-----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, Ubaw3uE+cQllGAxiY39QTvyiO6/7TU5FML38nr32EbF/5KPW3/YHVLJzO0DqBTiR dUBgGaRD1sVl2pEv1OHRuw== 0001070312-99-000003.txt : 19990615 0001070312-99-000003.hdr.sgml : 19990615 ACCESSION NUMBER: 0001070312-99-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR ARIZONA MUNICIPAL INCOME FUND INC CENTRAL INDEX KEY: 0000895577 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411737155 STATE OF INCORPORATION: MN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07412 FILM NUMBER: 99642048 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: 2127132741 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 INC CENTRAL INDEX KEY: 0000884174 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411718337 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06568 FILM NUMBER: 99642049 BUSINESS ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS STREET 2: SUITE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132741 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 FLORIDA INSURED MUNICIPAL INCOME FUND CENTRAL INDEX KEY: 0000895574 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411737161 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07410 FILM NUMBER: 99642050 BUSINESS ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS STREET 2: SUITE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132741 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 MINNESOTA MUNICIPAL INCOME FUND II INC CENTRAL INDEX KEY: 0000895658 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07420 FILM NUMBER: 99642051 BUSINESS ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS STREET 2: SUITE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132741 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: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411751991 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07810 FILM NUMBER: 99642052 BUSINESS ADDRESS: STREET 1: 1818 MARKET STREET STREET 2: 2005 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19103-3682 BUSINESS PHONE: 8005234640 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 MINNESOTA MUNICIPAL INCOME FUND III INC CENTRAL INDEX KEY: 0000910347 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411761999 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07938 FILM NUMBER: 99642053 BUSINESS ADDRESS: STREET 1: C/O DELAWARE MANAGEMENT CO STREET 2: ONE COMMERCE SQU CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2122551000 MAIL ADDRESS: STREET 1: C/O DELAWARE MANAGEMENT CO STREET 2: ONE COMMERCE SQU CITY: PHILADELPHIA STATE: PA ZIP: 19103 N-30D 1 ANNUAL REPORT Voyageur Closed-End Municipal Bond Funds FOR TAX-EXEMPT INCOME service and guidance (various photos demonstrating service and guidance, professional management and goals) professional management 1999 Annual Report goals Arizona Municipal Income Fund Florida Insured Municipal Income Fund Colorado Insured Municipal Income Fund Minnesota Municipal Income Funds I Minnesota Municipal Income Funds II Minnesota Municipal Income Funds III DELAWARE INVESTMENTS - ---------------------- Philadelphia o London A TRADITION OF SOUND INVESTING commitment Investment Objectives and Strategies EACH OF THE SIX FUNDS IN THIS report are closed-end management investment companies 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. (photo of computer keyboard) (illustration of airport) INVESTMENT ADVISER Delaware Management Company (Delaware Management) has been the Funds' investment adviser since May 1, 1997. Delaware Management is a part of Lincoln Financial Group, one of America's largest publicly held diversified financial services companies, with global insurance operations and more than $130 billion in assets under management. Delaware Management currently manages more than $45 billion for mutual fund shareholders and institutional investors such as pension plans and foundations. In addition to the six closed-end funds in this report, Delaware Management also manages closed-end equity funds traded on the New York Stock Exchange. LEVERAGING Each of the six Funds in this report uses leveraging, a tool that is not usually used by open-end mutual funds and one that can be an important contributor to each Fund's income and capital appreciation potential. Of course, there is no guarantee that leveraging will benefit any of the Funds. Leveraging could result in a higher degree of volatility because the Fund's net asset value could be more sensitive to fluctuations in short-term interest rates and equity prices. Delaware believes this volatility risk is reasonable given the benefits of higher income potential. tax-exempt income tradition April 12, 1999 for tax-exempt income 1 Dear Shareholder: OUR 1999 FISCAL YEAR WAS MARKED BY momentous activity in the municipal bond market. First there was the brisk pace at which state and local governments issued new bonds. Second was an increase in refunding activity to pay off old debts, driven by the attractiveness of lower interest rates. Following very heavy activity in the early part of the year, reduced demand in the late summer and early fall of 1998 temporarily curbed new issuance and refunding activity. Concern about a global recession and lower U.S. corporate earnings growth prompted foreign and domestic investors to seek the safety and liquidity of U.S. Treasuries. As U.S. Treasury prices rose, their yields fell. This allowed municipal bond yields to nearly catch up to Treasuries. Unlike Treasuries, the payment of principal and interest on municipal bonds is not guaranteed by the U.S. government. WITH 30-YEAR TAX-EXEMPT BONDS STILL YIELDING MORE THAN THEIR HISTORIC AVERAGE OF 83% OF TREASURIES, WE BELIEVE MUNICIPAL BONDS REMAIN ATTRACTIVELY PRICED COMPARED TO TREASURIES. By October, 30-year AAA (the highest quality rating) general obligation municipal bonds had a yield of 4.82%, about 98% of the yield available from comparable maturity Treasuries. We considered this a compelling value given that the interest on municipal bonds is exempt from federal income tax. As we ended our 1999 fiscal year on March 31, the yield on the 30-year U.S. Treasury had risen to 5.62%, widening the TOTAL RETURNS - ------------------------------------------------------------------------------------------------------------------------------------ APRIL 1, 1998 TO MARCH 31, 1999 Premium (+)/ Total Return Total Return Discount (-)* at Net Asset at Market as of ASE Value Value March 31, 1999 Symbol - ------------------------------------------------------------------------------------------------------------------------------------ Minnesota Municipal Income Fund I +5.88% +11.29% +7.28% VMN Minnesota Municipal Income Fund II +6.76% +14.73% +0.75% VMM Minnesota Municipal Income Fund III +7.28% +11.59% +1.11% VYM Lipper Minnesota Closed-End Municipal Fund Average (6 funds) +6.07% - ------------------------------------------------------------------------------------------------------------------------------------ Arizona Municipal Income Fund +7.07% +8.84% -1.08% VAZ Lipper Other States Closed-End Municipal Debt Fund Average (18 funds) +6.15% - ------------------------------------------------------------------------------------------------------------------------------------ Florida Insured Municipal Income Fund +7.80% +8.47% -5.87% VFL Lipper Florida Closed-End Municipal Fund Average (14 funds) +5.95% - ------------------------------------------------------------------------------------------------------------------------------------ Colorado Insured Municipal Income Fund +7.21% +12.13% -1.86% VCF Lipper Other States Closed-End Municipal Debt Fund Average (18 funds) +6.15% - ------------------------------------------------------------------------------------------------------------------------------------ Lehman Brothers Municipal Bond Index +6.20% Lehman Brothers Insured Municipal Bond Index +6.43%
- -------------------------------------------------------------------------------- * As of March 31, 1999. The Funds' total returns and the returns of unmanaged indexes shown above assume reinvestment of distributions. Past performance does not guarantee future results. The indexes are not available for direct investment. for tax-exempt income 2 yield gap between Treasuries and municipal bonds. However, with 30-year tax-exempt bonds still yielding more than their historic average of 83% of Treasuries, we believe municipal bonds remain attractively priced compared to Treasuries. (Source: Municipal Market Data) We are pleased with the performance of the Voyageur Closed-End Municipal Bond Funds for the 12 months ended March 31, 1999. Five of the six funds in this report outperformed their respective unmanaged indexes and peer group averages for fiscal 1999, as the table on page 1 shows, with Minnesota Municipal Income Fund I slightly underperforming. The three Minnesota Municipal Income Funds traded at attractive premiums to net asset value. In the first three months of 1999, new issuance of municipal bonds was light, down 19% from the same period in 1998, according to The Bond Buyer. Refunding activity had also declined since many state and local governments have already taken advantage of lower interest rates to reduce existing debt payments. On the pages that follow, the portfolio managers for the Voyageur Closed-End Municipal Bond Funds review each Fund's performance and positioning in fiscal 1999. They also share their outlook for the economies and municipal bond markets in Minnesota, Arizona, Florida and Colorado for fiscal year 2000. We thank you for your investment, and look forward to reporting to you again next autumn. Sincerely, /S/ WAYNE A. STORK - ------------------------------------- WAYNE A. STORK Director of the Funds Chairman, Delaware Management Holdings, Inc. /S/ DAVID K. DOWNES - ------------------------------------- DAVID K. DOWNES Executive Vice President and Chief Operating Officer Delaware Investments Family of Funds discipline for tax-exempt income 3 Portfolio Managers' Review ELIZABETH H. HOWELL Vice President/Senior Portfolio Manager Minnesota Municipal Income Funds I, II, III ANDREW M. MCCULLAGH, JR. Vice President/Senior Portfolio Manager Arizona Municipal Income Fund, Colorado Insured Municipal Income Fund PATRICK P. COYNE AND MITCHELL L. CONERY Vice Presidents/Senior Portfolio Managers Florida Insured Municipal Income Fund April 12, 1999 Minnesota Municipal Income Funds - I, II, III THE VOYAGEUR MINNESOTA MUNICIPAL Income Funds II and III provided superior returns at net asset value for the 12 months ended March 31, 1999, compared to the unmanaged Lehman Brothers Municipal Bond Index and the average return of funds in the Lipper Minnesota Closed End Municipal Fund Average. Minnesota Municipal Income Fund II and III had higher returns at net asset value than Fund I. We attribute this to the longer average effective durations for Funds II and III, as shown in the table below. In February 1999, we began to modestly lengthen each Fund's duration because we think interest rates could move lower in 1999. A longer duration would improve our total return potential if interest rates decline. We lengthened duration without sacrificing income. During fiscal 1999, Minnesota municipalities issued new bonds at a rate consistent with the national market average. As issuance around the country has slowed in recent months, Minnesota's supply has declined as well. Of the issuance we've seen, most has been nonrated issues of small rural Minnesota nursing homes. We added some of these bonds to each Fund's holdings to take advantage of their higher relative yields. As of March 31, we held roughly one-fourth of each Fund's net assets in pre-refunded bonds. During the past year, municipalities used lower interest rates to minnesota Minnesota Municipal Income Funds Bond Quality and Portfolio Highlights - -------------------------------------------------------------------------------- MARCH 31, 1999 Fund I Fund II Fund III - -------------------------------------------------------------------------------- AAA 40.57% 24.94% 38.60% AA 19.72% 28.18% 10.07% A 23.90% 31.35% 28.69% BBB -- 1.86% 6.40% Unrated 15.81% 13.67% 16.24% - -------------------------------------------------------------------------------- Average Quality AA AA AA Average Effective Maturity 6.48 years 7.10 years 7.55 years Average Effective Duration 4.68 years 5.54 years 5.82 years Current Yield at Market Price 5.64% 5.43% 5.32% Amount of Leveraging (Millions) $20 million $60 million $15 million - -------------------------------------------------------------------------------- Approximately 19.95%, 20.49% and 12.23% of the income generated by Minnesota Municipal Income Funds - I, II and III for the 12 months ended March 31, 1999, respectively, was subject to the federal alternative minimum tax. for tax-exempt income 4 pay off older debt at lower costs. They do this by establishing an escrow account funded with U.S. government securities. The bonds are then paid off at their first call date. In most cases, once a bond is pre-refunded, we continue to hold it. This allows the Funds to collect an attractive level of current income and benefit from better protection of principal due to the escrow account. Bonds often increase in value after they are pre-refunded as well. All three Minnesota funds traded at a premium to net asset value as of March 31 - Fund I at a +7.28% premium, Fund II at a +0.75% premium, and Fund III at a +1.11% premium. This was the first time since Minnesota Municipal Income Fund III's inception in 1993 that it traded at a premium. As for Minnesota Municipal Income Fund I, we think its exceptionally large premium is the result of investors having grown comfortable paying a premium for older funds. Minnesota Municipal Income Fund I was introduced in April 1992. (photo of keyboard) OUTLOOK We expect interest rates to move modestly lower in the coming months. We base this on our belief that inflation will remain low and U.S. economic growth will slow somewhat. This should prevent the Federal Reserve from having to raise interest rates anytime soon. Our credit outlook for Minnesota's municipal bond market remains positive. Minnesota has one of the strongest economies in the country. The state unemployment rate is currently half that of the nation. Minnesota's municipalities, in our view, are in the best shape we've seen in eight years. Going forward, we think the direction of interest rates will determine the amount of new municipal bond issuance. If rates remain low, issuance should increase. If rates rise, issuance is likely to slow dramatically because refinancing activity will cease. Traditionally, state and local governments issue a fair amount of new bonds in April and May to finance new projects, such as park renovations and road repairs. outlook MINNESOTA MUNICIPAL INCOME FUNDS ASSET MIX - -------------------------------------------------------------------------------- MARCH 31, 1999 Fund I Fund II Fund III - -------------------------------------------------------------------------------- Housing 22.52% 21.34% 19.15% Pre-Refunded Bonds/Escrowed to Maturity 20.54% 21.53% 23.65% Power Authority 16.72% 5.81% 4.68% Hospitals 15.09% 18.82% 22.97% General Obligation 13.12% 9.95% 4.15% Higher Education 7.24% 9.06% 6.00% Water & Sewer 1.76% -- 7.22% Transportation 1.22% 3.74% 3.35% Industrial Development -- 0.86% -- Pollution Control -- 7.90% 6.47% Cash & Other Assets 1.79% 0.99% 2.36% for tax-exempt income 5 Arizona Municipal Income Fund ARIZONA MUNICIPAL INCOME FUND delivered an impressive total return of +7.07% at net asset value (capital change with reinvestment of dividends) for the 12 months ended March 31, 1999, outpacing the unmanaged Lehman Brothers Municipal Bond Index. Over the past 12 months, we wanted to accomplish three positioning objectives: o Sell pre-refunded bonds that had met our performance expectations, but in a manner that did not result in an overall taxable gain for the portfolio. o Improve the call protection of the portfolio. Call protection is a provision of a bond that prevents the issuer from refinancing it before a specific date. o Consolidate our positions wherever it made sense. This allows us to concentrate to a greater extent on areas that we believe offer better potential (photo of three people in a discussion) The Fund's average effective duration was shortened to 5.31 years during fiscal 1999. This was due in part to a decline in interest rates and partly to our conservative investment approach. While Arizona has one of the strongest economies in the U.S., it traditionally has had scarce bond issuance on a per capita basis. Therefore, we have a very limited universe from which to choose. Most of the portfolio is made up of securities issued by two counties: Maricopa County and Pima County. Because of the short supply, tax-exempt bonds from Arizona tend to perform better in a down market than states that issue more bonds because overwhelming demand helps to support prices. Arizona ARIZONA MUNICIPAL INCOME FUND PORTFOLIO HIGHLIGHTS AND ASSET MIX - -------------------------------------------------------------------------------- MARCH 31, 1999 (Pie chart) Industrial Development 2.89% Higher Education 3.12% Housing 19.71% Hospitals 15.81% Power Authority 2.48% Cash & Other Assets 3.68% Water & Sewer 12.50% General Obligation 20.83% Transportation 10.94% Leases/Certificates of Participation 3.63% Pre-refunded Bonds/Escrowed to Maturity 4.41% Average Effective Maturity 7.39 years Average Effective Duration 5.31 years Average Quality AA Current Yield at Market Price 5.11% Amount of Leveraging $25 million - -------------------------------------------------------------------------------- Approximately 11.49% of the income generated by Arizona Municipal Income Fund for the 12 months ended March 31, 1999 was subject to the federal alternative minimum tax. for tax-exempt income 6 OUTLOOK Arizona's economy is expected to continue its uphill growth, driven mostly by strong consumer spending. Economists predict a 3% annual growth rate in Arizona for 1999, despite an anticipated slowdown in Arizona's exports emanating from financial problems in Mexico - Arizona's largest trading partner. (Source: Economic and Research Program, The University of Arizona.) (photo of three people on a beach) Florida Insured Municipal Income Fund FLORIDA INSURED MUNICIPAL INCOME Fund had a robust total return of +7.80% at net asset value (capital change with reinvested dividends) for the 12 months ended March 31, 1999. The Fund outpaced the unmanaged Lehman Brothers Insured Municipal Bond Index by 1.37 percentage points. The Fund also outperformed its Lipper peer group average, as shown on page 1. Our results were achieved with a portfolio exclusively invested in AAA-rated municipal bonds - the highest quality rating available. Our quality focus is consistent for a couple of reasons: o The credit quality of Florida's bonds is traditionally strong - over 75% of all bonds sold in the state are insured, more than in any other state. Insured bonds guarantee the payment of principal and interest. o We use leveraging to increase the Fund's income potential, which exposes the Fund to a higher degree of interest rate risk. We don't want to compound this risk by taking unnecessary credit risks. Since March 1998, the Fund's average effective duration decreased by approximately one year. As of March 31, 1999, the duration was 5.89 years. This was not an active strategy on our part. As interest rates declined during the course of our fiscal year, this effectively reduced our duration. During fiscal 1999, we continued to earn strong yields from hospital bonds, which represented 15.85% of net assets as Florida FLORIDA INSURED MUNICIPAL INCOME FUND PORTFOLIO HIGHLIGHTS AND ASSET MIX - -------------------------------------------------------------------------------- MARCH 31, 1999 (Pie chart) Hospitals 15.85% Pre-refunded Bonds/Escrowed to Maturity 12.32% Housing 11.71% Water & Sewer 11.49% Cash & Other Assets 1.01% Higher Education 4.99% School District 12.62% Utilities 2.31% Transportation 8.62% Other 19.08% Average Effective Maturity 7.62 years Average Effective Duration 5.89 years Average Quality AAA Current Yield at Market Price 5.14% Amount of Leveraging $20 million - -------------------------------------------------------------------------------- Approximately 16.61% of the income generated by Florida Insured Municipal Income Fund for the 12 months ended March 31, 1999 was subject to the federal alternative minimum tax. for tax-exempt income 7 of March 31. Many hospitals have begun to trim costs and manage their facilities more efficiently as overcapacity in the industry has raised the level of competition between hospitals. Most of the yields on the hospital bonds we purchased have yields higher than those of traditional AAA insured bonds. Pre-refunded bonds accounted for 12.32% of net assets. We held onto these bonds because they continue to generate high levels of income for the Fund. As they approach their maturity date, we will sell them and seek to replace them with comparable yielding bonds. OUTLOOK In the first three months of 1999, new municipal supply in Florida was down 13.8% from the same period a year ago, according to The Bond Buyer. The state has dropped one position in 1999 to become the nation's sixth largest issuer of tax-exempt bonds. We believe that issuance will pick up as municipalities issue bonds to finance some large seasonal projects. We also believe Florida's economy remains healthy, stimulated by a combination of steady migration into the state - a real boon to the housing industry - and its traditionally strong travel and tourism industry. This should provide strong underpinnings for Florida's municipal bond market to offer attractive investment opportunities. Colorado Insured Municipal Income Fund COLORADO INSURED MUNICIPAL INCOME Fund provided a total return of +7.21% at net asset value (capital change with reinvestment of dividends) for the 12 months ended March 31, 1999. The Fund outperformed the Lehman Brothers Insured Municipal Bond Index. The Fund invested exclusively in top-rated AAA insured bonds, in keeping with the Fund's investment policies. As has been our strategy in the past, none of the income generated by securities in the portfolio was subject to the federal alternative minimum tax (AMT). colorado COLORADO INSURED MUNICIPAL INCOME FUND PORTFOLIO HIGHLIGHTS AND ASSET MIX - -------------------------------------------------------------------------------- MARCH 31, 1999 (Pie chart) Higher Education 14.30% Pollution 1.40% Power 1.83% Hospitals 13.11% Water & Sewer Bonds 2.86% Cash & Other Assets 1.21% General Obligation 21.52% Transportation 11.43% Housing 8.19% Leases/Certificates of Participation 10.02% Pre-Refunded 11.53% Miscellaneous & Sales Tax Revenue 2.60% Average Effective Maturity 8.13 years Average Effective Duration 6.54 years Average Quality AAA Current Yield at Market Price 4.92% Amount of Leveraging $40 million - -------------------------------------------------------------------------------- None of the income generated by Colorado Insured Municipal Income Fund for the 12 months ended March 31, 1999 was subject to the federal alternative minimum tax. for tax-exempt income 8 (photo of still-life) With a market value of $112 million, Colorado Insured Municipal Income Fund is the only insured closed-end fund in the state of Colorado. Our investment selection is focused in the corridor along Interstate 25, which spans several major cities such as Fort Collins, Greeley, Boulder, Denver, Colorado Springs and Pueblo. The supply and variety of Colorado municipal bonds is sufficient to satisfy our needs. During fiscal 1999, we sought to sell pre-refunded bonds that had met our expectations. We did this in a manner that would not create an overall taxable gain. We also set out to improve the call protection of the portfolio, which protects us against early redemptions on some securities. Finally, we consolidated our holdings to concentrate on areas of the market that we believed offered more attractive total return potential. OUTLOOK The state of Colorado's economy is encouraging for municipal bond investors. Its average unemployment rate in 1998 was a mere 3.8%, well below the national average of 4.3%. More job gains are expected in 1999 in Colorado's telecommunications, energy, and health care industries. (Source: State of Colorado, Economic Chronicle Legislative Council.) A strong economy should help sustain the solid credit quality of Colorado's municipal bond market. As for the Fund, we expect to identify bonds for potential sale as we begin our new fiscal year. In keeping with our investment objective, we may sell bonds that have been contributing the least amount of income to the Fund and reallocate those assets to bonds that offer higher current yields. In this way, we hope to achieve as good - if not better - results for shareholders in the coming year. outlook DIVIDEND REINVESTMENT PLANS Each Fund offers an automatic dividend reinvestment program. If Fund shares are registered in your name and you are not already reinvesting dividends but would like to do so, contact the dividend plan agent, Norwest Bank, Minnesota, NA at 1.800.468.9716. You will be asked to put your request in writing. If you have shares registered in "street" name, contact your financial adviser or the broker/dealer holding the shares. Under the Funds' current policies, all distributions of net investment income and capital gains to common stock shareholders are automatically reinvested in additional shares unless shareholders elect to receive all dividends and other distributions in cash paid by check mailed directly to the shareholders by the dividend plan agent. After each Fund declares a dividend or determines to make a capital gains distribution, the plan agent will, as agent for the participants, receive the cash payment and use it to buy shares in the open market on the American Stock Exchange. The Funds will not issue any new shares in connection with the plan. for tax-exempt income 9 Financial Statements VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC. STATEMENT OF NET ASSETS MARCH 31, 1999 PRINCIPAL MARKET AMOUNT VALUE ---------- ---------- MUNICIPAL BONDS - 98.72% GENERAL OBLIGATION BONDS - 13.12% Edina Recreation Facilities Series 1992-A 6.00% 1/1/09............................................... $305,000 $319,671 6.00% 1/1/10............................................... 320,000 335,309 Minneapolis, Minnesota Refunding (Laurel Village) 6.00% 3/1/16................................ 1,600,000 1,695,568 Minneapolis (St. Paul Metro Airport Commission) 6.60% 1/1/11 (AMT)........................................... 1,500,000 1,579,710 **Minnesota State Public Facilities Authority Water Pollution Control Revenue, Inverse Floater 6.631% 11/1/16............................................ 2,780,000 2,859,564 Rosemount Independent School District #196 5.70% 4/1/12................................................. 1,000,000 1,070,010 ------------ 7,859,832 ------------ HIGHER EDUCATION REVENUE BONDS - 7.24% Minnesota Higher Education Facility (St. Thomas University) Series 3-C 6.25% 9/1/16 ......................... 1,000,000 1,034,950 Minnesota State University Board (State University System) Series A 6.05% 6/30/18.................... 250,000 259,690 Northfield, Minnesota (St. Olaf College) 6.30% 10/1/12................................................ 1,075,000 1,157,001 6.40% 10/1/21................................................ 1,750,000 1,886,133 ------------ 4,337,774 ------------ HOSPITAL REVENUE BONDS - 15.09% Bloomington Health Care Facilities (Masonic Home Care Center) 5.875% 7/1/22 (AMBAC)...................................................... 1,000,000 1,069,800 Duluth Economic Development Authority Health Care (Benedictine Health System St. Mary's Hospital) Series 1993-C 6.00% 2/15/20 (Connie Lee)................................................. 1,000,000 1,073,790 Duluth Economic Development Authority Health Care (St. Luke's Hospital) Series 1992-B 6.40% 5/1/18 (Connie Lee).................................... 1,000,000 1,080,610 Duluth Economic Development Authority Health Care (Duluth Clinic) Series 1992 6.30% 11/1/22 (AMBAC).............................................. 1,270,000 1,384,719 Minneapolis Hospital System (Fairview Hospital) Series 1991-A 6.50% 1/1/11(MBIA)............................. 2,210,000 2,380,546 Minneapolis, Minnesota Health Care Facility (Fairview Hospital) Series 1993-A 5.25% 11/15/19 (MBIA).............................................. 1,500,000 1,522,485 Minneapolis & Saint Paul, Minnesota Housing & Redevelopment Authority Health Care System (Health One) Series 1993-A 5.25% 11/15/19 (MBIA).............................................. 500,000 527,515 ------------ 9,039,465 ------------ HOUSING REVENUE BONDS - 22.52% Brooklyn Center Multifamily Housing (Four Courts) 7.50% 6/1/25 (AMT)............................. $1,800,000 $1,885,644 Minnesota Housing Finance Agency Single Family Mortgage Series 1991-A 6.50% 7/1/06 (AMT))....................................................... 205,000 217,052 Minnesota Housing Finance Agency Single Family Mortgage Series 1992-G 7.45% 7/1/22 (AMT) (FHA).................................................. 1,320,000 1,389,604 Minnetonka Housing Facilities (Beacon Hill Project) 7.70% 6/1/25 (Presbyterian Homes Guaranteed)............................................ 2,725,000 2,927,413 New Brighton Multifamily Mortgage (Polynesian Village Apartments) Series 1995-A 7.60% 4/1/25 (AMT)................................................. 1,400,000 1,499,484 St. Anthony Multifamily Housing Development (Autumn Woods Project) 6.875% 7/1/22 (Asset Guaranty)............................................. 2,265,000 2,414,784 St. Paul Housing & Redevelopment Authority Multifamily Housing (Pointe of St. Paul Project) Series 1992 6.60% 10/1/12 (FNMA)....................................................... 2,950,000 3,158,742 ------------ 13,492,723 ------------ POWER AUTHORITY REVENUE BONDS - 16.72% Bass Brook, Minnesota Power & Light 6.00% 7/1/22....................................................... 2,575,000 2,700,248 Northern Minnesota Municipal Power Agency Electric System Series A 5.00% 1/1/21........................................ 1,500,000 1,464,900 Series B 5.50% 1/1/18 (AMBAC)................................ 1,250,000 1,293,950 Southern Minnesota Municipal Power Agency 5.00% 1/1/16 (FGIC).......................................... 580,000 579,965 5.50% 1/1/15 (AMBAC)......................................... 610,000 635,486 5.75% 1/1/11 (FGIC).......................................... 1,000,000 1,065,470 Western Minnesota Municipal Power Agency Series A 5.50% 1/1/15 (MBIA)................................. 2,275,000 2,279,641 ------------ 10,019,660 ------------ *PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 20.54% Dakota & Washington Counties HRA Single Family Mortgage 8.375% 9/1/21 (AMT) (GNMA) (Escrowed to Maturity)................................ 2,555,000 3,595,038 Duluth Economic Development Authority Health Care (Duluth Clinic) Series 1992 6.30% 11/1/22-04 (AMBAC)........................................... 730,000 817,702 Minnesota Higher Education Facility (Macalester College) Series 3-J 6.40% 3/1/22-02.......................... 1,000,000 1,073,620
10 for tax-exempt income VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC. STATEMENT OF NET ASSETS (CONTINUED) PRINCIPAL MARKET AMOUNT VALUE ---------- ---------- Municipal Bonds (CONTINUED) *PRE-REFUNDED BONDS/ESCROWED TO MATURITY (CONTINUED) Minnesota Public Facilities Authority (Water Pollution Control) Series 1992 6.50% 3/1/14-02.................................................... $1,500,000 $1,641,495 Puerto Rico Commonwealth 6.00% 7/1/26-07....................... 2,000,000 2,287,700 St. Cloud Hospital 6.75% 7/1/15-01 (AMBAC)..................... 1,000,000 1,086,620 St. Francis Independent School District #15 6.30% 2/1/11-06 (FSA).................................... 1,250,000 1,392,413 Southern Minnesota Municipal Power Agency 5.50% 1/1/15 (AMBAC) (Escrowed to Maturity) ...................................... 390,000 413,455 ------------ 12,308,043 ------------ TRANSPORTATION REVENUE BONDS - 1.22% Puerto Rico Commonwealth Highway & Transportation Authority 5.50% 7/1/26........................ 700,000 734,556 ------------ 734,556 ------------ WATER & SEWER REVENUE BONDS - 1.76% Anoka County Solid Waste Disposal National Rural Co-op Utility 6.95% 12/1/08 (AMT)............................ 1,000,000 1,053,930 ------------ 1,053,930 ------------ OTHER REVENUE BONDS - 0.51% Minneapolis, Minnesota Community Development Agency (Supported Development Limited Tax) Common Bond Fund Series 5 5.70% 12/1/27................................................ 300,000 307,384 ------------ 307,384 ------------ Total Municipal Bonds (cost $54,814,048)....................... 59,153,367 ------------ TOTAL MARKET VALUE OF SECURITIES - 98.72% (cost $54,814,048).......................................................... $59,153,367 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.28%......................................................... 765,585 ------------ TOTAL NET ASSETS - 100.00%.................................................... 59,918,952 LIQUIDATION VALUE OF PREFERRED STOCK.......................................... (20,000,000) ------------ NET ASSETS APPLICABLE TO 2,594,700 COMMON SHARES ($0.01 PAR VALUE) OUTSTANDING............................................... $39,918,952 ============ NET ASSET VALUE PER COMMON SHARE ($39,918,952 / 2,594,700 SHARES)............................................ $15.38 ====== - ---------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. ** Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect March 31, 1999. Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Alternative Minimum Tax Asset Guaranty - Insured by the Asset Guaranty Insurance Company Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT MARCH 31, 1999: Common stock, $0.01 par value, 200 million shares authorized to the Fund............................................................. $35,455,037 Preferred stock, $0.01 par value, 1 million shares authorized to the Fund............................................................. 20,000,000 Distributions in excess of net investment income........................... (62,572) Accumulated net realized gain on investments............................... 187,168 Net unrealized appreciation of investments................................. 4,339,319 ------------ Total net assets........................................................... $59,918,952 ============
See accompanying notes for tax-exempt income 11 VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC. STATEMENT OF NET ASSETS MARCH 31, 1999 PRINCIPAL MARKET AMOUNT VALUE ---------- ---------- MUNICIPAL BONDS - 99.01% GENERAL OBLIGATION BONDS - 9.95% Becker Refunding Tax Increment Series D 6.25% 8/1/15 (AMT)(MBIA)..................................... $3,700,000 $3,774,888 Buffalo Independent School District 6.15% 2/1/22 (FSA)................................................. 4,030,000 4,326,407 Hawley Independent School District 5.75% 2/1/17 (FSA)................................................. 1,000,000 1,081,780 **Minnesota State Public Facilities Authority Water Pollution Control Revenue, Inverse Floater 6.63% 11/1/17................................................ 4,005,000 4,095,113 6.626% 11/1/18............................................... 1,145,000 1,165,587 Rosemount Independent School District #196 5.70% 4/1/12............................................ 1,270,000 1,358,913 St. Paul Minnesota Tax Increment (Block 39 Project) Series A 4.75% 2/1/25............................... 1,000,000 956,920 ------------ 16,759,608 ------------ HIGHER EDUCATION REVENUE BONDS - 9.06% Minnesota Higher Education Facility (Macalester College) 5.55% 3/1/16............................ 1,250,000 1,287,925 Minnesota State Higher Education Facility (St. Thomas University) Series 3-R2 5.60% 9/1/14..................................... 275,000 285,192 Series B 3-R1 5.60% 10/1/15.................................. 1,050,000 1,085,585 Series 4A-1 5.625% 10/1/21................................... 1,000,000 1,030,440 Minnesota State University Board (State University System) Series 1993-C 5.60% 6/30/16 (MBIA)........................... 3,115,000 3,268,756 Series 1993-C 5.60% 6/30/19 (MBIA)........................... 3,720,000 3,893,352 Series 1993-A 6.10% 6/30/23.................................. 1,150,000 1,194,885 University of Minnesota Series A 5.50% 7/1/21.................. 3,000,000 3,216,480 ------------ 15,262,615 ------------ HOSPITAL REVENUE BONDS - 18.82% Bloomington Health Care Facilities (Masonic Home Care Center) 5.875% 7/1/22 (AMBAC)........................... 4,000,000 4,279,200 Brainerd Evangelical Lutheran Health Care Facilities Series A 6.65% 3/1/17 (FSA).................................. 1,195,000 1,295,010 Detroit Lakes Benedictine Health Systems (St. Mary's Hospital) 6.00% 2/15/19 (Connie Lee)................................................. 1,250,000 1,342,238 Duluth Economic Development Authority Benedictine Health Systems (St. Mary's Hospital) 6.00% 2/15/20 (Connie Lee)......................... 6,000,000 6,442,740 Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.20% 11/1/12 (AMBAC).............................................. 720,000 780,660 Series 1992 6.30% 11/1/22 (AMBAC)............................ 3,890,000 4,241,384 Minneapolis, St. Paul (Children's Health Care) 5.50% 8/15/25 (FSA).......................................... 1,500,000 1,557,900 Minneapolis, St. Paul (HealthOne) 7.40% 8/15/11(MBIA)................................................ 2,105,000 2,236,142 Minneapolis Health Care Facility (Jones-Harrison Residence Project) 6.00% 10/1/27............................. $2,000,000 $2,023,500 Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 5.75% 11/15/26 (MBIA)............................... 4,800,000 5,142,336 Rochester, Minnesota Health Care Facilities (Mayo Foundation) Series B 5.50% 11/15/27.......................... 2,265,000 2,360,515 ------------ 31,701,625 ------------ HOUSING REVENUE BONDS - 21.34% Chanhassen Multifamily Housing Heritage Park Project 6.20% 7/1/30 (AMT)(FHA).............................. 1,105,000 1,174,582 Dakota County HRA Multifamily Mortgage (Imperial Ridge Project) Series 1993-A 6.10% 12/15/28 (GNMA).............................................. 1,870,000 1,969,073 Harmony, Minnesota Multifamily Housing (Section 8) (Zedakah Foundation Project) Series A 5.95% 9/1/20........................................ 1,000,000 1,044,900 Minnesota Housing Finance Agency Multifamily Rental Housing Series D 5.90% 2/1/14........................................ 1,115,000 1,166,257 Series D 6.00% 8/1/22........................................ 2,295,000 2,401,419 Minnesota Housing Finance Agency Single Family Housing 7.05% 7/1/22 (AMT)........................................... 1,680,000 1,750,946 Series 1992-B 6.15% 1/1/26 (AMT)............................. 3,710,000 3,843,375 Series 1992-C2 6.15% 7/1/23 (AMT)............................ 3,760,000 3,889,156 Series 1994-F 6.30% 7/1/25................................... 1,540,000 1,624,346 Series 1994-J 6.95% 7/1/26 (AMT)............................. 3,470,000 3,693,156 Minnetonka, Minnesota Housing Facilities (Beacon Hill Project) 7.25% 6/1/09................................................. 1,225,000 1,310,603 7.50% 6/1/14................................................. 760,000 816,810 7.55% 6/1/19................................................. 2,365,000 2,536,084 Moorhead, Minnesota Economic Development Authority Multifamily Housing Development (Eventide) Series B 6.00% 6/1/18............................. 1,000,000 1,001,590 New Brighton Multifamily Mortgage (Polynesian Village Apartments) Series 1995-A 7.60% 4/1/25................................................. 3,820,000 4,091,449 St. Paul HRA Single Family Mortgage 6.40% 3/1/21 (FNMA).......................................... 1,935,000 2,044,018 Stillwater, Minnesota Multifamily Mortgage (Stillwater Cottages) 7.25% 11/1/27 (AMT).................... 1,540,000 1,589,372 ------------ 35,947,136 ------------ INDUSTRIAL DEVELOPMENT REVENUE BONDS - 0.86% Burnsville, Minnesota Commercial Development Refunding (Holiday Inn Project) 5.90% 4/1/08....................................................... 1,430,000 1,453,624 ------------ 1,453,624 ------------
12 for tax-exempt income VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC. STATEMENT OF NET ASSETS (CONTINUED) PRINCIPAL MARKET AMOUNT VALUE ---------- ---------- MUNICIPAL BONDS (CONTINUED) POLLUTION CONTROL REVENUE BONDS - 7.90% Bass Brook Minnesota Power & Light 6.00% 7/1/22................................................. $7,660,000 $8,032,582 Cloquet, Minnesota Pollution Control (Potlatch Corporation Project) 5.90% 10/1/26........................... 5,000,000 5,270,900 ------------ 13,303,482 ------------ POWER AUTHORITY REVENUE BONDS - 5.81% Northern Minnesota Municipal Power Agency Electric System Series B 5.50% 1/1/18 (AMBAC)...................................................... 5,955,000 6,164,378 Puerto Rico Electric Power Authority 5.25% 7/1/21....................................................... 2,000,000 2,016,760 Western Minnesota Municipal Power Agency 5.50% 1/1/15 (MBIA).......................................... 1,605,000 1,608,274 ------------ 9,789,412 ------------ *PRE-REFUNDED/ESCROWED TO MATURITY - 21.53% Dakota & Washington Counties HRA Single Family Mortgage 8.375% 9/1/21 (AMT) (GNMA) (Escrowed to Maturity) ...................................... 5,500,000 7,738,826 Duluth Economic Development Authority Health Care Facilities (Duluth Clinic) 6.30% 11/1/22-04 (AMBAC)........................................... 960,000 1,075,334 Duluth Economic Development Authority Hospital Facilities (Duluth Clinic) 6.20% 11/1/12-04 (AMBAC)...................................................... 280,000 312,248 Esko Independent School District 5.65% 4/1/12-05 (FSA).............................................. 550,000 590,315 Metropolitan Council Sports Facility Commission (Hubert H. Humphrey Metrodome) 6.00% 10/1/09 (Escrowed to Maturity)............................... 2,360,000 2,537,330 Minnesota Public Facilities Authority Water Pollution Control 6.25% 3/1/16-05............................ 1,000,000 1,118,330 Minnesota Public Facilities Authority Water Pollution Control Series 1992 6.50% 3/1/14-05.................................................... 3,300,000 3,611,289 Red Wing Independent School District # 256 Series 1993-A 5.70% 2/1/12-03................................ 2,925,000 3,088,712 Series 1993-A 5.70% 2/1/13-03................................ 1,625,000 1,715,951 St. Paul Sales Tax (Civic Center) 5.55% 11/1/23 (Escrowed To Maturity)......................... 2,300,000 2,415,276 5.55% 11/1/23 (MBIA) (Escrowed To Maturity) .................................... 4,200,000 4,456,074 Southern Minnesota Municipal Power Agency 5.75% 1/1/18-16.............................................. 3,715,000 3,980,808 Stewartville Independent School District #534 5.75% 2/1/17- 05........................................ 1,705,000 1,830,965 Western Minnesota Municipal Power Agency 6.625% 1/1/16 (Escrowed To Maturity)......................... 1,535,000 1,806,956 ------------ 36,278,414 ------------ TRANSPORTATION REVENUE BONDS - 3.74% Puerto Rico Commonwealth Highway & Transportation Authority 5.50% 7/1/26....................................... $6,000,000 $6,296,220 ------------ 6,296,220 ------------ Total Municipal Bonds (cost $156,831,187)...................... 166,792,136 ------------ TOTAL MARKET VALUE OF SECURITIES - 99.01% (cost $156,831,187)......................................................... $166,792,136 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.99%......................................................... 1,663,875 ------------ TOTAL NET ASSETS - 100.00%.................................................... 168,456,011 LIQUIDATION VALUE OF PREFERRED STOCK.......................................... (60,000,000) ------------ NET ASSETS APPLICABLE TO 7,252,200 COMMON SHARES ($0.01 PAR VALUE) OUTSTANDING............................................... $108,456,011 ============ NET ASSET VALUE PER COMMON SHARE ($108,456,011 / 7,252,200 SHARES)........................................... $14.95 ====== - ---------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. ** Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect March 31, 1999. Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Alternative Minimum Tax Connie Lee - Insured by the College Construction Insurance Association FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT MARCH 31, 1999: 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......................................... 1,103,134 Accumulated net realized loss on investments................................ (2,318,074) Net unrealized appreciation of investments.................................. 9,960,949 ...................................................................... ------------ Total net assets............................................................ $168,456,011 ============
See accompanying notes for tax-exempt income 13 VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC. STATEMENT OF NET ASSETS MARCH 31, 1999 PRINCIPAL MARKET AMOUNT VALUE ---------- ---------- MUNICIPAL BONDS - 98.59% GENERAL OBLIGATION BONDS - 4.15% **Minnesota State Public Facilities Authority Water Pollution Control Revenue, Inverse Floater 6.631% 11/1/16............................................. $1,640,000 $1,686,937 ------------ 1,686,937 ------------ HIGHER EDUCATION REVENUE BONDS - 6.00% Minnesota Higher Education Facilities Authority (St. Mary's College) Series 3-Q 6.15% 10/1/23...................................................... 1,000,000 1,034,170 Minnesota Higher Education Facilities Authority (St. Thomas University) Series 4-A1 5.625% 10/1/21...................................................... 1,010,000 1,040,744 Minnesota State Higher Educational Facilities Authority Revenue Unrefunded Balance Series 6.375% 3/1/20................................................ 345,000 364,306 ------------ 2,439,220 ------------ HOSPITAL REVENUE BONDS - 22.97% Duluth Economic Development Authority Hospital Facilities (Duluth Clinic) 6.20% 11/1/12 (AMBAC)...................................................... 1,080,000 1,170,990 Minnesota Agriculture & Economic Development Health Care System (Benedictine Care) 5.75% 2/1/29....................................................... 1,300,000 1,254,994 Minnesota Agricultural & Economic Development Health Care System (Fairview Hospital) Series A 5.75% 11/15/26 (MBIA)............................... 2,000,000 2,142,640 Princeton Fairview Hospital Series 1991-C 6.25% 1/1/21 (MBIA).......................................... 2,000,000 2,149,660 Robbinsdale North Memorial Medical Center Series 1993-B 5.50% 5/15/23 (AMBAC).......................... 1,500,000 1,544,535 St. Paul, Minnesota Housing & Redevelopment Authority for Healtheast Hospital 5.85% 11/1/17...................................................... 250,000 243,910 Wadena County Health Care Facilities 7.75% 9/1/24....................................................... 750,000 833,130 ------------ 9,339,859 ------------ HOUSING REVENUE BONDS - 19.15% Brooklyn Center Multifamily Housing (Four Courts) 7.50% 6/1/25 (AMT)............................. 1,000,000 1,047,580 Burnsville Multifamily Mortgage Series A 7.10% 1/1/30 (FSA)........................................... 2,000,000 2,219,120 Edina HRA (Edina Park Plaza) 7.70% 12/1/28 (FHA)................................................ 1,000,000 1,030,500 Minneapolis Multifamily Housing (Olson Townhomes) 6.00% 12/1/19 (AMT)............................... 1,875,000 1,938,075 Minnesota HFA Single Family Mortgage Series 1991-A 7.45% 7/1/22 (AMT) (FHA)....................... 1,475,000 1,552,777 ------------ 7,788,052 ------------ POLLUTION CONTROL REVENUE BONDS - 6.47% Bass Brook PCR Minnesota Power & Light 6.00% 7/1/22....................................................... $1,505,000 $1,578,203 Cloquet, Minnesota Pollution Control (Potlatch Corporation Project) 5.90% 10/1/26........................... 1,000,000 1,054,180 ------------ 2,632,383 ------------ POWER AUTHORITY REVENUE BONDS - 4.68% Southern Minnesota Municipal Power Agency 5.75% 1/1/18 (FGIC).......................................... 1,800,000 1,904,382 ------------ 1,904,382 ------------ *PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 23.65% Duluth Economic Development Authority Hospital Facilities (Duluth Clinic) 6.20% 11/1/12-04 (AMBAC)...................................................... 420,000 468,371 Esko Independent School District 5.75% 4/1/17-05 (FSA).............................................. 2,145,000 2,313,468 Minnesota Higher Education Facilities Authority (Saint Benedict) Series 3-W 6.375% 3/1/20-04.................................................... 930,000 1,030,459 Moorhead Public Utilities 6.25% 11/1/12-02 (MBIA)....................................................... 1,500,000 1,613,760 North Branch Independent School District #138 5.625% 2/1/17 (FGIC).................................... 1,000,000 1,070,170 University of Minnesota Hospital 6.75% 12/1/16 (Escrowed to Maturity)............................... 2,580,000 3,119,478 ------------ 9,615,706 ------------ TRANSPORTATION REVENUE BONDS - 3.35% Puerto Rico Commonwealth Highway & Transportation Authority 5.50% 7/1/26........................ 1,300,000 1,364,181 ------------ 1,364,181 ------------ WATER & SEWER REVENUE BONDS - 7.22% Minnesota Public Facility Authority Water Pollution Control 5.40% 3/1/15......................................... 2,820,000 2,935,085 ------------ 2,935,085 ------------ OTHER REVENUE BONDS - 0.95% Minneapolis, Minnesota Community Development Agency (Supported Development Revenue Limited Common Bond Fund) Series 5 5.70% 12/1/27...................................................... 375,000 384,229 ------------ 384,229 ------------ Total Municipal Bonds (cost $37,217,864)....................... 40,090,034 ------------ NUMBER OF SHARES ---------- SHORT TERM INVESTMENTS - 0.07% Federated Minnesota Municipal Cash Trust....................... 29,420 29,420 ------------ Total Short Term Investments (cost $29,420).................... 29,420 ------------
14 for tax-exempt income VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC. STATEMENT OF NET ASSETS (CONTINUED) TOTAL MARKET VALUE OF SECURITIES - 98.66% (COST $37,247,284).......................................................... $40,119,454 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.34%......................................................... 545,261 ------------ TOTAL NET ASSETS - 100.00%.................................................... 40,664,715 LIQUIDATION VALUE OF PREFERRED STOCK.......................................... (15,000,000) ------------ NET ASSETS APPLICABLE TO 1,837,200 COMMON SHARES ($0.01 PAR VALUE) OUTSTANDING............................................... $25,664,715 ============ NET ASSET VALUE PER COMMON SHARE ($25,664,715 / 1,837,200 SHARES)............................................ $13.97 ====== - ---------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. ** Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect March 31, 1999. Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Alternative Minimum Tax FGIC - Insured by the Financial Guaranty Insurance Corporation FHA - Insured by the Federal Housing Authority FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT MARCH 31, 1999: Common stock, $0.01 par value, 200 million shares authorized to the Fund............................................................. $25,246,730 Preferred stock, $0.01 par value, 1 million shares authorized to the Fund............................................................. 15,000,000 Undistributed net investment income........................................ 154,404 Accumulated net realized loss on investments............................... (2,608,589) Net unrealized appreciation of investments................................. 2,872,170 ------------ Total net assets........................................................... $40,664,715 ============
See accompanying notes VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC. STATEMENT OF NET ASSETS MARCH 31, 1999 PRINCIPAL MARKET AMOUNT VALUE ----------- ----------- MUNICIPAL BONDS - 98.92% GENERAL OBLIGATION BONDS - 20.83% Eagle Mountain Community Facility District A2 6.40% 7/1/17................................................. $1,500,000 $1,640,850 Maricopa County Alhambra Elementary School District #68 5.625% 7/1/13 (AMBAC)........................... 2,500,000 2,678,675 Maricopa County Unified School District #11 5.50% 7/1/10................................................. 3,000,000 3,202,620 Maricopa County Unified School District #41 6.25% 7/1/15 (FSA)........................................... 1,500,000 1,704,975 Maricopa County Washington Elementary Unified School District #6 5.375% 7/1/14 (AMBAC)...................................................... 1,000,000 1,042,110 Mohave County Unified School District #1 5.90% 7/1/15 (FGIC)................................................ 1,500,000 1,643,115 Pima County Unified School District #6 5.75% 7/1/12 (FGIC)................................................ 2,000,000 2,153,540 Santa Cruz Valley Unified School District #35 5.80% 7/1/09 (AMBAC)......................................... 600,000 638,280 ------------ 14,704,165 ------------ HIGHER EDUCATION REVENUE BONDS - 3.12% University of Arizona 6.25% 6/1/11................................................. 1,000,000 1,077,420 6.35% 6/1/14................................................. 1,000,000 1,128,190 ------------ 2,205,610 ------------ HOSPITAL REVENUE BONDS - 15.81% Maricopa County Health Facilities (Catholic Health Care West) Series A 5.75% 7/1/11 (MBIA)...................... 1,750,000 1,849,715 Maricopa County Health Facilities (Catholic Health Care West) Series A 6.00% 7/1/21 (MBIA)...................... 1,100,000 1,176,054 Maricopa County Industrial Development Authority (Baptist Hospital) 5.50% 9/1/13 (MBIA)....................... 300,000 315,690 Maricopa County Industrial Development Revenue 5.00% 7/1/16................................................. 4,000,000 3,954,160 Mohave County Industrial Development Authority (Baptist Hospital) 5.50% 9/1/21 (MBIA)....................... 500,000 518,925 Mohave County Industrial Development Authority (Baptist Hospital) 5.75% 9/1/26 (MBIA)....................... 150,000 161,733 Phoenix Industrial Development Authority (John C. Lincoln Hospital) 5.50% 12/1/13 (FSA)........................ 1,100,000 1,170,873 Show Low, Arizona Industrial Development Authority (Navapache Regional Medical Center) Series A 5.50% 12/1/17 (ACA)......................... 250,000 257,500 University of Arizona Medical Center 6.25% 7/1/16 (MBIA)................................................ 700,000 750,988 Yavapai County, Arizona Industrial Development Authority Residential Care Facilities 5.40% 2/20/38 (GNMA)............................................... 1,000,000 1,004,210 ------------ 11,159,848 ------------ HOUSING REVENUE BONDS - 19.71% Maricopa County, Arizona Industrial Development Authority Multifamily (Camelback Apartments Project A) 5.45% 5/1/28 (Asset Guaranty)..................... 1,250,000 1,267,588
for tax-exempt income 15 VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC. STATEMENT OF NET ASSETS (CONTINUED) PRINCIPAL MARKET AMOUNT VALUE ----------- ----------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Peoria Multifamily Housing Mortgage 7.30% 2/20/28 (GNMA)............................................... $1,230,000 $1,346,615 Phoenix Industrial Development Authority (Chris Ridge) 6.80% 11/1/25 (FHA)................................... 500,000 527,225 Phoenix Industrial Development Authority Single Family Mortgage 5.30% 4/1/20................................................. 2,500,000 2,513,450 5.35% 6/1/20 (GNMA).......................................... 3,345,000 3,384,839 Pima County, Arizona Industrial Development Authority 5.20% 4/1/19....................................... 1,235,000 1,234,988 Pima County, Arizona Industrial Development Authority (Single Family Mortgage Revenue) Series A 6.25% 11/1/30....................................... 1,125,000 1,185,075 Tempe Industrial Development Authority Multifamily Mortgage 6.125% 6/1/10 (FHA)..................... 2,305,000 2,453,742 ------------ 13,913,522 ------------ INDUSTRIAL DEVELOPMENT REVENUE BONDS - 2.89% Coconino County (Nevada Power) Pollution Control Corporation 5.80% 11/1/32............................ 1,000,000 1,013,220 Navajo County (Arizona Public Service) Pollution Control Corporation 5.50% 8/15/28 (AMBAC).................... 1,000,000 1,029,070 ------------ 2,042,290 ------------ LEASES/CERTIFICATES OF PARTICIPATION - 3.63% Scottsdale Municipal Property Corporation Lease 6.25% 11/1/14 (FGIC)......................................... 1,300,000 1,402,180 Tucson, Arizona Certificate of Participation 5.60% 7/1/11....................................................... 1,100,000 1,156,903 ------------ 2,559,083 ------------ POWER AUTHORITY REVENUE BONDS - 2.48% Salt River Project Electric System Revenue 6.25% 1/1/27................................................. 1,635,000 1,753,358 ------------ 1,753,358 ------------ *PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 4.41% Arizona Health Facility Authority Phoenix Baptist Hospital and Medical Center 6.25% 9/1/11 (MBIA) (Escrowed to Maturity)................................ 1,500,000 1,622,985 Phoenix Civic Improvement Corporation Water System Junior Lien 5.60% 7/1/18-06........................... 1,000,000 1,094,340 Salt River Project Electric System Series D 6.25% 1/1/27-02.............................................. 365,000 396,087 ------------ 3,113,412 ------------ TRANSPORTATION REVENUE BONDS - 10.94% City of Phoenix, Arizona Street & Highway Junior Lien 6.25% 7/1/11 (FGIC)..................................... 1,300,000 1,409,902 Phoenix, Arizona Civic Improvement Airport Revenue Senior Lein (Series A) 5.00% 7/1/25.................. 1,000,000 988,400 Tucson Airport Authority 5.70% 6/1/13 (MBIA)................... 2,000,000 2,137,260 Tucson Street & Highway 5.50% 7/1/12 (MBIA).................... 3,000,000 3,185,550 ------------ 7,721,112 ------------ WATER & SEWER REVENUE BONDS - 12.50% Phoenix, Arizona Civic Improvement Wastewater Systems Revenue 5.375% 7/1/22................................ 1,000,000 1,021,600 Phoenix Civic Improvement Corporation 5.50% 7/1/21 (AMBAC)............................................... $2,000,000 $2,067,280 Phoenix Water System 5.50% 7/1/22.............................. 2,000,000 2,043,180 Tucson Water Refunding Series A 5.75% 7/1/18 (AMBAC)............................................... 3,500,000 3,690,715 ------------ 8,822,775 ------------ OTHER REVENUE BONDS - 2.60% Maricopa County Stadium District 5.50% 7/1/13 (MBIA)................................................ 1,750,000 1,836,345 ------------ 1,836,345 ------------ Total Municipal Bonds (cost $65,577,996)....................... 69,831,520 ------------ NUMBER OF SHARES ----------- SHORT-TERM INVESTMENTS - 0.01% Norwest Advantage Municipal Money Market Fund.................. 2,500 2,500 ------------ Total Short Term Investments (cost $2,500)..................... 2,500 ------------ TOTAL MARKET VALUE OF SECURITIES - 98.93% (cost $65,580,496).......................................................... $69,834,020 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.07%......................................................... 752,205 ------------ TOTAL NET ASSETS - 100.00%.................................................... 70,586,225 LIQUIDATION VALUE OF PREFERRED STOCK.......................................... (25,000,000) ------------ NET ASSETS APPLICABLE TO 2,982,200 COMMON SHARES ($0.01 PAR VALUE) OUTSTANDING............................................... $45,586,225 ============ NET ASSET VALUE PER COMMON SHARE ($45,586,225 / 2,982,200 SHARES)............................................ $15.29 ====== - ---------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. Summary of Abbreviations: ACA - Insured by the American Capital Access Corporation AMBAC - Insured by the AMBAC Indemnity Corporation Asset Guaranty - Insured by the Asset Guaranty Insurance Company FGIC - Insured by the Financial Guaranty Insurance Corporation FHA - Insured by the Federal Housing Authority FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT MARCH 31, 1999: 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........................................... 563,796 Accumulated net realized loss on investments.................................. (69,988) Net unrealized appreciation of investments.................................... 4,253,524 ------------ Total net assets.............................................................. $70,586,225 ============
See accompanying notes 16 for tax-exempt income VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND STATEMENT OF NET ASSETS MARCH 31,1999 PRINCIPAL MARKET AMOUNT VALUE ------------ ------------ MUNICIPAL BONDS - 98.99% HIGHER EDUCATION REVENUE BONDS - 4.99% Florida Agricultural & Mechanical University (Student Apartment Facility) 5.625% 7/1/21 (MBIA)................................................ $1,250,000 $1,307,263 Volusia Education Facilities Authority (Stetson University) 5.50% 6/1/17 (MBIA).............................. 1,500,000 1,583,760 ------------ 2,891,023 ------------ HOSPITAL REVENUE BONDS - 15.85% Lakeland Hospital System (Lakeland Regional Medical Center) 5.75% 11/15/15 (FGIC)........................ 2,500,000 2,681,875 Orange County Health Facilities Authority (Adventist Health System) 5.75% 11/15/25 (AMBAC)............................................. 1,500,000 1,608,180 Orange County Health Facilities Authority (Orlando Regional Health) 6.25% 10/1/18 (MBIA)....................................................... 2,000,000 2,328,180 Venice Health Care (Bon Secours Health System Project) 5.60% 8/15/16 (MBIA)................................ 2,405,000 2,569,092 ------------ 9,187,327 ------------ HOUSING REVENUE BONDS - 11.71% Florida Housing Finance Agency Homeowner Mortgage Series 2 5.90% 7/1/29 (MBIA) (AMT)........................................................ 1,240,000 1,291,113 Florida State Housing (Leigh Meadows Project) Series N 6.30% 9/1/36 (AMBAC) (AMT).......................... 2,510,000 2,695,765 Florida State Housing (Woodbridge Project) Series L 6.05% 12/1/16 (AMBAC) (AMT).................................. 1,120,000 1,190,570 6.25% 6/1/36 (AMBAC)......................................... 1,500,000 1,607,640 ------------ 6,785,088 ------------ *PRE-REFUNDED BONDS/ESCROWED TO MATURITY - 12.32% Dade County Professional Sports Franchise Facilities 6.00% 10/1/22-02 (FGIC)........................... 1,000,000 1,087,770 Dade County Seaport 6.25% 10/1/21-01 (AMBAC)...................................................... 1,000,000 1,074,100 Hillsborough County Industrial Development Authority Alleghany Health System (Knox Village) (Escrowed to Maturity) 5.75% 12/1/21(MBIA)................................................ 1,000,000 1,062,010 Sunrise Utility System Series A 5.75% 10/1/26-06 (AMBAC)........................................... 2,500,000 2,785,450 Village Center Community Development District Series A 5.85% 11/1/16-06 (MBIA).................... 1,000,000 1,128,970 ------------ 7,138,300 ------------ SCHOOL DISTRICT REVENUE BONDS - 12.62% Dade County School Board Lease 5.60% 8/1/17 (AMBAC)............................................... 1,000,000 1,102,720 Escambia County School Board Lease 5.50% 2/1/22 (MBIA)................................................ 5,000,000 5,194,200 St. Lucie County School Board Lease 5.375% 7/1/19 (FSA)................................................. $1,000,000 $1,018,190 ------------ 7,315,110 ------------ TRANSPORTATION REVENUE BONDS - 8.62% Dade County Aviation Series B 5.60% 10/1/26 (MBIA)....................................................... 1,000,000 1,051,040 Florida Ports Financing Commission 5.375% 6/1/27 (MBIA) (AMT).......................................... 2,250,000 2,269,980 Hillsborough County Aviation Authority (Tampa International Airport) Series B 5.60% 10/1/19 (FGIC)............................................... 1,600,000 1,674,240 ------------ 4,995,260 ------------ UTILITIES REVENUE BONDS - 2.31% Florida State Municipal Power Agency (St. Lucie Project) 5.70% 10/1/16 (FGIC)................................ 1,250,000 1,336,888 ------------ 1,336,888 ------------ WATER & SEWER REVENUE BONDS - 11.49% City of Panama Beach Water & Sewer 5.50% 6/1/18 (AMBAC)............................................... 1,000,000 1,039,410 Dade County Water & Sewer 5.50% 10/1/25 (FGIC)....................................................... 1,100,000 1,143,813 Florida Keys Aqueduct Water 5.25% 9/1/21 (AMBAC)...................................................... 1,700,000 1,715,538 Indian River County Water & Sewer 5.50% 9/1/16 (FGIC)................................................ 1,000,000 1,064,880 North Springs District Florida Water Revenue 4.75% 10/1/23 (MBIA)......................................... 125,000 119,088 Sarasota County Utility System 5.50% 10/1/22 (FGIC)............................................... 1,500,000 1,576,560 ------------ 6,659,289 ------------ OTHER REVENUE BONDS - 19.08% Boca Raton Community Redevelopment Tax Increment (Mizner Park Project) 5.875% 3/1/13 (FGIC)................................................ 1,500,000 1,618,080 Miami Beach Resort Tax 5.50% 10/1/16 (AMBAC)...................................................... 1,000,000 1,061,440 Orange County Public Service Tax 6.00% 10/1/24 (FGIC)............................................... 3,000,000 3,274,350 Orange County Sales Tax 6.125% 1/1/19 (FGIC)................... 1,000,000 1,041,340 Reedy Creek Improvement (Sports Complex) 5.75% 6/1/13 (MBIA).......................................... 2,300,000 2,475,904 Saint John's County Industrial Development Authority (Pro Golf Hall of Fame) 5.50% 3/1/17 (MBIA)................................................ 250,000 262,848 Tampa Utilities Tax 6.00% 10/1/15 (AMBAC)...................... 1,000,000 1,049,780 Village Center Community Development District Series A 5.50% 11/1/10 (MBIA)....................... 250,000 277,113 ------------ 11,060,855 ------------ Total Municipal Bonds (cost $52,971,205)....................... 57,369,140 ------------
for tax-exempt income 17 VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND, INC. STATEMENT OF NET ASSETS (CONTINUED) TOTAL MARKET VALUE OF SECURITIES - 98.99% (COST $52,971,205).......................................................... $57,369,140 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.01%......................................................... 586,469 ------------ TOTAL NET ASSETS - 100.00%.................................................... 57,955,609 LIQUIDATION VALUE OF PREFERRED STOCK.......................................... (20,000,000) ------------ NET ASSETS APPLICABLE TO 2,422,200 COMMON SHARES ($0.01 PAR VALUE) OUTSTANDING............................................... $37,955,609 ============ NET ASSET VALUE PER COMMON SHARE ($37,955,609 / 2,422,200 SHARES)............................................ $15.67 ====== Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation AMT - 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 COMPONENTS OF NET ASSETS AT MARCH 31, 1999: 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........................................ 592,229 Accumulated net realized loss on investments............................... (395,944) Net unrealized appreciation of investments................................. 4,397,935 ------------ Total net assets........................................................... $57,955,609 ============
See accompanying notes VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC. STATEMENT OF NET ASSETS MARCH 31, 1999 PRINCIPAL MARKET AMOUNT VALUE ----------- ---------- Municipal Bonds - 98.79% GENERAL OBLIGATION BONDS - 21.52% Adams County School District #12 (Five Star) 5.40% 12/15/15 (FGIC)........................................ $1,250,000 $1,307,488 5.40% 12/15/16 (FGIC)........................................ 2,000,000 2,080,960 Archuleta & Hinsdale Counties School District #50JT 5.50% 12/1/14 (MBIA)......................................... 1,000,000 1,063,840 5.55% 12/1/20 (MBIA)......................................... 4,000,000 4,217,798 Eagle, Garfield & Routt Counties School District #Re-50J 6.30% 12/1/12 (FGIC)................................. 1,000,000 1,118,830 El Paso County School District #20 5.625% 12/15/16 (AMBAC)...................................... 3,000,000 3,217,170 5.625% 12/15/16 (MBIA)....................................... 1,000,000 1,075,760 Larimer, Weld & Boulder Counties School District #R-2J Thompson 5.45% 12/15/16 (FGIC)......................... $1,000,000 $1,042,150 Mesa County, Colorado Valley School District #51 (Grand Junction) 5.50% 12/1/15 (MBIA)......................................... 1,000,000 1,052,640 5.50% 12/1/16 (MBIA)......................................... 1,100,000 1,152,338 Mountain Village Metro District San Miguel County, Colorado Refunding & Improvement 5.00% 12/1/17 (MBIA)............................................... 585,000 586,293 Piney Creek, Colorado Metropolitan District 5.65% 12/1/17 (FGIC)......................................... 2,035,000 2,163,571 Pueblo, Colorado 5.80% 6/1/11 (MBIA)........................... 1,405,000 1,508,450 Stonegate Village Metropolitan District Refunding & Improvement Series A 5.50% 12/1/21 (FSA)........................................................ 2,750,000 2,865,885 ------------ 24,453,173 ------------ HIGHER EDUCATION REVENUE BONDS - 14.30% Aurora Educational Development 6.00% 10/15/15 (Connie Lee)........................................ 2,500,000 2,683,400 Colorado Educational & Cultural Facility Authority Revenue (Auraria Foundation/University Colorado) Series A 4.75% 9/1/28 (AMBAC)...................................................... 490,000 461,864 Colorado Mountain College Residence Hall Authority 5.75% 6/1/23 (MBIA)................................ 1,000,000 1,061,320 Colorado Postsecondary Education Facility Authority (University of Denver Project) 6.00% 3/1/16 (Connie Lee).................................... 4,000,000 4,272,640 Colorado Postsecondary Education Facility Authority Refunding & Improvement (University of Denver Project) 5.375% 3/1/18 (MBIA)................................................ 3,500,000 3,593,205 Colorado State Board Agriculture - State University Refunding & Improvement Auxiliary Facilities 5.125% 3/1/17 (AMBAC)............................. 1,000,000 1,012,430 Colorado State Colleges Board of Trustees (Adams State College) Series A 5.75% 5/15/19 (MBIA)....................................................... 2,000,000 2,108,180 University of Northern Colorado Auxiliary Facilities System 5.60% 6/1/24 (MBIA)........................ 1,000,000 1,053,380 ------------ 16,246,419 ------------ HOSPITAL REVENUE BONDS - 13.11% Colorado Health Facilities Authority (Boulder Community Hospital Project) Series B 5.875% 10/1/23 (MBIA)........................................ 2,625,000 2,806,729 Colorado Health Facilities Authority (North Colorado Medical Center) 5.95% 5/15/12 (MBIA)......................................... 2,000,000 2,151,040 6.00% 5/15/20 (MBIA)......................................... 1,000,000 1,072,690 Colorado Springs Memorial Hospital 6.00% 12/15/24 (MBIA).............................................. 2,250,000 2,475,023
18 for tax-exempt income VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC. STATEMENT OF NET ASSETS (CONTINUED) PRINCIPAL MARKET AMOUNT VALUE ----------- ---------- MUNICIPAL BONDS (CONTINUED) GENERAL OBLIGATION BONDS (CONTINUED) Logan County Health Care Facilities (Western Health Network, Inc.) 5.90% 1/1/19 (MBIA)....................................................... $2,510,000 $2,645,239 University of Colorado Hospital Authority Refunding Series A 5.20% 11/15/17 (AMBAC)...................................................... 3,695,000 3,739,894 ------------ 14,890,615 ------------ HOUSING REVENUE BONDS - 8.19% Colorado Housing Finance Authority (Single Family Housing) Series AA 5.625% 11/1/23 (MBIA)............................................... 5,000,000 5,158,400 Denver, Colorado City & County Multi-Family Housing Mortgage Loan (Garden Court) 5.40% 7/1/39 (FHA)........................................... 2,000,000 2,030,140 Snowmass Village Multi-Family Housing Refunding (Essential Function Housing) 6.25% 12/15/16 (FSA)......................................... 2,000,000 2,117,880 ------------ 9,306,420 ------------ LEASES/CERTIFICATES OF PARTICIPATION - 10.02% Arapahoe County, Colorado Library District 5.70% 12/15/10 (MBIA)........................................ 2,000,000 2,151,740 Auraria, Colorado Higher Education Center (Administrative Office Facility Project) 5.125% 5/1/28 (AMBAC)........................................ 6,250,000 6,245,063 Colorado Springs, Colorado School District No. 11 4.75% 12/15/18 (MBIA)........................................ 1,000,000 972,500 Fort Collins, Colorado Lease Certificates of Participation (Civic Center Facilities Project) 5.125% 12/1/18 (MBIA)........................................ 1,000,000 1,005,610 Thorton, Colorado Certificates of Participation 5.10% 12/1/17 (AMBAC)........................................ 1,000,000 1,003,720 ------------ 11,378,633 ------------ MISCELLANEOUS & SALES TAX REVENUE BONDS - 2.60% Castle Rock Sales & Use Tax 5.90% 6/1/16 (FSA)........................................................ 1,755,000 1,892,610 Douglas County Sales & Use Tax 5.50% 10/15/11 (MBIA).............................................. 1,000,000 1,058,640 ------------ 2,951,250 ------------ POLLUTION CONTROL REVENUE BONDS - 1.40% Adams County Pollution Control Refunding (Public Service Company Project) Series A 5.875% 4/1/14 (MBIA)................................................ 1,500,000 1,593,810 ------------ 1,593,810 ------------ *PRE-REFUNDED BONDS - 11.53% City of Westminster County Sales & Use Tax Refunding Series A 6.25% 12/1/12-02 (FGIC)....................................................... 5,000,000 5,431,600 Jefferson County School District #R-001 6.00% 12/15/12-02 (AMBAC).......................................... 1,575,000 1,712,592 Jefferson County School District #R-001 6.25% 12/15/12-02 (AMBAC).......................................... 2,435,000 2,668,541 Regional Transportation District (Colorado Sales Tax) 6.25% 11/1/12-02 (FGIC)................................. 3,000,000 3,279,840 ------------ 13,092,573 ------------ TRANSPORTATION REVENUE BONDS - 11.43% Arapahoe County Capital Improvements Highway 6.05% 8/31/15 (MBIA)......................................... $4,700,000 $5,196,038 Denver, Colorado City & County Airport Series E 5.25% 11/15/23 (MBIA)........................................ 2,250,000 2,280,938 Denver, Colorado City & County Airport 5.00% 11/15/25 (FSA)............................................... 1,390,000 1,373,793 E-470 Public Highway Authority Series A 5.00% 9/1/26 (MBIA)................................................ 3,500,000 3,433,255 Regional Transportation District (Colorado Sales Tax) 6.25% 11/1/12 (FGIC).................................... 645,000 696,619 ------------ 12,980,643 ------------ UTILITY REVENUE BONDS - 1.83% Platte River Power Authority (Colorado Power) Series DD 5.375% 6/1/17 (MBIA)............................... 2,000,000 2,083,260 ------------ 2,083,260 ------------ WATER & SEWER REVENUE BONDS - 2.86% Municipal Subdistrict of Northern Colorado Water Conservancy District Series F 6.50% 12/1/12 (AMBAC).............................................. 2,800,000 3,244,304 ------------ 3,244,304 ------------ Total Municipal Bonds (cost $106,389,744)...................... 112,221,100 ------------ TOTAL MARKET VALUE OF SECURITIES - 98.79% (COST $106,389,744)......................................................... $112,221,100 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.21%....................... 1,377,173 ------------ TOTAL NET ASSETS - 100.00%.................................................... 113,598,273 LIQUIDATION VALUE OF PREFERRED STOCK.......................................... (40,000,000) ------------ NET ASSETS APPLICABLE TO 4,837,100 COMMON SHARES ($0.01 PAR VALUE) OUTSTANDING............................................... $73,598,273 ============ NET ASSET VALUE PER COMMON SHARE ($73,598,273 / 4,837,100 SHARES)............................................ $15.22 ====== - ---------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. Summary of Abbreviations: AMBAC - Insured by the American Municipal Bond Assurance Corporation Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association COMPONENTS OF NET ASSETS AT MARCH 31, 1999: 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........................................ 920,439 Accumulated net realized loss on investments............................... (391,632) Net unrealized appreciation of investments................................. 5,831,356 ------------ Total net assets........................................................... $113,598,273 ============
See accompanying notes for tax-exempt income 19 STATEMENTS OF OPERATIONS YEAR ENDED MARCH 31, 1999 VOYAGEUR VOYAGEUR VOYAGEUR MINNESOTA MINNESOTA MINNESOTA MUNICIPAL INCOME MUNICIPAL INCOME MUNICIPAL INCOME FUND, INC. FUND II, INC. FUND III, INC. INVESTMENT INCOME: Interest ........................................................ $ 3,568,767 $ 9,453,201 $ 2,195,747 ----------- ----------- ----------- EXPENSES: Management fees ................................................. 240,430 674,030 161,995 Transfer agent fees and expenses ................................ 30,200 30,000 6,600 Registration fees ............................................... 6,300 4,850 4,001 Reports and statements to shareholders .......................... 17,700 18,282 5,500 Accounting and administration ................................... 73,161 125,414 48,006 Remarketing Agent fees .......................................... 56,000 156,000 43,192 Professional fees ............................................... 37,372 48,650 25,950 Custodian fees .................................................. 1,650 1,000 2,400 Directors' fees ................................................. 3,450 6,000 4,800 Rating Agency fees .............................................. 12,000 12,000 3,000 Taxes (other than taxes on income) .............................. 9,000 8,000 3,800 Interest expense ................................................ 22 1,354 145 Other ........................................................... -- -- 2,402 ----------- ----------- ----------- Total expenses .................................................. 487,285 1,085,580 311,791 ----------- ----------- ----------- NET INVESTMENT INCOME ........................................... 3,081,482 8,367,621 1,883,956 ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments ......................... 188,073 432,710 229,501 Net change in unrealized appreciation/depreciation of investments (173,366) 315,390 171,840 ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ................. 14,707 748,100 401,341 ----------- ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $ 3,096,189 $ 9,115,721 $ 2,285,297 =========== =========== =========== VOYAGEUR VOYAGEUR VOYAGEUR FLORIDA COLORADO ARIZONA INSURED INSURED MUNICIPAL INCOME MUNICIPAL MUNICIPAL INCOME FUND, INC. INCOME FUND FUND, INC. INVESTMENT INCOME: Interest ........................................................ $ 3,823,731 $ 3,125,685 $ 6,001,281 ----------- ----------- ----------- EXPENSES: Management fees ................................................. 281,352 230,719 453,810 Transfer agent fees and expenses ................................ 11,300 14,325 9,312 Registration fees ............................................... 3,530 6,050 4,077 Reports and statements to shareholders .......................... 19,700 10,800 26,296 Accounting and administration ................................... 85,020 55,421 106,446 Remarketing Agent fees .......................................... 69,467 56,000 107,022 Professional fees ............................................... 26,100 23,650 23,400 Custodian fees .................................................. 2,772 3,700 5,300 Directors' fees ................................................. 6,600 6,000 9,586 Rating Agency fees .............................................. 7,000 12,500 6,000 Taxes (other than taxes on income) .............................. 5,200 6,000 12,200 Interest expense ................................................ 916 732 -- Other ........................................................... 1,372 4,188 15,077 ----------- ----------- ----------- Total expenses .................................................. 520,329 430,085 778,526 ----------- ----------- ----------- NET INVESTMENT INCOME ........................................... 3,303,402 2,695,600 5,222,755 ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments ......................... 592,344 (344) 243,532 Net change in unrealized appreciation/depreciation of investments 6,754 696,343 996,668 ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ................. 599,098 695,999 1,240,200 ----------- ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $ 3,902,500 $ 3,391,599 $ 6,462,955 =========== =========== ===========
See accompanying notes 20 for tax-exempt income STATEMENTS OF CHANGES IN NET ASSETS VOYAGEUR VOYAGEUR MINNESOTA MINNESOTA MUNICIPAL INCOME MUNICIPAL INCOME FUND, INC. FUND II, INC. ------------------------------ ------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/99 3/31/98 3/31/99 3/31/98 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........................................... $ 3,081,482 $ 3,063,165 $ 8,367,621 $ 8,187,701 Net realized gain (loss) on investments ......................... 188,073 (905) 432,710 (99,452) Net change in unrealized appreciation/depreciation of investments (173,366) 2,515,951 315,390 8,807,600 ------------- ------------- ------------- ------------- Net increase in net assets resulting from operations ............ 3,096,189 5,578,211 9,115,721 16,895,849 ------------- ------------- ------------- ------------- DIVIDENDS AND DISTRIBUTIONS TO: Common shareholders from net investment income .................. (2,413,071) (2,413,072) (5,928,674) (5,928,674) Preferred shareholders from net investment income ............... (679,203) (720,894) (2,064,168) (2,206,092) Common shareholders from net realized gain on investments ....... -- (56,857) -- -- Preferred shareholders from net realized gain on investments .... -- (16,542) -- -- ------------- ------------- ------------- ------------- (3,092,274) (3,207,365) (7,992,842) (8,134,766) ------------- ------------- ------------- ------------- NET INCREASE IN NET ASSETS ...................................... 3,915 2,370,846 1,122,879 8,761,083 NET ASSETS: Beginning of year ............................................... 59,915,037 57,544,191 167,333,132 158,572,049 ------------- ------------- ------------- ------------- End of year ..................................................... $ 59,918,952 $ 59,915,037 $ 168,456,011 $ 167,333,132 ============= ============= ============= ============= VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC. ------------------------------ YEAR ENDED YEAR ENDED /31/99 3/31/98 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........................................... $ 1,883,956 $ 1,935,569 Net realized gain (loss) on investments ......................... 229,501 51,297 Net change in unrealized appreciation/depreciation of investments 171,840 1,892,300 ------------- ------------- Net increase in net assets resulting from operations ............ 2,285,297 3,879,166 ------------- ------------- DIVIDENDS AND DISTRIBUTIONS TO: Common shareholders from net investment income .................. (1,391,680) (1,391,679) Preferred shareholders from net investment income ............... (512,178) (552,111) Common shareholders from net realized gain on investments ....... -- -- Preferred shareholders from net realized gain on investments .... -- -- ------------- ------------- (1,903,858) (1,943,790) ------------- ------------- NET INCREASE IN NET ASSETS ...................................... 381,439 1,935,376 NET ASSETS: Beginning of year ............................................... 40,283,276 38,347,900 ------------- ------------- End of year ..................................................... $ 40,664,715 $ 40,283,276 ============= =============
See accompanying notes for tax-exempt income 21 STATEMENTS OF CHANGES IN NET ASSETS VOYAGEUR VOYAGEUR ARIZONA FLORIDA INSURED MUNICIPAL INCOME MUNICIPAL FUND, INC. INCOME FUND ------------------------------ ------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/99 3/31/98 3/31/99 3/31/98 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........................................... $ 3,303,402 $ 3,236,581 $ 2,695,600 $ 2,634,153 Net realized gain (loss) on investments ......................... 592,344 233,414 (344) 71,462 Net change in unrealized appreciation/depreciation of investments 6,754 3,450,141 696,343 3,818,631 ------------- ------------- ------------- ------------- Net increase in net assets resulting from operations ............ 3,902,500 6,920,136 3,391,599 6,524,246 ------------- ------------- ------------- ------------- DIVIDENDS AND DISTRIBUTIONS TO: Common shareholders from net investment income .................. (2,303,751) (2,303,750) (1,834,817) (1,834,817) Preferred shareholders from net investment income ............... (825,780) (905,587) (671,783) (728,766) ------------- ------------- ------------- ------------- (3,129,531) (3,209,337) (2,506,600) (2,563,583) ------------- ------------- ------------- ------------- NET INCREASE IN NET ASSETS ...................................... 772,969 3,710,799 884,999 3,960,663 ------------- ------------- ------------- ------------- NET ASSETS: Beginning of year ............................................... 69,813,256 66,102,457 57,070,610 53,109,947 ------------- ------------- ------------- ------------- End of year ..................................................... $ 70,586,225 $ 69,813,256 $ 57,955,609 $ 57,070,610 ============= ============= ============= ============= VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC. ------------------------------ YEAR ENDED YEAR ENDED 3/31/99 3/31/98 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........................................... $ 5,222,755 $ 5,187,058 Net realized gain (loss) on investments ......................... 243,532 974,269 Net change in unrealized appreciation/depreciation of investments 996,668 5,313,456 ------------- ------------- Net increase in net assets resulting from operations ............ 6,462,955 11,474,783 ------------- ------------- DIVIDENDS AND DISTRIBUTIONS TO: Common shareholders from net investment income .................. (3,555,269) (3,555,272) Preferred shareholders from net investment income ............... (1,496,328) (1,419,308) ------------- ------------- (5,051,597) (4,974,580) ------------- ------------- NET INCREASE IN NET ASSETS ...................................... 1,411,358 6,500,203 ------------- ------------- NET ASSETS: Beginning of year ............................................... 112,186,915 105,686,712 ------------- ------------- End of year ..................................................... $113,598,273 $ 112,186,915 ============= =============
See accompanying notes 22 for tax-exempt income FINANCIAL HIGHLIGHTS Selected data for each common share of the Fund outstanding throughout each year were as follows: VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC. ---------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/99 3/31/98(2) 3/31/97 3/31/96 3/31/95 Net asset value, beginning of year .............................. $15.380 $14.470 $14.430 $14.210 $13.890 Income from investment operations: Net investment income ....................................... 1.188 1.180 1.060 1.180 1.210 Net realized and unrealized gain on investments ............. 0.004 0.970 0.180 0.260 0.340 -------- -------- -------- -------- -------- Total from investment operations ............................ 1.192 2.150 1.240 1.440 1.550 -------- -------- -------- -------- -------- Less dividends and distributions to: Common shareholders from net investment income .............. (0.930) (0.930) (0.930) (0.930) (0.930) Preferred shareholders from net investment income ........... (0.262) (0.280) (0.270) (0.290) (0.270) Common shareholders from net realized gain on investments ... -- (0.020) -- -- (0.020) Preferred shareholders from net realized gain on investments -- (0.010) -- -- (0.010) -------- -------- -------- -------- -------- Total dividends and distributions ........................... (1.192) (1.240) (1.200) (1.220) (1.230) -------- -------- -------- -------- -------- Net asset value, end of year .................................... $15.380 $15.380 $14.470 $14.430 $14.210 ======== ======== ======== ======== ======== Market value, end of year ....................................... $16.500 $15.690 $14.380 $15.000 $14.500 ======== ======== ======== ======== ======== Total investment return based on:(1) Market value ................................................ 11.29% 16.04% 2.01% 10.31% (0.71%) Net asset value ............................................. 5.88% 13.02% 6.90% 8.20% 9.72% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted) ............................... $59,919 $59,915 $57,544 $57,429 $56,881 Ratio of expenses to average net assets(3) .................. 0.81% 0.77% 0.81% 0.82% 0.85% Ratio of expenses to average net assets applicable to common shares ........................................ 1.21% 1.17% 1.24% 1.24% 1.33% Ratio of net investment income to average net assets(3) ..... 5.13% 5.20% 4.78% 5.28% 5.66% Ratio of net investment income to average net assets applicable to common shares4 ............................ 5.99% 6.01% 5.45% 6.04% 6.93% Portfolio turnover .......................................... 15% 0% 5% 7% 13% Leverage analysis: Value of preferred shares outstanding (000 omitted) ......... $20,000 $20,000 $20,000 $20,000 $20,000 Net asset coverage per share of preferred shares, end of year.............................................. $149,797 $149,788 $143,860 $143,573 $142,201 Liquidation value per share of preferred shares(5) .......... $50,000 $50,000 $50,000 $50,000 $50,000
- ------------ (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes for tax-exempt income 23 FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for each common share of the Fund outstanding throughout each year were as follows: VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC. ------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDEd YEAR ENDED YEAR ENDED 3/31/99 3/31/98(2) 3/31/97 3/31/96 3/31/95 Net asset value, beginning of year .............................. $14.800 $13.590 $13.480 $13.120 $12.730 Income from investment operations: Net investment income ....................................... 1.154 1.130 1.130 1.100 1.110 Net realized and unrealized gain on investments ............. 0.099 1.200 0.080 0.380 0.390 -------- -------- -------- -------- -------- Total from investment operations ............................ 1.253 2.330 1.210 1.480 1.500 -------- -------- -------- -------- -------- Less dividends to: Common shareholders from net investment income .............. (0.818) (0.820) (0.810) (0.800) (0.830) Preferred shareholders from net investment income ........... (0.285) (0.300) (0.290) (0.320) (0.280) -------- -------- -------- -------- -------- Total dividends ............................................. (1.103) (1.120) (1.100) (1.120) (1.110) -------- -------- -------- -------- -------- Net asset value, end of year .................................... $14.950 $14.800 $13.590 $13.480 $13.120 ======== ======== ======== ======== ======== Market value, end of year ....................................... $15.060 $13.880 $12.630 $13.250 $12.380 ======== ======== ======== ======== ======== Total investment return based on:(1) Market value ................................................ 14.73% 16.56% 1.47% 14.16% (9.59%) Net asset value ............................................. 6.76% 15.51% 6.97% 8.88% 10.16% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted) ........................................... $168,456 $167,333 $158,572 $157,755 $155,139 Ratio of expenses to average net assets(3) .................. 0.64% 0.76% 0.74% 0.77% 0.77% Ratio of expenses to average net assets applicable to common shares ........................................... 1.00% 1.19% 1.19% 1.23% 1.28% Ratio of net investment income to average net assets3........ 4.96% 4.98% 5.15% 5.03% 5.39% Ratio of net investment income to average net assets applicable to common shares(4) .......................... 5.80% 5.73% 6.15% 5.76% 6.69% Portfolio turnover .......................................... 15% 4% 20% 11% 32% Leverage analysis: Value of preferred shares outstanding (000 omitted)........ . $60,000 $60,000 $60,000 $60,000 $60,000 Net asset coverage per share of preferred shares, end of year ............................................. $140,380 $139,444 $132,143 $131,462 $129,283 Liquidation value per share of preferred shares(5)........... $50,000 $50,000 $50,000 $50,000 $50,000
- ---------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 24 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for each common share of the Fund outstanding throughout each year were as follows: VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC. -------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/99 3/31/98(2) 3/31/97 3/31/96 3/31/95 Net asset value, beginning of year............................... $13.760 $12.710 $12.540 $12.200 $11.860 Income from investment operations: Net investment income........................................ 1.025 1.050 1.080 1.050 1.060 Net realized and unrealized gain on investments.............. 0.222 1.060 0.150 0.330 0.280 ------- ------- ------- ------- ------- Total from investment operations............................. 1.247 2.110 1.230 1.380 1.340 ------- ------- ------- ------- ------- Less dividends to: Common shareholders from net investment income............... (0.758) (0.760) (0.750) (0.720) (0.730) Preferred shareholders from net investment income............ (0.279) (0.300) (0.310) (0.320) (0.280) ------- ------- ------- ------- ------- Total dividends.............................................. (1.037) (1.060) (1.060) (1.040) (1.010) ------- ------- ------- ------- ------- Capital share transactions: Capital charge with respect to issuance of shares............ -- -- -- -- 0.010 ------- ------- ------- ------- ------- Net asset value, end of year..................................... $13.970 $13.760 $12.710 $12.540 $12.200 ======= ======= ======= ======= ======= Market value, end of year........................................ $14.125 $13.380 $12.250 $12.000 $11.250 ======= ======= ======= ======= ======= Total investment return based on:(1) Market value................................................. 11.59% 15.80% 8.62% 13.51% (14.27%) Net asset value.............................................. 7.28% 14.82% 7.50% 8.79% 9.55% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted)............................................ $40,665 $40,283 $38,348 $38,046 $37,418 Ratio of expenses to average net assets(3)................... 0.77% 0.83% 0.81% 0.81% 0.82% Ratio of expenses to average net assets applicable to common shares......................................... 1.22% 1.34% 1.33% 1.33% 1.40% Ratio of net investment income to average net assets(3)...... 4.64% 4.88% 5.17% 5.05% 5.37% Ratio of net investment income to average net assets applicable to common shares(4)........................... 5.35% 5.61% 6.05% 5.81% 6.79% Portfolio turnover........................................... 15% 9% 39% 35% 47% Leverage analysis: Value of preferred shares outstanding (000 omitted).......... $15,000 $15,000 $15,000 $15,000 $15,000 Net asset coverage per share of preferred shares, end of year.............................................. $135,549 $134,278 $127,826 $126,821 $124,728 Liquidation value per share of preferred shares(5) .......... $50,000 $50,000 $50,000 $50,000 $50,000
- ---------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes for tax-exempt income 25 FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for each common share of the Fund outstanding throughout each year were as follows: VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC. -------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/99 3/31/98(2) 3/31/97 3/31/96 3/31/95 Net asset value, beginning of year............................... $15.030 $13.780 $13.740 $13.220 $12.700 Income from investment operations: Net investment income........................................ 1.108 1.090 1.080 1.090 1.080 Net realized and unrealized gain on investments.............. 0.202 1.230 0.010 0.470 0.560 ------- ------- ------- ------- ------- Total from investment operations............................. 1.310 2.320 1.090 1.560 1.640 ------- ------- ------- ------- ------- Less dividends and distributions to: Common shareholders from net investment income............... (0.773) (0.770) (0.760) (0.730) (0.780) Preferred shareholders from net investment income............ (0.277) (0.300) (0.290) (0.310) (0.280) Common shareholders from net realized gain on investments.... -- -- -- -- (0.050) Preferred shareholders from net realized gain on investments........................................... -- -- -- -- (0.010) ------- ------- ------- ------- ------- Total dividends and distributions............................ (1.050) (1.070) (1.050) (1.040) (1.120) ------- ------- ------- ------- ------- Net asset value, end of year..................................... $15.290 $15.030 $13.780 $13.740 $13.220 ======= ======= ======= ======= ======= Market value, end of year........................................ $15.125 $14.630 $13.000 $12.750 $12.130 ======= ======= ======= ======= ======= Total investment return based on:(1) Market value................................................. 8.84% 18.79% 8.20% 11.52% (6.43%) Net asset value.............................................. 7.07% 15.17% 5.94% 9.55% 11.29% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted)............................................ $70,586 $69,813 $66,102 $65,990 $64,438 Ratio of expenses to average net assets(3)................... 0.74% 0.80% 0.78% 0.78% 0.79% Ratio of expenses to average net assets applicable to common shares............................................ 1.15% 1.26% 1.25% 1.26% 1.32% Ratio of net investment income to average net assets(3)...... 4.69% 4.71% 4.85% 4.88% 5.19% Ratio of net investment income to average net assets applicable to common shares(4)........................... 5.46% 5.34% 5.71% 5.57% 6.42% Portfolio turnover........................................... 46% 22% 31% 30% 18% Leverage analysis: Value of preferred shares outstanding (000 omitted).......... $25,000 $25,000 $25,000 $25,000 $25,000 Net asset coverage per share of preferred shares, end of year.............................................. $141,172 $139,627 $132,205 $131,979 $128,877 Liquidation value per share of preferred shares(5) $50,000 $50,000 $50,000 $50,000 $50,000
- ---------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 26 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for each common share of the Fund outstanding throughout each year were as follows: VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND ---------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/99 3/31/98(2) 3/31/97 3/31/96 3/31/95 Net asset value, beginning of year............................... $15.300 $13.670 $13.710 $13.170 $12.460 Income (loss) from investment operations: Net investment income........................................ 1.113 1.090 1.080 1.060 1.070 Net realized and unrealized gain (loss) on investments....... 0.292 1.600 (0.080) 0.510 0.690 ------- ------- ------- ------- ------- Total from investment operations............................. 1.405 2.690 1.000 1.570 1.760 ------- ------- ------- ------- ------- Less dividends to: Common shareholders from net investment income............... (0.758) (0.760) (0.750) (0.720) (0.770) Preferred shareholders from net investment income............ (0.277) (0.300) (0.290) (0.310) (0.280) ------- ------- ------- ------- ------- Total dividends.............................................. (1.035) (1.060) (1.040) (1.030) (1.050) ------- ------- ------- ------- ------- Net asset value, end of year..................................... $15.670 $15.300 $13.670 $13.710 $13.170 ======= ======= ======= ======= ======= Market value, end of year........................................ $14.750 $14.310 $12.500 $12.750 $12.250 ======= ======= ======= ======= ======= Total investment return based on:(1) Market value................................................. 8.47% 20.94% 3.94% 10.39% 4.69% Net asset value.............................................. 7.80% 18.22% 5.23% 9.66% 12.56% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted)............................................ $57,956 $57,071 $53,110 $53,207 $51,891 Ratio of expenses to average net assets(3)................... 0.75% 0.80% 0.78% 0.80% 0.81% Ratio of expenses to average net assets applicable to common shares............................................ 1.14% 1.25% 1.25% 1.27% 1.35% Ratio of net investment income to average net assets(3)...... 4.67% 4.73% 4.91% 4.82% 5.21% Ratio of net investment income to average net assets applicable to common shares(4)........................... 5.37% 5.33% 5.74% 5.45% 6.37% Portfolio turnover........................................... 0% 5% 68% 22% 10% Leverage analysis: Value of preferred shares outstanding (000 omitted).......... $20,000 $20,000 $20,000 $20,000 $20,000 Net asset coverage per share of preferred shares, end of year.................................................. $144,889 $142,677 $132,775 $133,017 $129,728 Liquidation value per share of preferred shares(5)........... $50,000 $50,000 $50,000 $50,000 $50,000
- ---------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997 Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes for tax-exempt income 27 FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for each common share of the Fund outstanding throughout each year were as follows: VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC. ----------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/99 3/31/98(2) 3/31/97 3/31/96 3/31/95 Net asset value, beginning of year............................... $14.920 $13.580 $13.610 $13.190 $12.800 ------- ------- ------- ------- ------- Income from investment operations: Net investment income........................................ 1.080 1.070 1.050 1.030 1.020 Net realized and unrealized gain on investments.............. 0.264 1.300 (0.060) 0.410 0.440 ------- ------- ------- ------- ------- Total from investment operations............................. 1.344 2.370 0.990 1.440 1.460 ------- ------- ------- ------- ------- Less dividends and distributions to: Common shareholders from net investment income............... (0.735) (0.740) (0.730) (0.700) (0.760) Preferred shareholders from net investment income............ (0.309) (0.290) (0.290) (0.320) (0.270) Common shareholders from net realized gain on investments.... -- -- -- -- (0.030) Preferred shareholders from net realized gain on investments........................................... -- -- -- -- (0.010) ------- ------- ------- ------- ------- Total dividends and distributions................................ (1.044) (1.030) (1.020) (1.020) (1.070) ------- ------- ------- ------- ------- Net asset value, end of year..................................... $15.220 $14.920 $13.580 $13.610 $13.190 ======= ======= ======= ======= ======= Market value, end of year........................................ $14.938 $14.000 $12.500 $12.630 $12.250 ======= ======= ======= ======= ======= Total investment return based on:(1) Market value................................................. 12.13% 18.09% 4.77% 8.99% (10.05%) Net asset value.............................................. 7.21% 15.84% 5.19% 8.55% 9.67% Ratios and supplemental data: Net assets applicable to capital shares, end of year (000 omitted)............................................ $113,598 $112,187 $105,687 $105,843 $103,781 Ratio of expenses to average net assets(3)................... 0.69% 0.75% 0.77% 0.75% 0.76% Ratio of expenses to average net assets applicable to common shares............................................ 1.06% 1.18% 1.23% 1.21% 1.27% Ratio of net investment income to average net assets(3)...... 4.61% 4.72% 4.76% 4.68% 4.88% Ratio of net investment income to average net assets applicable to common shares(4)........................... 5.08% 5.38% 5.51% 5.18% 5.88% Portfolio turnover........................................... 18% 39% 88% 39% 7% Leverage analysis: Value of preferred shares outstanding (000 omitted).......... $40,000 $40,000 $40,000 $40,000 $40,000 Net asset coverage per share of preferred shares, end of year.............................................. $141,998 $140,234 $132,109 $132,304 $129,727 Liquidation value per share of preferred shares(5) $50,000 $50,000 $50,000 $50,000 $50,000
- ---------- (1) Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each year reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in years where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such years. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in years where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such years. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Ratios were calculated on the basis of expenses and net investment income applicable to both the common and preferred shares relative to the average net assets of common and preferred shareholders. (4) Ratio reflects total net investment income less dividends paid to preferred shareholders from net investment income divided by average net assets applicable to common shareholders. (5) Excluding any accumulated but unpaid dividends. See accompanying notes 28 for tax-exempt income NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 Voyageur Minnesota Municipal Income Fund, Inc. ("Minnesota Municipal Fund"); Voyageur Minnesota Municipal Income Fund II, Inc. ("Minnesota Municipal Fund II"); Voyageur Minnesota Municipal Income Fund III, Inc. ("Minnesota Municipal Fund III"); Voyageur Arizona Municipal Income Fund, Inc. ("Arizona Municipal Fund"); Voyageur Florida Insured Municipal Income Fund ("Florida Insured Municipal Fund"); and Voyageur Colorado Insured Municipal Income Fund, Inc. ("Colorado Insured Municipal Fund") (each referred to as a "Fund" and collectively as the "Funds") are registered under the Investment Company Act of 1940 ("1940 Act")(as amended) as closed-end management investment companies. The Minnesota Municipal II, Florida Insured Municipal and Arizona Municipal Funds are registered as diversified funds. The Minnesota Municipal, Minnesota Municipal III and Colorado Insured Municipal Funds are registered as non-diversified funds. The Funds' shares trade on the American Stock Exchange. The investment objective of each Fund is to provide high current income exempt from federal income tax and from the personal income tax of its state, if any, consistent with the preservation of capital. Florida Insured Municipal Fund will generally seek investments that will enable its shares to be exempt from Florida's intangible personal property tax. Each Fund will seek to achieve its investment objective by investing substantially all of its net assets in investment grade, tax-exempt municipal obligations of its respective state. 1. Fund Reorganization On April 30, 1997, Lincoln National Corporation ("LNC") acquired Voyageur Fund Managers, Inc.'s ("Voyageur") parent, Dougherty Financial Group, Inc. ("DFG"), pursuant to an agreement and plan of merger dated January 15, 1997, in which LNC acquired DFG, including the mutual fund investment advisory business of DFG conducted by Voyageur. Upon completion of the acquisition, Delaware Management Company ("DMC") became the Investment Manager to the Funds. 2. Significant Accounting Policies The following accounting policies are in accordance with generally accepted accounting principles and are consistently followed by the Funds. Security Valuation - Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Money market instruments having less than 60 days to maturity are valued at amortized cost which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Funds' Board of Directors. Federal Income Taxes - Each Fund intends to continue to qualify as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Other - Expenses common to all funds are allocated amongst the funds within the Delaware Investments Family of Funds on the basis of average net assets. Security transactions are recorded on the date the securities are purchased or sold (trade date). Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Original issue discounts and market premiums are amortized to interest income over the lives of the respective securities. Each Fund intends to pay monthly dividends from net investment income. Capital gains, if any, are distributed annually. 3. Investment Management, Administration and Transactions with Affiliates In accordance with the terms of their respective Investment Management Agreements, each Fund pays DMC, the Investment Manager, an annual fee of 0.40% which is calculated daily based upon the average net assets of each Fund, including assets attributable to any preferred stock that may be outstanding. Commencing August 1, 1998 (July 1, 1998 for Colorado Insured Municipal Fund) the Funds have engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC, to provide administration and accounting services. DSC's fees for these services were as follows: MINNESOTA MINNESOTA MINNESOTA MUNICIPAL MUNICIPAL II MUNICIPAL III FUND FUND FUND --------- ------------ ------------- Accounting and administration fees......................... $39,737 $41,521 $27,806 FLORIDA COLORADO ARIZONA INSURED INSURED MUNICIPAL MUNICIPAL MUNICIPAL FUND FUND FUND --------- ------------ ------------- Accounting and administration fees......................... $50,005 $26,795 $64,287 Prior to August 1, 1998 (July 1, 1998 for Colorado Insured Municipal Fund) the Funds had Administrative Agreements with Mitchell Hutchins Asset Management Inc. and Princeton Administrators, L.P. (Colorado Insured Municipal Fund only)(the "Administrators"). On March 31, 1999, the Funds had payables to affiliates as follows: MINNESOTA MINNESOTA MINNESOTA MUNICIPAL MUNICIPAL II MUNICIPAL III FUND FUND FUND --------- ------------ ------------- Investment management fee payable to DMC.............. $80,472 $226,227 $54,127 Administration fees, accounting fees and other expenses payable to DSC and affiliates................... 95,339 178,471 80,034 FLORIDA COLORADO ARIZONA INSURED INSURED MUNICIPAL MUNICIPAL MUNICIPAL FUND FUND FUND --------- ------------ ----------- Investment management fee payable to DMC............... $94,513 $77,806 $190,308 Administration fees, accounting fees and other expenses payable to DSC and affiliates................... 104,186 138,291 134,781 Certain officers of DMC are officers, directors and/or employees of the Funds. These officers, directors, and employees are not compensated by the Funds. for tax-exempt income 29 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. Investments During the year ended March 31, 1999, the Funds made purchases and sales of investment securities other than temporary cash investments as follows: FLORIDA COLORADO MINNESOTA MINNESOTA MINNESOTA ARIZONA INSURED INSURED MUNICIPAL MUNICIPAL II MUNICIPAL III MUNICIPAL MUNICIPAL MUNICIPAL FUND FUND FUND FUND FUND FUND --------- ------------ ------------- --------- --------- --------- Purchases... $8,626,565 $24,615,310 $5,986,997 $32,819,989 $512,503 $19,505,848 Sales....... 8,776,961 24,210,939 6,061,368 32,364,592 130,411 18,995,778
At March 31, 1999, the aggregate cost of investments and unrealized appreciation (depreciation) of securities for federal income tax purposes for each Fund were as follows: COST AGGREGATE AGGREGATE NET OF UNREALIZED UNREALIZED UNREALIZED INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION ----------- ------------ ------------ ------------ Minnesota Municipal Fund................ $54,814,048 $4,402,875 $(63,556) $4,339,319 Minnesota Municipal Fund II............. 156,831,187 10,065,562 (104,613) 9,960,949 Minnesota Municipal Fund III............ 37,247,284 2,919,012 (46,842) 2,872,170 Arizona Municipal Fund.................. 65,580,496 4,261,195 (7,671) 4,253,524 Florida Insured Municipal Fund.......... 52,971,205 4,399,620 (1,685) 4,397,935 Colorado Insured Municipal Fund......... 106,389,744 5,831,356 -- 5,831,356
For federal income tax purposes, as of March 31, 1999, the Funds had capital loss carryforwards expiring in the following years: 2003 2004 2005 2006 TOTAL ------- --------- ------ ------- --------- Minnesota Municipal Fund II....... 913,206 1,143,840 89,665 132,129 2,278,840 Minnesota Municipal Fund III...... 866,889 1,279,495 455,666 6,539 2,608,589 Arizona Municipal Fund............ -- -- 47,185 -- 47,185 Florida Insured Municipal Fund.... 212,501 183,099 -- -- 395,600 Colorado Insured Municipal Fund... -- -- 391,632 -- --
30 for tax-exempt income NOTES TO FINANCIAL STATEMENTS (CONTINUED) 5. Capital Stock Pursuant to their articles of incorporation, Minnesota Municipal Fund, Minnesota Municipal Fund II, Minnesota Municipal Fund III, Arizona Municipal Fund and Colorado Insured Municipal Fund each have 200 million shares of $0.01 par value common shares authorized. Florida Insured Municipal Fund has been authorized to issue an unlimited amount of $0.01 par value common shares. For the years ended March 31, 1999 and March 31, 1998, the Funds did not have any transactions in common shares. The Funds each have one million shares of $0.01 par value preferred shares authorized, except for Florida Insured Municipal Fund which has an unlimited amount of $0.01 par value preferred shares authorized. Under resolutions adopted by the Board of Directors/Trustees, Minnesota Municipal Fund is allowed to issue up to 400 preferred shares, of which the entire amount was issued on August 6, 1992. On May 14, 1993, Minnesota Municipal Fund II, Arizona Municipal Fund and Florida Insured Municipal Fund issued 1,200, 500 and 400 preferred shares, respectively. On December 10, 1993, Minnesota Municipal Fund III issued 300 preferred shares and on September 23, 1993, Colorado Insured Municipal Fund issued 800 preferred shares. The preferred shares of each Fund have a liquidation preference of $50,000 per share plus an amount equal to accumulated but unpaid dividends. Dividends for the outstanding preferred shares of each Fund are cumulative at a rate established at the initial public offering and are typically reset every 28 days based on the results of an auction. Dividend rates (adjusted for any capital gain distributions) ranged from 2.90% to 3.70% on Minnesota Municipal Fund, from 3.00% to 3.80% on Minnesota Municipal Fund II, from 3.04% to 3.80% on Minnesota Municipal Fund III, from 2.95% to 3.70% on Arizona Municipal Fund, from 2.55% to 3.70% on Florida Insured Municipal Fund and from 2.90% to 3.90% on Colorado Insured Municipal Fund during the year ended March 31. 1999. 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. 6. Market and Credit Risks The Funds concentrate their investments in securities issued by each specific state's municipalities. The value of these investments may be adversely affected by new legislation within the state, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that the market may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statement of Net Assets. for tax-exempt income 31 The Voyageur FundsReport of Independent Auditors To the Shareholders and Board of Directors Voyageur Minnesota Municipal Income Fund, Inc. Voyageur Minnesota Municipal Income Fund II, Inc. Voyageur Minnesota Municipal Income Fund III, Inc. Voyageur Arizona Municipal Income Fund, Inc. Voyageur Florida Insured Municipal Income Fund Voyageur Colorado Insured Municipal Income Fund, Inc. We have audited the accompanying statements of net assets of Voyageur Minnesota Municipal Income Fund, Inc., Voyageur Minnesota Municipal Income Fund II, Inc., Voyageur Minnesota Municipal Income Fund III, Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur Florida Insured Municipal Income Fund, and Voyageur Colorado Insured Municipal Income Fund, Inc. (the "Funds") as of March 31, 1999, and the related statements of operations for the year then ended and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods presented through March 31, 1997 were audited by other auditors whose report dated May 9, 1997 expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds at March 31, 1999, the results of their operations for the year then ended and the changes in their net assets and their financial highlights for each of the two years in the period then ended, in conformity with generally accepted accounting principles. /s/ ERNST & YOUNG LLP --------------------- ERNST & YOUNG LLP Philadelphia, Pennsylvania May 3, 1999 32 for tax-exempt income PROXY RESULTS (UNAUDITED) For the period year ended March 31, 1999, shareholders of the Voyageur Minnesota Municipal Income Fund, Inc., Voyageur Minnesota Municipal Income Fund II, Inc., Voyageur Minnesota Municipal Income Fund III, Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur Florida Insured Municipal Income Fund, and Voyageur Colorado Insured Municipal Income Fund, Inc. voted on the following proposals at the annual meeting of shareholders on December 4, 1998, as adjourned. The description of each proposal and number of shares voted are as follows: COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- 1. To elect the Fund's Board of Directors/Trustees: Voyageur Minnesota Municipal Income Fund, Inc: Jeffrey J. Nick ...................................... 1,658,471 -- 113,756 -- -- -- Walter P. Babich ..................................... 1,659,290 -- 112,937 -- -- -- Anthony D. Knerr ..................................... 1,661,000 -- 111,227 -- -- -- Ann R. Leven ......................................... 1,664,425 -- 107,802 -- -- -- W. Thacher Longstreth ................................ N/A N/A N/A 398 -- 2 Thomas F. Madison .................................... N/A N/A N/A 398 -- 2 Charles E. Peck ...................................... -- 107,802 -- -- -- Wayne A. Stork ....................................... 1,656,898 -- 115,329 -- -- -- Voyageur Minnesota Municipal Income Fund II, Inc: Jeffrey J. Nick ...................................... 4,365,956 -- 414,563 -- -- -- Walter P. Babich ..................................... 4,360,723 -- 419,796 -- -- -- Anthony D. Knerr ..................................... 4,370,849 -- 409,670 -- -- -- Ann R. Leven ......................................... 4,374,364 -- 406,155 -- -- -- W. Thacher Longstreth ................................ N/A N/A N/A 807 -- -- Thomas F. Madison .................................... N/A N/A N/A 807 -- -- Charles E. Peck ...................................... 4,382,941 -- 397,578 -- -- -- Wayne A. Stork ....................................... 4,366,336 -- 414,183 -- -- -- Voyageur Minnesota Municipal Income Fund III, Inc: Jeffrey J. Nick ...................................... 1,043,360 -- 138,886 -- -- -- Walter P. Babich ..................................... 1,045,077 -- 137,169 -- -- -- Anthony D. Knerr ..................................... 1,048,585 -- 133,661 -- -- -- Ann R. Leven ......................................... 1,048,585 -- 133,661 -- -- -- W. Thacher Longstreth ................................ N/A N/A N/A 300 -- -- Thomas F. Madison .................................... N/A N/A N/A 300 -- -- Charles E. Peck ...................................... 1,048,585 -- 133,661 -- -- -- Wayne A. Stork ....................................... 1,043,360 -- 138,886 -- -- -- Voyageur Arizona Municipal Income Fund, Inc: Jeffrey J. Nick ...................................... 1,764,337 -- 137,703 -- -- -- Walter P. Babich ..................................... 1,765,496 -- 136,544 -- -- -- Anthony D. Knerr ..................................... 1,765,496 -- 136,544 -- -- -- Ann R. Leven ......................................... 1,765,829 -- 136,211 -- -- -- W. Thacher Longstreth ................................ N/A N/A N/A 322 -- -- Thomas F. Madison .................................... N/A N/A N/A 322 -- -- Charles E. Peck ...................................... 1,766,829 -- 135,211 -- -- -- Wayne A. Stork ....................................... 1,763,637 -- 138,403 -- -- --
for tax-exempt income 33 PROXY RESULTS (CONTINUED) 1. To elect the Fund's Board of Directors/Trustees (Continued) COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Florida Insured Municipal Income Fund: Jeffrey J. Nick ...................................... 2,004,543 -- 106,660 -- -- -- Walter P. Babich ..................................... 2,005,658 -- 105,545 -- -- -- Anthony D. Knerr ..................................... 2,005,658 -- 105,545 -- -- -- Ann R. Leven ......................................... 2,005,658 -- 105,545 -- -- -- W. Thacher Longstreth ................................ N/A N/A N/A 213 -- -- Thomas F. Madison .................................... N/A N/A N/A 213 -- -- Charles E. Peck ...................................... 2,005,658 -- 105,545 -- -- -- Wayne A. Stork ....................................... 2,004,543 -- 106,660 -- -- -- Voyageur Colorado Insured Municipal Income Fund, Inc: Jeffrey J. Nick ...................................... 2,981,730 -- 176,204 -- -- -- Walter P. Babich ..................................... 2,979,730 -- 174,204 -- -- -- Anthony D. Knerr ..................................... 2,983,130 -- 174,804 -- -- -- Ann R. Leven ......................................... 2,992,205 -- 165,729 -- -- -- W. Thacher Longstreth ................................ N/A N/A N/A 454 -- -- Thomas F. Madison .................................... N/A N/A N/A 454 -- -- Charles E. Peck ...................................... 2,995,855 -- 162,079 -- -- -- Wayne A. Stork ....................................... 2,981,730 -- 176,204 -- -- --
2. To approve the reclassification of the Fund's investment objective from fundamental to non-fundamental. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Minnesota Municipal Income Fund, Inc. ......... 1,276,206 64,880 95,882 326 1 1 Voyageur Minnesota Municipal Income Fund II, Inc. ...... 3,246,140 348,035 262,296 564 -- 21 Voyageur Minnesota Municipal Income Fund III, Inc. ..... 824,311 108,952 64,480 177 -- Voyageur Arizona Municipal Income Fund, Inc. ........... 1,425,760 83,215 97,442 316 -- 1 Voyageur Florida Insured Municipal Income Fund ......... 1,321,511 88,038 100,699 205 -- 10 Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,289,199 163,287 185,274 371 71 8
3. To approve a change in the Fund's fundamental policy concerning diversification of investments. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ----------------------------- Voyageur Minnesota Municipal Income Fund II, Inc. ...... 3,275,663 325,252 255,555 564 -- 21 Voyageur Arizona Municipal Income Fund, Inc. ........... 1,434,254 74,054 98,109 316 -- 1 Voyageur Florida Insured Municipal Income Fund ......... 1,331,218 79,839 99,191 199 10 4
34 for tax-exempt income PROXY RESULTS (CONTINUED) 4. To approve standardized fundamental investment restrictions for the Fund (proposal involves separate votes on seven sub-proposals 4A-4G). 4A. To adopt a new fundamental investment restriction concerning concentration of the Fund's investments in the same industry. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Minnesota Municipal Income Fund, Inc. ......... 1,290,613 42,382 103,973 327 -- 1 Voyageur Minnesota Municipal Income Fund II, Inc. ...... 3,321,468 273,608 261,394 582 -- 3 Voyageur Minnesota Municipal Income Fund III, Inc. ..... 840,718 77,872 79,153 177 -- Voyageur Arizona Municipal Income Fund, Inc. ........... 1,432,929 58,348 115,140 316 -- 1 Voyageur Florida Insured Municipal Income Fund ......... 1,327,315 82,196 100,737 205 10 -- Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,327,955 103,750 206,056 371 71 8
4B. To adopt a new fundamental investment restriction concerning borrowing money and issuing senior securities. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Minnesota Municipal Income Fund, Inc........... 1,271,981 56,855 108,132 325 -- 3 Voyageur Minnesota Municipal Income Fund II, Inc........ 3,267,118 322,610 266,742 585 -- -- Voyageur Minnesota Municipal Income Fund III, Inc....... 835,181 81,198 81,364 177 -- -- Voyageur Arizona Municipal Income Fund, Inc............. 1,427,275 71,566 107,576 316 -- 1 Voyageur Florida Insured Municipal Income Fund.......... 1,305,089 97,883 107,276 201 14 -- Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,306,350 121,667 209,743 371 71 8
4C. To adopt a new fundamental investment restriction concerning underwriting. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Minnesota Municipal Income Fund, Inc. ......... 1,279,609 46,070 111,289 327 -- 1 Voyageur Minnesota Municipal Income Fund II, Inc. ...... 3,269,998 300,622 285,849 585 -- -- Voyageur Minnesota Municipal Income Fund III, Inc. ..... 824,889 85,302 87,551 177 -- -- Voyageur Arizona Municipal Income Fund, Inc. ........... 1,423,207 56,072 127,138 316 -- 1 Voyageur Florida Insured Municipal Income Fund ......... 1,316,437 78,451 115,360 201 14 -- Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,295,279 110,705 231,777 371 71 8
4D. To adopt a new fundamental investment restriction concerning investments in real estate. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Minnesota Municipal Income Fund, Inc. ......... 1,273,629 56,578 106,761 325 -- 3 Voyageur Minnesota Municipal Income Fund II, Inc. ...... 3,262,698 327,240 266,532 564 21 -- Voyageur Minnesota Municipal Income Fund III, Inc. ..... 830,446 82,541 84,756 177 -- -- Voyageur Arizona Municipal Income Fund, Inc. ........... 1,439,009 53,077 114,331 316 -- 1 Voyageur Florida Insured Municipal Income Fund ......... 1,314,272 85,456 110,520 205 10 -- Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,286,440 124,502 226,818 371 71 8
for tax-exempt income 35 PROXY RESULTS (CONTINUED) 4E. To adopt a new fundamental investment restriction concerning investments in commodities. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Minnesota Municipal Income Fund, Inc. ......... 1,262,465 68,846 105,657 325 2 1 Voyageur Minnesota Municipal Income Fund II, Inc. ...... 3,223,069 355,517 277,884 564 21 -- Voyageur Minnesota Municipal Income Fund III, Inc. ..... 812,085 101,211 84,447 177 -- -- Voyageur Arizona Municipal Income Fund, Inc. ........... 1,408,432 79,962 118,023 316 -- 1 Voyageur Florida Insured Municipal Income Fund ......... 1,351,332 77,662 81,254 205 10 -- Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,265,080 146,001 226,679 371 71 8
4F. To adopt a new fundamental investment restriction concerning lending by the Fund. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Minnesota Municipal Income Fund, Inc. ......... 1,262,514 67,809 106,645 327 -- 1 Voyageur Minnesota Municipal Income Fund II, Inc. ...... 3,273,472 304,149 278,849 585 -- -- Voyageur Minnesota Municipal Income Fund III, Inc. ..... 830,819 81,562 85,362 177 -- -- Voyageur Arizona Municipal Income Fund, Inc. ........... 1,423,879 67,829 114,709 316 -- 1 Voyageur Florida Insured Municipal Income Fund ......... 1,315,605 91,709 102,934 211 4 -- Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,299,190 122,864 215,706 371 71 8
4G. To reclassify all current fundamental investment restrictions as non-fundamental. COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Minnesota Municipal Income Fund, Inc. ......... 1,244,104 76,070 116,794 326 1 1 Voyageur Minnesota Municipal Income Fund II, Inc. ...... 3,207,481 357,645 291,344 564 -- 21 Voyageur Minnesota Municipal Income Fund III, Inc. ..... 808,232 100,637 88,873 177 -- -- Voyageur Arizona Municipal Income Fund, Inc. ........... 1,410,628 82,591 113,198 316 -- 1 Voyageur Florida Insured Municipal Income Fund ......... 1,326,507 77,952 105,789 201 14 -- Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,248,651 156,987 232,123 371 71 8
5. To approve a new investment management agreement with Delaware Management Company for the Fund. COMMON SHAREHOLDERS SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN --------------------------------- Voyageur Minnesota Municipal Income Fund, Inc........... 1,274,573 52,127 110,596 Voyageur Minnesota Municipal Income Fund II, Inc........ 3,256,300 330,696 269,474 Voyageur Minnesota Municipal Income Fund III, Inc....... 835,458 87,083 75,379 Voyageur Arizona Municipal Income Fund, Inc............. 1,432,025 61,737 112,655 Voyageur Florida Insured Municipal Income Fund.......... 1,307,546 101,100 101,817 Voyageur Colorado Insured Municipal Income Fund, Inc. .. 2,322,440 113,419 201,901
36 for tax-exempt income PROXY RESULTS (CONTINUED) 6. To ratify the selection of Ernst & Young LLP, as the independent auditors for the Fund. COMMON SHAREHOLDERS SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN --------------------------------- Voyageur Minnesota Municipal Income Fund, Inc........... 1,679,596 9,919 82,712 Voyageur Minnesota Municipal Income Fund II, Inc........ 4,470,216 103,385 206,916 Voyageur Minnesota Municipal Income Fund III, Inc. ..... 1,101,125 23,187 58,234 Voyageur Arizona Municipal Income Fund, Inc............. 1,795,148 13,568 93,324 Voyageur Florida Insured Municipal Income Fund.......... 2,008,253 28,543 74,622 Voyageur Colorado Insured Municipal Income Fund, Inc.... 2,982,114 32,243 144,030
7. To approve the restructuring of the Fund from a Massachusetts Business Trust into a Maryland Corporation.* COMMON SHAREHOLDERS PREFERRED SHAREHOLDERS SHARES SHARES SHARES SHARES SHARES SHARES VOTED VOTED VOTED VOTED VOTED VOTED FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN --------------------------------- ---------------------------- Voyageur Florida Insured Municipal Income Fund.......... 1,342,246 62,719 105,283 215 -- --
- ---------- *The Board of Trustees of the Fund voted to abandon the reorganization at a meeting held on April 15, 1999. YEAR 2000 (UNAUDITED) Like other investment companies, financial and business organizations and individuals around the world, the Funds could be adversely affected if computer systems used by the Investment Manager and other service providers do not properly process and calculate date-related information and data on and after January 1, 2000. The Funds are taking steps to obtain satisfactory assurances that the Investment Manager and other major service providers are taking steps reasonably designed to address the Year 2000 issue with respect to the computer systems that such service providers use. At this time, however, there can be no assurance that these steps will be sufficient to avoid any adverse impact to the Funds. THIS ANNUAL REPORT IS FOR THE INFORMATION OF SHAREHOLDERS OF VOYAGEUR CLOSED-END MUNICIPAL BOND FUNDS. It sets forth details about charges, expenses, investment objectives and operating policies of each Fund. You should read it carefully before you invest. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Board of Directors WALTER P. BABICH Board Chairman, Citadel Constructors, Inc. King of Prussia, PA JOHN H. DURHAM Partner, Complete Care Services Horsham, PA ANTHONY D. KNERR Consultant, Anthony Knerr & Associates New York, NY Ann R. Leven Treasurer, National Gallery of Art Washington, DC THOMAS F. MADISON President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN CHARLES E. PECK Secretary/Treasurer, Enterprise Homes, Inc. Fredericksburg, VA WAYNE A. STORK Chairman Delaware Management Holdings, Inc. Philadelphia, PA JAN L. YEOMANS Vice President and Treasurer 3M Corporation St. Paul, Minnesota Affiliated Officers DAVID K. DOWNES Executive Vice President, Chief Financial Officer and Chief Operating Officer Delaware Investments Family of Funds Philadelphia, PA GEORGE M. CHAMBERLAIN, JR. Senior Vice President, Secretary and General Counsel Delaware Investments Family of Funds Philadelphia, PA BRUCE D. BARTON President and Chief Executive Officer Delaware Distributors, L.P. Philadelphia, PA (photo of globes) directors & officers INVESTMENT MANAGER Delaware Management Company Philadelphia, Pennsylvania INTERNATIONAL AFFILIATE Delaware International Advisers Ltd. London, England PRINCIPAL OFFICE OF THE FUND 1818 Market Street PHILADELPHIA, PA 19103-3682 INDEPENDENT AUDITORS Ernst & Young LLP 2001 Market Street Philadelphia, PA (photo of globes) Registrar and Stock Transfer Agent Norwest Bank Minnesota, NA P.O. Box 64851 St. Paul, MN 55164 1.800.468.9716 For Securities Dealers 1.800.362.7500 For Financial Institutions Representatives Only 1.800.659.2265 www.delawareinvestments.com The Delaware Investments family includes open-end and closed-end funds with a wide range of investment objectives. Stock funds, income funds, tax-exempt funds, money market funds and closed-end funds give investors the ability to create a portfolio that fits their personal financial goals. For a prospectus of any open-end fund from Delaware Investments, contact your financial adviser or call Delaware Investments at 1.800.523.1918. Read the prospectus carefully before investing. Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Funds included herein may from time to time purchase shares of their common stock in the open market. Number of Recordholders as of March 31, 1999: Minnesota Municipal Income Fund I 478 Minnesota Municipal Income Fund II 819 Minnesota Municipal Income Fund III 200 Arizona Municipal Income Fund 160 Florida Insured Municipal Income Fund 281 Colorado Insured Municipal Income Fund 260 DELAWARE INVESTMENTS - --------------------- Philadelphia o London Printed in the USA on recycled paper (1696) VOY-CEAR[3/99]PPL5/99 -----END PRIVACY-ENHANCED MESSAGE-----