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 MINNEAPOLIS, Nov. 4 /PRNewswire/ -- Voyageur Fund Managers, Inc. today announced The Voyageur Minnesota Municipal Income Fund, Inc. (AMEX: VMN) third quarter Manager's Quarterly Report.
 The Economy and Interest Rates: Bond market activity in the third quarter was, in many respects, a repeat of the first two quarters of 1993: Treasury prices rallied as interest rates continued their downward trend. Economic data continued to confirm the previous belief that inflation is under control and will remain subdued over the coming months. Clinton's deficit reduction package passed the House and Senate and will increase individual income tax rates retroactively to Jan. 1, 1993. The combination of tax hikes and modest spending cuts are expected to improve the federal government's financial position. The recent Health Care Reform Proposal is the newest item confronting the markets and, at the very least, is anticipated to be costly. The Tax Bill, in addition to the uncertainty associated with the Health Care Reform Proposal, is expected to foster slow economic growth and thereby create a favorable environment for long term bonds. Voyageur continues to have a positive view of the bond market, but has moderated its forecast from extremely bullish to cautious. From this point, Voyageur believes interest rates on the long Treasury bond will hover around 6 percent through the middle part of the decade.
 Municipals: Falling interest rates have fueled several municipal refinancings and the tax exempt bond market has consequently experienced an all-time high in supply. This record high in the supply of bonds has caused the market to become "cheap" on an after-tax basis when compared to the Treasury market. At the present time, municipals offer tremendous value and are as cheap (compared to treasuries) as they have been in over two years. The traditional buyers of tax exempt bonds continue to purchase municipals aggressively. Despite strong demand, supply remains heavy.
 In Voyageur's opinion, the supply of refinancings is finite and will abate by year end. The bulk of the new supply is coming from refinancing and most issuers have already taken advantage of low interest rates. From here, Voyageur would need to see rates move substantially lower to enable the refinancing of 1992 and 1993 issues. Voyageur thinks it is very unlikely that rates can drop dramatically lower than the 6 percent level on the 30-year Treasury. Demand should remain healthy in light of Clinton's proposed higher tax rates. The supply/demand imbalance will correct and the shortage of munis will cause the municipal sector to perform very well relative to other taxable, fixed income investments.
 The Fund (VMN): The portfolio was fully invested at 9/30/93 in long term Minnesota municipal bonds with excellent call protection. Call protection continues to be very important. The superior call protection has contributed strongly to the sharp increase in the Net Asset Value (NAV) and total return over the quarter. The average call date is approximately 11 years, which will continue to contribute to strong fund performance in a climate of moderately declining interest rates. All of the bonds are extremely high quality: 100 percent of the portfolio is rated "A" or better; almost 60 percent of the bonds are rated "AAA." Narrow quality spreads indicate that high quality bonds offer much better value than lower rated bonds and Voyageur remains committed to the higher investment-grade credits. The fund was well diversified in terms of sectors, with the largest concentration in general obligations (22 percent), health care (18 percent), and essential service utility bonds (15 percent).
 Market Price/NAV/Average Daily Volume Data
 Month End July August September
 Market Price 16.25 16.38 16.50
 NAV 15.11 15.62 15.87
 Avg. Daily Vol. 1,382 1,904 2,245
 Dividend Data
 July August September
 Div. Amt.: $.775 $.775 $.775
 Sector Weightings/Credit Qualities
 General Obligations 22 pct.
 Health Care 18 pct.
 Housing 15 pct.
 Public Power 13 pct.
 Industrial 11 pct.
 Education 9 pct.
 Pre-Re/Escrowed 7 pct.
 Transportation 3 pct.
 Water & Sewer 2 pct.
 AAA 56 pct.
 AA 16 pct.
 A 28 pct.
 NR 0 pct.
 Holdings (five largest)
 1. Dakota & Washington County HRA -- ETM
 2. Bass Brook MN PCR Rev Rfg
 3. St. Paul, MN HRA Multifamily -- Point of St. Paul
 4. St. Anthony, MN Multifamily -- Ins by Asset Gty
 5. Hennepin County, MN G.O.
 Portfolio Statistics
 Weighted Average Maturity 22.1 years
 Duration 11.98 years
 Percent AMT 14.3 pct.
 Average Cost Price 100.741
 Average Market Price 110.094
 Average Coupon 6.382 pct.
 Par Value $55.2 million
 -0- 11/4/93
 /CONTACT: John S. Doering of Voyageur Asset Management, 612-376-7048/

CO: Voyageur Fund Distributors, Inc.; Voyageur Minnesota Municipal Fund ST: Minnesota IN: FIN SU:

CP-DB -- MN006 -- 0759 11/04/93 13:10 EST
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Publication:PR Newswire
Date:Nov 4, 1993

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