UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-07410
Exact name of registrant as specified in charter:
Delaware Investments Florida Insured Municipal Income Fund
Address of principal executive offices:
2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service:
Richelle S. Maestro, Esq.
2005 Market Street
Philadelphia, PA 19103
Registrant's telephone number, including area code: (800) 523-1918
Date of fiscal year end: March 31
Date of reporting period: September 30, 2004
Item 1. Reports to Stockholders
The Registrant's shareholder report is combined with the shareholder reports of
other investment company registrants. This Form N-CSR pertains to the
information of the Delaware Investments Florida Insured Municipal Income Fund,
Inc., which is included in the following shareholder report.
Delaware
Investments(SM)
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CLOSED END A member of Lincoln Financial Group(R)
Semiannual Report SEPTEMBER 30, 2004
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DELAWARE INVESTMENTS CLOSED-END
MUNICIPAL BOND FUNDS
[LOGO] POWERED BY RESEARCH.(SM)
TABLE
OF CONTENTS
SECTOR ALLOCATION
Minnesota Municipal Income Fund 1
Minnesota Municipal Income Fund II 2
Minnesota Municipal Income Fund III 3
Arizona Municipal Income Fund 4
Florida Insured Municipal Income Fund 5
Colorado Insured Municipal Income Fund 6
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FINANCIAL STATEMENTS:
Statements of Net Assets 7
Statements of Operations 20
Statements of Changes in Net Assets 22
Financial Highlights 23
Notes to Financial Statements 29
Proxy Results 33
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Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series
of Delaware Management Business Trust, which is a registered investment advisor.
(C) 2004 Delaware Distributors, L.P.
DIVIDEND REINVESTMENT PLANS
Each Fund offers an automatic dividend reinvestment program. If Fund shares are
registered in your name and you are not already reinvesting dividends but would
like to do so, contact the dividend plan agent, Mellon Investor Services,
L.L.C., at 800 851-9677. You will be asked to put your request in writing. If
you have shares registered in "street" name, contact your financial advisor or
the broker/dealer holding the shares.
Under the current policies of Arizona Municipal Income Fund, Florida Insured
Municipal Income Fund, Minnesota Municipal Income Fund, and Minnesota Municipal
Income Fund II, all distributions of net investment income and capital gains to
common stock shareholders are automatically reinvested in additional shares
unless shareholders elect to receive all dividends and other distributions in
cash paid by check mailed directly to shareholders by the dividend plan agent.
Under the current policies of Colorado Insured Municipal Income Fund and
Minnesota Municipal Income Fund III, distributions of net investment income and
capital gains to common shareholders will be paid in cash unless shareholders
notify Mellon Investor Services, L.L.C. of their desire to participate in the
dividend reinvestment program.
After each Fund declares a dividend or determines to make a capital gains
distribution, the plan agent will, as agent for the participants, receive the
cash payment and use it to buy shares in the open market on the American Stock
Exchange. The Funds will not issue any new shares in connection with the plan.
You can contact Mellon at:
Mellon Investor Services, L.L.C.
Dividend Reinvestment Department
Overpeck Centre
85 Challenger Road
Ridgefield, NJ 07660
800 851-9677
SECTOR ALLOCATION As of September 30, 2004
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND
The SEC adopted a requirement that all Funds present their categories of
portfolio holdings in a table, chart, or graph format in their annual and
semiannual shareholder reports, whether or not a schedule of investments is
utilized. The following charts list each Fund's categories of portfolio holdings
as a percent of total net assets, and is provided in compliance with such
requirement.
PERCENTAGE
SECTOR OF NET ASSETS
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MUNICIPAL BONDS 151.56%
Airport Revenue Bonds 7.43%
City General Obligation Bonds 4.02%
Corporate Backed Revenue Bonds 4.37%
Escrowed to Maturity Bonds 13.52%
Higher Education Revenue Bonds 5.72%
Hospital Revenue Bonds 19.35%
Miscellaneous Revenue Bonds 7.10%
Multifamily Housing Revenue Bonds 6.02%
Municipal Lease Revenue Bonds 4.49%
Parking Revenue Bonds 1.80%
Political Subdivision General Obligation Bonds 8.82%
Pre-Refunded Bonds 10.73%
Public Power Revenue Bonds 30.79%
School District General Obligation Bonds 15.54%
Single Family Housing Revenue Bonds 2.60%
State General Obligation Bonds 2.79%
Tax Increment/Special Assessment Bonds 1.39%
Territorial Revenue Bonds 2.26%
Variable Rate Demand Notes 2.82%
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TOTAL MARKET VALUE OF SECURITIES 151.56%
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RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 0.49%
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LIQUIDATION VALUE OF PREFERRED STOCK (52.05%)
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TOTAL NET ASSETS 100.00%
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1
SECTOR ALLOCATION As of September 30, 2004
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND II
The following chart lists the Fund's categories of portfolio holdings as a
percent of total net assets.
PERCENTAGE
SECTOR OF NET ASSETS
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MUNICIPAL BONDS 152.79%
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Airport Revenue Bonds 7.91%
City General Obligation Bonds 3.75%
Continuing Care/Retirement Revenue Bonds 2.28%
Corporate Backed Revenue Bonds 5.45%
Escrowed to Maturity Bonds 22.38%
Higher Education Revenue Bonds 10.12%
Hospital Revenue Bonds 25.51%
Miscellaneous Revenue Bonds 3.74%
Multifamily Housing Revenue Bonds 10.05%
Municipal Lease Revenue Bonds 11.01%
Parking Revenue Bonds 1.21%
Political Subdivision General Obligation Bonds 6.59%
Pre-Refunded Bonds 9.00%
Public Power Revenue Bonds 11.92%
School District General Obligation Bonds 9.29%
Single Family Housing Revenue Bonds 2.65%
State General Obligation Bonds 4.06%
Tax Increment/Special Assessment Bonds 0.49%
Territorial General Obligation Bonds 1.08%
Territorial Revenue Bonds 1.61%
Variable Rate Demand Notes 2.69%
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TOTAL MARKET VALUE OF SECURITIES 152.79%
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RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 2.00%
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LIQUIDATION VALUE OF PREFERRED STOCK (54.79%)
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TOTAL NET ASSETS 100.00%
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2
SECTOR ALLOCATION As of September 30, 2004
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND III
The following chart lists the Fund's categories of portfolio holdings as a
percent of total net assets.
PERCENTAGE
SECTOR OF NET ASSETS
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MUNICIPAL BONDS 156.00%
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Airport Revenue Bonds 9.41%
City General Obligation Bonds 4.91%
Corporate Backed Revenue Bonds 7.41%
Escrowed to Maturity Bonds 12.31%
Higher Education Revenue Bonds 5.15%
Hospital Revenue Bonds 30.05%
Miscellaneous Revenue Bonds 1.01%
Multifamily Housing Revenue Bonds 15.34%
Municipal Lease Revenue Bonds 9.91%
Parking Revenue Bonds 5.88%
Political Subdivision General Obligation Bonds 9.63%
Pre-Refunded Bonds 9.98%
Public Power Revenue Bonds 20.15%
Single Family Housing Revenue Bonds 2.51%
Territorial General Obligation Bonds 1.96%
Variable Rate Demand Notes 1.62%
Water & Sewer Revenue Bonds 8.77%
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TOTAL MARKET VALUE OF SECURITIES 156.00%
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RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 1.35%
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LIQUIDATION VALUE OF PREFERRED STOCK (57.35%)
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TOTAL NET ASSETS 100.00%
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3
SECTOR ALLOCATION As of September 30, 2004
DELAWARE INVESTMENTS ARIZONA MUNICIPAL INCOME FUND
The following chart lists the Fund's categories of portfolio holdings as a
percent of total net assets.
PERCENTAGE
SECTOR OF NET ASSETS
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MUNICIPAL BONDS 152.06%
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Airport Revenue Bonds 6.79%
City General Obligation Bonds 1.14%
Continuing Care/Retirement Revenue Bonds 3.48%
Convention Center/Auditorium/Hotel Revenue Bonds 2.25%
Dedicated Tax & Fees Revenue Bonds 6.76%
Escrowed to Maturity Bonds 10.72%
Higher Education Revenue Bonds 8.45%
Hospital Revenue Bonds 18.81%
Miscellaneous Revenue Bonds 8.27%
Multifamily Housing Revenue Bonds 3.91%
Municipal Lease Revenue Bonds 10.78%
Political Subdivision General Obligation Bonds 3.57%
Pre-Refunded Bonds 13.15%
Public Power Revenue Bonds 2.26%
School District General Obligation Bonds 17.58%
Single Family Housing Revenue Bonds 5.52%
Territorial Revenue Bonds 23.30%
Water & Sewer Revenue Bonds 5.32%
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TOTAL MARKET VALUE OF SECURITIES 152.06%
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RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 3.01%
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LIQUIDATION VALUE OF PREFERRED STOCK (55.07%)
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TOTAL NET ASSETS 100.00%
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4
SECTOR ALLOCATION As of September 30, 2004
DELAWARE INVESTMENTS FLORIDA INSURED MUNICIPAL INCOME FUND
The following chart lists the Fund's categories of portfolio holdings as a
percent of total net assets.
PERCENTAGE
SECTOR OF NET ASSETS
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Municipal Bonds 150.09%
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Airport Revenue Bonds 2.79%
Dedicated Tax & Fees Revenue Bonds 24.67%
Higher Education Revenue Bonds 7.68%
Hospital Revenue Bonds 21.57%
Multifamily Housing Revenue Bonds 22.87%
Municipal Lease Revenue Bonds 23.93%
Ports & Harbors Revenue Bonds 2.68%
Pre-Refunded Bonds 22.01%
Public Power Revenue Bonds 5.28%
State General Obligation Bonds 6.00%
Tax Increment/Special Assessment Bonds 0.79%
Water & Sewer Revenue Bonds 9.82%
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TOTAL MARKET VALUE OF SECURITIES 150.09%
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RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 2.15%
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LIQUIDATION VALUE OF PREFERRED STOCK (52.24%)
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TOTAL NET ASSETS 100.00%
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5
SECTOR ALLOCATION As of September 30, 2004
DELAWARE INVESTMENTS COLORADO INSURED MUNICIPAL INCOME FUND
The following chart lists the Fund's categories of portfolio holdings as a
percent of total net assets.
PERCENTAGE
SECTOR OF NET ASSETS
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MUNICIPAL BONDS 150.42%
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Airport Revenue Bonds 10.41%
City General Obligation Bonds 2.67%
Continuing Care/Retirement Revenue Bonds 3.48%
Convention Center/Auditorium/Hotel Revenue Bonds 3.98%
Dedicated Tax & Fees Revenue Bonds 11.30%
Higher Education Revenue Bonds 32.64%
Hospital Revenue Bonds 4.50%
Multifamily Housing Revenue Bonds 5.78%
Municipal Lease Revenue Bonds 17.68%
Parking Revenue Bonds 3.50%
Political Subdivision General Obligation Bonds 8.22%
Pre-Refunded Bonds 14.02%
School District General Obligation Bonds 9.09%
Turnpike/Toll Road Revenue Bonds 13.52%
Water & Sewer Revenue Bonds 9.63%
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TOTAL MARKET VALUE OF SECURITIES 150.42%
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RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 1.76%
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LIQUIDATION VALUE OF PREFERRED STOCK (52.18%)
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TOTAL NET ASSETS 100.00%
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6
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND, INC.
STATEMENTS September 30, 2004 (Unaudited)
OF NET ASSETS
Principal Market
Amount Value
MUNICIPAL BONDS - 151.56%
Airport Revenue Bonds - 7.43%
Minneapolis/St. Paul Metropolitan Airports
Commission Revenue
Series A 5.00% 1/1/30 (AMBAC) $ 250,000 $ 253,380
Series C 5.25% 1/1/32 (FGIC) 2,500,000 2,602,675
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2,856,055
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City General Obligation Bonds - 4.02%
Metropolitan Council Minnesota
(Minneapolis/St. Paul Metropolitan Area)
Series C 5.00% 2/1/22 500,000 521,600
Willmar (Rice Memorial Hospital Project)
5.00% 2/1/32 (FSA) 1,000,000 1,023,480
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1,545,080
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Corporate Backed Revenue Bonds - 4.37%
Anoka County Solid Waste Disposal
National Rural Co-Op Utility (United
Power Association) Series A
6.95% 12/1/08 (CFC)(AMT) 675,000 680,103
Sartell Environmental Improvement
Revenue (International Paper)
Series A 5.20% 6/1/27 1,000,000 997,280
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1,677,383
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Escrowed to Maturity Bonds - 13.52%
Dakota/Washington Counties Housing &
Redevelopment Authority Bloomington
Single Family Residential Mortgage
Revenue 8.375% 9/1/21
(GNMA)(FHA)(AMT) 2,555,000 3,779,101
Southern Minnesota Municipal Power
Agency Series B
5.50% 1/1/15 (AMBAC) 390,000 399,430
5.75% 1/1/11 (FGIC) 1,000,000 1,017,520
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5,196,051
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Higher Education Revenue Bonds - 5.72%
Minnesota State Higher Education Facilities
Authority (College of St. Benedict)
Series 5-W 5.00% 3/1/20 1,000,000 1,034,330
University of Minnesota Series A
5.50% 7/1/21 1,000,000 1,163,740
----------
2,198,070
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Hospital Revenue Bonds - 19.35%
Bemidji Hospital Facilities Revenue
(North Country Health Services)
5.00% 9/1/24 (RADIAN) 1,000,000 1,031,620
Duluth Economic Development Authority
Health Care Facilities Revenue
Benedictine Health System
(St. Mary's Hospital) 5.25% 2/15/33 1,250,000 1,254,975
Minneapolis Health Care System Revenue
(Allina Health Systems)
Series A 5.75% 11/15/32 1,100,000 1,148,939
Minnesota Agricultural & Economic
Development Health Care System
(Fairview Hospital)
Series A 6.375% 11/15/29 1,750,000 1,894,672
Shakopee Health Care Facilities Revenue
(St. Francis Regional Medical Center)
5.25% 9/1/34 500,000 493,510
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Hospital Revenue Bonds (continued)
St. Paul Housing & Redevelopment
Authority Health Care
Facilities Revenue
(Franciscan Health Project)
5.40% 11/20/42 (GNMA)(FHA) $ 880,000 $ 911,337
(Regions Hospital Project)
5.30% 5/15/28 700,000 700,553
----------
7,435,606
----------
Miscellaneous Revenue Bonds - 7.10%
Minneapolis Art Center Facilities
Revenue (Walker Art Center Project)
5.125% 7/1/21 1,600,000 1,684,880
Minneapolis Community Development
Agency Supported
Series G-3 5.45% 12/1/31 1,000,000 1,041,670
----------
2,726,550
----------
Multifamily Housing Revenue Bonds - 6.02%
Minneapolis Multifamily Housing
Revenue (Seward Towers Project)
5.00% 5/20/36 (GNMA) 1,000,000 1,017,950
Southeastern Minnesota Multi County
Housing & Redevelopment Authority
(Winona County) 5.35% 1/1/28 300,000 303,153
Washington County Housing &
Redevelopment Authority Revenue
(Woodland Park Apartments Project)
4.70% 10/1/32 1,000,000 993,220
----------
2,314,323
----------
Municipal Lease Revenue Bonds - 4.49%
St. Paul Port Authority Lease Revenue
(Cedar Street Office Building Project)
5.125% 12/1/27 500,000 520,070
5.25% 12/1/27 1,150,000 1,205,465
----------
1,725,535
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Parking Revenue Bonds - 1.80%
St. Paul Housing & Redevelopment
Authority Parking Revenue
(Block 19 Ramp Project)
Series A 5.35% 8/1/29 (FSA) 650,000 689,657
----------
689,657
----------
Political Subdivision General Obligation Bonds - 8.82%
Hennepin County Series B 5.00% 12/1/18 1,300,000 1,412,034
Washington County Housing &
Redevelopment Authority Series B
5.50% 2/1/22 (MBIA) 855,000 922,536
5.50% 2/1/32 (MBIA) 1,000,000 1,055,050
----------
3,389,620
----------
*Pre-Refunded Bonds - 10.73%
Duluth Economic Development Authority
Health Care Facilities Revenue (Duluth
Clinic) 6.30% 11/1/22-04 (AMBAC) 730,000 732,971
Puerto Rico Commonwealth
6.00% 7/1/26-07 1,000,000 1,121,210
Puerto Rico Public Buildings Authority
Series D 5.25% 7/1/27-12 845,000 948,563
St. Francis Independent School District #15
Series A 6.30% 2/1/11-06 (FSA) 1,250,000 1,320,838
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4,123,582
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7
STATEMENTS DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND, INC.
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Public Power Revenue Bonds - 30.79%
Chaska Electric Revenue
Series A 6.00% 10/1/25 $1,000,000 $ 1,070,820
Minnesota State Municipal Power
Agency 5.25% 10/1/19 1,110,000 1,200,620
Rochester Electric Utility Revenue
5.25% 12/1/30 (AMBAC) 150,000 156,947
**Southern Minnesota Municipal Power
Agency Supply System Revenue, Inverse
Floater Series A 8.688% 1/1/14 (AMBAC) 2,500,000 3,150,375
Southern Minnesota Municipal Power
Agency Supply System Revenue Series A
5.00% 1/1/12 (AMBAC) 1,000,000 1,112,560
5.00% 1/1/13 (MBIA) 500,000 555,790
5.25% 1/1/15 (AMBAC) 570,000 648,170
5.25% 1/1/16 (AMBAC) 1,000,000 1,139,080
Western Minnesota Municipal Power Agency
Series A 5.00% 1/1/30 (MBIA) 1,900,000 1,945,676
Series B 5.00% 1/1/15 (MBIA) 765,000 849,517
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11,829,555
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School District General Obligation Bonds - 15.54%
Centennial Independent School
District #012 Series 2002A
5.00% 2/1/20 (FSA) 400,000 424,020
Farmington Independent School
District #192 5.00% 2/1/23 (FSA) 1,200,000 1,254,227
Minneapolis Special School District #001
5.00% 2/1/19 (FSA) 675,000 724,640
Morris Independent School District #769
5.00% 2/1/28 (MBIA) 1,000,000 1,030,940
Mounds View Independent School
District #621 5.00% 2/1/23 (FSA) 1,020,000 1,071,347
Robbinsdale Independent School
District #281 5.00% 2/1/21 (FSA) 500,000 527,100
St. Michael Independent School
District #885
5.00% 2/1/22 (FSA) 500,000 524,520
5.00% 2/1/24 (FSA) 400,000 415,520
-----------
5,972,314
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Single Family Housing Revenue Bonds - 2.60%
Dakota County Housing & Redevelopment
Authority Single Family Mortgage
Revenue 5.85% 10/1/30
(GNMA)(FNMA)(AMT) 54,000 55,497
Minnesota State Housing Finance Agency
Single Family Mortgage Series J
5.90% 7/1/28 (AMT) 910,000 942,797
-----------
998,294
-----------
State General Obligation Bonds - 2.79%
Minnesota State 5.00% 8/1/21 1,000,000 1,072,140
-----------
1,072,140
-----------
Tax Increment/Special Assessment Bonds - 1.39%
Moorhead Economic Development
Authority Tax Increment Series A
5.25% 2/1/25 (MBIA) 500,000 535,630
-----------
535,630
-----------
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Territorial Revenue Bonds - 2.26%
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue
Series A 5.00% 7/1/38 $ 300,000 $ 301,467
Series G 5.00% 7/1/42 250,000 250,685
Puerto Rico Public Buildings Authority
Revenue Series D
(Unrefunded Balance) 5.25% 7/1/27 305,000 316,977
-----------
869,129
-----------
Variable Rate Demand Notes - 2.82%
Minneapolis Library 1.56% 12/1/32 700,000 700,000
Minnesota State Higher Education
Facilities Authority (Carleton College)
Series 5-G 1.56% 11/1/29 385,000 385,000
-----------
1,085,000
-----------
TOTAL MUNICIPAL BONDS (cost $55,858,033) 58,239,574
-----------
TOTAL MARKET VALUE OF SECURITIES - 151.56%
(cost $55,858,033) 58,239,574
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.49% 188,216
LIQUIDATION VALUE OF PREFERRED STOCK - (52.05%) (20,000,000)
------------
NET ASSETS APPLICABLE TO 2,594,700
SHARES OUTSTANDING - 100.00% $ 38,427,790
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Net Asset Value Per Common Share
($38,427,790 / 2,594,700 Shares) $14.81
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COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 2004:
Common stock, $0.01 par value, 200 million shares
authorized to the Fund $ 35,426,619
Undistributed net investment income 601,048
Accumulated net realized gain on investments 33,096
Net unrealized appreciation of investments 2,367,027
------------
Total net assets $ 38,427,790
------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded.
**An inverse floater bond is a type of bond with variable or floating interest
rates that move in the opposite direction of short-term interest rates.
Interest rate disclosed is in effect as of September 30, 2004.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
CFC - Insured by the National Rural Utilities Cooperative Finance Corporation
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FNMA - Insured by Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
See accompanying notes
8
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND II, INC.
STATEMENTS September 30, 2004 (Unaudited)
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS - 152.79%
Airport Revenue Bonds - 7.91%
Minneapolis/St. Paul Metropolitan Airports
Commission Revenue Series A
5.00% 1/1/28 (MBIA) $1,370,000 $ 1,406,237
5.00% 1/1/30 (AMBAC) 1,450,000 1,469,604
5.25% 1/1/16 (MBIA) 1,000,000 1,103,700
Series B 5.25% 1/1/24 (FGIC)(AMT) 1,000,000 1,032,980
Series C 5.25% 1/1/32 (FGIC) 3,500,000 3,643,745
------------
8,656,266
------------
City General Obligation Bonds - 3.75%
Metropolitan Council Minnesota
(Minneapolis/St. Paul Metropolitan Area)
Series C 5.00% 2/1/22 500,000 521,600
Moorhead Series B 5.00% 2/1/33 (MBIA) 2,000,000 2,053,160
Willmar (Rice Memorial Hospital Project)
5.00% 2/1/32 (FSA) 1,500,000 1,535,220
------------
4,109,980
------------
Continuing Care/Retirement Revenue Bonds - 2.28%
Minneapolis Health Care Facility Revenue
(Jones-Harrison Residence Project)
6.00% 10/1/27 1,565,000 1,494,309
Moorhead Economic Development Authority
Multifamily Revenue (Eventide Lutheran
Home Project) Series B 6.00% 6/1/18 1,000,000 1,004,160
------------
2,498,469
------------
Corporate Backed Revenue Bonds - 5.45%
Burnsville Commonwealth Development
(Holiday Inn Project) 5.90% 4/1/08 1,430,000 1,413,240
Cloquet Pollution Control Revenue
(Potlatch Corporation) 5.90% 10/1/26 4,500,000 4,552,605
------------
5,965,845
------------
Escrowed to Maturity Bonds - 22.38%
Dakota/Washington Counties Housing &
Redevelopment Authority Bloomington
Single Family Residential Mortgage
Revenue 8.375% 9/1/21
(GNMA)(FHA)(AMT) 5,500,000 8,135,050
Elk River Independent School District #728
5.00% 2/1/16 (FGIC) 1,500,000 1,651,035
Metropolitan Council Minneapolis/St. Paul
Area Sports Facilities Revenue (Hubert H.
Humphrey Metrodome) 6.00% 10/1/09 2,360,000 2,395,896
Southern Minnesota Municipal Power
Agency Supply Revenue
Series A 5.75% 1/1/18 3,715,000 3,811,739
St. Paul Housing & Redevelopment
Authority Sales Tax (Civic Center Project)
5.55% 11/1/23 (MBIA) 4,200,000 4,297,986
5.55% 11/1/23 2,300,000 2,353,659
Western Minnesota Municipal Power
Agency 6.625% 1/1/16 1,535,000 1,866,268
------------
24,511,633
------------
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Higher Education Revenue Bonds - 10.12%
Minnesota State Higher Education
Facilities Authority
(College of St. Benedict)
Series 5-W 5.00% 3/1/20 $1,000,000 $ 1,034,330
(St. Catherine College)
Series 5-N1 5.375% 10/1/32 1,500,000 1,547,205
(St. Mary's University)
Series 5-U 4.80% 10/1/23 1,400,000 1,401,526
(St. Thomas University)
Series 4-A1 5.625% 10/1/21 1,000,000 1,027,100
Series 5-Y 5.25% 10/1/34 1,500,000 1,545,075
St. Cloud Housing & Redevelopment
Authority Revenue (State University
Foundation Project) 5.00% 5/1/23 1,000,000 1,037,980
University of Minnesota Series A
5.50% 7/1/21 3,000,000 3,491,220
-----------
11,084,436
-----------
Hospital Revenue Bonds - 25.51%
Brainerd Health Care (Evangelical Lutheran
Health Care Facilities)
Series A 6.65% 3/1/17 (FSA) 1,195,000 1,195,669
Duluth Economic Development Authority
Health Care Facilities Revenue
Benedictine Health System
(St. Mary's Hospital) 5.25% 2/15/33 5,000,000 5,019,899
Minneapolis Health Care System Revenue
(Allina Health Systems)
Series A 5.75% 11/15/32 1,000,000 1,044,490
(Fairview Health Services)
Series A 5.625% 5/15/32 2,750,000 2,864,290
Minneapolis/St. Paul Housing &
Redevelopment Authority Health Care Systems
(Children's Health Care)
Series A 5.50% 8/15/25 (FSA) 1,400,000 1,474,844
Minnesota Agricultural & Economic
Development Health Care System
(Fairview Hospital)
Series A 6.375% 11/15/29 3,300,000 3,572,811
Series 97A 5.75% 11/15/26 (MBIA) 5,550,000 6,078,970
Rochester Health Care Facilities Revenue
(Mayo Foundation)
Series B 5.50% 11/15/27 3,365,000 3,567,539
St. Louis Park Health Care Facilities Revenue
(Park Nicollet Health Services)
Series B 5.25% 7/1/30 1,250,000 1,263,688
St. Paul Housing & Redevelopment
Authority Health Care Facilities Revenue
(Regions Hospital Project) 5.30% 5/15/28 300,000 300,237
Waconia Health Care Facilities Revenue
(Ridgeview Medical Center Project)
Series A 6.10% 1/1/19 (RADIAN) 1,405,000 1,556,417
-----------
27,938,854
-----------
Miscellaneous Revenue Bonds - 3.74%
Minneapolis Art Center Facilities Revenue
(Walker Art Center Project)
5.125% 7/1/21 2,400,000 2,527,320
9
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND II, INC.
STATEMENTS
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Miscellaneous Revenue Bonds (continued)
Minneapolis Community Development
Agency (Supported Development
Revenue Limited Tax Common Bond Fund)
Series 5 5.70% 12/1/27 $ 375,000 $ 382,391
Series G1 5.70% 12/1/19 1,100,000 1,184,964
-----------
4,094,675
-----------
Multifamily Housing Revenue Bonds - 10.05%
Chanhassen Multifamily Housing Revenue
(Heritage Park Project Section 8)
6.20% 7/1/30 (FHA)(AMT) 1,105,000 1,149,255
Harmony Multifamily Housing Revenue
Refunding Section 8
(Zedakah Foundation Project)
Series A 5.95% 9/1/20 1,000,000 858,510
Minneapolis Multifamily Housing Revenue
(Seward Towers Project)
5.00% 5/20/36 (GNMA) 1,000,000 1,017,950
(Sumner Housing Project)
Series A 5.15% 2/20/45 (GNMA)(AMT) 3,575,000 3,620,581
Minnesota State Housing Finance Agency
Series A 5.00% 2/1/35 1,000,000 1,000,990
Series D 5.95% 2/1/18 (MBIA) 950,000 973,332
Southeastern Minnesota Multi County
Housing & Redevelopment Authority
(Winona County) 5.35% 1/1/28 870,000 879,144
Stillwater Multifamily Housing Revenue
(Stillwater Cottages) (Orleans Homes
Number One) 7.25% 11/1/27 (AMT) 1,540,000 1,505,319
-----------
11,005,081
-----------
Municipal Lease Revenue Bonds - 11.01%
Andover Economic Development Authority
Public Facilities Lease Revenue (Andover
Community Center) 5.20% 2/1/29 1,000,000 1,010,470
Minneapolis Development Revenue
(Limited Tax Supported Common
Bond Fund) 5.50% 12/1/24 1,000,000 1,043,050
St. Paul Port Authority Lease Revenue
(Cedar Street Office Building Project)
5.00% 12/1/22 2,385,000 2,494,662
5.25% 12/1/27 2,650,000 2,777,810
St. Paul Port Authority Lease Revenue
(Robert Street Office Building Project)
5.00% 12/1/27 2,545,000 2,619,136
Series 9 5.25% 12/1/27 2,000,000 2,104,820
-----------
12,049,948
-----------
Parking Revenue Bonds - 1.21%
St. Paul Housing & Redevelopment
Authority Parking Revenue
(Block 19 Ramp Project)
Series A 5.35% 8/1/29 (FSA) 1,250,000 1,326,263
-----------
1,326,263
-----------
Political Subdivision General Obligation Bonds - 6.59%
Hennepin County Series B 5.00% 12/1/18 1,000,000 1,086,180
Hennepin Regional Railroad Authority
5.00% 12/1/26 3,500,000 3,592,190
Metropolitan Council Waste Water
Treatment Series B 5.00% 12/1/21 1,250,000 1,340,025
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Political Subdivision General Obligation Bonds (continued)
Washington County Housing &
Redevelopment Authority
Series B 5.50% 2/1/32 (MBIA) $1,140,000 $ 1,202,757
-----------
7,221,152
-----------
*Pre-Refunded Bonds - 9.00%
Duluth Economic Development Authority
Health Care Facilities Revenue
(Duluth Clinic)
6.20% 11/1/12-04 (AMBAC) 280,000 281,117
6.30% 11/1/22-04 (AMBAC) 960,000 963,907
Esko Independent School District #99
5.65% 4/1/12-05 (FSA) 550,000 560,648
Hawley Independent School District #150
Series A 5.75% 2/1/17-06 (FSA) 1,000,000 1,049,450
Minnesota Public Facilities Authority Water
Pollution Control Revenue Series A
6.25% 3/1/16-05 1,000,000 1,019,520
Puerto Rico Commonwealth Public
Improvement Series A 5.00% 7/1/27-12 1,250,000 1,395,613
Puerto Rico Highway & Transportation
Authority Revenue Series Y
5.50% 7/1/26-06 2,000,000 2,157,759
Puerto Rico Public Buildings Authority
Series D 5.25% 7/1/27-12 625,000 701,600
Stewartville Independent School
District #534 5.75% 2/1/17-05 1,705,000 1,727,677
-----------
9,857,291
-----------
Public Power Revenue Bonds - 11.92%
Minnesota State Municipal Power Agency
Series A 5.00% 10/1/34 5,750,000 5,769,320
Rochester Electric Utility Revenue
5.25% 12/1/30 (AMBAC) 450,000 470,840
**Southern Minnesota Municipal Power
Agency Supply System Revenue,
Inverse Floater Series A
8.688% 1/1/14 (AMBAC) 3,000,000 3,780,450
8.688% 1/1/15 1,500,000 1,911,435
Western Minnesota Municipal Power Agency
Series A 5.00% 1/1/30 (MBIA) 1,100,000 1,126,444
-----------
13,058,489
-----------
School District General Obligation Bonds - 9.29%
Centennial Independent School District #012
Series 2002A 5.00% 2/1/20 (FSA) 400,000 424,020
Farmington Independent School
District #192 5.00% 2/1/23 (FSA) 1,080,000 1,128,805
Minneapolis Special School District #001
5.00% 2/1/19 (FSA) 1,000,000 1,073,540
Morris Independent School District #769
5.00% 2/1/28 (MBIA) 2,750,000 2,835,085
Mounds View Independent School
District #621 5.00% 2/1/23 (FSA) 1,000,000 1,050,340
Rosemount Independent School
District #196 Series A 5.70% 4/1/12 1,270,000 1,339,126
St. Michael Independent
School District #885
5.00% 2/1/22 (FSA) 1,500,000 1,573,560
5.00% 2/1/24 (FSA) 725,000 753,130
-----------
10,177,606
-----------
10
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND II, INC.
STATEMENTS
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Single Family Housing Revenue Bonds - 2.65%
Minnesota State Housing Finance Agency
Single Family Housing Series 1992-C2
6.15% 7/1/23 (AMT) $ 920,000 $ 928,262
Minnesota State Housing Finance Agency
Single Family Mortgage
Series B 5.35% 1/1/33 (AMT) 1,155,000 1,176,044
Series J 5.90% 7/1/28 (AMT) 770,000 797,751
------------
2,902,057
------------
State General Obligation Bonds - 4.06%
Minnesota State 5.00% 8/1/21 3,525,000 3,779,293
**Minnesota State, Inverse Floater
8.479% 11/1/17 570,000 666,091
------------
4,445,384
------------
Tax Increment/Special Assessment Bonds - 0.49%
Moorhead Economic Development
Authority Tax Increment Series A
5.25% 2/1/25 (MBIA) 500,000 535,630
------------
535,630
------------
Territorial General Obligation Bonds - 1.08%
Puerto Rico Commonwealth Public
Improvement Series A
5.50% 7/1/19 (MBIA) 1,000,000 1,176,290
------------
1,176,290
------------
Territorial Revenue Bonds - 1.61%
Puerto Rico Electric Power Authority Power
Revenue Series Z 5.25% 7/1/21 1,500,000 1,527,465
Puerto Rico Public Buildings Authority
Revenue Series D (Unrefunded Balance)
5.25% 7/1/27 225,000 233,836
------------
1,761,301
------------
Variable Rate Demand Notes - 2.69%
Minneapolis Block E Buildings Series A
1.56% 12/1/18 300,000 300,000
1.56% 3/1/27 1,250,000 1,250,000
Minneapolis Library 1.56% 12/1/32 200,000 200,000
Minneapolis Multifamily Housing Revenue
(Seven Corners Apartments Project)
1.66% 11/1/31 300,000 300,000
Minnesota State Higher Education Facilities
Authority (Carleton College)
Series 5-G 1.56% 11/1/29 900,000 900,000
------------
2,950,000
------------
TOTAL MUNICIPAL BONDS (cost $159,831,480) 167,326,650
------------
TOTAL MARKET VALUE OF SECURITIES - 152.79%
(cost $159,831,480) $167,326,650
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 2.00% 2,187,819
LIQUIDATION VALUE OF PREFERRED STOCK - (54.79%) (60,000,000)
------------
Net Assets Applicable to 7,252,200
Shares Outstanding - 100.00% $109,514,469
------------
Net Asset Value Per Common Share
($109,514,469 / 7,252,200 Shares) $15.10
------
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 2004:
Common stock, $0.01 par value, 200 million shares
authorized to the Fund $ 99,710,000
Undistributed net investment income 2,951,972
Accumulated net realized loss on investments (461,794)
Net unrealized appreciation of investments 7,314,291
------------
Total net assets $109,514,469
------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded.
**An inverse floater bond is a type of bond with variable or floating interest
rates that move in the opposite direction of short-term interest rates.
Interest rate disclosed is in effect as of September 30, 2004.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
See accompanying notes
11
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND III, INC.
STATEMENTS September 30, 2004 (Unaudited)
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS - 156.00%
Airport Revenue Bonds - 9.41%
Minneapolis/St. Paul Metropolitan Airports
Commission Revenue Series A
5.00% 1/1/28 (MBIA) $ 750,000 $ 769,838
5.00% 1/1/30 (AMBAC) 750,000 760,140
5.125% 1/1/25 (FGIC) 900,000 930,636
-----------
2,460,614
-----------
City General Obligation Bonds - 4.91%
Moorhead Series B 5.00% 2/1/33 (MBIA) 1,250,000 1,283,225
-----------
1,283,225
-----------
Corporate Backed Revenue Bonds - 7.41%
Cloquet Pollution Control Revenue
(Potlatch Corporation) 5.90% 10/1/26 1,000,000 1,011,690
Minneapolis Community Development
Agency Supported Development
Revenue (Pajor Graphics) Series 1
(LOC US Bank NA) 6.75% 12/1/25 (AMT) 865,000 926,303
-----------
1,937,993
-----------
Escrowed to Maturity Bonds - 12.31%
University of Minnesota Hospital & Clinics
6.75% 12/1/16 2,580,000 3,219,324
-----------
3,219,324
-----------
Higher Education Revenue Bonds - 5.15%
Minnesota State Higher Education
Facilities Authority
(College of St. Benedict)
Series 5-W 5.25% 3/1/24 300,000 310,824
(St. Thomas University)
Series 4-A1 5.625% 10/1/21 1,010,000 1,037,371
-----------
1,348,195
-----------
Hospital Revenue Bonds - 30.05%
Bemidji Hospital Facilities Revenue
(North Country Health Services)
5.00% 9/1/24 (RADIAN) 500,000 515,810
Duluth Economic Development Authority
Health Care Facilities Revenue
Benedictine Health System
(St. Mary's Hospital) 5.25% 2/15/33 1,000,000 1,003,980
Minneapolis Health Care System Revenue
(Allina Health Systems)
Series A 5.75% 11/15/32 1,100,000 1,148,939
Minnesota Agricultural & Economic
Development Health Care System
(Benedictine Health Systems)
5.75% 2/1/29 600,000 585,750
(Fairview Hospital)
Series A 6.375% 11/15/29 1,250,000 1,353,338
Rochester Health Care Facilities Revenue
(Mayo Foundation)
Series B 5.50% 11/15/27 1,000,000 1,060,190
Shakopee Health Care Facilities Revenue
(St. Francis Regional Medical Center)
5.25% 9/1/34 310,000 305,976
St. Paul Housing & Redevelopment
Authority Revenue (Franciscan Health
Project) 5.40% 11/20/42 (GNMA)(FHA) 1,820,000 1,884,809
-----------
7,858,792
-----------
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Miscellaneous Revenue Bonds - 1.01%
Minneapolis Art Center Facilities Revenue
(Walker Art Center Project) 5.125% 7/1/21 $ 250,000 $ 263,263
----------
263,263
----------
Multifamily Housing Revenue Bonds - 15.34%
Burnsville Multifamily Housing Mortgage
Revenue SCA Tax Exempt Trust
Series A 7.10% 1/1/30 (FSA) 1,930,000 1,980,932
Minneapolis Multifamily Housing Revenue
(Gaar Scott Loft Project)
5.95% 5/1/30 (AMT) 980,000 1,047,345
(Olson Townhomes Project)
6.00% 12/1/19 (AMT) 1,000,000 983,790
----------
4,012,067
----------
Municipal Lease Revenue Bonds - 9.91%
Andover Economic Development Authority
Public Facilities Lease Revenue (Andover
Community Center) 5.125% 2/1/24 500,000 510,005
St. Paul Port Authority Lease Revenue
(Cedar Street Office Building Project)
5.125% 12/1/27 500,000 520,070
5.25% 12/1/27 1,000,000 1,048,230
St. Paul Port Authority Lease Revenue
(Robert Street Office Building Project)
5.00% 12/1/27 500,000 514,565
----------
2,592,870
----------
Parking Revenue Bonds - 5.88%
St. Paul Housing & Redevelopment
Authority Parking Revenue
(Block 19 Ramp Project)
Series A 5.35% 8/1/29 (FSA) 1,450,000 1,538,465
----------
1,538,465
----------
Political Subdivision General Obligation Bonds - 9.63%
Metropolitan Council Waste Water Treatment
Series B 5.00% 12/1/21 750,000 804,015
Minneapolis Sports Arena Project
5.125% 10/1/20 750,000 796,590
Washington County Housing &
Redevelopment Authority
Series B 5.50% 2/1/22 (MBIA) 850,000 917,142
----------
2,517,747
----------
*Pre-Refunded Bonds - 9.98%
Duluth Economic Development Authority
Health Care Facilities Revenue (Duluth
Clinic) 6.20% 11/1/12-04 (AMBAC) 420,000 421,676
Esko Independent School District #99
5.75% 4/1/17-05 (FSA) 2,145,000 2,187,600
----------
2,609,276
----------
Public Power Revenue Bonds - 20.15%
Minnesota State Municipal Power Agency
5.25% 10/1/19 500,000 540,820
Series A 5.00% 10/1/34 250,000 250,840
Southern Minnesota Municipal Power
Agency Supply System Revenue Series A
5.00% 1/1/13 (MBIA) 500,000 555,790
5.25% 1/1/15 (AMBAC) 700,000 795,998
5.25% 1/1/16 (AMBAC) 500,000 569,540
12
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND III, INC.
STATEMENTS
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Public Power Revenue Bonds (continued)
**Southern Minnesota Municipal Power
Agency Supply System Revenue,
Inverse Floater Series A
8.688% 1/1/14 (AMBAC) $1,500,000 $ 1,890,224
Western Minnesota Municipal Power
Agency Series B 5.00% 1/1/15 (MBIA) 600,000 666,288
-----------
5,269,500
-----------
Single Family Housing Revenue Bonds - 2.51%
Minnesota State Housing Finance Agency
Single Family Mortgage
Series B 5.35% 1/1/33 (AMT) 645,000 656,752
-----------
656,752
-----------
Territorial General Obligation Bonds - 1.96%
University Virgin Islands
Series A 5.375% 6/1/34 500,000 513,525
-----------
513,525
-----------
Variable Rate Demand Notes - 1.62%
Minneapolis Block E Buildings
Series A 1.56% 12/1/18 425,000 425,000
-----------
425,000
-----------
Water & Sewer Revenue Bonds - 8.77%
Minnesota Public Facilities Authority Water
Pollution Control Revenue
Series B 5.40% 3/1/15 2,200,000 2,293,302
-----------
2,293,302
-----------
TOTAL MUNICIPAL BONDS (cost $38,711,216) 40,799,910
-----------
TOTAL MARKET VALUE OF SECURITIES - 156.00%
(cost $38,711,216) $ 40,799,910
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.35% 354,192
LIQUIDATION VALUE OF PREFERRED STOCK - (57.35%) (15,000,000)
------------
NET ASSETS APPLICABLE TO 1,837,200
SHARES OUTSTANDING - 100.00% $ 26,154,102
------------
Net Asset Value Per Common Share
($26,154,102 / 1,837,200 Shares) $14.24
------
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 2004:
Common stock, $0.01 par value, 200 million shares
authorized to the Fund $ 23,985,129
Undistributed net investment income 683,427
Accumulated net realized loss on investments (482,990)
Net unrealized appreciation of investments 1,968,536
------------
Total net assets $ 26,154,102
------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded.
**An inverse floater bond is a type of bond with variable or floating interest
rates that move in the opposite direction of short-term interest rates.
Interest rate disclosed is in effect as of September 30, 2004.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
See accompanying notes
13
DELAWARE INVESTMENTS ARIZONA MUNICIPAL INCOME FUND, INC.
STATEMENTS September 30, 2004 (Unaudited)
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS - 152.06%
Airport Revenue Bonds - 6.79%
Phoenix Civic Improvement Corporation
Airport Revenue
Senior Lien Series A 5.00% 7/1/25 (FSA) $1,000,000 $1,025,790
Series B 5.25% 7/1/27 (FGIC)(AMT) 2,000,000 2,059,620
----------
3,085,410
----------
City General Obligation Bonds - 1.14%
DC Ranch Community Facilities
5.00% 7/15/27 (AMBAC) 500,000 515,680
----------
515,680
----------
Continuing Care/Retirement Revenue Bonds - 3.48%
Yavapai County Industrial Development
Authority Residential Care Facilities
(Margaret T. Morris Center)
Series A 5.40% 2/20/38 (GNMA) 1,575,000 1,580,560
----------
1,580,560
----------
Convention Center/Auditorium/Hotel Revenue Bonds - 2.25%
Arizona Tourism & Sports Authority Tax
Revenue Multipurpose Stadium Facilities
Series A 5.00% 7/1/31 (MBIA) 1,000,000 1,023,060
----------
1,023,060
----------
Dedicated Tax & Fees Revenue Bonds - 6.76%
Glendale Municipal Property Corporation
5.00% 7/1/33 (AMBAC) 3,000,000 3,069,180
----------
3,069,180
----------
Escrowed to Maturity Bonds - 10.72%
Puerto Rico Commonwealth Infrastructure
Financing Series A 5.50% 10/1/40 4,500,000 4,868,730
----------
4,868,730
----------
Higher Education Revenue Bonds - 8.45%
Arizona State University Certificates of
Participation 5.00% 9/1/30 (AMBAC) 1,000,000 1,023,930
South Campus Group Student Housing
Revenue (Arizona State University
South Campus Project)
5.625% 9/1/35 (MBIA) 1,000,000 1,090,990
Southern Arizona Capital Facilities Finance
Corporation (University of Arizona
Project) 5.00% 9/1/23 (MBIA) 1,150,000 1,193,735
University of Arizona Certificates of
Participation (University of Arizona
Project) Series B 5.125% 6/1/22 (AMBAC) 500,000 527,280
----------
3,835,935
----------
Hospital Revenue Bonds - 18.81%
Maricopa County Industrial
Development Authority
(Catholic Healthcare West)
Series A 5.50% 7/1/26 430,000 434,489
(Mayo Clinic Hospital) 5.25% 11/15/37 2,000,000 2,043,200
Mohave County Industrial Development
Authority (Chris/Silver Ridge)
6.375% 11/1/31 (GNMA) 260,000 273,546
Scottsdale Industrial Development
Authority Hospital Revenue
(Scottsdale Healthcare) 5.80% 12/1/31 1,000,000 1,035,340
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Hospital Revenue Bonds (continued)
Show Low Industrial Development
Authority Hospital Revenue
(Navapache Regional Medical Center)
Series A 5.50% 12/1/17 (ACA) $1,600,000 $1,665,472
University Medical Center Corporation
Arizona Hospital Revenue 5.00% 7/1/33 1,000,000 988,640
Yavapai County Industrial Development
Authority (Yavapai Regional Medical
Center) 5.25% 8/1/21 (RADIAN) 2,000,000 2,100,800
----------
8,541,487
----------
Miscellaneous Revenue Bonds - 8.27%
Arizona School Facilities Board Revenue
(State School Improvement)
Series 2001 5.00% 7/1/19 2,000,000 2,154,120
Arizona Student Loan Acquisition Authority
Revenue Series A-1 5.90% 5/1/24 (AMT) 1,500,000 1,601,820
----------
3,755,940
----------
Multifamily Housing Revenue Bonds - 3.91%
Maricopa County Industrial Development
Authority Multifamily Housing Revenue
(Sly-Mar Apartments Project)
6.10% 4/20/36 (GNMA)(AMT) 465,000 500,187
Peoria Industrial Development Authority
Multifamily Housing Revenue (Casa Del
Rio) Series A 7.30% 2/20/28 (GNMA) 1,230,000 1,273,505
----------
1,773,692
----------
Municipal Lease Revenue Bonds - 10.78%
Arizona School Facilities Board
Certificates of Participation
Series B 5.25% 9/1/19 (FSA) 1,000,000 1,102,780
Phoenix Civic Improvement Corporation
Excise Tax Senior Lien
(Municipal Courthouse Project)
Series A 5.25% 7/1/24 1,000,000 1,060,460
Prescott Valley Property Corporation
5.00% 1/1/27 (FGIC) 500,000 515,825
Tucson Certificates of Participation
5.60% 7/1/11 1,100,000 1,188,748
Yuma Municipal Property Corporation
5.00% 7/1/25 (AMBAC) 1,000,000 1,024,770
----------
4,892,583
----------
Political Subdivision General Obligation Bonds - 3.57%
Eagle Mountain Community Facilities
District Series A 6.40% 7/1/17 1,500,000 1,619,940
----------
1,619,940
----------
*Pre-Refunded Bonds - 13.15%
Arizona State Transportation Board Highway
Revenue Refunding 5.75% 7/1/18-09 2,350,000 2,674,887
Arizona Water Infrastructure Finance
Authority Revenue Water Quality
Series A 5.05% 10/1/20-11 1,500,000 1,675,350
Oro Valley Municipal Property Corporation
Excise Tax 5.00% 7/1/20-11 (FGIC) 1,000,000 1,059,540
Puerto Rico Commonwealth Public
Improvement Series A 5.125% 7/1/31-11 250,000 279,248
14
DELAWARE INVESTMENTS ARIZONA MUNICIPAL INCOME FUND, INC.
STATEMENTS
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
*Pre-Refunded Bonds (continued)
Yuma Industrial Development Authority
Hospital Revenue (Yuma Regional
Medical Center) 5.00% 8/1/31-11 (FSA) $ 250,000 $ 278,750
-----------
5,967,775
-----------
Public Power Revenue Bonds - 2.26%
Salt River Project Arizona Agricultural
Improvement & Power District Electric
System Revenue (Salt River Project)
Series A 5.00% 1/1/31 1,000,000 1,024,040
-----------
1,024,040
-----------
School District General Obligation Bonds - 17.58%
Maricopa County School District #6
(Washington Elementary School
Improvement Project of 2001)
Series B 5.00% 7/1/17 (FSA) 1,000,000 1,115,510
(Washington Elementary)
Series A 5.375% 7/1/13 (FSA) 3,000,000 3,431,700
Maricopa County School District #38
(Madison Elementary)
5.00% 7/1/13 (FSA) 1,250,000 1,394,738
5.00% 7/1/14 (FSA) 825,000 921,401
Tempe Union High School
District #213 5.00% 7/1/14 (FSA) 1,000,000 1,116,850
-----------
7,980,199
-----------
Single Family Housing Revenue Bonds - 5.52%
Phoenix Industrial Development Authority
Single Family Statewide
Series A 5.35% 6/1/20
(GNMA)(FNMA)(FHLMC)(AMT) 1,160,000 1,196,354
Series C 5.30% 4/1/20
(GNMA)(FNMA)(FHLMC)(AMT) 915,000 948,498
Pima County Industrial Development
Authority Single Family Mortgage
Revenue Series A 6.125% 11/1/33
(GNMA)(FNMA)(FHLMC)(AMT) 340,000 358,979
-----------
2,503,831
-----------
Territorial Revenue Bonds - 23.30%
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Refunding Series D 5.00% 7/1/32 (FSA) 8,500,000 8,727,374
Puerto Rico Commonwealth Public
Improvement Series A 5.125% 7/1/31 500,000 510,395
Virgin Islands Public Finance Authority
Revenue Series A 6.125% 10/1/29 (ACA) 1,250,000 1,343,213
-----------
10,580,982
-----------
Water & Sewer Revenue Bonds - 5.32%
Phoenix Civic Improvement Corporation
Wastewater Systems Revenue Junior Lien
5.00% 7/1/24 (FGIC) 1,590,000 1,641,818
5.00% 7/1/26 (FGIC) 750,000 772,530
-----------
2,414,348
-----------
TOTAL MUNICIPAL BONDS (cost $65,484,033) 69,033,372
-----------
TOTAL MARKET VALUE OF SECURITIES - 152.06%
(cost $65,484,033) $69,033,372
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 3.01% 1,365,531
LIQUIDATION VALUE OF PREFERRED STOCK - (55.07%) (25,000,000)
-----------
NET ASSETS APPLICABLE TO 2,982,200
COMMON SHARES OUTSTANDING - 100.00% $45,398,903
-----------
Net Asset Value Per Common Share
($45,398,903 / 2,982,200 Shares) $15.22
------
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 2004:
Common stock, $0.01 par value, 200 million shares
authorized to the Fund $40,838,893
Undistributed net investment income 990,162
Accumulated net realized gain on investments 45,981
Net unrealized appreciation of investments 3,523,867
-----------
Total net assets $45,398,903
-----------
*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 American Capital Access
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FHLMC - Insured by the Federal Home Loan Mortgage Corporation
FNMA - Insured by Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
See accompanying notes
15
DELAWARE INVESTMENTS FLORIDA INSURED MUNICIPAL INCOME FUND
STATEMENTS September 30, 2004 (Unaudited)
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS - 150.09%
Airport Revenue Bonds - 2.79%
Dade County Aviation Revenue
Series 96B 5.60% 10/1/26 (MBIA) $1,000,000 $1,069,970
----------
1,069,970
----------
Dedicated Tax & Fees Revenue Bonds - 24.67%
Florida State Department of Transportation
5.00% 7/1/31 (FGIC) 1,525,000 1,552,481
Jacksonville Sales Tax Revenue
5.00% 10/1/30 (MBIA) 1,500,000 1,534,380
Jacksonville Transportation Revenue
5.25% 10/1/29 (MBIA) 2,000,000 2,084,980
Miami Beach Resort Tax Revenue
5.50% 10/1/16 (AMBAC) 1,000,000 1,084,240
Orange County Public Service Tax Revenue
6.00% 10/1/24 (FGIC) 3,000,000 3,190,919
----------
9,447,000
----------
Higher Education Revenue Bonds - 7.68%
Florida Agriculture & Mechanical University
Revenue (Student Apartment Facility)
5.625% 7/1/21 (MBIA) 1,250,000 1,331,638
Volusia County Educational Facilities
Authority (Stetson University Project)
Series A 5.50% 6/1/17 (MBIA) 1,500,000 1,609,935
----------
2,941,573
----------
Hospital Revenue Bonds - 21.57%
Escambia County Health Facilities Authority
(Florida Health Care Facilities -
VHA Program) 5.95% 7/1/20 (AMBAC) 3,075,000 3,169,433
Lee County Memorial Health System
Board of Directors 5.00% 4/1/20 (FSA) 1,000,000 1,050,040
Orange County Health Facilities
Authority Revenue
(Adventist Health Systems)
5.75% 11/15/25 (AMBAC) 1,500,000 1,579,995
(Orlando Regional Healthcare)
Series A 6.25% 10/1/18 (MBIA) 2,000,000 2,458,280
----------
8,257,748
----------
Multifamily Housing Revenue Bonds - 22.87%
Broward County Housing Finance Authority
(St. Croix Apartments Project)
Series A 5.45% 11/1/36 (FSA)(AMT) 1,000,000 1,021,180
Florida Housing Finance Agency
(Homeowner Mortgage)
Series 2 5.90% 7/1/29 (MBIA)(AMT) 825,000 855,393
(Leigh Meadows Apartments Section 8)
Series N 6.30% 9/1/36 (AMBAC)(AMT) 2,510,000 2,604,150
(Woodbridge Apartments Project)
Series L
6.05% 12/1/16 (AMBAC)(AMT) 1,120,000 1,174,018
6.25% 6/1/36 (AMBAC)(AMT) 1,500,000 1,558,050
Volusia County Housing Finance Authority
(San Marco Apartments)
Series A 5.60% 1/1/44 (FSA)(AMT) 1,500,000 1,543,245
----------
8,756,036
----------
Municipal Lease Revenue Bonds - 23.93%
Broward School Board
Certificates of Participation
Series A 5.25% 7/1/24 (FSA) 1,000,000 1,061,660
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Municipal Lease Revenue Bonds (continued)
Escambia County School Board Certificates
of Participation Series 2
5.50% 2/1/22 (MBIA) $5,000,000 $ 5,294,700
Orange County School Board Certificates
of Participation Series A
5.00% 8/1/27 (MBIA) 1,250,000 1,277,725
Palm Beach County School Board
Certificates of Participation
Series D 5.00% 8/1/28 (FSA) 1,500,000 1,529,310
-----------
9,163,395
-----------
Ports & Harbors Revenue Bonds - 2.68%
Florida Ports Financing Commission State
Transportation Trust Fund
5.375% 6/1/27 (MBIA)(AMT) 1,000,000 1,024,550
-----------
1,024,550
-----------
*Pre-Refunded Bonds - 22.01%
Dade County School Board
Certificates of Participation
Series B 5.60% 8/1/17-06 (AMBAC) 1,000,000 1,077,830
Reedy Creek Improvement District
(Florida Sports Complex)
Series A 5.75% 6/1/13-05 (MBIA) 2,300,000 2,364,308
Sunrise Utility System Revenue
Series A 5.75% 10/1/26-06 (AMBAC) 2,500,000 2,715,700
Tampa Utility Tax Improvement
Series A 6.125% 10/1/19-09 (AMBAC) 1,000,000 1,167,250
Village Center Community Development
District Recreational Revenue
Series A 5.85% 11/1/16-06 (MBIA) 1,000,000 1,100,820
-----------
8,425,908
-----------
Public Power Revenue Bonds - 5.28%
JEA Electric Systems Revenue
Series 3-A 5.00% 10/1/34 (FSA) 2,000,000 2,019,820
-----------
2,019,820
-----------
State General Obligation Bonds - 6.00%
Florida State Board of Education
(Capital Outlay Public Education)
Series C 6.00% 6/1/21 (FGIC) 2,000,000 2,295,880
-----------
2,295,880
-----------
Tax Increment/Special Assessment Bonds - 0.79%
Julington Creek Plantation Community
Development District Special
Assessment 5.00% 5/1/29 (MBIA) 295,000 300,868
-----------
300,868
-----------
Water & Sewer Revenue Bonds - 9.82%
Dade County Water & Sewer System
Revenue 5.50% 10/1/25 (FGIC) 1,100,000 1,150,643
Indian River County Water & Sewer
Revenue 5.50% 9/1/16 (FGIC) 1,000,000 1,081,680
Village Center Community Development
District Florida Utility Revenue
5.00% 10/1/36 (MBIA) 1,500,000 1,528,380
-----------
3,760,703
-----------
TOTAL MUNICIPAL BONDS (cost $53,720,549) 57,463,451
-----------
16
DELAWARE INVESTMENTS FLORIDA INSURED MUNICIPAL INCOME FUND
STATEMENTS
OF NET ASSETS (CONTINUED)
TOTAL MARKET VALUE OF SECURITIES - 150.09%
(cost $53,720,549) $ 57,463,451
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 2.15% 823,231
LIQUIDATION VALUE OF PREFERRED STOCK - (52.24%) (20,000,000)
------------
NET ASSETS APPLICABLE TO 2,422,200
SHARES OUTSTANDING - 100.00% $ 38,286,682
------------
Net Asset Value Per Common Share
($38,286,682 / 2,422,200 Shares) $15.81
------
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 2004:
Common stock, $0.01 par value, unlimited shares
authorized to the Fund $ 33,361,389
Undistributed net investment income 922,679
Accumulated net realized gain on investments 259,712
Net unrealized appreciation of investments 3,742,902
------------
Total net assets $ 38,286,682
------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
VHA - Veterans Health Administration
See accompanying notes
17
DELAWARE INVESTMENTS COLORADO INSURED MUNICIPAL INCOME FUND, INC.
STATEMENTS September 30, 2004 (Unaudited)
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS - 150.42%
Airport Revenue Bonds - 10.41%
Denver City & County Airport Revenue
Series E 5.25% 11/15/23 (MBIA) $7,500,000 $ 7,981,725
-----------
7,981,725
-----------
City General Obligation Bonds - 2.67%
Bowles Metropolitan District
5.00% 12/1/33 (FSA) 2,000,000 2,046,400
-----------
2,046,400
-----------
Continuing Care/Retirement Revenue Bonds - 3.48%
Colorado Health Facilities Authority
Revenue (Porter Place) Series A
6.00% 1/20/36 (GNMA) 2,515,000 2,668,038
-----------
2,668,038
-----------
Convention Center/Auditorium/Hotel Revenue Bonds - 3.98%
Denver Convention Center
Series A 5.00% 12/1/33 (XLCA) 3,000,000 3,049,440
-----------
3,049,440
-----------
Dedicated Tax & Fees Revenue Bonds - 11.30%
Broomfield County Sales & Use Tax
Revenue Refunding & Improvement
Series A 5.00% 12/1/31 (AMBAC) 650,000 662,838
Denver City & County Excise Tax Revenue
(Colorado Convention Center Project)
Series A 5.00% 9/1/20 (FSA) 6,500,000 6,919,835
Golden Sales & Use Tax Revenue
Improvement Series B
5.10% 12/1/20 (AMBAC) 1,000,000 1,076,830
-----------
8,659,503
-----------
Higher Education Revenue Bonds - 32.64%
Boulder County Development Revenue
(University Corporation for Atmospheric
Research) 5.00% 9/1/26 (MBIA) 4,500,000 4,604,130
Colorado Educational & Cultural
Facilities Authority
(Johnson & Wales University Project)
Series A 5.00% 4/1/28 (XLCA) 3,000,000 3,062,280
(University of Colorado Foundation
Project) 5.00% 7/1/27 (AMBAC) 4,000,000 4,096,000
(University of Denver Project)
5.50% 3/1/21 (AMBAC) 3,200,000 3,568,512
(University of Northern Colorado)
5.00% 7/1/31 (MBIA) 2,500,000 2,539,175
Colorado Springs Revenue (Colorado
College Project) 5.375% 6/1/32 (MBIA) 5,000,000 5,314,549
Colorado State University Systems
Series B 5.00% 3/1/35 (AMBAC) 1,800,000 1,833,732
-----------
25,018,378
-----------
Hospital Revenue Bonds - 4.50%
Colorado Health Facilities Authority
(Boulder Community Hospital Project)
Series B 5.875% 10/1/23 (MBIA) 1,925,000 1,969,256
(North Colorado Medical Center)
5.95% 5/15/12 (MBIA) 1,420,000 1,480,350
-----------
3,449,606
-----------
Multifamily Housing Revenue Bonds - 5.78%
Burlingame Multifamily Housing Revenue
Series A 6.00% 11/1/29 (MBIA) 2,290,000 2,419,980
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Multifamily Housing Revenue Bonds (continued)
Snowmass Village Multifamily Housing
Revenue (Essential-Function Housing)
6.25% 12/15/16 (FSA) $2,000,000 $ 2,008,100
-----------
4,428,080
-----------
Municipal Lease Revenue Bonds - 17.68%
Arapahoe County Library District Certificates
of Participation 5.70% 12/15/10 (MBIA) 2,000,000 2,153,340
Aurora Certificates of Participation
5.50% 12/1/30 (AMBAC) 2,000,000 2,156,340
Aurora Educational Development Revenue
(Community College of Aurora
Foundation) 6.00% 10/15/15 (Connie Lee) 1,500,000 1,517,760
Broomfield City & County Certificates of
Participation 5.75% 12/1/24 (AMBAC) 1,500,000 1,676,520
Eagle County Certificates of Participation
5.40% 12/1/18 (MBIA) 1,000,000 1,104,260
Lakewood Certificates of Participation
5.375% 12/1/22 (AMBAC) 2,000,000 2,183,860
Westminster Building Authority Certificates
of Participation 5.25% 12/1/22 (MBIA) 1,555,000 1,670,521
Westminster Certificates of Participation
(Ice Centre Project)
5.40% 1/15/23 (AMBAC) 1,000,000 1,085,850
-----------
13,548,451
-----------
Parking Revenue Bonds - 3.50%
Auraria Higher Education Center Parking
Facilities System Revenue
5.50% 4/1/26 (AMBAC) 2,485,000 2,684,421
-----------
2,684,421
-----------
Political Subdivision General Obligation Bonds - 8.22%
Arapahoe County Water & Wastewater
Public Improvement District Refunding
Series A 5.125% 12/1/32 (MBIA) 1,000,000 1,031,850
G V R Metropolitan District
5.75% 12/1/19 (AMBAC) 1,000,000 1,129,450
Pueblo County 5.80% 6/1/11 (MBIA) 1,405,000 1,491,660
Pueblo County (Library District Project)
5.80% 11/1/19 (AMBAC) 1,395,000 1,576,183
Stonegate Village Metropolitan District
Refunding & Improvement
Series A 5.50% 12/1/21 (FSA) 1,000,000 1,070,340
-----------
6,299,483
-----------
*Pre-Refunded Bonds - 14.02%
Archuleta & Hinsdale Counties School
District #50JT 5.55% 12/1/20-10 (MBIA) 4,000,000 4,345,800
Denver City & County Certificates of
Participation Series B
5.50% 12/1/25-06 (AMBAC) 2,000,000 2,293,940
El Paso County School District #20
5.625% 12/15/16-06 (AMBAC) 2,800,000 3,023,160
5.625% 12/15/16-06 (MBIA) 1,000,000 1,079,700
-----------
10,742,600
-----------
School District General Obligation Bonds - 9.09%
Adams & Arapahoe Counties School
District #28J 5.00% 12/1/22 (FSA) 2,000,000 2,110,480
Adams County School District #1
5.00% 12/1/16 (FSA) 1,490,000 1,626,663
18
DELAWARE INVESTMENTS COLORADO INSURED MUNICIPAL INCOME FUND, INC.
STATEMENTS
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
School District General Obligation Bonds (continued)
Douglas County School District #Re-1
(Douglas & Elbert Counties)
5.00% 12/15/21 (MBIA) $1,000,000 $ 1,046,400
Larimer Weld & Boulder Counties School
Districts #R-2J 5.00% 12/15/15 (FSA) 1,950,000 2,187,412
------------
6,970,955
------------
Turnpike/Toll Road Revenue Bonds - 13.52%
E-470 Public Highway Authority Series A
5.75% 9/1/29 (MBIA) 3,000,000 3,330,900
5.75% 9/1/35 (MBIA) 1,700,000 1,892,763
Northwest Parkway Public Highway
Authority Series A 5.25% 6/15/41 (FSA) 5,000,000 5,142,100
------------
10,365,763
------------
Water & Sewer Revenue Bonds - 9.63%
Colorado Water Resources & Power
Development Authority Small Water
Resources Revenue Series A
5.80% 11/1/20 (FGIC) 2,000,000 2,266,520
Colorado Water Resources & Power
Development Authority Water
Resources Revenue (Parker Water &
Sanitation District) 5.125% 9/1/34 (MBIA) 1,500,000 1,551,225
Lafayette Water Revenue
Series A 5.00% 12/1/27 (MBIA) 1,100,000 1,131,218
Ute Utility Water Conservancy District
Water Revenue 5.75% 6/15/20 (MBIA) 2,155,000 2,435,797
------------
7,384,760
------------
TOTAL MUNICIPAL BONDS (cost $107,823,852) 115,297,603
------------
TOTAL MARKET VALUE OF SECURITIES - 150.42%
(COST $107,823,852) $115,297,603
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.76% 1,351,104
LIQUIDATION VALUE OF PREFERRED STOCK - (52.18%) (40,000,000)
------------
NET ASSETS APPLICABLE TO 4,837,100
SHARES OUTSTANDING - 100.00% $ 76,648,707
------------
Net Asset Value Per Common Share
($76,648,707 / 4,837,100 Shares) $15.85
------
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 2004:
Common stock, $0.01 par value, 200 million shares
authorized to the Fund $ 67,238,110
Undistributed net investment income 1,919,088
Accumulated net realized gain on investments 17,756
Net unrealized appreciation of investments 7,473,753
------------
Total net assets $ 76,648,707
------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
XLCA - Insured by XL Capital Assurance
See accompanying notes
19
DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
STATEMENTS For the Six Months Ended September 30, 2004 (Unaudited)
OF OPERATIONS
Delaware Delaware Delaware
Investments Investments Investments
Minnesota Minnesota Minnesota
Municipal Municipal Municipal
Income Income Income
Fund, Inc. Fund II, Inc. Fund III, Inc.
INVESTMENT INCOME:
Interest $1,420,540 $ 4,316,826 $1,068,090
---------- ----------- ----------
EXPENSES:
Management fees 114,907 334,115 81,127
Accounting and administration expenses 42,500 42,500 30,154
Remarketing Agent fees 26,457 75,216 19,354
Transfer agent fees and expenses 21,370 29,455 12,455
Legal and Professional fees 14,746 19,713 16,868
Rating Agency fees 9,000 6,000 9,000
Reports and statements to shareholders 5,965 16,002 750
Directors'/Trustees' Fees 4,070 6,070 3,688
Stock Exchange Fees 1,278 3,476 845
Custodian fees 953 2,222 793
Other 3,826 8,984 2,287
---------- ----------- ----------
245,072 543,753 177,321
Less expenses absorbed or waived (5,780) -- --
Less expenses paid indirectly (871) (2,017) (677)
---------- ----------- ----------
Total expenses 238,421 541,736 176,644
---------- ----------- ----------
NET INVESTMENT INCOME 1,182,119 3,775,090 891,446
---------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 249,021 203,300 64,477
Net change in unrealized appreciation/depreciation of investments (560,875) (1,105,324) (437,907)
---------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (311,854) (902,024) (373,430)
---------- ----------- ----------
DIVIDENDS ON PREFERRED STOCK (136,552) (379,038) (83,238)
---------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 733,713 $ 2,494,028 $ 434,778
---------- ----------- ----------
See accompanying notes
20
DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
STATEMENTS For the Six Months Ended September 30, 2004 (Unaudited)
OF OPERATIONS (CONTINUED)
Delaware Delaware Delaware
Investments Investments Investments
Arizona Florida Insured Colorado Insured
Municipal Municipal Municipal
Income Income Income
Fund, Inc. Fund Fund, Inc.
INVESTMENT INCOME:
Interest $1,702,643 $ 1,521,150 $ 2,873,885
---------- ----------- -----------
EXPENSES:
Management fees 138,789 115,906 229,646
Accounting and administration expenses 42,500 42,500 42,500
Remarketing Agent fees 26,709 28,224 33,583
Legal and Professional fees 17,159 15,114 20,620
Transfer agent fees and expenses 15,226 12,788 27,844
Rating Agency fees 6,265 5,846 5,383
Directors'/Trustees' Fees 3,918 4,614 4,796
Reports and statements to shareholders 3,697 3,946 9,600
Custodian fees 1,824 1,286 1,861
Stock Exchange Fees 1,570 1,619 3,547
Other 4,471 2,177 2,528
---------- ----------- -----------
262,128 234,020 381,908
Less expenses paid indirectly (1,374) (1,109) (1,538)
---------- ----------- -----------
Total expenses 260,754 232,911 380,370
---------- ----------- -----------
NET INVESTMENT INCOME 1,441,889 1,288,239 2,493,515
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 18,080 259,712 13,768
Net change in unrealized appreciation/depreciation of investments (801,804) (1,153,374) (1,111,161)
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (783,724) (893,662) (1,097,393)
---------- ----------- -----------
DIVIDENDS ON PREFERRED STOCK (143,860) (116,236) (255,696)
---------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 514,305 $ 278,341 $ 1,140,426
---------- ----------- -----------
See accompanying notes
21
STATEMENTS
OF CHANGES IN NET ASSETS
DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
Delaware Delaware
Investments Minnesota Investments Minnesota
Municipal Income Municipal Income
Fund, Inc. Fund II, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
9/30/04 3/31/04 9/30/04 3/31/04
(Unaudited) (Unaudited)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,182,119 $ 2,592,109 $ 3,775,090 $ 7,924,672
Net realized gain on investments 249,021 650,891 203,300 1,299,317
Net change in unrealized
appreciation/depreciation of investments (560,875) (316,556) (1,105,324) 221,686
Dividends on preferred stock (136,552) (262,664) (379,038) (595,374)
----------- ----------- ------------ ------------
Net increase in net assets resulting from operations 733,713 2,663,780 2,494,028 8,850,301
----------- ----------- ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (1,284,377) (2,432,531) (3,807,405) (7,234,070)
Net realized gain on investments -- (1,375,191) -- --
----------- ----------- ------------ ------------
(1,284,377) (3,807,722) (3,807,405) (7,234,070)
----------- ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (550,664) (1,143,942) (1,313,377) 1,616,231
NET ASSETS:
Beginning of period 38,978,454 40,122,396 110,827,846 109,211,615
----------- ----------- ------------ ------------
End of period $38,427,790 $38,978,454 $109,514,469 $110,827,846
----------- ----------- ------------ ------------
Undistributed net investment income $ 601,048 $ 805,302 $ 2,951,972 $ 3,358,447
----------- ----------- ------------ ------------
Delaware
Investments Minnesota
Municipal Income
Fund III, Inc.
Six Months Year
Ended Ended
9/30/04 3/31/04
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 891,446 $ 1,898,759
Net realized gain on investments 64,477 562,903
Net change in unrealized
appreciation/depreciation of investments (437,907) (350,631)
Dividends on preferred stock (83,238) (152,709)
----------- -----------
Net increase in net assets resulting from operations 434,778 1,958,322
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (881,856) (1,616,736)
Net realized gain on investments -- --
----------- -----------
(881,856) (1,616,736)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (447,078) 341,586
NET ASSETS:
Beginning of period 26,601,180 26,259,594
----------- -----------
End of period $26,154,102 $26,601,180
----------- -----------
Undistributed net investment income $ 683,427 $ 758,251
----------- -----------
Delaware Delaware
Investments Arizona Investments Florida
Municipal Income Insured Municipal
Fund, Inc. Income Fund, Inc.
Six Months Year Six Months Year
Ended Ended Ended Ended
9/30/04 3/31/04 9/30/04 3/31/04
(Unaudited) (Unaudited)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,441,889 $ 3,042,361 $ 1,288,239 $ 2,634,312
Net realized gain on investments 18,080 315,397 259,712 52,390
Net change in unrealized
appreciation/depreciation of investments (801,804) 501,711 (1,153,374) (362,616)
Dividends on preferred stock (143,860) (271,690) (116,236) (209,938)
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations 514,305 3,587,779 278,341 2,114,148
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (1,431,456) (2,862,912) (1,235,322) (2,410,089)
Net realized gain on investments (113,324) (462,241) -- (111,421)
----------- ----------- ----------- -----------
(1,544,780) (3,325,153) (1,235,322) (2,521,510)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (1,030,475) 262,626 (956,981) (407,362)
NET ASSETS:
Beginning of period 46,429,378 46,166,752 39,243,663 39,651,025
----------- ----------- ----------- -----------
End of period $45,398,903 $46,429,378 $38,286,682 $39,243,663
----------- ----------- ----------- -----------
Undistributed net investment income $ 990,162 $ 1,126,683 $ 922,679 $ 985,998
----------- ----------- ----------- -----------
Delaware
Investments Colorado
Insured Municipal
Income Fund, Inc.
Six Months Year
Ended Ended
9/30/04 3/31/04
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,493,515 $ 5,047,366
Net realized gain on investments 13,768 223,885
Net change in unrealized
appreciation/depreciation of investments (1,111,161) 1,336,193
Dividends on preferred stock (255,696) (435,224)
----------- -----------
Net increase in net assets resulting from operations 1,140,426 6,172,220
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income (2,321,808) (4,643,616)
Net realized gain on investments (72,557) (614,312)
----------- -----------
(2,394,365) (5,257,928)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (1,253,939) 914,292
NET ASSETS:
Beginning of period 77,902,646 76,988,354
----------- -----------
End of period $76,648,707 $77,902,646
----------- -----------
Undistributed net investment income $ 1,919,088 $ 2,003,077
----------- -----------
See accompanying notes
22
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Delaware Investments Minnesota Municipal Income Fund, Inc.
Six Months
Ended Year Ended
9/30/04(6) 3/31/04 3/31/03 3/31/02(1) 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.020 $ 15.460 $ 14.640 $ 14.790 $ 14.060 $ 15.380
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.456 0.999 1.119 1.191 1.155 1.180
Net realized and unrealized gain (loss) on investments (0.118) 0.130 0.758 (0.323) 0.732 (1.256)
Dividends on preferred stock from:
Net investment income (0.053) (0.054) (0.094) (0.178) (0.317) (0.272)
Net realized gain on investments -- (0.047) (0.008) -- -- (0.014)
-------- -------- -------- -------- -------- --------
Total dividends on preferred stock (0.053) (0.101) (0.102) (0.178) (0.317) (0.286)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.285 1.028 1.775 0.690 1.570 (0.362)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS TO
COMMON SHAREHOLDERS FROM:
Net investment income (0.495) (0.938) (0.890) (0.840) (0.840) (0.907)
Net realized gain on investments -- (0.530) (0.065) -- -- (0.051)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.495) (1.468) (0.955) (0.840) (0.840) (0.958)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 14.810 $ 15.020 $ 15.460 $ 14.640 $ 14.790 $ 14.060
-------- -------- -------- -------- -------- --------
MARKET VALUE, END OF PERIOD $ 16.240 $ 16.600 $ 16.000 $ 14.450 $ 14.300 $ 13.563
-------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN BASED ON:(2)
Market value 1.09% 13.86% 17.74% 7.00% 12.09% (12.39%)
Net asset value 1.89% 6.62% 12.29% 4.81% 11.83% (2.56%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets applicable to common shares, end of period
(000 omitted) $ 38,428 $ 38,978 $ 40,122 $ 37,996 $ 33,386 $36,488
Ratio of expenses to average net assets applicable to
common shares(3) 1.27% 1.20% 1.21% 1.13% 1.23% 1.36%
Ratio of expenses to average net assets applicable to
common shares prior to expense limitation and expenses
paid indirectly 1.30% 1.20% 1.21% 1.31% 1.23% 1.36%
Ratio of net investment income to average net assets
applicable to common shares(3) 6.45% 6.57% 7.35% 8.00% 8.22% 8.05%
Ratio of net investment income to average net assets
applicable to common shares prior to expenses limitation
and expenses paid indirectly 6.42% 6.57% 7.35% 8.00% 8.22% 8.05%
Ratio of net investment income to average net assets
applicable to common shares net of dividends to preferred
shares(4) 5.72% 5.90% 6.68% 6.84% 6.00% 6.17%
Ratio of net investment income to average net assets
applicable to common shares net of dividends to preferred
shares prior to expense limitation and expenses paid
indirectly 5.69% 5.90% 6.68% 6.84% 6.00% 6.17%
Portfolio turnover 18% 50% 38% 15% 6% 12%
LEVERAGE ANALYSIS:
Value of preferred shares outstanding (000 omitted) $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000
Net asset coverage per share of preferred shares, end
of period $146,069 $147,445 $150,306 $144,989 $145,964 $141,221
Liquidation value per share of preferred shares(5) $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
(1) As required, effective April 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the period ended March 31, 2002 was an increase in net
investment income per share of $0.006, a decrease in net realized and
unrealized gain (loss) per share of $0.006, and an increase in the ratio of
net investment income to average net assets of 0.04%. Per share data and
ratios for periods prior to April 1, 2001 have not been restated to reflect
this change in accounting.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods. Total investment return reflects a
waiver and payment of fees by the manager and distributors, as applicable.
Performance would have been lower had the expense limitation not been in
effect.
(3) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(4) Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
(5) Excluding any accumulated but unpaid dividends.
(6) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
The average shares outstanding method has been applied for per share information
for the six months ended 9/30/04 and the year ended 3/31/04.
See accompanying notes
23
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
Delaware Investments Minnesota Municipal Income Fund II, Inc.
Six Months
Ended Year Ended
9/30/04(6) 3/31/04 3/31/03 3/31/02(1) 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.280 $ 15.060 $ 14.280 $ 14.450 $ 13.590 $ 14.950
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.521 1.093 1.143 1.163 1.168 1.176
Net realized and unrealized gain (loss) on investments (0.124) 0.207 0.689 (0.313) 0.850 (1.411)
Dividends on preferred stock from:
Net investment income (0.052) (0.082) (0.112) (0.182) (0.340) (0.307)
-------- -------- -------- -------- -------- --------
Total dividends on preferred stock (0.052) (0.082) (0.112) (0.182) (0.340) (0.307)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.345 1.218 1.720 0.668 1.678 (0.542)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS TO COMMON SHAREHOLDERS FROM:
Net investment income (0.525) (0.998) (0.940) (0.838) (0.818) (0.818)
-------- -------- -------- -------- -------- --------
Total dividends (0.525) (0.998) (0.940) (0.838) (0.818) (0.818)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 15.100 $15.280 $ 15.060 $ 14.280 $ 14.450 $ 13.590
-------- -------- -------- -------- -------- --------
MARKET VALUE, END OF PERIOD $ 16.150 $16.800 $ 15.300 $ 14.050 $ 14.080 $ 12.438
-------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN BASED ON:(2)
Market value (0.58%) 16.87% 15.84% 5.75% 20.37% (12.28%)
Net asset value 2.21% 7.99% 12.19% 4.73% 13.06% (3.43%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets applicable to common shares, end of period
(000 omitted) $109,514 $110,828 $109,212 $103,573 $104,775 $ 98,574
Ratio of expenses to average net assets applicable to
common shares(3) 1.01% 0.93% 1.03% 1.06% 1.01% 0.99%
Ratio of net investment income to average net assets
applicable to common shares(3) 7.03% 7.23% 7.74% 8.03% 8.42% 8.44%
Ratio of net investment income to average net assets
applicable to common shares net of dividends to preferred
shares(4) 6.33% 6.69% 6.99% 6.79% 5.96% 6.24%
Portfolio turnover 23% 34% 22% 7% 3% 4%
LEVERAGE ANALYSIS:
Value of preferred shares outstanding (000 omitted) $60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
Net asset coverage per share of preferred shares, end of
period $141,262 $142,357 $141,010 $136,311 $137,312 $132,145
Liquidation value per share of preferred shares(5) $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
(1) As required, effective April 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the period ended March 31, 2002 was an increase in net
investment income per share of $0.003, a decrease in net realized and
unrealized gain (loss) per share of $0.003, and an increase in the ratio of
net investment income to average net assets of 0.02%. Per share data and
ratios for periods prior to April 1, 2001 have not been restated to reflect
this change in accounting.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(3) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(4) Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
(5) Excluding any accumulated but unpaid dividends.
(6) Ratios and portfolio turnover have been annualized and total return has not
been annualized. The average shares outstanding method has been applied for
per share information for the six months ended 9/30/04 and the year ended
3/31/04.
See accompanying notes
24
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
Delaware Investments Minnesota Municipal Income Fund III, Inc.
Six Months
Ended Year Ended
9/30/04(6) 3/31/04 3/31/03 3/31/02(1) 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.480 $ 14.290 $ 13.230 $ 13.420 $ 12.560 $ 13.970
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.485 1.034 1.084 1.064 1.065 1.075
Net realized and unrealized gain (loss) on investments (0.200) 0.119 0.918 (0.306) 0.889 (1.425)
Dividends on preferred stock from:
Net investment income (0.045) (0.083) (0.112) (0.183) (0.336) (0.302)
-------- -------- -------- -------- -------- --------
Total dividends on preferred stock (0.045) (0.083) (0.112) (0.183) (0.336) (0.302)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.240 1.070 1.890 0.575 1.618 (0.652)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS TO COMMON SHAREHOLDERS FROM:
Net investment income (0.480) (0.880) (0.830) (0.765) (0.758) (0.758)
-------- -------- -------- -------- -------- --------
Total dividends (0.480) (0.880) (0.830) (0.765) (0.758) (0.758)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 14.240 $ 14.480 $ 14.290 $ 13.230 $ 13.420 $ 12.560
-------- -------- -------- -------- -------- --------
MARKET VALUE, END OF PERIOD $ 15.500 $ 16.160 $ 14.800 $13.000 $ 13.000 $ 11.750
-------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN BASED ON:(2)
Market value (0.85%) 15.76% 20.72% 5.93% 17.57% (11.70%)
Net asset value 1.66% 7.43% 14.53% 4.43% 13.54% (4.57%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets applicable to common shares, end of period
(000 omitted) $ 26,154 $ 26,601 $ 26,260 $ 24,306 $ 24,659 $ 23,075
Ratio of expenses to average net assets applicable to
common shares(3) 1.38% 1.23% 1.32% 1.49% 1.42% 1.33%
Ratio of net investment income to average net assets
applicable to common shares(3) 6.95% 7.20% 7.80% 7.88% 8.30% 8.33%
Ratio of net investment income to average net assets
applicable to common shares net of dividends to preferred
shares(4) 6.31% 6.62% 6.99% 6.56% 5.68% 5.99%
Portfolio turnover 13% 41% 23% 5% 5% 16%
LEVERAGE ANALYSIS:
Value of preferred shares outstanding (000 omitted) $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000
Net asset coverage per share of preferred shares, end of
period $137,180 $138,670 $137,532 $131,007 $132,197 $126,916
Liquidation value per share of preferred shares(5) $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
(1) As required, effective April 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the period ended March 31, 2002 was an increase in net
investment income per share of $0.007, a decrease in net realized and
unrealized gain (loss) per share of $0.007, and an increase in the ratio of
net investment income to average net assets of 0.04%. Per share data and
ratios for periods prior to April 1, 2001 have not been restated to reflect
this change in accounting.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(3) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(4) Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
(5) Excluding any accumulated but unpaid dividends.
(6) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
The average shares outstanding method has been applied for per share information
for the six months ended 9/30/04 and the year ended 3/31/04.
See accompanying notes
25
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
Delaware Investments Arizona Municipal Income Fund, Inc.
Six Months
Ended Year Ended
9/30/04(6) 3/31/04 3/31/03 3/31/02(1) 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.570 $ 15.480 $ 14.650 $ 14.970 $ 14.000 $ 15.290
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.483 1.020 1.067 1.113 1.124 1.115
Net realized and unrealized gain (loss) on investments (0.267) 0.276 0.988 (0.257) 0.965 (1.333)
Dividends on preferred stock from:
Net investment income (0.048) (0.075) (0.103) (0.164) (0.346) (0.299)
Net realized gain on investments -- (0.016) (0.018) (0.051) -- --
-------- -------- -------- -------- -------- --------
Total dividends on preferred stock (0.048) (0.091) (0.121) (0.215) (0.346) (0.299)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.168 1.205 1.934 0.641 1.743 (0.517)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income (0.480) (0.960) (0.940) (0.817) (0.773) (0.773)
Net realized gain on investments (0.038) (0.155) (0.164) (0.144) -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.518) (1.115) (1.104) (0.961) (0.773) (0.773)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 15.220 $ 15.570 $ 15.480 $ 14.650 $ 14.970 $ 14.000
-------- -------- -------- -------- -------- --------
MARKET VALUE, END OF PERIOD $ 15.240 $ 16.560 $ 15.490 $ 14.750 $ 14.250 $ 12.625
-------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN BASED ON:(2)
Market value (4.71%) 14.64% 12.74% 10.22% 19.28% (11.65%)
Net asset value 1.22% 7.86% 13.44% 4.21% 13.00% (3.10%)
Ratios and supplemental data:
Net assets applicable to common shares, end of period
(000 omitted) $ 45,399 $ 46,429 $ 46,167 $ 43,703 $ 44,637 $ 41,758
Ratio of expenses to average net assets applicable to
common shares(3) 1.17% 1.05% 1.16% 1.19% 1.18% 1.21%
Ratio of net investment income to average net assets
applicable to common shares(3) 6.46% 6.63% 6.96% 7.41% 7.86% 7.84%
Ratio of net investment income to average net assets
applicable to common shares net of dividends to preferred
shares(4) 5.82% 6.04% 6.18% 5.99% 5.44% 5.74%
Portfolio turnover 11% 30% 24% 43% 24% 41%
LEVERAGE ANALYSIS:
Value of preferred shares outstanding (000 omitted) $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Net asset coverage per share of preferred shares, end of
period $140,798 $142,858 $142,334 $137,405 $139,274 $133,516
Liquidation value per share of preferred shares(5) $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
(1) As required, effective April 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the period ended March 31, 2002 was an increase in net
investment income per share of $0.002, a decrease in net realized and
unrealized gain (loss) per share of $0.002, and an increase in the ratio of
net investment income to average net assets of 0.02%. Per share data and
ratios for periods prior to April 1, 2001 have not been restated to reflect
this change in accounting.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(3) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(4) Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
(5) Excluding any accumulated but unpaid dividends.
(6) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
The average shares outstanding method has been applied for per share information
for the six months ended 9/30/04 and the year ended 3/31/04.
See accompanying notes
26
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
Delaware Investments Florida Insured Municipal Income Fund
Six Months
Ended Year Ended
9/30/04(6) 3/31/04 3/31/03 3/31/02(1) 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.200 $ 16.370 $ 15.150 $ 15.400 $ 14.340 $ 15.670
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.532 1.088 1.084 1.071 1.087 1.092
Net realized and unrealized gain (loss) on investments (0.364) (0.130) 1.186 (0.337) 1.068 (1.368)
Dividends on preferred stock from:
Net investment income (0.048) (0.082) (0.109) (0.179) (0.337) (0.296)
Net realized gain on investments -- (0.005) -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends on preferred stock (0.048) (0.087) (0.109) (0.179) (0.337) (0.296)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.120 0.871 2.161 0.555 1.818 (0.572)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS TO COMMON SHAREHOLDERS FROM:
Net investment income (0.510) (0.995) (0.941) (0.805) (0.758) (0.758)
Net realized gain on investments -- (0.046) -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends (0.510) (1.041) (0.941) (0.805) (0.758) (0.758)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 15.810 $ 16.200 $ 16.370 $ 15.150 $ 15.400 $ 14.340
-------- -------- -------- -------- -------- --------
MARKET VALUE, END OF PERIOD $ 15.630 $ 16.650 $ 15.050 $ 14.020 $ 13.180 $ 11.750
-------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN BASED ON:(2)
Market value (2.93%) 18.04% 14.17% 12.63% 19.06% (15.57%)
Net asset value 0.92% 5.59% 14.92% 4.16% 13.99% (3.01%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets applicable to common shares, end of period
(000 omitted) $ 38,287 $ 39,244 $ 39,651 $ 36,696 $ 37,300 $ 34,730
Ratio of expenses to average net assets applicable to
common shares(3) 1.22% 1.11% 1.18% 1.34% 1.32% 1.31%
Ratio of net investment income to average net assets
applicable to common shares(3) 5.55% 6.70% 6.81% 6.95% 7.38% 7.50%
Ratio of net investment income to average net assets
applicable to common shares net of dividends to preferred
shares(4) 4.93% 6.16% 6.13% 5.79% 5.10% 5.47%
Portfolio turnover 10% 3% 13% 13% 8% 6%
LEVERAGE ANALYSIS:
Value of preferred shares outstanding (000 omitted) $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000
Net asset coverage per share of preferred shares, end of
period $145,717 $148,110 $149,128 $141,740 $143,249 $136,825
Liquidation value per share of preferred shares(5) $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
(1) As required, effective April 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. This change
in accounting had no effect on the Fund's results of operations for the
period ended March 31, 2002. Per share data and ratios for the periods prior
to April 1, 2001 have not been restated to reflect this change in
accounting.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(3) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(4) Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
(5) Excluding any accumulated but unpaid dividends.
(6) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
The average shares outstanding method has been applied for per share information
for the six months ended 9/30/04 and the year ended 3/31/04.
See accompanying notes
27
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
Delaware Investments Colorado Insured Municipal Income Fund, Inc.
Six Months
Ended Year Ended
9/30/04(6) 3/31/04 3/31/03 3/31/02(1) 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.110 $ 15.920 $ 14.780 $ 15.260 $ 13.870 $ 15.220
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.515 1.043 1.068 1.094 1.105 1.099
Net realized and unrealized gain (loss) on investments (0.227) 0.324 1.324 (0.401) 1.373 (1.417)
Dividends on preferred stock from:
Net investment income (0.053) (0.077) (0.098) (0.172) (0.342) (0.297)
Net realized gain on investments -- (0.013) (0.023) (0.051) -- --
-------- -------- -------- -------- -------- --------
Total dividends on preferred stock (0.053) (0.090) (0.121) (0.223) (0.342) (0.297)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.235 1.277 2.271 0.470 2.136 (0.615)
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income (0.480) (0.960) (0.940) (0.818) (0.746) (0.735)
Net realized gain on investments (0.015) (0.127) (0.191) (0.132) -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.495) (1.087) (1.131) (0.950) (0.746) (0.735)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 15.850 $ 16.110 $ 15.920 $ 14.780 $ 15.260 $ 13.870
-------- -------- -------- -------- -------- --------
MARKET VALUE, END OF PERIOD $ 17.080 $ 16.960 $ 16.650 $ 14.700 $ 14.560 $ 12.563
-------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN BASED ON:(2)
Market value 3.85% 8.76% 21.31% 7.52% 22.42% (11.05%)
Net asset value 1.46% 8.05% 15.37% 3.15% 16.21% (3.62%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets applicable to common shares, end of period
(000 omitted) $ 76,649 $77,903 $ 76,988 $ 71,506 $ 73,817 $ 67,093
Ratio of expenses to average net assets applicable to
common shares(3) 1.01% 1.01% 1.05% 1.01% 1.06% 1.08%
Ratio of net investment income to average net assets
applicable to common shares(3) 5.63% 6.54% 6.83% 7.18% 7.68% 7.84%
Ratio of net investment income to average net assets
applicable to common shares net of dividends to preferred
shares(4) 4.95% 5.98% 6.08% 5.71% 5.31% 5.72%
Portfolio turnover 2% 13% 14% 37% 56% 37%
LEVERAGE ANALYSIS:
Value of preferred shares outstanding (000 omitted) $4 0,000 $ 40,000 $ 40,000 $ 40,000 $ 40,000 $ 40,000
Net asset coverage per share of preferred shares, end of
period $145,811 $147,379 $146,235 $139,382 $142,272 $133,867
Liquidation value per share of preferred shares(5) $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
(1) As required, effective April 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. This change
in accounting had no effect on the Fund's results of operations for the
period ended March 31, 2002. Per share data and ratios for the periods prior
to April 1, 2001 have not been restated to reflect this change in
accounting.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
the purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based on
market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such periods.
(3) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(4) Ratio reflects total net investment income less dividends paid to preferred
shareholders from net investment income divided by average net assets
applicable to common shareholders.
(5) Excluding any accumulated but unpaid dividends.
(6) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
The average shares outstanding method has been applied for per share information
for the six months ended 9/30/04 and the year ended 3/31/04.
See accompanying notes
28
DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
NOTES September 30, 2004 (Unaudited)
TO FINANCIAL STATEMENTS
Delaware Investments Minnesota Municipal Income Fund, Inc. ("Minnesota Municipal
Fund"); Delaware Investments Minnesota Municipal Income Fund II, Inc.
("Minnesota Municipal Fund II"); Delaware Investments Minnesota Municipal Income
Fund III, Inc. ("Minnesota Municipal Fund III"); Delaware Investments Arizona
Municipal Income Fund, Inc. ("Arizona Municipal Fund"), and Delaware Investments
Colorado Insured Municipal Income Fund, Inc. ("Colorado Insured Municipal Fund")
are organized as Minnesota corporations and Delaware Investments Florida Insured
Municipal Income Fund ("Florida Insured Municipal Fund") is organized as a
Massachusetts Business Trust (each referred to as a "Fund" and collectively as
the "Funds"). The Minnesota Municipal Fund II, Florida Insured Municipal Fund
and Arizona Municipal Fund are diversified closed-end management investment
companies and Minnesota Municipal Fund, Minnesota Municipal Fund III and
Colorado Insured Municipal Fund are non-diversified closed-end management
investment companies under the Investment Company Act of 1940, as amended. The
Funds' shares trade on the American Stock Exchange.
The investment objective of each Fund is to provide high current income exempt
from federal income tax and from the personal income tax of its state, if any,
consistent with the preservation of capital. Florida Insured Municipal Fund will
generally seek investments that will enable its shares to be exempt from
Florida's intangible personal property tax. Each Fund will seek to achieve its
investment objective by investing substantially all of its net assets in
investment grade, tax-exempt municipal obligations of its respective state.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. 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. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of the Funds' Board of
Trustees/Directors.
Federal Income Taxes - Each Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Use of Estimates - The preparation of financial statements in conformity with
U.S. 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 within the Delaware Investments Family of
Funds are allocated amongst the Funds on the basis of average net assets.
Management fees and some other expenses are paid monthly. 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. Discounts and premiums are amortized to interest
income over the lives of the respective securities. Each Fund declares and pays
dividends from net investment income monthly and distributions from net realized
gain on investments, if any, annually.
In addition, in order to satisfy certain distribution requirements of the Tax
Reform Act of 1986, the Funds may declare special year-end dividend and capital
gains distributions during November or December to shareholders of record on a
date in such month. Such distributions, if received by shareholders by January
31, are deemed to have been paid by the Funds and received by shareholders on
the earlier of the date paid for December 31 of the prior year.
Expenses Paid Indirectly - The Funds may receive earnings credits from their
custodian when positive cash balances are maintained, which are used to offset
custody fees. The expenses paid under the above arrangement is included in the
custodian fees on the Statement of Operations with the corresponding expense
offset shown as "expenses paid indirectly." The amount of this expense for the
six months ended September 30, 2004, were as follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Insured
Municipal Municipal Municipal Municipal Municipal Municipal
Fund I Fund II Fund III Fund Fund Fund
--------- --------- --------- --------- --------------- ----------------
Earnings Credits $871 $2,017 $677 $1,374 $1,109 $1,538
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its respective investment management agreement,
each Fund pays Delaware Management Company (DMC), a series of Delaware
Management Business Trust and the investment manager, an annual fee of 0.40%
which is calculated daily based on the average daily net assets of each Fund,
including assets attributable to any preferred stock that may be outstanding.
As of September 1, 2004, DMC has contractually agreed to waive that portion, if
any, of its management fee and reimburse the Minnesota Municipal Fund to the
extent necessary to ensure that annual operating expenses, exclusive of taxes,
interest, brokerage commissions, distribution fees, certain insurance costs and
extraordinary expenses, do not exceed 0.72% of average daily net assets of the
Fund, including assets attributable to any preferred stock that may be
outstanding, through March 31, 2005.
The Funds have engaged Delaware Service Company, Inc., (DSC), an affiliate of
DMC, to provide accounting and administration services which are based on
average net assets and paid on a monthly basis, subject to certain minimums.
29
NOTES DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES (CONTINUED)
At September 30, 2004, the Funds had liabilities payable to affiliates as
follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Insured
Municipal Municipal Municipal Municipal Municipal Municipal
Fund I Fund II Fund III Fund Fund Fund
--------- --------- --------- --------- --------------- ----------------
Investment management fee payable to DMC $19,464 $56,454 $13,708 $23,453 $19,443 $38,857
Dividend disbursing, transfer agent,
accounting and administration fees
and other expenses payable to DSC 7,965 9,598 5,641 8,122 7,976 47,720
Other expenses payable to DMC and affiliates* 5,118 10,509 3,026 3,865 2,637 5,561
*DMC, as part of its administrative services, pays operating expenses on behalf
of the Funds and is reimbursed on a periodic basis. Such expenses include items
such as printing of shareholder reports, fees for audit, legal and tax
services, registration fees, and trustees' fees.
As provided in the investment management agreement, the Funds bear the cost of
certain legal service expenses, including in-house legal services provided to
the Funds by DMC employees. For the six months ended September 30, 2004, the
Delaware Investments Minnesota Municipal Income Fund, Delaware Investments
Minnesota Municipal Income Fund II, Delaware Investments Minnesota Municipal
Income Fund III, Delaware Investments Arizona Municipal Income Fund, Delaware
Investments Florida Insured Municipal Income Fund, and Delaware Investments
Colorado Insured Municipal Income Fund had costs of $150, $500, $168, $229,
$179, and $428, respectively.
During the six months ended September 30, 2004 Robert Collins was appointed as a
co-portfolio manager for the Funds, and he worked with the existing portfolio
managers in making day to day investment decisions for the Funds. Certain
officers of DMC and DSC are officers, and/or directors/trustees of the Funds.
These officers and directors/trustees are paid no compensation by the Funds.
3. INVESTMENTS
For the six months ended September 30, 2004 the Funds made purchases and sales
of investment securities as follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Insured
Municipal Municipal Municipal Municipal Municipal Municipal
Fund I Fund II Fund III Fund Fund Fund
---------- ----------- ----------- ---------- --------------- ----------------
Purchases $5,065,817 $18,505,363 $2,663,654 $4,222,002 $2,870,721 $1,482,840
Sales 5,632,145 19,751,500 2,890,000 3,753,052 2,717,114 1,010,000
At September 30, 2004, the cost of investments for federal income tax purposes
has been estimated since the final tax characteristics cannot be determined
until fiscal year end. At September 30, 2004, the cost of investments and
unrealized appreciation (depreciation) for each Fund were as follows:
Minnesota Minnesota Minnesota Arizona Florida Insured Colorado Insured
Municipal Municipal Municipal Municipal Municipal Municipal
Fund I Fund II Fund III Fund Fund Fund
----------- ------------ ----------- ----------- --------------- ----------------
Cost of investments $55,858,033 $159,850,644 $38,711,216 $65,487,993 $53,720,549 $107,824,947
----------- ------------ ----------- ----------- ----------- ------------
Aggregate unrealized appreciation $ 2,485,340 $ 7,844,793 $ 2,131,536 $ 3,657,483 $ 3,742,903 $ 7,553,004
Aggregate unrealized depreciation (103,799) (368,787) (42,842) (112,104) -- (80,348)
----------- ------------ ----------- ----------- ----------- ------------
Net unrealized appreciation $ 2,381,541 $ 7,476,006 $ 2,088,694 $ 3,545,379 $ 3,742,903 $ 7,472,656
----------- ------------ ----------- ----------- ----------- ------------
4. DIVIDEND AND DISTRIBUTION INFORMATION
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from accounting principles
generally accepted in the United States. Tax information for the six months
ended September 30, 2004 is an estimate and the tax character of dividends and
distributions may be redesignated at fiscal year end. The tax character of
dividends and distributions paid during the six months ended September 30, 2004,
and the year ended March 31, 2004, were as follows:
Minnesota Municipal Fund Minnesota Municipal Fund II
------------------------- ---------------------------
9/30/04 3/31/04 9/30/04 3/31/04
Tax-exempt income $1,420,929 $2,538,026 $4,186,443 $7,775,641
Ordinary income -- 122,453 -- 53,803
Long-term capital gain -- 1,409,907 -- --
---------- ---------- ---------- ----------
Total $1,420,929 $4,070,386 $4,186,443 $7,829,444
--------- ---------- ---------- ----------
Minnesota Municipal Fund III Arizona Municipal Fund
---------------------------- ----------------------
9/30/04 3/31/04 9/30/04 3/31/04
Tax-exempt income $965,094 $1,750,401 $1,575,316 $3,072,779
Ordinary Income -- 19,044 77,537 178,072
Long-term capital gain -- -- 35,787 345,992
-------- ---------- ---------- ----------
Total $965,094 $1,769,445 $1,688,640 $3,596,843
-------- ---------- ---------- ----------
30
DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
4. DIVIDEND AND DISTRIBUTION INFORMATION (CONTINUED)
Florida Insured Municipal Fund Colorado Insured Municipal Fund
-------------------------------- -------------------------------
9/30/04 3/31/04 9/30/04 3/31/04
Tax-exempt income $1,351,558 $2,608,022 $2,577,504 $5,016,217
Ordinary Income -- -- 14,511 63,831
Long-term capital gain -- 123,426 58,046 613,104
---------- ---------- ---------- ----------
Total $1,351,558 $2,731,448 $2,650,061 $5,693,152
---------- ---------- ---------- ----------
As of September 30, 2004, the components of net assets on a tax basis were as
follows:
Minnesota Municipal Fund Minnesota Municipal Fund II Minnesota Municipal Fund III
------------------------ --------------------------- ----------------------------
Paid in capital $35,426,619 $99,710,000 $23,985,129
Undistributed tax-exempt income 601,048 2,951,972 683,427
Undistributed long-term gains (loss) 18,582 -- --
Capital loss carry forward -- (623,509) (603,148)
Unrealized appreciation (depreciation) 2,381,541 7,476,006 2,088,694
----------- ------------ -----------
Net assets $38,427,790 $109,514,469 $26,154,102
----------- ------------ -----------
Arizona Municipal Fund Florida Insured Municipal Fund Colorado Insured Municipal Fund
---------------------- ------------------------------ -------------------------------
Paid in capital $40,838,893 $33,361,389 $67,238,110
Undistributed tax-exempt income 990,162 922,679 1,919,088
Undistributed ordinary income 24,469 -- 124
Undistributed long-term gains (loss) -- 259,712 18,727
Unrealized appreciation (depreciation) 3,545,379 3,742,902 7,472,658
----------- ----------- -----------
Net assets $45,398,903 $38,286,682 $76,648,707
----------- ----------- -----------
For federal income tax purposes, certain Funds had accumulated capital losses as
of March 31, 2004, which may be carried forward and applied against future
capital gains. Such capital loss carry forward amounts will expire as follows:
2005 2006 2008 2009 2010 Total
-------- -------- -------- -------- ------ --------
Minnesota Municipal Fund II $ 73,298 $132,129 $437,162 $175,804 $8,416 $826,809
Minnesota Municipal Fund III 455,666 6,539 56,856 153,308 -- 672,369
For financial reporting purposes, capital accounts and distributions to
shareholders are adjusted to reflect the tax character of permanent book/tax
differences. For the six months ended September 30, 2004, the Funds recorded an
estimate of these differences since the final tax characteristics cannot be
determined until fiscal year end. Reclassifications are primarily due to tax
treatment of market discount and premium on certain debt instruments. Results of
operations and net assets were not affected by these reclassifications.
Minnesota Minnesota Minnesota Arizona
Municipal Municipal Municipal Municipal
Fund Fund II Fund III Fund
--------- ------- --------- ---------
Undistributed net investment income (loss) ($34,566) ($4,878) $1,176 $3,094
Accumulated realized gain (loss) 34,566 4,878 (1,176) (3,094)
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. The Funds did not
repurchase any shares under the Share Repurchase Program during the period
ending September 30, 2004. Shares issuable under the Fund's dividend
reinvestment plan are purchased by the Fund's transfer agent, Mellon Investor
Services, LLC, in the open market.
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.
31
DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL STOCK (CONTINUED)
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 during the period ended September 30, 2004 as
follows:
Fund Low High
---- ----- -----
Minnesota Municipal Fund 1.02% to 1.45%
Minnesota Municipal Fund II 1.00% to 1.50%
Minnesota Municipal Fund III 1.05% to 1.30%
Arizona Municipal Fund 0.95% to 1.55%
Florida Insured Municipal Fund 0.95% to 1.45%
Colorado Insured Municipal Fund 0.97% to 2.00%
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 are 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. CREDIT AND MARKET RISKS
The Funds concentrate their investments in securities issued by municipalities.
The value of these investments may be adversely affected by new legislation
within the state, regional or local economic conditions, and differing levels of
supply and demand for municipal bonds. Many municipalities insure repayment for
their obligations. Although bond insurance reduces the risk of loss due to
default by an issuer, such bonds remain subject to the risk that market value
may fluctuate for other reasons and there is no assurance that the insurance
company will meet its obligations. These securities have been identified in the
Statements of Net Assets.
The Funds may invest in inverse floating rate securities ("inverse floaters"), a
type of derivative tax-exempt obligation with floating or variable interest
rates that move in the opposite direction of short-term interest rates, usually
at an accelerated speed. Consequently, the market values of inverse floaters
will generally be more volatile than other tax-exempt investments. Such
securities are denoted on the Statements of Net Assets.
7. CONTRACTUAL OBLIGATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Funds' maximum exposure under these arrangements is unknown. However, the Funds
have not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
8. TAX INFORMATION
The information set forth is for the Funds' semi-annual period as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of the fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in January of each
year. Please consult your tax advisor for proper treatment of this information.
The information presented below is subject to change since final tax
characteristics cannot be determined until fiscal year end.
For the six months ended September 30, 2004, each Fund designates as long-term
capital gains, ordinary income, and tax-exempt income distributions paid during
the year as follows:
Long-Term Ordinary Tax Total
Capital Gains Income Exempt Distributions
Distributions Distributions Income (Tax Basis)
Minnesota Municipal Fund -- -- 100% 100%
Minnesota Municipal Fund II -- -- 100% 100%
Minnesota Municipal Fund III -- -- 100% 100%
Arizona Municipal Fund 2% 5% 93% 100%
Florida Insured Municipal Fund -- -- 100% 100%
Colorado Insured Municipal Fund 2% 1% 97% 100%
32
DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
PROXY
RESULTS (UNAUDITED)
Shareholders of the Delaware Investments Minnesota Municipal Income Fund, Inc.,
Delaware Investments Minnesota Municipal Income Fund II, Inc., Delaware
Investments Minnesota Municipal Income Fund III, Inc., Delaware Investments
Arizona Municipal Income Fund, Inc., Delaware Investments Florida Insured
Municipal Income Fund, and Delaware Investments Colorado Insured Municipal
Income Fund, Inc. voted on the following proposals at the annual meeting of
shareholders held on August 19, 2004. The description of each proposal and
number of share 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
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND, INC:
1. To elect the Fund's Board of Directors/Trustees:
Jude T. Driscoll 2,310,849 58,498 -- -- -- --
Walter P. Babich 2,309,403 59,944 -- -- -- --
John H. Durham 2,311,570 57,777 -- -- -- --
John A. Fry 2,311,137 58,210 -- -- -- --
Anthony D. Knerr 2,311,570 57,777 -- -- -- --
Ann R. Leven 2,311,787 57,560 -- -- -- --
Thomas F. Madison N/A N/A N/A 336 -- --
Janet L. Yeomans N/A N/A N/A 336 -- --
2. To reduce the number of accountant's certificates the
Fund must provide in connection with its preferred
shares, which shall include an amendment to the Fund's
Article of Incorporation. 2,261,502 40,857 66,988 336 -- --
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND II, INC:
1. To elect the Fund's Board of Directors/Trustees:
Jude T. Driscoll 6,513,487 152,513 -- -- -- --
Walter P. Babich 6,491,251 174,749 -- -- -- --
John H. Durham 6,510,851 155,149 -- -- -- --
John A. Fry 6,513,421 152,579 -- -- --
Anthony D. Knerr 6,511,563 154,437 -- -- -- --
Ann R. Leven 6,517,596 148,404 -- -- -- --
Thomas F. Madison N/A N/A N/A 1,088 1 --
Janet L. Yeomans N/A N/A N/A 1,088 1 --
2. To reduce the number of accountant's certificates the
Fund must provide in connection with its preferred
shares, which shall include an amendment to the Fund's
Article of Incorporation. 6,431,372 107,241 127,387 1,078 10 1
DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND III, INC:
1. To elect the Fund's Board of Directors/Trustees:
Jude T. Driscoll 1,622,958 51,656 -- -- -- --
Walter P. Babich 1,619,370 55,244 -- -- -- --
John H. Durham 1,622,958 51,656 -- -- -- --
John A. Fry 1,622,958 51,656 -- -- -- --
Anthony D. Knerr 1,622,958 51,656 -- -- -- --
Ann R. Leven 1,622,958 51,656 -- -- -- --
Thomas F. Madison N/A N/A N/A 272 -- --
Janet L. Yeomans N/A N/A N/A 272 -- --
2. To reduce the number of accountant's certificates the
Fund must provide in connection with its preferred
shares, which shall include an amendment to the Fund's
Article of Incorporation. 1,598,811 43,773 32,030 270 -- 2
33
DELAWARE INVESTMENTS CLOSED-END MUNICIPAL BOND FUNDS
PROXY
RESULTS (UNAUDITED) (CONTINUED)
Common Shareholders Preferred Shareholders
Shares Shares Shares Shares Shares Shares
Voted Voted Voted Voted Voted Voted
For Against Abstain For Against Abstain
DELAWARE INVESTMENTS ARIZONA MUNICIPAL INCOME FUND, INC:
1. To elect the Fund's Board of Directors/Trustees:
Jude T. Driscoll 2,650,527 40,113 -- -- -- --
Walter P. Babich 2,649,227 41,413 -- -- -- --
John H. Durham 2,652,077 38,563 -- -- -- --
John A. Fry 2,651,377 39,263 -- -- -- --
Anthony D. Knerr 2,651,227 39,413 -- -- -- --
Ann R. Leven 2,647,677 42,963 -- -- -- --
Thomas F. Madison N/A N/A N/A 500 -- --
Janet L. Yeomans N/A N/A N/A 500 -- --
2. To reduce the number of accountant's certificates the
Fund must provide in connection with its preferred shares,
which shall include an amendment to the Fund's Article of
Incorporation. 2,577,037 53,400 60,203 497 -- 3
DELAWARE INVESTMENTS FLORIDA INSURED MUNICIPAL INCOME FUND:
1. To elect the Fund's Board of Directors/Trustees:
Jude T. Driscoll 2,277,244 22,361 -- -- -- --
Walter P. Babich 2,277,185 22,420 -- -- -- --
John H. Durham 2,276,937 22,668 -- -- -- --
John A. Fry 2,278,519 21,086 -- -- -- --
Anthony D. Knerr 2,278,437 21,168 -- -- -- --
Ann R. Leven 2,278,185 21,420 -- -- -- --
Thomas F. Madison N/A N/A N/A 448 -- --
Janet L. Yeomans N/A N/A N/A 448 -- --
2. To reduce the number of accountant's certificates the
Fund must provide in connection with its preferred shares,
which shall include an amendment to the Fund's Article of
Incorporation. 2,230,774 46,550 22,281 442 -- 6
DELAWARE INVESTMENTS COLORADO INSURED MUNICIPAL INCOME FUND, INC.:
1. To elect the Fund's Board of Directors/Trustees:
Jude T. Driscoll 4,266,769 54,572 -- -- -- --
Walter P. Babich 4,266,444 54,897 -- -- -- --
John H. Durham 4,270,647 50,694 -- -- -- --
John A. Fry 4,270,669 50,672 -- -- -- --
Anthony D. Knerr 4,271,747 49,594 -- -- -- --
Ann R. Leven 4,271,949 49,391 -- -- -- --
Thomas F. Madison N/A N/A N/A 414 -- --
Janet L. Yeomans N/A N/A N/A 414 -- --
2. To reduce the number of accountant's certificates the
Fund must provide in connection with its preferred shares,
which shall include an amendment to the Fund's Article of
Incorporation. 4,156,683 70,073 94,585 409 -- 5
34
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
This semiannual report is for the information of Delaware Investments Closed-End
Municipal Bond Funds shareholders. The return and principal value of an
investment in each Fund will fluctuate so that shares, when resold, may be worth
more or less than their original cost. Notice is hereby given in accordance with
Section 23(c) of the Investment Company Act of 1940 that each Fund may, from
time-to-time, purchase shares of its common stock on the open market at market
prices.
Board of Trustees Affiliated Officers Contact Information
JUDE T. DRISCOLL JOSEPH H. HASTINGS INVESTMENT MANAGER
Chairman Executive Vice President and Delaware Management Company
Delaware Investments Family of Funds Chief Financial Officer Philadelphia, PA
Philadelphia, PA Delaware Investments Family of Funds
Philadelphia, PA PRINCIPAL OFFICE OF THE FUNDS
WALTER P. BABICH 2005 Market Street
Board Chairman RICHELLE S. MAESTRO Philadelphia, PA 19103-7057
Citadel Construction Corporation Executive Vice President,
King of Prussia, PA Chief Legal Officer and Secretary INDEPENDENT AUDITORS
Delaware Investments Family of Funds Ernst & Young LLP
JOHN H. DURHAM Philadelphia, PA 2001 Market Street
Private Investor Philadelphia, PA 19103
Gwynedd Valley, PA MICHAEL P. BISHOF
Senior Vice President and Treasurer REGISTRAR AND STOCK TRANSFER AGENT
JOHN A. FRY Delaware Investments Family of Funds Mellon Investor Services, L.L.C.
President Philadelphia, PA Overpeck Centre
Franklin & Marshall College 85 Challenger Road
Lancaster, PA Ridgefield Park, NJ 07660
800 851-9677
ANTHONY D. KNERR
Managing Director FOR SECURITIES DEALERS AND FINANCIAL
Anthony Knerr & Associates INSTITUTIONS REPRESENTATIVES
New York, NY 800 362-7500
ANN R. LEVEN WEB SITE
Former Treasurer/Chief Fiscal Officer www.delawareinvestments.com
National Gallery of Art
Washington, DC NUMBER OF RECORDHOLDERS AS OF
SEPTEMBER 30, 2004:
THOMAS F. MADISON Minnesota Municipal Income Fund I 325
President and Chief Executive Officer Minnesota Municipal Income Fund II 524
MLM Partners, Inc. Minnesota Municipal Income Fund III 124
Minneapolis, MN Arizona Municipal Income Fund 97
Florida Insured Municipal Income Fund 163
JANET L. YEOMANS Colorado Insured Municipal
Vice President/Mergers & Acquisitions Income Fund 174
3M Corporation
St. Paul, MN
Thomas F. Madison and Janet L. Yeomans were
elected by the preferred Shareholders
of the Delaware Investments Closed-End
Municipal Bond Funds.
Each Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. Each Fund's Forms N-Q, as well as a description of the policies and
procedures that each Fund uses to determine how to vote proxies (if any)
relating to portfolio securities is available without charge (i) upon request,
by calling 800 523-1918; (ii) on each Fund's Web site at
http://www.delawareinvestments.com; and (iii) on the Commission's Web site at
http://www.sec.gov. Each Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC; information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Information (if any) regarding how each Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through each Fund's Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
(9004) Printed in the USA
SA-CEMUNI [9/04] IVES 11/04 J9850
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Included as part of report to shareholders filed under Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Companies and Affiliated Purchasers
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 10. Controls and Procedures
The registrant's principal executive officer and principal financial
officer have evaluated the registrant's disclosure controls and procedures
within 90 days of the filing of this report and have concluded that they are
effective in providing reasonable assurance that the information required to be
disclosed by the registrant in its reports or statements filed under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission.
There were no significant changes in the registrant's internal control
over financial reporting that occurred during the registrant's last fiscal
half-year that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 11. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are
attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1
under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are
furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf, by the undersigned, thereunto duly authorized.
NAME OF REGISTRANT: Delaware Investments Florida Insured Municipal Income Fund
JUDE T. DRISCOLL
-----------------------
By: Jude T. Driscoll
----------------
Title: Chairman
Date: 11/29/04
----------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
JUDE T. DRISCOLL
-----------------------
By: Jude T. Driscoll
----------------
Title: Chairman
Date: 11/29/04
----------------
JOSEPH H. HASTINGS
-------------------------------
By: Joseph H. Hastings
------------------------
Title: Chief Financial Officer
Date: 11/29/04
------------------------