PP8/98 (934) -----END PRIVACY-ENHANCED MESSAGE-----