-----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, Agrf05qNTxhkOSHe9kOey16+xQTvFfzhHYuOYD3ll1XG300y5lK26SPQmYG+47rz NKZsZ9uIXRjZivxOW7dMmg== 0000950116-99-000904.txt : 19990505 0000950116-99-000904.hdr.sgml : 19990505 ACCESSION NUMBER: 0000950116-99-000904 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990312 FILED AS OF DATE: 19990504 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: 99609718 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: 99609719 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: 99609720 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: 99609721 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4115 BUSINESS PHONE: 6123767129 MAIL ADDRESS: STREET 1: 90 SOUTH SEVENTH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4115 N-30D 1 SEMI-ANNUAL REPORT FOR TAX-EXEMPT INCOME Minnesota Municipal Bond Funds (photo of illustration from Tax-Exempt Income Brochure) service and guidance professional management goals 1999 Semi-Annual Report TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND TAX-FREE MINNESOTA INTERMEDIATE FUND MINNESOTA HIGH YIELD MUNICIPAL BOND FUND DELAWARE(SM) INVESTMENTS - --------------------- Philadelphia o London professional management professional management MORE THAN 70 YEARS of investment experience has taught us that disciplined strategies and prudent risk management are a sound approach to any market environment. goals (various photos demonstrating service, guidance, professional management and goals) goals 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. March 12, 1999 for tax- exempt income 1 Dear Shareholder: OVER THE LAST SIX MONTHS, INVESTOR preference shifted back and forth between the security of U.S. Treasury bonds and the high return potential of stocks. Late in the summer, Treasuries rallied as the Asian recession created a ripple effect in the U.S. Reduced overseas demand for U.S. exports and less expensive foreign imports curtailed U.S. corporate earnings growth. Recessions in Russia and Brazil precipitated a late summer storm in the equity markets, pushing investors to the safe haven of U.S. Treasuries. Municipal bonds have historically provided approximately 83% of the income provided by Treasuries. Although municipal bonds typically provided less income than Treasuries, this has been balanced by the fact that municipal income is tax-exempt. In the fall of 1998, municipal bonds provided remarkable relative value to U.S Treasuries. As global economies became more volatile, strong worldwide demand for U.S. Treasuries pushed prices higher, which lowered their yields. At the same time, a large supply of municipal bonds, coupled with stable demand, limited municipal bond price gains. This caused the yield difference between Treasuries and municipal bonds to narrow substantially. In October, 30-year municipal bonds yielded as much as 98% of what comparable Treasuries yielded. The Federal Reserve responded to the global financial crisis with three interest rate reductions during the fall of 1998. Investors saw the additional liquidity as a Federal Reserve commitment to sustain U.S. economic growth amid worldwide recession. This set the stage for a stock market recovery that began during the fall of 1998 and continued into the new year. IN THE FALL OF 1998, MUNICIPAL BONDS PROVIDED REMARKABLE RELATIVE VALUE TO U.S TREASURIES. During the first two months of 1999, strength in the domestic economy and fading concerns about global volatility reduced the appeal of U.S. Treasury bonds. Municipal bond prices held up much better than Treasuries due to a declining supply. The returns of our Minnesota funds, in most cases, reflect conditions in the market and alternating investor considerations of safety versus performance. Since municipal bond prices typically lag Treasury prices during a strong bond market rally, Treasuries for tax- exempt income 2 outperformed municipals during flights to quality in the fall of 1998. Then as the domestic impact of global recession became less of a concern in the winter, the appeal of higher quality investments waned and investors returned to equity markets. We believe municipal bond funds provide diversification that can help reduce the volatility of a portfolio heavily weighted in equities. Municipal bond funds can also help provide for potential high income, free from both federal and Minnesota state taxes. In the pages that follow, your Fund's portfolio manager, Elizabeth H. Howell, reviews the performance of each Minnesota municipal bond fund and provides her outlook for the remainder of the year. Thank you for your continued confidence in Delaware Investments. Sincerely, /s/ Jeffrey J. Nick - ----------------------------------- JEFFREY J. NICK Chairman, President and Chief Executive Officer Delaware Investments Family of Funds CUMULATIVE TOTAL RETURNS - -------------------------------------------------------------------------------- Six Months Ended February 28, 1999 - -------------------------------------------------------------------------------- Tax-Free Minnesota Fund A Class +1.94% Minnesota Insured Fund A Class +1.81% Lipper Minnesota Municipal Debt Fund Average (47 funds) +1.92% - -------------------------------------------------------------------------------- Tax-Free Minnesota Intermediate Fund A Class +1.54% Lipper Other States Intermediate Municipal Debt Fund Average (80 funds) +1.96% - -------------------------------------------------------------------------------- Minnesota High Yield Municipal Bond Fund A Class +1.88% Lipper High Yield Municipal Debt Fund Average (53 funds) +1.46% - -------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index +2.62% Lehman Brothers Insured Municipal Bond Index +2.54% Lehman Brothers Five-Year Municipal Bond Index +2.82% All performance shown above is at net asset value and assumes reinvestment of distributions. Past performance does not guarantee future results. Performance of other Fund classes varies due to different charges and expenses. The unmanaged Lehman Brothers Indexes are composed of bonds with a variety of quality ratings from many states. Complete performance information for all funds can be found on pages 8 and 9. Jeffrey J. Nick Named Chairman On December 17, 1998, Jeffrey J. Nick was named Chairman of the Delaware Investments Family of Funds. He replaces Wayne A. Stork who has retired as Chairman of the Board of Directors, but continues to serve as a Board Member. Mr. Nick was named President and Chief Executive Officer of Delaware Investments Family of Funds in October 1997. He has been CEO of Lincoln National Investment Companies, an indirect parent company of Delaware Investments, since October 1996 and previously managed Lincoln's operations in the United Kingdom. Mr. Nick holds an MBA from the University of Chicago and a Bachelor of Arts degree from Princeton University. for tax- exempt income 3 Portfolio Manager's Review BY ELIZABETH H. HOWELL Vice President/Senior Portfolio Manager March 12, 1999 In 1998, state and local governments issued municipal bonds at a near-record volume. New municipal bond issues reached $285 billion in 1998, second only to the record $292 billion issued in 1993. Education issues led the way, followed by bonds sold to fund health care and transportation projects. TAX-FREE MINNESOTA FUND'S DURATION WAS SLIGHTLY LONGER THAN OUR PEER GROUP, ALLOWING US TO TAKE ADVANTAGE OF THE HIGHER YIELDS OFFERED BY LONGER-TERM SECURITIES. New bond issuance cooled off substantially over the first two months of 1999. At just $13.8 billion, January's new issue volume was down 24% from the same period in 1998 (Source: The Bond Buyer). The supply drought continued in February, driven by reduced refunding activity and growing municipal government surpluses. Reduced municipal bond supply early in 1999 helped keep prices from falling as quickly as Treasuries in the wake of stronger-than-expected U.S. economic growth. Throughout the final four months of 1998, Minnesota municipalities continued to issue bonds at the brisk pace set earlier in the year. An expanding state economy and lower interest rates helped create an attractive environment to issue debt. With interest rates at or near 25-year lows, many municipalities refinanced bonds to pay off older, higher interest debt. Just as happened nationally, however, new municipal bond issues in Minnesota fell sharply in 1999. TAX-FREE MINNESOTA FUND Tax-Free Minnesota Fund provided a total return of +1.94% (Class A shares at net asset value with distributions reinvested) for the six months ended February 28, 1999. This performance slightly exceeded the average return of the Fund's peers in the Lipper Minnesota Municipal Debt Fund category, but fell short of the Lehman Brothers Municipal Bond Index, the Fund's unmanaged benchmark. The Lehman Brothers index, however, is composed of bonds from many states and does not reflect municipal bond performance specifically in the state of Minnesota. We selected bonds for Tax-Free Minnesota Fund which we believed had the potential to improve total return for the portfolio and provide a competitive dividend yield. The majority of the Fund's assets were invested in high-quality health care, housing, and power authority issues. Within these categories, we focused on new bonds selling for less than their face value with strong credit ratings. We also sought bonds with at least 10 years of call protection. This helped protect the Fund from the possibility that bond issuers would pay off their loans early due to falling interest rates. for tax- exempt income 4 As of February 28, 1999, Tax-Free Minnesota Fund's average effective duration was 6.6 years. This allowed us to take advantage of the higher yields offered by longer term securities. Despite the robust performance of the U.S. economy in recent months, in our opinion, global recession should dampen U.S. economic growth, keeping inflation very low and favoring lower interest rates in the foreseeable future. MINNESOTA INSURED FUND Minnesota Insured Fund provided a total return of +1.81% (Class A shares at net asset value with distributions reinvested) for the six months ended February 28, 1999. This return was slightly less than the average return of other Minnesota insured municipal bond funds. The Fund also underperformed the unmanaged Lehman Brothers Insured Municipal Bond Index. The Lehman Brothers index, however, is composed of insured municipal bond funds from many states, not just in the state of Minnesota. In 1998, more than 50% of all new municipal issues carried insurance according to Securities Data Corporation, up from 23% of all new municipal issues in 1988. This demonstrates growing demand for the added security of insured municipal debt. The bonds in Tax-Free Minnesota Insured Fund's portfolio are protected by private insurance, which guarantees the timely payment of principal and interest. All of the insured bonds in the Fund carry AAA ratings. IN MOST CASES, ONCE A BOND IS PRE-REFUNDED WE CONTINUE TO HOLD IT. THIS ALLOWS THE FUND TO COLLECT AN ATTRACTIVE LEVEL OF CURRENT INCOME AND BENEFIT FROM BETTER PROTECTION OF PRINCIPAL. Over the last six months, more than 13% of the Fund's holdings were pre-refunded. Issuers often pre-refund their bonds when interest rates are low in order to reduce their interest costs. Pre-refunded bonds help the Fund because: o The credit quality increases. Pre-refunded bonds are backed by investments in U.S. government bonds, which are held in a separate escrow account. o The price increases because the bond will be paid off at the first call option. In general, prices for shorter bonds benefit from reduced sensitivity to interest rate fluctuations. PORTFOLIO HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------- FEBRUARY 28, 1999 Tax-Free Minnesota Tax-Free Minnesota Minnesota High Yield Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund - ------------------------------------------------------------------------------------------------------------- Average Maturity 20.0 years 18.3 years 13.1 years 23.0 years Average Effective Maturity* 7.99 years 7.79 years 7.30 years 13.46 years Effective Duration 6.6 years 6.0 years 5.9 years 8.1 years AMT Income** None 21.80% None None Current 30-Day SEC Yield (A Class) 3.87% 3.61% 3.84% 5.04% (B Class) 3.27% 3.00% 3.09% 4.48% (C Class) 3.27% 2.99% 3.10% 4.47%
*Average effective maturity takes into consideration all prepayments, puts, and adjustable coupons. **Percentage of income generated for the six months ended February 28, 1999 that was subject to the federal alternative minimum tax. for tax- exempt income 5 In most cases, once a bond is pre-refunded we continue to hold it. This allows the Fund to collect an attractive level of current income and benefit from better protection of principal. TAX-FREE MINNESOTA INTERMEDIATE FUND Tax-Free Minnesota Intermediate Fund provided a total return of +1.54% (Class A shares at net asset value with distributions reinvested) for the six months ended February 28, 1999. OUR LOW-TURNOVER APPROACH TO INVESTING HELPED LIMIT TAXABLE DISTRIBUTIONS TO OUR SHAREHOLDERS. The Fund modestly underperformed a peer group of municipal bond funds from a variety of states which invest in intermediate length securities. We were also unable to keep pace with the Fund's multi-state benchmark, the Lehman Brothers Five-Year Municipal Bond Index. This underperformance can be partially explained by the Fund's average effective duration. As of February 28, 1999, Tax-Free Minnesota Intermediate Fund's duration was positioned at 5.9 years. This prevented us from taking advantage of the higher yields of longer-term investments. As securities in the Fund's portfolio mature, we will strive to keep Tax-Free Minnesota Intermediate Fund's duration close to the average for all intermediate funds. Our primary goal for Tax-Free Minnesota Intermediate Fund is a high tax-free dividend. We believe that intermediate-term bonds in Minnesota help us achieve this goal by offering an attractive balance between the reduced price volatility of short-term bonds and the higher income potential of longer bonds. Consistent with our other Minnesota funds, we attempted to minimize capital gains for Tax-Free Minnesota Intermediate Fund by holding onto bonds that appreciated in value. Our low-turnover approach to investing helped limit taxable distributions to our shareholders. ASSET MIX
- ----------------------------------------------------------------------------------------------------- FEBRUARY 28, 1999 Tax-Free Minnesota Tax-Free Minnesota Minnesota High Yield Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund - ----------------------------------------------------------------------------------------------------- Housing 17.8% 18.2% 6.2% 50.6% Health Care 20.4% 20.4% 20.4% 19.9% General Obligation 12.6% 16.6% 3.4% 3.1% Power Authority 18.7% 9.2% 6.3% 2.6% Pre-Refunded 9.6% 18.4% 26.4% 0.4% Education 4.8% -- 3.3% 3.6% Industrial 8.3% -- 15.0% 3.4% Water and Sewer 2.5% -- 3.0% 4.7% Transportation -- 0.6% -- -- City Agencies -- -- -- 3.1% Miscellaneous 1.9% -- 3.7% 4.2% Escrowed to Maturity 1.3% 13.7% 11.8% -- Cash and Other 2.1% 2.9% 0.5% 4.4%
for tax- exempt income 6 MINNESOTA HIGH YIELD MUNICIPAL BOND FUND Minnesota High Yield Municipal Bond Fund provided a total return of +1.88% (Class A shares at net asset value with distributions reinvested) for the six months ended February 28, 1999. The Fund's six-month performance modestly surpassed the average return of other Minnesota municipal bond funds, but lagged the benchmark Lehman Brothers Municipal Bond Index, which is composed of bonds with a variety of credit ratings. Over the last six months, we increased Minnesota High Yield Municipal Bond Fund's holdings of non-rated bonds which now represent more than 66% of the portfolio. In most cases, these bonds were issued by small, rural municipalities looking to avoid the expense of obtaining a Standard and Poor's or Moody's rating. WE RIGOROUSLY RESEARCH NON-RATED BOND ISSUES BEFORE WE PURCHASE THEM AND CONTINUE TO MONITOR THEIR CREDIT QUALITY ON A REGULAR BASIS. We rigorously research non-rated bond issues before we purchase them and continue to monitor their credit quality on a regular basis. By investing in non-rated bonds, which generally offer higher yields, we were able to generate higher income for Minnesota High Yield Municipal Bond Fund's shareholders. Shareholders also benefited from Minnesota High-Yield Municipal Bond Fund's tax-efficient portfolio management. In 1998, we held onto our appreciated bonds and paid no capital gains. CREDIT QUALITY
- ------------------------------------------------------------------------------------------------------- FEBRUARY 28, 1999 Tax-Free Minnesota Tax-Free Minnesota Minnesota High-Yield Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund - ------------------------------------------------------------------------------------------------------- AAA 54.2% 100.0% 35.1% 9.0% AA 10.3% 0.0% 10.9% 4.8% A 16.7% 0.0% 10.5% 11.2% BBB 7.0% 0.0% 22.9% 7.6% BB 0.0% 0.0% 0.0% 0.5% B 0.0% 0.0% 0.0% 0.0% Unrated 11.8% 0.0% 20.6% 66.9% - ------------------------------------------------------------------------------------------------------- Average Quality AA- AAA AA- BBB+
for tax- exempt income 7 OUTLOOK After a brief slowdown last summer, the U.S. economy regained its momentum in the fourth quarter. U.S. Gross Domestic Product grew at a 5.6% annual rate over the last three months of 1998, largely driven by robust consumer spending. In fact, consumer spending in 1998 grew at its fastest pace in more than 14 years (Source: Bloomberg Business News). Early indications suggest this momentum has carried over into the new year. In February, U.S. retail sales rose for the seventh consecutive month. We believe that rising personal incomes, low interest rates and low unemployment should promote continued vigorous spending in 1999. IN MINNESOTA, THE BUDGET SURPLUS WAS 20% -- TWICE THE NATIONAL AVERAGE. State economies have also benefited from high employment rates and growing tax revenues. According to the National Conference of State Legislatures, which monitors the fiscal performance of state governments, the states are in their best fiscal health since 1980. In 1998, the average state government had a 10% budget surplus. In Minnesota, the budget surplus was 20% - twice the national average. Over the first few months of 1999, strong national and state economies have increased investors' concerns that the Federal Reserve may need to raise interest rates to fend off inflation. Thus far, however, with inflation running at approximately 1.7%, this has not been necessary. In our opinion, global weakness, particularly in Asia, South America and Russia, could dampen economic growth in the U.S., reducing the need for higher interest rates. Last summer, we saw that domestic financial markets can be vulnerable to shocks from overseas. Should conditions in world economies worsen in 1999, U.S. stock market volatility could increase. This may create stronger demand for fixed-income investments. Regardless of market conditions, in our view, municipal bond funds offer attractive opportunities for investors seeking the more moderate risk associated with fixed-income investments and tax-free dividends. for tax- exempt income 8 Performance Summary TAX-FREE MINNESOTA FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH FEBRUARY 28, 1999 Lifetime Ten Years Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 2/27/84) Excluding Sales Charge +8.80% +7.50% +6.05% +5.53% Including Sales Charge +8.52% +7.08% +5.24% +1.60% - -------------------------------------------------------------------------------- Class B (Est. 3/11/95) Excluding Sales Charge +6.83% +4.75% Including Sales Charge +6.20% +0.75% - -------------------------------------------------------------------------------- Class C (Est. 5/4/94) Excluding Sales Charge +6.30% +4.74% Including Sales Charge +6.30% +3.74% MINNESOTA INSURED FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH FEBRUARY 28, 1999 Lifetime Ten Years Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 5/1/87) Excluding Sales Charge +7.40% +7.43% +5.57% +5.16% Including Sales Charge +7.06% +7.02% +4.77% +1.18% - -------------------------------------------------------------------------------- Class B (Est. 3/7/95) Excluding Sales Charge +6.40% +4.37% Including Sales Charge +5.77% +0.37% - -------------------------------------------------------------------------------- Class C (Est. 5/4/94) Excluding Sales Charge +5.91% +4.47% Including Sales Charge +5.91% +3.47% Performance for all Funds includes reinvestment of distributions and applicable sales charge as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than their original cost. Past performance is not a guarantee of future results. Performance for Class B and C shares excluding sales charge assumes either contingent deferred sales charges did not apply or the investment was not redeemed. Returns reflect a voluntary expense limitation in effect at the time. Returns would have been lower without the limitation. Class A shares of each Fund have a 3.75% maximum front-end sales charge, except Tax-Free Minnesota Intermediate Fund, which has a 2.75% maximum front-end sales charge. All Funds have a 12b-1 fee. Class B shares do not carry a front-end sales charge, but are subject to a 1% annual distribution and service fee. They are also subject to a contingent 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 contingent 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. for tax- exempt income 9 TAX-FREE MINNESOTA INTERMEDIATE FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH FEBRUARY 28, 1999 Lifetime Ten Years Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 10/27/85) Excluding Sales Charge +6.04% +5.98% +4.92% +3.90% Including Sales Charge +5.83% +5.68% +4.34% +1.01% - -------------------------------------------------------------------------------- Class B (Est. 8/15/95) Excluding Sales Charge +4.46% +3.11% Including Sales Charge +4.46% +1.13% - -------------------------------------------------------------------------------- Class C (Est. 4/30/94) Excluding Sales Charge +4.62% +3.12% Including Sales Charge +4.62% +2.13% MINNESOTA HIGH YIELD MUNICIPAL BOND FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH FEBRUARY 28, 1999 Lifetime One Year - -------------------------------------------------------------------------------- Class A (Est. 6/4/96) Excluding Sales Charge +8.77% +5.98% Including Sales Charge +7.26% +1.98% - -------------------------------------------------------------------------------- Class B (Est. 6/12/96) Excluding Sales Charge +8.88% +5.22% Including Sales Charge +7.91% +1.22% - -------------------------------------------------------------------------------- Class C (Est. 6/7/96) Excluding Sales Charge +8.02% +5.22% Including Sales Charge +8.02% +4.22% Please turn to page 8 for important additional information. All performance includes reinvestment of distributions and sales charges as described on page 8. Past performance is not a guarantee of future results. 10 for tax-exempt income Financial Statements VOYAGEUR TAX-FREE FUNDS, INC. DELAWARE - VOYAGEUR TAX-FREE MINNESOTA FUND STATEMENT OF NET ASSETS FEBRUARY 28, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS - 97.88% GENERAL OBLIGATION BONDS - 12.55% Farmington Independent School District Number 192 Capital Appreciation Series B Zero Coupon 2/1/20 ........................................ $2,650,000 $ 897,423 Farmington Independent School District Number 192 Capital Appreciation Series B Zero Coupon 2/1/21 ........................................ 2,500,000 801,700 Hennepin County 5.75% 10/1/10 ........................... 7,990,000 8,640,386 Hutchinson Independent School District Series A (MN School District Enhanced) 5.85% 2/1/18 ......................................... 1,700,000 1,866,872 Lakeville Independent School District #194 Capital Appreciation Series B Zero Coupon 2/1/19 ........................................ 8,000,000 2,824,800 Lakeville Independent School District #194, Inverse Floater (MBIA) 6.92% 2/1/15 .................. 4,250,000 4,411,288 Mahtomedi Independent School District #832 Series B Zero Coupon (MBIA) 2/1/14 ................... 1,540,000 753,691 Minneapolis Convention Center Facilities, Inverse Floater 7.42% 4/1/14 ................................. 850,000 945,353 Minneapolis Sports Arena Project, Inverse Floater 6.78% 10/1/20 ........................................ 4,220,000 4,407,241 Minneapolis Sports Arena Project, Inverse Floater 6.82% 4/1/14 ......................................... 580,000 626,835 Minneapolis Unlimited Tax Series 1992 6.30% 10/1/08 ........................................ 1,750,000 1,903,318 Minnetonka Independent School District #276 (FSA) 5.75% 2/1/22 ................................... 4,550,000 4,904,081 North St. Paul Maplewood Independent School District #622, Inverse Floater 6.87% 2/1/20 ......................................... 2,250,000 2,273,288 Puerto Rico Commonwealth 5.25% 7/1/18 ................... 1,250,000 1,307,363 Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 ......................................... 1,000,000 923,400 Rochester Tax Increment 6.50% 12/1/04 ................... 1,000,000 1,006,960 Rosemount - Apple Valley Independent School District #196 Inverse Floater (FSA) 8.37% 4/1/15 ......................................... 4,000,000 4,544,800 Rosemount Independent School District #196 Series B Zero Coupon (FSA) 4/1/11 .................... 2,600,000 1,510,028 Rosemount Independent School District #196 Zero Coupon (FSA) 4/1/12 .................................. 1,850,000 1,014,133 Rosemount Independent School District #196 Zero Coupon (FSA) 4/1/13 .................................. 1,915,000 988,906 Rosemount Independent School District #196, Inverse Floater 4/1/15 ............................... 1,375,000 1,477,259 Sartell Independent School District #748 Zero Coupon (MBIA) 2/1/13 ................................. 540,000 281,043 Sartell Independent School District #748 Zero Coupon (MBIA) 2/1/15 ................................. 1,075,000 491,469 PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS (CONTINUED) GENERAL OBLIGATION BONDS (CONTINUED) Sartell Independent School District #748 Zero Coupon (MBIA) 2/1/16 ................................. $1,750,000 $ 766,710 Sartell Independent School District #748 Zero Coupon (MBIA) 2/1/17 ................................. 1,600,000 649,200 Spring Lake Park Independent School District #16, Inverse Floater (MBIA) 7.02% 2/1/17 .................. 1,000,000 1,048,280 St Paul Tax Increment - Block 39 Project A 4.75% 2/1/25 ............................... 2,000,000 1,916,520 Washington County 5.90% 2/1/10 .......................... 1,680,000 1,770,602 ---------- 54,952,949 ---------- HIGHER EDUCATION REVENUE BONDS - 4.77% Minnesota Higher Education Augsburg College Series 4F1 6.25% 5/1/23 ..................................... 1,000,000 1,063,680 Minnesota Higher Education Carleton College 5.75% 11/1/12 ........................................ 4,000,000 4,300,400 Minnesota Higher Education Facilities Revenue Hamline University 6.00% 10/1/12 ..................... 1,250,000 1,331,225 Minnesota Higher Education Facilities Revenue Hamline University 6.00% 10/1/16 ..................... 1,790,000 1,876,368 Minnesota Higher Education St. Benedicts College 6.20% 3/1/16 ......................................... 1,000,000 1,065,850 Minnesota Higher Education St. Thomas University Series R2 5.60% 9/1/14 ............................... 1,000,000 1,038,840 University Of Minnesota Series A 5.50% 7/1/21 ......................................... 9,500,000 10,214,020 ---------- 20,890,383 ---------- HOSPITAL REVENUE BONDS - 20.36% Bemidji Hospital Facilities Revenue North County Health 6.05% 9/1/16 .................................. 600,000 635,250 Bemidji Hospital Facilities Revenue North County Health 6.05% 9/1/24 .................................. 1,825,000 1,927,054 Brainerd Benedictine Health Care Systems for St.Joseph's Hospital (Connie Lee) 6.00% 2/15/12 ........................................ 2,250,000 2,432,408 Duluth Economic Development Authority Benedictine for St. Luke's Hospital (Connie Lee) 6.40% 5/1/18 ......................................... 3,295,000 3,566,080 Duluth Economic Development Authority St. Luke's Hospital (Connie Lee) 6.00% 2/15/20 .................. 9,450,000 10,148,072 Little Canada Health Care 1992 (Presbyterian Homes Guaranteed) 7.25% 7/1/12 ....................... 1,000,000 1,043,370 Minneapolis Fairview Hospital Series 91B (MBIA) 6.50% 1/1/11 ......................................... 3,000,000 3,244,530 Minneapolis Health Care American Baptist Homes 8.70% 11/1/09 ........................................ 2,485,000 2,750,796 Minneapolis/St. Paul Housing & Redevelopment Authority HealthOne (MBIA) 7.40% 8/15/11 ........................................ 1,360,000 1,450,358 for tax-exempt income 11 STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS (CONTINUED) HOSPITAL REVENUE BONDS (CONTINUED) Minneapolis/St. Paul Housing & Redevelopment Authority Children's Hospital Health Care, Inverse Floater 7.52% 8/15/25 ........................ $6,500,000 $ 6,995,495 Minneapolis/St. Paul Housing & Redevelopment Authority Health Care System for Healthspan Series A (AMBAC) 4.75% 11/15/18 ...................... 3,300,000 3,201,165 Robbinsdale North Memorial Medical (AMBAC) 5.50% 5/15/23 ........................................ 10,725,000 11,030,019 Rochester Health Care Facilities Revenue Mayo Foundation Series B 5.50% 11/15/27 ................... 5,000,000 5,216,400 Rochester Health Care Facilities Revenue Reg IRS for Mayo Clinic, Series H Inverse Floater 7.86% 11/15/15 ....................................... 3,500,000 4,069,555 Springfield St. John's Lutheran Home Revenue 8.50% 11/1/19 ........................................ 600,000 629,670 St. Cloud Hospital Facilities Revenue for St. Cloud Hospital (AMBAC) 5.30% 10/1/20 ....................... 7,250,000 7,386,590 St. Louis Park Commercial Development Revenue for G & N L P Project (Methodist Hospital Guaranteed) 7.25% 6/1/13 ......................................... 1,120,000 1,188,645 St. Louis Park Methodist Hospital (AMBAC) 5.20% 7/1/23 ......................................... 10,220,000 10,268,443 St. Paul Housing & Redevelopment Hospital Revenue for Health East Series A 6.625% 11/1/17 ....................................... 8,680,000 8,992,654 St. Paul Minnesota Housing & Redevelopment Authority Health Care Facilities Revenue Regions Hospital Project 5.30% 5/15/28 ................................ 3,000,000 2,896,140 ---------- 89,072,694 ---------- HOUSING REVENUE BONDS - 17.83% Austin Housing & Redevelopment Authority Courtyard Residence Series 95A 7.25% 1/1/26 ......................................... 500,000 548,300 Bloomington Housing & Redevelopment Authority Senior Summerhouse Bloomington Project 6.125% 5/1/35 ........................................ 3,420,000 3,456,662 Brooklyn Center Multifamily Housing Revenue Bonds Family Housing Project Section 8 5.90% 1/1/20 ......................................... 2,250,000 2,339,370 Burnsville Multifamily Bridgeway Apartments (FHA) 7.625% 2/1/24 ........................................ 3,370,000 3,594,914 Burnsville Multifamily Coventry Court Apartments Project (FHA) 7.50% 9/1/17 ........................... 1,000,000 1,029,830 Carver County Housing & Redevelopment Authority Multifamily Revenue Lake Grace Apartments 6.00% 7/1/28 ......................................... 1,435,000 1,509,319 Dakota County Housing & Redevelopment Authority Single Family (GNMA ) 8.10% 3/1/16 ................... 70,000 72,100 Eagan Forest Ridge Apartments Project (FHA) 7.50% 9/1/17 ................................... 1,000,000 1,032,270 Eden Prairie Multifamily Revenue Eden Investments (FHA) 7.40% 8/1/25 ................................... 400,000 418,012 PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Eden Prairie Multifamily Windslope Apartments Section 8 Housing 7.10% 11/1/17 ...................... $1,585,000 $1,681,558 Eden Prarie Multifamily Homes Tanager Creek (GNMA) 8.05% 6/20/31 ................................. 7,605,000 8,800,278 Edina Park Plaza Multifamily Housing (FHA) 7.50% 12/1/09 .................................. 1,440,000 1,492,502 Edina Park Plaza Multifamily Housing (FHA) 7.70% 12/1/28 ........................................ 1,250,000 1,290,013 Hopkins Renaissance Multifamily Housing Section 8 6.375% 4/1/20 ........................................ 1,000,000 1,066,150 Little Canada Multifamily Housing Revenue Housing Alternative Development Company Project Series A 6.10% 12/1/17 ............................... 1,675,000 1,719,304 Little Canada Multifamily Housing Revenue Housing Alternative Development Company Project Series A 6.25% 12/1/27 ............................... 2,900,000 2,986,188 Minneapolis Housing Facility Revenue for Augustana Chapel View Project Series 1993 7.00% 4/1/18 ......................................... 1,000,000 1,020,830 Minneapolis Multifamily Mortgage for Seward Towers Project (GNMA) 7.375% 12/20/30 ....................... 4,000,000 4,178,160 Minneapolis-Nicollet Towers Multifamily Housing Section 8 Housing 6.00% 12/1/19 ...................... 2,000,000 2,124,060 Minnesota Housing Finance Agency Multifamily Housing 6.95% 2/1/14 ................................. 1,500,000 1,590,360 Minnesota Housing Finance Agency Multifamily Housing Series 92A 6.95% 8/1/17 ...................... 745,000 794,885 Minnesota Housing Finance Agency Rental Housing Series B 6.25% 8/1/22 ................................ 985,000 996,220 Minnesota Housing Finance Agency Single Family Mortgage Series B 7.30% 7/1/10 ....................... 120,000 123,038 Minnesota Housing Finance Agency Single Family Mortgage Series D 7.30% 7/1/09 ....................... 270,000 276,926 Minnesota Housing Finance Agency Single Family Mortgage Series 91C 7.10% 7/1/11 ..................... 970,000 1,019,305 Minnetonka Multifamily Beacon Hill Project (Presbyterian Homes Guaranteed) 7.70% 6/1/25 ......................................... 2,000,000 2,152,020 Oakdale Housing - Oak Meadows Project 7.00% 4/1/27 ......................................... 6,800,000 7,258,184 Park Rapids Multifamily Revenue The Court Apartments Project Section 8 6.30% 2/1/20 ......................................... 3,235,000 3,289,089 Spring Park Minnesota Twin Birch Health Care Center (Guarantor: Presbyterian Homes of Minnesota) 8.25% 8/1/11 ......................................... 600,000 635,382 St. Cloud Germain Towers Housing Series 1993 Section 8 5.90% 9/1/20 ............................... 2,000,000 2,075,200 St. Louis Park Residential Mortgage Revenue for Single Family (GNMA) 7.25% 4/20/23 .......................... 1,218,000 1,277,365 St. Louis Park Multifamily Housing Revenue Community Housing (FHA) 6.25% 12/1/28 .......................... 3,855,000 4,122,190 12 for tax-exempt income STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) St. Louis Park Multifamily Westwind Apartments Housing (GNMA) 5.75% 1/1/29 ..........................$ 3,865,000 $ 4,005,763 St. Paul Housing & Redevelopment Agency (Executive Life Guaranteed Investment Contract) Como Lake Project (FHA) 7.50% 3/1/26 ...................... 1,000,000 980,000 St. Paul Housing & Redevelopment Single Family Mortgage (FNMA) 6.90% 12/1/21 ........................ 1,525,000 1,607,609 St. Paul Housing & Redevelopment Single Family Mortgage (FNMA) 6.90% 12/1/11 ........................ 51,000 52,547 Stillwater Multifamily Housing Stillwater Cottages 7.00% 11/1/27 ........................................ 1,000,000 1,031,000 Wadena Housing & Redevelopment Agency Humphrey Manor - Section 8 6.00% 2/1/19 ....................... 2,130,000 2,220,610 Wells Housing & Redevelopment Agency Broadway Apartment Project - Section 8 7.00% 1/1/19 ......................................... 1,050,000 1,118,922 Willmar Housing & Redevelopment Agency Highland Apartments - Section 8 5.85% 6/1/19 ......................................... 1,050,000 1,089,522 ---------- 78,075,957 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 8.25% Andover Development Revenue Downtown Center Project Series A 7.00% 12/1/12 ....................... 1,000,000 1,064,280 Anoka Resource Recovery Revenue for Northern State Power Co Series 85 7.15% 12/1/08 ..................... 1,000,000 1,042,060 Becker Pollution Control Revenue for Northern States Power Co Series 89A 6.80% 4/1/07 .............. 2,000,000 2,044,780 Cloquet Pollution Control Revenue for Potlatch Corporation 5.90% 10/1/26 ............................ 15,000,000 15,853,050 East Grand Forks for American Crystal Sugar Pollution Control Revenue 7.75% 4/1/18 ............... 1,230,000 1,328,511 International Falls Pollution Control Revenue 5.60% 12/1/22 ........................................ 1,500,000 1,465,365 Richfield Commercial Development Revenue for Richfield Shoppes 8.375% 10/1/13 ..................... 2,200,000 2,510,178 Seaway Port Authority Duluth Industrial Development Dock & Wharf Revenue Cargill Project Series E 6.125% 11/1/14 .............................. 4,500,000 4,927,230 St. Cloud Commercial Development Revenue for Northwest Center Association 7.50% 8/1/12 ......................................... 4,283,971 4,551,334 St. Paul Minnesota Port Authority Commercial Development Revenue Fort Rd Medical (Asset Gty) 7.50% 9/1/02 ......................................... 1,300,000 1,327,495 --------- 36,114,283 ---------- LEASE/CERTIFICATES OF PARTICIPATION - 0.64% Beltrami County Housing & Redevelopment Authority Revenue 6.20% 2/1/14 ................................. 1,010,000 1,072,378 West St. Paul Commercial Mortgage K-Mart Lease 7.00% 11/1/07 ........................................ 1,563,219 1,713,883 --------- 2,786,261 --------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS (CONTINUED) POWER AUTHORITY REVENUE BONDS - 18.74% Bass Brook Pollution Control Revenue for Minnesota Power & Light 6.00% 7/1/22 ...........................$17,490,000 $18,370,466 Bass Brook Pollution Control Revenue for Minnesota Power & Light Company (MBIA) 6.00% 7/1/22 ......................................... 1,750,000 1,871,030 Northern Minnesota Municipal Power Agency Minnesota Electric Systems 4.75% 1/1/20 ........................ 7,100,000 6,907,306 Northern Minnesota Municipal Power Agency (FSA) 5.25% 1/1/13 ......................................... 4,000,000 4,208,760 Northern Minnesota Municipal Power Agency Electric System Revenue (AMBAC) 5.50% 1/1/18 .................. 9,200,000 9,528,072 Northern Minnesota Municipal Power Agency Zero Coupon (AMBAC) 1/1/09 ................................ 3,815,000 2,484,938 Northern Municipal Power Agency Minnesota Electric Systems Revenue 5.40% 1/1/15 ......................... 2,000,000 2,109,040 Puerto Rico Electric Power Authority Power Revenue Series DD Inverse Floater (FSA) 5.83% 7/1/19 ......................................... 3,050,000 2,772,694 Puerto Rico Electric Power Authority Series EE 4.75% 7/1/24 ......................................... 5,000,000 4,752,350 Puerto Rico Electric Power Authority Series X 5.50% 7/1/25 ......................................... 2,930,000 3,037,355 Puerto Rico Electric Power Authority Series Z 5.25% 7/1/21 ......................................... 1,500,000 1,512,735 Southern Minnesota Municipal Power Agency (FGIC) 5.75% 1/1/18 ......................................... 2,000,000 2,117,700 Southern Minnesota Municipal Power Agency (MBIA) 4.75% 1/1/16 ......................................... 7,200,000 7,092,093 Southern Minnesota Municipal Power Agency (MBIA) 5.75% 1/1/18 ......................................... 7,770,000 8,226,422 Southern Minnesota Municipal Power Agency Supply System (AMBAC) 5.50% 1/1/15 .......................... 1,560,000 1,623,679 Southern Minnesota Municipal Power Agency Zero Coupon (MBIA) 1/1/19 ................................. 6,785,000 2,524,020 Southern Minnesota Municipal Power Agency Zero Coupon (MBIA) 1/1/21 ................................. 5,000,000 1,655,000 Southern Minnesota Municipal Power Agency Power Supply System Revenue Capital Appreciation - Series A Zero Coupon 1/1/27 .......................... 3,000,000 720,930 Western Municipal Power Agency Revenue 6.125% 1/1/16 ........................................ 525,000 526,612 ---------- 82,041,202 ---------- *PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 10.92% Albert Lea St. John's Lutheran Home Project 8.50% 11/1/19-99 ..................................... 1,000,000 1,065,430 Blaine Industrial Development Revenue (Ball Corp.) (Escrowed to Maturity) 8.25% 12/1/99 ................. 250,000 259,668 Blaine Industrial Development Revenue (Ball Corp.) (Escrowed to Maturity) 8.25% 12/1/00 ................. 300,000 324,948 Bloomington Tax Increment (Escrowed to Maturity) 9.75% 2/1/08 ......................................... 500,000 649,985 Brainerd Independent School District #181 7.00% 6/1/11-01 ...................................... 390,000 417,444 for tax-exempt income 13 STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS (CONTINUED) *PRE-REFUNDED/ESCROWED TO MATURITY BONDS (CONTINUED) Faribault Independent School District #656 (MN School District Credit Enhanced) 6.10% 6/1/10-04 ......................................$ 1,000,000 $ 1,093,450 Glencoe/Mcleod County Health Care 8.50% 12/1/15-00 ..................................... 500,000 543,680 Kenyon Wanamingo Independent School District (MBIA) 6.00% 2/1/18-05 ............................... 2,350,000 2,575,718 Maplewood Independent School District #622 (FSA) 7.10% 2/1/25-05 ................................ 10,000,000 11,672,714 Minnesota Public Facilities Authority Water Pollution Control Series 90A 7.10% 3/1/12-00 ................... 1,990,000 2,104,942 Minnesota Public Facilities Authority Water Pollution Control 6.95% 3/1/13-01 .................... 5,220,000 5,677,324 Minnesota Public Facilities Authority Water Pollution Control 6.25% 3/1/16-05 .................... 4,400,000 4,960,472 Owatanna Public Utilities 6.75% 1/1/16-01 .............. 1,000,000 1,058,820 Pine Island Independent School District #255 (FSA) 6.625% 6/1/12-01 ............................... 240,000 254,969 Pine Island Independent School District #255 (FSA) 6.625% 6/1/13-01 ............................... 310,000 329,335 Pine Island Independent School District #255 (FSA) 6.625% 6/1/14-01 ............................... 330,000 350,582 Pine Island Independent School District #255 (FSA) 6.625% 6/1/15-01 ............................... 355,000 377,141 Pine Island Independent School District #255 (FSA) 6.625% 6/1/16-01 ............................... 380,000 403,700 Plainview Independent School District #810 6.70% 2/1/06-03 ...................................... 385,000 420,817 Plainview Independent School District #810 6.75% 2/1/08-03 ...................................... 445,000 487,195 Plainview Independent School District #811 6.75% 2/1/07-03 ...................................... 420,000 459,824 Red Wing Housing & Redevelopment Agency Jordan Tower Section 8 Series 92 7.00% 1/1/19-02 ...................................... 1,500,000 1,662,975 Richfield Independent School District #280 Series C, Inverse Floater 5.34% 2/1/15-03 ...................... 1,365,000 1,511,519 Southern Minnesota Municipal Power Agency Revenue (MBIA) (Escrowed to Maturity) 5.75% 1/1/18 ......................................... 1,000,000 1,073,000 Southern Minnesota Municipal Power Agency Supply System (AMBAC) (Escrowed to Maturity) 5.50% 1/1/15 ......................................... 990,000 1,049,727 PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS (CONTINUED) *PRE-REFUNDED/ESCROWED TO MATURITY BONDS (CONTINUED) St. Cloud Housing & Redevelopment Agency Northway A&B Project - Section 8 7.50% 12/1/18-00 ..................................... $2,045,000 $2,227,925 St. Louis Park Methodist Hospital (AMBAC) 7.25% 7/1/18-00 ...................................... 775,000 830,296 Stillwater Independent School District #834 (MBIA) 5.75% 2/1/15-05 ............................... 2,000,000 2,166,140 University Of Minnesota Series A (Escrowed to Maturity) 6.00% 2/1/11 ............................... 1,500,000 1,513,230 Western Minnesota Municipal Power Agency Revenue (Escrowed to Maturity) 9.75% 1/1/16 .................. 185,000 283,326 ---------- 47,806,296 ---------- WATER & SEWER REVENUE BONDS - 2.45% Minnesota Public Facilities Authority Water Revenue 5.98% 3/1/16 ................................. 1,000,000 960,020 Minnesota Public Facilities Authority Inverse Floater 6.23% 3/1/19 ................................. 2,000,000 1,921,400 Minnesota Public Facilities Authority Inverse Floater 6.13% 3/1/17 ................................. 3,000,000 2,893,410 Puerto Rico Aqueduct & Sewer Authority 5.00% 7/1/19 ......................................... 3,000,000 2,962,110 Puerto Rico Aqueduct & Sewer Authority 5.00% 7/1/15 ......................................... 2,000,000 2,007,260 ---------- 10,744,200 ---------- OTHER REVENUE BONDS - 1.37% Minneapolis Community Development Agency Common Bond Fund 7.95% 12/1/11 ....................... 855,000 948,759 Minneapolis Community Development Agency Common Bond Fund 7.40% 12/1/21 ....................... 795,000 870,923 Minneapolis Community Development Agency Common Bond Fund Opportunity Workshop Project Series 2A 7.125% 12/1/05 ..................... 510,000 560,398 Minneapolis Community Development Agency Tax Increment Revenue Zero Coupon 9/1/09 ................. 5,750,000 3,637,968 --------- 6,018,048 --------- Total Municipal Bonds (cost $393,850,885) 428,502,273 ----------- NUMBER OF SHARES --------- SHORT-TERM INVESTMENTS - 0.94% Federated Minnesota Municipal Money Market ............. 4,110,389 4,110,389 --------- Total Short-Term Investments (cost $4,110,389) .................................... 4,110,389 --------- 14 for tax-exempt income STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- TOTAL MARKET VALUE OF SECURITIES OWNED - 98.82% (COST $397,961,274) ......................................... $432,612,662 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.18% ......................................... 5,174,519 ------------ NET ASSETS APPLICABLE TO 33,892,468 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% ...................... $437,787,181 ============ NET ASSET VALUE - TAX-FREE MINNESOTA FUND A CLASS ($419,392,784 / 32,469,305 SHARES) .......................... $12.92 ====== NET ASSET VALUE - TAX-FREE MINNESOTA FUND B CLASS ($11,846,018 / 916,843 SHARES) .............................. $12.92 ====== NET ASSET VALUE - TAX-FREE MINNESOTA FUND C CLASS ($6,548,379 / 506,320 SHARES) ............................... $12.93 ====== - ------------ *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: AMBAC -Insured by the AMBAC Indemnity Corporation Asset Gty -Insured by the Asset Guaranty Insurance Company Connie Lee -Insured by College Construction Insurance Association FGIC -Insured by the Financial Guaranty Insurance Company FHA -Insured by the Federal Housing Authority FNMA -Insured by the Federal National Mortgage Association FSA -Insured by Financial Security Assurance GNMA -Insured by the Government National Mortgage Association MBIA -Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT FEBRUARY 28, 1998: Common stock $.01 par value, 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Tax-Free Minnesota Fund A Class, 1,000,000,000 shares allocated to Tax-Free Minnesota Fund B Class, and 1,000,000,000 shares allocated to Tax-Free Minnesota Fund C Class ................ $402,737,630 Distributions in excess of net investment income ............... (3,377) Accumulated net realized gain on investments ................... 401,540 Net unrealized appreciation of investments ..................... 34,651,388 ------------- Total net assets ............................................... $437,787,181 ============= NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE MINNESOTA FUND A CLASS: Net asset value per share (A) .................................. $12.92 Sales charge (3.75% of offering price or 3.87% of amount invested per share) (B) ..................................... 0.50 ------- Offering Price ................................................. $13.42 ======= - ------------ (A) Net asset value per share illustrated is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current prospectus for purchases of $100,000. See accompanying notes VOYAGEUR INSURED FUNDS, INC. DELAWARE-VOYAGEUR MINNESOTA INSURED FUND STATEMENT OF NET ASSETS FEBRUARY 28, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS - 97.17% GENERAL OBLIGATION BONDS - 16.93% Anoka County Capital Improvement Series C (FGIC) 5.90% 2/1/11 ................................. $8,045,000 $8,411,289 Becker Refunding Tax Increment Series D (MBIA) (AMT) 6.25% 8/1/15 .................................. 6,300,000 6,833,421 Dakota County Refunding Series B (AMBAC) 6.40% 2/1/08 ........................................ 1,135,000 1,159,289 Dakota County Refunding Series B (AMBAC) 6.45% 2/1/09 ........................................ 1,000,000 1,024,370 Dakota County Refunding Series B (AMBAC) 6.45% 2/1/10 ........................................ 2,500,000 2,561,625 Eden Prairie Independent School District #272 (MBIA) 5.65% 2/1/13 ................................. 3,200,000 3,315,104 Eden Prairie Independent School District #272 Inverse Floater (FGIC) 6.77% 2/1/14 ................. 1,125,000 1,185,907 Eden Prairie Independent School District #272, Inverse Floater (MBIA) 6.77% 2/1/15 ................. 1,000,000 1,043,740 Hennepin County Ref Solid Waste IBC (MBIA) 5.75% 10/1/10 ....................................... 1,800,000 1,930,842 Hopkins Independent School District #270 (MBIA) 4.875% 2/1/14 ....................................... 1,875,000 1,881,206 Lakeville Independent School District #194 Capital Appreciation Series B Zero Coupon (FSA) 2/1/17 ............................ 2,490,000 986,488 Lakeville Independent School District #194 Capital Appreciation Series B Zero Coupon (FSA) 2/1/15 ............................ 2,455,000 1,093,801 North Branch Independent School District #138, Inverse Floater (FGIC) 7.42% 2/1/11 ................. 965,000 1,098,431 Prior Lake Independent School District #719, Inverse Floater (FGIC) 6.67% 2/1/14 ................. 1,000,000 1,056,070 Rosemount Independent School District #196 Series B Zero Coupon (FSA) 4/1/10 ................... 2,240,000 1,372,672 Rosemount Independent School District #196 Zero Coupon (FSA) 4/1/09 ............................ 1,860,000 1,199,570 South Washington County Independent School District #883 (FGIC) 6.125% 6/1/09 .................. 1,430,000 1,497,639 South Washington County Independent School District #883 (FGIC) 6.125% 6/1/11 .................. 2,720,000 2,850,451 Spring Lake Park Independent School District #16, Inverse Floater (MBIA) 6.92% 2/1/14 ................. 2,175,000 2,309,981 St. Cloud Independent School District #742 (FGIC) 6.05% 2/1/09 ........................................ 1,000,000 1,066,040 St. Francis Independent School District #15 (FGIC) 5.90% 4/1/10 ................................. 1,845,000 1,956,383 Stillwater Independent School District #834 (FGIC) 5.50% 2/1/10 ................................. 2,995,000 3,094,734 Western Lake Superior Series A (MBIA) (AMT) 6.00% 10/1/08 ................................. 400,000 439,064 for tax-exempt income 15 STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) GENERAL OBLIGATION BONDS (CONTINUED) Western Lake Superior Series A (MBIA) (AMT) 6.10% 10/1/09 ................................. $ 425,000 $ 464,593 Western Lake Superior Series A (MBIA) (AMT) 6.20% 10/1/10 ....................................... 450,000 493,925 Western Lake Superior Series A (MBIA) (AMT) 6.20% 10/1/11 ................................. 475,000 521,365 ---------- 50,848,000 ---------- HOSPITAL REVENUE BONDS - 20.41% Bloomington Masonic Home Care Center (AMBAC) 5.90% 7/1/09 ................................ 1,250,000 1,341,087 Brainerd Benedictine Health Care Systems for St. Joseph's Hospital (Connie Lee) 6.00% 2/15/12 ....................................... 1,500,000 1,621,605 Brainerd Benedictine Health Care Systems for St. Joseph's Hospital (Connie Lee) 6.00% 2/15/20 ....................................... 2,000,000 2,147,740 Detroit Lakes Benedictine Health for St. Mary's Hospital (Connie Lee) 6.00% 2/15/12 ................. 1,630,000 1,762,144 Detroit Lakes Benedictine Health for St. Mary's Hospital (Connie Lee) 6.00% 2/15/19 ................. 1,000,000 1,075,000 Duluth Economic Development Authority Benedictine for St. Luke's Hospital (Connie Lee) 6.40% 5/1/18 ........................................ 500,000 541,135 Duluth Economic Development Authority Health Care Duluth Clinic (AMBAC) 6.30% 11/1/22 ................. 2,690,000 2,924,918 Duluth Economic Development Authority Health Care Revenue for St. Mary's Hospital, Inverse Floater (Connie Lee) 8.52% 2/15/17 .......................... 5,000,000 5,738,800 Duluth Economic Development Authority St. Luke's Hospital (Connie Lee) 6.00% 2/15/20 ................. 1,300,000 1,396,031 Duluth Economic Development Authority St. Luke's Hospital (Connie Lee) 6.40% 5/1/10 .................. 3,335,000 3,624,912 Minneapolis Fairview Hospital Series 91B (MBIA) 6.50% 1/1/11 ................................. 3,000,000 3,244,530 Minneapolis Health Care Facility Revenue Fairview Hospital & Healthcare Series A (MBIA) 5.25% 11/15/19 ...................................... 2,750,000 2,791,635 Minneapolis/St. Paul Housing & Redevelopment Authority Health Care System for Healthspan Series A (AMBAC) 4.75% 11/15/18 ..................... 4,000,000 3,880,200 Minneapolis/St. Paul Housing & Redevelopment Authority HealthOne (MBIA) 7.40% 8/15/05 ....................................... 600,000 641,364 Minneapolis/St. Paul Housing & Redevelopment Authority HealthOne (MBIA) 7.40% 8/15/11 ....................................... 2,370,000 2,527,463 Minneapolis/St. Paul Housing & Redevelopment Authority Health Care Systems for Healthspan Series 93A (FSA) 5.00% 11/15/13 ...................................... 6,490,000 6,592,866 Minneapolis/St. Paul Housing & Redevelopment Authority - Childrens Hospital, Inverse Floater (FSA) 7.82% 8/15/16 ................................. 1,310,000 1,466,244 PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) HOSPITAL REVENUE BONDS (CONTINUED) Minnesota Agricultural & Economic Development Fairview Hospital Series 97A (MBIA) 5.75% 11/15/26 ......................................$8,250,000 $ 8,820,818 Robbinsdale North Memorial Medical (AMBAC) 5.50% 5/15/23 ....................................... 5,400,000 5,553,576 St. Louis Park Health Care for Methodist Hospital, Inverse Floater (AMBAC) 6.92% 7/1/23 ................ 2,500,000 2,551,075 St. Paul Ramsey Medical (AMBAC) 5.50% 5/15/13 ....................................... 1,000,000 1,049,650 ---------- 61,292,793 ---------- HOUSING REVENUE BONDS - 18.17% Chaska Waters Edge Multifamily Revenue (GNMA) 7.30% 1/20/30 ................................ 3,257,000 3,622,273 Dakota County Housing & Redevelopment Authority Single Family Mortgage Revenue (FNMA) 6.70% 10/1/17 ....................................... 3,990,000 4,243,006 Dakota County Housing & Redevelopment Authority Single Family Mortgage Revenue (GNMA/FNMA) 5.85% 10/1/30 ........................... 6,984,000 7,240,103 Dakota, Washington & Stearns Counties Housing & Redevelopment Authority Single Family Mortgage Revenue (MBIA) 7.85% 12/1/30 ............... 140,000 145,572 Eagan Multifamily Revenue Woodridge Apartments (GNMA) 5.90% 8/1/20 ................................. 1,000,000 1,063,180 Hopkins Multifamily Housing Auburn Apartments (GNMA) 8.05% 6/20/31 ................................ 3,790,000 4,297,708 Minneapolis/St. Paul Housing Finance Board Housing Project Phase V (GNMA) 8.875% 11/1/18 ...................................... 50,000 51,140 Minneapolis/St. Paul Housing Finance Board Housing Project Phase IX (GNMA) 7.25% 8/1/21 ........................................ 1,030,000 1,087,876 Minneapolis/St. Paul Housing Finance Board Housing Project Phase IX (GNMA) 7.30% 8/1/31 ........................................ 695,000 731,974 Minneapolis/St. Paul Housing Finance Board Single Family Mortgage Revenue (GNMA) 8.125% 12/1/14 ...................................... 115,000 117,839 Minneapolis /St. Paul Housing Finance Board Single Family Mortgage Revenue (GNMA) 8.30% 8/1/21 ........................................ 75,000 76,105 Minneapolis/St. Paul Housing Finance Board Single Family Mortgage-Project Phase XI (GNMA) 5.80% 11/1/30 ................................ 2,705,000 2,791,614 Minnesota Housing Finance Agency Single Family Housing Rental Series A (AMBAC) (AMT) 5.875% 8/1/28 ....................................... 2,610,000 2,741,544 Minnesota Housing Finance Agency Single Family Housing Rental (AMBAC) 5.95% 2/1/15 ................. 2,325,000 2,461,524 Minnesota Housing Finance Agency Single Family Housing Rental (MBIA) 5.95% 2/1/18 .................. 6,620,000 6,969,006 16 for tax-exempt income STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Minnesota State Housing Finance Agency Single Family Housing Rental Series D (AMBAC) (AMT) 5.80% 7/1/21 .................................. $4,185,000 $ 4,359,598 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series A (AMBAC) 7.05% 7/1/22 ........................................ 495,000 517,522 Minnesota Housing Finance Agency Single Family Mortgage Revenue Series A (AMBAC) 7.45% 7/1/22 ........................................ 1,330,000 1,389,690 Minnetonka Multifamily Housing Cedar Hills Project Cedar Hills East (FHA) 7.50% 12/1/17 ................ 400,000 415,644 Minnetonka Multifamily Housing Cedar Hills Project Cedar Hills East (FHA) 7.50% 12/1/27 ....................................... 500,000 517,770 Scott County Housing & Redevelopment Authority Facility Lease Revenue Justice Center Project (AMBAC) 5.50% 12/1/15 ............................... 1,755,000 1,855,877 South St. Paul Housing & Redevelopment Authority Single Family Housing Mortgage Series 93 (FNMA) 5.75% 9/1/20 ................................. 2,385,000 2,457,957 St. Paul Housing & Redevelopment Authority Multifamily Housing (FHA) 6.60% 10/1/12 ................................. 4,000,000 4,289,120 White Bear Lake Multifamily Housing Lake Square (FHA) 5.875% 2/1/15 ................................. 1,055,000 1,116,011 ---------- 54,559,653 ---------- POWER AUTHORITY REVENUE BONDS - 9.22% Bass Brook Pollution Control Revenue for Minnesota Power & Light Company (MBIA) 6.00% 7/1/22 ........................................ 2,000,000 2,138,320 Marshall Utility Revenue (FSA) 6.45% 7/1/10 ............ 500,000 549,245 Marshall Utility Revenue (FSA) 6.45% 7/1/11 ............ 100,000 109,849 Marshall Utility Revenue (FSA) 6.50% 7/1/12 ............ 500,000 550,230 Marshall Utility Revenue (FSA) 6.50% 7/1/13 ............ 500,000 550,230 Northern Minnesota Municipal Power Agency (FSA) 5.25% 1/1/13 .................................. 4,750,000 4,997,903 Northern Minnesota Municipal Power Agency Electric Systems 4.75% 1/1/20 ....................... 1,500,000 1,459,290 Northern Minnesota Municipal Power Agency Electric System Revenue (AMBAC) 5.50% 1/1/18 ................. 4,200,000 4,349,772 Puerto Rico Electric Power Authority Revenue Ref-Series GG 4.75% 9/1/21 .......................... 1,000,000 974,410 Puerto Rico Electric Power Authority Inverse Floater 5.83% 7/1/19 ................................ 2,825,000 2,568,151 Southern Minnesota Municipal Power Agency (AMBAC) 5.75% 1/1/18 ................................ 1,330,000 1,408,271 Southern Minnesota Municipal Power Agency (FGIC) 5.75% 1/1/18 ................................. 4,570,000 4,838,945 Southern Minnesota Municipal Power Agency (MBIA) 4.75% 1/1/16 ................................. 2,400,000 2,364,312 Southern Minnesota Municipal Power Agency, Inverse Floater (FGIC) 7.92% 1/1/18 ................. 750,000 836,640 ---------- 27,695,568 ---------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) *PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 31.79% Alexandria Independent School District #206 (MBIA) 6.30% 2/1/13 Crossover Refunded to 2/1/03 ................................. $ 1,775,000 $1,921,384 Becker Wastewater Treatment Facility Series A (MBIA) 5.95% 2/1/14 Crossover Refunded to 2/1/04 ................................. 500,000 541,905 Brainerd Independent School District #181 (FGIC) 7.00% 6/1/09 Crossover Refunded to 6/1/01 ................................. 515,000 551,241 Brainerd Independent School District #181 (FGIC) 7.00% 6/1/10 Crossover Refunded to 6/1/01 ................................. 550,000 588,703 Buffalo Independent School District #887 (FSA) 6.10% 2/1/15 Crossover Refunded to 2/1/03 ................................. 1,030,000 1,109,485 Carver County Housing & Redevelopment Authority Jail Facility (MBIA) 6.40% 2/1/10 Crossover Refunded to 2/1/02 ....................... 515,000 550,818 Carver County Housing & Redevelopment Authority Jail Facility (MBIA) 6.40% 2/1/11 Crossover Refunded to 2/1/02 ....................... 550,000 588,252 Carver County Housing & Redevelopment Authority Jail Facility (MBIA) 6.40% 2/1/12 Crossover Refunded to 2/1/02 ....................... 585,000 625,687 Carver County Housing & Redevelopment Authority Jail Facility (MBIA) 6.40% 2/1/13 Crossover Refunded to 2/1/02 ....................... 625,000 668,469 Carver County Housing & Redevelopment Authority Jail Facility (MBIA) 6.40% 2/1/14 Crossover Refunded to 2/1/02 ....................... 670,000 716,598 Centennial Independent School District #12 (FSA) 7.10% 2/1/09-00 .............................. 200,000 207,308 Centennial Independent School District #12 (FSA) 7.15% 2/1/11-00 .............................. 450,000 466,645 Centennial Independent School District #12 (FSA) 7.15% 2/1/12-00 .............................. 250,000 259,247 Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage Revenue (Escrowed to Maturity) (MBIA) 8.15% 9/1/16 ....................................... 405,000 541,728 Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage Revenue (Escrowed to Maturity) (GNMA) 8.375% 9/1/21 ...................................... 14,115,000 19,921,629 Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage Revenue (Escrowed to Maturity) (GNMA) 8.45% 9/1/19 ....................................... 9,000,000 12,614,759 Delano Independent School District #879 (AMBAC) 7.25% 2/1/10 Crossover Refunded to 2/1/01 ................................. 500,000 532,440 for tax-exempt income 17 STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) PRE-REFUNDED/ESCROWED TO MATURITY BONDS (CONTINUED) Duluth Economic Development Authority Health Care Duluth Clinic (AMBAC) 6.30% 11/1/22 Crossover Refunded to 11/1/04 ....................... $ 1,060,000 $1,196,655 Eden Prairie Independent School District #272 (FGIC) 5.85% 2/1/13 Crossover Refunded 2/1/01 ........................... 2,500,000 2,636,350 Elk River Independent School District #728 (FSA) 7.00% 2/1/10 Crossover Refunded to 2/1/00 .................................. 200,000 206,398 Elk River Independent School District #728 (FSA) 6.30% 2/1/14 Crossover Refunded to 2/1/02 .................................. 500,000 533,410 Elk River Independent School District #728 (FSA) 6.30% 2/1/15 Crossover Refunded to 2/1/02 .................................. 665,000 709,435 Elk River Independent School District #728 Series 92 B (AMBAC) 6.00% 2/1/09 Crossover Refunded to 2/1/03 ........................ 3,950,000 4,240,641 Ellendale Geneva Independent School District #762 (AMBAC) 6.00% 2/1/10 Crossover Refunded to 2/1/03 ........................ 230,000 246,923 Ellendale Geneva Independent School District #762 (AMBAC) 6.00% 2/1/11 Crossover Refunded to 2/1/03 .................................. 245,000 263,027 Ellendale Geneva Independent School District #762 (AMBAC) 6.00% 2/1/12 Crossover Refunded to 2/1/03 ........................ 265,000 284,499 Ellendale Geneva Independent School District #762 (AMBAC) 6.00% 2/1/13 Crossover Refunded to 2/1/03 ........................ 280,000 300,602 Ellendale Geneva Independent School District #762 (AMBAC) 6.00% 2/1/14 Crossover Refunded to 2/1/03 ........................ 300,000 322,074 Ellendale Geneva Independent School District #762 (AMBAC) 6.00% 2/1/15 Crossover Refunded to 2/1/03 ........................ 320,000 343,546 Farmington Independent School District #192 (MBIA) 6.80% 2/1/11 Crossover Refunded to 2/1/01 ........................ 850,000 898,152 Maplewood Independent School District #622 (MBIA) 7.10% 2/1/19-05 .............................. 5,935,000 6,928,756 Maplewood Independent School District #622 (FSA) 7.10% 2/1/25-05 ............................... 11,525,000 13,454,746 Minnesota Public Facilities Authority Water Pollution Control Revenue (MBIA) 6.50% 3/1/14-02 ..................................... 1,500,000 1,651,650 Moorhead Independent School District #152 (AMBAC) 5.90% 2/1/10 Crossover Refunded to 2/1/01 ........................ 475,000 494,090 Moorhead Independent School District #152 (AMBAC) 5.90% 2/1/11 Crossover Refunded to 2/1/01 ........................ 505,000 525,296 PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) PRE-REFUNDED/ESCROWED TO MATURITY BONDS (CONTINUED) Moorhead Independent School District #152 (AMBAC) 5.90% 2/1/12 Crossover Refunded to 2/1/01 ........................ $ 540,000 $ 561,703 Moorhead Independent School District #152 (AMBAC) 6.00% 2/1/13 Crossover Refunded to 2/1/01 ........................ 575,000 599,162 Moorhead Minnesota Public Utilities (MBIA) 6.25% 11/1/12 Crossover Refunded to 11/1/02 ....................... 735,000 794,653 Mora Series A (AMBAC) 6.85% 2/1/10-00 ..................................... 245,000 253,406 Mora Series A (AMBAC) 6.85% 2/1/11-00 ..................................... 265,000 274,092 Northern Minnesota Municipal Power Agency Series B (AMBAC) 5.90% 1/1/08-03 ............................. 700,000 767,942 Roseau Independent School District #682 (AMBAC) 7.00% 2/1/16 Crossover Refunded to 2/1/00 ........................ 500,000 515,995 St. Cloud Hospital Facility Revenue (AMBAC) 6.75% 7/1/15-01 ..................................... 500,000 546,400 St. Cloud Hospital Facility Revenue (AMBAC) 6.75% 7/1/11-01 ..................................... 400,000 437,120 St. Cloud Hospital Facility Revenue (AMBAC) 7.00% 7/1/07-01 ..................................... 500,000 549,170 St. Louis Park Methodist Hospital (AMBAC) 7.25% 7/1/18-00 ..................................... 500,000 535,675 South St. Paul Independent School District #6 (FGIC) 6.45% 2/1/11 Crossover Refunded to 2/1/00 ........................ 500,000 513,550 South St. Paul Independent School District #6 (FGIC) 6.45% 2/1/12 Crossover Refunded to 2/1/00 ........................ 300,000 308,130 South St. Paul Independent School District #6 (FGIC) 6.25% 2/1/10 Crossover Refunded to 2/1/00 ........................ 625,000 640,825 South Washington County Independent School District #883 (FGIC) 6.875% 6/1/11-00 ............... 520,000 541,798 Southern Minnesota Municipal Power Agency Revenue (Escrowed to Maturity) (MBIA) 5.75% 1/1/18 ................................. 3,790,000 4,066,670 Southern Minnesota Municipal Power Agency Revenue (Escrowed to Maturity) (AMBAC) 5.75% 1/1/18 ................................ 670,000 718,910 Warroad Independent School District #690 (AMBAC) 6.85% 2/1/13-00 ............................. 500,000 515,325 Washington County Housing & Redevelopment Authority Jail Facilities (MBIA) 7.00% 2/1/12-02 ..................................... 500,000 547,290 Western Minnesota Municipal Power Agency Revenue (Escrowed to Maturity) (MBIA) 6.60% 1/1/10 ........................................ 2,000,000 2,286,500 18 for tax-exempt income STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) PRE-REFUNDED/ESCROWED TO MATURITY BONDS (CONTINUED) Western Minnesota Municipal Power Agency Revenue (Escrowed to Maturity) (MBIA) 9.75% 1/1/16 ........................................ $ 530,000 $ 811,690 Wright County (FSA) (AMT) 7.20% 12/1/12-99 .................................... 1,000,000 1,030,250 ------------ 95,458,804 ------------ TRANSPORTATION BONDS - 0.65% Puerto Rico Commonwealth Highway & Transportation Authority Revenue Series A Zero Coupon (AMBAC) 7/1/18 ...................................... 5,000,000 1,943,250 ------------ 1,943,250 ------------ Total Municipal Bonds (cost $268,272,485) .............. 291,798,068 ------------ NUMBER OF SHARES --------- SHORT-TERM INVESTMENTS - 1.90% Federated Minnesota Municipal Money Market ............. 5,716,700 5,716,700 ------------ Total Short-Term Investments (cost $5,716,700) ................................... 5,716,700 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 99.07% (COST $273,989,185) ................................. $297,514,768 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.93% ................................. 2,791,491 ------------ NET ASSETS APPLICABLE TO 27,317,967 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% .............. $300,306,259 ============ NET ASSET VALUE - MINNESOTA INSURED FUND A CLASS ($284,722,436 / 25,899,657 SHARES) .................. $10.99 ====== NET ASSET VALUE - MINNESOTA INSURED FUND B CLASS ($11,648,391 / 1,060,434 SHARES) .................... $10.98 ====== NET ASSET VALUE - MINNESOTA INSURED FUND C CLASS ($3,935,432 / 357,876 SHARES) ....................... $11.00 ====== - ------------ *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: AMBAC -Insured by the AMBAC Indemnity Corporation AMT -Alternative Minimum Tax Connie Lee -Insured by the College Construction Insurance Company FGIC -Insured by the Financial Guaranty Insurance Company FHA -Insured by the Federal Housing Authority FNMA -Insured by the Federal National Mortgage Association FSA -Insured by Financial Security Assurance GNMA -Insured by the Government National Mortgage Association MBIA -Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT FEBRUARY 28, 1999: 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 and 1,000,000,000 shares allocated to Minnesota Insured Fund C Class ...................... $283,129,527 Distributions in excess of net investment income ....... (3,213) Accumulated net realized loss on investments ........... (6,345,638) Net unrealized appreciation of investments ............. 23,525,583 ------------ Total net assets ....................................... $300,306,259 ============ NET ASSET VALUE AND OFFERING PRICE FOR MINNESOTA INSURED FUND A CLASS Net Asset Value per share (A) .......................... $10.99 Sales Charge (3.75% of offering price or 3.91% of amount invested per share)(B) ....................... 0.43 ------ Offering Price ......................................... $11.42 ====== - ------------ (A) Net asset value per share illustrated is the estimated amount which would be paid upon the redemtion or repurchase of shares. (B) See How to Buy Shares in the current prospectus for purchase of $100,000. See accompanying notes for tax-exempt income 19 VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC. DELAWARE-VOYAGEUR TAX-FREE MINNESOTA INTERMEDIATE FUND STATEMENT OF NET ASSETS FEBRUARY 28, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS - 99.46% GENERAL OBLIGATION BONDS - 3.38% Olmstead County Resource Recovery Series A 5.90% 2/1/05 .................................... $1,175,000 $ 1,238,368 Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 .................................... 1,000,000 923,400 ---------- 2,161,768 ---------- HEALTH CARE/HOSPITAL REVENUE BONDS - 20.41% Fergus Falls Health Care Facility Broen Memorial Home Project 6.20% 11/1/05 ...................... 100,000 103,908 Fergus Falls Health Care Facility Broen Memorial Home Project 6.30% 11/1/06 ...................... 200,000 208,732 Fergus Falls Health Care Facility Broen Memorial Home Project 6.40% 11/1/07 ...................... 200,000 208,700 Fergus Falls Health Care Facility Broen Memorial Home Project 6.60% 11/1/09 ...................... 240,000 250,361 Fergus Falls Health Care Facility Broen Memorial Home Project 6.70% 11/1/10 ...................... 260,000 271,183 Maplewood Healthcare Facility For Health East 5.70% 11/15/02 .................................. 1,000,000 1,001,690 Maplewood Healthcare Facility For Health East 5.95% 11/15/06 .................................. 2,200,000 2,193,070 Minneapolis Health Care Facilities Jones-Harrison Residence Project 5.90% 10/1/16 ................. 125,000 126,623 Rochester Health Care Facilities Revenue Mayo Foundation Series B 5.50% 11/15/27 .............. 2,000,000 2,086,560 Rochester Nursing Home & Multifamily Housing Revenue Samaritan Bethany, Inc. 6.00% 5/1/04 .................................... 300,000 304,575 Rochester Nursing Home & Multifamily Housing Revenue Samaritan Bethany, Inc. 6.10% 5/1/05 .................................... 250,000 253,808 St. Paul Housing & Redevelopment Authority Health Care Facility Revenue Regions Hospital Project 5.30% 5/15/28 ................................... 3,000,000 2,896,140 St. Paul Housing & Redevelopment Authority for Health East Authority Hospital Revenue 5.70% 11/1/15 ................................... 2,100,000 2,031,876 St. Paul Housing & Redevelopment Authority for Health East Authority Hospital Revenue 5.85% 11/1/17 ................................... 1,160,000 1,132,879 ---------- 13,070,105 ---------- HIGHER EDUCATION REVENUE BONDS - 3.25% Minnesota Higher Education Facility Authority Augsburg College Series 4F2 5.75% 5/1/16 ........ 2,005,000 2,080,508 2,080,508 HOUSING REVENUE BONDS - 6.19% Burnsville Multifamily Housing Revenue Burnsville Apts. Project (LOC Twin City Federal) Mandatory Put 7.00% 9/1/99 ................................ 580,000 582,175 PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Oakdale Elderly Housing Revenue PHM/Oakdale Project 5.75% 3/1/18 ............................ $ 1,400,000 $ 1,408,904 Oakdale Housing Oak Meadows Project 6.20% 4/1/07 .................................... 150,000 157,934 Oakdale Housing Oak Meadows Project 6.30% 4/1/08 .................................... 260,000 273,707 Oakdale Housing Oak Meadows Project 6.50% 4/1/10 .................................... 295,000 311,797 Park Rapids Multifamily Revenue The Court Apartments Project Section 8 6.05% 8/1/12 ....... 1,125,000 1,137,049 St. Paul Housing & Redevelopment Single Family Mortgage (FNMA) 6.90% 12/1/21 ................... 85,000 89,604 ---------- 3,961,170 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 15.00% Andover Development Revenue Downtown Center Project Series A 6.50% 12/1/06 .................. 1,795,000 1,874,285 Anoka County Minnesota Resource Recovery Revenue-Northern States Power Company PJ 4.50% 12/1/07 ................................ 1,000,000 993,510 Anoka County Minnesota Resource Recovery Revenue-Northern States Power Company PJ 4.60% 12/1/08 ................................ 1,000,000 995,280 Brooklyn Center Commercial Development Revenue Brookdale Association Reliastar Life Insurance Co Mandatory Put 5.70% 6/1/01 ...................... 1,000,000 1,043,510 Duluth Gross Revenue Bond Duluth Entertainment Project 7.00% 12/1/03 ........................... 1,250,000 1,381,488 Duluth Gross Revenue Bond Duluth Entertainment Project 7.30% 12/1/06 ........................... 250,000 285,528 Richfield Shoppes Commercial Development Revenue Richfield Shoppes Project 7.50% 10/1/04 ................................... 950,000 985,264 St. Paul Port Authority Commercial Development Revenue Fort Rd Medical (Asset Gty) 7.50% 9/1/02 .................................... 2,000,000 2,042,300 ---------- 9,601,165 ---------- LEASE/CERTIFICATES OF PARTICIPATION - 3.65% Beltrami County Housing & Redevelopment Authority Revenue 5.90% 2/1/08 .................. 355,000 375,810 Beltrami County Housing & Redevelopment Authority Revenue 6.00% 2/1/09 .................. 380,000 402,207 Beltrami County Housing & Redevelopment Authority Revenue 6.00% 2/1/10 .................. 405,000 426,542 Beltrami County Housing & Redevelopment Authority Revenue 6.10% 2/1/11 .................. 430,000 453,925 Hibbing Economic Development Authority Revenue 6.10% 2/1/08 .................................... 650,000 681,499 ---------- 2,339,983 ---------- 20 for tax-exempt income STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS (CONTINUED) POWER AUTHORITY REVENUE BONDS - 6.32% Eveleth Industrial Development Revenue for Minnesota Power & Light Company 6.125% 1/1/04 ..................................... $2,500,000 $ 2,658,750 Puerto Rico Electric Power Authority ROLS Inverse Floater 5.69% 7/1/19 ...................... 1,000,000 909,080 Southern Minnesota Municipal Power Agency Power Supply System Revenue Capital Appreciation- Series A Zero Coupon 1/1/27 ....................... 2,000,000 480,620 ----------- 4,048,450 ----------- *PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 38.26% Austin Independent School District #492 (MBIA) 6.875% 2/1/12 Crossover Refunded to 2/1/01 ...................... 1,205,000 1,274,914 Braham Independent School District #314 (AMBAC) 6.30% 2/1/19 Crossover Refunded to 2/1/01 ...................... 3,015,000 3,158,243 Eden Valley Watkins Independent School District #463 (FSA) 6.55% 2/1/11 Crossover Refunded to 2/1/02 ...................... 250,000 268,410 Eden Valley Watkins Independent School District #463 (FSA) 6.60% 2/1/16 Crossover Refunded to 2/1/02 ...................... 615,000 661,131 Mankato Independent School District #77 (FSA) 6.35% 2/1/13 Crossover Refunded to 2/1/02 ...................... 1,750,000 1,869,315 Metropolitan Council Hubert H Humphrey Metrodome Sports Facility Revenue Series 92 (Escrowed to Maturity) 6.00% 10/1/09 ........................... 3,520,000 3,796,424 Minneapolis/St. Paul HealthOne Series B (Escrowed to Maturity) 7.55% 8/15/00 .............. 325,000 344,867 Minnesota Public Facilities Authority Pollution Control Revenue Series A 6.55% 3/1/03 ............. 1,720,000 1,844,700 Minnesota State 6.25% 8/1/10-02 ...................... 4,000,000 4,343,960 Olmstead County 6.85% 2/1/02-01 ...................... 800,000 851,384 Olmstead County 6.90% 2/1/03-01 ...................... 900,000 958,635 Olmstead County 6.95% 2/1/04-01 ...................... 950,000 1,012,767 Richfield Independent School District #280 Series C Inverse Floater 5.34% 2/1/15 Crossover Refunded to 2/1/03 ...................... 1,000,000 1,107,340 St. Cloud Hospital Facility Revenue (AMBAC) 7.00% 7/1/20-01 ................................... 2,740,000 3,006,218 ----------- 24,498,308 ----------- WATER & SEWER REVENUE BONDS - 3.00% Minnesota Public Facilities Authority Water Pollution Control Revenue 5.74% 3/1/16 ............ 2,000,000 1,920,040 ----------- 1,920,040 ----------- Total Municipal Bonds (cost $61,617,549) ............. 63,681,497 =========== NUMBER OF SHARES --------- SHORT-TERM INVESTMENTS - 2.43% Norwest Federated Municipal Money Market Fund ................................. 1,555,682 1,555,682 ----------- Total Short-Term Investments (cost $1,555,682) ................................. 1,555,682 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED - 101.89% (COST $63,173,231) ...................................... $65,237,179 LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (1.89%) .................................. (1,212,304) ----------- NET ASSETS APPLICABLE TO 5,785,915 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% .................. $64,024,875 =========== NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND A CLASS ($59,771,214 / 5,401,849 SHARES) ................ $11.06 ====== NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND B CLASS ($2,166,186 / 195,494 SHARES) ................... $11.08 ====== NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND C CLASS ($2,087,475 / 188,572 SHARES) ................... $11.07 ====== * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: AMBAC -Insured by the AMBAC Indemnity Corporation Asset Gty -Insured by the Asset Guaranty Insurance Company FNMA -Insured by the Federal National Mortgage Association FSA -Insured by Financial Security Assurance LOC -Line of Credit MBIA -Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT FEBRUARY 28, 1999: 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 Fund B Class, and 1,000,000,000 shares allocated to Tax-Free Minnesota Intermediate Fund C Class ............................................. $61,991,528 Undistributed net investment income ......................... $1,703 Accumulated net realized loss on investments ................ (32,304) Net unrealized appreciation of invesments ................... 2,063,948 ----------- Total Net Assets ............................................ $64,024,875 =========== NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE MINNESOTA INTERMEDIATE FUND A CLASS Net asset value per share (A) ................................ $11.06 Sales charge(2.75% of offering price or 2.80% of amount invested per share) (B) ................................... 0.31 ------ Offering price ............................................... $11.37 ====== (A) Net asset value per share illustrated is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current prospectus for purchases of $100,000. See accompanying notes for tax-exempt income 21 VOYAGEUR MUTUAL FUNDS, INC. DELEWARE-VOYAGEUR MINNESOTA HIGH YIELD MUNICIPAL BOND FUND STATEMENT OF NET ASSETS FEBRUARY 28, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS - 95.59% CITY AGENCIES REVENUE BONDS - 3.12% Minneapolis Community Development Agency Common Bond Fund Series 2 6.20% 6/1/17 ................... $ 750,000 $ 799,748 Minneapolis Community Development Agency Revenue Limited Tax Series 4 6.20% 6/1/17 ................. 1,055,000 1,102,602 --------- 1,902,350 --------- GENERAL OBLIGATION BONDS - 3.12% Inner Grove Heights (MN School District Enhanced) Series A 5.75% 2/1/13 ............................. 100,000 107,842 Puerto Rico Commonwealth 5.375% 7/1/25 ............... 500,000 515,355 Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 ...................................... 1,270,000 1,172,718 Waconia Independent School District Series 93A (FSA) 5.45% 2/1/15 ................................ 100,000 102,897 --------- 1,898,812 --------- HIGHER EDUCATION REVENUE BONDS - 3.64% Minnesota State Higher Education Facility Macalester College 4C 5.50% 3/1/12 ................ 100,000 104,668 Minnesota State Higher Education Facility St. Mary's College Series 3Q 6.15% 10/1/23 ..................................... 900,000 931,842 Minnesota State University System Revenue Bonds Series 93A 6.10% 6/30/23 .................... 100,000 104,068 University Of Minnesota Series A 5.50% 7/1/21 ...................................... 1,000,000 1,075,160 --------- 2,215,738 --------- HOSPITAL REVENUE BONDS - 19.86% Cambridge Healthcare Facility Revenue Grandview Christian Home 7.25% 9/1/26 ....................... 125,000 132,850 Cannon Falls Nursing Home Franciscan Health Community Project 7.25% 7/1/21 .................... 100,000 104,312 Duluth Economic Development Authority Health Care Facilities St. Francis Health Care Facility 6.75% 12/1/17 ..................................... 325,000 342,573 Fergus Falls Health Care Facility Revenue Lake Region Hospital 6.50% 9/1/18 ...................... 750,000 816,938 Glencoe Health Care Revenue 6.40% 12/1/15 ..................................... 275,000 291,574 Little Canada Senior Facility Residence Series 92 (Presbyterian Homes Guaranteed) 7.25% 7/1/12 ...................................... 250,000 260,843 Mankato Health Facilities Revenue Mankato Lutheran Homes Series A 6.875% 10/1/26 ..................... 300,000 311,343 Minneapolis Health Care American Baptist Homes 8.70% 11/1/09 ..................................... 150,000 166,044 Minneapolis Health Care Facility Revenue Jones-Harrison Residence Project 6.00% 10/1/27 ..................................... 1,565,000 1,585,235 Minneapolis Housing & Health Care Facility Revenue Augustana Chapel View Homes 6.50% 6/1/17 ...................................... 1,370,000 1,408,798 - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS (CONTINUED) HOSPITAL REVENUE BONDS (CONTINUED) Northfield Health Care Facilities Revenue Refunding & Improvement (Northfield Care Center) Series A 6.00% 5/1/28 ........................... $ 1,405,000 $ 1,419,247 Perham Hospital District Congregate Housing Facilities Briarwood Project 6.25% 2/1/22 ....... 620,000 628,618 Robbinsdale North Memorial Medical (AMBAC) 5.50% 5/15/23 ................................... 100,000 102,844 Rochester Health Care Facilities Revenue Reg IRS for Mayo Clinic, Series H Inverse Floater 7.864% 11/15/15 ................................. 1,500,000 1,744,095 Springfield St. John's Lutheran Home Revenue 8.50% 11/1/19 ................................... 150,000 157,418 St. Paul Housing & Redevelopment Hospital Revenue for Health East Series B 6.625% 11/1/17 .................................. 490,000 507,650 St. Paul Housing & Redevelopment Hospital Revenue for Health East Series A 6.625% 11/1/17 .................................. 240,000 248,645 Waconia Good Samaritan Housing & Redevelopment Revenue for The Evangelical Lutheran Series A 6.00% 6/1/14 ........................... 660,000 683,872 Wadena County Health Care Facility Gross Revenue Series B 7.75% 9/1/24 ........................... 250,000 278,310 Washington County Housing & Redevelopment Authority for Health East 5.50% 11/15/27 .................................. 1,000,000 899,190 ---------- 12,090,399 ---------- HOUSING REVENUE BONDS - 50.61% Bloomington Multifamily Housing Revenue Refunding Hampshire Apartments Series A 6.20% 12/1/31 ................................. 2,500,000 2,496,225 Brooklyn Center Four Court Multifamily Housing 7.50% 6/1/25 .................................... 370,000 388,223 Carver Multifamily Housing Lake Grace 6.25% 7/1/28 .................................... 330,000 346,883 Carver Multifamily Housing Lake Grace 8.00% 7/1/28 .................................... 320,000 352,467 Chanhassen Multifamily Housing Heritage Park 6.20% 7/1/30 .................................... 300,000 319,266 Cheska Multifamily West Suburban Housing Partners 7.875% 3/1/31 ................................... 1,000,000 997,130 Coon Rapids Multifamily Revenue Margaret Place Series A 6.50% 5/1/25 ........................... 500,000 507,740 Coon Rapids Senior Housing Revenue Refunding Epiphany Senior Citizens Housing Corporation Project 6.00% 11/1/28 ........................... 3,455,000 3,456,555 Eden Prairie Health Care Facilities Revenue Refunding Castle Ridge Care Center 5.70% 7/1/28 .................................... 1,740,000 1,690,149 22 for tax-exempt income STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Eden Prairie Multifamily Housing Subordinated Tanager Creek 8.00% 6/20/31 ....................... $ 770,000 $ 801,054 Hibbing Economic Development Authority 6.40% 2/1/12 ...................................... 530,000 555,387 Hutchinson Multifamily Housing Revenue Evergreen Apartments Project, Section 8 5.75% 11/1/28 ..................................... 3,630,000 3,624,552 Minneapolis Multifamily Housing Olson Townhomes, Section 8 6.00% 12/1/19 ........................... 800,000 827,664 Minneapolis-Nicollet Towers Multifamily Housing, Section 8 6.00% 12/1/19 ........................... 300,000 318,609 Minnesota Housing Finance Authority Single Family Mortgage Series E 6.25% 1/1/23 .................... 90,000 94,342 Minnesota Housing Finance Authority Single Family Housing 5.875% 1/1/17 ............................. 100,000 104,925 Minnesota State Housing Finance Agency Single Family Mortgage Series K 5.75% 1/1/26 ............. 1,000,000 1,028,140 Minnetonka Multifamily Housing Beacon Hill Senior Housing Project (Presbyterian Homes Guaranteed) 7.55% 6/1/19 .......................... 200,000 214,808 Minnetonka Senior Housing Revenue Westridge Senior Housing Project 6.30% 9/1/08 ...................................... 110,000 114,599 Minnetonka Senior Housing Revenue Westridge Senior Housing Project 6.50% 9/1/12 ...................................... 285,000 296,850 Minnetonka Senior Housing Revenue Westridge Senior Housing Project 7.00% 9/1/27 ...................................... 1,275,000 1,343,238 Moorhead Economic Development Authority Multifamily Revenue Refunding & Improvement Housing Development for Eventide Series B 6.00% 6/1/18 ...................................... 870,000 872,279 New Brighton Multifamily Polynesian Village Apartments 7.60% 4/1/25 ................... 300,000 321,804 Oakdale Elderly Housing Revenue PHM/Oakdale Project 6.00% 3/1/28 .............................. 1,800,000 1,822,770 Oakdale Housing Oak Meadows Project 6.75% 4/1/15 ...................................... 1,500,000 1,594,965 Shoreview Elderly Housing (Presbyterian Homes of Homes)/Shoreview Project 6.15% 12/1/33 ............ 2,955,000 2,961,087 St. Anthony Multifamily Housing Chandler (GNMA) 6.05% 11/20/16 .................................... 135,000 144,939 St. Louis Park Multifamily Mortgage Revenue Tamarind Project (FNMA) 5.50% 11/1/13 ..................................... 125,000 128,566 Stillwater Multifamily Housing Stillwater Cottages 6.75% 11/1/11 ..................................... 205,000 210,340 MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Stillwater Multifamily Housing Stillwater Cottages 7.00% 11/1/27 ................................... $ 340,000 $ 350,540 Stillwater Multifamily Housing Stillwater Cottages 7.00% 11/1/16 ................................... 680,000 701,080 Twin Valley Congregate Housing Revenue Living Options Incorporated Project 5.95% 11/1/28 ...... 1,825,000 1,822,281 ---------- 30,809,457 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 3.36% Andover Development Revenue Downtown Center Project Series A 7.00% 12/1/12 .................. 1,640,000 1,745,419 Red Wing Industrial Development Revenue for Kmart (First Mortgage) 5.50% 7/1/08 ................... 300,000 302,673 ---------- 2,048,092 ---------- LEASE/CERTIFICATES OF PARTICIPATION - 1.68% Beltrami County Housing & Redevelopment Authority Revenue Lease 6.10% 2/1/12 ............ 460,000 484,394 Rice County Certificate of Participation 6.00% 12/1/21 ................................... 125,000 131,053 Saint Cloud Certificate of Participation 5.90% 12/1/17 ................................... 400,000 410,008 ---------- 1,025,455 ---------- POWER AUTHORITY REVENUE BONDS - 2.63% Bass Brook Pollution Control Revenue for Minnesota Power & Light 6.00% 7/1/22 ...................... 805,000 845,524 Puerto Rico Electric Power Authority Inverse Floater 5.83% 7/1/19 .................... 400,000 363,632 Southern Minnesota Municipal Power Agency (FGIC) 5.75% 1/1/18 ............................. 100,000 105,885 Western Municipal Power Agency Revenue 6.125% 1/1/16 ................................... 285,000 285,875 ---------- 1,600,916 ---------- *PRE-REFUNDED BONDS - 0.36% Esko Independent School District #99 (FSA) 5.75% 4/1/17-05 ................................. 100,000 108,514 Stewartville Independent School District (MN School District Enhanced) Series A 5.75% 2/1/12-05 ................................. 100,000 108,035 ---------- 216,549 ---------- WATER & SEWER REVENUE BONDS - 4.75% Minnesota Public Facilities Authority Water Pollution Control Revenue Inverse Floater 6.13% 3/1/18 .................................... 3,000,000 2,889,870 ---------- 2,889,870 ---------- OTHER REVENUE BONDS - 2.46% Minneapolis Community Development Agency Revenue Holiday Inn Metrodome Project 6.00% 12/1/01 ................................... 1,100,000 1,112,749 Woodbury Golf Course Revenue 6.75% 2/1/22 .......... 365,000 384,276 ---------- 1,497,025 ---------- Total Municipal Bonds (cost $56,767,169) ........... 58,194,663 ---------- for tax-exempt income 23 STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- NUMBER MARKET OF SHARES VALUE --------------------------------------------- SHORT-TERM INVESTMENTS - 2.28% Norwest Federated Municipal Money Market Fund ......................................1,387,605 $ 1,387,605 ----------- Total Short-Term Investments (cost $1,387,605) ...................................... 1,387,605 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED - 97.87% (COST $58,154,774) ..................................... $59,582,268 RECIEVABLES AND OTHER ASSETS NET OF LIABILITIES - 2.13% ............................. 1,297,780 ----------- NET ASSETS APPLICABLE TO 5,678,526 SHARES ($.01 PAR VALUE) OUTSTANDING - 100.00% ................. $60,880,048 =========== NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND A CLASS ($39,566,437 / 3,690,871 SHARES) .......... $10.72 ====== NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND B CLASS ($15,012,837 / 1,399,952 SHARES) .......... $10.72 ====== NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND FUND C CLASS ($6,300,774 / 587,703 SHARES) ............. $10.72 ====== - ---------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: AMBAC-Insured by the AMBAC Indemnity Corporation FGIC -Insured by the Financial Guaranty Insurance Company FSA -Insured by Financial Security Assurance GNMA -Insured by the Government National Mortgage Association FNMA -Insured by the Federal National Mortgage Association COMPONENTS OF NET ASSETS AT FEBRUARY 28, 1999: 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, and 10,000,000,000 shares allocated to Minnesota High Yield Municipal Fund C Class ................. $59,440,634 Distributions in excess of net investment income ........ (5,662) Accumulated net realized gain on investments ............ 17,582 Net unrealized appreciation of investments .............. 1,427,494 ----------- Total Net Assets ........................................ $60,880,048 =========== NET ASSET VALUE AND OFFERING PRICE FOR MINNESOTA HIGH YIELD MUNICIPAL BOND FUND A CLASS Net asset value per share (A) ........................... $10.72 Sales charge (3.75% of offering price or 3.92% of amount invested per share) (B) .............................. 0.42 ------ Offering price .......................................... $11.14 ====== (A) Net asset value per share illustrated is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current prospectus for purchases of $100,000. See accompanying notes 24 for tax-exempt income DELAWARE GROUP MINNESOTA MUNICIPAL BOND FUNDS, INC. - STATEMENTS OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1999 (UNAUDITED) - --------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR VOYAGEUR INTERMEDIATE VOYAGEUR MUTUAL TAX-FREE INSURED TAX-FREE FUNDS, INC. FUNDS, INC. FUNDS, INC. FUNDS, INC. MINNESOTA HIGH TAX-FREE MINNESOTA TAX-FREE MINNESOTA YIELD MUNICIPAL MINNESOTA FUND INSURED FUND INTERMEDIATE FUND BOND FUND -------------- ------------ ------------------ --------------- INVESTMENT INCOME: Interest .......................................... $12,417,469 $8,350,270 $1,699,927 $1,657,522 ----------- ---------- ---------- ---------- EXPENSES: Management fees ................................... 1,073,714 743,682 118,161 179,412 Distribution expense .............................. 601,934 426,447 59,380 143,227 Dividend disbursing and transfer agent fees and expenses .............................. 148,442 108,118 27,428 4,844 Registration fees ................................. 9,800 8,250 1,400 591 Reports and statements to shareholders ............ 18,586 13,000 1,207 1,000 Accounting and administration ..................... 89,992 65,015 12,460 3,846 Professional fees ................................. 12,853 9,548 3,383 1,100 Custodian fees .................................... 5,500 7,900 2,500 600 Taxes (other than taxes on income) ................ 8,500 12,948 6,630 600 Amortization of organization expenses ............. -- (1,210) -- -- Directors' fees ................................... 4,754 3,383 1,785 568 Other ............................................. 2,919 465 2,061 2,177 ----------- ---------- ---------- ---------- 1,976,994 1,397,546 236,395 337,965 Less expenses absorbed by Delaware Management Company ............................. -- -- -- (123,333) ----------- ---------- ---------- ---------- Total operating expenses .......................... 1,976,994 1,397,546 236,395 214,632 Interest expense .................................. 45,948 11,219 2,214 13,463 ----------- ---------- ---------- ---------- Total expenses .................................... 2,022,942 1,408,765 238,609 228,095 ----------- ---------- ---------- ---------- NET INVESTMENT INCOME ............................. 10,394,527 6,941,505 1,461,318 1,429,427 ----------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments .................. 750,325 148,628 15,077 29,373 Net change in unrealized appreciation/ depreciation of investments .................... (3,028,497) (1,643,180) (575,511) (487,099) ----------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS ... (2,278,172) (1,494,552) (560,434) (457,726) ----------- ---------- ---------- ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................ $8,116,355 $5,446,953 $900,884 $971,701 =========== ========== ========== ==========
See accompanying notes for tax-exempt income 25 DELAWARE GROUP MINNESOTA MUNICIPAL BOND FUNDS, INC. - STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
VOYAGEUR TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA FUND ------------------------------------------ SIX MONTHS EIGHT MONTHS YEAR ENDED ENDED ENDED 2/28/99 8/31/98 12/31/97 (UNAUDITED) INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income ............................. $10,394,527 $14,121,711 $22,233,984 Net realized gain on investments .................. 750,325 998,916 3,216,993 Net change in unrealized appreciation/ depreciation of investments .................... (3,028,497) 3,595,749 13,746,414 ------------- ------------ ------------ Net increase in net assets resulting from operations ................................ 8,116,355 18,716,376 39,197,391 ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income: A Class ........................................ (9,991,857) (13,881,351) (21,801,997) B Class ........................................ (221,491) (254,452) (342,308) C Class ........................................ (115,199) (110,969) (121,569) ------------ ------------ ------------ (10,328,547) (14,246,772) (22,265,874) ------------ ------------ ------------ Net realized gain from investment transactions: A Class ........................................ (1,282,606) (701,597) -- B Class ........................................ (33,499) (16,734) -- C Class ........................................ (17,432) (7,940) -- ------------ ------------ ------------ (1,333,537) (726,271) -- ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class ........................................ 16,632,548 16,789,907 30,690,547 B Class ........................................ 2,154,534 2,144,150 2,901,401 C Class ........................................ 1,924,733 2,221,006 1,258,502 Net asset value of shares issued upon reinvestment of dividends from net investment income and net realized gains on investment transactions: A Class ........................................ 7,622,955 9,615,052 14,861,153 B Class ........................................ 185,596 203,099 265,963 C Class ........................................ 106,679 101,927 108,591 ------------ ------------ ------------ 28,627,045 31,075,141 50,086,157 ------------ ------------ ------------ Cost of shares repurchased: A Class ........................................ (17,572,997) (31,266,997) (73,076,182) B Class ........................................ (646,827) (403,632) (1,502,411) C Class ........................................ (346,775) (537,644) (1,472,994) ------------ ------------ ------------ (18,566,599) (32,208,273) (76,051,587) ------------ ------------ ------------ Increase (decrease) in net assets derived from capital share transactions ............................. 10,060,446 (1,133,132) (25,965,430) ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ............. 6,514,717 2,610,201 (9,033,913) NET ASSETS: Beginning of period ............................... 431,272,464 428,662,263 437,696,176 ------------ ------------ ------------ End of period ..................................... $437,787,181 $431,272,464 $428,662,263 ============ ============ ============ [RESTUBBED FROM PREVIOUS TABLE] VOYAGEUR INSURED FUNDS, INC. MINNESOTA INSURED FUND ------------------------------------------- SIX MONTHS EIGHT MONTHS YEAR ENDED ENDED ENDED 2/28/99 8/31/98 12/31/97 (UNAUDITED) INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income ............................. $6,941,505 $9,421,773 $14,992,728 Net realized gain on investments .................. 148,628 32,436 1,476,574 Net change in unrealized appreciation/ depreciation of investments .................... (1,643,180) 2,911,667 7,964,819 ------------ ------------ ------------ Net increase in net assets resulting from operations ................................ 5,446,953 12,365,876 24,434,121 ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income: A Class ........................................ (6,656,495) (9,116,602) (14,559,667) B Class ........................................ (219,621) (253,079) (326,611) C Class ........................................ (68,602) (84,466) (135,307) ------------ ------------ ------------ (6,944,718) (9,454,147) (15,021,585) ------------ ------------ ------------ Net realized gain from investment transactions: A Class ........................................ -- -- -- B Class ........................................ -- -- -- C Class ........................................ -- -- -- ------------ ------------ ------------ -- -- -- ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class ........................................ 11,311,341 8,614,988 16,105,669 B Class ........................................ 1,682,913 1,720,072 2,803,647 C Class ........................................ 910,920 302,962 726,891 Net asset value of shares issued upon reinvestment of dividends from net investment income and net realized gains on investment transactions: A Class ........................................ 4,509,399 6,103,879 10,480,178 B Class ........................................ 144,898 175,169 249,513 C Class ........................................ 55,094 65,047 114,902 ------------ ------------ ------------ 18,614,565 16,982,117 30,480,800 ------------ ------------ ------------ Cost of shares repurchased: A Class ........................................ (12,738,242) (22,936,162) (52,017,149) B Class ........................................ (491,921) (547,658) (1,207,521) C Class ........................................ (218,454) (287,466) (973,441) ------------ ------------ ------------ (13,448,617) (23,771,286) (54,198,111) ------------ ------------ ------------ Increase (decrease) in net assets derived from capital share transactions ............................. 5,165,948 (6,789,169) (23,717,311) ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ............. 3,668,183 (3,877,440) (14,304,775) NET ASSETS: Beginning of period ............................... 296,638,076 300,515,516 314,820,291 ------------ ------------ ------------ End of period ..................................... $300,306,259 $296,638,076 $300,515,516 ============ ============ ============
See accompanying notes 26 for tax-exempt income DELAWARE GROUP MINNESOTA MUNICIPAL BOND FUNDS, INC. - STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) - --------------------------------------------------------------------------------
VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA INTERMEDIATE FUND ------------------------------------------ SIX MONTHS EIGHT MONTHS YEAR ENDED ENDED ENDED 2/28/99 8/31/98 12/31/97 (UNAUDITED) INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income ............................ $1,461,318 $1,908,966 $2,988,988 Net realized gain (loss) on investments .......... 15,077 103,601 638,280 Net change in unrealized appreciation/ depreciation of investments ................... (575,511) (121,364) 321,114 ----------- ----------- ----------- Net increase in net assets resulting from operations ............................... 900,884 1,891,203 3,948,382 ----------- ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income: A Class ....................................... (1,388,980) (1,838,819) (2,915,016) B Class ....................................... (33,146) (29,833) (26,474) C Class ....................................... (35,582) (42,221) (52,600) ----------- ----------- ----------- (1,457,708) (1,910,873) (2,994,090) ----------- ----------- ----------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class ....................................... 8,245,617 3,869,637 7,081,491 B Class ....................................... 837,942 702,708 669,318 C Class ....................................... 563,956 644,898 810,790 Net asset value of shares issued upon reinvestment of dividends from net investment income: A Class ....................................... 1,050,856 1,378,025 2,185,735 B Class ....................................... 23,302 24,782 23,336 C Class ....................................... 32,102 38,393 52,025 ----------- ----------- ----------- 10,753,775 6,658,443 10,822,695 ----------- ----------- ----------- Cost of shares repurchased: A Class ....................................... (3,223,445) (8,471,167) (18,684,272) B Class ....................................... (54,605) (263,216) (205,353) C Class ....................................... (150,460) (594,312) (510,897) ----------- ----------- ----------- (3,428,510) (9,328,695) (19,400,522) ----------- ----------- ----------- Increase (decrease) in net assets derived from capital share transactions .................................. 7,325,265 (2,670,252) (8,577,827) ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ............ 6,768,441 (2,689,922) (7,623,535) NET ASSETS: Beginning of period .............................. 57,256,434 59,946,356 67,569,891 ----------- ----------- ----------- End of period .................................... $64,024,875 $57,256,434 $59,946,356 =========== =========== =========== See accompanying notes [RESTUBBED FROM PREVIOUS TABLE] VOYAGEUR MUTUAL FUNDS, INC. MINNESOTA HIGH YIELD MUNICIPAL BOND FUND ------------------------------------------- SIX MONTHS EIGHT MONTHS YEAR ENDED ENDED ENDED 2/28/99 8/31/98 12/31/97 (UNAUDITED) INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income ............................ $1,429,427 $1,341,908 $1,229,469 Net realized gain (loss) on investments .......... 29,373 (648) (4,334) Net change in unrealized appreciation/ depreciation of investments ................... (487,099) 659,652 1,166,080 ----------- ----------- ----------- Net increase in net assets resulting from operations ............................... 971,701 2,000,912 2,391,215 ----------- ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income: A Class ....................................... (971,176) (873,324) (783,576) B Class ....................................... (335,405) (359,748) (312,756) C Class ....................................... (129,506) (134,232) (109,945) ----------- ----------- ----------- (1,436,087) (1,367,304) (1,206,277) ----------- ----------- ----------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class ....................................... 7,949,868 15,804,815 12,612,422 B Class ....................................... 2,230,281 5,379,096 5,453,844 C Class ....................................... 1,262,965 2,319,609 2,470,327 Net asset value of shares issued upon reinvestment of dividends from net investment income: A Class ....................................... 550,697 580,383 503,798 B Class ....................................... 197,402 202,199 160,239 C Class ....................................... 92,914 99,018 89,364 ----------- ----------- ----------- 12,284,127 24,385,120 21,289,994 ----------- ----------- ----------- Cost of shares repurchased: A Class ....................................... (1,933,231) (2,500,965) (903,309) B Class ....................................... (644,984) (603,878) (475,668) C Class ....................................... (173,248) (498,154) (405,467) ----------- ----------- ----------- (2,751,463) (3,602,997) (1,784,444) ----------- ----------- ----------- Increase (decrease) in net assets derived from capital share transactions .................................. 9,532,664 20,782,123 19,505,550 ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ............ 9,068,278 21,415,731 20,690,488 NET ASSETS: Beginning of period .............................. 51,811,770 30,396,039 9,705,551 ----------- ----------- ----------- End of period .................................... $60,880,048 $51,811,770 $30,396,039 =========== =========== ===========
See accompanying notes for tax-exempt income 27 DELAWARE GROUP MINNESOTA MUNICIPAL BOND FUNDS, INC. - FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA FUND A CLASS ----------------------------------------------- SIX MONTHS EIGHT MONTHS ENDED ENDED 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 (UNAUDITED) Net asset value, beginning of period .................. $13.020 $12.910 $12.400 $12.630 Income from investment operations: Net investment income .............................. 0.318 0.431 0.654 0.630 Net realized and unrealized gain (loss) on investments ................................... (0.062) 0.136 0.511 (0.230) ------- ------- ------- ------- Total from investment operations ................... 0.256 0.567 1.165 0.400 ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ............... (0.316) (0.435) (0.655) (0.630) Distributions from net realized gain on investments ................................... (0.040) (0.022) -- -- In excess of net realized gains .................... -- -- -- -- ------- ------- ------- ------- Total dividends and distributions .................. (0.356) (0.457) (0.655) (0.630) ------- ------- ------- ------- Net asset value, end of period ........................ $12.920 $13.020 $12.910 $12.400 ======= ======= ======= ======= Total Return(2) ....................................... 1.94% 4.46% 9.68% 3.33% Ratios and supplemental data: Net assets, end of period (000 omitted) ............ $419,393 $416,113 $417,365 $428,380 Ratio of expenses to average net assets ............ 0.91% 0.89% 0.91% 0.92% Ratio of expenses to average net assets prior to expense limitation ............................ 0.91% 0.92% 0.95% 0.92% Ratio of net investment income to average net assets ....................................... 4.84% 5.00% 5.22% 5.13% Ratio of net investment income to average net assets prior to expense limitation ............... 4.84% 4.97% 5.18% 5.13% Portfolio turnover ................................. 27% 13% 19% 28% [RESTUBBED FROM PREVIOUS TABLE] VOYAGEUR TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA FUND A CLASS ---------------------------------- YEAR ENDED 12/31/95 12/31/94 12/31/93 Net asset value, beginning of period .................. $11.330 $12.850 $12.210 Income from investment operations: Net investment income .............................. 0.620 0.630 0.640 Net realized and unrealized gain (loss) on investments ................................... 1.320 (1.480) 0.870 ------- ------- ------- Total from investment operations ................... 1.940 (0.850) 1.510 ------- ------- ------- Less dividends and distributions: Dividends from net investment income ............... (0.640) (0.610) (0.640) Distributions from net realized gain on investments ................................... -- (0.050) (0.230) In excess of net realized gains .................... -- (0.010) -- ------- ------- ------- Total dividends and distributions .................. (0.640) (0.670) (0.870) ------- ------- ------- Net asset value, end of period ........................ $12.630 $11.330 $12.850 ======= ======= ======= Total Return(2) ....................................... 17.49% (6.73%) 12.70% Ratios and supplemental data: Net assets, end of period (000 omitted) ............ $455,220 $406,497 $458,145 Ratio of expenses to average net assets ............ 0.93% 0.90% 1.02% Ratio of expenses to average net assets prior to expense limitation ............................ 0.93% 0.90% 1.02% Ratio of net investment income to average net assets ....................................... 5.11% 5.29% 5.02% Ratio of net investment income to average net assets prior to expense limitation ............... 5.11% 5.29% 5.02% Portfolio turnover ................................. 51% 24% 32%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. See accompanying notes 28 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA FUND B CLASS ----------------------------------------------------------- SIX MONTHS EIGHT MONTHS PERIOD FROM ENDED ENDED YEAR ENDED 3/11/95(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 TO 12/31/95 (UNAUDITED) Net asset value, beginning of period ........................... $13.020 $12.910 $12.400 $12.620 $11.900 Income from investment operations: Net investment income ....................................... 0.268 0.366 0.574 0.560 0.450 Net realized and unrealized gain (loss) from investments .......................................... (0.061) 0.136 0.508 (0.220) 0.710 ------- ------- ------- ------- ------- Total from investment operations ............................ 0.207 0.502 1.082 0.340 1.160 ------- ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ........................ (0.267) (0.370) (0.572) (0.560) (0.440) Distributions from net realized gain on investments ......... (0.040) (0.022) -- -- -- ------- ------- ------- ------- ------- Total dividends and distributions ........................... (0.307) (0.392) (0.572) (0.560) (0.440) ------- ------- ------- ------- ------- Net asset value, end of period ................................. $12.920 $13.020 $12.910 $12.400 $12.620 ======= ======= ======= ======= ======= Total Return(2) ................................................ 1.56% 3.94% 8.95% 2.83% 9.95% Ratios and supplemental data: Net assets, end of period (000 omitted) ..................... $11,846 $10,246 $8,215 $6,233 $2,701 Ratio of expenses to average net assets ..................... 1.66% 1.64% 1.56% 1.50% 1.38%(5) Ratio of expenses to average net assets prior to expense limitation ........................................ 1.66% 1.67% 1.60% 1.67% 1.63%(5) Ratio of net investment income to average net assets ........ 4.09% 4.25% 4.57% 4.53% 4.43%(5) Ratio of net investment income to average net assets prior to expense limitation ............................... 4.09% 4.22% 4.53% 4.36% 4.18%(5) Portfolio turnover .......................................... 27% 13% 19% 28% 51%
- ------------------ (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (4) Commencement of operations. (5) Annualized See accompanying notes for tax-exempt income 29 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA FUND C CLASS -------------------------------------------------------------------------- SIX MONTHS EIGHT MONTHS PERIOD FROM ENDED ENDED YEAR ENDED 5/4/94(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95 TO 12/31/94 (UNAUDITED) Net asset value, beginning of period ................ $13.040 $12.920 $12.410 $12.630 $11.330 $11.960 Income from investment operations: Net investment income ............................ 0.273 0.374 0.564 0.540 0.530 0.340 Net realized and unrealized gain (loss) from investments ........................ (0.076) 0.138 0.508 (0.220) 1.320 (0.610) ------- ------- ------- ------- ------- ------- Total from investment operations ................. 0.197 0.512 1.072 0.320 1.850 (0.270) ------- ------- ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ............. (0.267) (0.370) (0.562) (0.540) (0.550) (0.320) Distributions from net realized gain on investments ................................. (0.040) (0.022) -- -- -- (0.040) ------- ------- ------- ------- ------- ------- Total dividends and distributions ................ (0.307) (0.392) (0.562) (0.540) (0.550) (0.360) ------- ------- ------- ------- ------- ------- Net asset value, end of period ...................... $12.930 $13.040 $12.920 $12.410 $12.630 $11.330 ======= ======= ======= ======= ======= ======= Total Return(2) ..................................... 1.48% 4.02% 8.82% 2.64% 16.62% (2.30%) Ratios and supplemental data: Net assets, end of period (000 omitted) .................................. $6,548 $4,914 $3,083 $3,083 $2,319 $1,061 Ratio of expenses to average net assets .......... 1.66% 1.64% 1.65% 1.67% 1.67% 1.72%(5) Ratio of expenses to average net assets prior to expense limitation .................... 1.66% 1.67% 1.69% 1.67% 1.67% 1.72%(5) Ratio of net investment income to average net assets ............................. 4.09% 4.25% 4.48% 4.38% 4.33% 4.56%(5) Ratio of net investment income to average net assets prior to expense limitation ............................. 4.09% 4.22% 4.44% 4.38% 4.33% 4.56%(5) Portfolio turnover ............................... 27% 13% 19% 28% 51% 24%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (4) Commencement of operations. (5) Annualized See accompanying notes 30 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR INSURED FUNDS, INC. MINNESOTA INSURED FUND A CLASS -------------------------------------------------- SIX MONTHS EIGHT MONTHS ENDED ENDED 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 (UNAUDITED) Net asset value, beginning of period $11.050 $10.940 $10.600 $10.730 Income from investment operations: Net investment income ............................... 0.263 0.349 0.533 0.520 Net realized and unrealized gain (loss) on investments .................................... (0.060) 0.111 0.341 (0.130) -------- -------- -------- -------- Total from investment operations .................... 0.203 0.460 0.874 0.390 -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ................ (0.263) (0.350) (0.534) (0.520) Distributions from net realized gain on investments .................................... -- -- -- -- -------- -------- -------- -------- Total dividends and distributions ................... (0.263) (0.350) (0.534) (0.520) -------- -------- -------- -------- Net asset value, end of period ......................... $10.990 $11.050 $10.940 $10.600 ======== ======== ======== ======== Total Return(2) ........................................ 1.81% 4.28% 8.49% 3.75% Ratios and supplemental data: Net assets, end of period (000 omitted) ............. $284,722 $283,057 $288,494 $304,877 Ratio of expenses to average net assets ............. 0.91% 0.92% 0.92% 0.92% Ratio of expenses to average net assets prior to expense limitation ....................... 0.91% 0.94% 0.94% 0.92% Ratio of net investment income to average net assets ........................................ 4.70% 4.79% 5.01% 4.93% Ratio of net investment income to average net assets prior to expense limitation ............ 4.70% 4.77% 4.99% 4.93% Portfolio turnover .................................. 4% 6% 21% 14% [RESTUBBED FROM PREVIOUS TABLE] VOYAGEUR INSURED FUNDS, INC. MINNESOTA INSURED FUND A CLASS ---------------------------------- YEAR ENDED 12/31/95 12/31/94 12/31/93 Net asset value, beginning of period $9.610 $11.020 $10.270 Income from investment operations: Net investment income ............................... 0.510 0.540 0.540 Net realized and unrealized gain (loss) on investments .................................... 1.140 (1.390) 0.840 -------- -------- -------- Total from investment operations .................... 1.650 (0.850) 1.380 -------- -------- -------- Less dividends and distributions: Dividends from net investment income ................ (0.530) (0.520) (0.540) Distributions from net realized gain on investments .................................... -- (0.040) (0.090) -------- -------- -------- Total dividends and distributions ................... (0.530) (0.560) (0.630) -------- -------- -------- Net asset value, end of period ......................... $10.730 $9.610 $11.020 ======== ======== ======== Total Return(2) ........................................ 17.52% (7.88%) 13.80% Ratios and supplemental data: Net assets, end of period (000 omitted) ............. $307,734 $284,132 $311,187 Ratio of expenses to average net assets ............. 0.87% 0.61% 0.70% Ratio of expenses to average net assets prior to expense limitation ....................... 0.92% 0.94% 1.02% Ratio of net investment income to average net assets ........................................ 4.92% 5.29% 4.93% Ratio of net investment income to average net assets prior to expense limitation ............ 4.87% 4.96% 4.61% Portfolio turnover .................................. 54% 25% 18%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. See accompanying notes for tax-exempt income 31 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR INSURED FUNDS, INC. MINNESOTA INSURED FUND B CLASS --------------------------------------------------------------- SIX MONTHS EIGHT MONTHS PERIOD FROM ENDED ENDED YEAR ENDED 3/7/95(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 TO 12/31/95 (UNAUDITED) Net asset value, beginning of period ............................ $11.040 $10.930 $10.580 $10.720 $10.140 Income from investment operations: Net investment income ........................................ 0.221 0.294 0.454 0.450 0.380 Net realized and unrealized gain (loss) on investments ....... (0.060) 0.111 0.348 (0.140) 0.580 ------- ------- ------- ------- ------- Total from investment operations ............................. 0.161 0.405 0.802 0.310 0.960 ------- ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ......................... (0.221) (0.295) (0.452) (0.450) (0.380) ------- ------- ------- ------- ------- Total dividends and distributions ............................ (0.221) (0.295) (0.452) (0.450) (0.380) ------- ------- ------- ------- ------- Net asset value, end of period .................................. $10.980 $11.040 $10.930 $10.580 $10.720 ======= ======= ======= ======= ======= Total Return(2) ................................................. 1.43% 3.76% 7.77% 3.03% 9.59% Ratios and supplemental data: Net assets, end of period (000 omitted) ...................... $11,648 $10,374 $8,926 $6,817 $4,655 Ratio of expenses to average net assets ...................... 1.66% 1.67% 1.67% 1.56% 1.34%(5) Ratio of expenses to average net assets prior to expense limitation ......................................... 1.66% 1.69% 1.69% 1.68% 1.64%(5) Ratio of net investment income to average net assets ......... 3.95% 4.04% 4.26% 4.29% 4.15%(5) Ratio of net investment income to average net assets prior to expense limitation ................................ 3.95% 4.02% 4.24% 4.17% 3.85%(5) Portfolio turnover ........................................... 4% 6% 21% 14% 54%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (4) Commencement of operations. (5) Annualized See accompanying notes 32 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR INSURED FUNDS, INC. MINNESOTA INSURED FUND C CLASS --------------------------------------------------------------------------- SIX MONTHS EIGHT MONTHS PERIOD FROM ENDED ENDED YEAR ENDED 5/4/94(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95 TO 12/31/94 (UNAUDITED) Net asset value, beginning of period ................. $11.050 $10.940 $10.600 $10.730 $9.610 $10.230 Income from investment operations: Net investment income ............................. 0.221 0.295 0.454 0.440 0.430 0.300 Net realized and unrealized gain (loss) on investments .................................. (0.050) 0.110 0.338 (0.130) 1.140 (0.620) ------- ------- ------- ------- ------- ------- Total from investment operations .................. 0.171 0.405 0.792 0.310 1.570 (0.320) ------- ------- ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income .............. (0.221) (0.295) (0.452) (0.440) (0.450) (0.280) Distributions from net realized gain on investments .................................. -- -- -- -- -- (0.020) ------- ------- ------- ------- ------- ------- Total dividends and distributions ................. (0.221) (0.295) (0.452) (0.440) (0.450) (0.300) ------- ------- ------- ------- ------- ------- Net asset value, end of period ....................... $11.000 $11.050 $10.940 $10.600 $10.730 $9.610 ======= ======= ======= ======= ======= ======= Total Return(2) ...................................... 1.52% 3.76% 7.66% 2.98% 16.63% (3.14%) Ratios and supplemental data: Net assets, end of period (000 omitted) ................................... $3,935 $3,207 $3,096 $3,126 $3,166 $1,525 Ratio of expenses to average net assets ........... 1.66% 1.67% 1.67% 1.68% 1.66% 1.36%(5) Ratio of expenses to average net assets prior to expense limitation ..................... 1.66% 1.69% 1.69% 1.68% 1.67% 1.68%(5) Ratio of net investment income to average net assets .............................. 3.95% 4.04% 4.26% 4.18% 4.11% 4.68%(5) Ratio of net investment income to average net assets prior to expense limitation .............................. 3.95% 4.02% 4.24% 4.18% 4.10% 4.36%(5) Portfolio turnover ................................ 4% 6% 21% 14% 54% 25%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (4) Commencement of operations. (5) Annualized See accompanying notes for tax-exempt income 33 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA INTERMEDIATE FUND A CLASS ----------------------------------------------- SIX MONTHS EIGHT MONTHS ENDED ENDED 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 (UNAUDITED) Net asset value, beginning of period ...................... $11.160 $11.170 $10.990 $11.140 Income from investment operations: Net investment income .................................. 0.272 0.363 0.535 0.510 Net realized and unrealized gain (loss) on investments ....................................... (0.101) (0.009) 0.180 (0.150) ------- ------- ------- ------- Total from investment operations ....................... 0.171 0.354 0.715 0.360 ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ................... (0.271) (0.364) (0.535) (0.510) Distributions from net realized gain on investments ....................................... -- -- -- -- ------- ------- ------- ------- Total dividends and distributions ...................... (0.271) (0.364) (0.535) (0.510) ------- ------- ------- ------- Net asset value, end of period ............................ $11.060 $11.160 $11.170 $10.990 ======= ======= ======= ======= Total Return(2) ........................................... 1.54% 3.22% 6.69% 3.46% Ratios and supplemental data: Net assets, end of period (000 omitted) ................ $59,771 $54,281 $57,524 $66,024 Ratio of expenses to average net assets ................ 0.75% 0.80% 0.91% 0.89% Ratio of expenses to average net assets prior to expense limitation .......................... 0.75% 0.80% 0.95% 0.89% Ratio of net investment income to average net assets ................................... 4.91% 4.90% 4.86% 4.69% Ratio of net investment income to average net assets prior to expense limitation ............... 4.91% 4.90% 4.82% 4.69% Portfolio turnover ..................................... 15% 14% 21% 28% [RESTUBBED FROM PREVIOUS TABLE] VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA INTERMEDIATE FUND A CLASS -------------------------------------------- YEAR ENDED 12/31/95 12/31/94 12/31/93 Net asset value, beginning of period ...................... $10.500 $11.160 $10.830 Income from investment operations: Net investment income .................................. 0.510 0.450 0.470 Net realized and unrealized gain (loss) on investments ....................................... 0.640 (0.660) 0.370 ------- ------- ------- Total from investment operations ....................... 1.150 (0.210) 0.840 ------- ------- ------- Less dividends and distributions: Dividends from net investment income ................... (0.510) (0.450) (0.470) Distributions from net realized gain on investments ....................................... -- -- (0.040) ------- ------- ------- Total dividends and distributions ...................... (0.510) (0.450) (0.510) ------- ------- ------- Net asset value, end of period ............................ $11.140 $10.500 $11.160 ======= ======= ======= Total Return(2) ........................................... 11.00% (1.91%) 7.88% Ratios and supplemental data: Net assets, end of period (000 omitted) ................ $72,405 $84,168 $75,374 Ratio of expenses to average net assets ................ 0.91% 0.92% 0.99% Ratio of expenses to average net assets prior to expense limitation .......................... 0.91% 0.92% 0.99% Ratio of net investment income to average net assets ................................... 4.61% 4.18% 4.18% Ratio of net investment income to average net assets prior to expense limitation ............... 4.61% 4.18% 4.18% Portfolio turnover ..................................... 40% 42% 19%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. See accompanying notes 34 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA INTERMEDIATE FUND B CLASS -------------------------------------------------------------- SIX MONTHS EIGHT MONTHS PERIOD FROM ENDED ENDED YEAR ENDED 8/15/95(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 TO 12/31/95 (UNAUDITED) Net asset value, beginning of period .......................... $11.180 $11.170 $10.990 $11.140 $10.950 Income from investment operations: Net investment income ...................................... 0.227 0.301 0.437 0.440 0.170 Net realized and unrealized gain (loss) on investments ........................................... (0.103) 0.009 0.190 (0.150) 0.190 ------- ------- ------- ------- ------- Total from investment operations ........................... 0.124 0.310 0.627 0.290 0.360 ------- ------- ------- ------- ------- Less dividends: Dividends from net investment income ....................... (0.224) (0.300) (0.447) (0.440) (0.170) ------- ------- ------- ------- ------- Total dividends ............................................ (0.224) (0.300) (0.447) (0.440) (0.170) ------- ------- ------- ------- ------- Net asset value, end of period ................................ $11.080 $11.180 $11.170 $10.990 $11.140 ======= ======= ======= ======= ======= Total Return(2) ............................................... 1.12% 2.82% 5.84% 2.74% 3.26% Ratios and supplemental data: Net assets, end of period (000 omitted) .................... $2,166 $1,375 $910 $408 $27 Ratio of expenses to average net assets .................... 1.60% 1.65% 1.81% 1.56% 1.30%(5) Ratio of expenses to average net assets prior to expense limitation ....................................... 1.60% 1.65% 1.85% 1.62% 1.55%(5) Ratio of net investment income to average net assets ....... 4.06% 4.05% 3.96% 3.99% 3.93%(5) Ratio of net investment income to average net assets prior to expense limitation .............................. 4.06% 4.05% 3.92% 3.93% 3.68%(5) Portfolio turnover ......................................... 15% 14% 21% 28% 40%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (4) Commencement of operations. (5) Annualized See accompanying notes for tax-exempt income 35 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC. TAX-FREE MINNESOTA INTERMEDIATE FUND C CLASS --------------------------------------------------------------------------- SIX MONTHS EIGHT MONTHS PERIOD FROM ENDED ENDED YEAR ENDED 5/4/94(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95 TO 12/31/94 (UNAUDITED) Net asset value, beginning of period ................ $11.170 $11.170 $10.990 $11.130 $10.500 $10.740 Income from investment operations: Net investment income ............................ 0.226 0.301 0.440 0.430 0.420 0.240 Net realized and unrealized gain (loss) on investments .......................... (0.102) (0.001) 0.187 (0.140) 0.630 (0.240) ------- ------- ------- ------- ------- ------- Total from investment operations ................. 0.124 0.300 0.627 0.290 1.050 -- ------- ------- ------- ------- ------- ------- Less dividends: Dividends from net investment income ............. (0.224) (0.300) (0.447) (0.430) (0.420) (0.240) ------- ------- ------- ------- ------- ------- Total dividends .................................. (0.224) (0.300) (0.447) (0.430) (0.420) (0.240) ------- ------- ------- ------- ------- ------- Net asset value, end of period ...................... $11.070 $11.170 $11.170 $10.990 $11.130 $10.500 ======= ======= ======= ======= ======= ======= Total Return(2) ..................................... 1.11% 2.73% 5.84% 2.69% 10.18% (0.03%) Ratios and supplemental data: Net assets, end of period (000 omitted) .......... $2,087 $1,601 $1,512 $1,137 $694 $341 Ratio of expenses to average net assets .......... 1.60% 1.65% 1.77% 1.64% 1.63% 1.71%(5) Ratio of expenses to average net assets prior to expense limitation ............. 1.60% 1.65% 1.81% 1.64% 1.63% 1.71%(5) Ratio of net investment income to average net assets ............................. 4.06% 4.05% 4.00% 3.94% 3.82% 3.35%(5) Ratio of net investment income to average net assets prior to expense limitation .................... 4.06% 4.05% 3.96% 3.94% 3.82% 3.35%(5) Portfolio turnover ............................... 15% 14% 21% 28% 40% 42%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (4) Commencement of operations. (5) Annualized See accompanying notes 36 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR MUTUAL FUNDS, INC. MINNESOTA HIGH YIELD MUNICIPAL BOND FUND A CLASS ------------------------------------------------ SIX MONTHS EIGHT MONTHS YEAR PERIOD FROM ENDED ENDED ENDED 6/4/96(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) TO 12/31/96 (UNAUDITED) Net asset value, beginning of period ................... $10.810 $10.650 $10.180 $10.000 Income from investment operations: Net investment income ............................... 0.290 0.392 0.643 0.350 Net realized and unrealized gain (loss) on investments ..................................... (0.089) 0.170 0.463 0.180 ------- ------- ------- ------- Total from investment operations .................... 0.201 0.562 1.106 0.530 ------- ------- ------- ------- Less dividends: Dividends from net investment income ................ (0.291) (0.402) (0.636) (0.350) ------- ------- ------- ------- Total dividends: .................................... (0.291) (0.402) (0.636) (0.350) ------- ------- ------- ------- Net asset value, end of period ......................... $10.720 $10.810 $10.650 $10.180 ======= ======= ======= ======= Total Return(2) ........................................ 1.88% 5.37% 11.26% 5.40% Ratios and supplemental data: Net assets, end of period (000 omitted) ............. $39,566 $33,296 $19,017 $6,068 Ratio of expenses to average net assets ............. 0.55% 0.40% 0.09% 0.24%(5) Ratio of expenses to average net assets prior to expense limitation ....................... 0.99% 1.20% 1.24% 1.25%(5) Ratio of net investment income to average net assets ........................................ 5.41% 5.50% 6.16% 5.78%(5) Ratio of net investment income to average net assets prior to expense limitation ............ 4.97% 4.70% 5.01% 4.77%(5) Portfolio turnover .................................. 63% 7% 23% 15%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (4) Commencement of operations. (5) Annualized See accompanying notes for tax-exempt income 37 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period was as follows:
VOYAGEUR MUTUAL FUNDS, INC. MINNESOTA HIGH YIELD MUNICIPAL BOND FUND B CLASS ------------------------------------------------- SIX MONTHS EIGHT MONTHS YEAR PERIOD FROM ENDED ENDED ENDED 6/12/96(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) TO 12/31/96 (UNAUDITED) Net asset value, beginning of period .................... $10.810 $10.660 $10.190 $9.780 Income from investment operations: Net investment income ................................ 0.253 0.343 0.557 0.290 Net realized and unrealized gain (loss) on investments .............................. (0.091) 0.159 0.470 0.410 ------- ------- ------- ------- Total from investment operations ..................... 0.162 0.502 1.027 0.700 ------- ------- ------- ------- Less dividends: Dividends from net investment income .................................. (0.252) (0.352) (0.557) (0.290) ------- ------- ------- ------- Total dividends: ..................................... (0.252) (0.352) (0.557) (0.290) ------- ------- ------- ------- Net asset value, end of period .......................... $10.720 $10.810 $10.660 $10.190 ======= ======= ======= ======= Total Return(2) ......................................... 1.52% 4.77% 10.41% 7.29% Ratios and supplemental data: Net assets, end of period (000 omitted) ...................................... $15,013 $13,351 $8,201 $2,738 Ratio of expenses to average net assets ......................................... 1.30% 1.15% 0.85% 0.95%(5) Ratio of expenses to average net assets prior to expense limitation ......................................... 1.74% 1.95% 2.00% 2.00%(5) Ratio of net investment income to average net assets ................................. 4.66% 4.75% 5.40% 5.14%(5) Ratio of net investment income to average net assets prior to expense limitation .............................. 4.22% 3.95% 4.25% 4.09%(5) Portfolio turnover ................................... 63% 7% 23% 15% [RESTUBBED FROM PREVIOUS TABLE] VOYAGEUR MUTUAL FUNDS, INC. MINNESOTA HIGH YIELD MUNICIPAL BOND FUND C CLASS ------------------------------------------------ SIX MONTHS EIGHT MONTHS YEAR PERIOD FROM ENDED ENDED ENDED 6/7/96(4) 2/28/99(1) 8/31/98(1) 12/31/97(3) TO 12/31/96 (UNAUDITED) Net asset value, beginning of period .................... $10.810 $10.650 $10.180 $9.990 Income from investment operations: Net investment income ................................ 0.251 0.340 0.572 0.300 Net realized and unrealized gain (loss) on investments .............................. (0.089) 0.170 0.455 0.190 ------- ------- ------- ------- Total from investment operations ..................... 0.162 0.510 1.027 0.490 ------- ------- ------- ------- Less dividends: Dividends from net investment income .................................. (0.252) (0.350) (0.557) (0.300) ------- ------- ------- ------- Total dividends: ..................................... (0.252) (0.350) (0.557) (0.300) ------- ------- ------- ------- Net asset value, end of period .......................... $10.720 $10.810 $10.650 $10.180 ======= ======= ======= ======= Total Return(2) ......................................... 1.52% 4.87% 10.41% 5.02% Ratios and supplemental data: Net assets, end of period (000 omitted) ...................................... $6,301 $5,165 $3,178 $900 Ratio of expenses to average net assets ......................................... 1.30% 1.15% 0.83% 0.99%(5) Ratio of expenses to average net assets prior to expense limitation ......................................... 1.74% 1.95% 1.98% 2.00%(5) Ratio of net investment income to average net assets ................................. 4.66% 4.75% 5.42% 4.90%(5) Ratio of net investment income to average net assets prior to expense limitation .............................. 4.22% 3.95% 4.27% 3.89%(5) Portfolio turnover ................................... 63% 7% 23% 15%
- ------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (4) Commencement of operations. (5) Annualized See accompanying notes 38 for tax-exempt income DELAWARE GROUP MINNESOTA MUNICIPAL BOND FUNDS, INC. - NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999 (UNAUDITED) - -------------------------------------------------------------------------------- Delaware-Voyageur Tax-Free Minnesota Fund ("Tax-Free Minnesota Fund"), a series of the Voyageur Tax Free Funds, Inc., Delaware-Voyageur Minnesota Insured Fund ("Minnesota Insured Fund"), a series of the Voyageur Insured Funds, Inc., Delaware-Voyageur Tax-Free Minnesota Intermediate Fund ("Tax-Free Minnesota Intermediate Fund"), a series of the Voyageur Intermediate Tax Free Funds, Inc., and Delaware-Voyageur Minnesota High Yield Municipal Bond Fund ("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 Managers Inc.'s ("Voyageur") parent, Dougherty Financial Group, Inc. ("DFG") pursuant to an agreement and plan of merger dated January 15, 1997, in which LNC acquired DFG including the mutual fund investment advisory business of DFG conducted by Voyageur. Upon completion of the acquisition, Delaware Management Company ("DMC") became the investment 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 and accounting and administration agent for the Funds. DMC, DDLP and DSC assumed these services under substantially similar fee structures that were in effect prior to the acquisition. 2. Significant Accounting Policies The following accounting policies are in accordance with generally accepted accounting principles and are consistently followed by the Funds. Security Valuation - Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Money market instruments having less than 60 days to maturity are valued at amortized cost which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Funds' Board of Directors. Federal Income Taxes - Each Fund intends to continue to qualify as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. Class Accounting - Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Other - Expenses common to all funds within the Delaware Investments Family of Funds are allocated amongst the funds on the basis of average net assets. Security transactions are recorded on the date the securities are purchased or sold (trade date). Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Original issue discounts and market premium are amortized to interest income over the lives of the respective securities. The Funds declare dividends from net investment income daily and pay them monthly. Capital gains, if any, are distributed annually. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. Investment Management and Other Transactions with Affiliates In accordance with the terms of the Investment Management Agreement, the Fund pays DMC the Investment Manager of each Fund, an annual fee, which is calculated daily on the net assets of each Fund. DMC has elected to waive its fees and reimburse each Fund to the extent that annual operating expenses exclusive of taxes, interest, brokerage commissions, distribution expenses and extraordinary expenses do not exceed the following percentages of average daily net assets through June 30, 1999. for tax-exempt income 39 NOTES TO FINANCIAL STATMENTS (CONTINUED) - -------------------------------------------------------------------------------- 3. Investment Management and Other Transactions with Affiliates (Continued)
TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA FUND INSURED FUND INTERMEDIATE FUND MUNICIPAL BOND FUND -------------- ------------ ------------------ -------------------- Management fee as a percentage of average daily net assets (per annum) ................................ 0.50% 0.50% 0.40% 0.65% Operating expense limitation as a percentage of average daily net assets (per annum) ............................. 0.75% 0.75% 0.75% 0.25%
The Funds have engaged DSC, an affiliate of DMC, to provide dividend disbursing, transfer agent and accounting services. Each Fund pays DSC a monthly fee based on number of shareholder accounts, shareholder transactions and average net assets, subject to certain minimums. On February 28, 1999, the Funds had payables to affiliates as follows:
TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA FUND INSURED FUND INTERMEDIATE FUND MUNICIPAL BOND FUND -------------- ------------ ------------------ -------------------- Investment Management fees payable to DMC ................ $14,236 $119,554 $18,488 $0 Dividend disbursing, transfer agent fees, accounting fees and other expenses payable to DSC ................. $40,375 $27,080 $5,929 $5,753 Other expenses payable to DMC and affiliates ............. $13,059 $9,633 $1,292 $1,872
Pursuant to the Distribution Agreement, the Funds pay DDLP, the Distributor and an affiliate of DMC, an annual fee not to exceed 0.25% of the average daily net assets of the A Class for the Tax-Free Minnesota Fund, the Minnesota Insured Fund and the Minnesota High Yield Municipal Bond Fund and 0.15% of the average daily net assets of the Tax-Free Minnesota Intermediate Fund A Class and 1.00% of the average daily net assets of the B and C Class for each Fund. For the six months ended February 28, 1999, DDLP earned commissions on sales of the Fund A Class shares for each Fund as follows:
TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA FUND INSURED FUND INTERMEDIATE FUND MUNICIPAL BOND FUND -------------- ------------ ------------------ -------------------- $40,980 $31,523 $3,647 $24,989
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees of the Funds. These officers, directors and employees are paid no compensation by the Funds. 4. Investments During the six months ended February 28, 1999 the Funds made purchases and sales of investment securities other than U.S. government securities and temporary cash investments for each Fund as follows:
TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA FUND INSURED FUND INTERMEDIATE FUND MUNICIPAL BOND FUND -------------- ------------ ------------------ -------------------- Purchases: ............................................... $58,239,055 $6,163,897 $12,340,865 $24,586,117 Sales: ................................................... $58,917,766 $11,580,817 $4,623,360 $17,917,316
At February 28, 1999 the aggregate cost of securities and unrealized appreciation (depreciation) for federal income tax purposes for each Fund were as follows:
TAX-FREE MINNESOTA TAX-FREE MINNESOTA MINNESOTA HIGH YIELD MINNESOTA FUND INSURED FUND INTERMEDIATE FUND MUNICIPAL BOND FUND -------------- ------------ ------------------ -------------------- Cost of Investments ...................................... $397,961,274 $273,989,185 $63,173,231 $58,154,774 Aggregate unrealized appreciation ........................ $34,823,507 $23,531,253 $2,217,817 $1,563,960 Aggregate unrealized depreciation ........................ $172,119 $5,670 $153,869 $136,466 Net unrealized appreciation .............................. $34,651,388 $23,525,583 $2,063,948 $1,427,494
For federal income tax purposes, as of August 31, 1998, Minnesota Insured Fund had a capital loss carryover of $6,050,123 that will expire in 2003 through 2004, Tax Free Minnesota Intermediate Fund had a capital loss carryover of $47,382 that will expire in 2004, and Minnesota High Yield Municipal Bond Fund had a capital loss carryover of $11,143 that will expire from 2004 through 2005. 40 for tax-exempt income NOTES TO FINANCIAL STATMENTS (CONTINUED) - -------------------------------------------------------------------------------- 5. Capital Stock
VOYAGEUR TAX-FREE FUNDS, INC. VOYAGEUR INSURED FUNDS, INC. TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND --------------------------------- ------------------------------------ SIX MONTHS EIGHT MONTHS YEAR SIX MONTHS EIGHT MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED 2/28/99 8/31/98 12/31/97 2/28/99 8/31/98 12/31/97 (UNAUDITED) (UNAUDITED) Shares Sold: A Class ......................................... 1,279,802 1,291,014 2,445,000 1,023,503 787,164 1,511,145 B Class ......................................... 165,557 165,933 230,517 152,099 157,408 262,553 C Class ......................................... 147,787 171,958 99,577 82,413 27,674 68,641 Shares issued upon reinvestment of dividends from net investment income and net realized gains on investment transactions: A Class ......................................... 586,513 742,960 1,191,155 407,783 557,163 983,624 B Class ......................................... 14,278 15,705 21,253 13,111 16,002 23,426 C Class ......................................... 8,200 7,877 8,668 4,982 5,937 10,782 --------- --------- --------- --------- --------- --------- 2,202,137 2,395,447 3,996,170 1,683,891 1,551,348 2,860,171 --------- --------- --------- --------- --------- --------- Shares repurchased: A Class ......................................... (1,350,876) (2,413,567) (5,840,279) (1,152,510) (2,096,352) (4,894,549) B Class ......................................... (49,672) (31,308) (118,151) (44,540) (50,332) (113,408) C Class ......................................... (26,581) (41,574) (118,065) (19,758) (26,316) (91,495) --------- --------- --------- --------- --------- --------- (1,427,129) (2,486,449) (6,076,495) (1,216,808) (2,173,000) (5,099,452) --------- --------- --------- --------- --------- --------- Net Increase (Decrease) ............................ 775,008 (91,002) (2,080,325) 467,083 (621,652) (2,239,281) ========= ========= ========= ========= ========= =========
VOYAGEUR TAX-FREE FUNDS, INC. VOYAGEUR INSURED FUNDS, INC. TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND --------------------------------- ------------------------------------ SIX MONTHS EIGHT MONTHS YEAR SIX MONTHS EIGHT MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED 2/28/99 8/31/98 12/31/97 2/28/99 8/31/98 12/31/97 (UNAUDITED) (UNAUDITED) Shares Sold: A Class ......................................... 739,514 347,131 642,232 738,063 1,474,592 1,228,700 B Class ......................................... 75,240 63,007 60,795 206,739 502,630 531,417 C Class ......................................... 50,544 57,860 73,831 117,296 216,871 240,090 Shares issued upon reinvestment of dividends from net investment income and net realized gains on investment transactions: A Class ......................................... 94,228 123,589 198,390 51,136 54,225 48,680 B Class ......................................... 2,087 2,221 2,115 18,321 18,875 15,493 C Class ......................................... 2,877 3,443 4,721 8,625 9,250 8,637 --------- --------- --------- --------- --------- --------- 964,490 597,251 982,084 1,140,180 2,276,443 2,073,017 --------- --------- --------- --------- --------- --------- Shares repurchased: A Class ......................................... (294,301) (760,113) (1,698,909) (179,201) (233,795) (87,722) B Class ......................................... (4,901) (23,623) (18,600) (59,791) (56,459) (46,061) C Class ......................................... (8,178) (53,354) (46,700) (16,060) (46,620) (38,834) --------- --------- --------- --------- --------- --------- (307,380) (837,090) (1,764,209) (255,052) (336,874) (172,617) --------- --------- --------- --------- --------- --------- Net Increase (Decrease) ............................ 657,110 (239,839) (782,125) 885,128 1,939,569 1,900,400 ========= ========= ========= ========= ========= =========
6. Lines of Credit Committed lines of credit were $21,600,000 for Tax-Free Minnesota Fund, $14,900,000 for Minnesota Insured Fund, $3,100,000 for Tax-Free Minnesota Intermediate Fund and $1,600,000 for Minnesota High Yield Municipal Bond Fund. No amount was outstanding at February 28, 1999, or at any time during the fiscal year. 7. Credit and Market Risk The Funds concentrate their investments in securities issued by municipalities, mainly in Minnesota. The value of these investments may be adversely affected by new legislation within the states, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that market value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statement of Net Assets. DELAWARE INVESTMENTS FAMILY OF FUNDS FOR GROWTH OF CAPITAL Aggressive Growth Fund Trend Fund DelCap Fund Small Cap Value Fund U.S. Growth Fund Growth Stock Fund Tax-Efficient Equity Fund Social Awareness Fund FOR TOTAL RETURN Blue Chip Fund Devon Fund Growth and Income Fund Decatur Equity Income Fund REIT Fund Delaware Balanced Fund FOR INTERNATIONAL DIVERSIFICATION Emerging Markets Fund New Pacific Fund Overseas Equity Fund International Equity Fund Global Equity Fund Global Bond Fund FOR CURRENT INCOME Delchester Fund High-Yield Opportunities Fund Strategic Income Fund Corporate Bond Fund Extended Duration Bond Fund U.S. Government Fund US Government Securities Fund Limited-Term Government Fund FOR TAX-EXEMPT INCOME National High Yield Municipal Bond Fund Tax-Free USA Fund Tax-Free Insured Fund Tax-Free USA Intermediate Fund State Tax-Free Funds* MONEY MARKET FUNDS Delaware Cash Reserve Tax-Free Money Fund ASSET ALLOCATION FUNDS Growth Portfolio Balanced Portfolio Income Portfolio * Available for the following states: Arizona, California, Colorado, Florida, Idaho, Iowa, Kansas, Minnesota, Missouri, North Dakota, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Utah, Washington, Wisconsin. Insured and intermediate bond funds are available in selected states. funds [photo of computer keyboard] Complete information on any fund offered by Delaware Investments can be found in each fund's current prospectus. Prospectuses for all funds offered by Delaware Investments are available from your financial adviser. Please read the prospectus carefully before you invest or send money. THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF MINNESOTA MUNICIPAL BOND FUNDS SHAREHOLDERS, BUT IT MAY BE USED with prospective investors when preceded or accompanied by a current Minnesota Municipal Bond Funds Prospectus and the Delaware Investments Performance Update for the most recently completed calendar quarter. The prospectus sets forth details about charges, expenses, investment objectives and operating policies of each Fund. You should read the prospectus carefully before you invest or send money. Summary investment results are documented in each Fund's current Statement of Additional Information. The figures in this report represent past results which are not a guarantee of future results. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. INVESTMENT MANAGER Delaware Management Company Philadelphia, Pennsylvania INTERNATIONAL AFFILIATE Delaware International Advisers Ltd. London, England NATIONAL DISTRIBUTOR Delaware Distributors, L.P. Philadelphia, Pennsylvania SHAREHOLDER SERVICING, DIVIDEND DISBURSING AND TRANSFER AGENT Delaware Service Company, Inc. Philadelphia, Pennsylvania 1818 Market Street Philadelphia, PA 19103-3682 [photo of globes] For Shareholders 1.800.523.1918 For Securities Dealers 1.800.362.7500 For Financial Institutions Representatives Only 1.800.659.2265 www.delawarefunds.com Be sure to consult your financial adviser when making investments. Mutual funds can be a valuable part of your financial plan; however, shares of the 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. (C) Delaware Distributors, L.P. DELAWARE(SM) INVESTMENTS - --------------------- Philadelphia o London Printed in the USA on recycled paper SA-MNALL[2/99] PP4/99 (1622) -----END PRIVACY-ENHANCED MESSAGE-----