N-30D 1 n30d.txt N-30D Delaware Investments(SM) --------------- A member of Lincoln Financial Group(R) Voyageur Closed-End Municipal Bond Funds: Minnesota Municipal Income Funds I, II and III Arizona Municipal Income Fund Florida Insured Municipal Income Fund Colorado Insured Municipal Income Fund Tax-Exempt Income 2001 ANNUAL REPORT (Tax-Exempt Income Artwork) TABLE OF CONTENTS ================= Letter to Shareholders 1 Portfolio Management Review 3 Financial Statements Statements of Net Assets 9 Statements of Operations 22 Statements of Changes in Net Assets 23 Financial Highlights 25 Notes to Financial Statements 31 Report of Independent Auditors 35 A TRADITION OF SOUND INVESTING SINCE 1929 ========================================= Investment Objectives and Strategies Each of the six Funds in this report is a closed-end management investment company whose shares trade on the American Stock Exchange (ASE) in New York. Each Fund seeks to provide high current income exempt from federal income tax and from the personal income tax of its state, if any, consistent with the preservation of capital. In addition, Florida Insured Municipal Income Fund seeks investments that enable its shares to be exempt from Florida's intangible 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), a series of Delaware Management Business Trust, 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 $124 billion in assets under management as of March 31, 2001. As of March 31, 2001, Delaware Management and its affiliates manage approximately $88 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 other closed-end 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. Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested. Dear Shareholder "WITH MANY INVESTORS LOOKING TO OFFSET HIGHER-RISK HOLDINGS IN 2000, AND WITH MUNICIPAL CREDIT BEING STRONG, DEMAND FOR MUNICIPAL BONDS GENERALLY REMAINED HIGH THROUGHOUT THE YEAR ENDED MARCH 31, 2001." May 7, 2001 Recap of Events -- During the fiscal year ended March 31, 2001, the U.S. economy slowed significantly. Weak corporate profits and discouraging economic indicators increased as the year progressed, contributing to poor performance in U.S. stock indexes and leading the Federal Reserve Board to begin a series of interest rate cuts in January. The dim profit picture late in 2000 led to frequent credit downgrades for U.S. corporations. As a result, investors seeking refuge in fixed-income investments often reached for securities with the highest credit ratings. In contrast to the corporate sector, state and local government credit worth generally did not weaken in the fall of 2000. As a result, municipal bonds were among those investments that often appealed to investors seeking safety. At the start of the fiscal year, interest rate hikes, coupled with the U.S. Treasury buyback and April 2000 turmoil in the U.S. stock market, led to a marked increase in demand for the safety of bonds. With many investors looking to offset higher-risk holdings in 2000, and with municipal credit being strong, demand for municipal bonds generally remained high throughout the year ended March 31, 2001. After a quiet start to 2001 in which supply remained scarce, new municipal bond issuance increased quickly and was booming by the end of February. The national 30-day visible supply, which is a forecast of bond issues coming to market over the next month, had climbed by the end of February 2001 to more than $9 billion -- an extremely high level of upcoming issuance (Source: Thomson Municipals Group). The result was better bond selection in many states, as well as higher yields. Delaware Closed-End Municipal Bond Funds for Minnesota, Arizona, Florida, and Colorado provided positive performance during the year ended March 31, 2001. Total return for five of the six Funds (Shares at net asset value with distributions reinvested) in this report was either in line with, or better than, performance of the relevant Lipper peer group and benchmark index. On the following pages, management discusses the specific performance of each Fund for the year ended March 31, 2001. Market Outlook -- Although the slowing U.S. economy poses challenges to municipal investors, we are cautiously optimistic about the rest of the year. Municipal credit upgrades by Moody's Investors Service outpaced downgrades in 2000 by a ratio of greater than five to one overall, and greater than 10 to one among tax-backed municipal bonds. Although we believe that municipal credit should remain strong, we think that 2001 will be hard-pressed to repeat those numbers. In our opinion, a slower pace of consumer spending and job creation, coupled with weakening real estate price appreciation, could diminish municipal tax revenue growth during the coming year. Yet we believe a number of factors are currently working in favor of municipal credit, including strong debt protection, slower debt growth, and more conservative budgets that are a result of anticipation of weaker revenue growth. 1 Municipal bond investors may also have noticed that a White House tax cut could be in store for this year. We expect the effects of any such cut on the municipal markets to be minimal, and slow in evolving. The approval process for a tax bill is likely to be drawn out, and any plan calling for slowly phased-in decreases in tax rates is unlikely to have a strong near-term impact for municipal investors. More importantly, we think there is evidence that the current economic downturn may be modest and short-lived. Presently, it appears that the Federal Reserve Board is likely to try to stimulate the economy through further interest rate cuts in 2001 -- a factor which could benefit your Fund going forward. We believe that municipal bond funds continue to be important investment vehicles which provide diversification and tax-advantaged investing.* Thank you for your continued commitment to Delaware Investments. Sincerely, /s/ Charles E. Haldeman, Jr. /s/ David K. Downes ------------------------------------- -------------------------------------- Charles E. Haldeman, Jr. David K. Downes Chairman, President and Chief Executive Officer, Delaware Investments Family of Funds Delaware Investments Family of Funds
Total Return For the year ended March 31, 2001 Total Return Total Return Premium (+)/ at Net at Market Discount (-) ASE Asset Value Value as of 3/31/01 Symbol ---------------------------------------------------------------------------------------------------------- Minnesota Municipal Income Fund I +11.83% +12.09% -3.31% VMN ---------------------------------------------------------------------------------------------------------- Minnesota Municipal Income Fund II +13.06% +20.37% -2.56% VMM ---------------------------------------------------------------------------------------------------------- Minnesota Municipal Income Fund III +13.54% +17.57% -3.13% VYM ---------------------------------------------------------------------------------------------------------- Lipper Minnesota Closed-End Municipal Debt Funds Average (6 funds) +11.14% ---------------------------------------------------------------------------------------------------------- Arizona Municipal Income Fund +13.00% +19.28% -4.81% VAZ ---------------------------------------------------------------------------------------------------------- Colorado Insured Municipal Income Fund +16.21% +22.42% -4.59% VCF ---------------------------------------------------------------------------------------------------------- Lipper Other States Closed-End Municipal Debt Funds Average (26 funds) +13.89% ---------------------------------------------------------------------------------------------------------- Florida Insured Municipal Income Fund +13.99% +19.06% -14.42% VFL ---------------------------------------------------------------------------------------------------------- Lipper Florida Closed-End Municipal Debt Funds Average (13 funds) +13.76% ---------------------------------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index +10.92% Lehman Brothers Insured Municipal Bond Index +11.12% ----------------------------------------------------------------------------------------------------------
All performance shown above assumes reinvestment of all distributions. The Lipper categories represent the average returns of municipal bond funds with similar investment objectives tracked by Lipper (Source: Lipper Inc.). The unmanaged Lehman Brothers Indexes are composed of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Past performance is not a guarantee of future results. *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 Senior Portfolio Manager Arizona Municipal Income Fund, Colorado Insured Municipal Income Fund Mitchell L. Conery Patrick P. Coyne Senior Portfolio Managers Florida Insured Municipal Income Fund May 7, 2001 The Fund's Results At the start of the fiscal year ended March 31, 2001, municipal markets were generally just beginning to pick up momentum. The struggles of the stock market contributed to a shift in investor sentiment, which continued as the year progressed, eventually bringing economic slowing and a decline in interest rates. Municipal bond markets performed strongly during the year, as the U.S. economy showed signs that it was slowing significantly faster than many investors had previously anticipated. During the fourth quarter of 2000, as the economy slowed, fundamental credit deterioration became evident in the corporate sector. However, municipal credit quality remained at very high levels, and rating agencies continued to upgrade many more municipal bonds than they downgraded (Source: Moody's Investors Service). By the end of the fiscal year, money was flowing back into tax-free mutual funds at a significant pace as investors displayed heightened concerns about the stock market and the corporate bond market (Source: AMG Data Services). The supply of tax-free issues had also rebounded considerably as municipalities and other issuers rushed to take advantage of lower borrowing costs (Source: Thomson Municipals Group). In addition, refinancings and new issuance were rising. Portfolio Highlights Minnesota Municipal Income Funds I, II and III During the year ended March 31, 2001, we kept the duration of the Funds slightly longer than those of their competitors. Duration is a common measure of a bond or bond fund's sensitivity to interest rate changes. The longer the duration, the more sensitive a bond or bond fund is to a given increase or decrease in interest rates. We were able to anticipate the decline in long-term interest rates, which began in May 2000 despite the Fed being in a monetary tightening mode. As interest rates fell, the Funds performed well and were each able to outperform their Lipper peer group. Our goal was to increase the Fund's income potential to the greatest extent as was consistent with preservation of capital. Minnesota Municipal Income Fund I, which is the oldest of our three Minnesota funds, holds a number of bonds with shorter maturities. The Fund's average duration and average maturity was thus somewhat lower as of March 31, 2001, and performance was not as strong as that in the other two Minnesota portfolios. Minnesota Municipal Income Fund I returned +11.83% (Shares at net asset value with distributions reinvested) for the year ended March 31, 2001, surpassing the 10.92% increase of the Lehman Brothers Municipal Bond Index and the 11.14% increase posted by the Lipper Minnesota Closed-End Municipal Debt Funds Average for the same period. Minnesota Municipal Income Fund II returned +13.06% (Shares at net asset value with distributions reinvested) for 3 FUND BASICS =========== As of March 31, 2001 Fund Objectives The Funds seek to provide current income exempt from both regular federal income tax and Minnesota state personal income tax, consistent with preservation of capital. Total Fund Net Assets Fund I $58.39 million Fund II $164.77 million Fund III $39.66 million Number of Holdings Fund I 43 Fund II 71 Fund III 31 Fund Start Date Fund I: May 1, 1992 Fund II: February 26, 1993 Fund III: October 29, 1993 Your Fund Manager Elizabeth H. Howell joined Delaware Investments via its acquisition of Voyageur Fund Managers in 1997. She previously held management positions at Windsor Financial Group, Loomis Sayles and Eaton Vance Management. She holds a bachelor's degree from Skidmore College, an MBA degree from Babson College, and is a member of the Twin Cities Securities Analysts Society. the period, also surpassing the benchmark, while Minnesota Municipal Income Fund III turned in a +13.54% return (Shares at net asset value with distributions reinvested) over the same period. All three funds traded on the open market at a discount to net asset value as of March 31, 2001. In all three Minnesota Municipal Income Funds, we maintained a significant portion of assets in pre-refunded bonds. When a bond issue is pre-refunded, a new bond is issued at a lower rate of interest than the original bond. The proceeds from the new issue are placed in an escrow account and used to purchase U.S. Government securities, with the interest from those investments used to pay off the original bond issue. Because the debt is thus "backed" by U.S. Government securities, pre-refunded bonds are considered low-risk, and are typically rated AAA by Standard & Poor's. As of March 31, 2001, pre-refunded bonds accounted for approximately 27% of net assets in Minnesota Municipal Income Fund I, 30% of net assets in Minnesota Municipal Income Fund II, and 24% of net assets in Minnesota Municipal Income Fund III. MINNESOTA MUNICIPAL INCOME FUNDS I, II, III ===========================================
Bond Quality and Portfolio Highlights March 31, 2001 Fund I Fund II Fund III ---------------------------------------------------------------------------------------------------- AAA 63.54% 55.69% 54.54% AA 6.07% 15.81% 7.42% A 14.58% 14.31% 21.71% BBB 1.48% 3.12% 7.21% Unrated 14.33% 11.07% 9.12% ---------------------------------------------------------------------------------------------------- Average Credit Quality AA AA AA Average Effective Maturity 5.74 years 7.04 years 8.30 years Average Duration 4.39 years 5.10 years 5.94 years Current Yield at Market Price 5.87% 5.81% 5.83% Amount or Leveraging (millions) $20 million $60 million $15 million ----------------------------------------------------------------------------------------------------
Approximately 18.35%, 19.14% and 12.51% of the income generated by Minnesota Municipal Income Funds - I, II and III, respectively, for the year ended March 31, 2001 was subject to the federal alternative minimum tax. 4 FUND BASICS =========== As of March 31, 2001 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 preservation of capital. Total Fund Net Assets $69.64 million Number of Holdings 39 Fund Start Date February 26, 1993 Your Fund Manager Andrew M. McCullagh, Jr. joined Delaware Investments in 1997, after holding investment management positions at Kirchner, Moore & Co. He holds a bachelor's degree from Washington College and a graduate certificate in public finance from the University of Michigan. Arizona Municipal Income Fund During the year ended March 31, 2001, we continued our efforts to maximize income in the Fund. During the year, your Fund posted a return of +13.00% (Shares at net asset value with distributions reinvested), surpassing the 10.92% gain of the Lehman Brothers Municipal Bond Index but trailing the 13.89% gain of the Lipper Other States Closed-End Municipal Debt Funds Average. Early in the fiscal year, we adopted a strategy of increasing the Fund's duration and call protection because we anticipated a decline in long-term interest rates. We moved out of intermediate-term bonds with relatively short call periods and into longer-term bonds with 10-year call protection. Duration measures a bond's sensitivity to interest rate changes. The longer the duration, the more the bond's price will change for a given increase or decrease in interest rates. By strengthening its call protection, we diminished the possibility that holdings that carry relatively high yields will be called in a declining interest-rate environment. During the first six months of our fiscal year, we restructured the portfolio by upgrading and consolidating certain positions while eliminating others. For example, based on credit concerns in the healthcare sector, we sold all of the Fund's healthcare bonds during the first half of the fiscal year, replacing them in the portfolio with airport bonds, general obligation bonds and stadium bonds. Arizona is generally experiencing employment and population growth, which have heightened the need for schools, roads and housing (Source: The Eller School of Business and Public Administration). As of March 31, 2001, we maintained our largest position in investment-grade housing bonds, which accounted for 25.50% of net assets. Transportation bonds in the portfolio included issues for funding airport projects in Phoenix and Tucson, and a bond issued by the Arizona State Transportation Board for a highway development project. In an effort to find competitive yield, we also began purchasing healthcare issues again in the second half of our fiscal year when we felt the risk/reward profile was strong. The sector accounted for more than 10% of net assets at fiscal year end. Portfolio Characteristics March 31, 2001 Current Yield at Market Price 5.42% ------------------------------------------- Average Duration* 6.04 years ------------------------------------------- Average Effective Maturity** 9.90 years ------------------------------------------- Average Credit Quality AA ------------------------------------------- * Duration is a common measure of a bond or bond fund's sensitivity to interest rate changes. ** Average effective maturity is the average time remaining until scheduled repayment by issuers of portfolio securities. Approximately 21.05% of the income generated by Arizona Municipal Income Fund for the year ended March 31, 2001 was subject to the federal alternative minimum tax. 5 FUND BASICS =========== As of March 31, 2001 Fund Objective The Fund seeks to provide current income exempt from regular federal income tax consistent with preservation of capital. The Fund will also seek to maintain its portfolio so that the Fund's shares will be exempt from the Florida intangible personal property tax. Total Fund Net Assets $57.30 million Number of Holdings 33 Fund Start Date February 26, 1993 Your Fund Managers Mitchell L. Conery holds a bachelor's degree from Boston University and an MBA in Finance from the State University of New York at Albany. Prior to joining Delaware Investments in 1997, he served as an investment officer with the Travelers Group. Before that, he held positions at CS First Boston Corporation, MBIA Corporation, Thomas McKinnon Securities, Ovest Financial Services, and Merrill Lynch. Patrick P. Coyne holds a bachelor's degree from Harvard University and an MBA in Finance from the University of Pennsylvania's Wharton School. He began his career with Kidder, Peabody & Co., where he managed the firm's trading desk for four years. He joined Delaware Investments' fixed-income department in 1990. Florida Insured Municipal Income Fund The Fund's +13.99% return (Shares at net asset value with distributions reinvested) for the year ended March 31, 2001 surpassed the 13.76% gain of the Lipper Florida Closed-End Municipal Debt Funds Average and the 10.92% gain of Lehman Brothers Municipal Bond Index. The Fund invests exclusively in AAA-rated municipal bonds, which constitute the top tier of credit quality in the tax-free asset class. Given the uncertainty of the economy and the impact that the downturn can have on equities and lower-credit debt issues, we are comfortable taking a conservative approach to managing this Fund. Risk averse investors undoubtedly flocked to the safe haven of treasuries and high-rated municipal securities during the last six months of the fiscal year. This allowed insured municipal portfolios to perform strongly. As of fiscal year end, the Fund's largest sector was hospital bonds, which comprised 17.10% of the portfolio. The Fund also held a significant amount of pre-refunded issues. When a bond issue is pre-refunded, a new bond is issued at a lower rate of interest than the original bond. The proceeds from the new issue are placed in an escrow account and used to purchase U.S. Government securities, with the interest from those investments used to pay off the original bond issue. Because the debt is thus "backed" by U.S. Government securities, pre-refunded bonds are considered low-risk, and are typically rated AAA by Standard & Poor's. 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. Early in the fiscal year, we generally allowed the Fund's duration to shorten as short-term interest-rates declined. In 2001, we began to increase duration again, adding select long-maturity, discounted issues that we felt offered strong appreciation potential in the declining interest rate environment. These included a non-callable Tampa utility bond and a bond issued to finance a new dormitory at the University of Central Florida. As of March 31, 2001, the Fund's current yield at market price was 5.75%. Portfolio Characteristics March 31, 2001 Current Yield at Market Price 5.75% ----------------------------------------------------------------------------- Average Duration* 5.48 years ----------------------------------------------------------------------------- Average Effective Maturity** 7.45 years ----------------------------------------------------------------------------- Average Credit Quality AAA ----------------------------------------------------------------------------- *Duration is a common measure of a bond or bond fund's sensitivity to interest rate changes. **Average effective maturity is the average time remaining until scheduled repayment by issuers of portfolio securities. Approximately 16.49% of the income generated by Florida Insured Municipal Income Fund for the year ended March 31, 2001 was subject to the federal alternative minimum tax. 6 FUND BASICS =========== As of March 31, 2001 Fund Objective The Fund seeks to provide current income exempt from both regular federal income tax and Colorado state personal income tax, consistent with preservation of capital. Total Fund Net Assets $113.82 million Number of Holdings 44 Fund Start Date July 29, 1993 Your Fund Manager Andrew M. McCullagh, Jr. Colorado Insured Municipal Income Fund We emphasized total return during the year ended March 31, 2001, while retaining a strong bias towards dividend income. During the year, your Fund's +16.21% return (Shares at net asset value with distributions reinvested) surpassed the 13.89% gain of the Lipper Other States Closed-End Municipal Debt Funds Average. The Fund had a current yield at market price of 5.36% as of March 31, 2001, and was trading at a 4.59% discount to its net asset value. Our four transportation bond holdings comprised 20.33% of the Fund's net assets at fiscal year end. Colorado's growing population has lead to congestion on the state's highways, moving the Colorado legislature to approve billions of dollars in highway bonds to expand both roads and mass transit systems (Source: Standard & Poor's). We saw the issuance of these new highway bonds as an opportunity to upgrade the transportation sector within the Fund. During the year, we sold older transportation bonds at a profit and replaced them with new issues that we believe were attractively priced and that carried relatively high yields. As of fiscal year end, hospital bonds remained integral to the Fund and were our only holdings in the healthcare sector. With Colorado hospitals in the Denver metropolitan area reaching capacity, we expect hospital financing to be brisk during the upcoming year. Because profitability of medical facilities has increased significantly in the past year, we feel that several bonds currently held in the portfolio have the potential of being upgraded. Those upgrades alone could produce favorable total returns during the next year, as well as significant dividend income. Because we are optimistic about the outlook for the Colorado municipal bond market throughout the balance of the year, we began to extend the Fund's duration in January 2001, hoping to capture returns from an anticipated bond market rally. Outlook We believe that 2001 will be a challenging year due to slowing domestic and international economies. Pronounced weakness in a broad range of indicators prompted the Federal Reserve to cut short-term interest rates just after the New Year in an effort to stave off recession. In the months ahead, we believe the Fed will make Portfolio Characteristics March 31, 2001 Current Yield at Market Price 5.36% ------------------------------------------------------------------------------ Average Duration* 6.44 years ------------------------------------------------------------------------------ Average Effective Maturity** 8.71 years ------------------------------------------------------------------------------ Average Credit Quality AAA ------------------------------------------------------------------------------ *Duration is a common measure of a bond or bond fund's sensitivity to interest rate changes. **Average effective maturity is the average time remaining until scheduled repayment by issuers of portfolio securities. None of the income generated by Colorado Insured Municipal Income Fund for the year ended March 31, 2001 was subject to the federal alternative minimum tax. 7 further cuts, though the timing and size of those reductions are unclear. In the past, bonds have typically outperformed stocks during Fed interest rate reduction cycles. Therefore, we believe that the coming months will continue to be a favorable climate for bonds. After the President's tax cut proposal was announced, many bondholders worried about the plan's possible impact on their investments. However, we believe that any tax cut instituted this year should have relatively little impact on municipal bond markets. The tax-equivalent yields on municipal bonds -- even at the proposed reduced top 33% tax bracket -- should remain compelling, especially when compared with alternative fixed-income investments, such as corporate or Treasury bonds. 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, Mellon Investor Services, L.L.C., at 1.800.851.9677. You will be asked to put your request in writing. If you have shares registered in "street" name, contact your financial adviser or the broker/dealer holding the shares. Under the current policies of the Arizona Municipal Income Fund, Florida Insured Municipal Income Fund, Minnesota Municipal Income Fund I, and Minnesota Municipal Income Fund II, all distributions of net investment income and capital gains to common stock shareholders are automatically reinvested in additional shares unless shareholders elect to receive all dividends and other distributions in cash paid by check mailed directly to shareholders by the dividend plan agent. Under the current policies of Colorado Insured Municipal Income Fund and Minnesota Municipal Income Fund III, distributions of net investment income and capital gains to common shareholders will be paid in cash unless shareholders notify Mellon Investors Services, L.L.C. of their desire to participate in the dividend reinvestment program. After each Fund declares a dividend or determines to make a capital gains distribution, the plan agent will, as agent for the participants, receive the cash payment and use it to buy shares in the open market on the American Stock Exchange. The Funds will not issue any new shares in connection with the plan. Effective December 8, 2000, Mellon Investor Services, L.L.C. became the transfer and dividend disbursing agent, registrar and dividend reinvestment agent for the Voyageur Closed-End Municipal Bond Funds. You can contact Mellon at: Mellon Investor Services, L.L.C. Dividend Reinvestment Department Overpeck Centre 85 - Challenger Road Ridgefield, NJ 07660 1.800.851.9677 8 Statements of Net Assets VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC. ============================================== Principal Market March 31, 2001 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.84% General Obligation Bonds - 5.42% Minneapolis Refunding (Laurel Village) 6.00% 3/1/16 ...................................... $1,600,000 $1,632,240 Minneapolis/St. Paul Metro Airport Commission 6.60% 1/1/11 (AMT) ..................... 1,500,000 1,532,685 ---------- 3,164,925 ---------- Higher Education Revenue Bonds - 7.20% Minnesota Higher Education Facility (St. Thomas University) Series 3-C 6.25% 9/1/16 ...................................... 1,000,000 1,005,470 Minnesota State University Board (State University System) Series A 6.05% 6/30/18 ..................................... 250,000 252,573 Northfield (St. Olaf College) 6.30% 10/1/12 ..................................... 1,075,000 1,134,620 6.40% 10/1/21 ..................................... 1,750,000 1,810,864 ---------- 4,203,527 ---------- Hospital Revenue Bonds - 16.04% Duluth Economic Development Authority (St. Luke's Hospital) 6.40% 5/1/18 (Connie Lee) ......................... 1,000,000 1,037,160 Duluth Economic Development Authority Benedictine (St. Mary's Hospital) 6.00% 2/15/20 (Connie Lee) ........................ 1,000,000 1,036,370 Minneapolis Health Care Facility Revenue (Fairview Hospital) Series A 5.25% 11/15/19 (MBIA) ............................. 1,500,000 1,503,870 Minneapolis Hospital System (Fairview Hospital) Series 1991-A 6.50% 1/1/11 ...................................... 2,210,000 2,303,770 Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 6.375% 11/15/29 ................................... 2,500,000 2,622,750 St. Paul Housing & Redevelopment Authority Health Care Facility (Regions Hospital Project) 5.30% 5/15/28 ..................................... 1,000,000 863,750 ---------- 9,367,670 ---------- Housing Revenue Bonds - 20.37% Brooklyn Multifamily Housing" (Four Courts Apartments) 7.50% 6/1/25 (AMT) ................................ 1,800,000 1,807,632 Dakota County Housing & Redevelopment Authority Single Family Mortgage Revenue 5.85% 10/1/30 (AMT/GNMA/FNMA) ..................... 301,000 307,667 Minnesota Housing Finance Agency Single Family Mortgage Series 1992-G 7.45% 7/1/22 (AMT/FHA) ............................ 175,000 178,647 Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Housing Revenue Bonds (continued) Minnetonka Multifamily Presbyterian Homes Guaranteed (Beacon Hill" Project) 7.70% 6/1/25 ..................................... $2,725,000 $ 2,751,051 New Brighton Multifamily Mortgage (Polynesian Village Apartments) Series 1995-A 7.60% 4/1/25 (AMT) ................. 1,400,000 1,403,990 St. Anthony Multifamily Housing Development (Autumn Woods" Project) 6.875% 7/1/22 (Asset Gty) ........................ 2,265,000 2,347,197 St. Paul Housing & Redevelopment Authority Multifamily Housing (Pointe of St. Paul Project) 6.60% 10/1/12 (FNMA) ............................. 2,950,000 3,098,680 ----------- 11,894,864 ----------- Pollution Control Revenue Bonds - 3.64% Bass Brook Pollution Control Revenue (Minnesota Power & Light" Company) 6.00% 7/1/22 ..................................... 2,100,000 2,125,389 ----------- 2,125,389 ----------- Power Authority Revenue Bonds - 13.13% Northern Minnesota Municipal Power Agency Electric System Series A 5.00% 1/1/21 ............................ 1,500,000 1,462,215 Northern Minnesota Municipal Power Agency Electric System Series B 5.50% 1/1/18 (AMBAC) ............................. 1,250,000 1,277,250 Puerto Rico Electric Power Authority Series EE 4.75% 7/1/24 ........................... 1,100,000 1,041,381 Rochester Electric 5.25% 12/1/30 (AMBAC) .......................................... 400,000 402,532 Southern Minnesota Municipal" Power Agency 5.50% 1/1/15 (AMBAC) ............................. 610,000 627,513 5.00% 1/1/16 (FGIC) .............................. 580,000 580,017 Western Minnesota Municipal Power Agency Series A 5.50% 1/1/15 (MBIA) .............................. 2,275,000 2,276,388 ----------- 7,667,296 ----------- *Pre-Refunded / Escrowed to Maturity Bonds - 26.67% Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage Revenue 8.375% 9/1/21 (AMT/GNMA) (Escrowed to Maturity) ........................... 2,555,000 3,586,275 Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.30% 11/1/22-02 (AMBAC) ......................... 1,270,000 1,353,464 6.30% 11/1/22-04 (AMBAC) ......................... 730,000 797,912 9 Statements of Net Assets (continued) Principal Market Voyageur Minnesota Municipal Income Fund, Inc. Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) *Pre-Refunded / Escrowed to Maturity" Bonds (continued) Edina Recreational Facilities Series 1992-A 6.00% 1/1/09-02 ................................. $ 305,000 $ 311,387 6.00% 1/1/10-02 ................................. 320,000 326,701 Minneapolis St. Paul Housing & Redevelopment Authority Health Care (Health One) 6.75% 8/15/14-02 (MBIA) ......................... 400,000 409,960 Minnesota Higher Education Revenue Series 3-J (Macalester College) 6.40% 3/1/22-02 ................................. 1,000,000 1,029,060 Minnesota Public Facilities Authority Water Pollution Control Series 1992 6.50% 3/1/14-02 ................................. 1,500,000 1,574,640 Puerto Rico Commonwealth 6.00% 7/1/26-07 ................................. 2,000,000 2,293,520 Southern Minnesota Municipal Power Agency 5.50% 1/1/15 (AMBAC) (Escrowed to Maturity) .......................... 390,000 411,641 5.75% 1/1/11 (FGIC) (Escrowed to Maturity) .......................... 1,000,000 1,053,540 St. Cloud Hospital Facility 6.75% 7/1/15-01 (AMBAC) ......................... 1,000,000 1,028,800 St. Francis Independent School District #15 6.30% 2/1/11-06 (FSA) ........................... 1,250,000 1,387,088 ----------- 15,563,988 ----------- Water & Sewer Revenue Bonds - 6.37% Anoka County Solid Waste Disposal National Rural Co-Op Utility 6.95% 12/1/08 (AMT) ............................. 1,000,000 1,020,450 **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floater ROLS 4.20% 3/1/16 .................................... 1,000,000 944,670 4.33% 3/1/17 .................................... 1,855,000 1,754,700 ----------- 3,719,820 ----------- Total Municipal Bonds (cost $54,396,937) .............................. 57,707,479 ----------- -------------------------------------------------------------------------------- Total Market Value of Securities - 98.84% (cost $54,396,937) .............................. $57,707,479 Receivables and Other Assets Net of Liabilities - 1.16% ...................... 678,183 ----------- Total Net Assets - 100.00% ........................ 58,385,662 Liquidation Value of Preferred Stock ................................. (20,000,000) ----------- Net Assets Applicable to 2,594,700 Common Shares ($0.01 Par Value) Outstanding ..................................... $38,385,662 =========== Net Asset Value Per Common Share ($38,385,662 / 2,594,700 shares) ................. $14.79 ------ ------------------ *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-funded. **An inverse floater bond is a type of bond with variable or floating interest rates that move in the opposite direction of short-term interest rates. Interest rate disclosed is in effect as of March 31, 2001. Components of Net Assets at March 31, 2001: 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 ............................... (19,052) Accumulated net realized loss on investments .................................. (332,568) Net unrealized appreciation of investments ........ 3,310,542 ----------- Total net assets .................................. $58,385,662 =========== Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Subject to Alternative Minimum Tax Asset Gty - Insured by the Asset Guaranty Insurance Company Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FNMA - Insured by Fannie Mae FSA - Insured by Financial Security Assurance GNMA - Insured by Ginnie Mae MBIA - Insured by the Municipal Bond Insurance Association See accompanying notes 10 Statements of Net Assets (continued) VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC. ================================================= Principal Market March 31, 2001 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.23% Continuing Care / Retirement Revenue Bonds - 1.54% Minneapolis Health Care Facility" Revenue (Jones-Harrison Residence Project) 6.00% 10/1/27 ..................................... $2,000,000 $ 1,650,920 Moorhead Economic Development Authority Multifamily Revenue Refunding & Improvement Housing Development (Eventide) Series B 6.00% 6/1/18 .................. 1,000,000 888,090 ----------- 2,539,010 ----------- General Obligation Bonds - 3.63% Becker Refunding Tax Increment Series D 6.25% 8/1/15 (AMT/MBIA) ........................... 3,700,000 3,790,206 Rosemount Independent School District #196 Series A 5.70% 4/1/12 ............... 1,270,000 1,347,800 St. Paul Tax Increment (Block 39 Project) Series A 4.75% 2/1/25 ............................. 900,000 845,550 ----------- 5,983,556 ----------- Higher Education Revenue Bonds - 8.79% Minnesota Higher Education Facility (Macalester College) Series C 5.55% 3/1/16 850,000 872,406 Minnesota Higher Education Facility (St. Thomas University) Series 3-R2 5.60% 9/1/14 .......................... 175,000 180,115 Series B 3-R1 5.60% 10/1/15 ....................... 1,050,000 1,078,634 Series 4A-1 5.625% 10/1/21 ........................ 1,000,000 1,023,710 Minnesota State University Board (State University System) Series 1993-A 6.10% 6/30/23 ....................... 1,150,000 1,160,753 Series 1993-C 5.60% 6/30/16 (MBIA) ................ 3,115,000 3,170,696 Series 1993-C 5.60% 6/30/19 (MBIA) ................ 3,720,000 3,773,828 University of Minnesota Series A 5.50% 7/1/21 ...................................... 3,000,000 3,219,240 ----------- 14,479,382 ----------- Hospital Revenue Bonds - 14.64% Bloomington Health Care Facilities (Masonic Home Care Center) 5.875% 7/1/22 (AMBAC) ............................. 1,200,000 1,229,064 Brainerd Health Care (Evangelical Lutheran Health Care Facilities) Series A 6.65% 3/1/17 (FSA) ................................ 1,195,000 1,247,329 Duluth Economic Development Authority Benedictine (St. Mary's Hospital) 6.00% 2/15/20 (Connie Lee) ........................ 6,000,000 6,218,220 Minneapolis/St. Paul Housing & Redevelopment Authority (Children's Health Care Series) 5.50% 8/15/25 (FSA) ............................... 1,400,000 1,419,040 Principal Market March 31, 2001 Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Hospital Revenue Bonds (continued) Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series 97A 5.75% 11/15/26 (MBIA) ............................. $5,550,000 $ 5,792,924 Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 6.375% 11/15/29 ................................... 2,800,000 2,937,480 Rochester Health Care Facilities (Mayo Foundation) Series B 5.50% 11/15/27 .................................... 3,365,000 3,435,429 St. Paul Housing & Redevelopment Authority Health Care Facilities (Regions Hospital Project) 5.30% 5/15/28 ..................................... 400,000 345,500 Waconia Health Care Facilities 6.10% 1/1/19 ...................................... 1,405,000 1,493,796 ----------- 24,118,782 ----------- Housing Revenue Bonds - 19.33% Chanhassen Multifamily Housing (Heritage Park Project) 6.20% 7/1/30 (FHA) ................................ 1,105,000 1,139,111 Dakota County Housing & Redevelopment Authority Multifamily Mortgage (Imperial Ridge Project) Series 1993-A 6.10% 12/15/28 (GNMA) ............................. 1,855,000 1,886,387 Harmony Multifamily Housing Section 8 (Zedakah Foundation Project) Series A 5.95% 9/1/20 ...................................... 1,000,000 1,011,150 Minnesota Housing Finance Agency Multifamily Rental Housing Series D 5.90% 2/1/14 ...................................... 1,115,000 1,144,447 6.00% 8/1/22 ...................................... 2,295,000 2,348,015 Minnesota Housing Finance Agency Single Family Housing Rental 5.95% 2/1/18 (MBIA) ............................... 1,285,000 1,321,288 Minnesota Housing Finance Agency Single Family Housing Series 1991-A 7.05% 7/1/22 (AMT) .................. 1,215,000 1,234,962 Series 1992-B 6.15% 1/1/26 (AMT) .................. 3,350,000 3,439,914 Series 1992-C2 6.15% 7/1/23 (AMT) ................. 3,395,000 3,488,702 Series 1994-F 6.30% 7/1/25 ........................ 1,495,000 1,558,597 Series 1994-J 6.95% 7/1/26 (AMT) .................. 2,405,000 2,500,984 Minnetonka Housing Facilities (Beacon Hill Project) 7.25% 6/1/09 ...................................... 1,225,000 1,230,880 7.50% 6/1/14 ...................................... 760,000 770,724 7.55% 6/1/19 ...................................... 2,365,000 2,395,792 11 Statements of Net Assets (continued) Principal Market Voyageur Minnesota Municipal Income Fund II, Inc. Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued)" Housing Revenue Bonds (continued) New Brighton Multifamily Mortgage (Polynesian Village Apartments) Series 1995-A 7.60% 4/1/25 (AMT) ................. $3,820,000 $ 3,830,887 St. Paul Housing & Redevelopment Authority Single Family Mortgage 6.40% 3/1/21 (FNMA) .............................. 995,000 1,051,904 Stillwater Multifamily Mortgage (Stillwater Cottages) 7.25% 11/1/27 (AMT) .............................. 1,540,000 1,499,221 ----------- 31,852,965 ----------- Industrial Development Revenue Bonds - 1.10% Burnsville Commonwealth Development (Holiday Inn Project) 5.90% 4/1/08 ............... 1,430,000 1,443,442 Minneapolis Community Development Agency (Supported Development) Series 5 5.70% 12/1/27 ........................... 375,000 375,851 ----------- 1,819,293 ----------- Pollution Control Revenue Bonds - 7.56% Bass Brook Pollution Control Revenue (Minnesota Power & Light Company) 6.00% 7/1/22 ..................................... 7,560,000 7,651,400 Cloquet Pollution Control (Potlatch Corporation Project) 5.90% 10/1/26 .................................... 5,000,000 4,802,850 ----------- 12,454,250 ----------- Power Authority Revenue Bonds - 5.04% Northern Minnesota Municipal Power Agency Electric System Series B 5.50% 1/1/18 (AMBAC) ............................. 5,955,000 6,084,819 Puerto Rico Electric Power Authority 5.25% 7/1/21 ..................................... 2,000,000 2,015,360 Rochester Electric 5.25% 12/1/30 (AMBAC) .......................................... 200,000 201,266 ----------- 8,301,445 ----------- *Pre-Refunded / Escrowed to Maturity Bonds - 29.95% Buffalo Independent School District 6.15% 2/1/22-03 (FSA) ............................ 4,030,000 4,224,327 Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage Revenue 8.375% 9/1/21 (AMT/GNMA) (Escrowed to Maturity) ................ 5,500,000 7,719,964 Detroit Lakes Benedictine Health (St. Mary's Hospital) 6.00% 2/15/19-03 (Connie Lee) .................... 1,250,000 1,332,088 Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.20% 11/1/12-02 (AMBAC) ......................... 720,000 766,210 6.20% 11/1/12-04 (AMBAC) ......................... 280,000 305,113 6.30% 11/1/22-02 (AMBAC) ......................... 3,890,000 4,145,651 6.30% 11/1/22-04 (AMBAC) ......................... 960,000 1,049,309 Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) *Pre-Refunded / Escrowed to Maturity Bonds (continued) Esko Independent School District 5.65% 4/1/12-05 FSA .............................. $ 550,000 $ 589,881 Hawley Independent School District 5.75% 2/1/17-06 (FSA) ............................ 1,000,000 1,043,340 Metropolitan Council Sports Facility Commission (Hubert H. Humphrey Metrodome Sports Facility) Series 92 6.00% 10/1/09 (Escrowed to Maturity) ........................... 2,360,000 2,501,270 Minneapolis/St. Paul Housing & Redevelopment Authority (HealthOne) 7.40% 8/15/11-02 (MBIA) .......................... 2,105,000 2,159,204 Minnesota Public Facilities Authority Water Pollution Control 6.25% 3/1/16-05 .................................. 1,000,000 1,095,070 Minnesota Public Facilities Authority Water Pollution Control Series 1992 6.50% 3/1/14-02 .................................. 3,300,000 3,464,208 Red Wing Independent School District #256 Series 1993-A 5.70% 2/1/12-03 .................................. 2,925,000 3,034,892 5.70% 2/1/13-03 .................................. 1,625,000 1,686,051 Southern Minnesota Municipal Power Agency 5.75% 1/1/18-16 ........................... 3,715,000 3,928,761 St. Paul Housing & Redevelopment Authority Sales Tax (Civic Center) 5.55% 11/1/23 (Escrowed to Maturity) ........................... 2,300,000 2,432,986 5.55% 11/1/23 (MBIA) (Escrowed to Maturity) ........................... 4,200,000 4,300,842 Stewartville Independent School District #534 5.75% 2/1/17-05 .................... 1,705,000 1,764,931 Western Municipal Power Agency 6.625% 1/1/16 (Escrowed to Maturity) ........................... 1,535,000 1,807,278 ----------- 49,351,376 ----------- Transportation Revenue Bonds - 3.74% Puerto Rico Commonwealth Highway & Transportation Authority (Highway Improvements) Series Y 5.50% 7/1/26 ..................................... 6,000,000 6,167,280 ----------- 6,167,280 ----------- 12 Statements of Net Assets (continued) Principal Market Voyageur Minnesota Municipal Income Fund II, Inc. Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Water & Sewer Revenue Bonds - 2.91% **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floaters ROLS 4.88% 11/1/17 ..................................... $ 570,000 $ 580,938 **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floater ROLS 4.33% 3/1/17 .................................... 1,145,000 1,083,090 4.42% 3/1/18 .................................... 1,360,000 1,283,473 4.42% 3/1/19 .................................... 2,000,000 1,842,120 4,789,621 Total Municipal Bonds (cost $155,383,446) ............................. 161,856,960 Total Market Value of Securities - 98.23% (cost $155,383,446) ............................. 161,856,960 Receivables and Other Assets Net of Liabilities - 1.77% ...................... 2,917,753 Total Net Assets - 100.00% ........................ 164,774,713 Liquidation Value of Preferred Stock .............................. (60,000,000) Net Assets Applicable to 7,252,200 Common Shares ($0.01 Par Value) Outstanding ..................................... $104,774,713 Net Asset Value Per Common Share ($104,774,713 / 7,252,200 shares) ................ $14.45 ------------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-funded. **An inverse floater bond is a type of bond with variable or floating interest rates that move in the opposite direction of short-term interest rates. Interest rate disclosed is in effect as of March 31, 2001. Components of Net Assets at March 31, 2001: 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 ................. 1,549,899 Accumulated net realized loss on investments .................................... (2,958,702) Net unrealized appreciation of investments .................................... 6,473,514 ------------ Total net assets .................................... $164,774,713 ============ Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity 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 Fannie Mae FSA - Insured by Financial Security Assurance GNMA - Insured by Ginnie Mae MBIA - Insured by the Municipal Bond Insurance Association See accompanying notes 13 Statements of Net Assets (continued) VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC. ================================================== Principal Market March 31, 2001 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 97.92% Continuing Care / Retirement Revenue Bonds - 2.59% Minnesota Agriculture & Economic Development Board (Benedictine Health Systems) 5.75% 2/1/29 ............................. $1,300,000 $1,025,557 ---------- 1,025,557 ---------- General Obligation Bonds - 1.90% Minneapolis Sports Arena Project 5.125% 10/1/20 .................................... 750,000 753,592 ---------- 753,592 ---------- Higher Education Revenue Bonds - 6.37% Minnesota Higher Education Facilities Authority (St. Thomas University) Series 4A-1 5.625% 10/1/21 ........................ 1,010,000 1,033,947 Minnesota State Higher Education Facilities Authority (St. Mary's College) Series 3Q 6.15% 10/1/23 ........................... 1,000,000 1,020,390 Minnesota State Higher Educational Facilities Authority (College of St. Benedict) Series 3-W 6.375% 3/1/20 ................ 345,000 354,329 Minnesota State Higher Educational Facilities Authority (Gustavus Adolphus College) Series 4-X 4.80% 10/1/21 .......................... 125,000 116,429 ---------- 2,525,095 ---------- Hospital Revenue Bonds - 17.94% Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 6.375% 11/15/29 ................................... 2,000,000 2,098,200 Princeton Hospital Systems (Fairview Hospital) Series C 6.25% 1/1/21 (MBIA) ............................... 2,000,000 2,056,360 Robbinsdale North Memorial Medical Center Series 1993-B 5.50% 5/15/23 (AMBAC) ................................... 500,000 505,380 Rochester Health Care Facilities (Mayo Foundation) Series B 5.50% 11/15/27 .................................... 1,700,000 1,735,581 St. Paul Housing & Redevelopment Authority (Health East Hospital) 5.85% 11/1/17 ..................................... 250,000 201,475 St. Paul Housing & Redevelopment Authority Health Care Facilities (Regions Hospital Project) 5.30% 5/15/28 ................... 600,000 518,250 ---------- 7,115,246 ---------- Housing Revenue Bonds - 15.74% Brooklyn Multifamily Housing (Four Courts Apartments) 7.50% 6/1/25 (AMT) ................................ 1,000,000 1,004,240 Burnsville Multifamily Mortgage Series A 7.10% 1/1/30 (FSA) ....................... 2,000,000 2,155,580 Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Housing Revenue Bonds (continued) Minneapolis Minnesota Multifamily Housing (Gaar Scott Loft Project) 5.95% 5/1/30 ..................................... $1,000,000 $1,000,000 Minneapolis Multifamily Housing (Olson Townhomes) 6.00% 12/1/19 (AMT) .............................. 1,875,000 1,882,369 Minnesota Housing Finance Agency Single Family Mortgage Series 1992-G 7.45% 7/1/22 (AMT/FHA/VA) ........................ 195,000 199,064 ---------- 6,241,253 ---------- Industrial Development Revenue Bonds - 2.29% Minneapolis Community Development Agency (Supported Development) 6.75% 12/1/25 .................................... 865,000 906,728 ---------- 906,728 ---------- Pollution Control Revenue Bonds - 6.26% Bass Brook Pollution Control Revenue (Minnesota Power & Light Company) 6.00% 7/1/22 ..................................... 1,505,000 1,523,195 Cloquet Pollution Control (Potlatch Corporation Project) 5.90% 10/1/26 ................................... 1,000,000 960,570 ---------- 2,483,765 ---------- Power Authority Revenue Bonds - 4.69% Southern Minnesota Municipal Power Agency 5.75% 1/1/18 (FGIC) ....................... 1,800,000 1,859,490 ---------- 1,859,490 ---------- *Pre-Refunded / Escrowed to Maturity Bonds - 24.05% Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.20% 11/1/12-02 (AMBAC) ......................... 1,080,000 1,149,314 6.20% 11/1/12-04 (AMBAC) ......................... 420,000 457,670 Esko Independent School District #99 5.75% 4/1/17-05 (FSA) ............................ 2,145,000 2,308,449 Minnesota State Higher Education Facilities Authority (Saint Benedict) Series 3-W 6.375% 3/1/20-04 ...................... 930,000 1,001,014 Moorhead Minnesota Public Utilities Series A 6.25% 11/1/12-02 (MBIA) .................. 1,500,000 1,568,685 University of Minnesota Hospital 6.75% 12/1/16 (Escrowed to Maturity) ............................ 2,580,000 3,054,746 ---------- 9,539,878 14 ---------- Statements of Net Assets (continued) Principal Market Voyageur Minnesota Municipal Income Fund III, Inc. Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Transportation Revenue Bonds - 4.85% Minneapolis/St. Paul Metropolitan Airport Commission 5.125% 1/1/25 (FGIC) ................. $ 900,000 $ 896,256 Puerto Rico Commonwealth Highway & Transportation Authority (Highway Improvements) Series Y 5.50% 7/1/26 ........................... 1,000,000 1,027,880 ---------- 1,924,136 ---------- Water & Sewer Revenue Bonds - 11.24% **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floater ROLS 4.42% 3/1/18 ....................... 1,640,000 1,547,717 Minnesota Public Facilities Authority Water Pollution Control Series B 5.40% 3/1/15 .................................... 2,820,000 2,910,071 ---------- 4,457,788 ---------- Total Municipal Bonds (cost $36,730,298) .............................. 38,832,528 ---------- Total Market Value of Securities - 97.92% (cost $36,730,298) .............................. 38,832,528 Receivables and Other Assets Net of Liabilities - 2.08% ...................... 826,440 ---------- Total Net Assets - 100.00% ........................ 39,658,968 Liquidation Value of Preferred Stock ................................. (15,000,000) ---------- Net Assets Applicable to 1,837,200 Common Shares ($0.01 Par Value) Outstanding ..................................... $24,658,968 =========== Net Asset Value Per Common Share ($24,658,968 / 1,837,200 shares) ................ $13.42 ------ ---------------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-funded. **An inverse floater bond is a type of bond with variable or floating interest rates that move in the opposite direction of short-term interest rates. Interest rate disclosed is in effect as of March 31, 2001. -------------------------------------------------------------------------------- Components of Net Assets at March 31, 2001: 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 ................. 128,760 Accumulated net realized loss on investments .................................... (2,818,752) Net unrealized appreciation of investments .................................... 2,102,230 ----------- Total net assets .................................... $39,658,968 =========== Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Subject to Alternative Minimum Tax FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association VA - Insured by the Veterans Administration See accompanying notes 15 Statements of Net Assets (continued) VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC. ============================================ Principal Market March 31, 2001 Amount Value ------------------------------------------------------------------------------- Municipal Bonds - 98.15% General Obligation Bonds - 6.42% Eagle Mountain Community Facility District A2 6.40% 7/1/17 .......................... 1,500,000 $1,632,375 Maricopa County Gilbert Unified School District #41 6.25% 7/1/15 (FSA) ................... 1,500,000 1,663,230 Maricopa County Unified School District #40 (Glendale) 6.30% 7/1/11 .............. 500,000 548,135 Santa Cruz Valley Unified School District #35 5.80% 7/1/09 (AMBAC) ................. 600,000 627,234 ---------- 4,470,974 ---------- Higher Education Revenue Bonds - 1.51% University of Arizona 6.25% 6/1/11 .................. 1,000,000 1,050,980 ---------- 1,050,980 ---------- Hospital Revenue Bonds - 10.35% Maricopa County Health Facilities (Catholic Health Care West) Series A 5.75% 7/1/11 (MBIA) ............................... 1,750,000 1,812,703 6.00% 7/1/21 (MBIA) ............................... 1,100,000 1,134,936 Maricopa Industrial Development Authority (Mayo Clinic Hospital) 5.25% 11/15/37 (MBIA) ............................. 1,000,000 989,660 Show Low Industrial Development Authority Hospital Revenue (Navapache Regional Medical Center) Series A 5.50% 12/1/17 (ACA) ............................... 2,600,000 2,545,660 University of Arizona Medical Center 6.25% 7/1/16 (MBIA) ............................... 700,000 726,068 ---------- 7,209,027 ---------- Housing Revenue Multifamily Bonds - 9.35% Maricopa County Industrial Development Authority Multifamily (Avalon Apartments Project) Series A 6.35% 4/1/30 (Asset Gty) .......................... 1,610,000 1,692,255 Maricopa County Industrial Development Authority Multifamily Family Housing Revenue (Pines at Camelback Apartments Project) Series A 5.45% 5/1/28 (Asset Gty) .......................... 1,250,000 1,251,888 Maricopa County Industrial Development Authority Multifamily Housing Revenue (Villas at Augusta) 6.50% 10/20/33 (GNMA) ............................. 150,000 162,687 Peoria Casa Del Rio Multifamily Housing 7.30% 2/20/28 (GNMA) ...................... 1,230,000 1,327,453 Phoenix Industrial Development Authority (Chris Ridge) 6.80% 11/1/25 (FHA) ................. 500,000 515,835 Yavapai County Industrial Development Authority Residential Care Facilities (Margaret T. Morris Center) Series A 5.40% 2/20/38 (GNMA) ..................... 1,575,000 1,564,180 ---------- 6,514,298 ---------- Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Housing Revenue Single Family Bonds - 16.19% Maricopa County Industrial Development Authority Single Family Housing Revenue 6.625% 7/1/21 (GNMA/FNMA) ......................................... $1,500,000 $ 1,601,640 Phoenix Individual Development Authority Single Family Mortgage 5.30% 4/1/20 (GNMA/FNMA/FHLMC) ................................... 2,485,000 2,476,152 Phoenix Industrial Development Authority Single Family Mortgage 5.35% 6/1/20 (GNMA/FNMA/FHLMC) ................................... 3,270,000 3,254,238 Pima County Industrial Development Authority (Single Family Mortgage Revenue) Series A 6.25% 11/1/30 (GNMA/FNMA/FHLMC) ................................... 1,105,000 1,138,824 Pima County Industrial Development Authority Single Family Mortgage Revenue 6.125% 11/1/33 (GNMA/FNMA/FHLMC) ................................... 1,745,000 1,835,374 Pima County Industrial Development Authority Single Family Revenue Housing Series A 5.20% 5/1/31 (GNMA/FNMA/FHLMC) ................................... 1,000,000 967,190 ----------- 11,273,418 ----------- Leases / Certificates of Participation - 3.59% Scottsdale Municipal Property Corporation Lease 6.25% 11/1/14 (FGIC) .......................... 1,300,000 1,348,490 Tuscon Certificates of Participation 5.60% 7/1/11 ........................................ 1,100,000 1,153,922 ----------- 2,502,412 ----------- Other Revenue Bonds - 8.00% Arizona Student Loan Acquisition Authority Revenue 5.90% 5/1/24 ................................ 1,500,000 1,554,900 Maricopa County Stadium District 5.50% 7/1/13 (MBIA) ................................. 2,650,000 2,750,806 Phoenix Civic Improvement Corporation Excise Tax Revenue 5.25% 7/1/24 ..................... 1,250,000 1,263,138 ----------- 5,568,844 ----------- Pollution Control Revenue Bonds - 1.27% Coconino County Pollution Control (Nevada Power) Series B 5.80% 11/1/32 ....................................... 1,000,000 885,920 ----------- 885,920 ----------- Power Authority Revenue Bonds - 2.42% Salt River Project Electric System Revenue Series D 6.25% 1/1/27 ............................... 1,635,000 1,684,164 ----------- 1,684,164 ----------- 16 Statements of Net Assets (continued) Principal Market Voyageur Arizona Municipal Income Fund, Inc. Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) *Pre-Refunded / Escrowed to Maturity Bonds - 17.68% Maricopa County Unified School District #11 (Peoria) 5.50% 7/1/10-05 ..................................... $2,750,000 $ 2,972,695 Mohave County Unified School District #1 (Lake Havasu) 5.90% 7/1/15-06 (FGIC) .............................. 1,500,000 1,665,090 Phoenix Street & Highway Junior Lien 6.25% 7/1/11-02 (FGIC) .............................. 1,300,000 1,369,745 Puerto Rico Commonwealth Infrastructure Financing Authority Special Series A 5.50% 10/1/40 (Escrowed to Maturity) .............................. 6,000,000 6,304,860 ----------- 12,312,390 ----------- Territorial Revenue Bonds - 3.67% Virgin Islands, Public Finance Authority Revenue Series A 6.125% 10/1/29 (ACA) ................................ 2,450,000 2,556,036 ----------- 2,556,036 ----------- Transportation Revenue Bonds - 11.79% Arizona State Transportation Board Highway 5.75% 7/1/18 ................................ 2,350,000 2,507,873 Phoenix Civic Improvement Airport Revenue Senior Lien Series A 5.00% 7/1/25 (FSA) ........................................ 1,000,000 980,500 Tucson Airport Authority Revenue 5.70% 6/1/13 (MBIA) ................................. 3,250,000 3,420,040 Tucson Street & Highway 5.50% 7/1/12 (MBIA) ................................. 1,250,000 1,302,713 ----------- 8,211,126 ----------- Water & Sewer Revenue Bonds - 5.91% Tucson Water Revenue Refunding Series A 5.75% 7/1/18 (AMBAC) ....................... 4,000,000 4,113,440 ----------- 4,113,440 ----------- Total Municipal Bonds (cost $65,196,441) .................................. 68,353,029 ----------- -------------------------------------------------------------------------------- Total Market Value of Securities - 98.15% (cost $65,196,441) .................................. $68,353,029 Receivables and Other Assets Net of Liabilities - 1.85% .......................... 1,284,071 ----------- Total Net Assets - 100.00% ............................ 69,637,100 Liquidation Value of Preferred Stock ..................................... (25,000,000) ----------- Net Assets Applicable to 2,982,200 Common Shares ($0.01 Par Value) Outstanding ......................................... $44,637,100 =========== Net Asset Value Per Common Share ($44,637,100 / 2,982,200 shares) .................... ($14.97) ------- ----------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-funded. Components of Net Assets at March 31, 2001: 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 ................... 706,870 Accumulated net realized loss on investments .......... (65,251) Net unrealized appreciation of investments ...................................... 3,156,588 ----------- Total net assets ...................................... $69,637,100 =========== Summary of Abbreviations: ACA - Insured by American Capital Access AMBAC - Insured by the AMBAC Indemnity Corporation Asset Gty - Insured by the Asset Guaranty Insurance Company FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FHLMC - Insured by the Federal Home Loan Mortgage Corporation FNMA - Insured by Fannie Mae FSA - Insured by Financial Security Assurance GNMA - Insured by the Ginnie Mae MBIA - Insured by the Municipal Bond Insurance Association See accompanying notes 17 Statements of Net Assets (continued) VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND ============================================== Principal Market March 31, 2001 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.41% Airport Revenue Bonds - 4.68% Dade County Aviation Series 96B 5.60% 10/1/26 (MBIA) ................................ $1,000,000 $1,037,090 Hillsborough County Aviation Authority (Tampa International Airport) Series B 5.60% 10/1/19 (FGIC) ................................ 1,600,000 1,643,792 ---------- 2,680,882 ---------- General Obligation Bonds - 3.79% Florida State Board of Education (Capital Outlay Public Education) 6.00% 6/1/21 (FGIC) ................................. 1,975,000 2,171,809 ---------- 2,171,809 ---------- Higher Education Revenue Bonds - 6.14% Capital Projects Finance Authority Florida Student Housing Revenue (University of Central Florida) Series F-1 5.00% 10/1/31 (MBIA) ................................ 690,000 664,718 Florida Agriculture & Mechanical University (Student Apartment Facility) 5.625% 7/1/21 (MBIA) ................................ 1,250,000 1,296,500 Volusia County Educational Facilities Authority (Stetson University Project) Series A 5.50% 6/1/17 (MBIA) ........................ 1,500,000 1,559,730 ---------- 3,520,948 ---------- Hospital Revenue Bonds - 17.10% Escambia County Health Facilities Authority (Florida Health Care Facilities) 5.95% 7/1/20 (AMBAC/VA) ............................. 3,075,000 3,382,069 Orange County Health Facilities Authority (Adventist Health Center) 5.75% 11/15/25 (AMBAC) .............................. 1,500,000 1,566,555 Orange County Health Facilities Authority (Orlando Regional Health) Series A 6.25% 10/1/18 (MBIA) ................................ 2,000,000 2,316,160 Venice Health Care (Bon Secours Health System) 5.60% 8/15/16 (MBIA) ........................ 2,405,000 2,531,864 ---------- 9,796,648 ---------- Housing Revenue Bonds - 11.58% Florida Housing Finance Agency (Homeowner Mortgage) Series 2 5.90% 7/1/29 (AMT/MBIA) ............................. 1,225,000 1,263,588 Florida Housing Finance Agency (Woodbridge Apartments) Series L 6.05% 12/1/16 (AMBAC) ............................... 1,120,000 1,177,747 6.25% 6/1/36 (AMT/AMBAC) ............................ 1,500,000 1,565,190 Florida State Housing Finance Agency (Leigh Meadows Apartments Section 8) Series N 6.30% 9/1/36 (AMT/AMBAC) ................... 2,510,000 2,628,974 ---------- 6,635,499 ---------- Principal Market Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Leases / Certificates of Participation - 10.74% Escambia County School Board Certificates of Participation Series 2 5.50% 2/1/22 (MBIA) ................................ $5,000,000 $5,138,500 St. Lucie County School Board Certificates of Participation 5.375% 7/1/19 (FSA) ............... 1,000,000 1,014,320 ---------- 6,152,820 ---------- Other Revenue Bonds - 17.06% Florida Ports Financing Commission State Transportation Trust Fund 5.375% 6/1/27 (AMT/MBIA) .................................. 2,000,000 2,013,500 Miami Beach Resort Tax 5.50% 10/1/16 (AMBAC) ............................................ 1,000,000 1,046,550 Orange County Public Service Tax 6.00% 10/1/24 (FGIC) ............................... 3,000,000 3,194,580 Reedy Creek Improvement District (Sports Complex) Series A 5.75% 6/1/13 (MBIA) ................................ 2,300,000 2,417,392 Tampa Utility Tax 6.125% 10/1/19 (AMBAC) ............................. 1,000,000 1,106,040 ---------- 9,778,062 ---------- Power Authority Revenue Bonds - 2.25% Florida State Municipal Power Agency (St. Lucie Project) 5.70% 10/1/16 (FGIC) ............................... 1,250,000 1,289,413 ---------- 1,289,413 ---------- *Pre-Refunded / Escrowed to Maturity Bonds - 16.84% Boca Raton Community Redevelopment Agency Tax Increment (Mizner Park Project) 5.875% 3/1/13-02 (FGIC) ................... 1,500,000 1,567,200 Dade County Professional Sports Franchise Facilities Series B 6.00% 10/1/22-02 (FGIC) ............................ 1,000,000 1,056,810 Dade County School Board Certificates of Participation Series B 5.60% 8/1/17-06 (AMBAC) ............................ 1,000,000 1,100,180 Hillsborough County Industrial Development Authority (Allegany Health System - John Knox Village) 5.75% 12/1/21 (MBIA) (Escrowed to Maturity) ............................. 1,000,000 1,019,320 Sunrise Utility System Series A 5.75% 10/1/26-06 (AMBAC) ........................... 2,500,000 2,775,475 Tampa Utility Tax 6.00% 10/1/15-01 (AMBAC) ........................... 1,000,000 1,007,200 Village Center Community Development District Recreational Revenue Series A 5.85% 11/1/16-06 (MBIA) ............................ 1,000,000 1,124,680 ---------- 9,650,865 ---------- 18 Statements of Net Assets (continued) Principal Market Voyageur Florida Insured Municipal Income Fund Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Water & Sewer Revenue Bonds - 8.23% Dade County Water & Sewer System 5.50% 10/1/25 (FGIC) ................................ $1,100,000 $ 1,127,456 Indian River County Water & Sewer System 5.50% 9/1/16 (FGIC) ................................. 1,000,000 1,046,080 Panama City Beach Water & Sewer System 5.50% 6/1/18 (AMBAC) ................................ 1,000,000 1,017,200 Sarasota County Utility System 5.50% 10/1/22 (FGIC) ................................ 1,500,000 1,523,100 ----------- 4,713,836 ----------- Total Municipal Bonds (cost $52,745,313) .................................. 56,390,782 ----------- Total Market Value of Securities - 98.41% (cost $52,745,313) .................................. $56,390,782 Receivables and Other Assets Net of Liabilities - 1.59% .......................... 908,726 ----------- Total Net Assets - 100.00% ............................ 57,299,508 Liquidation Value of Preferred Stock ..................................... (20,000,000) ----------- Net Assets Applicable to 2,422,200 Common Shares ($0.01 Par Value) Outstanding ......................................... $37,299,508 =========== Net Asset Value Per Common Share ($37,299,508 / 2,422,200 shares) .................... ($15.40) ------- ------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-funded. Components of Net Assets at March 31, 2001: 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 .................. 667,482 Accumulated net realized loss on investments ..................................... (374,832) Net unrealized appreciation of investments ..................................... 3,645,469 ----------- Total net assets ..................................... $57,299,508 =========== Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Subject to Alternative Minimum Tax FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association VA - Insured by the Veterans Administration See accompanying notes 19 Statements of Net Assets (continued) VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC. ----------------------------------------------------- Principal Market March 31, 2001 Amount Value -------------------------------------------------------------------------------- Municipal Bonds - 98.60% General Obligation Bonds - 21.92% Adams County School District #12 (Five Star) 5.40% 12/15/16 (FGIC) ................... $1,750,000 $ 1,818,565 Archuleta & Hinsdale Counties School Districts #50JT 5.50% 12/1/14 (MBIA) ................................ 1,000,000 1,052,890 5.55% 12/1/20 (MBIA) ................................ 4,000,000 4,154,440 Colorado Springs Revenue (Colorado College) 5.375% 6/1/32 (MBIA) ................................ 5,000,000 5,102,900 Douglas County School District #Re-1 (Douglas & Elbert Counties) 5.00% 12/15/21 (MBIA) ............................... 2,000,000 1,973,200 El Paso County School District #20 5.625% 12/15/16 (AMBAC) ............................. 3,000,000 3,127,380 5.625% 12/15/16 (MBIA) .............................. 1,000,000 1,042,460 G V R Metropolitan District 5.75% 12/1/19 (AMBAC) ............................... 1,000,000 1,063,370 Pueblo County 5.80% 6/1/11 (MBIA) .................... 1,405,000 1,504,825 Pueblo County (Library District) 5.80% 11/1/19 (AMBAC) ............................... 1,395,000 1,486,805 Stonegate Village Metropolitan District Refunding & Improvement Series A 5.50% 12/1/21 (FSA) ................................. 2,550,000 2,627,903 ---------- 24,954,738 ---------- Higher Education Revenue Bonds - 7.51% Adams State College (Board of Trustees) 5.75% 5/15/19 (MBIA) ................................ 2,000,000 2,067,820 Aurora Educational Development 6.00% 10/15/15 (Connie Lee) ......................... 1,500,000 1,574,370 Colorado Educational & Cultural Facilities Authority Revenue (University of Denver Project) 5.375% 3/1/23 (AMBAC) ............................... 500,000 513,125 5.50% 3/1/21 (AMBAC) ................................ 3,200,000 3,332,672 Colorado Post Secondary Education (Auraria Fund Project) 6.00% 9/1/15 (FSA) .................................. 1,000,000 1,054,760 --------- 8,542,747 --------- Hospital Revenue Bonds - 10.22% Colorado Health Facilities Authority (Boulder Community Hospital Project) Series B 5.875% 10/1/23 (MBIA) ...................... 1,925,000 1,999,074 Colorado Health Facilities Authority (North Colorado Medical Center) 5.95% 5/15/12 (MBIA) ................................ 2,000,000 2,099,300 6.00% 5/15/20 (MBIA) ................................ 1,000,000 1,038,490 Colorado Health Facilities Authority (Porter Place) Series A 6.00% 1/20/36 (GNMA) ........ 2,515,000 2,663,259 Logan County Health Care Facilities (Western Health Network) 5.90% 1/1/19 (MBIA) ................................. 2,000,000 2,059,960 Principal Market March 31, 2001 Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Hospital Revenue Bonds (continued) University of Colorado Hospital Authority (Hospital Revenue) Series A 5.20% 11/15/17 (AMBAC) .............................. $1,750,000 $ 1,771,858 ---------- 11,631,941 ---------- Housing Revenue Bonds - 9.66% Burlingame Multifamily Housing Income 6.00% 11/1/29 (MBIA) ................................ 2,290,000 2,384,692 Colorado Housing Finance Authority (Single Family Housing) Series AA 5.625% 11/1/23 (MBIA) ............................... 5,000,000 5,107,999 Mountain Glen Housing Multifamily Revenue 6.70% 7/20/20 (GNMA) ........................ 1,280,000 1,433,306 Snowmass Village Multifamily Housing Refunding (Essential Function Housing) 6.25% 12/15/16 (FSA) ................................ 2,000,000 2,067,080 ---------- 10,993,077 ---------- Leases / Certificates of Participation - 15.08% Arapahoe County Library District Certificates Participation 5.70% 12/15/10 (MBIA) ................. 2,000,000 2,147,480 Auraria Higher Education Center Certificates of Participation 5.50% 4/1/26 (AMBAC) ............... 2,485,000 2,569,639 Aurora Certificates of Participation 5.50% 12/1/30 (AMBAC) ............................... 2,500,000 2,570,599 Broomfield Public Improvements 5.75% 12/1/24 (AMBAC) ............................... 1,500,000 1,583,100 Broomfield Public Improvements Certificates of Participation 6.00% 12/1/29 (AMBAC)................................ 1,750,000 1,881,303 Denver City & County Certificates of Participation 5.50% 12/1/25 (AMBAC) ............................... 2,000,000 2,067,540 Eagle County Public Improvements 5.40% 12/1/18 (MBIA) ................................ 1,000,000 1,032,480 Lakewood Certificates of Participation 5.375% 12/1/22 (AMBAC) .............................. 2,000,000 2,040,660 Westminster Certificates of Participation 5.40% 1/15/23 (AMBAC) ............................... 1,250,000 1,272,213 ---------- 17,165,014 ---------- Other Revenue Bonds - 6.50% Denver Excise Tax Revenue (Colorado Convention Center) 5.00% 9/1/20 (FSA) .................................. 7,500,000 7,403,400 --------- 7,403,400 --------- Pollution Control Revenue Bonds - 1.14% Adams County Pollution Control Refunding (Public Service Company Project) Series A 5.875% 4/1/14 (MBIA) ....................... 1,250,000 1,293,150 --------- 1,293,150 --------- 20 Statements of Net Assets (continued) Principal Market Voyageur Colorado Insured Municipal Income Fund, Inc. Amount Value -------------------------------------------------------------------------------- Municipal Bonds (continued) Transportation Revenue Bonds - 20.33% Arapahoe County Capital Improvements Highway 6.05% 8/31/15 (MBIA) ........................ $ 4,700,000 $ 5,083,755 Denver City & County Airport Series E 5.25% 11/15/23 (MBIA) ...................... 13,000,000 13,048,360 E-470 Public Highway Authority 5.75% 9/1/29 (MBIA) ................................. 3,000,000 3,203,250 5.75% 9/1/35 (MBIA) ................................. 1,700,000 1,811,061 ---------- 23,146,426 ---------- Water & Sewer Revenue Bonds - 6.24% Colorado Water Resources & Power Development Authority (Small Water Resources) 5.80% 11/1/20 (FGIC) ..................... 2,000,000 2,152,300 Pueblo West Metropolitan District (Water & Wastewater Revenue) 5.25% 12/15/25 (MBIA) ............................... 2,495,000 2,514,611 Ute Utility Water Conservancy District Water Revenue 5.75% 6/15/20 (MBIA) ................................ 2,255,000 2,430,822 ----------- 7,097,733 ----------- Total Municipal Bonds (cost $107,538,476) ................................. 112,228,226 ----------- -------------------------------------------------------------------------------- Total Market Value of Securities - 98.60% (cost $107,538,476) ................................. $112,228,226 Receivables and Other Assets Net of Liabilities - 1.40% .......................... 1,589,253 ------------ Total Net Assets - 100.00% ........................... 113,817,479 Liquidation Value of Preferred Stock ................. (40,000,000) ----------- Net Assets Applicable to 4,837,100 Common Shares ($0.01 Par Value) Outstanding ......................................... $73,817,479 =========== Net Asset Value Per Common Share ($73,817,479 / 4,837,100 shares) .................... ($15.26) ------- Components of Net Assets at March 31, 2001: 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 .................. 1,323,724 Accumulated net realized gain on investments ...................................... 565,895 Net unrealized appreciation of investments ...................................... 4,689,750 ------------ Total net assets ..................................... $113,817,479 ============ Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by Financial Security Assurance GNMA - Insured by Ginnie Mae. MBIA - Insured by the Municipal Bond Insurance Association See accompanying notes 21 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, 2001 Fund, Inc. Fund II, Inc. Fund III, Inc. Fund, Inc. Fund Income Fund, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Investment Income: Interest .................................. $3,499,230 $9,483,617 $2,290,223 $3,853,818 $3,104,944 $6,083,668 -------------------------------------------------------------------------------- Expenses: Management fees ........................... 227,855 641,821 154,140 270,204 222,410 438,688 Transfer agent fees and expenses ............................. 21,525 24,027 12,600 12,788 20,074 12,504 Registration fees ......................... 2,196 50 125 150 - 330 Reports and statements to shareholders .......................... 17,594 27,412 17,030 23,048 19,200 45,977 Accounting and administration ........................... 84,884 85,113 66,613 84,532 87,844 79,172 Remarketing Agent fees .................... 50,485 151,456 37,761 62,579 50,212 98,486 Professional fees ......................... 26,289 31,673 23,334 24,336 50,428 39,462 Custodian fees ............................ 2,528 14,147 3,507 3,381 2,290 6,193 Directors' / Trustee's Fees ............... 9,100 11,665 5,350 8,300 8,498 3,700 Rating Agency fees ........................ 5,250 6,750 7,158 7,422 4,750 5,750 Taxes (other than taxes on income) ............................... 4,333 11,883 3,959 1,815 900 1,534 Other ..................................... 4,449 16,624 5,210 8,558 7,088 12,258 -------------------------------------------------------------------------------- 456,488 1,022,621 336,787 507,113 473,694 744,054 Less expenses paid indirectly ............. (1,478) (9,140) (2,348) (2,161) (1,870) (3,913) -------------------------------------------------------------------------------- Total expenses ............................ 455,010 1,013,481 334,439 504,952 471,824 740,141 -------------------------------------------------------------------------------- Net Investment Income ..................... 3,044,220 8,470,136 1,955,784 3,348,866 2,633,120 5,343,527 -------------------------------------------------------------------------------- Net Realized and Unrealized Loss on Investments: Net realized gain (loss) on investments ........................... 2,513 (176,192) (113,781) 76,138 138,481 1,014,580 Net change in unrealized appreciation of investments ........................... 1,853,302 6,304,816 1,751,579 2,788,269 2,449,642 5,630,688 -------------------------------------------------------------------------------- Net Realized and Unrealized Gain on Investments ...................... 1,855,815 6,128,624 1,637,798 2,864,407 2,588,123 6,645,268 -------------------------------------------------------------------------------- Net Increase in Net Assets Resulting from Operations ............................... $4,900,035 $14,598,760 $3,593,582 $6,213,273 $5,221,243 $11,988,795 ================================================================================
See accompanying notes 22 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 3/31/01 3/31/00 3/31/01 3/31/00 3/31/01 3/31/00 Increase (Decrease) in Net Assets from Operations: Net investment income ................................. $ 3,044,220 $ 3,015,406 $ 8,470,136 $ 8,528,029 $ 1,955,784 $ 1,974,126 Net realized gain (loss) on investments ............... 2,513 (334,960) (176,192) (464,436) (113,781) (96,382) Net change in unrealized appreciation/ depreciation of investments .......................... 1,853,302 (2,882,079) 6,304,816 (9,792,251) 1,751,579 (2,521,519) -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations ...................................... 4,900,035 (201,633) 14,598,760 (1,728,658) 3,593,582 (643,775) -------------------------------------------------------------------------- Dividends and Distributions to: Common shareholders from net investment income .................................... (2,179,548) (2,354,690) (5,928,674) (5,928,674) (1,391,679) (1,391,679) Preferred shareholders from net investment income .................................... (823,120) (705,125) (2,469,090) (2,224,962) (617,796) (554,400) Common shareholders from net realized gain on investments .................................. - (132,070) - - - - Preferred shareholders from net realized gain on investments .................................. - (37,139) - - - - -------------------------------------------------------------------------- (3,002,668) (3,229,024) (8,397,764) (8,153,636) (2,009,475) (1,946,079) -------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets ................. 1,897,367 (3,430,657) 6,200,996 (9,882,294) 1,584,107 (2,589,854) Net Assets: Beginning of period ................................... 56,488,295 59,918,952 158,573,717 168,456,011 38,074,861 40,664,715 -------------------------------------------------------------------------- End of period $58,385,662 $56,488,295 $164,774,713 $158,573,717 $39,658,968 $38,074,861 ==========================================================================
See accompanying notes 23 Statements of Changes in Net Assets (continued)
Voyageur Arizona Voyageur Florida Voyageur Colorado Municipal Income Insured Municipal Insured Municipal Fund, Inc. Income Fund Income Fund Inc. ---------------------------------------------------------------------------------------------------------------------------------- Year Year Year Year Year Year Ended Ended Ended Ended Ended Ended 3/31/01 3/31/00 3/31/01 3/31/00 3/31/01 3/31/00 Increase (Decrease) in Net Assets from Operations: Net investment income ................................$ 3,348,866 $ 3,324,093 $ 2,633,120 $ 2,645,843 $ 5,343,527 $ 5,316,770 Net realized gain (loss) on investments .............. 76,138 (71,401) 138,481 (117,369) 1,014,580 (57,053) Net change in unrealized appreciation/ depreciation of investments ......................... 2,788,269 (3,885,205) 2,449,642 (3,202,108) 5,630,688 (6,772,294) ---------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations ..................................... 6,213,273 (632,513) 5,221,243 (673,634) 11,988,795 (1,512,577) ---------------------------------------------------------------------------- Dividends and Distributions to: Common shareholders from net investment income ................................... (2,303,750) (2,303,750) (1,834,817) (1,834,817) (3,609,686) (3,555,269) Preferred shareholders from net investment income ................................... (1,030,535) (891,850) (817,026) (717,050) (1,654,933) (1,437,124) ---------------------------------------------------------------------------- (3,334,285) (3,195,600) (2,651,843) (2,551,867) (5,264,619) (4,992,393) ---------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets ................ 2,878,988 (3,828,113) 2,569,400 (3,225,501) 6,724,176 (6,504,970) Net Assets: Beginning of period .................................. 66,758,112 70,586,225 54,730,108 57,955,609 107,093,303 113,598,273 ---------------------------------------------------------------------------- End of period $69,637,100 $66,758,112 $57,299,508 $54,730,108 $113,817,479 $107,093,303 ============================================================================
See accompanying notes 24 Financial Highlights
Selected data for each share of the Fund outstanding throughout each period were as follows: Voyageur Minnesota Municipal Income Fund, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 Net asset value, beginning of period ................................... $14.060 $15.380 $15.380 $14.470 $14.430 Income (loss) from investment operations: Net investment income ................................................. 1.155 1.180 1.188 1.180 1.060 Net realized and unrealized gain (loss) on investments ................ 0.732 (1.256) 0.004 0.970 0.180 ----------------------------------------------------------- Total from investment operations ...................................... 1.887 (0.076) 1.192 2.150 1.240 ----------------------------------------------------------- Less dividends and distributions to: Common shareholders from net investment income ........................ (0.840) (0.907) (0.930) (0.930) (0.930) Preferred shareholders from net investment income ..................... (0.317) (0.272) (0.262) (0.280) (0.270) 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 (1.157) (1.244) (1.192) (1.240) (1.200) ----------------------------------------------------------- Net asset value, end of period ......................................... $14.790 $14.060 $15.380 $15.380 $14.470 =========================================================== Market value, end of period ............................................ $14.300 $13.563 $16.500 $15.690 $14.380 =========================================================== Total investment return based on:(1) Market value .......................................................... 12.09% (12.39%) 11.29% 16.04% 2.01% Net asset value ....................................................... 11.83% (2.56%) 5.88% 13.02% 6.90% Ratios and supplemental data: Net assets applicable to capital shares, end of period (000 omitted) $58,386 $56,488 $59,919 $59,915 $57,544 Ratio of expenses to average net assets(3) ............................ 0.80% 0.89% 0.81% 0.77% 0.81% Ratio of expenses to average net assets applicable to common shares 1.23% 1.36% 1.21% 1.17% 1.24% Ratio of net investment income to average net assets(3) ............... 5.34% 5.25% 5.13% 5.20% 4.78% Ratio of net investment income to average net assets applicable to common shares(4) ....................................... 6.00% 6.17% 5.99% 6.01% 5.45% Portfolio turnover .................................................... 6% 12% 15% 0% 5% 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 period ........................................................ $145,964 $141,221 $149,797 $149,788 $143,860 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 period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 25 Financial Highlights (continued)
Selected data for each share of the Fund outstanding throughout each period were as follows: Voyageur Minnesota Municipal Income Fund II, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 Net asset value, beginning of period .................................... $13.590 $14.950 $14.800 $13.590 $13.480 Income (loss) from investment operations: Net investment income .................................................. 1.168 1.176 1.154 1.130 1.130 Net realized and unrealized gain (loss) on investments ................. 0.850 (1.411) 0.099 1.200 0.080 ---------------------------------------------------------- Total from investment operations ....................................... 2.018 (0.235) 1.253 2.330 1.210 ---------------------------------------------------------- Less dividends to: Common shareholders from net investment income ......................... (0.818) (0.818) (0.818) (0.820) (0.810) Preferred shareholders from net investment income ...................... (0.340) (0.307) (0.285) (0.300) (0.290) ---------------------------------------------------------- Total dividends ........................................................ (1.158) (1.125) (1.103) (1.120) (1.100) ---------------------------------------------------------- Net asset value, end of period .......................................... $14.450 $13.590 $14.950 $14.800 $13.590 ========================================================== Market value, end of period ............................................. $14.080 $12.438 $15.060 $13.880 $12.630 ========================================================== Total investment return based on:(1) Market value ........................................................... 20.37% (12.28%) 14.73% 16.56% 1.47% Net asset value ........................................................ 13.06% (3.43%) 6.76% 15.51% 6.97% Ratios and supplemental data: Net assets applicable to capital shares, end of period (000 omitted) ........................................... $164,775 $158,574 $168,456 $167,333 $158,572 Ratio of expenses to average net assets(3) ............................. 0.63% 0.62% 0.64% 0.76% 0.74% Ratio of expenses to average net assets applicable to common shares ...................................................... 1.01% 0.99% 1.00% 1.19% 1.19% Ratio of net investment income to average net assets(3) ................ 5.27% 5.30% 4.96% 4.98% 5.15% Ratio of net investment income to average net assets applicable to common shares(4) ........................................ 5.96% 6.24% 5.80% 5.73% 6.15% Portfolio turnover 3% 4% 15% 4% 20% 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 period ......................................................... $137,312 $132,145 $140,380 $139,444 $132,143 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 period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 26 Financial Highlights (continued)
Selected data for each share of the Fund outstanding throughout each period were as follows: Voyageur Minnesota Municipal Income Fund III, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 Net asset value, beginning of period .................................... $12.560 $13.970 $13.760 $12.710 $12.540 Income (loss) from investment operations: Net investment income .................................................. 1.065 1.075 1.025 1.050 1.080 Net realized and unrealized gain (loss) on investments ................. 0.889 (1.425) 0.222 1.060 0.150 ----------------------------------------------------------- Total from investment operations ....................................... 1.954 (0.350) 1.247 2.110 1.230 ----------------------------------------------------------- Less dividends to: Common shareholders from net investment income ......................... (0.758) (0.758) (0.758) (0.760) (0.750) Preferred shareholders from net investment income ...................... (0.336) (0.302) (0.279) (0.300) (0.310) ----------------------------------------------------------- Total dividends ........................................................ (1.094) (1.060) (1.037) (1.060) (1.060) ----------------------------------------------------------- Net asset value, end of period .......................................... $13.420 $12.560 $13.970 $13.760 $12.710 =========================================================== Market value, end of period ............................................. $13.000 $11.750 $14.125 $13.380 $12.250 =========================================================== Total investment return based on:(1) Market value ........................................................... 17.57% (11.70%) 11.59% 15.80% 8.62% Net asset value ........................................................ 13.54% (4.57%) 7.28% 14.82% 7.50% Ratios and supplemental data: Net assets applicable to capital shares, end of period (000 omitted) ........................................... $39,659 $38,075 $40,665 $40,283 $38,348 Ratio of expenses to average net assets(3) ............................. 0.87% 0.81% 0.77% 0.83% 0.81% Ratio of expenses to average net assets applicable to common shares ...................................................... 1.42% 1.33% 1.22% 1.34% 1.33% Ratio of net investment income to average net assets(3) ................ 5.07% 5.10% 4.64% 4.88% 5.17% Ratio of net investment income to average net assets applicable to common shares(4) ........................................ 5.68% 5.99% 5.35% 5.61% 6.05% Portfolio turnover ..................................................... 5% 16% 15% 9% 39% 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 period ......................................................... $132,197 $126,916 $135,549 $134,278 $127,826 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 period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 27 Financial Highlights (continued)
Selected data for each share of the Fund outstanding throughout each period were as follows: Voyageur Arizona Municipal Income Fund, Inc. ----------------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 Net asset value, beginning of period .................................... $14.000 $15.290 $15.030 $13.780 $13.740 Income (loss) from investment operations: Net investment income .................................................. 1.124 1.115 1.108 1.090 1.080 Net realized and unrealized gain (loss) on investments ................. 0.965 (1.333) 0.202 1.230 0.010 -------------------------------------------------------- Total from investment operations ....................................... 2.089 (0.218) 1.310 2.320 1.090 -------------------------------------------------------- Less dividends to: Common shareholders from net investment income ......................... (0.773) (0.773) (0.773) (0.770) (0.760) Preferred shareholders from net investment income ...................... (0.346) (0.299) (0.277) (0.300) (0.290) -------------------------------------------------------- Total dividends ........................................................ (1.119) (1.072) (1.050) (1.070) (1.050) -------------------------------------------------------- Net asset value, end of period .......................................... $14.970 $14.000 $15.290 $15.030 $13.780 ======================================================== Market value, end of period ............................................. $14.250 $12.625 $15.125 $14.630 $13.000 ======================================================== Total investment return based on:(1) Market value ........................................................... 19.28% (11.65%) 8.84% 18.79% 8.20% Net asset value ........................................................ 13.00% (3.10%) 7.07% 15.17% 5.94% Ratios and supplemental data: Net assets applicable to capital shares, end of period (000 omitted) ........................................... $69,637 $66,758 $70,586 $69,813 $66,102 Ratio of expenses to average net assets(3) ............................. 0.75% 0.76% 0.74% 0.80% 0.78% Ratio of expenses to average net assets applicable to common shares ...................................................... 1.18% 1.21% 1.15% 1.26% 1.25% Ratio of net investment income to average net assets(3) ................ 4.95% 4.93% 4.69% 4.71% 4.85% Ratio of net investment income to average net assets applicable to common shares(4) ........................................ 5.44% 5.74% 5.46% 5.34% 5.71% Portfolio turnover ...................................................... 24% 41% 46% 22% 31% 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 period ......................................................... $139,274 $133,516 $141,172 $139,627 $132,205 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 period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 28 Financial Highlights (continued)
Selected data for each share of the Fund outstanding throughout each period were as follows: Voyageur Florida Insured Municipal Income Fund ----------------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 Net asset value, beginning of period .................................... $14.340 $15.670 $15.300 $13.670 $13.710 Income (loss) from investment operations: Net investment income .................................................. 1.087 1.092 1.113 1.090 1.080 Net realized and unrealized gain (loss) on investments ................. 1.068 (1.368) 0.292 1.600 (0.080) ----------------------------------------------------------- Total from investment operations ....................................... 2.155 (0.276) 1.405 2.690 1.000 ----------------------------------------------------------- Less dividends to: Common shareholders from net investment income ......................... (0.758) (0.758) (0.758) (0.760) (0.750) Preferred shareholders from net investment income ...................... (0.337) (0.296) (0.277) (0.300) (0.290) ----------------------------------------------------------- Total dividends ........................................................ (1.095) (1.054) (1.035) (1.060) (1.040) ----------------------------------------------------------- Net asset value, end of period .......................................... $15.400 $14.340 $15.670 $15.300 $13.670 =========================================================== Market value, end of period ............................................. $13.180 $11.750 $14.750 $14.310 $12.500 =========================================================== Total investment return based on:(1) Market value ........................................................... 19.06% (15.57%) 8.47% 20.94% 3.94% Net asset value ........................................................ 13.99% (3.01%) 7.80% 18.22% 5.23% Ratios and supplemental data: Net assets applicable to capital shares, end of period (000 omitted) ........................................... $57,300 $54,730 $57,956 $57,071 $53,110 Ratio of expenses to average net assets(3) ............................. 0.85% 0.83% 0.75% 0.80% 0.78% Ratio of expenses to average net assets applicable to common shares ...................................................... 1.32% 1.31% 1.14% 1.25% 1.25% Ratio of net investment income to average net assets(3) ................ 4.73% 4.79% 4.67% 4.73% 4.91% Ratio of net investment income to average net assets applicable to common shares(4) ........................................ 5.10% 5.47% 5.37% 5.33% 5.74% Portfolio turnover ..................................................... 8% 6% 0% 5% 68% 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 period ......................................................... $143,249 $136,825 $144,889 $142,677 $132,775 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 period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997 Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 29 Financial Highlights (continued)
Selected data for each share of the Fund outstanding throughout each period were as follows: Voyageur Colorado Insured Municipal Income Fund, Inc. ---------------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 Net asset value, beginning of period .................................... $13.870 $15.220 $14.920 $13.580 $13.610 Income (loss) from investment operations: Net investment income .................................................. 1.105 1.099 1.080 1.070 1.050 Net realized and unrealized gain (loss) on investments ................. 1.373 (1.417) 0.264 1.300 (0.060) ---------------------------------------------------------- Total from investment operations ....................................... 2.478 (0.318) 1.344 2.370 0.990 ---------------------------------------------------------- Less dividends to: Common shareholders from net investment income ......................... (0.746) (0.735) (0.735) (0.740) (0.730) Preferred shareholders from net investment income ...................... (0.342) (0.297) (0.309) (0.290) (0.290) ---------------------------------------------------------- Total dividends ........................................................ (1.088) (1.032) (1.044) (1.030) (1.020) ---------------------------------------------------------- Net asset value, end of period .......................................... $15.260 $13.870 $15.220 $14.920 $13.580 ========================================================== Market value, end of period ............................................. $14.560 $12.563 $14.938 $14.000 $12.500 ========================================================== Total investment return based on:(1) Market value ........................................................... 22.42% (11.05%) 12.13% 18.09% 4.77% Net asset value ........................................................ 16.21% (3.62%) 7.21% 15.84% 5.19% Ratios and supplemental data: Net assets applicable to capital shares, end of period (000 omitted) ........................................... $113,817 $107,093 $113,598 $112,187 $105,687 Ratio of expenses to average net assets(3) ............................. 0.68% 0.68% 0.69% 0.75% 0.77% Ratio of expenses to average net assets applicable to common shares ...................................................... 1.06% 1.08% 1.06% 1.18% 1.23% Ratio of net investment income to average net assets(3) ................ 4.87% 4.93% 4.61% 4.72% 4.76% Ratio of net investment income to average net assets applicable to common shares(4) ........................................ 5.31% 5.72% 5.08% 5.38% 5.51% Portfolio turnover ..................................................... 56% 37% 18% 39% 88% 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 period .......................................................... $142,272 $133,867 $141,998 $140,234 $132,109 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 period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 30 Notes to Financial Statements March 31, 2001 -------------------------------------------------------------------------------- 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"); and Voyageur Colorado Insured Municipal Income Fund, Inc. ("Colorado Insured Municipal Fund") (each referred to as a "Fund" and collectively as the "Funds") are organized as Maryland corporations. The Voyageur Florida Insured Municipal Income Fund ("Florida Insured Municipal Fund") is organized as a Massachusetts Business Trust. The Minnesota Municipal Fund II, Florida Insured Municipal Fund and Arizona Municipal Fund are diversified closed-end management investment companies and Minnesota Municipal Fund, Minnesota Municipal Fund III and Colorado Insured Municipal Fund are non-diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. The Funds' s hares 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. Short-term debt securities 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 under the direction of the Funds' Board of Directors/Trustees. Federal Income Taxes - Each Fund intends to continue to qualify for federal income tax purposes 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 within the Delaware Investments Family of Funds are allocated amongst 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 accreted to interest income over the lives of the respective securities. Each Fund declares and pays dividends from net investment income monthly and distributions from net realized gain on investments, if any, annually. In November 2000, the American Institute of Certified Public Accountants (AICPA) issued a revised version of the AICPA Audit and Accounting Guide for Investment Companies (the "Guide"). The Guide is effective for annual financial statements issued for fiscal years beginning after December 15, 2000 and will require investment companies to amortize all premiums and discounts on fixed income securities. The Funds do not amortize market discounts on fixed income securities. Upon adoption, each Fund will be required to record a cumulative effect adjustment to reflect the amortization of such discounts. The adjustment will effectively be a reclassification between net investment income and net unrealized appreciation (depreciation) of securities and therefore will not impact total net assets or the net asset value per share of each Fund. Additionally, the above adjustment will have no impact on each Fund's distributions which are determined in accordance with federal income tax regulations. Certain expenses of the Funds are paid through commission arrangements with brokers. These transactions are done subject to best execution. In addition, the Funds may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expenses paid under the above arrangements are included in their respective expense captions on the Statement of Operations with the corresponding expense offset shown as "expenses paid indirectly". The amounts of these expenses for the year ended March 31, 2001 were as follows: Minnesota Minnesota Minnesota Municipal Municipal Municipal Fund Fund II Fund III --------- --------- --------- Commission Expenses ........ $1,312 $3,694 $887 Earnings Credit ............ 166 5,446 1,461 Arizona Florida Colorado Municipal Insured Insured Fund Municipal Fund Municipal Fund --------- -------------- -------------- Commission Expenses ........ $1,555 $1,280 $2,520 Earnings Credit ............ 606 590 1,393 31 Notes to Financial Statements (continued) March 31, 2001 -------------------------------------------------------------------------------- 2. Investment Management, Administration Agreements and Other Transactions with Affiliates In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee of 0.40% of the average daily net assets of each Fund, including assets attributable to any preferred stock that may be outstanding. The Funds have engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC, to provide accounting and administration services. DSC receives a fee based on average net assets subject to certain minimums. At March 31, 2001, the Funds had payables to affiliates as follows:
Minnesota Minnesota Minnesota Arizona Florida Colorado Municipal Municipal Municipal Municipal Insured Insured Fund Fund II Fund III Fund Municipal Fund Municipal Fund --------- --------- --------- --------- -------------- -------------- Investment management fees payable to DMC ............ $19,468 $54,986 $13,232 $23,220 $19,106 $37,989 Dividend disbursing, accounting fee and other expenses payable to DSC ................. 10,463 11,924 6,381 8,439 9,523 42,973 Other expenses payable to DMC and affiliates ............. 24,839 32,386 16,403 20,597 17,796 23,252
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 For the year ended March 31, 2001, the Funds made purchases and sales of investment securities other than U.S. government securities and short-term 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 ...................... $3,328,953 $4,931,633 $2,016,616 $16,115,457 $4,413,522 $60,690,041 Sales .......................... 3,426,916 6,112,508 3,320,711 16,502,425 4,373,902 60,765,708
At March 31, 2001, the cost of investments and unrealized appreciation (depreciation) of securities for federal income tax purposes for each Fund were as follows:
Aggregate Aggregate Cost of Unrealized Unrealized Net Unrealized Investments Appreciation Depreciation Appreciation ----------- ------------ ------------ -------------- Minnesota Municipal Fund ............. $54,398,197 $3,329,680 $(20,074) $3,309,406 Minnesota Municipal Fund II .......... 155,402,610 7,205,129 (750,921) 6,454,208 Minnesota Municipal Fund III ......... 36,730,298 2,429,029 (326,799) 2,102,230 Arizona Municipal Fund ............... 65,196,441 3,344,676 (188,088) 3,156,588 Florida Insured Municipal Fund ....... 52,745,313 3,645,469 - 3,645,469 Colorado Insured Municipal Fund ...... 107,538,476 4,702,270 (12,520) 4,689,750
32 Notes to Financial Statements (continued) March 31, 2001 -------------------------------------------------------------------------------- 3. Investments (continued) For federal income tax purposes, as of March 31, 2001, the Funds had capital loss carryforwards expiring in the following years:
2003 2004 2005 2006 2008 2009 Total ---- ---- ---- ---- ---- ---- ----- Minnesota Municipal Fund ............. $ - $ - $ - $ - $265,111 $ 63,920 $ 329,031 Minnesota Municipal Fund II .......... 952,440 1,143,840 89,665 132,129 437,162 175,804 2,931,040 Minnesota Municipal Fund III ......... 866,889 1,279,495 455,666 6,539 56,856 153,308 2,818,753 Arizona Municipal Fund ............... - - - - - 65,251 65,251 Florida Insured Municipal Fund ....... 92,804 183,099 - - 98,928 - 374,831
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, 2001 and March 31, 2000, the Funds did not have any transactions in common shares. The Funds each have one million shares of $0.01 par value preferred shares authorized, except for Florida Insured Municipal Fund which has an unlimited amount of $0.01 par value preferred shares authorized. Under resolutions adopted by the Board of Directors/Trustees, Minnesota Municipal Fund is allowed to issue up to 400 preferred shares, of which the entire amount was issued on August 6, 1992. On May 14, 1993, Minnesota Municipal Fund II, Arizona Municipal Fund and Florida Insured Municipal Fund issued 1,200, 500 and 400 preferred shares, respectively. On December 10, 1993, Minnesota Municipal Fund III issued 300 preferred shares and on September 23, 1993, Colorado Insured Municipal Fund issued 800 preferred shares. The preferred shares of each Fund have a liquidation preference of $50,000 per share plus an amount equal to accumulated but unpaid dividends. Dividends for the outstanding preferred shares of each Fund are cumulative at a rate established at the initial public offering and are typically reset every 28 days based on the results of an auction. Dividend rates (adjusted for any capital gain distributions) ranged from 3.40% to 4.85% on Minnesota Municipal Fund, from 3.55% to 5.15% on Minnesota Municipal Fund II, from 3.45% to 4.75% on Minnesota Municipal Fund III, from 3.45% to 4.85 % on Arizona Municipal Fund, from 3.00% to 4.85% on Florida Insured Municipal Fund and from 3.21% to 5.25% on Colorado Insured Municipal Fund during the year ended March 31, 2001. 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/Trustees. 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. Credit and Market Risks The Funds concentrate their investments in securities issued by each specific state's municipalities. The value of these investments may be adversely affected by new legislation within the state, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that the market may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statement of Net Assets. 33 Notes to Financial Statements (continued) March 31, 2001 -------------------------------------------------------------------------------- 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 in early 2002. Please consult your tax advisor for proper treatment of the information. For the fiscal year ended March 31, 2001, 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 - - 100% 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, 2001, 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 four 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 year ended 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 included confirmation of securities owned as of March 31, 2001, 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, 2001, 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 four years in the period then ended, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP Philadelphia, Pennsylvania May 1, 2001 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 2, 2000. 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 ................................ 2,331,139 31,794 - - - - David K. Downes ............................... 2,330,939 31,994 - - - - Walter P. Babich .............................. 2,328,586 34,347 - - - - John H. Durham ................................ 2,331,139 31,794 - - - - Anthony D. Knerr .............................. 2,331,139 31,794 - - - - Ann R. Leven .................................. 2,331,139 31,794 - - - - Thomas F. Madison ............................. N/A N/A N/A 300 - - Charles E. Peck ............................... 2,329,688 33,245 - - - - Janet L. Yeomans .............................. N/A N/A N/A 300 - - Voyageur Minnesota Municipal Income Fund II, Inc: Wayne A. Stork ................................ 6,703,478 64,631 - - - - David K. Downes ............................... 6,703,278 64,831 - - - - Walter P. Babich .............................. 6,675,231 92,878 - - - - John H. Durham ................................ 6,700,985 67,124 - - - - Anthony D. Knerr .............................. 6,704,078 64,031 - - - - Ann R. Leven .................................. 6,704,078 64,031 - - - - Thomas F. Madison ............................. N/A N/A N/A 1,188 - - Charles E. Peck ............................... 6,671,622 96,487 - - - - Janet L. Yeomans .............................. N/A N/A N/A 1,188 - - Voyageur Minnesota Municipal Income Fund III, Inc: Wayne A. Stork ................................ 1,700,506 36,041 - - - - David K. Downes ............................... 1,700,506 36,041 - - - - Walter P. Babich .............................. 1,696,648 39,899 - - - - John H. Durham ................................ 1,700,506 36,041 - - - - Anthony D. Knerr .............................. 1,700,506 36,041 - - - - Ann R. Leven .................................. 1,700,506 36,041 - - - - Thomas F. Madison ............................. N/A N/A N/A 300 - - Charles E. Peck ............................... 1,696,648 39,899 - - - - Janet L. Yeomans .............................. N/A N/A N/A 300 - - Voyageur Arizona Municipal Income Fund, Inc: Wayne A. Stork ................................ 2,907,602 31,873 - - - - David K. Downes ............................... 2,907,002 32,473 - - - - Walter P. Babich .............................. 2,900,110 39,365 - - - - John H. Durham ................................ 2,907,602 31,873 - - - - Anthony D. Knerr .............................. 2,907,602 31,873 - - - - Ann R. Leven .................................. 2,907,602 31,873 - - - - Thomas F. Madison ............................. N/A N/A N/A 500 - - Charles E. Peck ............................... 2,900,110 39,365 - - - - Janet L. Yeomans .............................. N/A N/A N/A 500 - -
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 ................................... 2,283,174 13,552 - - - - David K. Downes .................................. 2,234,914 61,812 - - - - Walter P. Babich ................................. 2,284,074 12,652 - - - - John H. Durham ................................... 2,285,074 11,652 - - - - Anthony D. Knerr ................................. 2,285,074 11,652 - - - - Ann R. Leven ..................................... 2,285,074 11,652 - - - - Thomas F. Madison ................................ N/A N/A N/A 400 - - Charles E. Peck .................................. 2,284,004 12,722 - - - - Janet L. Yeomans ................................. N/A N/A N/A 400 - - Voyageur Colorado Insured Municipal Income Fund, Inc: Wayne A. Stork ................................... 4,568,884 56,877 - - - - David K. Downes .................................. 4,565,434 60,327 - - - - Walter P. Babich ................................. 4,572,695 53,066 - - - - John H. Durham ................................... 4,582,384 43,377 - - - - Anthony D. Knerr ................................. 4,580,934 44,827 - - - - Ann R. Leven ..................................... 4,580,934 44,827 - - - - Thomas F. Madison ................................ N/A N/A N/A 482 317 - Charles E. Peck .................................. 4,570,240 55,521 - - - - Janet L. Yeomans ................................. N/A N/A N/A 482 317 -
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. .................. 2,326,453 4,617 31,862 Voyageur Minnesota Municipal Income Fund II, Inc. ............... 6,701,569 17,617 48,923 Voyageur Minnesota Municipal Income Fund III, Inc. .............. 1,701,253 6,333 28,961 Voyageur Arizona Municipal Income Fund, Inc. .................... 2,914,662 5,061 19,751 Voyageur Florida Insured Municipal Income Fund .................. 2,282,216 9,177 5,332 Voyageur Colorado Insured Municipal Income Fund, Inc. ........... 4,574,280 6,083 45,398
37 Delaware Investments(SM) -------------------------------------- A member of Lincoln Financial Group(R) Registrar and Stock Transfer Agent Mellon Investor Services, L.L.C. Overpeck Centre 85 Challenger Road Ridgefield Park, NJ 07660 1.800.851.9677 For Securities Dealers 1.800.362.7500 For Financial Institutions Representatives Only 1.800.659.2265 www.delawareinvestments.com This 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 TRUSTEES Thomas F. Madison Investment Manager President and Chief Executive Officer Delaware Management Company Charles E. Haldeman, Jr. MLM Partners, Inc. Philadelphia, PA Chairman Minneapolis, MN Delaware Investments Family of Funds International Affiliate Philadelphia, PA Janet L. Yeomans Delaware International Advisers Ltd. Vice President and Treasurer London, England Walter P. Babich 3M Corporation Board Chairman St. Paul, MN Principal Office of the Fund Citadel Constructors, Inc. 2005 Market Street King of Prussia, PA AFFILIATED OFFICERS Philadelphia, PA 19103-7057 David K. Downes William E. Dodge Independent Auditors President and Chief Executive Officer Executive Vice President and Ernst & Young LLP Delaware Investments Family of Funds Chief Investment Officer, Equity 2001 Market Street Philadelphia, PA Delaware Investments Family of Funds Philadelphia, PA Philadelphia, PA John H. Durham Number of Recordholders as of Private Investor Jude T. Driscoll March 31, 2001 Horsham, PA Executive Vice President and Head of Fixed Income Minnesota Municipal Income Fund I 413 John A. Fry Delaware Investments Family of Funds Minnesota Municipal Income Fund II 680 Executive Vice President Philadelphia, PA Minnesota Municipal Income Fund III 165 University of Pennsylvania Arizona Municipal Income Fund 127 Philadelphia, PA Richard J. Flannery Florida Insured Municipal Income Fund 222 President and Chief Executive Officer Colorado Insured Municipal Income Fund 220 Anthony D. Knerr Delaware Distributors, L.P. Consultant, Anthony Knerr & Associates Philadelphia, PA New York, NY Thomas F. Madison and Janet L. Yeomans Ann R. Leven were elected by the preferred Former Treasurer, National Gallery of Art Shareholders of the Voyageur Closed-End Washington, DC Municipal Bond Funds.
(4588) Printed in the USA VOY-CEAR [3/01] PPL 5/01 J7088