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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)
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<TABLE>
<CAPTION>
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
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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%
----------------------------------------------------------------------------------------------------------
</TABLE>
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
<PAGE>
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
<PAGE>
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
===========================================
<TABLE>
<CAPTION>
Bond Quality and Portfolio Highlights
March 31, 2001 Fund I Fund II Fund III
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
----------------------------------------------------------------------------------------------------
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
-----------
<PAGE>
--------------------------------------------------------------------------------
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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 ----------
<PAGE>
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.
<PAGE>
--------------------------------------------------------------------------------
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
<PAGE>
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
----------
<PAGE>
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
<PAGE>
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
-----------
<PAGE>
--------------------------------------------------------------------------------
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
<PAGE>
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
----------
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
-----------
<PAGE>
--------------------------------------------------------------------------------
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
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
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:
<S> <C> <C> <C> <C> <C> <C>
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
================================================================================
</TABLE>
See accompanying notes
22
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C>
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 $38,074,861
==========================================================================
</TABLE>
See accompanying notes
23
<PAGE>
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Voyageur Arizona Voyageur Florida Voyageur Colorado
Municipal Income Insured Municipal Insured Municipal
Fund, Inc. Income Fund Income Fund Inc.
----------------------------------------------------------------------------------------------------------------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
3/31/01 3/31/00 3/31/01 3/31/00 3/31/01 3/31/00
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations:
Net investment income ................................$ 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
============================================================================
</TABLE>
See accompanying notes
24
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
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
</TABLE>
------------
(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
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
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
</TABLE>
-----------
(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
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
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
</TABLE>
-----------
(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
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
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
</TABLE>
---------------
(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
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
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
</TABLE>
---------------
(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
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
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
</TABLE>
-------------
(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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
Minnesota Minnesota Minnesota Arizona Florida Colorado
Municipal Municipal Municipal Municipal Insured Insured
Fund Fund II Fund III Fund Municipal Fund Municipal Fund
--------- --------- --------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
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:
<TABLE>
<CAPTION>
Minnesota Minnesota Minnesota Arizona Florida Colorado
Municipal Municipal Municipal Municipal Insured Insured
Fund Fund II Fund III Fund Municipal Fund Municipal Fund
--------- --------- --------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
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:
<TABLE>
<CAPTION>
Aggregate Aggregate
Cost of Unrealized Unrealized Net Unrealized
Investments Appreciation Depreciation Appreciation
----------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
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
</TABLE>
32
<PAGE>
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:
<TABLE>
<CAPTION>
2003 2004 2005 2006 2008 2009 Total
---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
Long-Term Ordinary Tax Total
Capital Gains Income Exempt Distributions
Distributions Distributions Income (Tax Basis)
------------- ------------- ------ -------------
<S> <C> <C> <C> <C>
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%
</TABLE>
34
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
Common Shareholders Preferred Shareholders
Shares Shares Shares Shares Shares Shares
Voted Voted Voted Voted Voted Voted
For Against Abstain For Against Abstain
------ ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
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 - -
</TABLE>
36
<PAGE>
Proxy Results (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Shareholders Preferred Shareholders
Shares Shares Shares Shares Shares Shares
Voted Voted Voted Voted Voted Voted
For Against Abstain For Against Abstain
------ ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
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 -
</TABLE>
2. To ratify the selection of Ernst & Young LLP, as the independent auditors for
the Fund.
<TABLE>
<CAPTION>
Common Shareholders
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
<S> <C> <C> <C>
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
</TABLE>
37
<PAGE>
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.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
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.
</TABLE>
(4588) Printed in the USA
VOY-CEAR [3/01] PPL 5/01 J7088
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