-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IQXMprwkTz3EWqRLCGi1lfMwJNNmpOmbS5KSgumZBhisw/ak10zV2DQpT3ch77uM 8A+1ZuyM4kd9vtqJ8ORyeg== 0000950116-01-501212.txt : 20020412 0000950116-01-501212.hdr.sgml : 20020412 ACCESSION NUMBER: 0000950116-01-501212 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND INC CENTRAL INDEX KEY: 0000884174 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 411718337 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06568 FILM NUMBER: 1801700 BUSINESS ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS STREET 2: SUITE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2152552127 MAIL ADDRESS: STREET 1: ONE COMMERCE SQUARE STREET 2: 2005 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND INC CENTRAL INDEX KEY: 0000907573 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 411751991 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07810 FILM NUMBER: 1801701 BUSINESS ADDRESS: STREET 1: 1818 MARKET STREET STREET 2: 2005 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19103-3682 BUSINESS PHONE: 2152552127 MAIL ADDRESS: STREET 1: 1818 MARKET STREET STREET 2: 2005 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19103-3682 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND CENTRAL INDEX KEY: 0000895574 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 411737161 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07410 FILM NUMBER: 1801702 BUSINESS ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS STREET 2: SUITE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2152552127 MAIL ADDRESS: STREET 1: ONE COMMERCE SQUARE STREET 2: 2005 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19103 FORMER COMPANY: FORMER CONFORMED NAME: VOYAGEUR FLORIDA INSURD MUNICIPAL INCOME FUND DATE OF NAME CHANGE: 19930122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR ARIZONA MUNICIPAL INCOME FUND INC CENTRAL INDEX KEY: 0000895577 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 411737155 STATE OF INCORPORATION: MN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07412 FILM NUMBER: 1801703 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET SUITE STREET 2: 1285 AVE OF THE AMERICAS 16TH FLR CITY: MINNIAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 2152552127 MAIL ADDRESS: STREET 1: MITCHELL HUTCHINSONE COMMERCE SQUARE STREET 2: 2005 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III INC CENTRAL INDEX KEY: 0000910347 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 411761999 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07938 FILM NUMBER: 1801704 BUSINESS ADDRESS: STREET 1: C/O DELAWARE MANAGEMENT CO STREET 2: ONE COMMERCE SQU CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2152552127 MAIL ADDRESS: STREET 1: C/O DELAWARE MANAGEMENT CO STREET 2: ONE COMMERCE SQU CITY: PHILADELPHIA STATE: PA ZIP: 19103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II INC CENTRAL INDEX KEY: 0000895658 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07420 FILM NUMBER: 1801705 BUSINESS ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS STREET 2: SUITE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2152552127 MAIL ADDRESS: STREET 1: ONE COMMERCE SQUARE STREET 2: 2005 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19103 N-30D 1 n30d.txt N30D.TXT Delaware Investments (SM) - --------------------------------------- A member of Lincoln Financial Group (R) [GRAPHIC OMITTED] -- Fixed Income photo FIXED INCOME Semi-Annual Report 2002 Voyageur Closed-End Municipal Bond Funds [GRAPHIC] POWERED BY RESEARCH. (SM) A Commitment to Our Investors 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 Advisor Delaware Management Company (Delaware Management), a series of Delaware Management Business Trust, has been the Funds' investment advisor 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 $118 billion in assets under management as of September 30, 2001. As of September 30, 2001, Delaware Management manages more than $80 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 a Fund's net asset value could be more sensitive to fluctuations in short-term interest rates and equity prices. Delaware Management believes this volatility risk is reasonable given the benefits of higher income potential. Effective on or about December 1, 2001, the names of the Funds will be changed to Delaware Investments Minnesota Municipal Income Fund, Inc., Delaware Investments Minnesota Municipal Income Fund II, Inc., Delaware Investments Minnesota Municipal Income Fund III, Inc., Delaware Investments Arizona Municipal Income Fund, Inc., Delaware Investments Florida Insured Municipal Income Fund, and Delaware Investments Colorado Insured Municipal Income Fund, Inc. Table of Contents Letter to Shareholders 1 Portfolio Management Review 3 Performance Summaries Minnesota Municipal Income Funds I, II, III 5 Arizona Municipal Income Fund 6 Florida Insured Municipal Income Fund 7 Colorado Insured Municipal Income Fund 8 Tax Bill Update 10 New at Delaware 11 Financial Statements: Statements of Net Assets 12 Statements of Operations 25 Statements of Changes in Net Assets 27 Financial Highlights 29 Notes to Financial Statements 35 Voyageur Closed-End Municipal Bond Funds October 16, 2001 Letter to Shareholders Recap of Events During the six-month fiscal period ended September 30, 2001, corporate profits continued to slip and the U.S. economy weakened. The generally weak environment contributed to poor performance for U.S. stock indexes. It also led the Federal Reserve Board to continue the aggressive series of interest rate cuts it began in January 2001. The dim profit picture that we reported to you last spring continued in the summer of 2001 and 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 (Source: Moody's Investors Service). In contrast to the corporate sector, state and local government credit worth has not weakened. As a result, municipal bonds continued to perform well, as they often appealed to investors seeking relative safety (Source: Moody's Investors Service). After a quiet start to 2001, in which supply remained scarce, new municipal bond issuance nationally began to increase and was booming by the time your Fund began its new fiscal year on April 1, 2001. The result was better bond selection in many states, higher yields, and strong performance in the municipal bond markets. Delaware's Closed-End Municipal Bond Funds for Minnesota, Arizona, Florida, and Colorado provided positive performance during the six-month period ended September 30, 2001. Total returns for five of the six Funds (Shares at net asset value with dividends and distributions reinvested) in this report were either in line with, or better than, performance of their relevant Lipper peer group and benchmark index. On the following pages, management discusses the specific performance of each Fund for the six-month period ended September 30, 2001. "In contrast to the corporate sector, state and local government credit worth has not weakened."
Total Return Total Return Premium (+)/ Total Return at Net at Market Discount (-) ASE For the six-month period ended September 30, 2001 Asset Value Value as of 9/30/01 Symbol Minnesota Municipal Income Fund I +4.02% +2.19% -5.02% VMN Minnesota Municipal Income Fund II +3.87% +2.94% -3.43% VMM Minnesota Municipal Income Fund III +4.12% +2.89% -4.27% VYM Lipper Minnesota Closed-End Municipal Debt Funds Average (6 funds) +3.64% Arizona Municipal Income Fund +4.26% +9.88% +0.33% VAZ Colorado Insured Municipal Income Fund +4.12% +5.81% -3.04% VCF Lipper Other States Closed-End Municipal Debt Funds Average (26 funds) +4.27% Florida Insured Municipal Income Fund +4.08% +11.23% -8.54% VFL Lipper Florida Closed-End Municipal Debt Funds Average (13 funds) +4.04% - ------------------------------------------------------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index +3.48% Lehman Brothers Insured Municipal Bond Index +3.43% - ------------------------------------------------------------------------------------------------------------------------------
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. The Lipper categories represent the average return 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. Unlike U.S. Treasuries, the U.S. government does not guarantee the payment of principal and interest on municipal bonds. 1 Market Outlook We believe that municipal bonds can continue to perform well in the current environment. Given that the U.S. economy has not shown clear signs of recovery as of this writing, municipal bonds may continue to appear attractive to a wide array of investors. Continued economic weakness could create an environment conducive to strong total returns going forward. In our last report we mentioned that we expected the effects of a White House tax cut to have minimal impact on the outlook for the municipal bond markets, and that any changes would be slow in evolving. Given this year's tax legislation, we believe this turned out to be the right call, but we do encourage investors to contact their tax advisors about their personal tax situations. We believe that municipal bond funds continue to be important investment vehicles which can provide diversification and tax-advantaged investing.* Thank you for your continued commitment to Delaware Investments. Sincerely, /s/ Charles E. Haldeman, Jr. - -------------------------------------- Charles E. Haldeman, Jr. Chairman, Delaware Investments Family of Funds /s/ David K. Downes - -------------------------------------- David K. Downes President and Chief Executive Officer, Delaware Investments Family of Funds *A portion of the income from tax-exempt Funds may be subject to the alternative minimum tax. 2 Voyageur Closed-End Municipal Bond Funds October 16, 2001 Portfolio Management Review Voyageur Closed-End Municipal Bond Funds Managers Drew M. McCullagh Senior Portfolio Manager Arizona Municipal Income Fund, Colorado Insured Municipal Income Fund Patrick P. Coyne Mitchell L. Conery Senior Portfolio Managers Minnesota Municipal Income Funds I, II, III, Florida Insured Municipal Income Fund The Funds' Results The strong performance that we had been seeing in municipal bond markets at the end of our last fiscal year continued throughout the six-month period ended September 30, 2001. As the U.S. economy continued to slow, the equity markets spiraled lower. Investors continued to shun the equity markets throughout much of your Funds' six-month reporting period, as many companies experienced a reduction in profits and lowered their earnings and revenue expectations. While economic growth was anemic during the period, municipal credit remained at high levels throughout 2001. Rating agencies are concerned that tax-exempt sectors -- such as airports and higher education -- will face credit challenges due to the financial downturn (Source: Moody's Investors Service). The Federal Reserve continued to cut interest rates during the period. The federal funds target rate stood at just 2.5% following another reduction that came just two days after the close of our reporting period. Both supply and demand for municipal investments were relatively strong during the period. One result of increased supply was better bond selection in many states, as well as higher yields (Source: Investment Company Institute). As always, we closely monitored each Fund's duration, an indicator of a bond or bond fund's sensitivity to changes in interest rates. The longer the duration, the more sensitive a bond or bond fund is to changes in interest rates. 3 Portfolio Highlights Minnesota Municipal Income Funds I, II, and III During the spring of 2001, as interest rates fell, the average effective maturity and average effective duration in each Fund fell slightly, bringing these figures closer to those of the Funds' peer group. Our goal was to maximize the Funds' income potential to the greatest extent, 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 effective duration and average effective maturity remained lower than those of the other two Funds as of September 30, 2001. During the period, the Funds' benchmark index -- the Lehman Brothers Municipal Bond Index -- rose 3.48%. The Funds' peer group, the Lipper Minnesota Closed-End Municipal Debt Funds Average, returned +3.64% during the same period. Returns for all three Funds surpassed both their benchmarks and peer groups. Minnesota Municipal Income Fund I returned +4.02% for the six-month period ended September 30, 2001 (Shares at net asset value with dividends and distributions reinvested), Minnesota Municipal Income Fund II returned +3.87% for the period (Shares at net asset value with dividends and distributions reinvested), and Minnesota Municipal Income Fund III turned in a +4.12% return (Shares at net asset value with dividends and distributions reinvested). In all three Minnesota Municipal Income Funds, we maintained a significant portion of assets in pre-refunded bonds, and, as a result, the average credit quality in each of the Funds at period-end was AAA. Pre-refunded bonds typically have a AAA credit rating, because interest from U.S. government securities is used to pay off the bond issue. As of September 30, 2001, pre-refunded bonds accounted for approximately 25% 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. The Minnesota economy has grown more diverse in recent years, and its growth has produced many opportunities for municipal investors. Businesses in the state now span more than 90 percent of the primary U.S. industries, yet the state still ranks sixth in the nation in cash receipts from agricultural commodities (Source: Minnesota Department of Trade and Economic Development). Going forward, we expect to continue to make significant investments in credit-worthy hospital and housing bonds in the state. We also plan to maintain our exposure to pre-refunded issues in order to keep the high credit quality in the Funds. 4 Voyageur Minnesota Municipal Income Funds I, II, III Fund Basics As of September 30, 2001 Fund Objective: 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 $58.78 million Fund II $165.72 million Fund III $39.95 million - -------------------------------------------------------------------------------- Number of Holdings: Fund I 42 Fund II 72 Fund III 30 - -------------------------------------------------------------------------------- Fund Start Dates: Fund I May 1, 1992 Fund II February 26, 1993 Fund III October 29, 1993 - -------------------------------------------------------------------------------- Your Fund Managers: Patrick P. Coyne received a bachelor's degree from Harvard University and an MBA in finance from the University of Pennsylvania's Wharton School. He began his career with Kidder, Peabody & Co., where he managed the firm's trading desk for four years. He joined Delaware Investments' fixed-income department in 1990. Mitchell L. Conery received 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 a municipal bond Investment Officer with the Travelers Group. Before that, he held positions at CS First Boston Corporation, MBIA Corporation, Thomson McKinnon Securities, Ovest Financial Services, and Merrill Lynch. Minnesota Municipal Income Funds I, II, III Bond Quality and Portfolio Highlights
September 30, 2001 Fund I Fund II Fund III AAA 63.5% 56.9% 53.8% AA 5.7% 13.6% 7.0% A 14.6% 15.2% 22.0% BBB 1.6% 3.1% 7.7% Unrated 14.6% 11.2% 9.5% - ----------------------------------------------------------------------------------------------------------- Average Credit Quality AAA AAA AAA Average Effective Duration* 4.27 years 4.95 years 5.63 years Average Effective Maturity** 5.43 years 6.69 years 7.99 years Current Yield at Market Price 5.92% 5.97% 5.83% Amount or Leveraging (millions) $20 million $60 million $15 million - -----------------------------------------------------------------------------------------------------------
*Duration is a common measure of a bond or bond fund's sensitivity to interest rate changes. The longer the duration, the more sensitive the bond or bond fund is to changes in interest rates. **Average Effective Maturity is the average time remaining until scheduled repayment by issuers of portfolio securities. Approximately 17.84%, 18.37%, and 13.65% of the income generated by the Minnesota Municipal Income Funds I, II and III, respectively, for the six-month period ended September 30, 2001 was subject to the federal alternative minimum tax. The following is a list of new CUSIP numbers for the Minnesota Income Funds I, II, III effective December 1, 2001: Minnesota Municipal Income Fund I: Common shares: 24610U 10 5 Preferred shares: 24610U 20 4 Minnesota Municipal Income Fund II: Common shares: 24610V 10 3 Preferred Series A shares: 24610V 20 2 Preferred Series B shares: 24610V 30 1 Minneosta Municipal Income Fund III: Common shares: 24610W 10 1 Preferred shares: 24610W 20 0 5 Voyageur Arizona Municipal Income Fund Fund Basics As of September 30, 2001 Fund Objective: The Fund seeks to provide current income exempt from both regular federal income tax and Arizona state personal income tax, consistent with preservation of capital. - -------------------------------------------------------------------------------- Total Fund Net Assets: $70.34 million - -------------------------------------------------------------------------------- Number of Holdings: 42 - -------------------------------------------------------------------------------- Fund Start Date: February 26, 1993 - -------------------------------------------------------------------------------- Your Fund Manager: Drew M. McCullagh 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. The following is a list of new CUSIP numbers for the Fund effective December 1, 2001: Arizona Municipal Income Fund: Common shares: 246100 10 1 Preferred Series A shares: 246100 20 0 Preferred Series B shares: 246100 30 9 Portfolio Characteristics As of September 30, 2001 Current Yield at Market Price 5.31% Average Effective Duration* 5.45 years Average Effective Maturity** 8.22 years Average Credit Quality AAA - -------------------------------------------------------------------------------- *Duration is a common measure of a bond or bond fund's sensitivity to interest rate changes. The longer the duration, the more sensitive the bond or bond fund is to changes in interest rates. **Average Effective Maturity is the average time remaining until scheduled repayment by issuers of portfolio securities. Approximately 19.95% of the income generated by the Arizona Municipal Income Fund for the six-month period ended September 30, 2001 was subject to the federal alternative minimum tax. For the six months ended September 30, 2001, the Fund outpaced its benchmark index, posting a return that was in line with its peer group's average return. The Fund returned +4.26% (Shares at net asset value with dividends and distributions reinvested) while the Lipper Other States Closed-End Municipal Debt Funds Average returned +4.27%. The Lehman Brothers Municipal Bond Index finished the same period with a 3.48% gain. We began the fiscal period with a longer duration relative to our peers. This was a more aggressive posture for us, and was a stance that we took in an effort to maximize income in the Fund. We feel that we achieved that objective, as the Fund's current yield at market price as of September 30, 2001 was a competitive 5.31%. During the spring, we assumed a more conservative approach, shortening the Fund's duration to be more consistent with that of our peers. As of September 30, 2001, the Fund's average effective duration was 5.45 years, down from 6.04 years at the start of the fiscal period. Duration measures a bond or bond fund's sensitivity to interest rate changes. The longer the duration, the more the bond or bond fund's price will change for a given increase or decrease in interest rates. As of September 30, 2001, housing revenue bonds represented the Fund's largest sector weighting, at 24.8% of net assets. The Fund also had significant allocations to both hospital bonds and bonds to fund various transportation and infrastructure projects. As of September 30, 2001, hospital bonds and transportation bonds represented 11.8% and 11.6% of net assets, respectively. 6 Voyageur Florida Insured Municipal Income Fund Fund Basics As of September 30, 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: $57.74 million - -------------------------------------------------------------------------------- Number of Holdings: 33 - -------------------------------------------------------------------------------- Fund Start Date: February 26, 1993 - -------------------------------------------------------------------------------- Your Fund Managers: Patrick P. Coyne Mitchell L. Conery The following is a list of new CUSIP numbers for the Fund effective December 1, 2001: Florida Insured Municipal Income Fund: Common shares: 24610T 10 8 Preferred Series A shares: 24610T 20 7 Preferred Series B shares: 24610T 30 6 Portfolio Characteristics As of September 30, 2001 Current Yield at Market Price 5.56% Average Effective Duration* 5.50 years Average Effective Maturity** 7.34 years Average Credit Quality AAA - -------------------------------------------------------------------------------- *Duration is a common measure of a bond or bond fund's sensitivity to interest rate changes. The longer the duration, the more sensitive the bond or bond fund is to changes in interest rates. **Average Effective Maturity is the average time remaining until scheduled repayment by issuers of portfolio securities. Approximately 16.15% of the income generated by the Florida Insured Municipal Income Fund for the six-month period ended September 30, 2001 was subject to the federal alternative minimum tax. For the six months ended September 30, 2001, the Fund outpaced its benchmark index, posting a return that was in line with that of its peer group. The Fund returned +4.08% (Shares at net asset value with dividends and distributions reinvested) while the Lipper Florida Closed-End Municipal Debt Funds Average returned +4.04%. The Lehman Brothers Insured Municipal Bond Index finished the same period with a 3.43% gain. We usually maintain a shorter duration posture in our insured funds, because insured bonds are the most liquid bonds in the municipal universe. The enhanced liquidity can lead to increased price volatility, as it often does in the Treasury market. During the fiscal period, our duration posture generally remained unchanged. Given the impact that the economic downturn can have on equities and lower-rated debt issues, we are comfortable taking a somewhat conservative approach to duration in our insured funds. The Fund invests primarily in AAA-rated municipal bonds, which constitute the top tier of credit quality in the tax-free asset class. Both housing and hospital bonds have played significant roles in the Fund for some time. As of September 30, 2001, 20.5% of the Fund's net assets were dedicated to hospital revenue bonds, and 11.5% were in housing revenue bonds. 7 Voyageur Colorado Insured Municipal Income Fund Fund Basics As of September 30, 2001 Fund Objective: The Fund seeks to provide current income exempt from both regular federal income tax and Colorado state income tax, consistent with preservation of capital. - -------------------------------------------------------------------------------- Total Fund Net Assets: $114.82 million - -------------------------------------------------------------------------------- Number of Holdings: 44 - -------------------------------------------------------------------------------- Fund Start Date: July 29, 1993 - -------------------------------------------------------------------------------- Your Fund Manager: Drew M. McCullagh The following is a list of new CUSIP numbers for the Fund effective December 1, 2001: Colorado Insured Municipal Income Fund: Common shares: 246101 10 9 Preferred Series A shares: 246101 20 8 Preferred Series B shares: 246101 30 7 Portfolio Characteristics As of September 30, 2001 Current Yield at Market Price 5.40% Average Effective Duration* 6.86 years Average Effective Maturity** 10.40 years Average Credit Quality AAA - -------------------------------------------------------------------------------- *Duration is a common measure of a bond or bond fund's sensitivity to interest rate changes. The longer the duration, the more sensitive the bond or bond fund is to changes in interest rates. **Average Effective Maturity is the average time remaining until scheduled repayment by issuers of portfolio securities. None of the income generated by the Colorado Insured Municipal Income Fund for the six-month period ended September 30, 2001 was subject to the federal alternative minimum tax. For the six months ended September 30, 2001, the Fund outpaced its benchmark index, although its return trailed that of its peer group. The Fund returned +4.12% (Shares at net asset value with dividends and distributions reinvested) while the Lipper Other States Closed-End Municipal Debt Funds Average returned +4.27%. In our opinion, the municipal bond market in Colorado was not as strong during the period as that in some other states. This factor may partially account for the Fund's underperformance versus its peer group, which includes funds from various states. On an absolute basis, the six-month period was a rather positive one, and the return beat the 3.43% gain of the Lehman Brothers Insured Municipal Bond Index during the same period. We continue to have a bright outlook for the municipal bond market in Colorado given the state's long-term growth trends. A growing population has led to many highway projects, and transportation bond holdings continue to be a significant part of the investment portfolio, accounting for 23.9% of the Fund's net assets as of September 30, 2001. Our outlook for Colorado hospitals also remains bright, as there is a strong supply of insured hospital bonds in the state. During the six-month fiscal period, however, consolidation in the medical field led our allocation to hospital bonds to decrease slightly. During the fiscal period, we continued with a strategy of increasing duration, which was begun prior to the start of our fiscal year, in an effort to capture higher yields during a period of strong performance in the municipal markets. As of September 30, 2001, the Fund's average effective duration was 6.86 years, up somewhat from the 6.44 years at the start of the period. Duration measures a bond or bond fund's sensitivity to interest rate changes. The longer the duration, the more the bond or bond fund's price will change for a given increase or decrease in interest rates. 8 Outlook We think that the economic slowdown may be nearing a bottom. We expect the economy to recover modestly next year, thanks to aggressive interest rate cuts from the Federal Reserve, income tax rebates, and the stimulus that comes from financial aid packages developed in the aftermath of the September 11th terrorist attacks. We also anticipate that inflation, which has been benign for some time, will remain in check. In our opinion, these factors point to a neutral market. In such an environment, we would look to manage the insured Funds by implementing a "barbell" structure to the portfolios. This means that we would concentrate assets at both ends of the yield curve, looking to invest in shorter bonds to add stability to the portfolio, while also investing substantially in longer bonds to pick up some additional yield. In our opinion, over the next several months, the environment will remain compelling for municipal bond investing, particularly for investors seeking additional diversification away from volatile stock investments as well as the potential for tax-free income. 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 800 851-9677. You will be asked to put your request in writing. If you have shares registered in "street" name, contact your financial advisor or the broker/dealer holding the shares. Under the current policies of 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 Investor 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. You can contact Mellon at: Mellon Investor Services, L.L.C. Dividend Reinvestment Department Overpeck Centre 85 Challenger Road Ridgefield, NJ 07660 800 851-9677 9 Tax Bill Update New Tax Legislation in 2001 has reduced marginal income tax rates for U.S. taxpayers (see schedule below). We believe it is unlikely that these changes in tax rates will significantly influence behavior among municipal investors and that investors will continue to look to municipal bonds and municipal bond funds as a source of tax-free income.
Former Former Former Former Calendar Year 28% rate 31% rate 36% rate 39.6% rate 2001 27.5% 30.5% 35.5% 39.1% 2002-2003 27.0% 30.0% 35.0% 38.6% 2004-2005 26.0% 29.0% 34.0% 37.6% 2006 and later 25.0% 28.0% 33.0% 35.0%
Subsequent to marginal tax rate changes of the recent past (1982, 1986, 1988, and 1994), there was little evident effect on relative bond yields (Source: Salomon Smith Barney). The current tax legislation is being phased in, suggesting that consequences for municipal investors may be negligible. One notable change in the new tax law, however, is the increase in the exemption for the alternative minimum tax (AMT). According to projections by the Congressional Joint Committee on Taxation, the number of individuals affected by the AMT could increase significantly, from 1.4 million this year to 35.5 million in 2010. Many tax advisors currently suggest that, barring further legislation, this year's tax relief would cause many more middle- and upper-income taxpayers to become responsible for paying the AMT in the years ahead. We encourage investors to consult their tax advisors about their particular tax situations, and how they might be affected by current tax law. For a more complete discussion of your Fund's dividends, distributions, and taxes, please consult the prospectus. 30-year AAA-rated Municipal Bonds Tax-equivalent Yields As of September 30, 2001 [Bar Graph] Income Tax-equivalent Tax Bracket Yield ----------- -------------- 15% 5.87% 27.5% 6.88% 30.5% 7.18% 35.5% 7.74% 39.1% 8.19% As of September 30, 2001, the yield on 30-year AAA-rated municipal bonds nationally was 4.99% (Source: Bloomberg). The chart shows what the equivalent yield would be on a taxable investment for investors in each tax bracket.* *Principal and interest of municipal bonds, unlike U.S. Treasury securities, are not guaranteed by the U.S. government. The above illustration is not intended to represent the yield of any mutual fund from Delaware Investments. 10 New at Delaware Get a Jump on 2001 Taxes With Delaware's Online Account Access Feature! Why wait for your year-end statement to arrive before you start your tax planning? Get a head start on your tax preparation for 2001. You can review all of your 2001 Delaware Investments' account transactions online at anytime by using Delaware's online Account Access feature. Register for online Account Access and start planning your tax strategy before the end of the year. And if you use Quicken(R) TurboTax(R) to prepare your taxes, this year you can make tax preparation even easier. Delaware Investments has joined TurboTax Connect to offer shareholders Intuit's Instant Data Entry. The Instant Data Entry feature helps you complete your tax forms by quickly, securely and accurately retrieving common tax information -- dividends and transactions -- from Delaware Investments and instantly entering that information in the correct forms in TurboTax. The Instant Data Entry feature is included in all individual 1040 versions of TurboTax. To use Instant Data Entry, you must be registered for Delaware's online Account Access feature. Account Access is a password-protected area of the Delaware Investments web site that gives you access to your account information and allows you to perform account transactions in a secure environment. For more information about Delaware's online Account Access feature and Instant Data Entry, call our Shareholder Service Center at 800 523-1918. Shareholder representatives are available Monday through Friday from 8:00 a.m. to 8:00 p.m., Eastern Time. You can also register for online Account Access by visiting our web site at www.delawareinvestments.com. 11 Voyageur Minnesota Municipal Income Fund, Inc.+ September 30, 2001 (Unaudited) Statements of Net Assets
Principal Market Amount Value Municipal Bonds - 98.37% Continuing Care/Retirement Revenue Bonds - 4.71% Minnetonka Multifamily Presbyterian Homes Guaranteed (Beacon Hill Project) 7.70% 6/1/25 $2,725,000 $ 2,767,101 ----------- 2,767,101 ----------- General Obligation Bonds - 7.61% Hennepin County Series B 5.00% 12/1/18 1,300,000 1,313,741 Minneapolis Refunding (Laurel Village) 6.00% 3/1/16 1,600,000 1,645,232 Minneapolis/St. Paul Metro Airport Commission 6.60% 1/1/11 (AMT) 1,500,000 1,514,760 ----------- 4,473,733 ----------- Higher Education Revenue Bonds - 7.19% Minnesota Higher Education Facility (St. Thomas University) Series 3-C 6.25% 9/1/16 1,000,000 1,001,140 Minnesota State University Board (State University System) Series A 6.05% 6/30/18 250,000 251,783 Northfield (St. Olaf College) 6.30% 10/1/12 1,075,000 1,134,738 6.40% 10/1/21 1,750,000 1,839,617 ----------- 4,227,278 ----------- Hospital Revenue Bonds - 16.07% Duluth Economic Development Authority (St. Luke's Hospital) 6.40% 5/1/18 (Connie Lee) 1,000,000 1,040,210 Duluth Economic Development Authority Benedictine (St. Mary's Hospital) 6.00% 2/15/20 (Connie Lee) 1,000,000 1,051,240 Minneapolis Health Care Facility Revenue (Fairview Hospital) Series A 5.25% 11/15/19 (MBIA) 1,500,000 1,510,125 Minneapolis Hospital System (Fairview Hospital) Series 1991-A 6.50% 1/1/11 (MBIA) 2,210,000 2,276,853 Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 6.375% 11/15/29 2,500,000 2,657,000 St. Paul Housing & Redevelopment Authority Health Care Facilities (Regions Hospital Project) 5.30% 5/15/28 1,000,000 908,660 ----------- 9,444,088 ----------- Housing Revenue Bonds - 15.20% Brooklyn Center Multifamily Housing (Four Courts Apartments) 7.50% 6/1/25 (AMT) 1,800,000 1,812,078
+These financial statements reference Voyageur Minnesota Municipal Income Fund, Inc. as of September 30, 2001. Effective December 1, 2001, Voyageur Minnesota Municipal Income Fund, Inc. will be renamed Delaware Investments Minnesota Municipal Income Fund, Inc.
Principal Market Amount Value Municipal Bonds(continued) Housing Revenue Bonds (continued) Dakota County Housing & Redevelopment Authority Single Family Mortgage Revenue 5.85% 10/1/30 (AMT)(GNMA)(FNMA) $ 301,000 $ 308,375 New Brighton Multifamily Mortgage (Polynesian Village Apartments) Series 1995-A 7.60% 4/1/25 (AMT) 1,400,000 1,408,078 St. Anthony Multifamily Housing Development (Autumn Woods Project) 6.875% 7/1/22 (Asset Gty) 2,265,000 2,333,765 St. Paul Housing & Redevelopment Authority Multifamily Housing (Pointe of St. Paul Project) 6.60% 10/1/12 (FNMA) 2,950,000 3,073,989 ----------- 8,936,285 ----------- Pollution Control Revenue Bonds - 3.65% Bass Brook Pollution Control Revenue (Minnesota Power & Light Company) 6.00% 7/1/22 2,100,000 2,147,586 ----------- 2,147,586 ----------- Power Authority Revenue Bonds - 12.66% Northern Minnesota Municipal Power Agency Electric System Series A 5.00% 1/1/21 1,5 00,000 1,484,340 Series B 5.50% 1/1/18 (AMBAC) 1,250,000 1,275,063 Puerto Rico Electric Power Authority Series EE 4.75% 7/1/24 1,100,000 1,042,041 Rochester Electric 5.25% 2/1/30 (AMBAC) 150,000 151,566 Southern Minnesota Municipal Power Agency 5.00% 1/1/16 (FGIC) 580,000 580,070 5.50% 1/1/15 (AMBAC) 610,000 627,043 Western Minnesota Municipal Power Agency Series A 5.50% 1/1/15 (MBIA) 2,275,000 2,279,254 ----------- 7,439,377 ----------- *Pre-Refunded/Escrowed to Maturity Bonds - 24.77% Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage Revenue 8.375% 9/1/21 (AMT) (GNMA) (Escrowed to Maturity) 2,555,000 3,609,013 Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.30% 11/1/22-02 (AMBAC) 1,270,000 1,349,693 6.30% 11/1/22-04 (AMBAC) 730,000 806,854 Edina Recreational Facilities Series 1992-A 6.00% 1/1/09-02 305,000 307,867 6.00% 1/1/10-02 320,000 323,008
12 Voyageur Minnesota Municipal Income Fund, Inc.+ September 30, 2001 (Unaudited) Statements of Net Assets (continued)
Principal Market Amount Value Municipal Bonds (continued) *Pre-Refunded/Escrowed to Maturity Bonds (continued) Minneapolis St. Paul Housing & Redevelopment Authority Health Care (Health One) 6.75% 8/15/14-02 (MBIA) $ 400,000 $ 410,428 Minnesota Higher Education Revenue Series 3-J (Macalester College) 6.40% 3/1/22-02 1,000,000 1,018,120 Minnesota Public Facilities Authority Water Pollution Control Series 1992 6.50% 3/1/14-02 1,500,000 1,557,615 Puerto Rico Commonwealth 6.00% 7/1/26-07 2,000,000 2,321,260 Southern Minnesota Municipal Power Agency 5.50% 1/1/15 (AMBAC) (Escrowed to Maturity) 390,000 411,388 5.75% 1/1/11 (FGIC) (Escrowed to Maturity) 1,000,000 1,049,350 St. Francis Independent School District #15 6.30% 2/1/11-06 (FSA) 1,250,000 1,397,513 ----------- 14,562,109 ----------- Water & Sewer Revenue Bonds - 6.51% Anoka County Solid Waste Disposal National Rural Co-Op Utility 6.95% 12/1/08 (AMT) 1,000,000 1,022,190 **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floater ROLS 6.83% 3/1/16 1,000,000 984,350 6.98% 3/1/17 1,855,000 1,821,146 ----------- 3,827,686 ----------- Total Municipal Bonds (cost $54,240,636) 57,825,243 ----------- Total Market Value of Securities - 98.37% (cost $54,240,636) 57,825,243 Receivables and Other Assets Net of Liabilities - 1.63% 957,791 ----------- Total Net Assets - 100.00% 58,783,034 Liquidation Value of Preferred Stock (20,000,000) ----------- Net Assets Applicable to 2,594,700 Common Shares ($0.01 Par Value) Outstanding $38,783,034 =========== Net Asset Value Per Common Share ($38,783,034 / 2,594,700 Shares) $14.95 ------ Components of Net Assets at September 30, 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 Undistributed net investment income 112,533 Accumulated net realized loss on investments (340,846) Net unrealized appreciation of investments 3,584,607 ----------- Total net assets $58,783,034 ===========
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. **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 September 30, 2001. 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 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 Voyageur Minnesota Municipal Income Fund II, Inc.+ September 30, 2001 (Unaudited) Statements of Net Assets
Principal Market Amount Value Municipal Bonds - 98.74% Continuing Care/Retirement Revenue Bonds - 5.73% Bloomington Health Care Facilities (Masonic Home Care Center) 5.875% 7/1/22 (AMBAC) $1,200,000 $ 1,228,656 Brainerd Health Care (Evangelical Lutheran Health Care Facilities) Series A 6.65% 3/1/17 (FSA) 1,195,000 1,236,311 Minneapolis Health Care Facility Revenue (Jones-Harrison Residence Project) 6.00% 10/1/27 2,000,000 1,684,800 Minnetonka Housing Facilities (Beacon Hill Project) 7.25% 6/1/09 1,225,000 1,234,727 7.50% 6/1/14 760,000 775,724 7.55% 6/1/19 2,365,000 2,409,178 Moorhead Economic Development Authority Multifamily Revenue Refunding & Improvement Housing Development (Eventide) Series B 6.00% 6/1/18 1,000,000 932,880 ----------- 9,502,276 ----------- General Obligation Bonds - 5.39% Becker Refunding Tax Increment Series D 6.25% 8/1/15 (AMT)(MBIA) 3,700,000 3,777,293 Hennepin County Series B 5.00% 12/1/18 1,300,000 1,313,741 **Minnesota State, Inverse Floaters ROLS 7.58% 11/1/17 570,000 589,426 Puerto Rico Commonwealth Refunding Public Improvements 5.125% 7/1/30 (FSA) 1,000,000 1,009,170 Rosemount Independent School District #196 Series A 5.70% 4/1/12 1,270,000 1,381,506 St. Paul Tax Increment (Block 39 Project) Series A 4.75% 2/1/25 900,000 854,298 ----------- 8,925,434 ----------- Higher Education Revenue Bonds - 8.21% Minnesota Higher Education Facility (St. Thomas University) Series 3-R2 5.60% 9/1/14 175,000 179,984 Series B 3-R1 5.60% 10/1/15 1,050,000 1,078,298 Series 4A-1 5.625% 10/1/21 1,000,000 1,027,610 Minnesota State University Board (State University System) Series 1993-A 6.10% 6/30/23 1,150,000 1,157,199 Series 1993-C 5.60% 6/30/16 (MBIA) 3,115,000 3,165,089 Series 1993-C 5.60% 6/30/19 (MBIA) 3,720,000 3,765,309 University of Minnesota Series A 5.50% 7/1/21 3,000,000 3,235,860 ----------- 13,609,349 -----------
+These financial statements reference Voyageur Minnesota Municipal Income Fund II, Inc. as of September 30, 2001. Effective December 1, 2001, Voyageur Minnesota Municipal Income Fund II, Inc. will be renamed Delaware Investments Minnesota Municipal Income Fund II, Inc.
Principal Market Amount Value Municipal Bonds (continued) Hospital Revenue Bonds - 13.18% Duluth Economic Development Authority Benedictine (St. Mary's Hospital) 6.00% 2/15/20 (Connie Lee) $6,000,000 $ 6,307,439 Minneapolis/St. Paul Housing & Redevelopment Authority (Children's Health Care) Series A 5.50% 8/15/25 (FSA) 1,400,000 1,424,850 Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series 97A 5.75% 11/15/26 (MBIA) 5,550,000 5,819,286 Series A 6.375% 11/15/29 2,800,000 2,975,840 Rochester Health Care Facilities (Mayo Foundation) Series B 5.50% 11/15/27 3,365,000 3,448,587 St. Paul Housing & Redevelopment Authority Health Care Facilities (Regions Hospital Project) 5.30% 5/15/28 400,000 363,464 Waconia Health Care Facilities 6.10% 1/1/19 1,405,000 1,494,808 ----------- 21,834,274 ----------- Housing Revenue Bonds - 15.62% Chanhassen Multifamily Housing (Heritage Park Project) 6.20% 7/1/30 (FHA) 1,105,000 1,146,647 Dakota County Housing & Redevelopment Authority Multifamily Mortgage (Imperial Ridge Project) Series 1993-A 6.10% 12/15/28 (GNMA) 1,840,000 1,876,450 Harmony Multifamily Housing Section 8 (Zedakah Foundation Project) Series A 5.95% 9/1/20 1,000,000 1,019,540 Minnesota Housing Finance Agency Multifamily Rental Housing Series D 5.90% 2/1/14 1,115,000 1,156,288 6.00% 8/1/22 2,295,000 2,365,135 Minnesota Housing Finance Agency Single Family Housing Rental 5.95% 2/1/18 (MBIA) 1,195,000 1,235,343 Minnesota Housing Finance Agency Single Family Housing Series 1992-B 6.15% 1/1/26 (AMT) 3,275,000 3,359,234 Series 1992-C2 6.15% 7/1/23 (AMT) 3,320,000 3,406,520 Series 1994-F 6.30% 7/1/25 1,495,000 1,555,308 Series 1994-J 6.95% 7/1/26 (AMT) 2,405,000 2,503,172 New Brighton Multifamily Mortgage (Polynesian Village Apartments) Series 1995-A 7.60% 4/1/25 (AMT) 3,820,000 3,842,042
14 Voyageur Minnesota Municipal Income Fund II, Inc.+ September 30, 2001 (Unaudited) Statements of Net Assets (continued)
Principal Market Amount Value Municipal Bonds (continued) Housing Revenue Bonds (continued) St. Paul Housing & Redevelopment Authority Single Family Mortgage 6.40% 3/1/21 (FNMA) $ 870,000 $ 917,424 Stillwater Multifamily Mortgage (Stillwater Cottages) 7.25% 11/1/27 (AMT) 1,540,000 1,509,831 ----------- 25,892,934 ----------- Industrial Development Revenue Bonds - 0.90% Burnsville Community Development (Holiday Inn Project) 5.90% 4/1/08 1,430,000 1,485,227 ----------- 1,485,227 ----------- Other Revenue Bonds - 0.91% Minneapolis Community Development Agency (Supported Development) Series 5 5.70% 12/1/27 375,000 377,291 Minneapolis Community Development Agency-G1-TA 5.70% 12/1/19 1,100,000 1,132,967 ----------- 1,510,258 ----------- Pollution Control Revenue Bonds - 7.47% Bass Brook Pollution Control Revenue (Minnesota Power & Light Company) 6.00% 7/1/22 7,560,000 7,731,310 Cloquet Pollution Control (Potlatch Corporation Project) 5.90% 10/1/26 5,000,000 4,649,100 ----------- 12,380,410 ----------- Power Authority Revenue Bonds - 5.15% Northern Minnesota Municipal Power Agency Electric System Series B 5.50% 1/1/18 (AMBAC) 5,955,000 6,074,398 Puerto Rico Electric Power Authority 5.25% 7/1/21 2,000,000 2,013,040 Rochester Electric 5.25% 12/1/30 (AMBAC) 450,000 454,698 ----------- 8,542,136 ----------- *Pre-Refunded/Escrowed to Maturity Bonds - 29.82% Buffalo Independent School District 6.15% 2/1/22-03 (FSA) 4,030,000 4,223,399 Dakota & Washington Counties Housing & Redevelopment Authority Single Family Mortgage Revenue 8.375% 9/1/21 (AMT) (GNMA) (Escrowed to Maturity) 5,500,000 7,768,914 Detroit Lakes Benedictine Health (St. Mary's Hospital) 6.00% 2/15/19-03 (Connie Lee) 1,250,000 1,334,813
Principal Market Amount Value Municipal Bonds (continued) *Pre-Refunded/Escrowed to Maturity Bonds (continued) Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.20% 11/1/12-02 (AMBAC) $ 720,000 $ 764,410 6.20% 11/1/12-04 (AMBAC) 280,000 308,655 6.30% 11/1/22-02 (AMBAC) 3,890,000 4,134,097 6.30% 11/1/22-04 (AMBAC) 960,000 1,061,069 Esko Independent School District 5.65% 4/1/12-05 (FSA) 550,000 596,189 Hawley Independent School District 5.75% 2/1/17-06 (FSA) 1,000,000 1,061,240 Metropolitan Council Sports Facilities Commission (Hubert H. Humphrey Metrodome Sports Facility) Series 92 6.00% 10/1/09 (Escrowed to Maturity) 2,360,000 2,496,266 Minneapolis/St. Paul Housing & Redevelopment Authority (Health One) 7.40% 8/15/11-02 (MBIA) 2,105,000 2,161,772 Minnesota Public Facilities Authority Water Pollution Control 6.25% 3/1/16-05 1,000,000 1,106,560 6.50% 3/1/14-02 3,300,000 3,426,753 Red Wing Independent School District #256 Series 1993-A 5.70% 2/1/12-03 2,925,000 3,044,165 5.70% 2/1/13-03 1,625,000 1,691,203 Southern Minnesota Municipal Power Agency Supply System Revenue Series A 5.75% 1/1/18-16 (MBIA) (Escrowed to Maturity) 3,715,000 3,930,099 St. Paul Housing & Redevelopment Authority Sales Tax (Civic Center) 5.55% 11/1/23 (Escrowed to Maturity) 2,300,000 2,367,965 5.55% 11/1/23 (MBIA) (Escrowed to Maturity) 4,200,000 4,324,109 Stewartville Independent School District #534 5.75% 2/1/17-05 1,705,000 1,786,755 Western Municipal Power Agency 6.625% 1/1/16 (Escrowed to Maturity) 1,535,000 1,825,576 ----------- 49,414,009 ----------- Transportation Revenue Bonds - 3.72% Puerto Rico Commonwealth Highway & Transportation Authority (Highway Improvements) Series Y 5.50% 7/1/26 6,000,000 6,171,480 ----------- 6,171,480 -----------
15 Voyageur Minnesota Municipal Income Fund II, Inc. September 30, 2001 (Unaudited) Statements of Net Assets (continued)
Principal Market Amount Value Municipal Bonds (continued) Water & Sewer Revenue Bonds - 2.64% **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floater ROLS 6.98% 3/1/17 $1,145,000 $ 1,124,104 7.08% 3/1/18 1,360,000 1,329,346 7.08% 3/1/19 2,000,000 1,916,319 ------------ 4,369,769 ------------ Total Municipal Bonds (cost $156,548,712) 163,637,556 ------------ Total Market Value of Securities - 98.74% (cost $156,548,712) 163,637,556 Receivables and Other Assets Net of Liabilities - 1.26% 2,081,565 ------------ Total Net Assets - 100.00% 165,719,121 Liquidation Value of Preferred stock (60,000,000) ------------ Net Assets Applicable to 7,252,200 Common Shares ($0.01 Par Value) Outstanding $105,719,121 ============ Net Asset Value Per Common Share ($105,719,121 / 7,252,200 Shares) $14.58 ------
Components of Net Assets at September 30, 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 1,878,895 Accumulated net realized loss on investments (2,958,620) Net unrealized appreciation of investments 7,088,844 ------------ Total net assets $165,719,121 ============
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. **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 September 30, 2001. 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 16 Voyageur Minnesota Municipal Income Fund III, Inc. September 30, 2001 (Unaudited) Statements of Net Assets (continued)
Principal Market Amount Value Municipal Bonds - 97.29% Continuing Care/Retirement Revenue Bonds - 2.64% Minnesota Agriculture & Economic Development Board (Benedictine Health Systems) 5.75% 2/1/29 $1,300,000 $1,053,598 ------------ 1,053,598 ------------ General Obligation Bonds - 1.90% Minneapolis Sports Arena Project 5.125% 10/1/20 750,000 758,723 ------------ 758,723 ------------ Higher Education Revenue Bonds - 6.34% Minnesota Higher Education Facility (St. Thomas University) Series 4A-1 5.625% 10/1/21 1,010,000 1,037,885 Minnesota State Higher Education Facilities Authority (St. Mary's College) Series 3Q 6.15% 10/1/23 1,000,000 1,022,440 Minnesota State Higher Educational Facilities Authority (College of St. Benedict) Series 3-W 6.375% 3/1/20 345,000 354,543 Minnesota State Higher Educational Facilities Authority (Gustavus Adolphus College) Series 4-X 4.80% 10/1/21 125,000 117,568 ------------ 2,532,436 ------------ Hospital Revenue Bonds - 17.94% Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 6.375% 11/15/29 2,000,000 2,125,600 Princeton Hospital Systems (Fairview Hospital) Series C 6.25% 1/1/21 (MBIA) 2,000,000 2,054,020 Robbinsdale Hospital Revenue (North Memorial Medical Center) Series B 5.50% 5/15/23 (AMBAC) 500,000 505,775 Rochester Health Care Facilities (Mayo Foundation) Series B 5.50% 11/15/27 1,700,000 1,742,228 St. Paul Housing & Redevelopment Authority (Health East Hospital) 5.85% 11/1/17 250,000 192,998 St. Paul Housing & Redevelopment Authority Health Care Facilities (Regions Hospital Project) 5.30% 5/15/28 600,000 545,196 ------------ 7,165,817 ------------
+These financial statements reference Voyageur Minnesota Municipal Income Fund III, Inc. as of September 30, 2001. Effective December 1, 2001, Voyageur Minnesota Municipal Income Fund III, Inc. will be renamed Delaware Investments Minnesota Municipal Income Fund III, Inc.
Principal Market Amount Value Municipal Bonds (continued) Housing Revenue Bonds - 15.13% Brooklyn Center Multifamily Housing (Four Courts Apartments) 7.50% 6/1/25 (AMT) $ 1,000,000 $ 1,006,710 Burnsville Multifamily Mortgage Series A 7.10% 1/1/30 (FSA) 2,000,000 2,145,940 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 1,891,313 ------------ 6,043,963 ------------ Other Revenue Bonds - 2.29% Minneapolis Community Development Agency (Supported Development) 6.75% 12/1/25 865,000 913,371 ------------ 913,371 ------------ Pollution Control Revenue Bonds - 6.18% Bass Brook Pollution Control Revenue (Minnesota Power & Light Company) 6.00% 7/1/22 1,505,000 1,539,103 Cloquet Pollution Control (Potlatch Corporation Project) 5.90% 10/1/26 1,000,000 929,820 ------------ 2,468,923 ------------ Power Authority Revenue Bonds - 4.66% Southern Minnesota Municipal Power Agency 5.75% 1/1/18 (FGIC) 1,800,000 1,861,020 ------------ 1,861,020 ------------ *Pre-Refunded/Escrowed to Maturity Bonds - 24.06% Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.20% 11/1/12-02 (AMBAC) 1,080,000 1,146,614 6.20% 11/1/12-04 (AMBAC) 420,000 462,983 Esko Independent School District #99 5.75% 4/1/17-05 (FSA) 2,145,000 2,332,216 Minnesota State Higher Education Facilities Authority (Saint Benedict) Series 3-W 6.375% 3/1/20-04 930,000 1,007,516 Moorhead Minnesota Public Utilities Series A 6.25% 11/1/12-02 (MBIA) 1,500,000 1,561,245 University of Minnesota Hospital 6.75% 12/1/16 (Escrowed to Maturity) 2,580,000 3,104,229 ------------ 9,614,803 ------------
17 Voyageur Minnesota Municipal Income Fund III, Inc. September 30, 2001 (Unaudited) Statements of Net Assets (continued)
Principal Market Amount Value Municipal Bonds (continued) Transportation Revenue Bonds - 4.83% Minneapolis/St. Paul Metropolitan Airport Commission 5.125% 1/1/25 (FGIC) $ 900,000 $ 901,242 Puerto Rico Commonwealth Highway & Transportation Authority (Highway Improvements) Series Y 5.50% 7/1/26 1,000,000 1,028,580 ------------ 1,929,822 ------------ Water & Sewer Revenue Bonds - 11.32% **Minnesota Public Facilities Authority Water Pollution Control Revenue, Inverse Floater ROLS 7.08% 3/1/18 1,640,000 1,603,034 Minnesota Public Facilities Authority Water Pollution Control Series B 5.40% 3/1/15 2,820,000 2,918,982 ----------- 4,522,016 ----------- Total Municipal Bonds (cost $36,536,276) 38,864,492 ----------- Total Market Value of Securities - 97.29% (cost $36,536,276) 38,864,492 Receivables and Other Assets Net of Liabilities - 2.71% 1,081,545 ----------- Total Net Assets - 100.00% 39,946,037 Liquidation Value of Preferred Stock (15,000,000) ----------- Net Assets Applicable to 1,837,200 Common Shares ($0.01 Par Value) Outstanding $24,946,037 =========== Net Asset Value Per Common Share ($24,946,037 / 1,837,200 Shares) $13.58 ------
Components of Net Assets at September 30, 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 15,000000 Undistributed net investment income 192,967 Accumulated net realized loss on investments (2,821,876) Net unrealized appreciation of investments 2,328,216 ------------ Total net assets $39,946,037 ------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. **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 September 30, 2001. 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 See accompanying notes 18 Statements of Net Assets (continued) Voyageur Arizona Municipal Income Fund, Inc.+ September 30, 2001 (Unaudited) Principal Market Amount Value Municipal Bonds - 98.27% General Obligation Bonds - 7.09% Eagle Mountain Community Facility District A2 6.40% 7/1/17 $1,500,000 $1,656,930 Maricopa County Gilbert Unified School District #41 6.25% 7/1/15 (FSA) 1,500,000 1,686,225 Puerto Rico Commonwealth 5.125% 7/1/30 (FSA) 1,000,000 1,009,170 Santa Cruz Valley Unified School District #35 5.80% 7/1/09 (AMBAC) 600,000 635,268 ------------- 4,987,593 ------------- Higher Education Revenue Bonds - 3.69% Arizona Student Loan Acquisition Authority Revenue 5.90% 5/1/24 1,500,000 1,549,185 University of Arizona 6.25% 6/1/11 1,000,000 1,045,120 ------------- 2,594,305 ------------- Hospital Revenue Bonds - 11.75% Maricopa County Health Facilities (Catholic Health Care West) Series A 5.75% 7/1/11 (MBIA) 1,750,000 1,804,688 6.00% 7/1/21 (MBIA) 1,100,000 1,141,294 Maricopa Industrial Development Authority (Mayo Clinic Hospital) 5.25% 11/15/37 (MBIA) 1,000,000 1,007,250 Show Low Industrial Development Authority Hospital Revenue (Navapache Regional Medical Center) Series A 5.50% 12/1/17 (ACA) 2,600,000 2,639,961 University of Arizona Medical Center 6.25% 7/1/16 (MBIA) 700,000 730,198 Yuma Industrial Development Authority (Yuma Regional Medical Center) 5.00% 8/1/31 (FSA) 950,000 941,925 ------------ 8,265,316 ------------ Housing Revenue Bonds - 24.79% Maricopa County Industrial Development Authority Multifamily Family Housing Revenue (Avalon Apartments Project) Series A 6.35% 4/1/30 (Asset Gty) 1,610,000 1,694,734 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 1,258,625 +These financial statements reference Voyageur Arizona Municipal Income Fund, Inc. as of September 30, 2001. Effective December 1, 2001, Voyageur Arizona Municipal Income Fund, Inc. will be renamed Delaware Investments Arizona Municipal Income Fund, Inc. Principal Market Amount Value Municipal Bonds (continued) Housing Revenue Bonds (continued) Maricopa County Industrial Development Authority Multifamily Housing Revenue (Villas at Augusta) 6.50% 10/20/33 (GNMA) $ 150,000 $ 164,549 Maricopa County Industrial Development Authority Single Family Housing Revenue 6.625% 7/1/21 (GNMA)(FNMA) 1,345,000 1,447,422 Peoria Casa Del Rio Multifamily Housing 7.30% 2/20/28 (GNMA) 1,230,000 1,325,719 Phoenix Individual Development Authority Single Family Mortgage 5.30% 4/1/20 (GNMA)(FNMA)(FHLMC) 2,485,000 2,500,779 Phoenix Industrial Development Authority (Chris Ridge) 6.80% 11/1/25 (FHA) 500,000 513,295 Phoenix Industrial Development Authority Single Family Mortgage 5.35% 6/1/20 (GNMA)(FNMA)(FHLMC) 3,260,000 3,277,244 Pima County Industrial Development Authority (Single Family Mortgage Revenue) Series A 5.20% 5/1/31 (GNMA)(FNMA)(FHLMC) 1,000,000 978,080 6.125% 11/1/33 (AMT)(GNMA)(FNMA)(FHLMC) 1,745,000 1,837,311 6.25% 11/1/30 (GNMA)(FNMA)(FHLMC) 840,000 871,760 Yavapai County Industrial Development Authority Residential Care Facilities (Margaret T. Morris Center) Series A 5.40% 2/20/38 (GNMA) 1,575,000 1,577,363 ------------ 17,446,881 ------------ Leases/Certificates of Participation - 7.05% Oro Valley Municipal Property Corporation Excise Tax Revenue 5.00% 7/1/20 (FGIC) 1,450,000 1,452,886 Scottsdale Municipal Property Corporation Lease 6.25% 11/1/14 (FGIC) 1,300,000 1,348,035 Tuscon Certificates of Participation 5.60% 7/1/11 1,100,000 1,164,416 Yuma Municipal Property 5.00% 7/1/25 (AMBAC) 1,000,000 995,100 ------------ 4,960,437 ------------ Other Revenue Bonds - 11.22% Maricopa County Stadium District 5.50% 7/1/13 (MBIA) 2,650,000 2,749,322 Phoenix Civic Improvement Corporation Excise Tax Revenue 5.25% 7/1/24 1,250,000 1,266,975 19 Statements of Net Assets (continued) Voyageur Arizona Municipal Income Fund, Inc.+ September 30, 2001 (Unaudited) Principal Market Amount Value Municipal Bonds (continued) Other Revenue Bonds (continued) Pima County Industrial Development Authority (Arizona Charter Schools Project) Series A 6.75% 7/1/31 $ 3,250,000 $ 3,375,158 Puerto Rico Commonwealth 5.00% 6/1/26 (FSA) 500,000 500,125 ------------ 7,891,580 ------------ Pollution Control Revenue Bonds - 1.32% Coconino County Pollution Control (Nevada Power) Series B 5.80% 11/1/32 1,000,000 925,720 ------------ 925,720 ------------ Power Authority Revenue Bonds - 2.38% Salt River Project Electric System Revenue Series D 6.25% 1/1/27 1,635,000 1,673,537 ------------ 1,673,537 ------------ *Pre-Refunded/Escrowed to Maturity Bonds - 6.71% Puerto Rico Commonwealth Infrastructure Financing Authority Special Series A 5.50% 10/1/40 (Escrowed to Maturity) 4,500,000 4,716,990 ------------ 4,716,990 ------------ School District Revenue Bonds - 2.87% Arizona School Facilities Board Revenue 5.00% 7/1/19 2,000,000 2,015,980 ------------ 2,015,980 ------------ Territorial Revenue Bonds - 1.89% Virgin Islands, Public Finance Authority Revenue Series A 6.125% 10/1/29 (ACA) 1,250,000 1,327,800 ------------ 1,327,800 ------------ Transportation Revenue Bonds - 11.62% Arizona State Transportation Board Highway 5.75% 7/1/18 2,350,000 2,515,769 Phoenix Civic Improvement Airport Revenue Senior Lien Series A 5.00% 7/1/25 (FSA) 1,000,000 973,480 Tucson Airport Authority Revenue 5.70% 6/1/13 (MBIA) 3,250,000 3,377,985 Tucson Street & Highway 5.50% 7/1/12 (MBIA) 1,250,000 1,305,088 ------------ 8,172,322 ------------ Water & Sewer Revenue Bonds - 5.89% Tucson Water Revenue Refunding Series A 5.75% 7/1/18 (AMBAC) 4,000,000 4,146,600 ------------ 4,146,600 ------------ Total Municipal Bond (cost $66,012,777) 69,125,061 ------------ Total Market Value of Securities - 98.27% (cost $66,012,777) $ 69,125,061 Receivables and Other Assets Net of Liabilities - 1.73% 1,216,576 Total Net Assets - 100.00% 70,341,637 Liquidation Value of Preferred Stock (25,000,000) ------------ Net Assets Applicable to 2,982,200 Common Shares ($0.01 Par Value) Outstanding $ 45,341,637 ============ Net Asset Value Per Common Share ($45,341,637/2,982,200) $ 15.20 Components of Net Assets at September 30, 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 819,762 Accumulated net realized gain on investments 570,698 Net unrealized appreciation of investments 3,112,284 ------------ Total net assets $ 70,341,637 ============ *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: ACA - Insured by American Capital Access AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Subject to Alternative Minimum Tax Asset Gty - Insured by the Asset Guaranty Insurance Company Asset 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 FSA - Insured by Financial Security Assurance GNMA - Insured by Ginnie Mae MBIA - Insured by the Municipal Bond Insurance Association MBIA - Insured by the Municipal Bond Insurance Association See accompanying notes 20 Statements of Net Assets (continued) Voyageur Florida Insured Municipal Income Fund, Inc.+ September 30, 2001 (Unaudited) Principal Market Amount Value Municipal Bonds - 99.76% Airport Revenue Bonds - 8.12% Dade County Aviation Series 96B 5.60% 10/1/26 (MBIA) $ 1,000,000 $ 1,032,300 Florida Ports Financing Commission State Transportation Trust Fund 5.375% 6/1/27 (AMT)(MBIA) 2,000,000 2,015,600 Hillsborough County Aviation Authority (Tampa International Airport) Series B 5.60% 10/1/19 (FGIC) 1,600,000 1,641,536 ------------- 4,689,436 ------------- General Obligation Bonds - 3.77% Florida State Board of Education (Capital Outlay Public Education) 6.00% 6/1/21 (FGIC) 1,975,000 2,178,899 ------------- 2,178,899 ------------- Higher Education Revenue Bonds - 6.36% Capital Projects Finance Authority Florida Student Housing Revenue (University of Central Florida) Series F-1 5.00% 10/1/31 (MBIA) 830,000 811,699 Florida Agriculture & Mechanical University (Student Apartment Facility) 5.625% 7/1/21 (MBIA) 1,250,000 1,295,838 Volusia County Educational Facilities Authority (Stetson University Project) Series A 5.50% 6/1/17 (MBIA) 1,500,000 1,562,294 ------------- 3,669,831 ------------- Hospital Revenue Bonds - 20.54% Escambia County Health Facilities Authority (Florida Health Care Facilities) 5.95% 7/1/20 (AMBAC)(VA) 3,075,000 3,413,650 Jacksonville Health Care Facilities (Mayo Clinic) Series B 5.50% 11/15/36 2,000,000 2,006,140 Orange County Health Facilities Authority (Adventist Health Center) 5.75% 11/15/25 (AMBAC) 1,500,000 1,563,900 Orange County Health Facilities Authority (Orlando Regional Health) Series A 6.25% 10/1/18 (MBIA) 2,000,000 2,338,360 Venice Health Care (Bon Secours Health System) 5.60% 8/15/16 (MBIA) 2,405,000 2,536,481 ------------- $11,858,531 ------------- Housing Revenue Bonds - 11.48% Florida Housing Finance Agency (Homeowner Mortgage) Series 2 5.90% 7/1/29 (AMT)(MBIA) 1,215,000 1,255,144 +These financial statements reference Voyageur Florida Insured Municipal Income Fund as of September 30, 2001. Effective December 1, 2001, Voyageur Florida Insured Municipal Income Fund will be renamed Delaware Investments Florida Insured Municipal Income Fund. Principal Market Amount Value Municipal Bonds (continued) Housing Revenue Bonds (continued) Florida Housing Finance Agency (Woodbridge Apartments) Series L 6.05% 12/1/16 (AMBAC) $1,120,000 $1,182,205 6.25% 6/1/36 (AMBAC)(AMT) 1,500,000 1,565,370 Florida State Housing Finance Agency (Leigh Meadows Apartments Section 8) Series N 6.30% 9/1/36 (AMBAC)(AMT) 2,510,000 2,628,321 ------------- 6,631,040 ------------- Leases/Certificates of Participation - 10.79% Escambia County School Board Certificates of Participation Series 2 5.50% 2/1/22 (MBIA) 5,000,000 5,145,000 St. Lucie County School Board Certificates of Participation 5.375% 7/1/19 (FSA) 1,000,000 1,085,070 ------------- 6,230,070 ------------- Other Revenue Bonds - 13.74% Miami Beach Resort Tax 5.50% 10/1/16 (AMBAC) 1,000,000 1,050,030 Orange County Public Service Tax 6.00% 10/1/24 (FGIC) 3,000,000 3,260,280 Reedy Creek Improvement District (Sports Complex) Series A 5.75% 6/1/13 (MBIA) 2,300,000 2,521,375 Tampa Utility Tax 6.125% 10/1/19 (AMBAC) 1,000,000 1,103,550 ------------- 7,935,235 ------------- *Pre-Refunded/Escrowed to Maturity Bonds - 16.79% Boca Raton Community Redevelopment Agency Tax Increment (Mizner Park Project) 5.875% 3/1/13-02 (FGIC) 1,500,000 1,553,730 Dade County Professional Sports Franchise Facilities Series B 6.00% 10/1/22-02 (FGIC) 1,000,000 1,052,830 Dade County School Board Certificates of Participation Series B 5.60% 8/1/17-06 (AMBAC) 1,000,000 1,115,620 Hillsborough County Industrial Development Authority (Allegany Health System - John Knox Village) 5.75% 12/1/21 (MBIA) (Escrowed to Maturity) 1,000,000 1,017,360 Sunrise Utility System Series A 5.75% 10/1/26-06 (AMBAC) 2,500,000 2,814,800 Tampa Utility Tax 6.00% 10/1/15-01 (AMBAC) 1,000,000 1,000,320 Village Center Community Development District Recreational Revenue Series A 5.85% 11/1/16-06 (MBIA) 1,000,000 1,140,840 ------------- 9,695,500 ------------- 21 Statements of Net Assets (continued) Voyageur Florida Insured Municipal Income Fund, Inc.+ September 30, 2001 (Unaudited) Principal Market Amount Value Municipal Bonds (continued) Water & Sewer Revenue Bonds - 8.17% Dade County Water & Sewer System 5.50% 10/1/25 (FGIC) $ 1,100,000 $ 1,129,667 Indian River County Water & Sewer System 5.50% 9/1/16 (FGIC) 1,000,000 1,049,490 Panama City Beach Water & Sewer System 5.50% 6/1/18 (AMBAC) 1,000,000 1,016,930 Sarasota County Utility System 5.50% 10/1/22 (FGIC) 1,500,000 1,522,575 ------------ 4,718,662 ------------ Total Municipal Bonds (cost $53,618,439) 57,607,204 ------------ Total Market Value of Securities - 99.76% (cost $53,618,439) 57,607,204 Receivables and Other Assets Net of Liabilities - 0.24% 136,917 ------------ Total Net Assets - 100.00% 57,744,121 ------------ Liquidation Value of Preferred Stock (20,000,000) Net Assets Applicable to 2,422,200 Common Shares ($0.01 Par Value) Outstanding $ 37,744,121 ============ Net Asset Value Per Common Share ($37,744,121 / 2,422,200 Shares) $ 15.58 ------------ Components of Net Assets at September 30, 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 734,726 Accumulated net realized loss on investments (340,759) Net unrealized appreciation of investments 3,988,765 ------------ Total net assets $ 57,744,121 ============ *For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. 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 22 Statements of Net Assets (continued) Voyageur Colorado Insured Municipal Income Fund, Inc.+ September 30, 2001 (Unaudited) Principal Market Amount Value Municipal Bonds - 98.42% General Obligation Bonds - 13.69% Archuleta & Hinsdale Counties School Districts #50JT 5.55% 12/1/20 (MBIA) $4,000,000 $ 4,151,559 Douglas County School District #Re-1 (Douglas & Elbert Counties) 5.00% 12/15/21 (MBIA) 1,250,000 1,241,263 El Paso County School District #20 5.625% 12/15/16 (AMBAC) 2,800,000 2,924,236 5.625% 12/15/16 (MBIA) 1,000,000 1,044,370 G V R Metropolitan District 5.75% 12/1/19 (AMBAC) 1,000,000 1,064,580 Pueblo County 5.80% 6/1/11 (MBIA) 1,405,000 1,506,385 Pueblo County (Library District) 5.80% 11/1/19 (AMBAC) 1,395,000 1,487,656 Puerto Rico Commonwealth 5.125% 7/1/30 (FSA) 1,250,000 1,261,463 Stonegate Village Metropolitan District Refunding & Improvement Series A 5.50% 12/1/21 (FSA) 1,000,000 1,033,220 ------------ 15,714,732 ------------ Higher Education Revenue Bonds - 14.97% Adams State College (Board of Trustees) 5.75% 5/15/19 (MBIA) 2,000,000 2,063,200 Aurora Educational Development 6.00% 10/15/15 (Connie Lee) 1,500,000 1,628,910 Colorado Educational & Cultural Facilities Authority Revenue (University of Denver Project) 5.00% 3/1/27 500,000 488,030 5.50% 3/1/21 3,200,000 3,334,816 Colorado Educational Housing (University of Northern Colorado) 5.00% 7/1/31 (MBIA) 3,500,000 3,433,290 Colorado Post Secondary Education (Auraria Fund Project) 6.00% 9/1/15 (FSA) 1,000,000 1,111,250 Colorado Springs Revenue (Colorado College) 5.375% 6/1/32 (MBIA) 5,000,000 5,120,850 ------------ 17,180,346 ------------ Hospital Revenue Bonds - 6.84% Colorado Health Facilities Authority (Boulder Community Hospital Project) Series B 5.875% 10/1/23 (MBIA) 1,925,000 2,003,559 Principal Market Amount Value Municipal Bonds (continued) Hospital Revenue Bonds (continued) Colorado Health Facilities Authority (North Colorado Medical Center) 5.95% 5/15/12 (MBIA) $ 2,000,000 $ 2,132,560 6.00% 5/15/20 (MBIA) 1,000,000 1,056,740 Colorado Health Facilities Authority (Porter Place) Series A 6.00% 1/20/36 (GNMA) 2,515,000 2,659,462 ------------- 7,852,321 ------------- Housing Revenue Bonds - 9.59% Burlingame Multifamily Housing Income 6.00% 11/1/29 (MBIA) 2,290,000 2,387,554 Colorado Housing Finance Authority (Single Family Housing) Series AA 5.625% 11/1/23 (MBIA) 5,000,000 5,121,450 Mountain Glen Housing Multifamily Revenue 6.70% 7/20/20 (GNMA) 1,280,000 1,438,336 Snowmass Village Multifamily Housing Refunding (Essential Function Housing) 6.25% 12/15/16 (FSA) 2,000,000 2,068,260 ------------- 11,015,600 ------------- Leases/Certificates of Participation - 14.07% Arapahoe County Library District Certificates of Participation 5.70% 12/15/10 (MBIA) 2,000,000 2,157,960 Auraria Higher Education Center Certificates of Participation 5.50% 4/1/26 2,485,000 2,570,757 Aurora Certificates of Participation 5.50% 12/1/30 (AMBAC) 2,000,000 2,070,480 Broomfield Public Improvements 5.75% 12/1/24 (AMBAC) 1,500,000 1,589,580 Denver City & County Certificates of Participation 5.50% 12/1/25 (AMBAC) 2,000,000 2,081,280 Eagle County Public Improvements 5.40% 12/1/18 (MBIA) 1,000,000 1,037,570 Lakewood Certificates of Participation 5.375% 12/1/22 (AMBAC) 2,000,000 2,043,420 Westminster Building Authority Certificates of Participation 5.25% 12/1/22 1,555,000 1,576,304 Westminster Certificates of Participation 5.40% 1/15/23 1,000,000 1,021,840 ------------- 16,149,191 ------------- Other Revenue Bonds - 6.52% Denver Excise Tax Revenue (Colorado Convention Center) 5.00% 9/1/20 (FSA) 7,500,000 7,486,050 ------------- 7,486,050 ------------- +These financial statements reference Voyageur Colorado Insured Municipal Income Fund, Inc. as of September 30, 2001. Effective December 1, 2001, Voyageur Colorado Insured Municipal Income Fund, Inc. will be renamed Delaware Investments Colorado Insured Municipal Income Fund, Inc. 23 Statements of Net Assets (continued) Voyageur Colorado Insured Municipal Income Fund, Inc.+ September 30, 2001 (Unaudited) Principal Market Amount Value Municipal Bonds (continued) Pollution Control Revenue Bonds - 0.91% Adams County Pollution Control Refunding (Public Service Company Project) Series A 5.875% 4/1/14 (MBIA) $ 1,000,000 $ 1,049,450 ------------ 1,049,450 ------------ Sales Tax Revenue Bonds - 1.75% Golden Colorado Sales & Use Tax Revenue Improvement Series B 5.10% 12/1/01 (AMBAC) 2,000,000 2,011,700 ------------ 2,011,700 ------------ Transportation Revenue Bonds - 23.90% Arapahoe County Capital Improvements Highway 6.05% 8/31/15 (MBIA) 4,700,000 5,356,778 Denver City & County Airport Series E 5.25% 11/15/23 (MBIA) 12,000,000 12,042,479 E-470 Public Highway Authority 5.75% 9/1/29 (MBIA) 3,000,000 3,217,560 5.75% 9/1/35 (MBIA) 1,700,000 1,820,156 Northwest Parkway Public Highway Authority 5.25% 6/15/41 (FSA) 5,000,000 5,010,450 ------------ 27,447,423 ------------ Water & Sewer Revenue Bonds - 6.18% Colorado Water Resources & Power Development Authority (Small Water Resources) 5.80% 11/1/20 (FGIC) 2,000,000 2,147,540 Pueblo West Metropolitan District (Water & Wastewater Revenue) 5.25% 12/15/25 2,495,000 2,521,123 Ute Utility Water Conservancy District Water Revenue 5.75% 6/15/20 (MBIA) 2,255,000 2,431,386 ------------ 7,100,049 ------------ Total Municipal Bonds (cost $107,778,504) 113,006,862 ------------ Total Market Value of Securities - 98.42% (cost $107,778,504) 113,006,862 Receivables and Other Assets Net of Liabilities - 1.58% 1,810,968 ------------ Total Net Assets - 100.00% 114,817,830 Liquidation Value of Preferred Stock (40,000,000) ------------ Net Assets Applicable to 4,837,100 Common Shares ($0.01 Par Value) Outstanding $ 74,817,830 ------------ Net Asset Value Per Common Share ($74,817,830/4,837,100 Shares) $ 15.47 ------------ Components of Net Assets at September 30, 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 1,471,337 Accumulated net realized gain on investments 880,025 Net unrealized appreciation of investments 5,228,358 ------------ Total net assets $114,817,830 ============ 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 24 Statements of Operations
Voyageur Closed-End Municipal Bond Funds Six Months Ended September 30, 2001 (Unaudited) Voyageur Voyageur Voyageur Minnesota Minnesota Minnesota Municipal Income Municipal Income Municipal Income Fund, Inc. Fund II, Inc. Fund III, Inc. Investment Income: Interest $ 1,754,346 $ 4,753,063 $ 1,146,007 ----------- ----------- ----------- Expenses: Management fees 116,265 329,528 78,937 Accounting and administration 42,500 42,500 35,870 Remarketing Agent fees 25,278 75,834 18,958 Professional fees 11,188 23,400 18,906 Transfer agent fees and expenses 8,600 26,686 11,120 Reports and statements to shareholders 1,800 17,216 5,896 Custodian fees 2,200 9,616 3,142 Directors'/Trustee's Fees 5,448 7,100 6,600 Rating Agency fees 3,000 4,500 3,000 Taxes (other than taxes on income) 900 4,500 757 Registration fees -- 300 -- Other 2,241 8,924 2,785 ----------- ----------- ----------- 219,420 550,104 187,463 Less expenses paid indirectly (2,641) (6,433) (1,956) ----------- ----------- ----------- Total expenses 216,779 543,671 184,015 ----------- ----------- ----------- Net Investment Income 1,537,567 4,209,392 961,992 ----------- ----------- ----------- Net Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) on investments (8,278) 82 (3,124) Net change in unrealized appreciation/depreciation of investments 274,065 615,330 225,986 ----------- ----------- ----------- Net Realized and Unrealized Gain on Investments 265,787 615,412 222,862 ----------- ----------- ----------- Net Increase in Net Assets Resulting from Operations $ 1,803,354 $ 4,824,804 $ 1,184,854 =========== =========== ===========
See accompanying notes 25 Statements of Operations (continued)
Voyageur Closed-End Municipal Bond Funds Six Months Ended September 30, 2001 (Unaudited) Voyageur Voyageur Voyageur Arizona Florida Insured Colorado Insured Municipal Income Municipal Income Municipal Income Fund, Inc. Fund Fund, Inc. Investment Income: Interest $ 1,933,581 $ 1,556,944 $ 3,047,338 ----------- ----------- ----------- Expenses: Management fees 139,524 115,324 226,202 Accounting and administration 42,500 42,500 42,498 Remarketing Agent fees 31,597 25,278 46,667 Professional fees 14,660 33,009 18,134 Transfer agent fees and expenses 10,199 15,133 11,005 Reports and statements to shareholders 9,481 7,870 13,605 Custodian fees 2,768 2,137 4,044 Directors' / Trustee's Fees 7,823 7,500 3,696 Rating Agency fees 4,500 -- 6,000 Taxes (other than taxes on income) 900 -- 2,220 Other 5,281 4,920 10,313 ----------- ----------- ----------- 269,233 253,671 384,384 Less expenses paid indirectly (3,171) (2,552) (4,260) ----------- ----------- ----------- Total expenses 266,062 251,119 380,124 ----------- ----------- ----------- Net Investment Income 1,667,519 1,305,825 2,667,214 ----------- ----------- ----------- Net Realized and Unrealized Gain (Loss) on Investments: Net realized gain on investments 635,949 34,073 314,130 Net change in unrealized appreciation/depreciation of investments (44,304) 343,296 538,608 ----------- ----------- ----------- Net Realized and Unrealized Gain on Investments 591,645 377,369 852,738 ----------- ----------- ----------- Net Increase in Net Assets Resulting from Operations $ 2,259,164 $ 1,683,194 $ 3,519,952 =========== =========== ===========
See accompanying notes 26 Statements of Changes in Net Assets
Voyageur Closed-End Municipal Bond Funds Voyageur Minnesota Municipal Voyageur Minnesota Municipal Income Fund, Inc. Income Fund II, Inc. Six Months Six Months Ended 9/30/01 Year Ended Ended 9/30/01 Year Ended (Unaudited) 3/31/01 (Unaudited) 3/31/01 Increase (Decrease) in Net Assets from Operations: Net investment income $ 1,537,567 $ 3,044,220 $ 4,209,392 $ 8,470,136 Net realized gain (loss) on investments (8,278) 2,513 82 (176,192) Net change in unrealized appreciation/depreciation of investments 274,065 1,853,302 615,330 6,304,816 ------------- ------------- ------------- ------------- Net increase in net assets resulting from operations 1,803,354 4,900,035 4,824,804 14,598,760 ------------- ------------- ------------- ------------- Dividends and Distributions to: Common shareholders from net investment income (1,089,774) (2,179,548) (3,032,326) (5,928,674) Preferred shareholders from net investment income (316,208) (823,120) (848,070) (2,469,090) ------------- ------------- ------------- ------------- (1,405,982) (3,002,668) (3,880,396) (8,397,764) ------------- ------------- ------------- ------------- Net Increase in Net Assets 397,372 1,897,367 944,408 6,200,996 Net Assets: Beginning of period 58,385,662 56,488,295 164,774,713 158,573,717 ------------- ------------- ------------- ------------- End of period $ 58,783,034 $ 58,385,662 $ 165,719,121 $ 164,774,713 ============= ============= ============= =============
Voyageur Minnesota Municipal Voyageur Arizona Municipal Income Fund III, Inc. Income Fund, Inc. Six Months Six Months Ended 9/30/01 Year Ended Ended 9/30/01 Year Ended (Unaudited) 3/31/01 (Unaudited) 3/31/01 Increase (Decrease) in Net Assets from Operations: Net investment income $ 961,992 $ 1,955,784 $ 1,667,519 $ 3,348,866 Net realized gain (loss) on investments (3,124) (113,781) 635,949 76,138 Net change in unrealized appreciation/depreciation of investments 225,986 1,751,579 (44,304) 2,788,269 ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations 1,184,854 3,593,582 2,259,164 6,213,273 ------------ ------------ ------------ ------------ Dividends and Distributions to: Common shareholders from net investment income (692,395) (1,391,679) (1,198,472) (2,303,750) Preferred shareholders from net investment income (205,390) (617,796) (356,155) (1,030,535) ------------ ------------ ------------ ------------ (897,785) (2,009,475) (1,554,627) (3,334,285) ------------ ------------ ------------ ------------ Net Increase in Net Assets 287,069 1,584,107 704,537 2,878,988 Net Assets: Beginning of period 39,658,968 38,074,861 69,637,100 66,758,112 ------------ ------------ ------------ ------------ End of period $ 39,946,037 $ 39,658,968 $ 70,341,637 $ 69,637,100
See accompanying notes 27 Statements of Changes in Net Assets (continued)
Voyageur Closed-End Municipal Bond Funds Voyageur Florida Insured Voyageur Colorado Insured Municipal Municipal Income Fund Income Fund, Inc. Six Months Six Months Ended 9/30/01 Year Ended Ended 9/30/01 Year Ended (Unaudited) 3/31/01 (Unaudited) 3/31/01 Increase (Decrease) in Net Assets from Operations: Net investment income $ 1,305,825 $ 2,633,120 $ 2,667,214 $ 5,343,527 Net realized gain on investments 34,073 138,481 314,130 1,014,580 Net change in unrealized appreciation/depreciation of investments 343,296 2,449,642 538,608 5,630,688 ------------- ------------- ------------- ------------- Net increase in net assets resulting from operations 1,683,194 5,221,243 3,519,952 11,988,795 ------------- ------------- ------------- ------------- Dividends and Distributions to: Common shareholders from net investment income (952,227) (1,834,817) (1,946,933) (3,609,686) Preferred shareholders from net investment income (286,354) (817,026) (572,668) (1,654,933) ------------- ------------- ------------- ------------- (1,238,581) (2,651,843) (2,519,601) (5,264,619) ------------- ------------- ------------- ------------- Net Increase in Net Assets 444,613 2,569,400 1,000,351 6,724,176 Net Assets: Beginning of period 57,299,508 54,730,108 113,817,479 107,093,303 ------------- ------------- ------------- ------------- End of period $ 57,744,121 $ 57,299,508 $ 114,817,830 $ 113,817,479 ============= ============= ============= =============
See accompanying notes 28 Financial Highlights Selected data for each share of the Fund outstanding throughout each period were as follows:
Voyageur Minnesota Municipal Income Fund, Inc. Six Months Year Year Year Year Year Ended Ended Ended Ended Ended Ended 9/30/01(6) 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 (Unaudited) Net asset value, beginning of period $ 14.790 $ 14.060 $ 15.380 $ 15.380 $ 14.470 $ 14.430 Income (loss) from investment operations: Net investment income 0.575 1.155 1.180 1.188 1.180 1.060 Net realized and unrealized gain (loss) on investments 0.127 0.732 (1.256) 0.004 0.970 0.180 --------- --------- --------- --------- --------- --------- Total from investment operations 0.702 1.887 (0.076) 1.192 2.150 1.240 --------- --------- --------- --------- --------- --------- Less dividends and distributions to: Common shareholders from net investment income (0.420) (0.840) (0.907) (0.930) (0.930) (0.930) Preferred shareholders from net investment income (0.122) (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 (0.542) (1.157) (1.244) (1.192) (1.240) (1.200) --------- --------- --------- --------- --------- --------- Net asset value, end of period $ 14.950 $ 14.790 $ 14.060 $ 15.380 $ 15.380 $ 14.470 --------- --------- --------- --------- --------- --------- Market value, end of period $ 14.200 $ 14.300 $ 13.563 $ 16.500 $ 15.690 $ 14.380 ========= ========= ========= ========= ========= ========= Total investment return based on(1) Market value 2.19% 12.09% (12.39%) 11.29% 16.04% 2.01% Net asset value 4.02% 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) $ 58,783 $ 53,386 $ 56,488 $ 59,919 $ 59,915 $ 57,544 Ratio of expenses to average net assets(3) 0.76% 0.80% 0.89% 0.81% 0.77% 0.81% Ratio of expenses to average net assets applicable to common shares 1.13% 1.23% 1.36% 1.21% 1.17% 1.24% Ratio of net investment income to average net assets(3) 5.24% 5.34% 5.25% 5.13% 5.20% 4.78% Ratio of net investment income to average net assets applicable to common shares(4) 6.36% 6.00% 6.17% 5.99% 6.01% 5.45% Portfolio turnover 2% 6% 12% 15% 0% 5% Leverage analysis: Value of preferred shares outstanding (000 omitted) $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 Net asset coverage per share of preferred shares, end of period $ 146,958 $ 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 $ 50,000
(1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. (6) Ratios have been annualized and total return has not been annualized. See accompanying notes 29 Financial Highlights (continued) Selected data for each share of the Fund outstanding throughout each period were as follows:
Voyageur Minnesota Municipal Income Fund II, Inc. Six Months Year Year Year Year Year Ended Ended Ended Ended Ended Ended 9/30/01(6) 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 (Unaudited) Net asset value, beginning of period $ 14.450 $ 13.590 $ 14.950 $ 14.800 $ 13.590 $ 13.480 Income (loss) from investment operations: Net investment income 0.580 1.168 1.176 1.154 1.130 1.130 Net realized and unrealized gain (loss) on investments 0.085 0.850 (1.411) 0.099 1.200 0.080 --------- --------- --------- --------- --------- --------- Total from investment operations 0.665 2.018 (0.235) 1.253 2.330 1.210 --------- --------- --------- --------- --------- --------- Less dividends to: Common shareholders from net investment income (0.418) (0.818) (0.818) (0.818) (0.820) (0.810) Preferred shareholders from net investment income (0.117) (0.340) (0.307) (0.285) (0.300) (0.290) --------- --------- --------- --------- --------- --------- Total dividends (0.535) (1.158) (1.125) (1.103) (1.120) (1.100) --------- --------- --------- --------- --------- --------- Net asset value, end of period $ 14.580 $ 14.450 $ 13.590 $ 14.950 $ 14.800 $ 13.590 --------- --------- --------- --------- --------- --------- Market value, end of period $ 14.080 $ 14.080 $ 12.438 $ 15.060 $ 13.880 $ 12.630 ========= ========= ========= ========= ========= ========= Total investment return based on(1) Market value 2.94% 19.17% (12.28%) 14.73% 16.56% 1.47% Net asset value 3.87% 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) $ 165,719 $ 164,775 $ 158,574 $ 168,456 $ 167,333 $ 158,572 Ratio of expenses to average net assets(3) 0.68% 0.63% 0.62% 0.64% 0.76% 0.74% Ratio of expenses to average net assets applicable to common shares 1.04% 1.01% 0.99% 1.00% 1.19% 1.19% Ratio of net investment income to average net assets(3) 5.09% 5.27% 5.30% 4.96% 4.98% 5.15% Ratio of net investment income to average net assets applicable to common shares(4) 6.42% 5.96% 6.24% 5.80% 5.73% 6.15% Portfolio turnover 3% 3% 4% 15% 4% 20% Leverage analysis: Value of preferred shares outstanding (000 omitted) $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000 Net asset coverage per share of preferred shares, end of period $ 138,099 $ 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 $ 50,000
(1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. (6) Ratios have been annualized and total return has not been annualized. See accompanying notes 30 Financial Highlights (continued) Selected data for each share of the Fund outstanding throughout each period were as follows:
Voyageur Minnesota Municipal Income Fund III, Inc. Six Months Year Year Year Year Year Ended Ended Ended Ended Ended Ended 9/30/01(6) 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 (Unaudited) Net asset value, beginning of period $ 13.420 $ 12.560 $ 13.970 $ 13.760 $ 12.710 $ 12.540 Income (loss) from investment operations: Net investment income 0.524 1.065 1.075 1.025 1.050 1.080 Net realized and unrealized gain (loss) on investments 0.125 0.889 (1.425) 0.222 1.060 0.150 --------- --------- --------- --------- --------- --------- Total from investment operations 0.649 1.954 (0.350) 1.247 2.110 1.230 --------- --------- --------- --------- --------- --------- Less dividends to: Common shareholders from net investment income (0.377) (0.758) (0.758) (0.758) (0.760) (0.750) Preferred shareholders from net investment income (0.112) (0.336) (0.302) (0.279) (0.300) (0.310) --------- --------- --------- --------- --------- --------- Total dividends (0.489) (1.094) (1.060) (1.037) (1.060) (1.060) --------- --------- --------- --------- --------- --------- Net asset value, end of period $ 13.580 $ 13.420 $ 12.560 $ 13.970 $ 13.760 $ 12.710 --------- --------- --------- --------- --------- --------- Market value, end of period $ 13.000 $ 13.000 $ 11.750 $ 14.125 $ 13.380 $ 12.250 ========= ========= ========= ========= ========= ========= Total investment return based on(1) Market value 2.89% 17.57% (11.70%) 11.59% 15.80% 8.62% Net asset value 4.12% 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) $ 39,946 $ 39,659 $ 38,075 $ 40,665 $ 40,283 $ 38,348 ========= ========= ========= ========= ========= ========= Ratio of expenses to average net assets(3) 0.94% 0.87% 0.81% 0.77% 0.83% 0.81% Ratio of expenses to average net assets applicable to common shares 1.51% 1.42% 1.33% 1.22% 1.34% 1.33% Ratio of net investment income to average net assets(3) 4.84% 5.07% 5.10% 4.64% 4.88% 5.17% Ratio of net investment income to average net assets applicable to common shares(4) 6.13% 5.68% 5.99% 5.35% 5.61% 6.05% Portfolio turnover 1% 5% 16% 15% 9% 39% Leverage analysis: Value of preferred shares outstanding (000 omitted) $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 Net asset coverage per share of preferred shares, end of period $ 133,153 $ 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 $ 50,000
(1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. (6) Ratios have been annualized and total return has not been annualized. See accompanying notes 31 Financial Highlights (continued) Selected data for each share of the Fund outstanding throughout each period were as follows:
Voyageur Arizona Municipal Income Fund, Inc. Six Months Year Year Year Year Year Ended Ended Ended Ended Ended Ended 9/30/01(6) 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 (Unaudited) Net asset value, beginning of period $ 14.970 $ 14.000 $ 15.290 $ 15.030 $ 13.780 $ 13.740 Income (loss) from investment operations: Net investment income 0.559 1.124 1.115 1.108 1.090 1.080 Net realized and unrealized gain (loss) on investments 0.192 0.965 (1.333) 0.202 1.230 0.010 --------- --------- --------- --------- --------- --------- Total from investment operations 0.751 2.089 (0.218) 1.310 2.320 1.090 --------- --------- --------- --------- --------- --------- Less dividends to: Common shareholders from net investment income (0.402) (0.773) (0.773) (0.773) (0.770) (0.760) Preferred shareholders from net investment income (0.119) (0.346) (0.299) (0.277) (0.300) (0.290) --------- --------- --------- --------- --------- --------- Total dividends (0.521) (1.119) (1.072) (1.050) (1.070) (1.050) --------- --------- --------- --------- --------- --------- Net asset value, end of period $ 15.200 $ 14.970 $ 14.000 $ 15.290 $ 15.030 $ 13.780 --------- --------- --------- --------- --------- --------- Market value, end of period $ 15.250 $ 14.250 $ 12.625 $ 15.125 $ 14.630 $ 13.000 ========= ========= ========= ========= ========= ========= Total investment return based on(1) Market value 9.88% 19.28% (11.65%) 8.84% 18.79% 8.20% Net asset value 4.26% 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) $ 70,342 $ 69,637 $ 66,758 $ 70,586 $ 69,813 $ 66,102 Ratio of expenses to average net assets(3) 0.78% 0.75% 0.76% 0.74% 0.80% 0.78% Ratio of expenses to average net assets applicable to common shares 1.20% 1.18% 1.21% 1.15% 1.26% 1.25% Ratio of net investment income to average net assets(3) 4.77% 4.95% 4.93% 4.69% 4.71% 4.85% Ratio of net investment income to average net assets applicable to common shares(4) 5.84% 5.44% 5.74% 5.46% 5.34% 5.71% Portfolio turnover 43% 24% 41% 46% 22% 31% Leverage analysis: Value of preferred shares outstanding (000 omitted) $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 Net asset coverage per share of preferred shares, end of period $ 140,683 $ 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 $ 50,000
(1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. (6) Ratios have been annualized and total return has not been annualized. See accompanying notes 32 Financial Highlights (continued) Selected data for each share of the Fund outstanding throughout each period were as follows:
Voyageur Colorado Insured Municipal Income Fund, Inc. Six Months Year Year Year Year Year Ended Ended Ended Ended Ended Ended 9/30/01(6) 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 (Unaudited) Net asset value, beginning of period $ 15.400 $ 14.340 $ 15.670 $ 15.300 $ 13.670 $ 13.710 Income (loss) from investment operations: Net investment income 0.539 1.087 1.092 1.113 1.090 1.080 Net realized and unrealized gain (loss) on investments 0.152 1.068 (1.368) 0.292 1.600 (0.080) --------- --------- --------- --------- --------- --------- Total from investment operations 0.691 2.155 (0.276) 1.405 2.690 1.000 --------- --------- --------- --------- --------- --------- Less dividends to: Common shareholders from net investment income (0.393) (0.758) (0.758) (0.758) (0.760) (0.750) Preferred shareholders from net investment income (0.118) (0.337) (0.296) (0.277) (0.300) (0.290) --------- --------- --------- --------- --------- --------- Total dividends (0.511) (1.095) (1.054) (1.035) (1.060) (1.040) --------- --------- --------- --------- --------- --------- Net asset value, end of period $ 15.580 $ 15.400 $ 14.340 $ 15.670 $ 15.300 $ 13.670 --------- --------- --------- --------- --------- --------- Market value, end of period $ 14.250 $ 13.180 $ 11.750 $ 14.750 $ 14.310 $ 12.500 ========= ========= ========= ========= ========= ========= Total investment return based on(1) Market value 11.23% 19.06% (15.57%) 8.47 20.94% 3.94% Net asset value 4.08% 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) $ 57,744 $ 57,300 $ 54,730 $ 57,956 $ 57,071 $ 53,110 Ratio of expenses to average net assets(3) 0.88% 0.85% 0.83% 0.75% 0.80% 0.78% Ratio of expenses to average net assets applicable to common shares 1.36% 1.32% 1.31% 1.14% 1.25% 1.25% Ratio of net investment income to average net assets(3) 4.55% 4.73% 4.79% 4.67% 4.73% 4.91% Ratio of net investment income to average net assets applicable to common shares(4) 5.46% 5.10% 5.47% 5.37% 5.33% 5.74% Portfolio turnover 7% 8% 6% 0% 5% 68% Leverage analysis: Value of preferred shares outstanding (000 omitted) $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 Net asset coverage per share of preferred shares, end of period $ 144,360 $ 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 $ 50,000
(1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997 Delaware Management Company replaced Voyageur Fund Managers, Inc., as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. (6) Ratios have been annualized and total return has not been annualized. See accompanying notes 33 Financial Highlights (continued) Selected data for each share of the Fund outstanding throughout each period were as follows:
Voyageur Colorado Insured Municipal Income Fund, Inc. Six Months Year Year Year Year Year Ended Ended Ended Ended Ended Ended 9/30/01(6) 3/31/01 3/31/00 3/31/99 3/31/98(2) 3/31/97 (Unaudited) Net asset value, beginning of period $ 15.260 $ 13.870 $ 15.220 $ 14.920 $ 13.580 $ 13.610 Income (loss) from investment operations: Net investment income 0.551 1.105 1.099 1.080 1.070 1.050 Net realized and unrealized gain (loss) on investments 0.180 1.373 (1.417) 0.264 1.300 (0.060) --------- --------- --------- --------- --------- --------- Total from investment operations 0.731 2.478 (0.318) 1.344 2.370 0.990 --------- --------- --------- --------- --------- --------- Less dividends to: Common shareholders from net investment income (0.403) (0.746) (0.735) (0.735) (0.740) (0.730) Preferred shareholders from net investment income (0.118) (0.342) (0.297) (0.309) (0.290) (0.290) --------- --------- --------- --------- --------- --------- Total dividends (0.521) (1.088) (1.032) (1.044) (1.030) (1.020) --------- --------- --------- --------- --------- --------- Net asset value, end of period $ 15.470 $ 15.260 $ 13.870 $ 15.220 $ 14.920 $ 13.580 --------- --------- --------- --------- --------- --------- Market value, end of period $ 15.000 $ 14.560 $ 12.563 $ 14.938 $ 14.000 $ 12.500 ========= ========= ========= ========= ========= ========= Total investment return based on(1) Market value 5.81% 22.42% (11.05%) 12.13 18.09% 4.77% Net asset value 4.12% 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) $ 114,818 $ 113,817 $ 107,093 $ 113,598 $ 112,187 $ 105,687 Ratio of expenses to average net assets(3) 0.68% 0.68% 0.68% 0.69% 0.75% 0.77% Ratio of expenses to average net assets applicable to common shares 1.04% 1.06% 1.08% 1.06% 1.18% 1.23% Ratio of net investment income to average net assets(3) 4.66% 4.87% 4.93% 4.61% 4.72% 4.76% Ratio of net investment income to average net assets applicable to common shares(4) 5.66% 5.31% 5.72% 5.08% 5.38% 5.51% Portfolio turnover 22% 56% 37% 18% 39% 88% Leverage analysis: Value of preferred shares outstanding (000 omitted) $ 40,000 $ 40,000 $ 40,000 $ 40,000 $ 40,000 $ 40,000 Net asset coverage per share of preferred shares, end of period $ 143,522 $ 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 $ 50,000
(1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. (6) Ratios have been annualized and total return has not been annualized. See accompanying notes 34 Notes to Financial Statements Voyageur Closed-End Municipal Bond Funds September 30, 2001 (Unaudited) 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") are organized as Minnesota corporations. The Voyageur Florida Insured Municipal Income Fund ("Florida Insured Municipal Fund") is organized as a Massachusetts Business Trust. Each of the above referenced companies are hereinafter referred to as a "Fund" and collectively as the "Funds". 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' shares trade on the American Stock Exchange. The investment objective of each Fund is to provide high current income exempt from federal income tax and from the personal income tax of its state, if any, consistent with the preservation of capital. Florida Insured Municipal Fund will generally seek investments that will enable its shares to be exempt from Florida's intangible personal property tax. Each Fund will seek to achieve its investment objective by investing substantially all of its net assets in investment grade, tax-exempt municipal obligations of its respective state. 1. Significant Accounting Policies The following accounting policies are in accordance with accounting principles generally accepted in the United States and are consistently followed by the Funds. Security Valuation - Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. 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 period. Actual results could differ from those estimates. Other - Expenses common to all funds within the Delaware Investments Family of Funds are allocated amongst the Funds on the basis of average net assets. Security transactions are recorded on the date the securities are purchased or sold (trade date). Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis Original issue discounts and market 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 currently on fixed income securities, but recognize such discounts at disposition in compliance with the Internal Revenue Code. 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. 35 Notes to Financial Statements (continued) Voyageur Closed-End Municipal Bond Funds September 30, 2001 (Unaudited) 1. Significant Accounting Policies (continued) 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 its 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 Statements of Operations with the corresponding expense offset shown as "expenses paid indirectly". The amounts of these expenses for the period ended September 30, 2001 were as follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Insured Municipal Municipal Municipal Municipal Municipal Municipal Fund Fund II Fund III Fund Fund Fund --------- --------- --------- ------- --------------- ---------------- Commission reimbursements $1,341 $3,738 $ 910 $1,603 $1,315 $2,616 Earnings credits 1,300 2,650 1,046 1,568 1,237 1,644
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% which is calculated daily based on the average daily net assets of each Fund, including assets attributable to any preferred stock that may be outstanding. The Funds have engaged Delaware Services Company, Inc., (DSC), an affiliate of DMC, to provide accounting and administration services which are based on average net assets and paid on a monthly basis, subject to certain minimums. At September 30, 2001, the Funds had liabilities payable to affiliates as follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Insured Municipal Municipal Municipal Municipal Municipal Municipal Fund Fund II Fund III Fund Fund Fund --------- --------- --------- ------- --------------- ---------------- Investment management fees payable to DMC $19,637 $55,395 $13,344 $23,524 $19,296 $38,465 Dividend disbursing, transfer agent fees, accounting and other expenses payable to DSC 24,445 12,519 7,475 9,368 7,215 15,980 Other expenses payable to DMC and affiliates 1,739 2,366 1,609 1,798 1,729 2,123
Certain officers of DMC and DSC are officers, and/or directors/trustees of the Funds. These officers and directors/trustees are paid no compensation by the Funds. 3. Investments For the period ended September 30, 2001, the Funds made purchases and sales of investment securities other than short-term investments as follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Insured Municipal Municipal Municipal Municipal Municipal Municipal Fund Fund II Fund III Fund Fund Fund --------- --------- --------- --------- --------------- ---------------- Purchases $1,289,483 $3,643,356 $ -- $14,889,175 $1,889,557 $12,274,396 Sales 1,440,453 2,452,565 195,000 14,713,221 2,721,348 14,342,537
At September 30, 2001, the cost of investments for federal income tax purposes approximates the cost for book purposes. At September 30, 2001, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Insured Municipal Municipal Municipal Municipal Municipal Municipal Fund Fund II Fund III Fund Fund Fund --------- --------- --------- ------- --------------- ---------------- Cost of Investments $54,240,636 $156,548,712 $36,536,276 $66,012,777 $53,618,439 $107,778,504 =========== ============ =========== =========== =========== ============ Aggregate Unrealized Appreciation 3,584,607 7,876,607 2,666,516 3,212,234 3,988,765 5,230,454 Aggregate Unrealized Depreciation -- (787,763) (338,300) (99,950) -- (2,096) ----------- ------------ ----------- ----------- ----------- ------------ Net Unrealized Appreciation 3,584,607 7,088,844 2,328,216 3,112,284 3,988,765 5,228,358
36 Notes to Financial Statements (continued) Voyageur Closed-End Municipal Bond Funds September 30, 2001 (Unaudited) 3. Investments (continued) For federal income tax purposes, certain Funds had accumulated capital losses as of September 30, 2001, which may be carried forward and applied against future capital gains. Such capital loss carry forward amounts will expire as follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Municipal Municipal Municipal Municipal Municipal Year of Expiration Fund Fund II Fund III Fund Fund - ------------------ --------- ---------- --------- ---------- --------------- 2003 $ -- $ 952,440 $ 866,889 $ -- $ 92,804 2004 -- 1,143,840 1,279,495 -- 183,099 2005 -- 89,665 455,666 -- -- 2006 -- 132,129 6,539 -- -- 2008 265,111 437,162 56,856 -- 98,928 2009 63,920 175,807 153,308 65,251 -- ------- --------- --------- ------ ------- Total 329,031 2,931,040 2,818,753 65,251 374,831 ======= ========= ========= ====== -------
4. Capital Stock Pursuant to their articles of incorporation, Minnesota Municipal Fund, Minnesota Municipal Fund II, Minnesota Municipal Fund III, Arizona Municipal Fund and Colorado Insured Municipal Fund each have 200 million shares of $0.01 par value common shares authorized. Florida Insured Municipal Fund has been authorized to issue an unlimited amount of $0.01 par value common shares. The Funds did not repurchase any shares under the Share Repurchase Program during the period ending September 30, 2001. Shares issuable under the Fund's dividend reinvestment plan are purchased by the Fund's transfer agent, Mellon Investor Services, LLC, in the open market. For the period ended September 30, 2001, 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, 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 2.50% to 3.70% on Minnesota Municipal Fund, from 2.30% to 3.80% on Minnesota Municipal Fund II, from 2.45% to 3.70% on Minnesota Municipal Fund III, from 2.45% to 3.85% on Arizona Municipal Fund, from 2.45% to 3.65% on Florida Insured Municipal Fund and from 2.55% to 3.80% on Colorado Insured Municipal Fund during the period ended September 30, 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. 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 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 Statements of Net Assets. 37 Delaware Investments (SM) - -------------------------------------- A member of Lincoln Financial Group(R) This annual report is for the information of Voyageur Closed-End Municipal Bond Funds shareholders. It sets forth details about charges, expenses, investment objectives, and operating policies of the Funds. You should read the prospectus carefully before you invest. The return and principal value of an investment in the Funds will fluctuate so that shares, when resold, may be worth more or less than their original cost. Notice is hereby given in accordance with Section 23(c) of the Investment Act of 1940 that the Funds may, from time-to-time, purchase shares of their common stock on the open market at market prices. Board of Trustees Walter P. Babich Board Chairman Citadel Constructors, Inc. King of Prussia, PA David K. Downes President and Chief Executive Officer Delaware Investments Family of Funds Philadelphia, PA John H. Durham Private Investor Gwynedd Valley, PA Anthony D. Knerr Consultant, Anthony Knerr & Associates New York, NY Ann R. Leven Former Treasurer, National Gallery of Art Washington, DC Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN Thomas F. Madison and Janet L. Yeomans were elected by the preferred Shareholders of the Voyageur Closed-End Municipal Bond Funds. Affiliated Officers Charles E. Haldeman, Jr. Chairman Delaware Investments Family of Funds Philadelphia, PA William E. Dodge Executive Vice President and Chief Investment Officer, Equity Delaware Investments Family of Funds Philadelphia, PA Jude T. Driscoll Executive Vice President and Head of Fixed Income Delaware Investments Family of Funds Philadelphia, PA Richard J. Flannery President and Chief Executive Officer Delaware Distributors, L.P. Philadelphia, PA Contact Information Investment Manager Delaware Management Company Philadelphia, PA International Affiliate Delaware International Advisers Ltd. London, England Principal Office of the Funds 2005 Market Street Philadelphia, PA 19103-7057 Independent Auditors Ernst & Young LLP 2001 Market Street Philadelphia, PA 19103 Registrar and Stock Transfer Agent Mellon Investor Services, L.L.C. Overpeck Center 85 Challenger Road Ridgefield Park, NJ 07660 800 851-9677 For Securities Dealers 800 362-7500 For Financial Institutions Representatives Only 800 659-2265 Website www.delawareinvestments.com Number of Recordholders as of September 30, 2001: Minnesota Municipal Income Fund I 395 Minnesota Municipal Income Fund II 651 Minnesota Municipal Income Fund III 157 Arizona Municipal Income Fund 120 Florida Insured Municipal Income Fund 222 Colorado Insured Municipal Income Fund 209 (5234) Printed in the USA VOY-CESA[9/01]CG 11/01 J7567 -----END PRIVACY-ENHANCED MESSAGE-----