-----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, VWMvovHuf9hq9G7fmXBayHJqKHb7vEuA48ZrFYScNIo2Lrw6Z9LKRYDjbt0/IO0i O+1EyLnde6IgV3US9ZCmKg== 0000950116-97-001688.txt : 19970912 0000950116-97-001688.hdr.sgml : 19970912 ACCESSION NUMBER: 0000950116-97-001688 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970909 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: 97677047 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: 97677048 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: 97677049 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: 97677050 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 For Tax-Exempt Income DELAWARE-VOYAGEUR Minnesota Municipal Bond Funds 1997 Semi-Annual Report professional management service and guidance goals Tax-Free Minnesota Fund Minnesota Insured Fund Tax-Free Minnesota Intermediate Fund Minnesota High Yield Municipal Bond Fund DELAWARE GROUP - -------- professional management professional management More Than 68 Years Of Investment Experience has taught us that disciplined strategies and prudent risk management are a sound approach to any market environment. [PICTURE OF MAN] goals goals [PICTURE OF BEACH] Whatever Your Goals, the years ahead will be shaped by choices you make today. Delaware offers many options that can be an appropriate part of a sound investment plan. service and guidance service and guidance Delaware Believes That The Guidance of a professional financial adviser is vital to your long-term success. We are committed to providing you and your adviser with the highest quality information and service. [PICTURE OF THREE PEOPLE] - -------------------------------------------------------------------------------- JULY 15, 1997 Dear Shareholder: I am pleased to present the first shareholder report of our Minnesota Municipal Bond Funds since the Voyageur funds joined the Delaware family on April 30, 1997. On behalf of all of us here in Philadelphia, I welcome you to an organization of experienced financial professionals dedicated to helping you reach your investment goals. Delaware has managed municipal bond investments for more than 20 years and pioneered the concept of single-state, tax-exempt funds. I am delighted to report that during this transition period, three of the Minnesota Funds outperformed their unmanaged benchmarks, as shown on page 10. Elizabeth H. Howell, the Funds' portfolio manager under Voyageur, continues to oversee all four Minnesota portfolios from her office in Minneapolis. We view the municipal bond market's long-term prospects as very attractive, particularly in a state with an economy as diverse as Minnesota's. Municipal bond prices have generally been stronger than U.S. Treasuries* during 1997, despite pending federal tax changes in Washington and a modest tightening of monetary policy by the Federal Reserve Board. IN THE COMING YEARS, WE BELIEVE IT WILL BECOME MORE IMPORTANT THAN EVER TO CONSIDER THE IMPACT OF TAXES ON THE PERFORMANCE OF AN INVESTMENT PORTFOLIO. As our nation's leaders grapple with tax issues and states take on a greater fiscal responsibility for managing social and public works programs, we believe it will become more important than ever to consider the impact of taxes on the performance of an investment portfolio. When Delaware offered its first municipal bond fund in 1977, federal taxpayers were able to take many more deductions on their tax returns than they can take today. Among these were: * Interest on student and consumer loans, * More extensive job-related moving expenses, * Sales and gasoline taxes; and * A portion of dividend income. *THE PRINCIPLE AND INTEREST OF U.S. TREASURY SECURITIES ARE GUARANTEED BY THE U.S. GOVERNMENT. MINNESOTA MUNICIPAL BONDS MAY OR MAY NOT BE GUARANTEED BY THE STATE, A PRIVATE INSURER OR LOCAL GOVERNMENT ENTITY. 1997 semi-annual report 1 In our opinion, the income from municipal bonds and the tax-free compounding of such income over time has the potential to help investors reach their financial goals more quickly. In addition to providing income free from federal taxes, many Minnesota securities have the added benefit of being exempt from the state's high income tax, which can be as much as 9.9%. On the pages that follow, Ms. Howell reviews each Fund's performance and outlines her approach for the coming months. We look forward to reporting to you again in 1998 and serving your needs for many years to come. Sincerely, /s/ Wayne A. Stork - ----------------------------------------------- Wayne A. Stork CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER Your Funds' Portfolio Manager Prior to joining the Delaware-Voyageur family, Elizabeth H. Howell had managed municipal bond funds at Voyageur Asset Management for six years. Ms. Howell has more than 13 years experience that includes serving as a fixed-income portfolio manager at Windsor Financial Group and investment management positions at Loomis Sayles & Co. and Eaton Vance Management. She has an MBA from Babson College. (Photo of Elizabeth H. Howell here) ELIZABETH H. HOWELL 2 1997 semi-annual report Performance Review Delaware-Voyageur's Minnesota municipal bond funds provided attractive total returns during the first half of fiscal 1997 despite substantial interest rate volatility and renewed efforts in Washington to cut income taxes. With a below-average unemployment rate and an annualized economic growth rate of 4.8% that ranks 10th nationwide, Minnesota exhibits credit characteristics attractive to income-oriented investors. Per capita income in the state is the highest of all Plains states and ranks 9th nationwide, while the state's general obligation bonds carry a quality rating of AAA, the highest available (See page 8). Nationwide, our country's output of goods and services grew at a robust pace in the first quarter. This prompted the Federal Reserve to raise its target for short-term interest rates by a modest 25 basis points (0.25%) to 5.5% in an effort to forestall inflation. As the second calendar quarter of 1997 progressed, the bond market welcomed news of possible slower U.S. economic growth. By the end of June, long-term U.S. Treasury bonds yielded 6.78%, compared to more than 7% just a few months earlier. Between December 31, 1996 and mid-year, yields on short and intermediate-term Minnesota general obligation bonds increased modestly, as shown in the chart below. Yields on long-term bonds, those maturing in 15 years or more, showed little change during the period. Short-Term Minnesota Bond Yields Have Risen Modestly December 31, 1996 vs. June 30, 1997 Yield Yield Minnesota Minnesota General Obligation Bonds General Obligation Bonds Maturity December 31, 1996 June 30, 1997 3 months 3.21% 3.29% 6 months 3.41% 3.47% 1 year 3.58% 3.73% 2 years 3.88% 4.05% 3 years 4.08% 4.26% 4 years 4.23% 4.41% 5 years 4.33% 4.51% 7 years 4.53% 4.67% 10 years 4.83% 4.91% 15 years 5.25% 5.26% 20 years 5.41% 5.41% 30 years 5.47% 5.47% Source: Bloomberg Business News 1997 semi-annual report 3 Since December, the supply of new municipal bonds issued in Minnesota has declined by 38% to an annualized pace of $1.4 billion, according to THE BOND BUYER, a trade publication. This has helped support the state's bond prices since investor demand in Minnesota for securities providing tax-exempt income has remained steady. During the first half of fiscal 1997, we positioned Tax-Free Minnesota Fund and Minnesota High-Yield Municipal Bond Fund to benefit from what we anticipated would be a decline in long-term interest rates. Both Funds' average effective duration was kept longer than that of their peers, enabling each to benefit from the rise in bond prices that occurred in May and June after government statistics showed very modest U.S. inflation. We took a somewhat more conservative approach to interest rate risk with Tax-Free Minnesota Intermediate Fund and Minnesota Insured Fund. Still, the Intermediate Fund outperformed the average of its peers and matched the return of the Merrill Lynch Three-to-Seven Year Municipal Bond Index (for A Class shares at net asset value. See page 10 for the performance information for all classes). The Insured Fund's returns were modestly lower than average, the result of a shorter-than-average duration. TAX-FREE MINNESOTA FUND: SEEKING GOOD STRUCTURE Tax-Free Minnesota Fund provided a +3.37% total return for the six months ended June 30, 1997 (for A Class shares at net asset value with dividends reinvested). The Fund was able to outpace its benchmark by having a longer duration than our unmanaged benchmark and strong position in general obligation bonds (16.6% of net assets). General obligation bonds (G.O.s) are primarily backed by income taxes. They typically have credit characteristics superior to revenue bonds which are based on user fees. General obligation bonds have performed well since December. TAX-FREE MINNESOTA FUND PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION June 30, 1997 Power Authority 16.4% Higher Education 5.2% Pre-Refunded Bonds 9.4% Industrial Development 9.2% General Obligation 17.3% Hospitals 20.6% Housing 17.2% Other Revenue Bonds 3.2% Cash 2.2% Average Effective Maturity 11.1 years Average Effective Duration 7.8 years Average Quality AA Thirty-Day Current SEC Yield* 4.68% *FOR A CLASS SHARES BASED ON SECURITIES AND EXCHANGE COMMISSION GUIDELINES. SEC YIELDS FOR B AND C CLASSES WERE, RESPECTIVELY 4.26% AND 4.12%. APPROXIMATELY 0.15% OF THE INCOME GENERATED BY TAX-FREE MINNESOTA FUND FOR THE SIX MONTHS ENDED JUNE 30, 1997, WAS SUBJECT TO THE ALTERNATIVE MINIMUM TAX. 4 1997 semi-annual report In managing the Fund's portfolio, we seek to achieve good structure - a prudent combination of average coupon, call date, and effective maturity that represent the mathematical underpinnings of the portfolio. By managing duration as market conditions warranted, we sought to maximize the fund's income and total return potential. In addition to G.O.s, your Fund's portfolio included hospital, power authority, nursing home, multifamily housing and college bonds as of June 30. Since December, I have focused on bonds that were selling at a discount to their face value, with good call protection features and long maturities. This position enabled the Fund to perform well. MINNESOTA INSURED FUND: A CONSERVATIVE APPROACH Minnesota Insured Fund provided a total return of +2.70% for the six months ended June 30, 1997 (for A Class shares at net asset value with dividends reinvested). In our opinion, the Fund offered a very favorable risk profile relative to the return we were able to generate. The Insured Fund invests exclusively in bonds rated AAA by Moody's Investors Services or Standard & Poor's and insured by a municipal bond insurance company. Consequently, the portfolio is of the highest credit quality available in the municipal market. As of June 30, about 20.6% of the Fund's net assets were bonds that generate income subject to the alternative minimum tax (AMT). Of course, only certain taxpayers are subject to this federal levy. Generally, we believe that the superior income potential, favorable risk profile and diversification benefits offered by certain AMT bonds warrant their inclusion in your Fund's portfolio. quality MINNESOTA INSURED FUND PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION June 30, 1997 Power Authority 5.9% General Obligations 28.3% Hospitals 19.6% Housing 19.3% Other Revenue Bonds 1.8% Pre-Refunded Bonds 25.1% Average Effective Maturity 11.2 years Average Effective Duration 7.5 years Average Quality AAA Thirty-Day Current SEC Yield* 4.42% *FOR A CLASS SHARES BASED ON SECURITIES AND EXCHANGE COMMISSION GUIDELINES. SEC YIELDS FOR B AND C CLASSES WERE, RESPECTIVELY 3.85% AND 3.84%. APPROXIMATELY 18.4% OF THE INCOME GENERATED BY MINNESOTA INSURED FUND FOR THE SIX MONTHS ENDED JUNE 30, 1997, WAS SUBJECT TO THE ALTERNATIVE MINIMUM TAX. 1997 semi-annual report 5 TAX-FREE MINNESOTA INTERMEDIATE FUND: BALANCING RISK AND RETURN For the six months ended June 30, 1997, Tax-Free Minnesota Intermediate Fund outpaced its peers and matched the +2.48% total return of Merrill Lynch Three-to-Seven Municipal Bond Index, an unmanaged benchmark of intermediate-term bonds. The Fund's duration (sensitivity to interest rates) was almost a full year shorter than comparable mutual funds, according to Lipper Analytical Services. We actively manage the Fund to take about 50% less interest rate risk than Tax-Free Minnesota and Minnesota Insured Funds. The Intermediate Fund seeks to generate a superior level of income and total return on a risk-adjusted basis. We focus on very high quality securities. At the end of June, the Fund had 43% of its holdings in pre-refunded bonds, or bonds escrowed in U.S. government securities. These bonds are of the highest credit quality and consequently rated AAA. Pre-refunded bonds are also among the most liquid of all municipal bonds. They tend to have above-average coupon rates and fluctuate less in price during periods of interest rate volatility. The defensive nature of these securities helps stabilize your Fund's share price. During the first half of 1997, this helped us produce a stream of income that was about 90% of what is available from the longest term bonds. MINNESOTA HIGH YIELD MUNICIPAL BOND FUND Minnesota High Yield Municipal Bond Fund provided a total return of +3.98% for the six months ended June 30, 1997, (for A Class shares at net asset value with dividends reinvested). The Fund's strong relative performance during the first half of income TAX-FREE MINNESOTA INTERMEDIATE FUND PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION June 30, 1997 Power Authority 5.7% Higher Education 6.1% General Obligations 2.4% Hospitals 10.1% Housing 3.1% Other Revenue Bonds 5.1% Pre-Refunded Bonds 43.1% Cash 2.7% Certificates of Participation 3.8% Industrial Development 17.7% Average Effective Maturity 5.1 years Average Effective Duration 4.1 years Average Quality AA Thirty-Day Current SEC Yield* 4.01% *FOR A CLASS SHARES BASED ON SECURITIES AND EXCHANGE COMMISSION GUIDELINES. SEC YIELDS FOR B AND C CLASSES WERE, RESPECTIVELY 3.36% AND 3.36%. NONE OF THE INCOME GENERATED BY TAX-FREE MINNESOTA INTERMEDIATE FUND FOR THE SIX MONTHS ENDED JUNE 30, 1997, WAS SUBJECT TO THE ALTERNATIVE MINIMUM TAX. 6 1997 semi-annual report fiscal 1997 resulted from our positioning the Fund for a decline in interest rates. During the period, the yield differential between high-yield bonds and higher rated, investment grade bonds narrowed. That is, investors earned less yield as they moved into lower rated securities compared to what we were able to earn in prior years. The High Yield Fund invests in higher risk bonds as well as more liquid, rated investment grade bonds. As of June 30, approximately 58% of the Fund's net assets were invested in bonds rated BBB or higher while the balance was invested in unrated securities. Our team of municipal credit analysts seeks bonds that are likely to make timely payment of principal and interest over time. Bonds in the portfolio must show ongoing credit strength or they are sold. We are pleased to report that since the Fund's inception in June 1995, all of the bonds in the Fund's portfolio have shown ongoing credit strength. The Fund currently has large positions in unrated health care and housing bonds. Health care includes not only hospitals but nursing homes and assisted living centers. The housing sector includes financing for single family homes, apartments, senior citizen communities and low-income (Section 8) housing. Since the Fund's inception, we have had little difficulty investing the Fund's more than $20 million in net assets. We have seen a steady flow of new high-yield bond issues in the state and as of June 30, 1997, we held more than 50 different issues. In the coming months, the portfolio has the potential to generate a stream of income we believe will be significantly higher than the income of investment grade municipal securities. high yield MINNESOTA HIGH YIELD MUNICIPAL BOND FUND PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION June 30, 1997 Power Authority 5.5% Higher Education 5.1% Hospitals 37.5% Housing 31.4% Certificates of Participation 2.7% Other Revenue Bonds 14.8% General Obligations 1.8% Industrial Development 1.3% Average Effective Maturity 12.1 years Average Effective Duration 7.1 years Average Quality** A Thirty-Day Current SEC Yield* 5.75% * FOR A CLASS SHARES BASED ON SECURITIES AND EXCHANGE COMMISSION GUIDELINES. SEC YIELDS FOR B AND C CLASSES WERE, RESPECTIVELY 5.22% AND 5.23%. ** REPRESENTS AVERAGE QUALITY OF THOSE SECURITIES THAT HAVE RATINGS. APPROXIMATELY 20.6% OF THE INCOME GENERATED BY MINNESOTA HIGH YIELD MUNICIPAL BOND FUND FOR THE SIX MONTHS ENDED JUNE 30, 1997, WAS SUBJECT TO THE ALTERNATIVE MINIMUM TAX. 1997 semi-annual report 7 SUMMARY OUTLOOK In Minnesota and across the U.S., inflation appears to be benign. Despite a strong U.S. economy, the Federal Reserve Board has been able to use monetary policy to effectively manage consumer price increases. Should long-term interest rates remain stable or decline for the balance of 1997, municipal bond investments could potentially provide an attractive real rate of return. In our opinion, the long-term outlook for Minnesota's economy and bond market is bright. Annual growth in per capita personal and disposal income has been averaging about 7% in recent years. Municipalities will continue to need capital from private investors to meet the needs of a diverse population of more than 4 million, presenting investors with many income opportunities. Elizabeth H. Howell VICE PRESIDENT SENIOR PORTFOLIO MANAGER July 15, 1997 outlook - -------------------------------------------------------------- MINNESOTA AT A GLANCE - -------------------------------------------------------------- Data as of June 30, 1997 General Obligation Bond Rating AAA Budget Surplus $502 million Per Capita Income $25,580 Population 4.4 million Range of Individual Income Tax Rates 6% to 8.5% Top Tax Bracket $51,330 Unemployment Rate 3.3% SOURCES: BLOOMBERG BUSINESS NEWS, CATO INSTITUTE. 8 1997 SEMI-ANNUAL REPORT Performance Summary COMPARATIVE TOTAL RETURNS FOR THE SIX MONTHS ENDED JUNE 30, 1997* - ------------------------------------------------------------------ Tax-Free Minnesota Fund A 3.37% Minnesota High-Yield Muni Bond Fund A 3.98% Lehman Brothers Municipal Bond Index 3.20% Minnesota Insured Fund A 2.70% Lehman Brothers Insured Municipal Bond Index 3.12% Tax-Free Minnesota Intermediate Fund A 2.48% Merrill Lynch Three-to-Seven Year Municipal Bond Index 2.48% * TOTAL RETURN IS BASED ON CHANGE IN NET ASSET VALUE WITH DISTRIBUTIONS REINVESTED. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. PERFORMANCE OF OTHER FUND CLASSES VARIES DUE TO DIFFERENT CHARGES AND EXPENSES. SEE PAGES 27 TO 32 FOR SIX-MONTH RETURNS FOR B AND C CLASSES. THE UNMANAGED INDEXES SHOWN ABOVE INCLUDE TAX-EXEMPT BONDS FROM MANY STATES AND ASSUME NO MANAGEMENT FEES OR OTHER EXPENSES. TAX-FREE MINNESOTA FUND - -------------------------------------------------------------------------------- Average Annual Return Through June 30, 1997
LIFETIME TEN YEARS FIVE YEARS ONE YEAR - ----------------------------------------------------------------------------------------------------- Class A (Est. 2/29/84) Excluding Sales Charge +8.95% +7.50% +6.60% +8.49% Including Sales Charge +8.64% +7.09% +5.79% +4.43% - ----------------------------------------------------------------------------------------------------- Class B (Est. 3/11/95) Excluding Sales Charge +6.85% +7.85% Including Sales Charge +5.64% +3.85% - ----------------------------------------------------------------------------------------------------- Class C (Est. 5/4/95) Excluding Sales Charge +6.02% +7.67% Including Sales Charge +6.02% +6.67% - -----------------------------------------------------------------------------------------------------
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 IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR B AND C CLASS SHARES "EXCLUDING SALES CHARGE" ASSUMES 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 CARRY 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 UP TO 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. 1997 semi-annual report 9 MINNESOTA INSURED FUND - -------------------------------------------------------------------------------- Average Annual Return Through June 30, 1997
LIFETIME TEN YEARS FIVE YEARS ONE YEAR - ------------------------------------------------------------------------------------------------------ Class A (Est. 5/1/87) Excluding Sales Charge +7.45% +7.44% +6.57% +7.60% Including Sales Charge +7.05% +7.03% +5.77% +3.60% - ------------------------------------------------------------------------------------------------------ Class B (Est. 3/7/95) Excluding Sales Charge +6.46% +6.83% Including Sales Charge +5.26% +2.83% - ------------------------------------------------------------------------------------------------------ Class C (Est. 5/4/94) Excluding Sales Charge +5.66% +6.80% Including Sales Charge +5.66% +5.80% - ------------------------------------------------------------------------------------------------------
TAX-FREE MINNESOTA INTERMEDIATE FUND - -------------------------------------------------------------------------------- Average Annual Return Through June 30, 1997
LIFETIME TEN YEARS FIVE YEARS ONE YEAR - ------------------------------------------------------------------------------------------------------ Class A (Est. 10/27/85) Excluding Sales Charge +6.14% +5.90% +5.30% +5.90% Including Sales Charge +5.89% +5.60% +4.61% +2.96% - ------------------------------------------------------------------------------------------------------ Class B (Est. 8/15/95) Excluding Sales Charge +4.33% +5.03% Including Sales Charge +3.30% +3.03% - ------------------------------------------------------------------------------------------------------ Class C (Est. 5/4/94) Excluding Sales Charge +4.66% +5.11% Including Sales Charge +4.66% +4.11% - ------------------------------------------------------------------------------------------------------
MINNESOTA HIGH YIELD MUNICIPAL BOND FUND - -------------------------------------------------------------------------------- Average Annual Return Through June 30, 1997
LIFETIME ONE YEAR - -------------------------------------------------------------------------------------- Class A (Est. 6/4/96) Excluding Sales Charge +8.90% +7.88% Including Sales Charge +5.09% +3.88% - -------------------------------------------------------------------------------------- Class B (Est. 6/12/96) Excluding Sales Charge +10.54% +7.08% Including Sales Charge +6.76% +3.08% - -------------------------------------------------------------------------------------- Class C (Est. 6/12/96) Excluding Sales Charge +8.21% +6.97% Including Sales Charge +8.21% +5.97% - --------------------------------------------------------------------------------------
PLEASE SEE PAGE 9 FOR IMPORTANT ADDITIONAL INFORMATION. ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. 10 1997 semi-annual report Financial Statements DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS JUNE 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------------- MUNICIPAL BONDS - 98.03% GENERAL OBLIGATION BONDS - 16.62% Centennial Independent School District #12 4.88% 02/01/10 (FGIC) .......................... $1,805,000 $1,751,247 Faribault Independent School District #656 (MN School District Credit Enhanced) 6.10% 06/01/10 ................................. 1,000,000 1,058,170 Farmington Independent School District #192 5.13% 02/01/15 (AMBAC) ......................... 1,500,000 1,445,235 Hennepin County 5.75% 10/01/10 ................... 7,990,000 8,305,445 Hopkins Independent School District #270 4.88% 02/01/13 (MBIA) .......................... 3,675,000 3,477,028 Hutchinson Independent School District Series A (MN School District Enhanced) 5.85% 02/01/18 ................................. 1,700,000 1,748,518 Kenyon Wanamingo Independent School District 6.00% 02/01/18 (MBIA) .......................... 2,350,000 2,445,504 Lakeville Independent School District #194, Inverse Floater 6.47% 02/01/15 (MBIA) ........... 4,250,000 3,930,485 Mahtomedi Independent School District #832 Series B Zero Coupon 5.51% 02/01/14 (MBIA) .......................... 1,540,000 621,405 Milaca Independent School District #912 5.50% 02/01/20 (FSA) ........................... 1,015,000 1,016,056 Minneapolis Convention Center Facilities, Inverse Floater 7.07% 04/01/14 ......................... 850,000 861,143 Minneapolis Sports Arena Project, Inverse Floater 6.42% 10/01/20 ................................. 4,220,000 3,848,176 Minneapolis Sports Arena Project, Inverse Floater 6.37% 04/01/14 ................................. 580,000 552,549 Minneapolis Unlimited Tax Series 1992 6.30% 10/01/08 ................................. 1,750,000 1,884,103 Minnetonka Independent School District #276 5.75% 02/01/22 (FSA) ........................... 4,550,000 4,662,066 North Branch Independent School District #138 5.50% 02/01/12 (FGIC) .......................... 1,540,000 1,549,394 North St. Paul, Maplewood Independent School District #622, Inverse Floater 6.42% 02/01/20 ................................. 2,250,000 2,016,338 Pine Island Independent School District #255 6.63% 06/01/12 (FSA) ........................... 240,000 252,814 Pine Island Independent School District #255 6.63% 06/01/13 (FSA) ........................... 310,000 325,993 Pine Island Independent School District #255 6.63% 06/01/14 (FSA) ........................... 330,000 346,427 Pine Island Independent School District #255 6.63% 06/01/15 (FSA) ........................... 355,000 372,033 Pine Island Independent School District #255 6.63% 06/01/16 (FSA) ........................... 380,000 397,552
Financial Statements DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS JUNE 30, 1997 (UNAUDITED)
- ---------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE --------------------------------- MUNICIPAL BONDS (CONTINUED) GENERAL OBLIGATION BONDS (CONTINUED) Plainview Independent School District #810 6.70% 02/01/06 ................................. $ 385,000 $ 420,012 Plainview Independent School District #811 6.75% 02/01/07 ................................. 420,000 458,140 Plainview Independent School District #812 6.75% 02/01/08 ................................. 445,000 484,280 Puerto Rico Aqueduct & Sewer Authority 5.00% 07/01/15 ................................. 2,000,000 1,884,480 Rochester Tax Increment 6.50% 12/01/04 ........... 1,000,000 1,007,840 Rosemount - Apple Valley Independent School District #196 7.92% 04/01/15 (FSA) .............. 4,000,000 4,189,720 Rosemount Independent School District #196 Series B 5.31% 04/01/11 (FSA) ................... 2,600,000 1,258,400 Rosemount Independent School District #196 5.47% 04/01/12 (FSA) ........................... 1,850,000 830,058 Rosemount Independent School District #196 5.52% 04/01/13 (FSA) ........................... 1,915,000 807,555 Rosemount Independent School District #196, Inverse Floater 5.88% 04/01/15 .................. 1,375,000 1,410,269 Sartell Independent School District #748 Series A 5.75% 02/01/15 (MBIA) .......................... 1,850,000 1,881,191 Sartell Independent School District #748 5.46% 02/01/13 (MBIA) .......................... 540,000 231,908 Sartell Independent School District #748 5.50% 02/01/15 (MBIA) .......................... 1,075,000 410,672 Sartell Independent School District #748 5.55% 02/01/16 (MBIA) .......................... 1,750,000 628,355 Sartell Independent School District #748 5.51% 02/01/17 (MBIA) .......................... 1,600,000 547,840 South Washington County Independent School District #833 4.88% 06/01/12 (FGIC) ............. 1,310,000 1,246,557 South Washington County Independent School District #833 4.88% 06/01/13 (FGIC) ............. 1,350,000 1,274,900 South Washington County Independent School District #833 4.88% 06/01/14 (FGIC) ............. 2,170,000 2,033,160 Spring Lake Park Independent School District #16, Inverse Floater 6.67% 02/01/17 (MBIA) ........... 1,000,000 943,770 Stillwater Independent School District #834 5.75% 02/01/15 (MBIA) .......................... 3,000,000 3,062,550 Stillwater Series A 5.38% 02/01/21 (FSA) ......... 1,025,000 1,013,469 Washington County 5.90% 02/01/10 ................ 1,680,000 1,731,408 ---------- 70,624,215 ---------- HIGHER EDUCATION REVENUE BONDS - 5.18% Minnesota Higher Education Augsburg College Series 4F1 6.25% 05/01/23 ............................. 1,000,000 1,011,650 Minnesota Higher Education Carleton College 5.75% 11/01/12 ................................. 4,000,000 4,142,360
1997 semi-annual report 11 DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS (CONTINUED)
- ---------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE --------------------------------- MUNICIPAL BONDS (CONTINUED) HIGHER EDUCATION REVENUE BONDS (CONTINUED) Minnesota Higher Education Facilities Revenue- Hamline 6.00% 10/01/12 ........................ $ 1,250,000 $ 1,274,725 Minnesota Higher Education Facilities Revenue- Hamline 6.00% 10/01/16 ........................ 1,790,000 1,811,301 Minnesota Higher Education St. Benedicts College 6.20% 03/01/16 ................................ 1,000,000 1,013,250 Minnesota Higher Education St. Thomas University Series R2 5.60% 09/01/14 ...................... 1,000,000 1,010,350 Minnesota State Higher Education Facilities Authority Revenue(MacAlester College-Four-J) 5.55% 03/01/17 ................................ 700,000 703,059 St. Paul HRA St. Paul Academy Series 1993 5.45% 10/01/23 ................................ 1,540,000 1,478,847 University Of Minnesota Series A 5.50% 07/01/21 ................................ 9,500,000 9,550,445 ---------- 21,995,987 ---------- HOSPITAL REVENUE BONDS - 20.60% Albert Lea St. John's Luthern Home Project 8.50% 11/01/19 ................................ 1,000,000 1,068,260 Bemidji Hospital Facilities Revenue North County Health 6.05% 09/01/16 ......................... 600,000 611,538 Bemidji Hospital Facilities Revenue North County Health 6.05% 09/01/24 ......................... 1,825,000 1,848,232 Bemidji Hospital Facilities Revenue North County Health 5.63% 09/01/15 ......................... 1,760,000 1,745,022 Bemidji Hospital Facilities Revenue North County Health 5.63% 09/01/21 ......................... 2,435,000 2,395,285 Brainerd Benedictine Health Care Systems 6.00% 02/15/12 (Connie Lee) .................... 2,250,000 2,316,240 Duluth Benedictine/St. Mary's Health 6.40% 05/01/18 (Connie Lee) .................... 4,295,000 4,529,636 Duluth Economic Development Authority St. Luke's Hospital 6.00% 02/15/20 (Connie Lee) ........... 9,450,000 9,581,638 Edina Fairview Hospital Revenue 7.13% 07/01/19 ................................ 2,500,000 2,649,850 Glencoe/Mcleod County Health Care 8.50% 12/01/15 ................................ 500,000 564,075 Little Canada Health Care 1992 Presbyterian Homes Guaranteed 7.25% 07/01/12 ..................... 1,000,000 1,035,410 Minneapolis Fairview Hospital Revenue Series 1993A 5.25% 11/15/13 (MBIA) ............. 4,000,000 3,913,800 Minneapolis Fairview Hospital Series 91B 6.50% 01/01/11 (MBIA) ......................... 3,000,000 3,229,680 Minneapolis Health Care-American Baptist Homes 8.70% 11/01/09 ................................ 2,485,000 2,749,479 Minneapolis/St. Paul HRA Children's Hospital Health Care, Inverse Floater 7.17% 08/15/25 ................................ 6,500,000 6,262,165 Minneapolis/St. Paul HRA HealthOne 7.40% 08/15/11 (MBIA) ......................... 1,360,000 1,482,930 Robbinsdale North Memorial Medical 5.50% 05/15/23 (AMBAC) ........................ 10,725,000 10,521,118
DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS (CONTINUED)
- ---------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE --------------------------------- MUNICIPAL BONDS (CONTINUED) HOSPITAL REVENUE BONDS (CONTINUED) Spring Park Twin Birch Nursing Home (Presbyterian Homes Guaranteed) 8.25% 08/01/11 ................ $ 600,000 $ 638,292 Springfield St. John's Lutheran Home Revenue 8.50% 11/01/19 ................................. 600,000 634,926 St. Cloud Hospital Facilities Revenue for St ..... Cloud Hospital 5.30% 10/01/20 (AMBAC) ........... 10,250,000 9,787,930 St. Louis Park Commercial Development Revenue 7.25% 06/01/13 ................................. 1,120,000 1,194,357 St. Louis Park Methodist Hospital 5.20% 07/01/23 (AMBAC) ......................... 10,220,000 9,531,376 St. Paul Housing and Redevelopment Hospital Health East Series A 6.63% 11/01/17 .................... 8,900,000 9,241,671 ---------- 87,532,910 ---------- HOUSING REVENUE BONDS - 17.21% Austin Housing and Redevelopment Authority Courtyard Residence Series 95A 7.25% 01/01/26 ................................. 500,000 503,640 Brooklyn Center Multifamily Housing Revenue Bonds Family Housing Project-Section 8 5.90% 01/01/20 ................................. 2,250,000 2,263,410 Burnsville Multifamily-Bridgeway Apartments 7.63% 02/01/24 (FHA) ........................... 3,370,000 3,444,207 Burnsville Multifamily-Coventry Court Apartments Project 7.50% 09/01/17 (FHA) .................... 1,000,000 1,049,330 Carver County Housing and Redevelopment Authority Multifamily Revenue Lake Grace Apartments 6.00% 07/01/28 ................................. 1,435,000 1,434,986 Dakota County Housing and Redevelopment Authority Single Family 8.10% 03/01/16 (GNMA) ............. 165,000 171,489 Eagan Forest Ridge Apartments Project 7.50% 09/01/17 (FHA) ........................... 1,000,000 1,038,020 Eden Prairie Multifamily Revenue, Eden Investments 7.40% 08/01/25 (FHA) ........................... 400,000 422,860 Eden Prairie Multifamily Windslope Apartments- Section 8 7.10% 11/01/17 ........................ 1,585,000 1,667,832 Eden Prairie Multifamily Homes, Tanager Creek 8.05% 06/20/31 (GNMA) .......................... 7,605,000 8,796,247 Edina Park Plaza Multifamily Housing 7.50% 12/01/09 (FHA) ........................... 1,575,000 1,666,145 Edina Park Plaza Multifamily Housing 7.70% 12/01/28 (FHA) ........................... 1,250,000 1,307,138 Hopkins Renaissance Multifamily Housing- Section 8 6.38% 04/01/20 ....................... 1,000,000 1,019,340 Maplewood Hazel Ridge Apartments Multifamily Housing 9.25% 12/01/15 ......................... 1,000,000 1,034,150 Minneapolis Housing Facility Revenue 1993 Augustana Chapel View 7.00% 04/01/18 ............ 1,000,000 1,024,220 Minneapolis Multifamily Mortgage Seward Towers 7.38% 12/20/30 (GNMA) .......................... 4,000,000 4,208,560 Minneapolis-Nicollet Multifamily Housing 6.00% 12/01/19 .................................. 2,000,000 2,031,240
12 1997 semi-annual report DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE -------------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Minnesota Housing Finance Agency Housing Development Series A-Section 8 7.80% 08/01/18 ................................ $1,000,000 $1,022,250 Minnesota Housing Finance Agency Multifamily Housing 6.95% 02/01/14 ........................ 1,500,000 1,585,845 Minnesota Housing Finance Agency Multifamily Housing Series 92A 6.95% 08/01/17 .............. 745,000 786,668 Minnesota Housing Finance Agency Rental Housing Series B 6.25% 08/01/22 ....................... 985,000 995,047 Minnesota Housing Finance Agency Single Family Mortgage 86 Series B 7.25% 07/01/16 ............ 955,000 969,249 Minnesota Housing Finance Agency Single Family Mortgage Series B 7.30% 07/01/10 ............... 165,000 171,938 Minnesota Housing Finance Agency Single Family Mortgage 7.30% 07/01/09 ....................... 340,000 354,950 Minnesota Housing Finance Agency Single Family Mortgage Series C 7.65% 07/01/08 ............... 415,000 438,709 Minnesota Housing Finance Agency Single Family Mortgage Series 91C 7.10% 07/01/11 ............. 1,010,000 1,071,155 Minnetonka Multifamily-Beacon Hill Project (Presbyterian Homes Guaranteed) 7.70% 06/01/25 ................................ 2,000,000 2,107,720 Oakdale, Minnesota Housing-Oak Meadows Project 7.00% 04/01/27 ................................ 6,800,000 6,865,824 Red Wing Housing and Redevelopment Agency Jordan Tower - Section 8 Series 1992 7.00% 01/01/19 ................................ 1,500,000 1,576,410 St. Cloud Germain Towers Housing Series 1993- Section 8 5.90% 09/01/20 ...................... 2,000,000 2,010,080 St. Cloud Housing and Redevelopment Agency Northway A&B Project-Section 8 7.50% 12/01/18 ................................ 2,045,000 2,109,826 St. Louis Park Multifamily Housing Revenue 6.25% 12/01/28 (FHA) .......................... 3,855,000 3,970,689 St. Louis Park Multifamily Westwind Apartments Housing 5.75% 01/01/29 (GNMA) .................. 3,865,000 3,872,691 St. Louis Park Single Family 7.25% 04/20/23 (GNMA) ......................... 1,848,000 1,946,960 St. Paul Housing and Redevelopment Agency Como Lake Project 7.50% 03/01/26 (FHA) .............. 1,000,000 935,000 St. Paul Housing and Redevelopment Single Family Mortgage 6.90% 12/01/21 (FNMA) ................. 1,695,000 1,783,343 St. Paul Housing and Redevelopment Single Family Mortgage 6.90% 12/01/11 (FNMA) ................. 70,000 73,801 Stillwater Multifamily Housing Cottages 7.00% 11/01/27 ................................ 1,000,000 1,006,850 Wadena Housing and Redevelopment Agency Humphrey Manor-Section 8 6.00% 02/01/19 ................................ 2,130,000 2,154,303 Wells Housing and Redevelopment Agency Broadway Apartment Project-Section 8 7.00% 01/01/19 ................................ 1,090,000 1,147,890
DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE -------------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Willmar Housing and Redevelopment Agency Highland Apartments-Section 8 5.85% 06/01/19 ................................. $ 1,050,000 $ 1,054,085 ---------- 73,094,097 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 9.22% Anoka Resource Recovery Revenue for NSP Series 85 7.15% 12/01/08 .............................. 1,000,000 1,071,390 Becker Pollution Control Revenue for NSP Series 89 A 6.80% 04/01/07 ...................... 2,000,000 2,115,940 Cloquet Pollution Control Revenue for Potlatch Corporation 5.90% 10/01/26 ...................... 15,000,000 15,121,050 Duluth Seaway Port Authority Revenue for Cargill, Inc. 6.13% 11/01/14 ............................ 4,500,000 4,745,520 East Grand Forks for American Crystal Sugar Pollution Control Revenue 7.75% 04/01/18 ................................. 1,230,000 1,348,560 Minneapolis Community Development Agency Common Bond Fund 7.63% 06/01/06 ................. 1,430,000 1,469,339 Minnesota Public Facilities Authority Water Pollution Control 6.25% 03/01/16 ................ 4,400,000 4,651,504 Richfield CDR for Richfield Shoppes 8.38% 10/01/13 ................................. 2,200,000 2,527,448 St. Cloud CDR for Northwest Center Association 7.50% 08/01/12 ................................. 4,573,971 4,755,695 St. Paul Minnesota CDR Fort Rd Medical 7.50% 09/01/02 (ASSET GTY) ...................... 1,300,000 1,371,409 ---------- 39,177,855 ---------- LEASE/CERTIFICATES OF PARTICIPATION - 0.68% Beltrami County 6.20% 02/01/14 .................. 1,010,000 1,038,159 West St. Paul Commercial Mortgage (K-Mart Lease) 7.00% 11/01/07 ................................ 1,716,693 1,839,025 ---------- 2,877,184 ---------- *PRE-REFUNDED BONDS - 9.39% Anoka County Capital Improvement 7.20% 02/01/08 (Escrowed to maturity) .......... 1,000,000 1,040,320 Blaine IDR (Ball Corp.) 8.25% 12/01/99 (Escrowed to maturity) ........................ 250,000 272,313 Blaine IDR (Ball Corp.) 8.25% 12/01/00 (Escrowed to maturity) ........................ 300,000 335,592 Bloomington Tax Increment 9.75% 02/01/08 (Escrowed to maturity) ........................ 500,000 655,270 Brainerd Independent School District #181 7.00% 06/01/11 (Escrowed to maturity) .......... 390,000 420,673 Hopkins Senior Multifamily Facilities Augustana Home 9.00% 07/1/20-97 ......................... 1,000,000 1,020,000 Kimball Independent School District #739 7.60% 02/01/04 (Escrowed to maturity) .......... 250,000 254,615 Kimball Independent School District #739 7.60% 02/01/05 (Escrowed to maturity) .......... 275,000 280,076 Kimball Independent School District #739 7.70% 02/01/06 (Escrowed to maturity) .......... 275,000 280,233
1997 semi-annual report 13 DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS (CONTINUED)
- ------------------------------------------------------------------------------------------ PRINCIPAL MARKET AMOUNT VALUE -------------------------------- MUNICIPAL BONDS (CONTINUED) *PRE-REFUNDED BONDS (CONTINUED) Kimball Independent School District #739 7.70% 02/01/07 (Escrowed to maturity) ...... $ 300,000 $ 305,709 Little Falls Independent School District #182 6.80% 02/01/08 (AMBAC) (Escrowed to maturity) .................... 500,000 519,080 Maplewood Independent School District #622 7.10% 02/1/25-05 (FSA) .................... 10,000,000 11,439,300 Minnesota Public Facilities Authority (Water Pollution Control) Series 90A 7.10% 03/1/12-00 .......................... 1,990,000 2,163,548 Minnesota Public Facilities Authority Water Pollution Control 6.95% 03/1/13-01 ......... 5,220,000 5,752,283 Northfield College Facility Revenue-St. Olaf College 7.88% 10/1/08-98 .................. 1,255,000 1,311,626 Northfield College Facility Revenue-St. Olaf College 8.00% 10/1/18-98 .................. 860,000 900,093 Owatanna Public Utilities 6.75% 01/1/16-01 .......................... 1,000,000 1,073,340 Rockford Independent School District #883 7.20% 12/15/13-98 ......................... 750,000 778,943 Southern Minnesota Municipal Power Agency Revenue 5.75% 01/01/18 (MBIA) (Escrowed to maturity) .................... 1,000,000 1,023,750 Southern Minnesota Municipal Power Agency Supply System 5.50% 01/01/15 (AMBAC) (Escrowed to maturity) .................... 990,000 993,307 St. Cloud Independent School District #742 7.50% 02/01/10 (Escrowed to maturity) ...... 1,000,000 1,019,050 St. Louis Park Methodist Hospital 7.25% 07/1/18-00 (AMBAC) .................. 775,000 850,857 St. Paul Civic Center Revenue Sales Tax 5.55% 11/01/23 (MBIA) (Escrowed to maturity) .................... 825,000 834,793 St. Paul Sewer Revenue Series 88A 8.00% 12/01/08 (Escrowed to maturity) ...... 2,175,000 2,305,304 University Of Minnesota Series A 6.00% 02/01/11 (Escrowed to maturity) ...... 1,500,000 1,500,705 Wayzata Independent School District #284 7.05% 02/01/06 (Escrowed to maturity) ...... 625,000 649,750 Wayzata Independent School District #284 7.10% 02/01/08 (Escrowed to maturity) ...... 1,000,000 1,040,360 Wayzata Independent School District #284 7.10% 02/01/09 (Escrowed to maturity) ...... 560,000 582,602 Western Minnesota Municipal Power Agency Revenue 9.75% 01/01/16 (Escrowed to maturity) .................... 185,000 273,852 ---------- 39,877,344 ---------- POWER AUTHORITY REVENUE BONDS - 16.34% Bass Brook PCR for Minnesota Power and Light Revenue 6.00% 07/01/22 .................... 17,490,000 17,668,573 Bass Brook Pollution Control Revenue for Minnesota Power & Light Company 6.00% 07/01/22 ............................ 1,750,000 1,806,368
14 1997 semi-annual report DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS (CONTINUED)
- ------------------------------------------------------------------------------------------ PRINCIPAL MARKET AMOUNT VALUE -------------------------------- MUNICIPAL BONDS (CONTINUED) POWER AUTHORITY REVENUE BONDS (CONTINUED) Northern Minnesota Municipal Power Agency Electric System Revenue 5.50% 01/01/18 (AMBAC) ......................... $ 9,200,000 $ 9,166,328 Northern Minnesota Municipal Power Agency Series 89A 7.25% 01/01/16 ...................... 5,875,000 6,206,232 Northern Minnesota Municipal Power Agency Zero Coupon 5.24% 01/01/09 (AMBAC) .............. 3,815,000 2,095,732 Puerto Rico Electric Power Authority 5.25% 07/01/21 ................................. 1,500,000 1,406,730 Puerto Rico Electric Power Authority Series X 5.50% 07/01/25 ................................. 2,930,000 2,836,562 Southern Minnesota Municipal Power Agency 5.75% 01/01/18 (FGIC) .......................... 2,000,000 2,024,240 Southern Minnesota Municipal Power Agency 4.75% 01/01/16 (MBIA) .......................... 7,200,000 6,554,664 Southern Minnesota Municipal Power Agency 5.75% 01/01/18 (MBIA) .......................... 9,770,000 9,888,412 Southern Minnesota Municipal Power Agency Series A 5.00% 01/01/12 (FGIC) .................. 3,880,000 3,744,239 Southern Minnesota Municipal Power Agency Series B 5.00% 01/01/13 (FGIC) .................. 1,125,000 1,078,155 Southern Minnesota Municipal Power Agency Supply System 5.50% 01/01/15 (AMBAC) ................... 1,560,000 1,553,058 Southern Minnesota Municipal Power Agency Zero Coupon 5.57% 01/01/19 (MBIA) .................... 4,785,000 1,453,731 Southern Minnesota Municipal Power Agency Zero Coupon 5.57% 01/01/21 (MBIA) .................... 5,000,000 1,359,650 Western Municipal Power Agency Revenue 6.13% 01/01/16 ................................. 550,000 551,172 ---------- 69,393,846 ---------- WATER AND SEWER REVENUE BONDS - 0.65% Puerto Rico Aqueduct & Sewer Authority 5.00% 07/01/19 ................................. 3,000,000 2,781,090 ---------- 2,781,090 ---------- OTHER REVENUE BONDS - 2.14% Minneapolis Community Development Agency Common Bond Fund 7.95% 12/01/11 ................. 855,000 934,019 Minneapolis Community Development Agency Common Bond Fund 7.40% 12/01/21 ................. 795,000 844,354 Minneapolis Community Development Agency Common Bond Fund 1991-4 Opportunity Workshop Project 7.13% 12/01/05 ................. 510,000 549,902 Minneapolis Community Development Agency Tax Increment Revenue 0.00% 09/01/09 ................ 5,750,000 3,061,703 Rochester Health Care Facilities Revenue 7.87% 11/15/15 ................................. 2,500,000 2,680,425 Seaway Port Authority Rfdg. Series 93A for Cargill Inc. 5.75% 12/01/16 ............................ 1,000,000 1,015,920 ---------- 9,086,323 ---------- Total Municipal Bonds (cost of $394,738,519) ......................... 416,440,851 ----------
14 1997 SEMI-ANNUAL REPORT DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS (CONTINUED)
- ----------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------------------- SHORT TERM INVESTMENTS - 0.68% Federated Minnesota Municipal Money Market ...... $ 2,884,000 $ 2,884,000 ------------ Total Short Term Investments (cost 2,884,000) .............................. 2,884,000 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 98.71% (cost of $397,622,519)** ...................... 419,324,851 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.29% .................... 5,481,441 ------------ NET ASSETS APPLICABLE TO 34,046,554 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% ......... $424,806,292 ============ NET ASSET VALUE - TAX FREE MINNESOTA FUND A CLASS ($414,564,179 / 33,225,790 shares) ............. $12.48 ====== NET ASSET VALUE - TAX FREE MINNESOTA FUND B CLASS ($7,724,697 / 619,119 shares) ................. $12.48 ====== NET ASSET VALUE - TAX FREE MINNESOTA FUND C CLASS ($2,517,416 / 201,645 shares) ................. $12.48 ====== - -------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. ** Also cost for federal tax purposes. AMBAC - Insured by the AMBAC Indemnity Corporation ASSET GTY - Insured by the Asset Guaranty Insurance Company Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by 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, 1997: 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 1,000,000,000 shares allocated to Tax Free Minnesota Fund C Class ..... $ 404,458,383 Accumulated overdistribution net investment income (73,078) Accumulated net realized loss on investments ...... (1,281,345) Net unrealized gain on investments ................ 21,702,332 ------------- Total Net Assets .................................. $ 424,806,292 =============
See accompanying notes DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS JUNE 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------------------------ PRINCIPAL MARKET AMOUNT VALUE -------------------------------- MUNICIPAL BONDS - 100.09% GENERAL OBLIGATION BONDS - 28.32% Alexandria Independent School District #206 6.30% 02/01/11 (MBIA) .......................... $1,575,000 $1,679,816 Alexandria Independent School District #206 6.30% 02/01/12 (MBIA) .......................... 1,675,000 1,786,471 Alexandria Independent School District #206 6.30% 02/01/13 (MBIA) .......................... 1,775,000 1,893,126 Anoka-Hennepin Independent School District #11 Series C 5.90% 02/01/11 ........................ 8,045,000 8,235,184 Becker 6.25% 08/01/15 (MBIA) ..................... 6,300,000 6,641,460 Becker Wastewater Treatment Facility Series A 5.95% 02/01/14 ................................. 500,000 514,470 Buffalo Independent School District #887 6.10% 02/01/15 (FSA) ........................... 1,030,000 1,071,808 Carver County HRA Jail Facility 6.40% 02/01/10 (MBIA) .......................... 515,000 549,129 Carver County HRA Jail Facility 6.40% 02/01/11 (MBIA) .......................... 550,000 586,449 Carver County HRA Jail Facility 6.40% 02/01/12 (MBIA) .......................... 585,000 623,768 Carver County HRA Jail Facility 6.40% 02/01/13 (MBIA) .......................... 625,000 666,419 Carver County HRA Jail Facility 6.40% 02/01/14 (MBIA) .......................... 670,000 714,401 Columbia Heights Independent School District #13 5.38% 02/01/19 (FSA) ........................... 3,865,000 3,837,984 Dakota County 6.40% 02/01/08 (AMBAC) ............. 1,135,000 1,180,990 Dakota County 6.45% 02/01/09 (AMBAC) ............. 1,000,000 1,041,720 Dakota County 6.45% 02/01/10 (AMBAC) ............. 2,500,000 2,601,225 Eden Prairie Independent School District #272 5.85% 02/01/13 (FGIC) .......................... 2,500,000 2,548,000 Eden Prairie Independent School District #272 6.42% 02/01/14 (FGIC) .......................... 1,125,000 1,061,291 Eden Prairie Independent School District #272, Inverse Floater 5.65% 02/01/13 (MBIA) ........... 3,200,000 3,235,776 Eden Prairie Independent School District #272, Inverse Floater 6.42% 02/01/15 (MBIA) ........... 1,000,000 930,140 Elk River Independent School District #728 Series 92 B 6.00% 02/01/09 (AMBAC) .............. 3,950,000 4,130,239 Ellendale Geneva Independent School District #762 6.00% 02/01/10 (AMBAC) ......................... 230,000 239,927 Ellendale Geneva Independent School District #762 6.00% 02/01/11 (AMBAC) ......................... 245,000 254,972 Ellendale Geneva Independent School District #762 6.00% 02/01/12 (AMBAC) ......................... 265,000 274,490 Ellendale Geneva Independent School District #762 6.00% 02/01/13 (AMBAC) ......................... 280,000 289,344 Ellendale Geneva Independent School District #762 6.00% 02/01/14 (AMBAC) ......................... 300,000 310,011
1997 semi-annual report 15 DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS (CONTINUED)
- ------------------------------------------------------------------------------------------ PRINCIPAL MARKET AMOUNT VALUE -------------------------------- MUNICIPAL BONDS (CONTINUED) GENERAL OBLIGATION BONDS (CONTINUED) Ellendale Geneva Independent School District #762 6.00% 02/01/15 (AMBAC) ......................... $ 320,000 $ 330,678 Farmington Independent School District #192 6.80% 02/01/11 (MBIA) .......................... 850,000 913,895 Hennepin County 5.75% 10/01/10 (MBIA) ........... 1,800,000 1,864,440 Hopkins Independent School District #270 4.85% 02/01/12 (MBIA) .......................... 2,500,000 2,364,775 Hopkins Independent School District #270 4.88% 02/01/14 (MBIA) .......................... 3,875,000 3,637,656 Lakeville Independent School District 5.40% 02/01/13 (FGIC) .......................... 1,100,000 1,095,358 Moorhead Minnesota Independent School District 152 5.90% 02/01/10 (AMBAC) ..................... 475,000 485,702 Moorhead Minnesota Independent School District 152 5.90% 02/01/11 (AMBAC) ..................... 505,000 515,555 Moorhead Minnesota Independent School District 152 5.90% 02/01/12 (AMBAC) ..................... 540,000 549,526 Moorhead Minnesota Independent School District 152 6.00% 02/01/13 (AMBAC) .................... 575,000 587,932 Mora Series A 6.85% 02/01/10 (AMBAC) ............ 245,000 260,016 Mora Series A 6.85% 02/01/11 (AMBAC) ............ 265,000 281,242 North Branch Independent School District #138, Inverse Floater 7.17% 02/01/11 ................. 965,000 990,930 Prior Lake Independent School District #719, Inverse Floater 6.17% 02/01/14 (FGIC) .......... 1,000,000 943,370 Roseau Independent School District #682 7.00% 02/01/16 (AMBAC) ......................... 500,000 529,205 Rosemount Independent School District #196 Series B 5.26% 04/01/10 (FSA) .................. 2,240,000 1,150,061 Rosemount Independent School District #196 5.16% 04/01/09 (FSA) ........................... 1,860,000 1,017,811 South St. Paul Independent School District #6 6.45% 02/01/11 (FGIC) .......................... 500,000 522,590 South St. Paul Independent School District #6 6.45% 02/01/12 (FGIC) .......................... 300,000 313,554 South St. Paul Independent School District #6 6.25% 02/01/10 (FGIC) .......................... 625,000 650,231 South Washington County Independent School District #883 6.13% 06/01/09 (FGIC) ............ 1,430,000 1,486,943 South Washington County Independent School District #883 6.13% 06/01/11 (FGIC) ............ 2,720,000 2,818,546 Spring Lake Park Independent School District #16, Inverse Floater 6.67% 02/01/14 (MBIA) .......... 2,175,000 2,111,294 St. Cloud Independent School District #742 6.05% 02/01/09 (FGIC) .......................... 1,000,000 1,050,510 St. Francis Independent School District #15 5.90% 04/01/10 (FGIC) .......................... 1,845,000 1,908,247 Stillwater Independent School District #834 5.50% 02/01/10 (FGIC) .......................... 2,995,000 3,023,752 Western Lake Superior Series A 6.00% 10/01/08 (MBIA) .......................... 400,000 425,328 Western Lake Superior Series A 6.10% 10/01/09 (MBIA) .......................... 425,000 451,805
DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) GENERAL OBLIGATION BONDS (CONTINUED) Western Lake Superior Series A 6.20% 10/01/10 (MBIA) ......................... $ 450,000 $ 479,817 Western Lake Superior Series A 6.20% 10/01/11 (MBIA) ......................... 475,000 504,835 Willmar Independent School District #347 6.25% 02/01/15 (AMBAC) ........................ 4,100,000 4,391,920 ---------- 84,556,134 ---------- HOSPITAL REVENUE BONDS - 19.63% Bloomington Masonic Home Care Center 5.90% 07/01/09 (AMBAC) ........................ 1,250,000 1,304,475 Brainerd Benedictine Health Care Systems 6.00% 02/15/12 (Connie Lee) .................... 1,500,000 1,544,160 Brainerd Benedictine Health Care Systems 6.00% 02/15/20 (Connie Lee) .................... 2,000,000 2,031,560 Detroit Lakes Benedictine Health 6.00% 02/15/12 (Connie Lee) .................... 1,630,000 1,687,213 Detroit Lakes Benedictine Health 6.00% 02/15/19 (Connie Lee) .................... 1,000,000 1,018,250 Duluth Benedictine/St. Mary's Health 6.40% 05/01/18 (Connie Lee) .................... 500,000 527,315 Duluth EDA Health Care - Duluth Clinic 6.30% 11/01/22 (AMBAC) ........................ 2,690,000 2,842,980 Duluth EDA Health Care Revenue, Inverse Floater 8.22% 02/15/17 ................................ 5,000,000 5,132,100 Duluth Economic Development Authority St. Luke's Hospital 6.00% 02/15/20 (Connie Lee) ........... 1,300,000 1,318,109 Duluth St. Luke's Hospital 6.40% 05/01/10 (Connie Lee) .................................. 3,335,000 3,580,856 Minneapolis Fairview Hospital Series 91B 6.50% 01/01/11 (MBIA) ......................... 3,000,000 3,229,680 Minneapolis Fairview Hospital Series 93A 5.25% 11/15/19 (MBIA) ......................... 3,750,000 3,560,588 Minneapolis/St. Paul HRA-Childrens Hospital 7.57% 08/15/16 (FSA) .......................... 1,310,000 1,333,344 Minneapolis/St. Paul HRA Health Care, Inverse Floater 5.00% 11/15/13 (FSA) ................... 9,490,000 8,991,395 Minneapolis/St. Paul HRA HealthOne 7.40% 08/15/05 (MBIA) ......................... 600,000 656,064 Minneapolis/St. Paul HRA HealthOne 7.40% 08/15/11 (MBIA) ......................... 2,370,000 2,584,224 Minnesota Agricultural & Economic Development (Health Care Systems-Fairview Hospital-Series A) 5.75% 11/15/26 ................................ 8,250,000 8,314,680 Robbinsdale North Memorial Medical 5.50% 05/15/23 (AMBAC) ........................ 5,400,000 5,297,346 St. Cloud Hospital Facility Revenue 6.75% 07/01/11 (AMBAC) ........................ 400,000 441,432 St. Louis Park Health Care, Inverse Floater 6.32% 07/01/23 (AMBAC) ........................ 2,500,000 2,197,925 St. Paul Ramsey Medical 5.50% 05/15/13 (AMBAC) ........................ 1,000,000 1,003,090 ---------- 58,596,786 ----------
16 1997 semi-annual report DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS - 19.27% Anoka County, Minnesota Housing & Redevelopment Authority (Ice Arena-A) 5.70% 02/01/23 .......... $1,000,000 $1,013,200 Chaska Waters Edge Multifamily Revenue 7.30% 01/20/30 (GNMA) ........................... 3,257,000 3,595,402 Dakota County HRA Single Family Mortgage Revenue 5.85% 10/01/30 (GNMA / FNMA) .................... 7,000,000 6,968,710 Dakota County HRA Single Family Mortgage Revenue 6.70% 10/01/17 (FNMA) ........................... 6,290,000 6,579,780 Dakota, Washington and Stearns Counties HRA Single Family Mortgage Revenue 7.85% 12/01/30 (MBIA) ........................... 180,000 189,074 Eagan Multifamily Revenue Woodridge Apartments 5.90% 08/01/20 (GNMA) ........................... 1,000,000 1,015,880 Hopkins Multifamily Housing-Auburn Apartments 8.05% 06/20/31 (GNMA) ........................... 3,790,000 4,273,831 Minneapolis and St. Paul Housing Finance Board Housing Project Phase V 8.88% 11/01/18 (GNMA) ........................... 75,000 77,555 Minneapolis and St. Paul Housing Finance Board Single Family Mortgage Revenue 8.30% 08/01/21 (GNMA) ........................... 125,000 127,824 Minneapolis and St. Paul Housing Finance Board Single Family Mortgage Revenue 8.13% 12/01/14 (GNMA) ........................... 160,000 167,550 Minneapolis and St. Paul Housing Finance Board Housing Project Phase IX 7.25% 08/01/21 (GNMA) ........................... 1,265,000 1,342,519 Minneapolis and St. Paul Housing Finance Board Housing Project Phase IX 7.30% 08/01/31 (GNMA) ........................... 845,000 894,289 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series A 8.38% 02/01/15 (FHA) ............................ 80,000 81,802 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series B 7.25% 07/01/06 (MBIA) ........................... 150,000 152,936 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series A 8.50% 02/01/17 (FHA) ............................ 65,000 66,355 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series C 9.00% 08/01/18 (FHA) ............................ 400,000 408,232 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series A 7.95% 07/01/22 (MBIA) ........................... 320,000 336,208 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series A 7.45% 07/01/22 (AMBAC) .......................... 1,435,000 1,510,524 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series A 7.05% 07/01/22 (AMBAC) .......................... 510,000 537,091 Minnesota Housing Finance Agency Single Family Housing Rental Series A (AMT) 5.88% 08/01/28 ............................ 2,610,000 2,610,966
DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS - 19.27% Minnesota Housing Finance Agency Single Family Housing Rental 5.95% 02/01/15 (AMBAC) ........................... $2,480,000 $ 2,528,806 Minnesota Housing Finance Agency Single Family Housing Rental 5.95% 02/01/18 (MBIA) ............................ 7,525,000 7,634,188 Minnesota Housing Finance Agency Single Family Mortgage Series D (AMT) 5.80% 07/01/21 ................................... 5,000,000 5,008,250 Minnetonka Multifamily Housing Cedar Hills Project 7.50% 12/01/27 (FHA) ............................. 500,000 515,645 Minnetonka Multifamily Housing Cedar Hills Project 7.50% 12/01/17 (FHA) ............................. 400,000 418,952 Scott County, Minnesota Housing & Redevelopment Authority Facility Lease Revenue-Justice Center Project 5.50% 12/01/15 ........................... 1,755,000 1,763,178 South St. Paul, HRA Single Family Housing Mortgage Series 1993 5.75% 09/01/20 (FNMA)................. 2,410,000 2,414,603 St. Paul HRA Multifamily Housing 6.60% 10/01/12 (FHA) ............................. 4,000,000 4,222,880 White Bear Lake Multifamily Housing Lake Square 5.88% 02/01/15 (FHA) ............................. 1,055,000 1,067,787 ----------- 57,524,017 ----------- LEASE/CERTIFICATES OF PARTICIPATION - 0.69% Stearns County HRA Courthouse Project 7.00% 02/01/11 (AMBAC) ........................... 2,000,000 2,075,480 ---------- 2,075,480 ----------- POLLUTION CONTROL REVENUE BONDS - 0.54% Minnesota Public Facilities Authority Water Pollution Control Revenue 6.50% 03/01/14 (MBIA) ............................ 1,500,000 1,605,210 ---------- 1,605,210 ----------- POWER AUTHORITY REVENUE BONDS - 5.91% Bass Brook Pollution Control Revenue for Minnesota Power & Light Company 6.00% 07/01/22 .................................. 3,250,000 3,354,682 Marshall Utility Revenue 6.45% 07/01/10 (FSA) ............................. 500,000 539,025 Marshall Utility Revenue 6.45% 07/01/11 (FSA) ............................. 100,000 107,591 Marshall Utility Revenue 6.50% 07/01/12 (FSA) ............................. 500,000 536,560 Marshall Utility Revenue 6.50% 07/01/13 (FSA) ............................. 500,000 535,230 Northern Minnesota Municipal Power Agency Electric System Revenue 5.50% 01/01/18 (AMBAC) ........................... 4,200,000 4,184,627 Northern Minnesota Municipal Power Agency Series B 5.90% 01/01/08 (AMBAC)................... 700,000 735,399 Southern Minnesota Municipal Power Agency 5.75% 01/01/18 (FGIC) ............................ 4,570,000 4,625,387
1997 semi-annual report 17 DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) POWER AUTHORITY REVENUE BONDS (CONTINUED) Southern Minnesota Municipal Power Agency 4.75% 01/01/16 (MBIA)............................. $ 1,000,000 $ 910,370 Southern Minnesota Municipal Power Agency Revenue 5.75% 01/01/18 (AMBAC).................... 1,330,000 1,346,119 Southern Minnesota Municipal Power Agency, Inverse Floater 7.67% 01/01/18.................... 750,000 760,650 ---------- 17,635,640 ---------- *PRE-REFUNDED BONDS - 25.08% Brainerd Independent School District #181 7.00% 06/01/09 (FGIC) (Escrowed to maturity) ........................... 515,000 557,410 Brainerd Independent School District #181 7.00% 06/01/10 (FGIC) (Escrowed to maturity) ........................... 550,000 595,293 Centennial Independent School District #12 7.10% 02/1/09-00 (FSA) ........................... 200,000 213,466 Centennial Independent School District #12 7.15% 02/1/11-00 (FSA) ........................... 450,000 480,843 Centennial Independent School District #12 7.15% 02/1/12-00 (FSA) ........................... 250,000 267,135 Dakota & Washington Counties HRA Single Family Mortgage Revenue 8.38% 09/01/21 (GNMA) (Escrowed to maturity) ........................... 14,115,000 18,987,639 Dakota & Washington Counties HRA Single Family Mortgage Revenue 8.15% 09/01/16 (MBIA) (Escrowed to maturity) ........................... 405,000 518,611 Dakota, Washington & Anoka Counties HRA Single Family Housing 8.45% 09/01/19 (GNMA) (Escrowed to maturity) ........................... 9,000,000 11,993,940 Delano Independent School District #879 7.25% 02/01/10 (AMBAC) (Escrowed to maturity) ........................... 500,000 542,025 Duluth EDA Health Care-Duluth Clinic 6.30% 11/1/22-04 (AMBAC) ......................... 1,060,000 1,163,339 Elk River Independent School District 7.00% 02/01/10 (FSA) (Escrowed to maturity) ........................... 200,000 211,682 Elk River Independent School District #728 6.30% 02/01/14 (FSA) (Escrowed to maturity) ........................... 500,000 532,160 Elk River Independent School District #728 6.30% 02/01/15 (FSA) (Escrowed to maturity) ........................... 665,000 707,773 Lake Of The Woods Independent School District #390 7.35% 02/01/15 (AMBAC) (Escrowed to maturity) ........................... 200,000 209,292 Lake Of The Woods Independent School District #390 7.35% 02/01/16 (AMBAC) (Escrowed to maturity) ........................... 250,000 261,615 Maplewood Independent School District #622 7.10% 02/1/25-05 (FSA). .......................... 11,525,000 13,183,792 Maplewood Independent School District #622 7.10% 02/1/19-05 (MBIA) .......................... 5,935,000 6,809,522 Minnesota State University System 7.40% 06/30/19-99 (MBIA) ......................... 760,000 806,596
DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) *PRE-REFUNDED BONDS (CONTINUED) South Washington County Independent School District #883 6.88% 06/01/11 (FGIC) (Escrowed to maturity) ........................... $520,000 $552,297 Southern Minnesota Municipal Power Agency Revenue 5.75% 01/01/18 (MBIA) (Escrowed to maturity) ........................... 3,790,000 3,880,013 Southern Minnesota Municipal Power Agency Revenue 5.75% 01/01/18 (MBIA) (Escrowed to maturity) ........................... 1,000,000 1,023,750 Southern Minnesota Municipal Power Agency Revenue 5.75% 01/01/18 (AMBAC) (Escrowed to maturity) ........................... 670,000 685,913 St. Cloud Hospital Facility Revenue 7.00% 07/1/07-01 (AMBAC) ......................... 500,000 556,325 St. Cloud Hospital Revenue Series C 6.75% 07/1/15-01 (AMBAC) ......................... 500,000 550,820 St. Francis Independent School District #15 7.60% 02/01/09 (FGIC) (Escrowed to maturity) ........................... 250,000 254,833 St. Louis Park Methodist Hospital 7.25% 07/1/18-00 (AMBAC) ......................... 500,000 548,940 St. Michael Albertville Independent School District 7.25% 02/01/10 (AMBAC) (Escrowed to maturity) ........................... 725,000 737,999 St. Michael Albertville Independent School District 7.25% 02/01/11 (AMBAC) (Escrowed to maturity) ........................... 775,000 788,896 St. Michael Albertville Independent School District 7.25% 02/01/12 (AMBAC) (Escrowed to maturity) ........................... 255,000 259,572 St. Michael Albertville Independent School District 7.25% 02/01/13 (AMBAC) (Escrowed to maturity) ........................... 795,000 809,254 Stillwater Independent School District #834 6.75% 02/01/10 (FGIC) (Escrowed to maturity) ........................... 1,000,000 1,035,860 Warroad Independent School District #690 6.85% 02/01/13 (AMBAC) (Escrowed to maturity) ........................... 500,000 527,400 Washington County HRA Jail Facilities 7.00% 02/1/12-02 (MBIA) .......................... 500,000 552,040 Western Minnesota Municipal Power Agency Revenue 9.75% 01/01/16 (Escrowed to maturity) ........................... 530,000 784,548 Western Municipal Power Agency Series A 6.60% 01/01/10 (MBIA) (Escrowed to maturity) ........................... 2,000,000 2,221,800 Wright County 7.20% 12/1/12-99 (FSA)............... 1,000,000 1,064,269 ---------- 74,876,662 ---------- WATER AND SEWER REVENUE BONDS - 0.26% Moorhead Minnesota Public Utilities 6.25% 11/01/12 (MBIA) ............................ 735,000 771,485 ---------- 771,485 ----------
18 1997 semi-annual report DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- OTHER REVENUE BONDS - 0.39% Minneapolis Tax Increment Revenue 7.00% 03/01/03 (MBIA) ............................ $1,140,000 $ 1,159,528 ------------ 1,159,528 ------------ Total Municipal Bonds (cost of $284,471,124) ........................... 298,800,942 ------------ SHORT TERM INVESTMENTS - 0.67% Federated Minnesota Municipal Money Market......... 2,018,000 2,018,000 ------------ Total Short Term Investments (cost 2,018,000) ................................. 2,018,000 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED -100.77% (cost of $286,489,124)** ......................... 300,818,942 LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.77%) ........................... (2,294,613) ------------ NET ASSETS APPLICABLE TO 28,143,438 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% ........... 298,524,329 ============ NET ASSET VALUE - MINNESOTA INSURED FUND A CLASS ($287,495,963 / 27,103,124 shares) ............... $10.61 ====== NET ASSET VALUE - MINNESOTA INSURED FUND B CLASS ($7,848,843 / 740,630 shares) .................... $10.60 ====== NET ASSET VALUE - MINNESOTA INSURED FUND C CLASS ($3,179,523 / 299,684 shares) .................... $10.61 ====== * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. ** Also cost for federal tax purposes. AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Subject to Alternative Minimum Tax Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT JUNE 30, 1997: Common Stock, $.01 par value, 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Minnesota Insured Fund A Class 1,000,000,000 shares allocated to Minnesota Insured Fund B Class 1,000,000,000 shares allocated to Minnesota Insured Fund C Class ............................ $291,981,660 Accumulated overdistributed net investment income .............................. (83,132) Accumulated net realized loss on investments ................................... (7,704,017) Net unrealized gain on investments ............................................. 14,329,818 ------------ Total Net Assets ............................................................... $298,524,329 ============
See accompanying notes DELAWARE-VOYAGEUR TAX-FREE MINNESOTA INTERMEDIATE FUND STATEMENT OF NET ASSETS JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS - 97.01% GENERAL OBLIGATION BONDS - 2.38% Olmstead County Resource Recovery Series A 5.90% 02/01/05 ........................................ $1,175,000 $1,232,903 Western Lake Superior Sanitation District 6.10% 10/01/00 ........................................ 225,000 229,975 ---------- 1,462,878 ---------- HIGHER EDUCATION REVENUE BONDS - 6.12% Minnesota Higher Education Facility Authority Augsburg Series 4F2 5.75% 05/01/16..................... 3,700,000 3,767,266 ----------- 3,767,266 ----------- HOSPITAL REVENUE BONDS - 10.11% Furgus Falls Health Care Facility Broer Memorial Home Project 6.20% 11/01/05 ........................... 100,000 101,285 Furgus Falls Health Care Facility Broer Memorial Home Project 6.30% 11/01/06 ........................... 200,000 202,792 Furgus Falls Health Care Facility Broer Memorial Home Project 6.40% 11/01/07 ........................... 200,000 202,778 Furgus Falls Health Care Facility Broer Memorial Home Project 6.60% 11/01/09 ........................... 240,000 243,302 Furgus Falls Health Care Facility Broer Memorial Home Project 6.70% 11/01/10 ........................... 260,000 263,562 Maplewood Healthcare Facility Healtheast 5.70% 11/15/02 ........................................ 1,000,000 1,007,260 Maplewood Healthcare Facility Healtheast 5.95% 11/15/06 ........................................ 2,200,000 2,217,160 Minneapolis Health Care Facility Jones-Harrison Project 8.35% 09/01/21 ................................ 905,000 968,079 Rochester Nursing Home & Multifamily Housing Revenue Samaritan Bethany, Inc. 5.60% 05/01/02 ........................................ 200,000 201,830 Rochester Nursing Home & Multifamily Housing Revenue Samaritan Bethany, Inc. 5.80% 05/01/03 ........................................ 250,000 252,278 Rochester Nursing Home & Multifamily Housing Revenue Samaritan Bethany, Inc. 6.00% 05/01/04 ........................................ 300,000 302,718 Rochester Nursing Home & Multifamily Housing Revenue Samaritan Bethany, Inc. 6.10% 05/01/05 ........................................ 250,000 252,260 ---------- 6,215,304 ---------- HOUSING REVENUE BONDS - 3.04% Burnsville Multifamily Housing Revenue Burnsville Apts. Project (LOC: TCF) 7.00% 09/01/19 ........................................ 580,000 582,655 Minnesota HFA Single Family Mortgage Revenue Series C 6.30% 01/01/99 ............................... 70,000 70,717 Oakdale, Minnesota Housing-Oak Meadows Project 6.50% 04/01/10 ........................................ 295,000 297,926
1997 semi-annual report 19 DELAWARE-VOYAGEUR TAX-FREE MINNESOTA INTERMEDIATE FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Oakdale, Minnesota Housing-Oak Meadows Project 6.20% 04/01/07......................................... $ 150,000 $ 151,511 Oakdale, Minnesota Housing-Oak Meadows 6.30% 04/01/08......................................... 260,000 262,605 St. Paul HRA Minnesota Public Radio, (LOC: First Bank) 6.40% 06/01/98................................... 300,000 304,050 St. Paul HRA Minnesota Public Radio, (LOC: First Bank) 6.60% 06/01/99................................... 100,000 102,217 St. Paul Housing and Redevelopment Single Family Mortgage 6.90% 12/01/21 (FNMA)......................... 95,000 99,951 ---------- 1,871,632 ---------- INDUSTRIAL DEVELOPMENT REVENUE BOND - 17.66% Brooklyn Center CDR Brookdale Association 5.70% 12/01/07 (NWNL GTY).............................. 1,000,000 1,039,640 Duluth Gross Revenue Bond-Duluth Entertainment Project 5.75% 12/01/97................................. 260,000 261,394 Duluth Gross Revenue Bond-Duluth Entertainment Project 6.00% 12/01/98................................. 275,000 279,241 Duluth Gross Revenue Bond-Duluth Entertainment Project 7.00% 12/01/03................................. 1,250,000 1,355,675 Duluth Gross Revenue Rec. Facility Duluth Entertainment 7.30% 12/01/06........................... 250,000 277,360 Metropolitan Council HHH Metrodome Sports Facility Revenue 1992 6.00% 10/01/09................... 3,520,000 3,659,850 Minnesota Public Facilities Authority Revenue Series A 6.55% 03/01/03................................ 1,720,000 1,876,038 St. Paul Minnesota CDR Fort Rd Medical 7.50% 09/01/02 (ASSET GTY)............................. 2,000,000 2,109,860 ---------- 10,859,058 ---------- LEASE/CERTIFICATES OF PARTICIPATION - 3.75% Beltrami County Housing & Redevelopment Authority Revenue 5.70% 02/01/06....................... 315,000 324,945 Beltrami County Housing & Redevelopment Authority Revenue 5.80% 02/01/07....................... 335,000 345,536 Beltrami County Housing & Redevelopment Authority Revenue 5.90% 02/01/08....................... 355,000 366,122 Beltrami County Housing & Redevelopment Authority Revenue 6.00% 02/01/09....................... 380,000 391,860 Beltrami County Housing & Redevelopment Authority Revenue 6.00% 02/01/10....................... 405,000 415,121 Beltrami County Housing & Redevelopment Authority Revenue 6.10% 02/01/11...................... 430,000 442,035 Red Wing Pottery Project 7.75% 12/15/97................. 18,402 18,402 ---------- 2,304,021 ---------- *PRE-REFUNDED BONDS - 43.15% Austin Independent School District #492 6.88% 02/01/12 (MBIA)(Escrowed to maturity)........................... 1,205,000 1,291,555 Braham Independent School District #314 6.30% 02/01/19 (AMBAC) (Escrowed to maturity)................................. 3,015,000 3,175,066
DELAWARE-VOYAGEUR TAX-FREE MINNESOTA INTERMEDIATE FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) *PRE-REFUNDED BONDS (CONTINUED) Duluth EDU St. Mary's Hospital 7.90% 02/15/98 (Escrowed to maturity).................. $ 250,000 $ 256,155 Duluth EDU St. Mary's Hospital 7.90% 02/15/99 (Escrowed to maturity).................. 150,000 158,793 Eden Valley Watkins Independent School District #463 6.55% 02/01/11 (FSA) (Escrowed to maturity)................................. 250,000 268,625 Eden Valley Watkins Independent School District #463 6.60% 02/01/16 (FSA) (Escrowed to maturity)................................. 615,000 662,072 Mankato Independent School District #77 6.35% 02/01/13 (FSA) (Escrowed to maturity)................................. 2,570,000 2,740,520 Minneapolis/St. Paul HealthOne Series B 7.55% 08/15/00 (Escrowed to maturity).................. 325,000 354,884 Minneapolis/St. Paul HealthOne Series C 7.45% 08/15/99 (Escrowed to maturity).................. 400,000 426,372 Minnesota State 6.25% 08/1/10-02........................ 4,000,000 4,312,520 Olmstead County 6.85% 02/1/02-01........................ 800,000 863,912 Olmstead County 6.90% 02/1/03-01........................ 900,000 973,377 Olmstead County 6.95% 02/1/04-01........................ 950,000 1,029,012 St. Cloud Hospital Facility Revenue 7.00% 07/1/20-01 (AMBAC)............................... 2,740,000 3,043,345 St. Louis Park Methodist Hospital 7.25% 07/1/15-00 (AMBAC)............................... 3,500,000 3,842,580 Waconia Independent School District #110 6.40% 02/01/15 (FGIC) (Escrowed to maturity)................................. 3,000,000 3,131,940 ----------- 26,530,728 ----------- POWER AUTHORITY REVENUE BONDS - 5.70% Eveleth IDR for Minnesota Power And Light Company 6.13% 01/01/04................................. 2,500,000 2,606,500 Northern Minnesota Municipal Power Agency 7.20% 01/01/99......................................... 860,000 896,232 ----------- 3,502,732 ----------- OTHER REVENUE BONDS - 5.09% Hibbing Economic Development Authority Revenue 5.40% 02/01/03......................................... 1,180,000 1,172,660 Hibbing Economic Development Authority Revenue 6.10% 02/01/08......................................... 650,000 647,108 Richfield Shoppes CDR-Richfield Shoppes Project 7.50% 10/01/04......................................... 1,185,000 1,309,259 ----------- 3,129,027 ----------- Total Municipal Bonds (cost of $57,570,194).................................. 59,642,646 ----------- SHORT TERM INVESTMENTS - 1.23% Federated Minnesota Municipal Money Market 3.75%.................................................. 753,000 753,000 ----------- Total Short Term Investments (cost $753,000)........................................ 753,000 -----------
20 1997 semi-annual report DELAWARE-VOYAGEUR TAX-FREE MINNESOTA INTERMEDIATE FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- MARKET VALUE ------------- TOTAL MARKET VALUE OF SECURITIES OWNED - 98.24% (cost of $58,323,194)**................................................... $60,395,646 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.76%................................................ 1,082,897 ----------- NET ASSETS APPLICABLE TO 5,596,428 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00%.................................... $61,478,543 =========== NET ASSET VALUE - TAX FREE MINNESOTA INTERMEDIATE FUND A CLASS ($59,541,342 / 5,420,131 shares)............................. $10.99 ====== NET ASSET VALUE - TAX FREE MINNESOTA INTERMEDIATE FUND B CLASS ($741,739 / 67,483 shares)................................... $10.99 ====== NET ASSET VALUE - TAX FREE MINNESOTA INTERMEDIATE FUND C CLASS ($1,195,462 / 108,814 shares)................................ $10.99 ======
- -------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. ** Also cost for federal tax purposes. AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Subject to Alternative Minimum Tax ASSET GTY - Insured by the Asset Guaranty Insurance Company Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association NWNL GTY - Insured by the Northwestern National Life Insurance Company
- --------------------------------------------------------------------------------------------- MARKET VALUE ------------- COMPONENTS OF NET ASSETS AT JUNE 30, 1997: 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 1,000,000,000 shares allocated to Tax Free Minnesota Intermediate Fund C Class.................................... $59,854,878 Accumulated overdistributed net investment income....................... (9,332) Accumulated net realized loss on investments............................ (439,455) Net unrealized gain on investments...................................... 2,072,452 ----------- Total Net Assets........................................................ $61,478,543 ===========
See accompanying notes DELAWARE-VOYAGEUR MINNESOTA HIGH YIELD FUND STATEMENT OF NET ASSETS JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS - 100.85% GENERAL OBLIGATION BONDS - 1.87% Esko Independent School District #99 5.75% 04/01/17 (FSA)................................... $ 100,000 $ 101,712 Inver Grove Heights Series A 5.75% 02/01/13......................................... 100,000 102,097 Stewartville Independent School District Series A 5.75% 02/01/12......................................... 100,000 103,340 Waconia Independent School District Series 93A 5.45% 02/01/15 (FSA)................................... 100,000 100,159 ---------- 407,308 ---------- HIGHER EDUCATION REVENUE BONDS - 5.10% Minnesota State Higher Education Facility Macalaster College 4C 5.50% 03/01/12................... 100,000 101,615 Minnesota State Higher Education Facility St. Mary's College 3Q 6.15% 10/01/23....................... 900,000 908,577 Minnesota State University System Revenue Bonds 93A 6.10% 06/30/23............................... 100,000 101,715 ---------- 1,111,907 ---------- HOSPITAL REVENUE BONDS - 37.98% Cambridge Healthcare Facility Revenue-Grandview Christian Home 7.25% 09/01/26.......................... 125,000 126,525 Cannon Falls Nursing Home-Franciscan Health Community Project 7.25% 07/01/21....................... 100,000 101,037 Duluth St. Francis Health Care Facility 6.75% 12/01/17......................................... 325,000 338,315 Fergus Falls Health Care Facility Revenue- Lake Region Hospital 6.50% 09/01/18.................... 750,000 772,868 Glencoe Health Care Revenue 6.40% 12/01/15......................................... 275,000 273,510 Little Canada Senior Facility Residence 1992-Pres. Home 7.25% 07/01/12.................................... 250,000 258,853 Mankato Health Facilities Revenue Series A- Lutheran Homes 6.875% 10/01/26......................... 300,000 302,505 Minneapolis Health Care-American Baptist Homes 8.70% 11/01/09......................................... 150,000 165,965 Minneapolis, Minnesota Housing & Health Care Facility Revenue (Augustana Chapel View Homes) 6.50% 06/01/17......................................... 1,370,000 1,363,834 Minnesota Agricultural & Economic Development Health Care Systems-Fairview Hospital-A 5.50% 11/15/17......................................... 1,000,000 992,660 Robbinsdale North Memorial Medical 5.50% 05/15/23 (AMBAC)................................. 100,000 98,099 Rochester Health Care Facilities Revenue 7.874% 11/15/15........................................ 1,500,000 1,608,254
1997 semi-annual report 21 DELAWARE-VOYAGEUR MINNESOTA HIGH YIELD FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) HOSPITAL REVENUE BONDS (CONTINUED) Springfield St. John's Lutheran Home Revenue 8.50% 11/01/19......................................... $ 150,000 $ 158,732 St. Paul Housing and Redevelopment Hospital Health East Series B 6.625% 11/01/17................... 500,000 519,195 St. Paul Housing and Redevelopment Hospital Health East Series A 6.63% 11/01/17.................... 250,000 259,598 Waconia Good Samaritan Housing and Redevelopment 6.00% 06/01/14........................... 660,000 664,910 Wadena County Health Care Facility 7.75% 09/01/24......................................... 250,000 267,123 ---------- 8,271,983 ---------- HOUSING REVENUE BONDS - 31.44% Brooklyn Center Four Court Multifamily Housing 7.50% 06/01/25......................................... 370,000 373,563 Carver Multifamily Housing Lake Grace 6.25% 07/01/28......................................... 335,000 334,997 Carver Multifamily Housing Lake Grace 8.00% 07/01/28......................................... 200,000 199,998 Chanhassen Multifamily Housing Heritage Park 6.20% 07/01/30......................................... 300,000 305,928 Eden Prairie Multifamily Housing Subordinated- Tanager Creek 8.00% 06/20/31........................... 785,000 799,860 Minneapolis Multifamily Housing Olson Townhomes 6.00% 12/01/19......................................... 800,000 800,464 Minneapolis-Nicollet Multifamily Housing 6.00% 12/01/19......................................... 300,000 304,686 Minnesota Housing Finance Authority Single Family Mortgage Series E 6.25% 01/01/23....................... 100,000 102,081 Minnesota Housing Finance Authority Single Family Housing 5.875% 01/01/17................................ 100,000 101,418 Minnetonka Multifamily Housing Beacon Hill 7.55% 06/01/19......................................... 200,000 210,156 New Brighton Multifamily Polynesian Village 7.60% 04/01/25......................................... 300,000 305,538 Oakdale, Minnesota Housing-Oak Meadows Project 6.75% 04/01/15......................................... 1,500,000 1,514,700 St. Anthony Multifamily Housing Chandler 6.05% 11/20/16 (GNMA).................................. 135,000 138,561 St. Louis Park Multifamily Mortgage Revenue 5.50% 11/01/13......................................... 125,000 123,269
DELAWARE-VOYAGEUR MINNESOTA HIGH YIELD FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Stillwater Multifamily Housing Cottages 6.75% 11/01/11............................... $ 205,000 $ 205,246 Stillwater Multifamily Housing Cottages 7.00% 11/01/27............................... 340,000 342,329 Stillwater Multifamily Housing Cottages 7.00% 11/01/16............................... 680,000 684,658 ---------- 6,847,452 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 1.33% Red Wing IDR Kmart (First Mortgage) 5.50% 07/01/08............................... 300,000 290,154 ---------- 290,154 ---------- LEASE/CERTIFICATES OF PARTICIPATION - 2.75% Beltrami County 6.10% 02/01/12................ 460,000 471,449 Rice County 6.00% 12/01/21.................... 125,000 127,420 ---------- 598,869 ---------- POWER AUTHORITY REVENUE BONDS - 5.58% Bass Brook PCR for Minnesota Power and Light Revenue 6.00% 07/01/22....................... 805,000 813,219 Southern Minnesota Municipal Power Agency 5.75% 01/01/18 (FGIC)........................ 100,000 101,212 Western Municipal Power Agency Revenue 6.125% 01/01/16.............................. 300,000 300,639 ---------- 1,215,070 ---------- OTHER REVENUE BONDS - 14.80% Hibbing Economic Development Authority 6.40% 02/01/12............................... 530,000 531,468 Minneapolis, Minnesota Community Development Agency (Common Board Fund-Series 2) 6.20% 06/01/17............................... 750,000 767,835 Minneapolis, Minnesota Community Development Agency Supported Development Revenue Ltd. Tax-Series 4 6.20% 06/01/17.................. 1,055,000 1,069,727 Puerto Rico 5.375% 07/01/25................... 500,000 481,455 Woodbury Golf Course Revenue 6.75% 02/01/22............................... 365,000 374,516 ---------- 3,225,001 ---------- Total Municipal Bonds (cost $21,641,411)........................... 21,967,744 ---------- SHORT TERM INVESTMENTS - 0.04% Federated Minnesota Municipal Money Market.... 9,000 9,000 ---------- Total Short Term Investments (cost $9,000)................................ 9,000 ----------
22 1997 semi-annual report DELAWARE-VOYAGEUR MINNESOTA HIGH YIELD FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- MARKET VALUE ------------- TOTAL MARKET VALUE OF SECURITIES OWNED -100.89% (cost of $21,650,411)**.......................................... $21,976,744 LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.89%)....................................... (194,806) ----------- NET ASSETS APPLICABLE TO 2,124,637 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00%........................... $21,781,938 =========== NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND A CLASS ($13,399,482 / 1,307,286 shares).................... $10.25 ====== NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND B CLASS ($6,150,313 / 599,611 shares)....................... $10.26 ====== NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND C CLASS ($2,232,143 / 217,741 shares)....................... $10.25 ======
- --------------- ** Also cost for federal tax purposes. 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 DELAWARE-VOYAGEUR MINNESOTA HIGH YIELD FUND STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------------------- MARKET VALUE ------------- COMPONENTS OF NET ASSETS AT JUNE 30, 1997: 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 Bond Fund C Class................. $21,513,985 Accumulated overdistributed net investment income.................... (43,440) Accumulated net realized loss on investments......................... (14,940) Net unrealized gain on investments................................... 326,333 ----------- Total Net Assets..................................................... $21,781,938 ===========
See accompanying notes 1997 semi-annual report 23 DELAWARE-VOYAGEUR FUNDS STATEMENT OF OPERATIONS SIX MONTHS ENDING JUNE 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------- TAX-FREE MINNESOTA TAX-FREE MINNESOTA HIGH YIELD MINNESOTA MINNESOTA INTERMEDIATE MUNICIPAL FUND INSURED FUND FUND BOND FUND ------------------------------------------------------------------- INVESTMENT INCOME: Interest ................................................ $13,239,684 $9,068,236 $1,841,638 $466,986 ----------- ---------- ---------- -------- 13,239,684 9,068,236 1,841,638 466,986 ----------- ---------- ---------- -------- EXPENSES: Management fees ......................................... 1,060,030 751,534 125,587 32,709 Dividend disbursing, transfer agent and custodian fees and expenses ...................................... 305,337 187,143 83,860 9,850 Distribution expense .................................... 566,470 414,741 85,237 43,077 Registration fees ....................................... 5,567 12,994 4,435 4,023 Reports and statements to shareholders .................. 43,863 32,295 6,611 1,502 Accounting fees and salaries ............................ 39,241 26,719 5,769 1,886 Professional fees ....................................... 22,943 15,361 7,906 4,058 Directors' fees ......................................... 7,724 5,353 1,514 375 Amortization of organization expenses ................... -- -- -- 688 Other ................................................... 9,240 8,840 1,136 557 ----------- ---------- ---------- -------- 2,060,415 1,454,980 322,055 98,725 Less expenses waived or absorbed ........................ (109,324) (32,390) (17,547) (57,585) ----------- ---------- ---------- -------- Total net expenses ...................................... 1,951,091 1,422,590 304,548 41,140 ----------- ---------- ---------- -------- NET INVESTMENT INCOME ................................... 11,288,593 7,645,646 1,537,130 425,846 ----------- ---------- ---------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments: ................ 1,223,541 299,259 349,808 (8,131) Net change in unrealized appreciation (depreciation) of investments: ....................................... 1,364,610 37,541 (367,257) 237,472 ----------- ---------- ---------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ......................................... 2,588,151 336,800 (17,449) 229,341 ----------- ---------- ---------- -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................................ $13,876,744 $7,982,446 $1,519,681 $655,187 =========== ========== ========== ========
See accompanying notes 24 1997 semi-annual report THE DELAWARE-VOYAGEUR FUNDS STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------------- TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND ------------------------ ------------------------ SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED 6/30/97 12/31/96 6/30/97 12/31/96 (UNAUDITED) (UNAUDITED) INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income .................. $11,288,593 $22,746,587 $7,645,646 $14,894,385 Net realized gain (loss) on investments............................ 1,223,541 515,784 299,259 293,417 Net change in unrealized appreciation (depreciation) of investments ......... 1,364,610 (8,943,154) 37,541 (4,586,047) ----------- ----------- ----------- ----------- Net increase in net assets resulting from operations.............. 13,876,744 14,319,217 7,982,446 10,601,755 ----------- ----------- ----------- ----------- DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income: A Class................................ (11,222,128) (22,406,019) (7,563,064) (14,451,758) B Class................................ (163,061) (203,627) (157,051) (248,884) C Class................................ (64,076) (120,510) (69,894) (136,712) ----------- ----------- ----------- ----------- (11,449,265) (22,730,156) (7,790,009) (14,837,354) ----------- ----------- ----------- ----------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class................................ 18,784,413 28,935,567 7,871,374 19,743,497 B Class................................ 1,707,725 3,893,971 1,354,915 2,213,483 C Class................................ 332,468 1,575,266 470,076 962,058 Net asset value of shares issued in connection with the acquisition of Great Hall Minnesota Insured Tax- Exempt Fund (note 5): A Class................................ N/A N/A N/A 23,310,124 Net asset value of shares issued upon reinvestment of dividends from net investment income: A Class................................ 8,047,582 14,510,299 5,793,134 10,183,091 B Class................................ 132,545 159,491 131,960 198,159 C Class................................ 60,502 95,792 63,356 118,019 ----------- ----------- ---------- ----------- 29,065,235 49,170,386 15,684,815 56,728,431 Cost of shares repurchased: ----------- ----------- ---------- ----------- A Class................................ (43,004,687) (61,934,519) (31,224,261) (51,938,099) B Class................................ (405,805) (500,598) (465,103) (213,150) C Class................................ (972,106) (867,298) (483,850) (1,076,363) ----------- ----------- ----------- ----------- (44,382,598) (63,302,415) (32,173,214) (53,227,612) ----------- ----------- ----------- ----------- Increase (Decrease) in assets derived from capital share transactions........ (15,317,363) (14,132,029) (16,488,399) 3,500,819 ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS............................. (12,889,884) (22,542,968) (16,295,962) (734,780) NET ASSETS: Beginning of period .................... 437,696,176 460,239,144 314,820,291 315,555,071 ----------- ----------- ----------- ----------- End of period........................... $424,806,292 $437,696,176 298,524,329 $314,820,291 ----------- ----------- ----------- -----------
RESTUBBD TABLE
- ------------------------------------------------------------------------------------------------ TAX-FREE MINNESOTA MINNESOTA HIGH YIELD INTERMEDIATE FUND MUNICPAL BOND FUND ------------------------ -------------------------- SIX MONTHS SIX MONTHS PERIOD FROM ENDED YEAR ENDED ENDED 6/4/96* 6/30/97 12/31/96 6/30/97 TO 12/31/96 (UNAUDITED) (UNAUDITED) INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income .................. $1,537,130 $3,281,209 $425,846 $145,301 Net realized gain (loss) on investments............................ 349,808 58,144 (8,131) (6,809) Net change in unrealized appreciation (depreciation) of investments ......... (367,257) (1,060,245) 237,472 88,861 ----------- ----------- ----------- ---------- Net increase in net assets resulting from operations.............. 1,519,681 2,279,108 655,187 227,353 ----------- ----------- ----------- ---------- DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income: A Class................................ (1,514,123) (3,233,948) (298,217) (88,229) B Class................................ (11,423) (7,825) (133,717) (41,302) C Class................................ (26,018) (34,381) (40,555) (13,370) ----------- ----------- ----------- ---------- (1,551,564) (3,276,154) (472,489) (142,901) ----------- ----------- ----------- ---------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class................................ 3,326,788 8,813,544 7,377,187 7,102,907 B Class................................ 351,003 372,719 3,446,458 2,696,693 C Class................................ 496,744 862,998 1,328,876 948,440 Net asset value of shares issued in connection with the acquisition of Great Hall Minnesota Insured Tax- Exempt Fund (note 5): A Class................................ N/A N/A N/A N/A Net asset value of shares issued upon reinvestment of dividends from net investment income: A Class................................ 1,177,390 2,225,412 188,566 43,874 B Class................................ 11,228 5,862 68,067 13,064 C Class................................ 27,165 27,628 34,444 7,823 ----------- ----------- ----------- ---------- 5,390,318 12,308,163 12,443,598 10,812,801 Cost of shares repurchased: ----------- ----------- ----------- ---------- A Class................................ (10,952,902) (16,425,703) (341,241) (1,124,003) B Class................................ (30,531) 0 (157,504) 0 C Class................................ (466,350) (441,733) (51,164) (67,699) ----------- ----------- ----------- ---------- (11,449,783) (16,867,436) (549,909) (1,191,702) ----------- ----------- ----------- ---------- Increase (Decrease) in assets derived from capital share transactions........ (6,059,465) (4,559,273) 11,893,689 9,621,099 ----------- ----------- ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS............................. (6,091,348) (5,556,319) 12,076,387 9,705,551 NET ASSETS: Beginning of period .................... 67,569,891 73,126,210 9,705,551 0 ----------- ----------- ----------- ---------- End of period........................... $61,478,543 $67,569,891 $21,781,938 $9,705,551 ----------- ----------- ----------- ----------
- ---------- * Commencement of operations. See accompanying notes 1997 semi-annual report 25 THE DELAWARE-VOYAGEUR FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
TAX-FREE MINNESOTA FUND - A CLASS ----------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 (UNAUDITED) Net asset value, beginning of period ......... $ 12.40 $ 12.63 $ 11.33 $ 12.85 $ 12.21 $ 12.07 Income from investment operations: Net investment income (loss) ................ 0.32 0.63 0.62 0.63 0.64 0.70 Net realized and unrealized gain from investments ................................ 0.08 (0.23) 1.32 (1.48) 0.87 0.23 --------- --------- --------- --------- --------- --------- Net increase (decrease) in net assets from investment operations ...................... 0.40 0.40 1.94 (0.85) 1.51 0.93 --------- --------- --------- --------- --------- --------- Less dividends and distributions: Dividends from net investment income(1)...... (0.32) (0.63) (0.64) (0.61) (0.64) (0.70) Distributions from net realized gain on security transactions ...................... -- -- -- (0.05) (0.23) (0.09) In excess of net realized gains ............. -- -- -- (0.01) -- -- Total dividends and distributions ........... (0.32) (0.63) (0.64) (0.67) (0.87) (0.79) --------- --------- --------- --------- --------- --------- Net asset value, end of period ............... $ 12.48 $ 12.40 $ 12.63 $ 11.33 $ 12.85 $ 12.21 ========= ========= ========= ========= ========= ========= Total Return(2) ............................. 3.37% 3.33% 17.49% (6.73%) 12.70% 7.97% Ratios and supplemental data: Net assets, end of period (000 omitted) $414,564 $428,380 $455,220 $406,497 $458,145 $331,314 Ratio of expenses to average net assets(3) .. 0.91%(4) 0.92% 0.93% 0.90% 1.02% 0.96% Ratio of expenses to average net assets prior to expense limitation ................ 0.96%(4) 0.92% 0.93% 0.90% 1.02% 1.04% Ratio of net investment income to average net assets ................................. 5.33%(4) 5.13% 5.11% 5.29% 5.02% 5.73% Ratio of net investment income to average net assets prior to expense limitation ......... 5.28%(4) 5.13% 5.11% 5.29% 5.02% 5.65% Portfolio turnover .......................... 19.46%(4) 27.67% 50.84% 24.26% 31.77% 23.60%
- --------------------- (1) For federal income tax purposes, all of the net investment income distributions were derived from interest on securities exempt from federal income tax. (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) For the years ended December 31, 1995 and 1996, the expense ratio reflects the effect of gross expenses attributable to earnings credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted. (4) Annualized. 26 1997 SEMI-ANNUAL REPORT FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
TAX-FREE MINNESOTA FUND - B CLASS TAX-FREE MINNESOTA FUND - C CLASS ------------------------------------ ---------------------------------------------- SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM ENDED YEAR ENDED 3/11/95(1) ENDED YEAR ENDED YEAR ENDED 5/4/94(1) 6/30/97 12/31/96 TO 12/31/95 6/30/97 12/31/96 12/31/95 TO 12/31/94 (UNAUDITED) (UNAUDITED) Net asset value, beginning of period ......... $12.40 $12.62 $11.90 $12.41 $12.63 $11.33 $11.96 Income from investment operations: Net investment income........................ 0.28 0.56 0.45 0.27 0.54 0.53 0.34 Net realized and unrealized gain (loss) from investments................................. 0.08 (0.22) 0.71 0.07 (0.22) 1.32 (0.61) ------ ------ ------ ------ ------ ------ ------ Net increase (decrease) in net assets from investment operations....................... 0.36 0.34 1.16 0.34 0.32 1.85 (0.27) ------ ------ ------ ------ ------ ------ ------ Less dividends and distributions: Dividends from net investment income(2)...... (0.28) (0.56) (0.44) (0.27) (0.54) (0.55) (0.32) Distributions from net realized gain on security transactions....................... -- -- -- -- -- -- (0.04) Total dividends and distributions ........... (0.28) (0.56) (0.44) (0.27) (0.54) (0.55) (0.36) ------ ------ ------ ------ ------ ------ ------ Net asset value, end of period ............... $12.48 $12.40 $12.62 $12.48 $12.41 $12.63 $11.33 ====== ====== ====== ====== ====== ====== ====== Total Return(3)............................... 3.05% 2.83% 9.95% 2.87% 2.64% 16.62% (2.30%) Ratios and supplemental data: Net assets, end of period (000 omitted) ..... $7,725 $6,233 $2,701 $2,517 $3,083 $2,319 $1,061 Ratio of expenses to average net assets(4)... 1.51%(5) 1.50% 1.38%(5) 1.66%(5) 1.67% 1.67% 1.72%(5) Ratio of expenses to average net assets prior to expense limitation................. 1.71%(5) 1.67% 1.63%(5) 1.71%(5) 1.67% 1.67% 1.72%(5) Ratio of net investment income to average net assets.................................. 4.73%(5) 4.53% 4.43%(5) 4.58%(5) 4.38% 4.33% 4.56%(5) Ratio of net investment income to average net assets prior to expense limitation ......... 4.53%(5) 4.36% 4.18%(5) 4.53%(5) 4.38% 4.33% 4.56%(5) Portfolio turnover........................... 19.46%(5) 27.67% 50.84% 19.46%(5) 27.67% 50.84% 24.26%
- --------------------- (1) Commencement of operations. (2) For federal income tax purposes, all of the net investment income distributions were derived from interest on securities exempt from federal income tax. (3) 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. (4) For the years ended December 31, 1995 and 1996, the expense ratio reflects the effect of gross expenses attributable to earnings credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted. (5) Annualized. 1997 semi-annual report 27 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
MINNESOTA INSURED FUND - A CLASS ---------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 (UNAUDITED) Net asset value, beginning of period ........ $ 10.60 $ 10.73 $ 9.61 $ 11.02 $ 10.27 $ 10.07 Income from investment operations: Net investment income ....................... 0.26 0.52 0.51 0.54 0.54 0.59 Net realized and unrealized gain (loss) from investments ............................... 0.01 (0.13) 1.14 (1.39) 0.84 0.25 --------- --------- --------- --------- --------- --------- Net increase (decrease) in net assets from investment operations ..................... 0.27 0.39 1.65 (0.85) 1.38 0.84 --------- --------- --------- --------- --------- --------- Less dividends and distributions: Dividends from net investment income(1) .... (0.26) (0.52) (0.53) (0.52) (0.54) (0.59) Distributions from net realized gain on security transactions ............. -- -- -- (0.04) (0.09) (0.05) --------- --------- --------- --------- --------- --------- Total dividends and distributions .......... (0.26) (0.52) (0.53) (0.56) (0.63) (0.64) --------- --------- --------- --------- --------- --------- Net asset value, end of period .............. $ 10.61 $ 10.60 $ 10.73 $ 9.61 $ 11.02 $ 10.27 ========= ========= ========= ========= ========= ========= Total Return(2) ............................ 2.70% 3.75% 17.52% (7.88%) 13.80% 8.57% Ratios and supplemental data: Net assets, end of period (000 omitted) .... $287,496 $304,877 $307,734 $284,132 $311,187 $162,728 Ratio of expenses to average net assets(3) . 0.92%(4) 0.92% 0.87% 0.61% 0.70% 0.37% Ratio of expenses to average net assets prior to expense limitation ..................... 0.94%(4) 0.92% 0.92% 0.94% 1.02% 1.06% Ratio of net investment income to average net assets ..................... 5.11%(4) 4.93% 4.92% 5.29% 4.93% 5.66 Ratio of net investment income to average net assets prior to expense limitation .... 5.09%(4) 4.93% 4.87% 4.96% 4.61% 4.97% Portfolio turnover ......................... 29.41%(4) 14.04% 53.72% 24.75% 18.25% 14.11%
- ---------- (1) For federal income tax purposes, all of the net investment income distributions were derived from interest on securities exempt from federal income tax. (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) For the years ended December 31, 1995 and 1996, the expense ratio reflects the effect of gross expenses attributable to earnings credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted. (4) Annualized. 28 1997 semi-annual report FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
MINNESOTA INSURED FUND - B CLASS MINNESOTA INSURED FUND - C CLASS --------------------------------------------------------------------------------------- SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM ENDED YEAR ENDED 3/7/95(1) ENDED YEAR ENDED YEAR ENDED 5/4/94(1) 6/30/97 12/31/96 TO 12/31/95 6/30/97 12/31/96 12/31/95 TO 12/31/94 (UNAUDITED) (UNAUDITED) Net asset value, beginning of period ....... $10.58 $10.72 $10.14 $10.60 $10.73 $ 9.61 $ 10.23 Income from investment operations: Net investment income ...................... 0.22 0.45 0.38 0.22 0.44 0.43 0.30 Net realized and unrealized gain (loss) from investments ............................... 0.02 (0.14) 0.58 0.01 (0.13) 1.14 (0.62) ------ ------ ------ ------ ------ -------- ------- Net increase (decrease) in net assets from investment operations ..................... 0.24 0.31 0.96 0.23 0.31 1.57 (0.32) ------ ------ ------ ------ ------ -------- ------- Less dividends and distributions: Dividends from net investment income(2) .... (0.22) (0.45) (0.38) (0.22) (0.44) (0.45) (0.28) Distributions from net realized gain on security transactions ..................... -- -- -- -- -- -- (0.02) ------ ------ ------ ------ ------ -------- ------- Total dividends and distributions .......... (0.22) (0.45) (0.38) (0.22) (0.44) (0.45) (0.30) ------ ------ ------ ------ ------ -------- ------- Net asset value, end of period ............. $10.60 $10.58 $10.72 $10.61 $10.60 $ 10.73 $ 9.61 ====== ====== ====== ====== ====== ======== ======= Total Return(3) ........................... 2.40% 3.03% 9.59% 2.30% 2.98% 16.63% (3.14%) Ratios and supplemental data: Net assets, end of period (000 omitted) .... $7,849 $6,817 $4,655 $3,180 $3,126 $ 3,166 $ 1,525 Ratio of expenses to average net assets(4) . 1.67%(5) 1.56% 1.34%(5) 1.67%(5) 1.68% 1.66% 1.36%(5) Ratio of expenses to average net assets prior to expense limitation ............... 1.69%(5) 1.68% 1.64%(5) 1.69%(5) 1.68% 1.67% 1.68%(5) Ratio of net investment income to average net assets ................................ 4.36%(5) 4.29% 4.15%(5) 4.36%(5) 4.18% 4.11% 4.68%(5) Ratio of net investment income to average net assets prior to expense limitation .... 4.34%(5) 4.17% 3.85%(5) 4.34%(5) 4.18% 4.10% 4.36%(5) Portfolio turnover ......................... 29.41%(5) 14.04% 53.72% 29.41%(5) 14.04% 53.72% 24.75%
- --------- (1) Commencement of operations. (2) For federal income tax purposes, all of the net investment income distributions were derived from interest on securities exempt from federal income tax. (3) 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. (4) For the years ended December 31, 1995 and 1996, the expense ratio reflects the effect of gross expenses attributable to earnings credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted. (5) Annualized. 1997 semi-annual report 29 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
TAX-FREE MINNESOTA INTERMEDIATE FUND - A CLASS ---------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 (UNAUDITED) Net asset value, beginning of period ........ $ 10.99 $ 11.14 $ 10.50 $ 11.16 $ 10.83 $ 10.69 Income from investment operations: Net investment income ....................... 0.26 0.51 0.51 0.45 0.47 0.51 Net realized and unrealized gain (loss) from investments ................................ -- (0.15) 0.64 (0.66) 0.37 0.18 ------- ------- ------- ------- ------- ------- Net increase (decrease) in net assets from investment operations ...................... 0.26 0.36 1.15 (0.21) 0.84 0.69 ------- ------- ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income(1)...... (0.26) (0.51) (0.51) (0.45) (0.47) (0.51) Distributions from net realized gain on security transactions ................... -- -- -- -- (0.04) (0.04) ------- ------- ------- ------- ------- ------- Total dividends and distributions ........... (0.26) (0.51) (0.51) (0.45) (0.51) (0.55) ------- ------- ------- ------- ------- ------- Net asset value, end of period .............. $ 10.99 $ 10.99 $ 11.14 $ 10.50 $ 11.16 $ 10.83 ======= ======= ======= ======= ======= ======= Total Return(2) ............................ 2.48% 3.46% 11.00% (1.91%) 7.88% 6.62% Ratios and supplemental data: Net assets, end of period (000 omitted) ..... $59,541 $66,024 $72,405 $84,168 $75,374 $48,210 Ratio of expenses to average net assets(3) .. 0.95%(4) 0.89% 0.91% 0.92% 0.99% 1.09% Ratio of expenses to average net assets prior to expense limitation ....................... 1.00%(4) 0.89% 0.91% 0.92% 0.99% 1.09% Ratio of net investment income to average net assets ....................... 4.92%(4) 4.69% 4.61% 4.18% 4.18% 4.71% Ratio of net investment income to average net assets prior to expense limitation ..... 4.87%(4) 4.69% 4.61% 4.18% 4.18% 4.71% Portfolio turnover .......................... 8.39%(4) 28.18% 40.28% 42.06% 19.13% 25.56%
- ---------- (1) For federal income tax purposes, all of the net investment income distributions were derived from interest on securities exempt from federal income tax. (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) For the years ended December 31, 1995 and 1996, the expense ratio reflects the effect of gross expenses attributable to earnings credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted. (4) Annualized. 30 1997 semi-annual report FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
TAX-FREE TAX-FREE MINNESOTA INTERMEDIATE FUND - B CLASS MINNESOTA INTERMEDIATE FUND - C CLASS ------------------------------------- ------------------------------------------------- SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM ENDED YEAR ENDED 8/15/95(1) ENDED YEAR ENDED YEAR ENDED 4/30/94(1) 6/30/97 12/31/96 TO 12/31/95 6/30/97 12/31/96 12/31/95 TO 12/31/94 (UNAUDITED) (UNAUDITED) Net asset value, beginning of period ........ $10.99 $11.14 $10.95 $10.99 $11.13 $10.50 $10.74 Income from investment operations: Net investment income ....................... 0.22 0.44 0.17 0.22 0.43 0.42 0.24 Net realized and unrealized gain (loss) from investments ................................ -- (0.15) 0.19 -- (0.14) 0.63 (0.24) ------ ------ ------ ------ ------ ------ ------ Net increase in net assets from investment operations ...................... 0.22 0.29 0.36 0.22 0.29 1.05 -- ------ ------ ------ ------ ------ ------ ------ Less dividends and distributions: Dividends from net investment income(2) ..... (0.22) (0.44) (0.17) (0.22) (0.43) (0.42) (0.24) ------ ------ ------ ------ ------ ------ ------ Total dividends and distributions ........... (0.22) (0.44) (0.17) (0.22) (0.43) (0.42) (0.24) ------ ------ ------ ------ ------ ------ ------ Net asset value, end of period ............... $10.99 $10.99 $11.14 $10.99 $10.99 $11.13 $10.50 ====== ====== ====== ====== ====== ====== ====== Total Return(3)............................... 2.08% 2.74% 3.26% 2.08% 2.69% 10.18% (0.03%) Ratios and supplemental data: Net assets, end of period (000 omitted) ..... $ 742 $ 408 $ 27 $1,195 $1,137 $ 694 $ 341 Ratio of expenses to average net assets(4) .. 1.69%(5) 1.56% 1.30%(5) 1.70%(5) 1.64% 1.63% 1.71%(5) Ratio of expenses to average net assets prior to expense limitation ...................... 1.75%(5) 1.62% 1.55%(5) 1.75%(5) 1.64% 1.63% 1.71%(5) Ratio of net investment income to average net assets ...................... 4.17%(5) 3.99% 3.93%(5) 4.17%(5) 3.94% 3.82% 3.35%(5) Ratio of net investment income to average net assets prior to expense limitation ..... 4.11%(5) 3.93% 3.68%(5) 4.11%(5) 3.94% 3.82% 3.35%(5) Portfolio turnover .......................... 8.39%(5) 28.18% 40.28% 8.39%(5) 28.18% 40.28% 42.05%
- ------------------- (1) Commencement of operations. (2) For federal income tax purposes, all of the net investment income distributions were derived from interest on securities exempt from federal income tax. (3) 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. (4) For the years ended December 31, 1995 and 1996, the expense ratio reflects the effect of gross expenses attributable to earnings credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted. (5) Annualized. 1997 semi-annual report 31 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
MINNESOTA HIGH YIELD MINNESOTA HIGH YIELD MINNESOTA HIGH YIELD MUNICIPAL BOND FUND - A CLASS MUNICIPAL BOND FUND - B CLASS MUNICIPAL BOND FUND - C CLASS ----------------------------- ------------------------------ ----------------------------- SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM ENDED 6/4/96(1) ENDED 6/12/96(1) ENDED 6/7/96(1) 6/30/97 TO 12/31/96 6/30/97 TO 12/31/96 6/30/97 TO 12/31/96 (UNAUDITED) (UNAUDITED) (UNAUDITED) Net asset value, beginning of period ..... $ 10.18 $10.00 $10.19 $ 9.78 $ 10.18 $ 9.99 Income from investment operations: Net investment income .................... 0.29 0.35 0.26 0.29 0.26 0.30 Net realized and unrealized gain from investments ............................. 0.09 0.18 0.09 0.41 0.09 0.19 ------- ------ ------ ------ ------- ------ Net increase in net assets from investment operations ................... 0.38 0.53 0.35 0.70 0.35 0.49 ------- ------ ------ ------ ------- ------ Less dividends and distributions: Dividends from net investment income(2) .. (0.31) (0.35) (0.28) (0.29) (0.28) (0.30) ------- ------ ------ ------ ------- ------ Total dividends and distributions ........ (0.31) (0.35) (0.28) (0.29) (0.28) (0.30) ------- ------ ------ ------ ------- ------ Net asset value, end of period ............ $ 10.25 $10.18 $10.26 $10.19 $ 10.25 $10.18 ======= ====== ====== ====== ======= ====== Total Return(3)............................ 3.98% 5.40% 3.57% 7.29% 3.57% 5.02% Ratios and supplemental data: Net assets, end of period (000 omitted) .. $13,399 $6,068 $6,150 $2,738 $ 2,232 $ 900 Ratio of expenses to average net assets(4) 0.22%(5) 0.24%(5) 0.97%(5) 0.95%(5) 0.97%(5) 0.99%(5) Ratio of expenses to average net assets prior to expense limitation ............. 0.96%(5) 1.25%(5) 1.71%(5) 2.00%(5) 1.71%(5) 2.00%(5) Ratio of net investment income to average net assets ................... 5.72%(5) 5.78%(5) 4.98%(5) 5.14%(5) 4.98%(5) 4.90%(5) Ratio of net investment income to average net assets prior to expense limitation .. 4.98%(5) 4.77%(5) 4.24%(5) 4.09%(5) 4.24%(5) 3.89%(5) Portfolio turnover ....................... 51.36%(5) 14.97% 51.36%(5) 14.97% 51.36%(5) 14.97%
- ---------- (1) Commencement of operations. (2) For federal income tax purposes, all of the net investment income distributions were derived from interest on securities exempt from federal income tax. (3) 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. (4) For the years ended December 31, 1995 and 1996, the expense ratio reflects the effect of gross expenses attributable to earnings credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted. (5) Annualized. 32 1997 semi-annual report The Delaware-Voyageur Funds Notes To Financial Statements June 30, 1997 (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 Tax Free Funds, Inc.; 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 the Delaware-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, Inc. ("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-Voyageur 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 are accreted 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 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 Commencing May 1, 1997, and 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. The management fee rates are as follows: Tax-Free Minnesota Tax-Free Tax-Free Minnesota High Yield Minnesota Minnesota Intermediate Municipal Fund Insured Fund Fund Bond Fund --------- ----------- ------------ ---------- Management fee as a percentage of average daily net assets (per annum)................ 0.50% 0.50% 0.40% 0.65% DMC has elected to waive their fees and reimburse each Fund to the extent that annual operating expenses exclusive of 12b-1 distribution fees, taxes, interest, brokerage commissions and extraordinary expenses, exceed 0.66%, 0.67%, 0.71%, 0.05% of average daily net assets for the Tax-Free Minnesota Fund, Minnesota Insured Fund, Tax-Free Minnesota Intermediate Fund and Minnesota High Yield Municipal Bond Fund, respectively, through December 31, 1997. Total expenses absorbed by DMC for the two month period ended June 30, 1997 are as follows: Tax-Free Minnesota Tax-Free Tax-Free Minnesota High Yield Minnesota Minnesota Intermediate Municipal Fund Insured Fund Fund Bond Fund --------- ----------- ------------ ---------- Total expenses absorbed by DMC ........... $57,650 $52,795 $4,372 $33,097 Prior to May 1, 1997, the Funds had an investment advisory and management agreement with Voyageur. Voyageur received a fee for its investment advisory and management services based on the average daily net assets of the Tax Free Minnesota Fund and Minnesota Insured Fund at an annual rate of 0.50%, at an annual rate of 0.40% for the Tax-Free Minnesota Intermediate Fund and at an annual rate of 0.25% for the Minnesota High Yield Municipal Bond Fund. During the period January 1, 1997, to April 30, 1997, Voyageur waived $93,816, $29,190, $24,897, and $26,037 of the Tax-Free Minnesota Fund, Minnesota Insured Fund, Tax-Free Minnesota Intermediate Fund, and Minnesota High Yield Municipal Bond, respectively. 1997 semi-annual report 33 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Commencing May 1, 1997, the Funds have engaged DSC, an affiliate of DMC, to serve as dividend disbursing, transfer agent and accounting services agent for the Funds. For the two month period ended June 30, 1997, the amounts expensed for each Fund were as follows: Tax-Free Minnesota Tax-Free Tax-Free Minnesota High Yield Minnesota Minnesota Intermediate Municipal Fund Insured Fund Fund Bond Fund --------- ------------ ------------ ---------- Dividend disbursing, transfer agent fees and other expenses ........ $100,274 $91,917 $20,055 $4,679 Accounting fees ........ $27,241 $19,219 $3,969 $1,187 Prior to May 1, 1997, the Funds paid a fee to Voyageur for acting as the Fund's dividend disbursing, administrative and accounting services agent. Each Fund is also responsible for reimbursing Voyageur's out-of-pocket expense in connection with the performance of dividend-disbursing, administrative and accounting services. On June 30, 1997, the Funds had payables to affiliates as follows: Tax-Free Minnesota Tax-Free Tax-Free Minnesota High Yield Minnesota Minnesota Intermediate Municipal Fund Insured Fund Fund Bond Fund --------- ------------ ------------ ---------- Investment Management fee payable to DMC .... $177,672 $124,877 $20,520 $11,442 Dividend disbursing, transfer agent fees, accounting fees and other expenses payable to DSC ........ $35,140 $29,003 $6,028 $3,202 Other expenses payable to DMC and affiliates . $21,776 $25,665 $3,643 $4,894 Commencing May 1, 1997, and 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 and 1.00% of the average daily net assets of the B and C Class for each Series. For the period May 1, 1997 to June 30, 1997, DDLP voluntarily waived $1,831, for the Tax-Free Minnesota Fund Class B. For the two month period ended June 30, 1997, DDLP earned commissions on sales of the Fund A Class shares for each Fund as follows: Tax-Free Minnesota Tax-Free Tax-Free Minnesota High Yield Minnesota Minnesota Intermediate Municipal Fund Insured Fund Fund Bond Fund --------- ------------ ------------ ---------- $47,737 $22,873 $9,339 $13,575 Prior to May 1, 1997 each class of shares had a Distribution Agreement with Voyageur Fund Distributors, Inc. ("VFD"). Under the plan the Funds paid VFD a fee at an annual rate of 0.25% of the average daily net assets of the Class A Shares and 1.00% of the average daily net assets of the Class B and C Shares. For the period January 1, 1997 to April 30, 1997, VFD voluntarily waived $6,265, for the Tax-Free Minnesota Fund Class B. 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 period ended June 30, 1997, 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 Tax-Free Minnesota High Yield Minnesota Minnesota Intermediate Municipal Fund Insured Fund Fund Bond Fund --------- ------------ ------------ ---------- Purchases............ 39,085,777 42,037,323 2,638,698 14,674,416 Sales................ 58,921,096 52,654,947 11,386,926 3,763,856 At June 30, 1997, the aggregate unrealized appreciation (depreciation) of securities for federal income tax purposes for each Fund were as follows: Tax-Free Minnesota Tax-Free Tax-Free Minnesota High Yield Minnesota Minnesota Intermediate Municipal Fund Insured Fund Fund Bond Fund --------- ------------ ------------ ---------- Aggregate unrealized appreciation........... 21,773,417 14,405,094 2,086,337 335,174 Aggregate unrealized depreciation........... 71,085 75,276 13,885 8,841 ---------- ---------- --------- ------- Net unrealized appreciation........... 21,702,332 14,329,818 2,072,452 326,333 For federal income tax purposes, as of December 31, 1996, Tax-Free Minnesota Fund had a capital loss carryover of $2,504,886 that will expire in 2003, Minnesota Insured Fund had a capital loss carryover of $7,559,777 that will expire in 2001 through 2003, Tax-Free Minnesota Intermediate Fund had a capital loss carryover of $789,263 that will expire in 2003, and Minnesota High Yield Municipal Bond Fund had a capital loss carryover of $6,809 that will expire in 2004. 5 Fund Merger On November 9, 1996, Voyageur Minnesota Insured Fund acquired all of the net assets of Great Hall Minnesota Insured Tax-Exempt Fund (Great Hall Fund) pursuant to an Agreement and Plan of Reorganization approved by the Great Hall shareholders on November 6, 1996. The acquisition was accompanied to by a tax-free exchange of 2,317,110 Great Hall shares for 2,205,310 Class A shares of Minnesota Insured Fund. The aggregate net assets of Minnesota Insured Fund and Great Hall Fund before the acquisition were $295,563,851 and $23,310,124 (including $396,706 of net unrealized appreciation of investments, $627,187 of accumulated net realized loss on investments and $23,540,605 of paid-in capital for Great Hall Fund), respectively, resulting in combined net assets of $318,873,975 on November 9, 1996. 34 1997 semi-annual report NOTES TO FINANCIAL STATEMENTS (CONTINUED) 6. Capital Stock
Tax-Free Minnesota Minnesota High Yield Tax-Free Minnesota Fund Minnesota Insured Fund Intermediate Fund Municipal Bond Fund ----------------------- ----------------------- -------------------- ------------------------- Six Months Six Months Six Months Six Months Period From Ended Year Ended Ended Year Ended Ended Year Ended Ended 6/4/96* 6/30/97 12/31/96 6/30/97 12/31/96 6/30/97 12/31/96 6/30/97 12/31/96 (Unaudited) (Unaudited) (Unaudited) (Unaudited) ----------- ---------- ----------- --------- ----------- --------- ----------- --------- Shares sold: A Class................. 1,515,113 2 ,351,584 748,481 1,875,386 303,449 803,384 726,255 703,876 B Class................. 138,575 316,743 128,416 211,514 32,096 34,174 339,633 267,494 C Class................. 26,915 127,900 44,912 91,722 45,481 78,645 130,934 94,294 Shares issued in connection with the acquisition of Great Hall Minnesota Insured Tax-Exempt Fund: A Class................. N/A N/A N/A 2,205,310 N/A N/A N/A N/A B Class................. N/A N/A N/A N/A N/A N/A N/A N/A C Class................. N/A N/A N/A N/A N/A N/A N/A N/A Shares issued upon reinvestment of dividends from net investment income: A Class................. 650,420 1,180,162 549,700 969,663 107,421 202,700 18,552 4,348 B Class................. 10,713 12,994 12,535 18,904 1,023 536 6,691 1,293 C Class................. 4,888 7,795 6,011 11,243 2,478 2,520 3,387 775 --------- ---------- ---------- ---------- ---------- ---------- --------- --------- 2,346,624 3,997,178 1,490,055 5,383,742 491,948 1,121,959 1,225,452 1,072,080 --------- ---------- ---------- ---------- ---------- ---------- --------- --------- Shares repurchased: A Class................. (3,477,834) (5,048,128) (2,967,742) (4,947,642) (1,000,826) (1,498,234) (33,715) (112,030) B Class................. (32,842) (40,979) (44,435) (20,425) (2,790) 0 (15,500) 0 C Class................. (78,631) (70,822) (46,257) (102,914) (42,673) (39,981) (5,028) (6,621) --------- ---------- ---------- ---------- ---------- ---------- --------- --------- (3,589,307) (5,159,929) (3,058,434) (5,070,981) (1,046,289) (1,538,215) (54,243) (118,651) ========== ========== ========== ========== ========== ========== ========= ======== Net increase (decrease) . (1,242,683) (1,162,751) (1,568,379) 312,761 (554,341) (416,256) 1,171,209 953,429 ========== ========== ========== ========== ========== ========== ========= ========
- ----------------------- * Commencement of operations. 7. Concentration of Credit Risk The Funds concentrate their investments in securites mainly issued by Minnesota municipalities. The value of these investments may be adversly affected by new legislation within the state, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that market may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statement of Net Assets. The Funds may invest up to 15% of its total assets in illiquid securities which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of some of these securities may adversely affect the Fund's ability to dispose of such securities in a timely manner and at a fair price when it is necessary to liquidate such securities. These securities, if any, have been denoted in the Statement of Net Assets. 1997 semi-annual report 35 VOYAGEUR FUNDS SHAREHOLDER MEETING RESULTS - -------------------------------------------------------------------------------- A meeting of the funds' shareholders was held on April 11, 1997. The matters submitted to a vote of shareholders were the election of new directors and the approval of a new investment management agreement. Whenever there is a change in control of an investment manager, the Investment Company Act of 1940 requires shareholders to vote on a new investment management agreement.
TAX-FREE MINNESOTA FUND NUMBER OF VOTES ------------------------------------------------------ FOR AGAINST / WITHHELD ABSTENTIONS ------------------------------------------------------ Walter P. Babich ............................................... 22,672,463 171,624 -- Anthony D. Knerr ............................................... 22,681,171 162,916 -- Ann R. Leven ................................................... 22,680,981 163,106 -- W. Thacher Longstreth .......................................... 22,673,648 170,439 -- Thomas F. Madison .............................................. 22,689,171 154,916 -- Jeffrey J. Nick ................................................ 22,679,675 164,412 -- Charles E. Peck ................................................ 22,673,648 170,439 -- Wayne A. Stork ................................................. 22,679,675 164,412 -- Approval of New Investment Management Agreement ................ 20,027,554 689,221 2,127,312 MINNESOTA INSURED FUND NUMBER OF VOTES ------------------------------------------------------ FOR AGAINST / WITHHELD ABSTENTIONS ------------------------------------------------------ Walter P. Babich ............................................... 17,771,187 82,907 -- Anthony D. Knerr ............................................... 17,771,758 82,336 -- Ann R. Leven ................................................... 17,697,558 156,536 -- W. Thacher Longstreth .......................................... 17,771,187 82,907 -- Thomas F. Madison .............................................. 17,771,758 82,336 -- Jeffrey J. Nick ................................................ 17,771,758 82,336 -- Charles E. Peck ................................................ 17,770,699 83,395 -- Wayne A. Stork ................................................. 17,770,755 83,339 -- Approval of New Investment Management Agreement ................ 16,109,124 474,759 1,270,211 TAX-FREE MINNESOTA INTERMEDIATE FUND NUMBER OF VOTES ------------------------------------------------------ FOR AGAINST / WITHHELD ABSTENTIONS ------------------------------------------------------ Walter P. Babich ............................................... 3,913,918 76,910 -- Anthony D. Knerr ............................................... 3,915,440 75,388 -- Ann R. Leven ................................................... 3,915,440 75,388 -- W. Thacher Longstreth .......................................... 3,911,087 79,741 -- Thomas F. Madison .............................................. 3,913,918 76,910 -- Jeffrey J. Nick ................................................ 3,915,440 75,388 -- Charles E. Peck ................................................ 3,911,087 79,741 -- Wayne A. Stork ................................................. 3,915,440 75,388 -- Approval of New Investment Management Agreement ................ 3,127,619 206,340 656,869 MINNESOTA HIGH YIELD MUNICIPAL BOND FUND NUMBER OF VOTES ------------------------------------------------------ FOR AGAINST / WITHHELD ABSTENTIONS ------------------------------------------------------ Walter P. Babich ................................................ 834,293 5,022 -- Anthony D. Knerr ................................................ 834,293 5,022 -- Ann R. Leven .................................................... 834,293 5,022 -- W. Thacher Longstreth ........................................... 834,293 5,022 -- Thomas F. Madison ............................................... 834,293 5,022 -- Jeffrey J. Nick ................................................. 834,293 5,022 -- Charles E. Peck ................................................. 834,293 5,022 -- Wayne A. Stork .................................................. 834,293 5,022 -- Approval of New Investment Management Agreement ................. 766,011 13,087 60,217
36 1997 semi-annual report DELAWARE GROUP 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 Quantum Fund Blue Chip Fund Devon Fund Decatur Total Return Fund Decatur Income Fund Delaware Fund For International Diversification Emerging Markets Fund New Pacific Fund World Growth Fund International Equity Fund Global Assets Fund Global Bond Fund For Current Income Delchester Fund Strategic Income Fund U.S. Government Fund Delaware-Voyageur U.S. Government Securities Fund Limited-Term Government Fund For Tax-Exempt Current Income National High Yield Municipal Bond Fund Tax-Free USA Fund Tax-Free Insured Fund Tax-Free USA Intermediate Fund State Tax-Exempt Funds* Money Market Funds Delaware Cash Reserve U.S. Government Money Fund Tax-Free Money Fund * Available for the following states: AZ, CA, CO, FL, ID, IA, KS, MN, MO, ND, NJ, NM, NY, OH, OR, PA, UT, WA, WI. Insured and intermediate bond funds are available in selected states. funds Complete information on any Delaware Group fund can be found in each Fund's current prospectus. Prospectuses for all Delaware Group funds are available from your financial adviser. Please read the prospectus carefully before you invest or send money. THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF SHAREHOLDERS OF THE DELAWARE-VOYAGEUR MINNESOTA MUNICIPAL BOND FUNDS, BUT IT MAY BE USED WITH PROSPECTIVE INVESTORS WHEN PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE APPROPRIATE FUND. EACH PROSPECTUS 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 THE FUNDS' 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 THE FUNDS WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INVESTMENT MANAGER Delaware Management Company, Inc. 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 Be sure to consult your financial adviser when making investments. Mutual funds can be a valuable part of your financial plan; however, shares of the Funds are not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union, and involve investment risk, including the possible loss of the principal amount invested. Shares of the Funds are not bank or credit union deposits. Copy Rights Delaware Distributors, L.P. Printed in the USA on recycled paper (132) SA-VOYMN[--] PP8/97 -----END PRIVACY-ENHANCED MESSAGE-----