N-30D 1 0001.txt DELAWARE INVESTMENTS =========== Voyageur Closed-End Municipal Bond Funds: Minnesota Municipal Income Funds I, II and III Arizona Municipal Income Fund Florida Insured Municipal Income Fund Colorado Insured Municipal Income Fund Tax-Exempt Income (Tax-Exempt Income Artwork) 2000 ANNUAL REPORT A TRADITION OF SOUND INVESTING SINCE 1929 TABLE OF CONTENTS Letter to Shareholders 1 Portfolio Management Review 3 Financial Statements Statements of Net Assets 11 Statements of Operations 24 Statements of Changes in Net Assets 25 Financial Highlights 26 Notes to Financial Statements 32 Report of Independent Auditors 35 Investment Objectives and Strategies Each of the six Funds in this report is a closed-end management investment company whose shares trade on the American Stock Exchange (ASE) in New York. Each Fund seeks to provide current income exempt from both regular federal income tax and from the personal income tax of its state, if any, consistent with the preservation of capital. In addition, Florida Insured Municipal Income Fund seeks investments that enable its shares to be exempt from Florida's tangible personal property tax. Each Fund seeks to achieve its objective by investing at least 80% of its net assets in investment grade, tax-exempt municipal obligations. Investment Adviser Delaware Management Company (Delaware Management) has been the Funds' investment adviser since May 1, 1997. Delaware Management is a part of Lincoln Financial Group, one of America's largest publicly held diversified financial services companies, with global insurance operations and more than $141 billion in assets under management as of March 31, 2000. As of March 31, 2000, Delaware Management manages approximately $46 billion for mutual fund shareholders and institutional investors such as pension plans and foundations. In addition to the six closed-end funds in this report, Delaware Management also manages closed-end equity funds traded on the New York Stock Exchange. Leveraging Each of the six Funds in this report uses leveraging, a tool that is not usually used by open-ended mutual funds and one that can be an important contributor to each Fund's income and capital appreciation potential. Of course, there is no guarantee that leveraging will benefit any of the Funds. Leveraging could result in a higher degree of volatility because the Fund's net asset value could be more sensitive to fluctuations in short-term interest rates and equity prices. Delaware believes this volatility risk is reasonable given the benefits of higher income potential. Dear Shareholder May 12, 2000 Recap of Events - Economic activity in the United States continues to move along ahead of expectations. An improving global economic outlook further enhances the prospect of continued strong economic growth in the U.S. During the last 12 months, U.S. interest rates, as measured by the short and intermediate Treasury bond market, rose and Treasury bond prices fell significantly. Interest rates rose for two reasons. First, there was a perception that inflation would increase. Second, the Federal Reserve was actively raising short-term interest rates in an effort to thwart inflation. Each time Federal Reserve Chairman Alan Greenspan addressed the media and spoke of a more restrictive monetary policy, it tended to rattle the bond markets further. The booming stock market created a strong wealth effect (the tendency to spend more when your stocks are rising) during this period. Alan Greenspan commented recently that the wealth effect has mitigated the effects of the interest rate hikes the Fed has initiated. While inflation has remained low, concerns persist about the long term. The Fed's primary goal is to keep inflation under control. The U.S. economy, as measured by the Gross domestic product (GDP), grew at an annual rate of 5.4% in the first quarter 2000 (Source: Bloomberg). We believe the Fed will continue to increase short-term interest rates until the economy slows to an annual growth rate of between 3.0% and 3.5%, diminishing the risk of inflation. Municipal bonds weathered the turbulence in the fixed-income arena somewhat better than U.S. Treasury securities during the past 12 months. Municipal bond yields steadily increased throughout this time period, but municipal bond prices fluctuated less than U.S. Treasury securities (Source: Bloomberg). The bond market improved substantially in March of 2000. Bonds rallied strongly, pushing prices higher and yields lower. The rally was most pronounced in the Treasury market, though municipal bonds experienced an improvement as well. The weakness and extreme volatility in the Nasdaq Composite Index (the index that includes many younger technology and small capitalization companies) and technology stocks prompted some investors to seek a safe haven in Treasuries and municipal bonds. Despite the rally in March, municipal bonds in general, like most fixed-income securities, lost value for the 12 months ended March 31, 2000. Our Closed-End Municipal Bond Funds were no exception - all six Funds were down for the last 12 months. Please see the Portfolio Management Review for a discussion of each Fund's performance. 1 "We believe fixed-income investments play an important role in well-balanced portfolios, even as stocks continue to capture more attention and a larger share of investors' assets." (Tax-Exempt Income Artwork) Market Outlook - We believe fixed-income investments play an important role in well-balanced portfolios, even as stocks continue to capture more attention and a larger share of investors' assets. Looking forward, if the Fed succeeds in slowing economic growth to what it believes is a sustainable pace, we believe income from bonds will begin to look more attractive to investors. In our opinion, tax-exempt municipal bonds, which your Funds hold, continue to offer investors a range of benefits, including: o Attractive current income that is free from federal, and in some cases, state and local taxes.* o A high likelihood that interest and principal payments will be made as scheduled. We realize that the past 12 months have been a difficult period for fixed-income investors. We applaud you for remaining committed to your investment plan. Thank you for your continued confidence in Delaware Investments. Sincerely, /s/ Wayne A. Stork /s/ David K. Downes ------------------------------------ -------------------------------------- Wayne A. Stork David K. Downes Chairman, President and Chief Executive Officer, Delaware Investments Family of Funds Delaware Investments Family of Funds Total Returns For One-Year Period Ended March 31, 2000
Total Return Total Return Premium (+)/ at At Discount (-) Net Asset Market As of ASE Value Value March, 31, 2000 Symbol ------------------------------------------------------------------------------------------------------------- Minnesota Municipal Income Fund I -2.56% -12.39% -3.54% VMN ------------------------------------------------------------------------------------------------------------- Minnesota Municipal Income Fund II -3.43% -12.28% -8.48% VMM ------------------------------------------------------------------------------------------------------------- Minnesota Municipal Income Fund III -4.57% -11.70% -6.45% VYM ------------------------------------------------------------------------------------------------------------- Lipper Minnesota Closed-End Municipal Debt Fund Average (6 funds) -2.44% ------------------------------------------------------------------------------------------------------------- Arizona Municipal Income Fund -3.10% -11.65% -9.82% VAZ ------------------------------------------------------------------------------------------------------------- Colorado Insured Municipal Income Fund -3.62% -11.05% -9.43% VCF ------------------------------------------------------------------------------------------------------------- Lipper Other States Closed-End Municipal Debt Fund Average (19 funds) -4.74% ------------------------------------------------------------------------------------------------------------- Florida Insured Municipal Income Fund -3.01% -15.57% -18.06% VFL ------------------------------------------------------------------------------------------------------------- Lipper Florida Closed-End Municipal Debt Fund Average (13 funds) -4.32% ------------------------------------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index -0.25% Lehman Brothers Insured Municipal Bond Index -0.66% ------------------------------------------------------------------------------------------------------------- All performance shown above assumes reinvestment of distributions. The Lipper categories represent the average returns of municipal bond funds with similar investment objectives tracked by Lipper Analytical. Source: Lipper Analytical Services, Inc. The unmanaged Lehman Brothers Indexes are composed of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Past performance does not guarantee future results. ------------------------------------------------------------------------------------------------------------- * A portion of the income from tax-exempt funds may be subject to the alternative minimum tax.
2 PORTFOLIO MANAGEMENT REVIEW Elizabeth H. Howell Senior Portfolio Manager Minnesota Municipal Income Funds I, II, III Andrew M. McCullagh, Jr. Senior Portfolio Manager Arizona Municipal Income Fund Colorado Insured Municipal Income Fund Patrick P. Coyne and Mitchell L. Conery Senior Portfolio Managers Florida Insured Municipal Income Fund May 12, 2000 Overview Over the last 12 months, we have witnessed a combination of market events that have pushed municipal bond yields higher and prices lower. Concerns related to year 2000 computer issues helped to reduce the amount of municipal bonds being issued toward the end of 1999. Most municipalities issued bonds earlier in the year and sat out the end of the year. In addition, investors' interest in municipal bonds was minimal compared to their intense attention to the equity markets. In spite of the reduced supply of new bonds at year-end, the total supply of municipal bonds was ample and that gave us the opportunity to select bonds for our funds that have solid credit ratings and the potential for future price appreciation. Based on value measures, the relationship of municipal bonds to Treasury bonds vacillated throughout the year. In our view, municipal bonds offered better relative value for much of the time. Portfolio Highlights Minnesota Municipal Income Funds I, II and III performed less favorably than both the unmanaged Lehman Brothers Municipal Bond Index and the average return of funds in the Lipper Minnesota Closed-End Municipal Fund Average. During the year, we set out to improve the call protection of the portfolios, which protects us against bonds being redeemed early by their issuers. We believe the Funds are well positioned to benefit should long-term interest rates decline. Interest rates for longer term Treasury bonds, which are determined by market demand rather than the Fed, fell during the first quarter of 2000. We expect to see a continuation of this trend, as the Fed succeeds in slowing the U.S. economic growth rate. We believe such an environment would be very favorable for bond investors. We believe the bonds that we selected have the potential to improve total return and provide a competitive income stream. The majority of the Funds' assets were invested in high-quality healthcare, housing and power authority issues. Within these categories, we focused on bonds with strong credit ratings that were selling for less than their face value. 3 As of March 31, a significant portion of each Fund's holdings were invested in what are called pre-refunded/escrowed to maturity bonds (27% of Minnesota Municipal Income Fund I; 30% of Minnesota Municipal Income Fund II; 24% of Minnesota Municipal Income Fund III). Issuers often pre-refund their bonds when interest rates are low in order to reduce their interest costs. Pre-refunded bonds help the Fund because: o The credit quality of the bonds typically increases because of the high quality of the escrow account. o The price usually increases because the bond is now backed by U.S. Treasuries and will be retired before its stated maturity date. o In general, prices for these bonds are less sensitive to interest rate fluctuations because of their shorter duration. In most cases, once a bond is pre-refunded we continue to hold it. This normally allows the Fund to collect an attractive level of current income and benefit from better protection of principal. Pre-refunded bonds performed especially well in the rising interest rate environment that we've experienced over the last six months. Investor concerns about bond returns have kept demand for bonds low for most of our fiscal period. In addition, the extraordinary returns available in the equity markets continue to draw investors' attention, diverting investment dollars from bond investors. In this environment, all three Minnesota funds traded at a discount to net asset value as of March 31, 2000 - Fund I at a 3.54% discount, Fund II at a 8.48% discount, and Fund III at a 6.45% discount. Our credit outlook for Minnesota's municipal bonds remains positive. The Minnesota economy continues to steam ahead and is one of the strongest and most diverse in the nation. Minnesota has maintained growth in many traditional sectors and is experiencing strong growth in several emerging industries. For example, Minnesota's Medical Alley is the home to many thriving medical technology companies, including 3M, Medtronic, St. Jude, Guidant/CPI, and SciMed Life. The municipal bonds in our three Funds continue to look financially sound and we believe will continue to be able to pay their interest as a result of the state's economic strength. Going forward, we continue to manage the Minnesota Municipal Income Funds for the long term. We remain committed to purchasing high quality bonds and striving to achieve strong long-term total returns. 4 MINNESOTA MUNICIPAL INCOME FUNDS I, II, III ------------------------------------------- FUND BASICS ----------- Fund Objectives The Funds seek to provide current income exempt from both regular federal income tax and Minnesota state personal income tax, consistent with the preservation of capital. Total Fund Assets Fund I $56.49 million Fund II $158.57 million Fund III $38.07 million Number of Holdings Fund I 42 Fund II 69 Fund III 29 Fund Start Date Fund I: May 1, 1992 Fund II: February 26, 1993 Fund III: October 29, 1993 Your Fund Manager Elizabeth H. Howell joined Delaware Investments via its acquisition of Voyageur Fund Managers in 1997. She previously held management positions at Windsor Financial Group, Loomis Sayles and Eaton Vance Management. She holds a bachelor's degree from Skidmore College, an MBA from Babson College and is a member of the Twin Cities Securities Analysts Society. Bond Quality and Portfolio Highlights March 31, 2000 Fund I Fund II Fund III ------------------------------------------------------------------------------- AAA 58.17% 48.39% 58.75% AA 9.88% 19.18% 5.80% A 14.24% 17.20% 21.39% BBB 3.08% 4.31% 5.39% Unrated 14.63% 10.92% 8.67% ------------------------------------------------------------------------------- Average Quality AA AA AA Average Effective Maturity 14.61% 19.92 years 22.99 years Average Effective Duration 10.02% 12.32 years 14.73 years Current Yield at Market Price 9.57% 9.69% 9.88% Amount of Leveraging (Millions) $20 million $60 million $15 million ------------------------------------------------------------------------------- Approximately 18.93%, 19.75% and 10.74% of the income generated by Minnesota Municipal Income Funds - I, II and III respectively, for the 12 months ended March 31, 2000, was subject to the federal alternative minimum tax. Asset Mix March 31, 2000 Fund I Fund II Fund III ------------------------------------------------------------------------------- Housing 20.95% 21.17% 14.43% ------------------------------------------------------------------------------- Pre-Refunded Bonds/Escrowed to Maturity 26.85% 30.15% 24.17% ------------------------------------------------------------------------------- Power Authority 16.60% 10.40% 8.51% ------------------------------------------------------------------------------- Hospitals 15.84% 14.27% 20.30% ------------------------------------------------------------------------------- General Obligation 5.60% 4.05% 1.84% ------------------------------------------------------------------------------- Higher Education 7.38% 9.15% 6.12% ------------------------------------------------------------------------------- Water & Sewer 5.81% 2.22% 10.81% ------------------------------------------------------------------------------- Transportation - 3.60% 4.90% ------------------------------------------------------------------------------- Pollution Control - 2.87% 2.39% ------------------------------------------------------------------------------- City Agency - 0.22% 2.30% ------------------------------------------------------------------------------- Continuing Care/Retirement - - 2.71% ------------------------------------------------------------------------------- Other Assets 0.97% 1.90% 1.52% ------------------------------------------------------------------------------- 5 Arizona Municipal Income Fund Asset Mix as of March 31, 2000 Pre-Refunded Bonds/Escrowed to Maturity 6.01% Territorial 4.53% Leases/Certificates of Participation 3.66% Highway 3.58% Power Authority 2.49% Industrial Development 2.04% Higher Education 1.56% Other Assets 1.34% Housing 24.30% General Obligation 13.69% [GRAPHIC OMITTED] Hospitals 9.86% Miscellaneous 9.58% Water & Sewer 8.93% Transportation 8.43% FUND BASICS ----------- Fund Objectives The Fund seeks to provide current income exempt from both regular federal income tax and from Arizona state personal income tax, consistent with the preservation of capital. Total Fund Assets $66.76 million Number of Holdings 43 Fund Start Date February 26, 1993 Your Fund Manager Andrew M. McCullagh earned a bachelor of science degree at Washington College and a graduate certificate in public finance from the University of Michigan. He joined Delaware Investments via its acquisition of Voyageur Fund Managers in 1997. Previously he was the founder and executive vice president of the Colorado Double Tax-Exempt Fund. Arizona Municipal Income Fund The Arizona State economy continued to grow throughout the last 12 months. Arizona is projected to remain the second fastest growing state in the nation through 2003. The state boasts a diverse and expanding economy with rapid population and employment growth, a strong credit rating and moderately low debt (Source: Standard & Poor's). The job growth rate in Arizona was the highest in the nation as of February, 2000 (Source: Standard & Poor's). This economic expansion, along with an increasing need for schools, roads and housing, sets an attractive stage for Arizona municipal bond investors throughout the year 2000. Throughout the first half of fiscal 2000, we lengthened Arizona Municipal Income Fund's duration. Duration is a common measure of a bond or bond fund's sensitivity to interest rates. The longer the duration, the more the bond's price will change for a given increase or decrease in interest rates. Our goal was to increase the Fund's income potential to the greatest extent consistent with preservation of capital. Funds with a longer average duration, in our opinion, should perform well over the coming year. Even though we may experience short-term interest rate increases in the next six months, we expect overall long-term interest rates, which are determined by market demand and not the Federal Reserve, to stabilize or decline as compared to the last few months, when interest rates on long-term 30-year U.S. Treasury bonds reached a high of 6.75% on January 18, 2000. Arizona has traditionally had scarce bond issuance compared to other states. We expect to see even fewer new bond issues in the coming months. As a result, we have had a very limited universe from which to choose. Most of the portfolio is made up of securities issued by two counties: Pima and Maricopa. The municipal bonds in our portfolio continue to look financially sound and we believe they will continue to be able to pay their interest as a result of the state's economic strength. Despite the strength of our portfolio, demand for tax-exempt bonds in Arizona remains low, depressing our share price. In this environment, Arizona Municipal Income Fund returned a disappointing -3.10% at net asset value for the 12-month period ended March 31, 2000. Portfolio Characteristics As of March 31, 2000 Current Yield at Market Price 9.22% -------------------------------------------------------------------------------- Average Effective Duration 11.97 years -------------------------------------------------------------------------------- Average Effective Maturity 19.96 years -------------------------------------------------------------------------------- Approximately 16.19% of the income generated by Arizona Municipal Income Fund for the 12 months ended March 31, 2000 was subject to the federal alternative minimum tax. 6 FUND BASICS ----------- Fund Objective The Fund seeks to provide current income exempt from both regular federal income tax consistent with the preservation of capital. The Fund will also seek to maintain its portfolio so that the Fund's shares will be exempt from the Florida intangible personal property tax. Total Fund Assets $54.73 million Number of Holdings 34 Fund Start Date February 26, 1993 Your Fund Managers Patrick P. Coyne received a bachelor's degree from Harvard University and an MBA in Finance from the University of Pennsylvania's Wharton School. He began his career with Kidder, Peabody & Co., where he managed the firm's trading desk for four years. He joined Delaware Investments' fixed-income department in 1989. Mitchell L. Conery received a bachelor's degree from Boston University and an MBA in Finance from the State University of New York in Albany. Prior to joining Delaware Investments in 1997, he served as a Municipal Bond Investment Officer with the Travelers Group. Before that, he held positions at CS First Boston Corporation, MBIA Corporation, Thomson McKinnon Securities, Ovest Financial Services, and Merrill Lynch. Florida Insured Municipal Income Fund had a total return of -3.01% at net asset value (capital change with reinvested dividends) for the 12-month period ended March 31, 2000. During this difficult period, we succeeded in preserving capital to a greater degree than the Fund's peer group, represented by the Lipper Florida Closed-End Municipal Debt Fund Average, which had a -4.32% average return for the same 12-month period. The Fund, however, did not keep pace with its benchmark, the Lehman Brothers Insured Municipal Bond Index, which returned -0.66%. Over the last 12 months, Florida Insured Municipal Income Fund's average duration increased from 5.9 years to 12.2 years. Duration is a common measure of a bond or bond fund's sensitivity to interest rates. The longer the duration, the more the bond's price will change for a given increase or decrease in interest rates. Duration increased for two reasons: We added more discount bonds to the portfolio in order to preserve income in a rising interest rate environment. The increased duration was also a function of the higher interest rates. In the lower interest rate environment of 1999, most of the securities in the Fund were priced as premium bonds with shorter duration. As interest rates rose throughout the year, prices of these securities declined and the bonds were priced at their face value or below. Discount bonds have longer durations than premium bonds because they have longer effective maturities and are less likely to be retired before their stated maturity. As mandated by the Fund's investment policies, Florida Insured Municipal Income Fund continues to invest exclusively in insured municipal bonds rated AAA by Moody's or Standard & Poor's, the highest credit rating available. As of December 31, 1999, approximately 54% of all new municipal bonds issued in Florida were insured, more than in most states (Source: The Bond Buyer). This provides us with a large pool of securities from which to select your Fund's issues. Demand for insured municipal bonds, which guarantee the payment of principal and interest, remained strong in Florida over the past 12 months. We also continue to leverage this Fund. Although leveraging exposes the Fund to a higher degree of interest rate risk, it also increases the Fund's income potential when interest rates remain relatively stable. We expect interest rates to increase only slightly over the coming months. This trend should, in our opinion, create a positive scenario for the Fund in the coming months. 7 Florida Insured Municipal Income Fund Asset Mix March 31, 2000 Higher Education 5.00% Airports 4.71% General Obligations 3.40% Power Authority 2.30% Other Assets 1.79% Pre-Refunded Bonds/ Escrowed to Maturity 21.92% [GRAPHIC OMITTED] Other Revenue 19.27% Housing 11.70% Hospitals 11.04% School District 10.61% Water & Sewer 8.26% During the year, we increased our holdings in higher coupon bonds and reduced our exposure to bonds with 5.25% to 5.5% coupons. Holding bonds with a higher coupon increases total income and reduces price sensitivity. We also purchased bonds issued by the Florida Board of Education, a Florida general obligation bond, increasing the Fund's holdings of general obligation issues to 3.40%. We continue to hold a large portion of the Fund's assets in pre-refunded bonds. Pre-refunded bonds, which are issued by municipalities to refinance existing debt at lower interest rates, are generally rated AAA and are backed by U.S. government bonds held in escrow. We held onto these bonds because they continue to generate high levels of income for the Fund. As they approach their maturity date, we will sell them and seek to replace them with comparable yielding bonds. As of March 31, 2000, pre-refunded bonds accounted for 21.9% of net assets. Portfolio Characteristics As of March 31, 2000 Current Yield at Market Price 8.87% -------------------------------------------------------------------------------- Average Effective Duration 12.20 years -------------------------------------------------------------------------------- Average Effective Maturity 19.09 years -------------------------------------------------------------------------------- Approximately 16.58% of the income generated by Florida Insured Municipal Income Fund for the 12 months ended March 31, 2000 was subject to the federal alternative minimum tax. 8 Colorado Insured Municipal Income Fund Asset Mix March 31, 2000 Leases/Certificates of Participation 10.43% Water & Sewer 4.73% Pre-Refunded Bonds/ Escrowed to Maturity 1.89% Utility 1.82% Pollution 1.42% Other Assets 1.36% Transportation 23.21% [GRAPHIC OMITTED] Higher Education 17.45% General Obligation 16.28% Hospitals 10.90% Housing 10.51% FUND BASICS ----------- Fund Objectives The Fund seeks to provide current income exempt from both regular federal income tax and from Colorado state income tax, consistent with the preservation of capital. Total Fund Assets $107.09 million Number of Holdings 43 Fund Start Date July 29, 1993 Your Fund Manager Andrew M. McCullagh Colorado Insured Municipal Income Fund Colorado's robust economy helped fuel a growth rate that was twice the national rate. The third fastest growing state in the nation, Colorado exhibits strong personal income growth, large job gains and healthy residential construction (Source: Colorado Economic Chronicle). Hospital revenue bonds have been a strong focus for this Fund over the past few years. Historically, hospital and other medical bonds tend to perform well during a healthy economy. Recently, however, this has not been the case. As the U.S. government cuts funding for medical programs, hospital revenues have begun to decline. For this reason, over the past few months we have reduced our exposure to these securities and increased the Fund's holdings of transportation revenue bonds. We restructured the portfolio by consolidating our positions of certain holdings and by reducing our holdings of bonds that were likely to be called in the near future. We replaced those bonds with others that had 10-year call protection, meaning the issuer cannot redeem them for 10 years. Base on net asset value, Colorado Insured Municipal Income Fund was able to preserve capital to a greater extent than its peers in the Lipper Other States Closed-End Municipal Debt Fund Average for the 12-month period ended March 31, 2000. Consistent with its investment strategy, the Fund invests exclusively in Colorado insured municipal bonds rated AAA by Moody's or Standard & Poor's, the highest credit quality available. As always, we strive to seek a high level of current income free of federal and state income taxes for residents of Colorado. When selecting new securities, we utilize the following strategies for the Fund: o A bottom-up, research-intensive strategy - We start by evaluating specific bonds rather than focusing on bond sectors, and o A value-oriented focus - We strive to select specific bonds that are selling below fair market value. Portfolio Characteristics As of March 31, 2000 Current Yield at Market Price 9.04% -------------------------------------------------------------------------------- Average Effective Duration 15.11 years -------------------------------------------------------------------------------- Average Effective Maturity 25.19 years -------------------------------------------------------------------------------- None of the income generated by Colorado Insured Municipal Income Fund for the 12 months ended March 31, 2000 was subject to the federal alternative minimum tax. 9 "REGARDLESS OF MARKET CONDITIONS, MUNICIPAL BOND FUNDS HAVE THE POTENTIAL TO OFFER VALUABLE ASSET ALLOCATION BENEFITS WITHOUT ADDING TO YOUR TAXABLE INVESTMENT INCOME." Outlook The U.S. seems to be the engine of growth for the entire world at this time. We believe strong forward momentum for the U.S. economy is likely to result in solid growth for the remainder of this year. We don't think this will create an inflationary environment if labor productivity can maintain respectable gains. The Federal Reserve has been on a path of increasing short-term interest rates. There have been five one-quarter point increases in short-term interest rates since June 1999. Clearly, the Federal Reserve's goal is to slow the pace of the U.S. economic climate to what it believes is a non-inflationary rate of growth. We have seen some slowdown in the economy and the equity markets, as evidenced by a decline in the Dow Jones Industrial Average, which is down -0.44% since June, 1999 when the Fed began raising interest rates. If equity markets remain subdued we think longer term bonds--including municipal bonds--could begin to attract investors' attention once again and potentially increase in price. Regardless of market conditions, municipal bond funds have the potential to offer valuable asset allocation benefits without adding to your taxable investment income. In our view, investors seeking to diversify their portfolios will continue to find attractive opportunities in municipal bonds and municipal bond funds in the years to come. Dividend Reinvestment Plans Each Fund offers an automatic dividend reinvestment program. If Fund shares are registered in your name and you are not already reinvesting dividends but would like to do so, contact the dividend plan agent, Norwest Bank, Minnesota, NA at 1.800.468.9716. You will be asked to put your request in writing. If you have shares registered in "street" name, contact your financial adviser or the broker/dealer holding the shares. Under the Funds' current policies, all distributions of net investment income and capital gains to common stock shareholders are automatically reinvested in additional shares unless shareholders elect to receive all dividends and other distributions in cash paid by check mailed directly to the shareholders by the dividend plan agent. After each Fund declares a dividend or determines to make a capital gains distribution, the plan agent will, as agent for the participants, receive the cash payment and use it to buy shares in the open market on the American Stock Exchange. The Funds will not issue any new shares in connection with the plan. 10 Statements of Net Assets VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC. ---------------------------------------------- Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 99.03% General Obligation Bonds - 5.60% Minneapolis Refunding (Laurel Village) 6.00% 3/1/16 .................................... $1,600,000 $1,621,648 Minneapolis St. Paul Metro Airport Commission 6.60% 1/1/11 (AMT) ................... 1,500,000 1,541,355 ---------- 3,163,003 ---------- Higher Education Revenue Bonds - 7.38% Minnesota Higher Education Facility (St.Thomas University) Series 3-C 6.25% 9/1/16 .................................... 1,000,000 1,010,080 Minnesota State University Board (State University System) Series A 6.05% 6/30/18 ................................... 250,000 251,318 Northfield, Minnesota (St. Olaf College) 6.30% 10/1/12 ................................... 1,075,000 1,120,053 6.40% 10/1/21 ................................... 1,750,000 1,788,885 ---------- 4,170,336 ---------- Hospital Revenue Bonds- 15.84% Bloomington Health Care Facilities (Masonic Home Care Center) 5.875% 7/1/22 ................................... 1,000,000 1,000,450 Duluth Economic Development Authority Health Care (Benedictine Health System St. Mary's Hospital) Series 1993-C 6.00% 2/15/20 (Connie Lee) ...................... 1,000,000 1,006,600 Duluth Economic Development Authority Health Care (St. Luke's Hospital) Series 1992-B 6.40% 5/1/18 (Connie Lee) ....................... 1,000,000 1,029,450 Minneapolis Health Care Facility (Fairview Hospital) Series 1993-A 5.25% 11/15/19 (MBIA) ........................... 1,500,000 1,407,345 Minneapolis Hospital System (Fairview Hospital) Series 1991-A 6.50% 1/1/11 (MBIA) ............................. 2,210,000 2,311,329 St. Cloud Hospital Facilities Revenue for St. Cloud Hospital 5.30% 10/1/20 (AMBAC) ........................... 1,500,000 1,409,040 St. Paul Housing & Redevelopment Authority Health Care Facility (Regions Hospital Project) 5.30% 5/15/28 ................................... 1,000,000 783,820 ---------- 8,948,034 ---------- Housing Revenue Bonds - 20.95% Brooklyn Center Multifamily Housing (Four Courts Apartments) 7.50% 6/1/25 (AMT) .............................. 1,800,000 1,761,912 Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Housing Revenue Bonds (continued) Minnesota Housing Finance Agency Single Family Mortgage Series 1992-G 7.45% 7/1/22 (AMT) (FHA) ....................... $ 480,000 $ 493,483 Minnetonka Housing Facilities (Beacon Hill Project) 7.70% 6/1/25 ............. 2,725,000 2,744,402 New Brighton Multifamily Mortgage (Polynesian Village Apartments) Series 1995-A 7.60% 4/1/25 (AMT) ............... 1,400,000 1,418,844 St. Anthony Multifamily Housing Development (Autumn Woods Project) 6.875% 7/1/22 (Asset Guaranty) ................. 2,265,000 2,347,333 St. Paul Housing & Redevelopment Authority Multifamily Housing (Pointe of St. Paul Project) Series 1992 6.60% 10/1/12 (FNMA) ............... 2,950,000 3,068,000 ---------- 11,833,974 ---------- Power Authority Revenue Bonds - 16.60% Bass Brook, Minnesota Power & Light 6.00% 7/1/22 ................................... 2,575,000 2,456,344 Northern Minnesota Municipal Power Agency Electric System Series A 5.00% 1/1/21 .......................... 1,500,000 1,339,560 Series B 5.50% 1/1/18 (AMBAC) .................. 1,250,000 1,226,300 Puerto Rico Electric Power Authority Series EE 4.75% 7/1/24 ......................... 1,100,000 940,830 Southern Minnesota Municipal Power Agency 5.00% 1/1/16 (FGIC) ............................ 580,000 534,731 5.50% 1/1/15 (AMBAC) ........................... 610,000 609,945 Western Minnesota Municipal Power Agency Series A 5.50% 1/1/15 (MBIA) ............ 2,275,000 2,270,245 ---------- 9,377,955 ---------- *Pre-Refunded Bonds / Escrowed to Maturity - 26.85% Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage Revenue 8.375% 9/1/21 (Escrowed to Maturity) (AMT) (GNMA) ......................... 2,555,000 3,337,724 Duluth Economic Development Authority Health Care (Duluth Clinic) Series 1992 6.30% 11/1/22-02 (AMBAC) ....................... 1,270,000 1,340,231 6.30% 11/1/22-04 (AMBAC) ....................... 730,000 772,909 Edina Recreational Facilities Series 1992-A 6.00% 1/1/09-02 ................................ 305,000 310,347 6.00% 1/1/10-02 ................................ 320,000 325,610 Minneapolis & St. Paul Housing & Redevelopment Authority Health Care 6.75% 8/15/14 .................................. 500,000 514,410 11 Statements of Net Assets (continued) Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) *Pre-Refunded Bonds / Escrowed to Maturity (continued) Minnesota Higher Education Revenue Series 3-J (Macalester College) 6.40% 3/1/22-02 ................................. $1,000,000 $1,029,120 Minnesota Public Facilities Authority (Water Pollution Control) Series 1992 6.50% 3/1/14-02 ................................. 1,500,000 1,576,605 Puerto Rico Commonwealth 6.00% 7/1/26-07 ................................. 2,000,000 2,171,540 St. Cloud Hospital 6.75% 7/1/15-01 (AMBAC) ......................... 1,000,000 1,045,650 St. Francis Independent School District #15 6.30% 2/1/11-06 (FSA) ........................... 1,250,000 1,312,438 Southern Minnesota Municipal Power Agency 5.50% 1/1/15 (AMBAC) (Escrowed to Maturity) .......................... 390,000 395,966 5.75% 1/1/11 (FGIC) (Escrowed to Maturity) .......................... 1,000,000 1,031,640 ---------- 15,164,190 ---------- Water & Sewer Revenue Bonds - 5.81% Anoka County Solid Waste Disposal National Rural Co-op Utility 6.95% 12/1/08 (AMT) ............................. 1,000,000 1,023,140 **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floaters 5.01% 3/1/16 .................................... 1,000,000 792,020 5.16% 3/1/17 .................................... 1,855,000 1,469,865 ---------- 3,285,025 ---------- Total Municipal Bonds (cost $54,485,277) .............................. 55,942,517 ---------- Market Value -------------------------------------------------------------------------------- Total Market Value of Securities - 99.03% (cost $54,485,277) .............................. $55,942,517 Receivables and Other Assets Net of Liabilities - 0.97% ...................... 545,778 ----------- Total Net Assets - 100.00% ......................... 56,488,295 Liquidation Value of Preferred Stock ............... (20,000,000) ----------- Net Assets Applicable to 2,594,700 Common Shares ($0.01 Par Value) Outstanding ..................................... $36,488,295 =========== Net Asset Value per Common Share ($36,488,295 / 2,594,700 shares) ................ $14.06 ----------- ---------------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. **Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect March 31, 2000. Summary of Abbreviations: AMBAC - Insured by the American Municipal Bond Assurance Corporation AMT - Subject to Alternative Minimum Tax Asset Guaranty - Insured by the Asset Guaranty Insurance Company Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association Components of Net Assets at March 31, 2000: Common stock, $0.01 par value, 200 million shares authorized to the Fund .................. $35,426,740 Preferred stock, $0.01 par value, 1 million shares authorized to the Fund ................... 20,000,000 Distributions in excess of net investment income ............................... (60,604) Accumulated net realized loss on investments .................................. (335,081) Net unrealized appreciation of investments .................................. 1,457,240 ----------- Total net assets ................................... $56,488,295 =========== See accompanying notes 12 Statements of Net Assets (continued) VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC. Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.98 City Agencies - 0.22% Minneapolis Community Development Agency - Supported Development Revenue Limited Tax Common Bond Fund Series 5 5.70% 12/1/27 ................................... $ 375,000 $ 352,665 ---------- 352,665 ---------- General Obligation Bonds - 4.05% Becker Refunding Tax Increment Series D 6.25% 8/1/15 (AMT)(MBIA) ........................ 3,700,000 3,777,367 **Minnesota State Public Facilities Authority Water Pollution Control Revenue, Inverse Floater 5.794% 11/1/17 .................. 570,000 496,185 Rosemount Independent School District #196 Series A 5.70% 4/1/12 ............. 1,270,000 1,307,567 St. Paul Tax Increment (Block 39 Project) Series A 4.75% 2/1/25 ........................... 1,000,000 846,820 ---------- 6,427,939 ---------- Higher Education Revenue Bonds - 9.15% Minnesota Higher Education Facility (Macalester College) Series C 5.55% 3/1/16 .................................... 1,250,000 1,250,988 Minnesota State Higher Education Facility (St. Thomas University) Series 3-R2 5.60% 9/1/14 ........................ 275,000 276,254 Series B 3-R1 5.60% 10/1/15 ..................... 1,050,000 1,049,990 Series 4A-1 5.625% 10/1/21 ...................... 1,000,000 975,060 Minnesota State University Board (State University System) Series 1993-C 5.60% 6/30/16 (MBIA) .............. 3,115,000 3,122,009 Series 1993-C 5.60% 6/30/19 (MBIA) .............. 3,720,000 3,693,662 Series 1993-A 6.10% 6/30/23 ..................... 1,150,000 1,156,061 University of Minnesota Series A 5.50% 7/1/21 .................................... 3,000,000 2,992,260 ---------- 14,516,284 ---------- Hospital Revenue Bonds - 14.27% Bloomington Health Care Facilities (Masonic Home Care Center) 5.875% 7/1/22 (AMBAC) ........................... 4,000,000 4,001,800 Brainerd Evangelical Lutheran Health Care Facilities Series A 6.65% 3/1/17 (FSA) .............................. 1,195,000 1,242,561 Duluth Economic Development Authority Benedictine Health Systems (St. Mary's Hospital) Series C 6.00% 2/15/20 (Connie Lee) ...................... 6,000,000 6,039,600 Minneapolis Health Care Facility (Jones-Harrison Residence Project) 6.00% 10/1/27 ................................... 2,000,000 1,656,820 Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Hospital Revenue Bonds (continued) Minneapolis, St. Paul Housing & Redevelopment Authority (Children's Health Care) 5.50% 8/15/25 (FSA) ................ $1,500,000 $ 1,419,570 Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 5.75% 11/15/26 (MBIA) ........................... 4,800,000 4,735,296 Rochester Health Care Facilities (Mayo Foundation) Series B 5.50% 11/15/27 .................................. 3,365,000 3,213,272 St. Paul Housing & Redevelopment Authority Health Care Facility Revenue (Regions Hospital Project) 5.30% 5/15/28 ................................... 400,000 313,528 ----------- 22,622,447 ----------- Housing Revenue Bonds - 21.17% Chanhassen Multifamily Housing Heritage Park Project 6.20% 7/1/30 (AMT)(FHA) ......................... 1,105,000 1,120,481 Dakota County Housing & Redevelopment Authority Multifamily Mortgage (Imperial Ridge Project) Series 1993-A 6.10% 12/15/28 (GNMA) ........................... 1,870,000 1,890,495 Harmony Multifamily Housing (Section 8) (Zedakah Foundation Project) Series A 5.95% 9/1/20 .................................... 1,000,000 992,930 Minnesota Housing Finance Agency Multifamily Rental Housing Series D 5.90% 2/1/14 ........................... 1,115,000 1,126,540 Series D 6.00% 8/1/22 ........................... 2,295,000 2,307,209 Minnesota Housing Finance Agency Single Family Housing Series 1991-A 7.05% 7/1/22 (AMT) ................ 1,240,000 1,270,082 Series 1992-B 6.15% 1/1/26 (AMT) ................ 3,530,000 3,535,825 Series 1992-C2 6.15% 7/1/23 (AMT) ............... 3,575,000 3,584,081 Series 1994-F 6.30% 7/1/25 ...................... 1,495,000 1,518,501 Series 1994-J 6.95% 7/1/26 (AMT) ................ 2,780,000 2,874,993 Minnetonka Housing Facilities (Beacon Hill Project) 7.25% 6/1/09 .................................... 1,225,000 1,217,577 7.50% 6/1/14 .................................... 760,000 765,457 7.55% 6/1/19 .................................... 2,365,000 2,376,163 Moorhead Economic Development Authority Multifamily Housing Development (Eventide) Series B 6.00% 6/1/18 ........................... 1,000,000 873,880 New Brighton Multifamily Mortgage (Polynesian Village Apartments) Series 1995-A 7.60% 4/1/25 ...................... 3,820,000 3,871,415 13 Statements of Net Assets (continued) Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Housing Revenue Bonds (continued) St. Paul Housing & Redevelopment Authority Single Family Mortgage 6.40% 3/1/21 (FNMA) ............................. $1,320,000 $ 1,353,145 Stillwater Multifamily Mortgage (Stillwater Cottages) 7.25% 11/1/27 (AMT) ............................. 1,540,000 1,466,126 Waconia Health Care Facilities Revenue (Ridgeview Medical Center) Series A 6.10% 1/1/19 .................................... 1,405,000 1,422,324 ----------- 33,567,224 ----------- Pollution Control Revenue Bonds - 2.87% Cloquet, Minnesota Pollution Control (Potlatch Corporation Project) 5.90% 10/1/26 ................................... 5,000,000 4,552,450 ----------- 4,552,450 ----------- Power Authority Revenue Bonds - 10.40% Bass Brook Pollution Control Revenue for Minnesota Power & Light 6.00% 7/1/22 .................................... 7,560,000 7,211,635 Northern Minnesota Municipal Power Agency Electric System Series B 5.50% 1/1/18 (AMBAC) ............................ 5,955,000 5,842,093 Puerto Rico Electric Power Authority 5.25% 7/1/21 .................................... 2,000,000 1,836,760 Western Minnesota Municipal Power Agency 5.50% 1/1/15 (MBIA) ................ 1,605,000 1,601,646 ----------- 16,492,134 ----------- *Pre-Refunded Bonds / Escrowed To Maturity - 30.15% Buffalo Independent School District 6.15% 2/1/22-03 (FSA) ........................... 4,030,000 4,142,759 Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage 8.375% 9/1/21 (AMT) (GNMA) (Escrowed to Maturity) .......................... 5,500,000 7,184,924 Detroit Lakes Benedictine Health Systems (St. Mary's Hospital) 6.00% 2/15/19-03 (Connie Lee) ................... 1,250,000 1,312,088 Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.20% 11/1/12-02 (AMBAC) ........................ 720,000 758,088 6.20% 11/1/12-04 (AMBAC) ........................ 280,000 295,322 6.30% 11/1/22-02 (AMBAC) ........................ 3,890,000 4,105,117 6.30% 11/1/22-04 (AMBAC) ........................ 960,000 1,016,429 Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) *Pre-Refunded Bonds / Escrowed To Maturity (continued) Esko Independent School District 5.65% 4/1/12-05 (FSA) ........................... $ 550,000 $ 560,511 Hawley Independent School District 5.75% 2/1/17-06 (FSA) ........................... 1,000,000 1,022,710 Metropolitan Council Sports Facility Commission (Hubert H. Humphrey Metrodome) 6.00% 10/1/09 (Escrowed to Maturity) .......................... 2,360,000 2,464,288 Minneapolis & St. Paul Housing & Redevelopment Authority (HealthOne) 7.40% 8/15/11-00 (MBIA) ......................... 2,105,000 2,170,508 Minnesota Public Facilities Authority Water Pollution Control 6.25% 3/1/16-05 ................................. 1,000,000 1,058,630 Minnesota Public Facilities Authority Water Pollution Control Series 1992 6.50% 3/1/14-02 ................................. 3,300,000 3,468,531 Red Wing Independent School District #256 Series 1993-A 5.70% 2/1/12-03 ................... 2,925,000 2,970,338 Series 1993-A 5.70% 2/1/13-03 ................... 1,625,000 1,650,188 St. Paul Housing & Redevelopment Authority Sales Tax (Civic Center) 5.55% 11/1/23 (Escrowed To Maturity) .................................... 2,300,000 2,264,235 5.55% 11/1/23 (MBIA) (Escrowed To Maturity) .................................... 4,200,000 4,161,654 Southern Minnesota Municipal Power Agency 5.75% 1/1/18-16 .................... 3,715,000 3,763,889 Stewartville Independent School District #534 5.75% 2/1/17-05 ................... 1,705,000 1,740,038 Western Minnesota Municipal Power Agency 6.625% 1/1/16 (Escrowed To Maturity) .......................... 1,535,000 1,697,986 ----------- 47,808,233 ----------- Transportation Revenue Bonds - 3.60% Puerto Rico Commonwealth Highway & Transportation Authority 5.50% 7/1/26 .................................... 6,000,000 5,704,080 ----------- 5,704,080 ----------- Water & Sewer Revenue Bonds - 2.22% **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floaters 5.16% 3/1/17 .................................... 1,145,000 907,275 5.26% 3/1/18 .................................... 1,360,000 1,073,910 5.26% 3/1/19 .................................... 2,000,000 1,535,920 ----------- 3,517,105 ----------- 14 Statements of Net Assets (continued) Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Other Revenue Bonds - 0.88% Burnsville Commercial Development Refunding (Holiday Inn Project) 5.90% 4/1/08 .................................... $1,430,000 $ 1,396,252 ------------ 1,396,252 ------------ Total Municipal Bonds (cost $156,788,115) ............................. 156,956,813 ------------ Total Market Value of Securities - 98.98% (cost $156,788,115) ............................. 156,956,813 Receivables and Other Assets Net of Liabilities - 1.02% ...................... 1,616,904 ------------ Total Net Assets - 100.00% ........................ 158,573,717 Liquidation Value of Preferred Stock .............. (60,000,000) ------------ Net Assets Applicable to 7,252,200 Common Shares ($0.01 Par Value) Outstanding ..................................... $ 98,573,717 ============ Net Asset Value per Common Share ($98,573,717 / 7,252,200 shares) ................ $13.59 ------------ ---------------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. **Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect at March 31, 2000. Summary of Abbreviations: AMBAC - Insured by the American Municipal Bond Assurance Corporation AMT - Subject to Alternative Minimum Tax Connie Lee - Insured by the College Construction Insurance Association FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association -------------------------------------------------------------------------------- Components of Net Assets at March 31, 2000: Common stock, $0.01 par value, 200 million shares authorized to the Fund ................... $ 99,710,002 Preferred stock, $0.01 par value, 1 million shares authorized to the Fund ................... 60,000,000 Undistributed net investment income ................ 1,477,527 Accumulated net realized loss on investments .................................. (2,782,510) Net unrealized appreciation of investments .................................. 168,698 ------------ Total net assets ................................... $158,573,717 ============ See accompanying notes 15 Statements of Net Assets (continued) VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC. -------------------------------------------------- Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.48% City Agency Revenue Bonds - 2.30% Minneapolis Community Development Agency Supported Development 6.75% 12/1/25 ............. $ 865,000 $ 873,754 ---------- 873,754 ---------- Continuing Care/Retirement Center Revenue Bonds - 2.71% Minnesota Agricultural & Economic Development Health Care System (Benedictine Care) 5.75% 2/1/29 ................. 1,300,000 1,032,837 ---------- 1,032,837 ---------- General Obligation Bonds - 1.84% Minneapolis Sports Arena Project 5.125% 10/1/20 .................................. 750,000 699,113 ---------- 699,113 ---------- Higher Education Revenue Bonds - 6.12% Minnesota State Higher Educational Facilities Authority Unrefunded Balance Series 3-W 6.375% 3/1/20 ................ 345,000 348,108 Minnesota State Higher Educational Facilities Authority (St. Mary's College) Series 3Q 6.15% 10/1/23 ......................... 1,000,000 998,760 Minnesota State Higher Educational Facilities Authority (St. Thomas University) Series 4-A1 5.625% 10/1/21 .......... 1,010,000 984,811 ---------- 2,331,679 ---------- Hospital Revenue Bonds - 20.30% Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 5.75% 11/15/26 (MBIA) ........................... 2,000,000 1,973,040 Princeton Fairview Hospital Series 1991-C 6.25% 1/1/21 (MBIA) ...................... 2,000,000 2,027,640 Robbinsdale North Memorial Medical Center Series 1993-B 5.50% 5/15/23 (AMBAC) ........................... 1,500,000 1,432,005 Rochester Health Care Facilities (Mayo Foundation) Series B 5.50% 11/15/27 ............. 1,700,000 1,623,347 St. Paul Housing & Redevelopment Authority Health Care Facility (Regions Hospital Project) 5.30% 5/15/28 ................. 600,000 470,292 St. Paul Housing & Redevelopment Authority (Healtheast Hospital) 5.85% 11/1/17 ................................... 250,000 202,750 ---------- 7,729,074 ---------- Housing Revenue Bonds - 14.43% Brooklyn Center Multifamily Housing (Four Courts Apartments) 7.50% 6/1/25 (AMT) .............................. 1,000,000 978,840 Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Housing Revenue Bonds (continued) Burnsville Multifamily Mortgage Series A 7.10% 1/1/30 (FSA) ..................... $2,000,000 $2,131,500 Minneapolis Multifamily Housing (Olson Townhomes) 6.00% 12/1/19 (AMT) ............................. 1,875,000 1,832,550 Minnesota HFA Single Family Mortgage Series 1991-A 7.45% 7/1/22 (AMT) (FHA) ..................................... 535,000 550,028 ---------- 5,492,918 ---------- Pollution Control Revenue Bonds - 2.39% Cloquet, Minnesota Pollution Control (Potlatch Corporation Project) 5.90% 10/1/26 ................................... 1,000,000 910,490 ---------- 910,490 ---------- Power Authority Revenue Bonds - 8.51% Bass Brook Pollution Control Revenue for Minnesota Power & Light 6.00% 7/1/22 .................................... 1,505,000 1,435,650 Southern Minnesota Municipal Power Agency 5.75% 1/1/18 (FGIC) ...................... 1,800,000 1,805,724 ---------- 3,241,374 ---------- *Pre-Refunded Bonds / Escrowed to Maturity - 24.17% Duluth, Minnesota Economic Development Authority Hospital Facilities (Duluth Clinic) 6.20% 11/1/12-02 ................................ 1,080,000 1,137,132 6.20% 11/1/12-04 ................................ 420,000 442,982 Esko Independent School District 5.75% 4/1/17-05 (FSA) ........................... 2,145,000 2,195,300 Minnesota State Higher Education Facilities Authority (Saint Benedict) Series 3-W 6.375% 3/1/20-04 ..................... 930,000 978,174 Moorhead Public Utilities 6.25% 11/1/12-02 ................................ 1,500,000 1,546,485 University of Minnesota Hospital 6.75% 12/1/16 (Escrowed to Maturity) ............ 2,580,000 2,902,886 ---------- 9,202,959 ---------- Transportation Revenue Bonds - 4.90% Minneapolis Airport 5.125% 1/1/25 .................. 1,000,000 915,490 Puerto Rico Commonwealth Highway & Transportation Authority (Highway Improvements) Series Y 5.50% 7/1/26 ............. 1,000,000 950,680 ---------- 1,866,170 ---------- Water & Sewer Revenue Bonds - 10.81% Minnesota Public Facility Authority Water Pollution Control 5.40% 3/1/15 ............ 2,820,000 2,819,859 16 Statements of Net Assets (continued) Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Water & Sewer Revenue Bonds (continued) **Minnesota Public Facilities Authority Water Pollution Control, Inverse Floater 5.26% 3/1/18 ..................................... $1,640,000 $ 1,295,010 ----------- 4,114,869 ----------- Total Municipal Bonds (cost $37,144,586) ............................... 37,495,237 ----------- Total Market Value of Securities - 98.48% (cost $37,144,586) ............................... 37,495,237 Receivables and Other Assets Net of Liabilities - 1.52% ....................... 579,624 ----------- Total Net Assets - 100% .......................... 38,074,861 Liquidation Value of Preferred Stock ............. (15,000,000) ----------- Net Assets Applicable to 1,837,200 Common Shares ($0.01 Par Value) Outstanding ...................................... $23,074,861 =========== Net Asset Value per Common Share ($23,074,861 / 1,837,200 shares) ................. $12.56 ------ ---------------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. **Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect March 31, 2000. Summary of Abbreviations: AMBAC - Insured by the American Municipal Bond Assurance Corporation AMT - Subject to Alternative Minimum Tax FGIC - Insured by the Financial Guaranty Insurance Corporation FHA - Insured by the Federal Housing Authority FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association -------------------------------------------------------------------------------- Components of Net Assets at March 31, 2000: Common stock, $0.01 par value, 200 million shares authorized to the Fund ................... $25,246,730 Preferred stock, $0.01 par value, 1 million shares authorized to the Fund ................... 15,000,000 Undistributed net investment income ................ 182,451 Accumulated net realized loss on investments .................................. (2,704,971) Net unrealized appreciation of investments ......... 350,651 ----------- Total net assets ................................... $38,074,861 =========== See accompanying notes 17 Statements of Net Assets (continued) VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC. -------------------------------------------- Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.66% General Obligation Bonds - 13.69% Eagle Mountain Community Facility District A2 6.40% 7/1/17 ........................ $1,500,000 $1,565,010 Maricopa County Unified School District #11 5.50% 7/1/10 ....................... 2,750,000 2,791,772 Maricopa County Unified School District #40 6.30% 7/1/11 ....................... 500,000 527,535 Maricopa County Unified School District #41 6.25% 7/1/15 (FSA) ................. 1,500,000 1,580,685 Mohave County Unified School District #1 5.90% 7/1/15 (FGIC) ................. 1,500,000 1,544,175 Pima County Unified School District #6 5.75% 7/1/12 (FGIC) ................. 500,000 511,505 Santa Cruz Valley Unified School District #35 5.80% 7/1/09 (AMBAC) ............... 600,000 617,436 ---------- 9,138,118 ---------- Higher Education Revenue Bonds - 1.56% University of Arizona 6.25% 6/1/11 ................. 1,000,000 1,043,770 ---------- 1,043,770 ---------- Highway Revenue Bonds - 3.58% Arizona State Transportation Board Highway 5.75% 7/1/18 ............................ 2,350,000 2,386,777 ---------- 2,386,777 ---------- Hospital Revenue Bonds - 9.86% Maricopa County Health Facilities (Catholic Health Care West) Series A 5.75% 7/1/11 (MBIA) ............................. 1,750,000 1,786,697 6.00% 7/1/21 (MBIA) ............................. 1,100,000 1,110,923 Mohave County Industrial Development Authority (Baptist Hospital) 5.50% 9/1/21 (MBIA) ............................. 500,000 484,690 Show Low Industrial Development Authority Hospital (Navapache Regional Medical Center) Series A 5.50% 12/1/17 (ACA) ............................. 2,600,000 2,481,180 University of Arizona Medical Center 6.25% 7/1/16 (MBIA) ............................. 700,000 720,069 ---------- 6,583,559 ---------- Housing Revenue Bonds - 24.30% Maricopa County Industrial Development Authority Multifamily (Camelback Apartments Project A) 5.45% 5/1/28 (Asset Guaranty) ................... 1,250,000 1,171,612 Maricopa County Industrial Development Authority Single Family Housing Revenue 6.625% 7/1/21 (GNMA/FNMA) ....................... 1,500,000 1,539,825 Peoria Industrial Development Authority Multifamily Revenue 7.30% 2/20/28 (GNMA) ............................ 1,230,000 1,304,661 Market Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Housing Revenue Bonds (continued) Phoenix Industrial Development Authority (Chris Ridge) 6.80% 11/1/25 (FHA) ............... $ 500,000 $ 513,550 Phoenix Industrial Development Authority Single Family Mortgage 5.30% 4/1/20 (GNMA) ............................. 2,500,000 2,300,550 5.35% 6/1/20 (GNMA) ............................. 3,295,000 3,065,470 Pima County Industrial Development Authority (Single Family Mortgage Revenue) 6.10% 5/1/31 (GNMA) .................... 2,500,000 2,496,400 Pima County Industrial Development Authority (Single Family Mortgage Revenue) Series A 5.20% 5/1/31 (GNMA) ............................. 1,450,000 1,266,793 6.25% 11/1/30 (GNMA) ............................ 1,125,000 1,135,778 Yavapai County Industrial Development Authority Residential Care Facilities 5.40% 2/20/38 (GNMA) ............................ 1,585,000 1,423,584 ---------- 16,218,223 ---------- Industrial Development Revenue Bonds - 2.04% Coconino County (Nevada Power) Pollution Control Corporation Series B 5.80% 11/1/32 ................................... 1,000,000 874,320 Navajo County (Arizona Public Service) Pollution Control Corporation 5.50% 8/15/28 (AMBAC) ........................... 500,000 485,980 ---------- 1,360,300 ---------- Leases/Certificates of Participation - 3.66% Scottsdale Municipal Property Corporation Lease 6.25% 11/1/14 (FGIC) ...................... 1,300,000 1,329,900 Tuscon Certificates of Participation 5.60% 7/1/11 .................................... 1,100,000 1,115,565 ---------- 2,445,465 ---------- Power Authority Revenue Bonds - 2.49% Salt River Project Electric System Revenue Series D 6.25% 1/1/27 ........................... 1,635,000 1,663,629 ---------- 1,663,629 ---------- *Pre-Refunded Bonds / Escrowed to Maturity - 6.01% Arizona Health Facility Authority Phoenix Baptist Hospital & Medical Center 6.25% 9/1/11 (MBIA) (Escrowed to Maturity) .................................... 1,500,000 1,574,715 City of Phoenix Street & Highway Junior Lien 6.25% 7/1/11-02 (FGIC) ..................... 1,300,000 1,364,818 University of Arizona 6.35% 6/1/14-04 .............. 1,000,000 1,073,330 ---------- 4,012,863 ---------- Territorial Revenue Bonds - 4.53% Virgin Islands, Public Finance Authority Revenue Series A 6.125% 10/1/29 ................. 3,000,000 3,023,340 ---------- 3,023,340 ---------- 18 Statements of Net Assets (continued) Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Transportation Revenue Bonds - 8.43% Phoenix Civic Improvement Airport Revenue Senior Lien Series A 5.00% 7/1/25 (FSA) .............................. $1,000,000 $ 896,790 Tucson Airport Authority 5.70% 6/1/13 (MBIA) ............................. 1,900,000 1,939,748 Tucson Street & Highway 5.50% 7/1/12 (MBIA) ............................. 2,750,000 2,788,418 ---------- 5,624,956 ---------- Water & Sewer Revenue Bonds - 8.93% Phoenix Civic Improvement Wastewater Systems Revenue 5.375% 7/1/22 (MBIA) ............................ 1,000,000 962,880 Phoenix Water System 5.50% 7/1/22 .................................... 1,000,000 972,410 Tucson Water Refunding Series A 5.75% 7/1/18 (AMBAC) ............................ 4,000,000 4,029,440 ---------- 5,964,730 ---------- Other Revenue Bonds - 9.58% Arizona Student Loan Acquisition Authority 5.90% 5/1/24 .................................... 1,500,000 1,490,385 Maricopa County Stadium District 5.50% 7/1/13 (MBIA) ............................. 1,500,000 1,518,225 Phoenix Civic Improvement Corporation Excise Tax Revenue 5.25% 7/1/24 .................................... 1,250,000 1,171,800 5.375% 7/1/29 ................................... 2,350,000 2,216,238 ---------- 6,396,648 ---------- Total Municipal Bonds (cost $65,494,059) 65,862,378 ---------- Market Value -------------------------------------------------------------------------------- Total Market Value of Securities - 98.66% (cost $65,494,059) .............................. $65,862,378 Receivables and Other Assets Net of Liabilities - 1.34% ...................... 895,734 ---------- Total Net Assets - 100.00% ......................... 66,758,112 Liquidation Value of Preferred Stock ............... (25,000,000) ---------- Net Assets Applicable to 2,982,200 Common Shares ($0.01 Par Value) Outstanding ..................................... $41,758,112 =========== Net Asset Value per Common Share ($41,758,112 / 2,982,200 shares) ................ $14.00 ------ ---------------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: ACA - Insured by American Capital Access AMBAC - Insured by the American Municipal Bond Assurance Corporation Asset Guaranty - Insured by the Asset Guaranty Insurance Company FGIC - Insured by the Financial Guaranty Insurance Corporation FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association Components of Net Assets at March 31, 2000: Common stock, $0.01 par value, 200 million shares authorized to the Fund ................... $40,838,893 Preferred stock, $0.01 par value, 1 million shares authorized to the Fund ................... 25,000,000 Undistributed net investment income ................ 692,289 Accumulated net realized loss on investments .................................. (141,389) Net unrealized appreciation of investments .................................. 368,319 ---------- Total net assets ................................... $66,758,112 =========== See accompanying notes 19 Statements of Net Assets (continued) VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.21% Airport Revenue Bonds - 4.71% Dade County Aviation-96B 5.60% 10/1/26 (MBIA) .............................. $1,000,000 $ 981,050 Hillsboro-Tampa Airport 5.60% 10/1/19 (FGIC) .............................. 1,600,000 1,596,224 ---------- 2,577,274 ---------- General Obligations - 3.40% Florida Board of Education Capital Outlay 6.00% 6/1/21 (FGIC) ............................... 1,825,000 1,860,514 ---------- 1,860,514 ---------- Higher Education Revenue Bonds - 5.00% Florida Agriculture & Mechanical University (Student Apartment Facility) 5.625% 7/1/21 (MBIA) .............................. 1,250,000 1,239,937 Volusia Educational Facilities 5.50% 6/1/17 (MBIA) ............................... 1,500,000 1,496,580 ---------- 2,736,517 ---------- Hospital Revenue Bonds - 11.04% Orange County Health Facilities (Adventist Health Center) 5.75% 11/15/25 (AMBAC) ............................ 1,500,000 1,484,040 Orange County Health Facilities (Orlando Regional Health) 6.25% 10/1/18 (MBIA) ............. 2,000,000 2,150,920 Venice Health Care (Bon Secours Health System) 5.60% 8/15/16 (MBIA) ...................... 2,405,000 2,409,594 ---------- 6,044,554 ---------- Housing Revenue Bonds - 11.70% Florida Housing Finance Agency (Woodbridge) 6.05% 12/1/16 (AMBAC) ................ 1,120,000 1,137,976 Florida Housing Finance Agency Homeowner Mortgage Series 2 5.90% 7/1/29 (MBIA) (AMT) ......................... 1,240,000 1,199,663 Florida State Housing Finance Agency Leigh Meadows Apartments Section 8 Series N 6.30% 9/1/36 (AMBAC) (AMT) (LOC) ....................................... 2,510,000 2,544,086 Florida State Housing Finance Agency Woodbridge Apartments Series L 6.25% 6/1/36 (AMBAC) (AMT) (LOC) .................. 1,500,000 1,519,830 ---------- 6,401,555 ---------- Power Authority Revenue Bonds - 2.30% Florida State Municipal Power Agency 5.70% 10/1/16 (FGIC) .............................. 1,250,000 1,261,300 ---------- 1,261,300 ---------- *Pre-Refunded Bonds / Escrowed To Maturity - 21.92% Boca Raton Community Redevelopment Agency 5.875% 3/1/13-02 (FGIC) .................... 1,500,000 1,561,110 Dade County Professional Sports Franchise Facilities 6.00% 10/1/22-02 (FGIC) ........................... 1,000,000 1,044,040 Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) *Pre-Refunded Bonds / Escrowed To Maturity (continued) Dade County School Board 5.60% 8/1/17-06 (AMBAC) .......................... $1,000,000 $ 1,045,510 Dade County Seaport 6.25% 10/1/21-01 (AMBAC) ......................... 1,000,000 1,034,280 Hillsboro County Industrial Development Authority (Knox Village) 5.75% 12/1/21-01 (MBIA) (Escrowed to Maturity) ........................... 1,000,000 1,000,560 Lakeland Hospital System Revenue 5.75% 11/15/15-02 (FGIC) ......................... 2,500,000 2,609,200 Sunrise Utility System Series A 5.75% 10/1/26-06 (AMBAC) ......................... 2,500,000 2,636,575 Village Center Community Development 5.85% 11/1/16-06 (MBIA) .......................... 1,000,000 1,067,920 ---------- 11,999,195 ---------- School District Revenue Bonds - 10.61% Escambia County School Board Lease 5.50% 2/1/22 (MBIA) .............................. 5,000,000 4,839,200 St. Lucie County School COP 5.375% 7/1/19 (FSA) .............................. 1,000,000 965,620 ---------- 5,804,820 ---------- Water & Sewer Revenue Bonds - 8.26% City of Panama Beach Water & Sewer 5.50% 6/1/18 (AMBAC) ............................. 1,000,000 991,990 Dade County Water & Sewer System 5.50% 10/1/25 (FGIC) ............................. 1,100,000 1,066,296 Indian River County Water & Sewer 5.50% 9/1/16 (FGIC) .............................. 1,000,000 1,001,940 Sarasota County Utility System 5.50% 10/1/22 (FGIC) ............................. 1,500,000 1,460,370 ---------- 4,520,596 ---------- Other Revenue Bonds - 19.27% Florida Ports Financing Commission Transportation Trust Fund 5.375% 6/1/27 (AMT) (MBIA) ....................... 2,250,000 2,093,760 Miami Beach Resort Tax 5.50% 10/1/16 (AMBAC) ............................ 1,000,000 1,002,010 Orange County Public Service Tax 6.00% 10/1/24 (FGIC) ............................. 3,000,000 3,048,750 Reedy Creek Improvement (Sports Complex) 5.75% 6/1/13 (MBIA) .............................. 2,300,000 2,352,210 Tampa Utility Tax 6.00% 10/1/15 (AMBAC) ............................ 1,000,000 1,007,330 Tampa Utility Tax & Special Revenue 6.125% 10/1/19 ................................... 1,000,000 1,039,600 ---------- 10,543,660 ---------- Total Municipal Bonds (cost $52,554,158) ............................... 53,749,985 ---------- 20 Statements of Net Assets (continued) Number Market March 31, 2000 of Shares Value -------------------------------------------------------------------------------- Short-Term Investments - 0.05% Wells Fargo National Tax-Free Money Market Fund ......................................... 25,931 $ 25,931 ------------ Total Short-Term Investments (cost $25,931) ...................................... 25,931 ------------ Total Market Value of Securities - 98.26% (cost $52,580,089) .................................. 53,775,916 Receivables and Other Assets Net of Liabilities - 1.74% .......................... 954,192 ------------ Total Net Assets - 100.00% ............................. 54,730,108 Liquidation Value of Preferred Stock ................... (20,000,000) ------------ Net Assets Applicable to 2,422,200 Common Shares ($0.01 Par Value) Outstanding ......................................... $ 34,730,108 ============ Net Asset Value per Common Share ($34,730,108 / 2,422,200 shares) .................... $14.34 ------ ------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: AMBAC - Insured by the American Municipal Bond Assurance Corporation AMT - Subject to Alternative Minimum Tax FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by Financial Security Assurance LOC - Letter of Credit by First Union National Bank of North Carolina MBIA - Insured by the Municipal Bond Insurance Association -------------------------------------------------------------------------------- Components of Net Assets at March 31, 2000: Common stock, $0.01 par value, unlimited shares authorized to the Fund ........................ $33,361,389 Preferred stock $0.01 par value, unlimited shares authorized to the Fund ........................ 20,000,000 Undistributed net investment income ..................... 686,205 Accumulated net realized loss on investments ....................................... (513,313) Net unrealized appreciation of investments .............. 1,195,827 ----------- Total net assets ........................................ $54,730,108 =========== See accompanying notes 21 Statements of Net Assets (continued) VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC. Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.64% General Obligation Bonds - 16.28% Adams County School District #12 (Five Star) 5.40% 12/15/16 (FGIC) ............................ $2,000,000 $ 1,965,300 Archuleta & Hinsdale Counties School District #50JT 5.50% 12/1/14 (MBIA) ............................. 1,000,000 1,010,900 5.55% 12/1/20 (MBIA) ............................. 4,000,000 3,936,920 El Paso County, Colorado School District #20 5.625% 12/15/16 (AMBAC) .......................... 3,000,000 3,010,500 5.625% 12/15/16 (MBIA) ........................... 1,000,000 1,003,500 G V R Metropolitan District Colorado 5.75% 12/1/19 (AMBAC) ............................ 1,000,000 1,002,850 Pueblo, Colorado 5.80% 6/1/11 (MBIA) .............................. 1,405,000 1,445,829 Pueblo County, Colorado 5.80% 11/1/19 (AMBAC) ............................ 1,395,000 1,404,095 Stonegate Village Metropolitan District Refunding & Improvement Series A 5.50% 12/1/21 (FSA) .............................. 2,750,000 2,652,045 ----------- 17,431,939 ----------- Higher Education Revenue Bonds - 17.45% Aurora Educational Development 6.00% 10/15/15 (Connie Lee) ...................... 2,500,000 2,556,450 Colorado Mountain College Residence Hall Authority 5.75% 6/1/23 (MBIA) .................... 1,000,000 987,310 Colorado Postsecondary Education Facility (Auraria Fund Project) 6.00% 9/1/15 (FSA) ............................... 1,000,000 1,022,110 Colorado Postsecondary Education Facility Authority (University of Denver Project) 6.00% 3/1/16 (Connie Lee) ........................ 4,000,000 4,059,000 Colorado School Mines Auxiliary Facilities Revenue 5.00% 12/1/28 (MBIA) ..................... 1,700,000 1,485,647 Colorado Springs, Colorado (Colorado College) 5.375% 6/1/32 (MBIA) ................... 5,000,000 4,670,850 Colorado State Board Agriculture State University Refunding & Improvement Auxiliary Facilities 5.125% 3/1/17 (AMBAC) ............................ 1,000,000 941,180 Colorado State Colleges Board of Trustees (Adams State College) Series A 5.75% 5/15/19 (MBIA) ............................. 2,000,000 2,003,940 University of Northern Colorado Auxiliary Facilities System 5.60% 6/1/24 (MBIA) ............ 1,000,000 966,540 ----------- 18,693,027 ----------- Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Hospital Revenue Bonds - 10.90% Colorado Health Facilities Authority (Boulder Community Hospital Project) Series B 5.875% 10/1/23 (MBIA) ................... $2,625,000 $ 2,616,679 Colorado Health Facilities Authority (North Colorado Medical Center) 5.95% 5/15/12 (MBIA) ............................. 2,000,000 2,060,120 6.00% 5/15/20 (MBIA) ............................. 1,000,000 1,009,100 Logan County Health Care Facilities (Western Health Network) 5.90% 1/1/19 (MBIA) .............................. 2,510,000 2,518,986 University of Colorado Hospital Authority Refunding Series A 5.20% 11/15/17 (AMBAC) ........................... 3,695,000 3,463,804 ----------- 11,668,689 ----------- Housing Revenue Bonds - 10.51% Burlingame, Colorado Multi-Family Housing Income 6.00% 11/1/29 (MBIA) ...................... 2,540,000 2,536,368 Colorado Housing Finance Authority (Single Family Housing) Series AA 5.625% 11/1/23 (MBIA) ............................ 5,000,000 4,850,600 Denver, Colorado City & County Multi-Family Housing Mortgage Loan (Garden Court) 5.40% 7/1/39 (FHA) ................ 2,000,000 1,825,040 Snowmass Village Multi-Family Housing Refunding (Essential Function Housing) 6.25% 12/15/16 (FSA) ............................. 2,000,000 2,047,840 ----------- 11,259,848 ----------- Leases/Certificates of Participation - 10.43% Arapahoe County, Colorado Library District 5.70% 12/15/10 (MBIA) ............................ 2,000,000 2,068,320 Auraria, Colorado Higher Education Center (Administrative Office Facility Project) 5.125% 5/1/28 (AMBAC) ............................ 5,750,000 5,156,543 Broomfield, Colorado Public Improvements 5.75% 12/1/24 (AMBAC) ............................ 1,500,000 1,478,490 Eagle County, Colorado Public Improvements 5.40% 12/1/18 (MBIA) ............................. 1,300,000 1,259,804 Garfield County, Colorado Building Improvements 5.75% 12/1/19 (AMBAC) ............... 1,200,000 1,203,684 ----------- 11,166,841 ----------- Pollution Control Revenue Bonds - 1.42% Adams County Pollution Control Refunding (Public Service Company Project) Series A 5.875% 4/1/14 (MBIA) ............................. 1,500,000 1,524,720 ----------- 1,524,720 ----------- 22 Statements of Net Assets (continued) Principal Market March 31, 2000 Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) *Pre-Refunded Bonds - 1.89% Jefferson County School District #R-001 6.25% 12/15/12-02 (AMBAC) ...................... $1,935,000 $ 2,025,481 ----------- 2,025,481 ----------- Transportation Revenue Bonds - 23.21% Arapahoe County Capital Improvements Highway 6.05% 8/31/15 (MBIA) ................... 4,700,000 4,865,440 Denver, Colorado City & County Airport Series E 5.25% 11/15/23 (MBIA) ................. 8,500,000 7,851,110 E-470 Public Highway Authority Series A 5.00% 9/1/21 (MBIA) ................... 5,270,000 4,708,745 Series A 4.75% 9/1/23 (MBIA) ................... 4,000,000 3,408,640 Series A 5.00% 9/1/26 (MBIA) ................... 3,795,000 3,349,125 Regional Transportation District (Colorado Sales Tax) 6.25% 11/1/12 (FGIC) ................ 645,000 672,580 ----------- 24,855,640 ----------- Utility Revenue Bonds - 1.82% Platte River Power Authority (Colorado Power) Series DD 5.375% 6/1/17 (MBIA) ........................... 2,000,000 1,946,340 ----------- 1,946,340 ----------- Water & Sewer Revenue Bonds - 4.73% Colorado Water Resources & Power Development Authority (Small Water Resources) 5.80% 11/1/20 (FGIC) ................ 2,000,000 2,023,540 Municipal Subdistrict of Northern Colorado Water Conservancy District Series F 6.50% 12/1/12 (AMBAC) .......................... 2,800,000 3,045,448 ----------- 5,068,988 ----------- Total Municipal Bonds (cost $106,582,451) ............................ 105,641,513 ----------- Market Value -------------------------------------------------------------------------------- Total Market Value of Securities - 98.64% (cost $106,582,451) ..................................... $105,641,513 Receivables and Other Assets Net of Liabilities - 1.36% .............................. 1,451,790 ------------ Total Net Assets - 100.00% ................................. 107,093,303 Liquidation Value of Preferred Stock ....................... (40,000,000) ------------ Net Assets Applicable to 4,837,100 Common Shares ($0.01 Par Value) Outstanding ............................................. $ 67,093,303 ============ Net Asset Value per Common Share ($67,093,303 / 4,837,100 shares) ........................ $13.87 ------ -------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: AMBAC - Insured by the American Municipal Bond Assurance Corporation Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association Components of Net Assets at March 31, 2000: Common stock, $0.01 par value, 200 million shares authorized to the Fund ........................... $67,238,110 Preferred stock, $0.01 par value, 1 million shares authorized to the Fund ........................... 40,000,000 Undistributed net investment income ........................ 1,244,816 Accumulated net realized loss on investments .......................................... (448,685) Net unrealized depreciation of investments ................. (940,938) ------------ Total net assets ........................................... $107,093,303 ============ See accompanying notes 23 Statements of Operations
Voyageur Voyageur Voyageur Voyageur Voyageur Voyageur Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Municipal Municipal Municipal Municipal Municipal Insured Income Income Income Income Income Municipal Year Ended March 31, 2000 Fund, Inc. Fund II, Inc. Fund III, Inc. Fund, Inc. Fund Income Fund, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Investment Income: Interest .......................... $3,524,307 $9,525,549 $2,288,931 $3,836,926 $3,108,046 $6,053,554 ------------------------------------------------------------------------------------------- Expenses: Management fees ................... 230,050 642,896 154,538 268,773 221,444 431,667 Transfer agent fees and expenses ................... 40,200 29,781 7,200 21,055 10,638 29,250 Registration fees ................. 1,300 4,800 1,850 600 3,200 - Reports and statements to shareholders ................ 11,400 24,150 6,000 9,000 10,700 23,500 Accounting and administration ..... 90,216 72,982 60,842 84,943 88,035 87,988 Remarketing Agent fees ............ 56,104 156,309 43,577 68,157 50,103 101,285 Professional fees ................. 28,000 16,600 21,950 27,600 56,100 25,000 Custodian fees .................... 2,600 7,100 2,400 1,200 2,400 6,000 Directors'/Trustees' fees ......... 9,600 4,900 4,800 2,400 4,500 8,400 Rating Agency fees ................ 8,100 6,900 3,650 6,000 8,500 4,000 Taxes (other than taxes on income) ..................... 5,071 13,000 4,600 8,700 1,000 15,000 Interest expense .................. 270 915 24 1,297 802 1,694 Other ............................. 27,311 20,889 4,264 14,658 6,053 5,479 ------------------------------------------------------------------------------------------- 510,222 1,001,222 315,695 514,383 463,475 739,263 Less expenses paid indirectly ..... (1,321) (3,702) (890) (1,550) (1,272) (2,479) ------------------------------------------------------------------------------------------- Total expenses .................... 508,901 997,520 314,805 512,833 462,203 736,784 ------------------------------------------------------------------------------------------- Net Investment Income ............. 3,015,406 8,528,029 1,974,126 3,324,093 2,645,843 5,316,770 ------------------------------------------------------------------------------------------- Net Realized and Unrealized Loss on Investments: Net realized loss on investments ................. (334,960) (464,436) (96,382) (71,401) (117,369) (57,053) Net change in unrealized appreciation/depreciation of investments ................. (2,882,079) (9,792,251) (2,521,519) (3,885,205) (3,202,108) (6,772,294) ------------------------------------------------------------------------------------------- Net Realized and Unrealized Loss on Investments ............ (3,217,039) (10,256,687) (2,617,901) (3,956,606) (3,319,477) (6,829,347) ------------------------------------------------------------------------------------------- Net Decrease in Net Assets Resulting from Operations ..................... $ (201,633) $(1,728,658) $(643,775) $(632,513) $(673,634) $(1,512,577) ============================================================================================
See accompanying notes 24 Statements of Changes in Net Assets
Voyageur Minnesota Voyageur Minnesota Voyageur Minnesota Municipal Income Municipal Income Municipal Income Fund, Inc. Fund II, Inc. Fund III, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Year Year Year Year Year Year Ended Ended Ended Ended Ended Ended 3/31/00 3/31/99 3/31/00 3/31/99 3/31/00 3/31/99 Increase (Decrease) in Net Assets from Operations: Net investment income ............................. $ 3,015,406 $ 3,081,482 $ 8,528,029$ 8,367,621 $ 1,974,126 $ 1,883,956 Net realized gain (loss) on investments ........... (334,960) 188,073 (464,436) 432,710 (96,382) 229,501 Net change in unrealized appreciation/ depreciation of investments .................... (2,882,079) (173,366) (9,792,251) 315,390 (2,521,519) 171,840 ------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations ...................... (201,633) 3,096,189 (1,728,658) 9,115,721 (643,775) 2,285,297 ------------------------------------------------------------------------------- Dividends and Distributions to: Common shareholders from net investment income .............................. (2,354,690) (2,413,071) (5,928,674) (5,928,674) (1,391,679) (1,391,680) Preferred shareholders from net investment income .............................. (705,125) (679,203) (2,224,962) (2,064,168) (554,400) (512,178) Common shareholders from net realized gain on investments ............................ (132,070) - - - - - Preferred shareholders from net realized gain on investments ............................ (37,139) - - - - - ------------------------------------------------------------------------------- (3,229,024) (3,092,274) (8,153,636) (7,992,842) (1,946,079) (1,903,858) ------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets ............. (3,430,657) 3,915 (9,882,294) 1,122,879 (2,589,854) 381,439 Net Assets: Beginning of year ................................. 59,918,952 59,915,037 168,456,011 167,333,132 40,664,715 40,283,276 ------------------------------------------------------------------------------- End of year ....................................... $ 56,488,295 $59,918,952 $158,573,717 $168,456,011 $ 38,074,861 $ 40,664,715 ===============================================================================
Voyageur Arizona Voyageur Florida Voyageur Colorado Municipal Income Insured Municipal Insured Municipal Fund, Inc. Income Fund Income Fund, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Year Year Year Year Year Year Ended Ended Ended Ended Ended Ended 3/31/00 3/31/99 3/31/00 3/31/99 3/31/00 3/31/99 Increase (Decrease) in Net Assets from Operations: Net investment income ............................. $ 3,324,093 $ 3,303,402 $ 2,645,843 $ 2,695,600 $ 5,316,770 $ 5,222,755 Net realized gain (loss) on investments ........... (71,401) 592,344 (117,369) (344) (57,053) 243,532 Net change in unrealized appreciation/ depreciation of investments .................... (3,885,205) 6,754 (3,202,108) 696,343 (6,772,294) 996,668 ------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations ...................... (632,513) 3,902,500 (673,634) 3,391,599 (1,512,577) 6,462,955 ------------------------------------------------------------------------------- Dividends to: Common shareholders from net investment income .............................. (2,303,750) (2,303,751) (1,834,817) (1,834,817) (3,555,269) (3,555,269) Preferred shareholders from net investment income .............................. (891,850) (825,780) (717,050) (671,783) (1,437,124) (1,496,328) ------------------------------------------------------------------------------- (3,195,600) (3,129,531) (2,551,867) (2,506,600) (4,992,393) (5,051,597) Net Increase (Decrease) in Net Assets ............. (3,828,113) 772,969 (3,225,501) 884,999 (6,504,970) 1,411,358 Net Assets: Beginning of year ................................. 70,586,225 69,813,256 57,955,609 57,070,610 113,598,273 112,186,915 ------------------------------------------------------------------------------- End of year ....................................... $ 66,758,112 $70,586,225 $ 54,730,108 $57,955,609 $107,093,303 $113,598,273 ===============================================================================
See accompanying notes 25 Financial Highlights
Selected data for each common share of the Fund outstanding throughout each period was as follows: Voyageur Minnesota Municipal Income Fund, Inc. ----------------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96 Net asset value, beginning of year ...................................... $15.380 $15.380 $14.470 $14.430 $14.210 Income (loss) from investment operations: Net investment income ................................................ 1.180 1.188 1.180 1.060 1.180 Net realized and unrealized gain (loss) on investments ............... (1.256) 0.004 0.970 0.180 0.260 -------------------------------------------------------- Total from investment operations ..................................... (0.076) 1.192 2.150 1.240 1.440 -------------------------------------------------------- Less dividends and distributions to: Common shareholders from net investment income ....................... (0.907) (0.930) (0.930) (0.930) (0.930) Preferred shareholders from net investment income .................... (0.272) (0.262) (0.280) (0.270) (0.290) Common shareholders from net realized gain on investments ............ (0.051) - (0.020) - - Preferred shareholders from net realized gain on investments ......... (0.014) - (0.010) - - -------------------------------------------------------- Total dividends and distributions .................................... (1.244) (1.192) (1.240) (1.200) (1.220) -------------------------------------------------------- Net asset value, end of year ............................................ $14.060 $15.380 $15.380 $14.470 $14.430 ======================================================== Market value, end of year ............................................... $13.563 $16.500 $15.690 $14.380 $15.000 ======================================================== Total investment return based on:(1) Market value ......................................................... (12.39%) 11.29% 16.04% 2.01% 10.31% Net asset value ...................................................... (2.56%) 5.88% 13.02% 6.90% 8.20% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted) ......................................... $56,488 $59,919 $59,915 $57,544 $57,429 Ratio of expenses to average net assets(3) ........................... 0.89% 0.81% 0.77% 0.81% 0.82% Ratio of expenses to average net assets applicable to common shares ....................................... 1.36% 1.21% 1.17% 1.24% 1.24% Ratio of net investment income to average net assets(3) .............. 5.25% 5.13% 5.20% 4.78% 5.28% Ratio of net investment income to average net assets applicable to common shares(4) .................................... 6.17% 5.99% 6.01% 5.45% 6.04% Portfolio turnover ................................................... 12% 15% 0% 5% 7% Leverage analysis: Value of preferred shares outstanding (000 omitted) .................. $20,000 $20,000 $20,000 $20,000 $20,000 Net asset coverage per share of preferred shares, end of year ........ $141,221 $149,797 $149,788 $143,860 $143,573 Liquidation value per share of preferred shares(5) ................... $50,000 $50,000 $50,000 $50,000 $50,000
---------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 26 Financial Highlights (continued)
Selected data for each common share of the Fund outstanding throughout each period was as follows: Voyageur Minnesota Municipal Income Fund II, Inc. ----------------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96 Net asset value, beginning of year ...................................... $14.950 $14.800 $13.590 $13.480 $13.120 Income (loss) from investment operations: Net investment income ................................................ 1.176 1.154 1.130 1.130 1.100 Net realized and unrealized gain (loss) on investments ............... (1.411) 0.099 1.200 0.080 0.380 ------------------------------------------------------- Total from investment operations ..................................... (0.235) 1.253 2.330 1.210 1.480 ------------------------------------------------------- Less dividends to: Common shareholders from net investment income ....................... (0.818) (0.818) (0.820) (0.810) (0.800) Preferred shareholders from net investment income .................... (0.307) (0.285) (0.300) (0.290) (0.320) ------------------------------------------------------- Total dividends ...................................................... (1.125) (1.103) (1.120) (1.100) (1.120) ------------------------------------------------------- Net asset value, end of year ............................................ $13.590 $14.950 $14.800 $13.590 $13.480 ======================================================= Market value, end of year ............................................... $12.438 $15.060 $13.880 $12.630 $13.250 ======================================================= Total investment return based on:(1) Market value ......................................................... (12.28%) 14.73% 16.56% 1.47% 14.16% Net asset value ...................................................... (3.43%) 6.76% 15.51% 6.97% 8.88% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted) ......................................... $158,574 $168,456 $167,333 $158,572 $157,755 Ratio of expenses to average net assets(3) ........................... 0.62% 0.64% 0.76% 0.74% 0.77% Ratio of expenses to average net assets applicable to common shares .................................................. 0.99% 1.00% 1.19% 1.19% 1.23% Ratio of net investment income to average net assets(3) .............. 5.30% 4.96% 4.98% 5.15% 5.03% Ratio of net investment income to average net assets applicable to common shares(4) ............................................... 6.24% 5.80% 5.73% 6.15% 5.76% Portfolio turnover ................................................... 4% 15% 4% 20% 11% Leverage analysis: Value of preferred shares outstanding (000 omitted) .................. $60,000 $60,000 $60,000 $60,000 $60,000 Net asset coverage per share of preferred shares, end of year ........ $132,145 $140,380 $139,444 $132,143 $131,462 Liquidation value per share of preferred shares(5) ................... $50,000 $50,000 $50,000 $50,000 $50,000
---------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 27 Financial Highlights (continued)
Selected data for each common share of the Fund outstanding throughout each period was as follows: Voyageur Minnesota Municipal Income Fund III, Inc. ----------------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96 Net asset value, beginning of year $13.970 $13.760 $12.710 $12.540 $12.200 Income (loss) from investment operations: Net investment income ................................................ 1.075 1.025 1.050 1.080 1.050 Net realized and unrealized gain (loss) on investments ............... (1.425) 0.222 1.060 0.150 0.330 -------------------------------------------------------- Total from investment operations ..................................... (0.350) 1.247 2.110 1.230 1.380 -------------------------------------------------------- Less dividends to: Common shareholders from net investment income ....................... (0.758) (0.758) (0.760) (0.750) (0.720) Preferred shareholders from net investment income .................... (0.302) (0.279) (0.300) (0.310) (0.320) -------------------------------------------------------- Total dividends ...................................................... (1.060) (1.037) (1.060) (1.060) (1.040) -------------------------------------------------------- Net asset value, end of year ............................................ $12.560 $13.970 $13.760 $12.710 $12.540 ======================================================== Market value, end of year ............................................... $11.750 $14.125 $13.380 $12.250 $12.000 ======================================================== Total investment return based on:(1) Market value ......................................................... (11.70%) 11.59% 15.80% 8.62% 13.51% Net asset value ...................................................... (4.57%) 7.28% 14.82% 7.50% 8.79% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted) ......................................... $38,075 $40,665 $40,283 $38,348 $38,046 Ratio of expenses to average net assets(3) ........................... 0.81% 0.77% 0.83% 0.81% 0.81% Ratio of expenses to average net assets applicable to common shares .................................................. 1.33% 1.22% 1.34% 1.33% 1.33% Ratio of net investment income to average net assets(3) .............. 5.10% 4.64% 4.88% 5.17% 5.05% Ratio of net investment income to average net assets applicable to common shares(4) ............................................... 5.99% 5.35% 5.61% 6.05% 5.81% Portfolio turnover ................................................... 16% 15% 9% 39% 35% Leverage analysis: Value of preferred shares outstanding (000 omitted) .................. $15,000 $15,000 $15,000 $15,000 $15,000 Net asset coverage per share of preferred shares, end of year ........ $126,916 $135,549 $134,278 $127,826 $126,821 Liquidation value per share of preferred shares(5) ................... $50,000 $50,000 $50,000 $50,000 $50,000
--------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 28 Financial Highlights (continued) Selected data for each common share of the Fund outstanding throughout each period was as follows:
Voyageur Arizona Municipal Income Fund, Inc. ------------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96 Net asset value, beginning of year ................................ $15.290 $15.030 $13.780 $13.740 $13.220 Income (loss) from investment operations: Net investment income .......................................... 1.115 1.108 1.090 1.080 1.090 Net realized and unrealized gain (loss) on investments ......... (1.333) 0.202 1.230 0.010 0.470 ---------------------------------------------------------- Total from investment operations ............................... (0.218) 1.310 2.320 1.090 1.560 ---------------------------------------------------------- Less dividends to: Common shareholders from net investment income ................. (0.773) (0.773) (0.770) (0.760) (0.730) Preferred shareholders from net investment income .............. (0.299) (0.277) (0.300) (0.290) (0.310) ---------------------------------------------------------- Total dividends ................................................ (1.072) (1.050) (1.070) (1.050) (1.040) ---------------------------------------------------------- Net asset value, end of year ...................................... $14.000 $15.290 $15.030 $13.780 $13.740 ========================================================== Market value, end of year ......................................... $12.625 $15.125 $14.630 $13.000 $12.750 ========================================================== Total investment return based on:(1) Market value ................................................... (11.65%) 8.84% 18.79% 8.20% 11.52% Net asset value ................................................ (3.10%) 7.07% 15.17% 5.94% 9.55% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted) .................................... $66,758 $70,586 $69,813 $66,102 $65,990 Ratio of expenses to average net assets(3)...................... 0.76% 0.74% 0.80% 0.78% 0.78% Ratio of expenses to average net assets applicable to common shares ............................................. 1.21% 1.15% 1.26% 1.25% 1.26% Ratio of net investment income to average net assets(3) ........ 4.93% 4.69% 4.71% 4.85% 4.88% Ratio of net investment income to average net assets applicable to common shares(4) .......................................... 5.74% 5.46% 5.34% 5.71% 5.57% Portfolio turnover ............................................. 41% 46% 22% 31% 30% Leverage analysis: Value of preferred shares outstanding (000 omitted) ............ $25,000 $25,000 $25,000 $25,000 $25,000 Net asset coverage per share of preferred shares, end of year .. $133,516 $141,172 $139,627 $132,205 $131,979 Liquidation value per share of preferred shares(5) ............. $50,000 $50,000 $50,000 $50,000 $50,000
------------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 29 Financial Highlights (continued) Selected data for each common share of the Fund outstanding throughout each period was as follows:
Voyageur Florida Insured Municipal Income Fund ------------------------------------------------------------------------------------------------------------------------------ Year Ended 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96 Net asset value, beginning of year ............................... $15.670 $15.300 $13.670 $13.710 $13.170 Income (loss) from investment operations: Net investment income ......................................... 1.092 1.113 1.090 1.080 1.060 Net realized and unrealized gain (loss) on investments ........ (1.368) 0.292 1.600 (0.080) 0.510 ---------------------------------------------------------- Total from investment operations .............................. (0.276) 1.405 2.690 1.000 1.570 ---------------------------------------------------------- Less dividends to: Common shareholders from net investment income ................ (0.758) (0.758) (0.760) (0.750) (0.720) Preferred shareholders from net investment income ............. (0.296) (0.277) (0.300) (0.290) (0.310) ---------------------------------------------------------- Total dividends ............................................... (1.054) (1.035) (1.060) (1.040) (1.030) ---------------------------------------------------------- Net asset value, end of year ..................................... $14.340 $15.670 $15.300 $13.670 $13.710 ========================================================== Market value, end of year ........................................ $11.750 $14.750 $14.310 $12.500 $12.750 ========================================================== Total investment return based on:(1) Market value .................................................. (15.57%) 8.47% 20.94% 3.94% 10.39% Net asset value ............................................... (3.01%) 7.80% 18.22% 5.23% 9.66% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted) ................................... $54,730 $57,956 $57,071 $53,110 $53,207 Ratio of expenses to average net assets(3) .................... 0.83% 0.75% 0.80% 0.78% 0.80% Ratio of expenses to average net assets applicable to common shares ................................. 1.31% 1.14% 1.25% 1.25% 1.27% Ratio of net investment income to average net assets(3) ....... 4.79% 4.67% 4.73% 4.91% 4.82% Ratio of net investment income to average net assets applicable to common shares(4) .............................. 5.47% 5.37% 5.33% 5.74% 5.45% Portfolio turnover ............................................ 6% 0% 5% 68% 22% Leverage analysis: Value of preferred shares outstanding (000 omitted) ........... $20,000 $20,000 $20,000 $20,000 $20,000 Net asset coverage per share of preferred shares, end of year . $136,825 $144,889 $142,677 $132,775 $133,017 Liquidation value per share of preferred shares(5) ............ $50,000 $50,000 $50,000 $50,000 $50,000
------------------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 30 Financial Highlights (continued) Selected data for each common share of the Fund outstanding throughout each period was as follows:
Voyageur Colorado Insured Municipal Income Fund, Inc. ------------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31/00 3/31/99 3/31/98(2) 3/31/97 3/31/96 Net asset value, beginning of year ................................ $15.220 $14.920 $13.580 $13.610 $13.190 Income (loss) from investment operations: Net investment income .......................................... 1.099 1.080 1.070 1.050 1.030 Net realized and unrealized gain (loss) on investments ......... (1.417) 0.264 1.300 (0.060) 0.410 ---------------------------------------------------------- Total from investment operations ............................... (0.318) 1.344 2.370 0.990 1.440 ---------------------------------------------------------- Less dividends to: Common shareholders from net investment income ................. (0.735) (0.735) (0.740) (0.730) (0.700) Preferred shareholders from net investment income .............. (0.297) (0.309) (0.290) (0.290) (0.320) ---------------------------------------------------------- Total dividends ................................................ (1.032) (1.044) (1.030) (1.020) (1.020) ---------------------------------------------------------- Net asset value, end of year ...................................... $13.870 $15.220 $14.920 $13.580 $13.610 ========================================================== Market value, end of year ......................................... $12.563 $14.938 $14.000 $12.500 $12.630 ========================================================== Total investment return based on:(1) Market value ................................................... (11.05%) 12.13% 18.09% 4.77% 8.99% Net asset value ................................................ (3.62%) 7.21% 15.84% 5.19% 8.55% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted) .................................... $107,093 $113,598 $112,187 $105,687 $105,843 Ratio of expenses to average net assets(3) ..................... 0.68% 0.69% 0.75% 0.77% 0.75% Ratio of expenses to average net assets applicable to common shares .................................. 1.08% 1.06% 1.18% 1.23% 1.21% Ratio of net investment income to average net assets(3) ........ 4.93% 4.61% 4.72% 4.76% 4.68% Ratio of net investment income to average net assets applicable to common shares(4) ............................... 5.72% 5.08% 5.38% 5.51% 5.18% Portfolio turnover ............................................. 37% 18% 39% 88% 39% Leverage analysis: Value of preferred shares outstanding (000 omitted) ............ $40,000 $40,000 $40,000 $40,000 $40,000 Net asset coverage per share of preferred shares, end of year .. $133,867 $141,998 $140,234 $132,109 $132,304 Liquidation value per share of preferred shares(5) ............. $50,000 $50,000 $50,000 $50,000 $50,000
------------ (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 31 Notes to Financial Statements March 31, 2000 -------------------------------------------------------------------------------- Voyageur Minnesota Municipal Income Fund, Inc. ("Minnesota Municipal Fund"); Voyageur Minnesota Municipal Income Fund II, Inc. ("Minnesota Municipal Fund II"); Voyageur Minnesota Municipal Income Fund III, Inc. ("Minnesota Municipal Fund III"); Voyageur Arizona Municipal Income Fund, Inc. ("Arizona Municipal Fund"); Voyageur Florida Insured Municipal Income Fund ("Florida Insured Municipal Fund"); and Voyageur Colorado Insured Municipal Income Fund, Inc. ("Colorado Insured Municipal Fund") (each referred to as a "Fund" and collectively as the "Funds") are registered under the Investment Company Act of 1940 ("1940 Act") (as amended) as closed-end management investment companies. The Minnesota Municipal II, Florida Insured Municipal and Arizona Municipal Funds are registered as diversified funds. The Minnesota Municipal, Minnesota Municipal III and Colorado Insured Municipal Funds are registered as non-diversified funds. The Funds' shares trade on the American Stock Exchange. The investment objective of each Fund is to provide high current income exempt from federal income tax and from the personal income tax of its state, if any, consistent with the preservation of capital. Florida Insured Municipal Fund will generally seek investments that will enable its shares to be exempt from Florida's intangible personal property tax. Each Fund will seek to achieve its investment objective by investing substantially all of its net assets in investment grade, tax-exempt municipal obligations of its respective state. 1. Significant Accounting Policies The following accounting policies are in accordance with accounting principles generally accepted in the United States and are consistently followed by the Funds. Security Valuation - Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Money market instruments having less than 60 days to maturity are valued at amortized cost which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Funds' Board of Directors. Federal Income Taxes - Each Fund intends to continue to qualify as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from accounting principles generally accepted in the United States. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. Other - Expenses common to all funds are allocated amongst the funds within the Delaware Investments Family of Funds on the basis of average net assets. Security transactions are recorded on the date the securities are purchased or sold (trade date). Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Original issue discounts and market premiums are amortized to interest income over the lives of the respective securities. Each Fund intends to pay monthly dividends from net investment income. Capital gains, if any, are distributed annually. Certain expenses of the Funds are paid through commission arrangements with brokers. These transactions are done subject to best execution. The expenses paid under the above arrangements are included in their respective expense captions in the Statements of Operations with the corresponding offset shown as "expenses paid indirectly". The amount of these expenses for the year ended March 31, 2000 were: Minnesota Minnesota Minnesota Municipal Municipal Municipal Fund Fund II Fund III --------- ---------- ---------- Commission Expenses ................. $1,321 $3,702 $890 Arizona Florida Colorado Municipal Insured Insured Fund Municipal Fund Municipal Fund --------- -------------- -------------- Commission Expenses ................. $1,550 $1,272 $2,479 32 Notes to Financial Statements (continued) -------------------------------------------------------------------------------- 2. Investment Management and Transactions with Affiliates In accordance with the terms of their respective Investment Management Agreements, each Fund pays Delaware Management Company ("DMC"), the Investment Manager, an annual fee of 0.40% of average net assets, which is calculated daily, including assets attributable to any preferred stock that may be outstanding. The Funds have engaged Delaware Services Company, Inc., ("DSC"), an affiliate of DMC, to provide accounting and administration services which are paid on a monthly basis, and subject to certain minimums. On March 31, 2000, the Funds had payables to affiliates as follows:
Minnesota Minnesota Minnesota Arizona Florida Colorado Municipal Municipal Municipal Municipal Insured Insured Municipal Fund Fund II Fund III Fund Municipal Fund Fund ---------- --------- --------- --------- -------------- ---------------- Investment management and other expenses payable to DMC and affiliates ............. $21,962 $58,180 $21,357 $25,526 $21,366 $63,054 Administration and accounting fees and other expenses payable to DSC ........... 16,564 20,327 10,826 12,384 12,949 14,580
Certain officers of DMC and DSC are officers, directors, trustees and/or employees of the Funds. These officers, directors, trustees, and employees are not compensated by the Funds. 3. Investments During the year ended March 31, 2000, the Funds made purchases and sales of investment securities other than U.S. government securities and temporary cash investments as follows:
Minnesota Minnesota Minnesota Arizona Florida Colorado Municipal Municipal Municipal Municipal Insured Insured Fund Fund II Fund III Fund Municipal Fund Municipal Fund ---------- ---------- ----------- ---------- -------------- -------------- Purchases .................. $6,996,937 $7,240,868 $6,045,946 $27,440,288 $3,011,870 $40,291,620 Sales ...................... 6,656,622 6,778,003 6,010,957 27,474,119 3,324,383 40,014,716
At March 31, 2000, the aggregate cost of investments and unrealized appreciation (depreciation) of securities for federal income tax purposes for each Fund were as follows:
Aggregate Aggregate Net Unrealized Cost of Unrealized Unrealized Appreciation/ Investments Appreciation Depreciation (Depreciation) ------------ ------------ ------------- ------------- Minnesota Municipal Fund ....................... $ 54,485,277 $1,940,645 $ (483,405) $1,457,240 Minnesota Municipal Fund II .................... 156,807,302 2,467,146 (2,317,635) 149,511 Minnesota Municipal Fund III ................... 37,144,586 1,071,243 (720,592) 350,651 Arizona Municipal Fund ......................... 65,494,059 1,541,742 (1,173,423) 368,319 Florida Insured Municipal Fund ................. 52,580,089 1,288,842 (93,015) 1,195,827 Colorado Insured Municipal Fund ................ 106,582,451 1,007,689 (1,948,627) (940,938)
For federal income tax purposes, as of March 31, 2000, the Funds had capital loss carryforwards expiring in the following years:
2003 2004 2005 2006 2008 Total ---- ---- ---- ---- ---- ----- Minnesota Municipal Fund I ........... $ - $ - $ - $ - $265,111 $ 265,111 Minnesota Municipal Fund II .......... 952,440 1,143,840 89,665 132,129 437,162 2,755,236 Minnesota Municipal Fund III ......... 866,889 1,279,495 455,666 6,539 56,856 2,665,445 Arizona Municipal Fund ............... - - 47,185 - 66,924 114,109 Florida Insured Municipal Fund ....... 212,501 183,099 - - 98,928 494,528 Colorado Insured Municipal Fund ...... - - 391,632 - 57,053 448,685
33 Notes to Financial Statements (continued) -------------------------------------------------------------------------------- 4. Capital Stock Pursuant to their articles of incorporation, Minnesota Municipal Fund, Minnesota Municipal Fund II, Minnesota Municipal Fund III, Arizona Municipal Fund and Colorado Insured Municipal Fund each have 200 million shares of $0.01 par value common shares authorized. Florida Insured Municipal Fund has been authorized to issue an unlimited amount of $0.01 par value common shares. For the years ended March 31, 2000 and March 31, 1999, the Funds did not have any transactions in common shares. The Funds each have one million shares of $0.01 par value preferred shares authorized, except for Florida Insured Municipal Fund which has an unlimited amount of $0.01 par value preferred shares authorized. Under resolutions adopted by the Board of Directors/Trustees, Minnesota Municipal Fund is allowed to issue up to 400 preferred shares, of which the entire amount was issued on August 6, 1992. On May 14, 1993, Minnesota Municipal Fund II, Arizona Municipal Fund and Florida Insured Municipal Fund issued 1,200, 500 and 400 preferred shares, respectively. On December 10, 1993, Minnesota Municipal Fund III issued 300 preferred shares and on September 23, 1993, Colorado Insured Municipal Fund issued 800 preferred shares. The preferred shares of each Fund have a liquidation preference of $50,000 per share plus an amount equal to accumulated but unpaid dividends. Dividends for the outstanding preferred shares of each Fund are cumulative at a rate established at the initial public offering and are typically reset every 28 days based on the results of an auction. Dividend rates (adjusted for any capital gain distributions) ranged from 3.20% to 3.95% on Minnesota Municipal Fund, from 3.00% to 4.80% on Minnesota Municipal Fund II, from 3.30% to 4.25% on Minnesota Municipal Fund III, from 2.95% to 4.75% on Arizona Municipal Fund, from 3.00% to 4.75% on Florida Insured Municipal Fund and from 3.00% to 4.30% on Colorado Insured Municipal Fund during the year ended March 31, 2000. Salomon Smith Barney, Inc. and Merrill Lynch Pierce, Fenner & Smith Inc. (Colorado Insured Municipal Fund only), as the remarketing agents, receive an annual fee from each of the Funds of 0.25% of the average amount of preferred stock outstanding. Under the 1940 Act, the Funds may not declare dividends or make other distributions on common shares or purchase any such shares if, at the time of the declaration, distribution or purchase, asset coverage with respect to the outstanding preferred stock is less than 200%. The preferred shares are redeemable at the option of the Funds, in whole or in part, on any dividend payment date at $50,000 per share plus any accumulated but unpaid dividends whether or not declared. The preferred shares are also subject to mandatory redemption at $50,000 per share plus any accumulated but unpaid dividends whether or not declared, if certain requirements relating to the composition of the assets and liabilities of each Fund is not satisfied. The holders of preferred shares have voting rights equal to the holders of common shares (one vote per share) and will vote together with holders of common shares as a single class. However, holders of preferred shares are also entitled to elect two of each Fund's Directors. In addition, the 1940 Act requires that along with approval by shareholders that might otherwise be required, the approval of the holders of a majority of any outstanding preferred shares, voting separately as a class would be required to (a) adopt any plan of reorganization that would adversely affect the preferred shares, and (b) take any action requiring a vote of security holders pursuant of Section 13(a) of the 1940 Act, including, among other things, changes in each of the Fund's subclassification as a closed-end investment company or changes in their fundamental investment restrictions. 5. Market and Credit Risks The Funds concentrate their investments in securities issued by each specific state's municipalities. The value of these investments may be adversely affected by new legislation within the state, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that the market may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statement of Net Assets. 6. Tax Information (Unaudited) The information set forth is for the Fund's fiscal year as required by federal laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of a fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2001. Please consult your tax advisor for proper treatment of the information. For the fiscal year ended March 31, 2000, each Fund designates as long term capital gains, ordinary income, and tax-exempt income distributions paid during the year as follows:
Long Term Ordinary Tax Total Capital Gains Income Exempt Distributions Distributions Distributions Income (Tax Basis) -------------- ------------- ------ -------------- Minnesota Municipal Fund I ............ 5% - 95% 100% Minnesota Municipal Fund II ........... - - 100% 100% Minnesota Municipal Fund III .......... - - 100% 100% Arizona Municipal Fund ................ - - 100% 100% Florida Insured Municipal Fund ........ - - 100% 100% Colorado Insured Municipal Fund ....... - - 100% 100%
34 Report of Independent Auditors -------------------------------------------------------------------------------- To the Shareholders and Board of Directors/Trustees Voyageur Minnesota Municipal Income Fund, Inc. Voyageur Minnesota Municipal Income Fund II, Inc. Voyageur Minnesota Municipal Income Fund III, Inc. Voyageur Arizona Municipal Income Fund, Inc. Voyageur Florida Insured Municipal Income Fund Voyageur Colorado Insured Municipal Income Fund, Inc. We have audited the accompanying statements of net assets of Voyageur Minnesota Municipal Income Fund, Inc., Voyageur Minnesota Municipal Income Fund II, Inc., Voyageur Minnesota Municipal Income Fund III, Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur Florida Insured Municipal Income Fund, and Voyageur Colorado Insured Municipal Income Fund, Inc. (the "Funds") as of March 31, 2000, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods presented through March 31, 1997 were audited by other auditors whose report dated May 9, 1997 expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures include confirmation of securities owned as of March 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds at March 31, 2000, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP ---------------------- Ernst & Young LLP Philadelphia, Pennsylvania May 5, 2000 35 Proxy Results (Unaudited) -------------------------------------------------------------------------------- Shareholders of the Voyageur Minnesota Municipal Income Fund, Inc., Voyageur Minnesota Municipal Income Fund II, Inc., Voyageur Minnesota Municipal Income Fund III, Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur Florida Insured Municipal Income Fund, and Voyageur Colorado Insured Municipal Income Fund, Inc. voted on the following proposals at the annual meeting of shareholders on November 1, 1999, as adjourned. The description of each proposal and number of shares voted are as follows:
Common Shareholders Preferred Shareholders Shares Shares Shares Shares Shares Shares Voted Voted Voted Voted Voted Voted For Against Abstain For Against Abstain --- ------- ------- --- ------- ------- 1. To elect the Fund's Board of Directors/Trustees: Voyageur Minnesota Municipal Income Fund, Inc: Wayne A. Stork .................................... 2,333,400 5,319 - - - - David K. Downes ................................... 2,333,400 5,319 - - - - Walter P. Babich .................................. 2,331,537 7,182 - - - - John H. Durham .................................... N/A N/A N/A - - - Anthony D. Knerr .................................. 2,333,400 5,319 - - - - Ann R. Leven ...................................... 2,333,557 5,162 - - - - Thomas F. Madison ................................. N/A N/A N/A 273 - - Charles E. Peck ................................... 2,331,537 7,182 - - - - Janet L. Yeomans .................................. N/A N/A N/A 273 - - Voyageur Minnesota Municipal Income Fund II, Inc: Wayne A. Stork .................................... 6,525,983 24,657 - - - - David K. Downes ................................... 6,525,983 24,657 - - - - Walter P. Babich .................................. 6,525,779 24,861 - - - - John H. Durham .................................... N/A N/A N/A - - - Anthony D. Knerr .................................. 6,525,783 24,857 - - - - Ann R. Leven ...................................... 6,525,237 25,403 - - - - Thomas F. Madison ................................. N/A N/A N/A 1,157 - - Charles E. Peck ................................... 6,524,579 26,061 - - - - Janet L. Yeomans .................................. N/A N/A N/A 1,157 - - Voyageur Minnesota Municipal Income Fund III, Inc: Wayne A. Stork .................................... 1,654,790 14,938 - - - - David K. Downes ................................... 1,654,790 14,938 - - - - Walter P. Babich .................................. 1,651,290 18,438 - - - - John H. Durham .................................... N/A N/A N/A - - - Anthony D. Knerr .................................. 1,654,790 14,938 - - - - Ann R. Leven ...................................... 1,654,790 14,938 - - - - Thomas F. Madison ................................. N/A N/A N/A 252 - - Charles E. Peck ................................... 1,651,290 18,438 - - - - Janet L. Yeomans .................................. N/A N/A N/A 252 - - Voyageur Arizona Municipal Income Fund, Inc: Wayne A. Stork .................................... 2,923,839 3,439 - - - - David K. Downes ................................... 2,923,839 3,439 - - - - Walter P. Babich .................................. 2,923,839 3,439 - - - - John H. Durham .................................... N/A N/A N/A - - - Anthony D. Knerr .................................. 2,923,839 3,439 - - - - Ann R. Leven ...................................... 2,922,339 4,939 - - - - Thomas F. Madison ................................. N/A N/A N/A 448 - - Charles E. Peck ................................... 2,922,139 5,139 - - - - Janet L. Yeomans .................................. N/A N/A N/A 448 - -
36 Proxy Results (continued)
-------------------------------------------------------------------------------------------------------------------------------- Common Shareholders Preferred Shareholders Shares Shares Shares Shares Shares Shares Voted Voted Voted Voted Voted Voted For Against Abstain For Against Abstain --- ------- ------- --- ------- ------- 1. To elect the Fund's Board of Directors/Trustees: Voyageur Florida Insured Municipal Income Fund: Wayne A. Stork ........................................ 2,113,694 8,879 - - - - David K. Downes ....................................... 2,113,694 8,879 - - - - Walter P. Babich ...................................... 2,111,894 10,679 - - - - John H. Durham ........................................ N/A N/A N/A - - - Anthony D. Knerr ...................................... 2,113,694 8,879 - - - - Ann R. Leven .......................................... 2,113,294 9,279 - - - - Thomas F. Madison ..................................... N/A N/A N/A 400 - - Charles E. Peck ....................................... 2,112,894 9,679 - - - - Janet L. Yeomans ...................................... N/A N/A N/A 400 - - Voyageur Colorado Insured Municipal Income Fund, Inc: Wayne A. Stork ........................................ 4,237,498 17,953 - - - - David K. Downes ....................................... 4,237,498 17,953 - - - - Walter P. Babich ...................................... 4,237,970 17,482 - - - - John H. Durham ........................................ N/A N/A N/A - - - Anthony D. Knerr ...................................... 4,248,646 6,805 - - - - Ann R. Leven .......................................... 4,248,646 6,805 - - - - Thomas F. Madison ..................................... N/A N/A N/A 788 - - Charles E. Peck ....................................... 4,240,310 15,142 - - - - Janet L. Yeomans ...................................... N/A N/A N/A 788 - -
2. To ratify the selection of Ernst & Young LLP, as the independent auditors for the Fund.
Common Shareholders Shares Shares Shares Voted Voted Voted For Against Abstain --- ------- ------- Voyageur Minnesota Municipal Income Fund, Inc. ....................... 2,320,650 7,139 10,929 Voyageur Minnesota Municipal Income Fund II, Inc. .................... 6,532,773 4,740 13,127 Voyageur Minnesota Municipal Income Fund III, Inc. ................... 1,652,818 2,495 14,416 Voyageur Arizona Municipal Income Fund, Inc. ......................... 2,924,745 - 2,533 Voyageur Florida Insured Municipal Income Fund ....................... 2,099,763 5,590 17,220 Voyageur Colorado Insured Municipal Income Fund, Inc. ................ 4,236,085 2,596 16,771
37 DELAWARE Registrar and Stock Transfer Agent INVESTMENTS Norwest Bank Minnesota, N.A. ----------- P.O. Box 64851 St. Paul, MN 55164 1.800.468.9716 For Securities Dealers 1.800.362.7500 For Financial Institutions Representatives Only 1.800.659.2265 www.delawareinvestments.com This annual report is for the information of Shareholders of Voyageur Closed-End Municipal Bond Funds. It sets forth details about charges, expenses, investment objectives and operating policies of each Fund. You should read it carefully before you invest. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------------------------------------------------------- BOARD OF DIRECTORS/ AFFILIATED OFFICERS Investment Manager TRUSTEES Delaware Management Company Philadelphia, PA Wayne A. Stork Charles E. Haldeman, Jr. Chairman President and Chief Executive Officer International Affiliate Delaware Investments Family of Funds Delaware Management Holdings, Inc. Delaware International Advisers Ltd. Philadelphia, PA Philadelphia, PA London, England Walter P. Babich Richard J. Flannery Principal Office of the Fund Board Chairman Executive Vice President 1818 Market Street Citadel Constructors, Inc. and General Counsel Philadelphia, PA 19103-3682 King of Prussia, PA Delaware Investments Philadelphia, PA Independent Auditors David K. Downes Ernst & Young LLP President and Chief Executive Officer Bruce D. Barton 2001 Market Street Delaware Investments Family of Funds President and Chief Executive Officer Philadelphia, PA Philadelphia, PA Delaware Distributors, L.P. Philadelphia, PA Number of Recordholders as of Anthony D. Knerr March 31, 2000 Consultant, Anthony Knerr & Associates New York, NY Minnesota Municipal Income Fund I 436 Minnesota Municipal Income Fund II 735 Ann R. Leven Minnesota Municipal Income Fund III 180 Former Treasurer, National Gallery of Art Arizona Municipal Washington, DC Income Fund 137 Florida Insured Municipal Thomas F. Madison Thomas F. Madison and Janet L. Yeomans Income Fund 252 President and Chief Executive Officer were elected by the preferred Shareholders Colorado Insured Municipal MLM Partners, Inc. of the Voyageur Closed-End Municipal Income Fund 236 Minneapolis, MN Bond Funds. Charles E. Peck Retired Fredericksburg, VA Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN (3113) Printed in the USA VOY-CEAR [3/00] PPL 5/00 (J5870)