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: 811-07810
Exact name of registrant as specified
in charter:
Delaware
Investments® Colorado Municipal Income Fund, Inc.
Address of principal executive
offices:
2005 Market Street
Philadelphia, PA 19103
Name and address of agent for
service:
David F. Connor, Esq.
2005 Market
Street
Philadelphia, PA 19103
Registrant’s telephone number, including area code: (800) 523-1918
Date of fiscal year end: March 30
Date of reporting period: September 30, 2008
Item 1. Reports to Stockholders
| Semiannual Report | Delaware Investments Closed-End Municipal Bond Funds |
| September 30, 2008 | |
| Closed-end funds | |
 |
 |
Table of contents
| > Sector/State allocations and credit quality breakdowns | 1 | |
| > Statements of net assets | 4 | |
| > Statements of operations | 18 | |
| > Statements of changes in net assets | 19 | |
| > Financial highlights | 20 | |
| > Notes to financial statements | 24 | |
| > Other Fund information | 31 | |
| > About the organization | 33 |
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.
All third-party trademarks are the property of their respective owners.
Sector/State allocations and credit
quality
breakdowns
As of September 30, 2008
Sector designations may be different than the sector designations presented in other Fund materials.
Delaware
Investments
Arizona Municipal Income
Fund, Inc.
| Percentage | ||
| Sector | of Net Assets | |
| Municipal Bonds | 152.58 | % |
| Education Revenue Bonds | 16.51 | % |
| Electric Revenue Bonds | 9.06 | % |
| Escrowed to Maturity Bond | 6.60 | % |
| Health Care Revenue Bonds | 19.35 | % |
| Housing Revenue Bonds | 2.65 | % |
| Lease Revenue Bonds | 6.60 | % |
| Local General Obligation Bonds | 14.64 | % |
| Pre-Refunded Bonds | 40.92 | % |
| Special Tax Revenue Bonds | 19.96 | % |
| State General Obligation Bond | 0.74 | % |
| Transportation Revenue Bonds | 7.63 | % |
| Water & Sewer Revenue Bonds | 7.92 | % |
| Total Value of Securities | 152.58 | % |
| Receivables and Other Assets Net of Liabilities | 13.00 | % |
| Liquidation Value of Preferred Stock | (65.58 | %) |
| Total Net Assets | 100.00 | % |
| Credit Quality Breakdown | ||
| (as a % of fixed income investments) | ||
| AAA | 36.56 | % |
| AA | 38.75 | % |
| A | 10.69 | % |
| BBB | 14.00 | % |
| Total | 100.00 | % |
Delaware Investments
Colorado Municipal Income Fund,
Inc.
| Percentage | ||
| Sector | of Net Assets | |
| Municipal Bonds | 146.06 | % |
| Education Revenue Bonds | 24.21 | % |
| Electric Revenue Bond | 1.29 | % |
| Health Care Revenue Bonds | 6.78 | % |
| Housing Revenue Bonds | 1.93 | % |
| Lease Revenue Bonds | 5.72 | % |
| Local General Obligation Bonds | 13.26 | % |
| Pre-Refunded Bonds | 63.58 | % |
| Special Tax Revenue Bonds | 13.48 | % |
| State General Obligation Bond | 3.50 | % |
| Transportation Revenue Bond | 1.43 | % |
| Water & Sewer Revenue Bonds | 10.88 | % |
| Short-Term Investments | 1.94 | % |
| Total Value of Securities | 148.00 | % |
| Receivables and Other Assets Net of Liabilities | 14.63 | % |
| Liquidation Value of Preferred Stock | (62.63 | %) |
| Total Net Assets | 100.00 | % |
| Credit Quality Breakdown | ||
| (as a % of fixed income investments) | ||
| AAA | 31.80 | % |
| AA | 48.81 | % |
| A | 8.18 | % |
| BBB | 5.57 | % |
| Not Rated | 5.64 | % |
| Total | 100.00 | % |
(continues) 1
Sector/State allocations
and credit quality
breakdowns
As of September 30, 2008
Sector designations may be different than the sector designations presented in other Fund materials.
Delaware Investments
Minnesota
Municipal Income Fund II, Inc.
| Percentage | ||
| Sector | of Net Assets | |
| Municipal Bonds | 144.72 | % |
| Corporate-Backed Revenue Bonds | 6.33 | % |
| Education Revenue Bonds | 5.52 | % |
| Electric Revenue Bonds | 20.98 | % |
| Escrowed to Maturity Bonds | 17.90 | % |
| Health Care Revenue Bonds | 14.25 | % |
| Housing Revenue Bonds | 9.36 | % |
| Lease Revenue Bonds | 9.56 | % |
| Local General Obligation Bonds | 22.70 | % |
| Pre-Refunded Bonds | 22.53 | % |
| Special Tax Revenue Bonds | 4.43 | % |
| State General Obligation Bonds | 3.30 | % |
| Transportation Revenue Bonds | 7.86 | % |
| Short-Term Investment | 0.20 | % |
| Total Value of Securities | 144.92 | % |
| Receivables and Other Assets Net of Liabilities | 18.01 | % |
| Liquidation Value of Preferred Stock | (62.93 | %) |
| Total Net Assets | 100.00 | % |
| Credit Quality Breakdown | ||
| (as a % of fixed income investments) | ||
| AAA | 31.72 | % |
| AA | 33.66 | % |
| A | 18.08 | % |
| BBB | 11.54 | % |
| BB | 2.26 | % |
| B | 0.40 | % |
| Not Rated | 2.34 | % |
| Total | 100.00 | % |
2
Delaware
Investments
National Municipal Income
Fund
| Percentage | ||
| Sector | of Net Assets | |
| Municipal Bonds | 151.63 | % |
| Corporate-Backed Revenue Bonds | 7.66 | % |
| Education Revenue Bonds | 3.45 | % |
| Electric Revenue Bond | 3.22 | % |
| Health Care Revenue Bonds | 20.91 | % |
| Housing Revenue Bonds | 14.78 | % |
| Lease Revenue Bonds | 20.02 | % |
| Local General Obligation Bonds | 9.64 | % |
| Pre-Refunded Bonds | 9.05 | % |
| Special Tax Revenue Bonds | 26.52 | % |
| State General Obligation Bonds | 5.10 | % |
| Transportation Revenue Bonds | 13.09 | % |
| Water & Sewer Revenue Bonds | 18.19 | % |
| Short-Term Investments | 5.29 | % |
| Total Value of Securities | 156.92 | % |
| Receivables and Other Assets Net of Liabilities | 11.35 | % |
| Liquidation Value of Preferred Stock | (68.27 | %) |
| Total Net Assets | 100.00 | % |
| State | ||
| (as a % of fixed income investments) | ||
| Arizona | 2.58 | % |
| California | 2.60 | % |
| Florida | 68.22 | % |
| Georgia | 0.47 | % |
| Indiana | 0.58 | % |
| Iowa | 1.09 | % |
| Maryland | 1.02 | % |
| Massachusetts | 1.11 | % |
| New York | 6.42 | % |
| Ohio | 1.02 | % |
| Pennsylvania | 1.13 | % |
| Puerto Rico | 4.56 | % |
| South Carolina | 0.64 | % |
| Texas | 7.47 | % |
| Virginia | 1.09 | % |
| Total | 100.00 | % |
| Credit Quality Breakdown | ||
| (as a % of fixed income investments) | ||
| AAA | 30.22 | % |
| AA | 53.96 | % |
| A | 9.61 | % |
| BBB | 3.39 | % |
| BB | 0.47 | % |
| Not Rated | 2.35 | % |
| Total | 100.00 | % |
3
Statements of net assets
Delaware Investments Arizona Municipal Income Fund, Inc.
September 30, 2008 (Unaudited)
| Principal | |||||
| Amount | Value | ||||
| Municipal Bonds – 152.58% | |||||
| Education Revenue Bonds – 16.51% | |||||
| Arizona Board Regents System | |||||
| Revenue (Arizona State University) | |||||
| Series 8-A | |||||
| 5.00% 6/1/18 | $ | 200,000 | $ | 205,154 | |
| 5.00% 6/1/19 | 375,000 | 380,288 | |||
| Arizona State University Certificates | |||||
| of Participation (Research | |||||
| Infrastructure Project) | |||||
| 5.00% 9/1/30 (AMBAC) | 1,000,000 | 929,510 | |||
| Arizona Student Loan Acquisition | |||||
| Authority Revenue Refunding | |||||
| Series A-1 5.90% 5/1/24 (AMT) | 1,500,000 | 1,411,125 | |||
| Glendale Industrial Development | |||||
| Authority Revenue Refunding | |||||
| (Midwestern University) | |||||
| 5.00% 5/15/31 | 350,000 | 307,741 | |||
| Northern Arizona University Certificates | |||||
| of Participation (Northern Arizona | |||||
| University Research Project) | |||||
| 5.00% 9/1/30 (AMBAC) | 1,000,000 | 906,010 | |||
| Pima County Industrial Development | |||||
| Authority Educational Revenue | |||||
| Refunding (Tucson County Day | |||||
| School Project) 5.00% 6/1/37 | 500,000 | 373,045 | |||
| South Campus Group Student | |||||
| Housing Revenue (Arizona State | |||||
| University -South Campus Project) | |||||
| 5.625% 9/1/35 (MBIA) | 1,000,000 | 923,900 | |||
| University of Puerto Rico Revenue | |||||
| Series Q 5.00% 6/1/36 | 1,000,000 | 857,340 | |||
| 6,294,113 | |||||
| Electric Revenue Bonds – 9.06% | |||||
| Salt River Project Agricultural | |||||
| Improvement & Power District | |||||
| Electric System Revenue | |||||
| (Salt River Project) | |||||
| Series A | |||||
| 5.00% 1/1/16 | 500,000 | 530,855 | |||
| 5.00% 1/1/31 | 1,765,000 | 1,696,147 | |||
| Series B 5.00% 1/1/25 | 1,250,000 | 1,225,388 | |||
| 3,452,390 | |||||
| Escrowed to Maturity Bond – 6.60% | |||||
| Puerto Rico Commonwealth | |||||
| Infrastructure Financing Authority | |||||
| Series A 5.50% 10/1/40 | 2,500,000 | 2,517,150 | |||
| 2,517,150 | |||||
| Health Care Revenue Bonds – 19.35% | |||||
| Arizona Health Facilities Authority | |||||
| Revenue (Banner Health) Series D | |||||
| 5.50% 1/1/21 | 500,000 | 487,780 | |||
| Glendale Industrial Development | |||||
| Authority Hospital Refunding | |||||
| Revenue (John C. Lincoln Health) | |||||
| 5.00% 12/1/42 | 1,500,000 | 1,158,975 | |||
| Maricopa County Industrial | |||||
| Development Authority Revenue | |||||
| (Catholic Healthcare West) Series A | |||||
| 5.25% 7/1/32 | 400,000 | 349,456 | |||
| 5.50% 7/1/26 | 430,000 | 403,099 | |||
| Scottsdale Industrial Development | |||||
| Authority Hospital Revenue | |||||
| Refunding (Scottsdale Healthcare) | |||||
| Series A 5.25% 9/1/30 | 500,000 | 439,650 | |||
| Show Low Industrial Development | |||||
| Authority Hospital Revenue | |||||
| (Navapache Regional Medical Center) | |||||
| Series A 5.50% 12/1/17 (ACA) | 1,600,000 | 1,537,744 | |||
| University Medical Center | |||||
| Hospital Revenue | |||||
| 5.00% 7/1/33 | 1,000,000 | 800,920 | |||
| 5.00% 7/1/35 | 500,000 | 397,445 | |||
| Yavapai County Industrial | |||||
| Development Authority Revenue | |||||
| (Yavapai Regional Medical Center) | |||||
| Series A 5.25% 8/1/21 (RADIAN) | 2,000,000 | 1,802,160 | |||
| 7,377,229 | |||||
| Housing Revenue Bonds – 2.65% | |||||
| Phoenix Industrial Development | |||||
| Authority Single Family | |||||
| Statewide Revenue | |||||
| Series A 5.35% 6/1/20 (GNMA) | |||||
| (FNMA) (FHLMC) (AMT) | 435,000 | 414,634 | |||
| Series C 5.30% 4/1/20 (GNMA) | |||||
| (FNMA) (FHLMC) (AMT) | 370,000 | 371,746 | |||
| Pima County Industrial Development | |||||
| Authority Single Family | |||||
| Mortgage Revenue Series A-1 | |||||
| 6.125% 11/1/33 (GNMA) | |||||
| (FNMA) (FHLMC) (AMT) | 40,000 | 40,301 | |||
| Puerto Rico Housing Finance | |||||
| Authority Sub-Cap Foundation | |||||
| Modernization 5.50% 12/1/18 | 175,000 | 182,250 | |||
| 1,008,931 | |||||
| Lease Revenue Bonds – 6.60% | |||||
| Arizona Game & Fishing Department | |||||
| & Commission Beneficial Interest | |||||
| Certificates (AGF Administration | |||||
| Building Project) 5.00% 7/1/26 | 640,000 | 581,018 | |||
| Coconino County Unified School | |||||
| District #8 (Page Impact Aid | |||||
| Revenue Project of 2004) Series A | |||||
| 5.00% 7/1/15 (MBIA) | 1,000,000 | 1,043,820 | |||
| Nogales Development Authority | |||||
| Municipal Facilities Revenue | |||||
| 5.00% 6/1/30 (AMBAC) | 500,000 | 423,165 | |||
| Prescott Valley Municipal Property | |||||
| 5.00% 1/1/27 (FGIC) | 500,000 | 468,650 | |||
| 2,516,653 | |||||
4
| Principal | ||||||
| Amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Local General Obligation Bonds – 14.64% | ||||||
| Coconino & Yavapai Counties Joint | ||||||
| Unified School District #9 | ||||||
| (Sedona Oak Creek Project 2007) | ||||||
| Series A 4.25% 7/1/20 (FSA) | $ | 900,000 | $ | 851,607 | ||
| Φ | Gila County Unified School | |||||
| District #10 (Payson Step Coupon | ||||||
| Project of 2006) Series A | ||||||
| 1.00% 7/1/27 (AMBAC) | 500,000 | 449,260 | ||||
| Maricopa County School | ||||||
| District #6 (Washington | ||||||
| Elementary) Refunding Series A | ||||||
| 5.375% 7/1/13 (FSA) | 3,000,000 | 3,238,710 | ||||
| (School Improvement Project of | ||||||
| 2001) Series B | ||||||
| 5.00% 7/1/17 (FSA) | 1,000,000 | 1,040,920 | ||||
| 5,580,497 | ||||||
| §Pre-Refunded Bonds – 40.92% | ||||||
| Arizona School Facilities Board | ||||||
| Certificates of Participation | ||||||
| Series B 5.25% 9/1/19-14 (FSA) | 1,000,000 | 1,087,680 | ||||
| Arizona School Facilities | ||||||
| Board Revenue | ||||||
| (State School Improvement) | ||||||
| Series 2001 5.00% 7/1/19-11 | 2,000,000 | 2,108,360 | ||||
| (State School Trust) Series A | ||||||
| 5.75% 7/1/18-14 (AMBAC) | 500,000 | 554,970 | ||||
| Arizona Water Infrastructure Finance | ||||||
| Authority Revenue (Water Quality) | ||||||
| Series A 5.05% 10/1/20-11 | 1,500,000 | 1,588,335 | ||||
| Oro Valley Municipal Property Excise | ||||||
| Tax 5.00% 7/1/20-11 (FGIC) | 1,000,000 | 1,063,410 | ||||
| Phoenix Civic Improvement Excise Tax | ||||||
| (Senior Lien Municipal Courthouse | ||||||
| Project) Series A 5.25% 7/1/24-09 | 1,000,000 | 1,029,660 | ||||
| Puerto Rico Commonwealth Public | ||||||
| Improvement Revenue Series A | ||||||
| 5.125% 7/1/31-11 | 250,000 | 264,775 | ||||
| Puerto Rico Highway & | ||||||
| Transportation Authority Series D | ||||||
| 5.00% 7/1/32-12 (FSA) | 3,475,000 | 3,712,759 | ||||
| Scottsdale Industrial Development | ||||||
| Authority Hospital Revenue | ||||||
| (Scottsdale Healthcare) | ||||||
| 5.80% 12/1/31-11 | 1,000,000 | 1,089,680 | ||||
| Southern Arizona Capital Facilities | ||||||
| Finance (University of Arizona | ||||||
| Project) 5.00% 9/1/23-12 (MBIA) | 1,150,000 | 1,225,440 | ||||
| University of Arizona Certificates | ||||||
| of Participation (University | ||||||
| of Arizona Project) Series B | ||||||
| 5.125% 6/1/22-12 (AMBAC) | 500,000 | 532,965 | ||||
| Virgin Islands Public Finance | ||||||
| Authority Revenue (Gross | ||||||
| Receipts Tax Loan Note) Series A | ||||||
| 6.125% 10/1/29-10 (ACA) | 1,250,000 | 1,340,575 | ||||
| 15,598,609 | ||||||
| Special Tax Revenue Bonds – 19.96% | ||||||
| Arizona State Transportation Board | ||||||
| Excise Tax Revenue (Maricopa | ||||||
| County Regional Area Road | ||||||
| Foundation) 5.00% 7/1/19 | 750,000 | 761,100 | ||||
| Arizona Tourism & Sports Authority | ||||||
| (Multipurpose Stadium Facilities) | ||||||
| Series A 5.00% 7/1/31 (MBIA) | 1,000,000 | 905,390 | ||||
| Flagstaff Aspen Place Sawmill | ||||||
| Improvement District | ||||||
| 5.00% 1/1/32 | 385,000 | 350,943 | ||||
| Glendale Municipal Property Series A | ||||||
| 5.00% 7/1/33 (AMBAC) | 3,000,000 | 2,844,809 | ||||
| Marana Tangerine Farm Road | ||||||
| Improvement District Revenue | ||||||
| 4.60% 1/1/26 | 1,000,000 | 809,020 | ||||
| Peoria Municipal Development | ||||||
| Authority Sales Tax & Excise | ||||||
| Shared Revenue (Senior Lien & | ||||||
| Sub Lien) 5.00% 1/1/18 | 1,085,000 | 1,114,035 | ||||
| Queen Creek Improvement District #1 | ||||||
| 5.00% 1/1/32 | 1,000,000 | 823,350 | ||||
| 7,608,647 | ||||||
| State General Obligation Bond – 0.74% | ||||||
| Puerto Rico Commonwealth | ||||||
| Refunding Series C-7 | ||||||
| 6.00% 7/1/27 (MBIA) | 285,000 | 280,870 | ||||
| 280,870 | ||||||
| Transportation Revenue Bonds – 7.63% | ||||||
| Arizona Transportation Broad Grant | ||||||
| Anticipation Notes 5.00% 7/1/14 | 250,000 | 265,888 | ||||
| Phoenix Civic Improvement Airport | ||||||
| Revenue Series B 5.25% 7/1/27 | ||||||
| (FGIC) (AMT) | 2,000,000 | 1,713,659 | ||||
| Puerto Rico Commonwealth Highway | ||||||
| & Transportation Authority | ||||||
| Un-Refunded Balance Series D | ||||||
| 5.00% 7/1/32 (FSA) | 1,025,000 | 930,926 | ||||
| 2,910,473 | ||||||
| Water & Sewer Revenue Bonds – 7.92% | ||||||
| Phoenix Civic Improvement | ||||||
| Wastewater Systems Revenue | ||||||
| Junior Lien | ||||||
| 5.00% 7/1/19 (MBIA) | 850,000 | 860,761 | ||||
| 5.00% 7/1/24 (FGIC) | 1,590,000 | 1,539,343 | ||||
| Scottsdale Water & Sewer Revenue | ||||||
| Refunding 5.00% 7/1/19 | 600,000 | 618,084 | ||||
| 3,018,188 | ||||||
| Total Municipal Bonds | ||||||
| (cost $60,694,265) | 58,163,750 | |||||
(continues) 5
Statements of net assets
Delaware Investments Arizona Municipal Income Fund, Inc.
| Total Value of Securities – 152.58% | |||
| (cost $60,694,265) | $ | 58,163,750 | |
| Receivables and Other Assets | |||
| Net of Liabilities – 13.00%z | 4,955,852 | ||
| Liquidation Value of Preferred Stock – (65.58%) | (25,000,000 | ) | |
| Net Assets Applicable to 2,982,200 | |||
| Shares Outstanding – 100.00% | $ | 38,119,602 | |
| Net Asset Value Per Common Share | |||
| ($38,119,602 / 2,982,200 Shares) | $ | 12.78 | |
| Components of Net Assets at September 30, 2008: | |||
| Common stock, $0.01 par value, 200 million shares | |||
| authorized to the Fund | $ | 40,780,234 | |
| Distributions in excess of net investment income | (3,697 | ) | |
| Accumulated net realized loss on investments | (126,420 | ) | |
| Net unrealized depreciation of investments | (2,530,515 | ) | |
| Total net assets | $ | 38,119,602 | |
| Φ | Step coupon bond. Coupon increases periodically based on a predetermined schedule. Stated rate in effect at September 30, 2008. |
| § | Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
| z | Of this amount, $4,127,684 represents receivables for securities sold as of September 30, 2008. |
Summary of
Abbreviations:
ACA — Insured by American
Capital Access
AMBAC — Insured by the AMBAC
Assurance Corporation
AMT — Subject to Alternative Minimum
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
6
Delaware Investments Colorado Municipal Income Fund, Inc.
September 30, 2008 (Unaudited)
| Principal | ||||||
| Amount | Value | |||||
| Municipal Bonds – 146.06% | ||||||
| Education Revenue Bonds – 24.21% | ||||||
| Boulder County Development | ||||||
| Revenue (University Corporation | ||||||
| for Atmospheric Research) | ||||||
| 5.00% 9/1/26 (MBIA) | $ | 4,500,000 | $ | 4,299,749 | ||
| Colorado Educational & Cultural | ||||||
| Facilities Authority Revenue | ||||||
| (Bromley Charter School Project) | ||||||
| Refunding 5.25% 9/15/32 (XLCA) | 1,000,000 | 917,160 | ||||
| (Campus Village Apartments) | ||||||
| 5.00% 6/1/23 | 1,065,000 | 964,879 | ||||
| (Johnson & Wales University Project) | ||||||
| Series A 5.00% 4/1/28 (XLCA) | 3,000,000 | 2,583,690 | ||||
| (Littleton Charter School Project) | ||||||
| Refunding 4.375% 1/15/36 (CIFG) | 1,200,000 | 929,412 | ||||
| (University of Northern Colorado) | ||||||
| Series A 5.00% 7/1/31 (MBIA) | 2,500,000 | 2,275,275 | ||||
| Colorado State Board of Governors | ||||||
| (Colorado University) Series B | ||||||
| 5.00% 3/1/35 (AMBAC) | 1,800,000 | 1,638,054 | ||||
| University of Northern Colorado | ||||||
| Revenue Refunding | ||||||
| 5.00% 6/1/35 (FSA) | 2,000,000 | 1,852,920 | ||||
| 15,461,139 | ||||||
| Electric Revenue Bond – 1.29% | ||||||
| Arkansas River Power Authority | ||||||
| Revenue Improvement | ||||||
| 5.25% 10/1/32 (XLCA) | 1,000,000 | 824,990 | ||||
| 824,990 | ||||||
| Health Care Revenue Bonds – 6.78% | ||||||
| Colorado Health Facilities | ||||||
| Authority Revenue | ||||||
| (Evangelical Lutheran) 5.25% 6/1/23 | 1,000,000 | 899,450 | ||||
| (North Colorado Medical Center) | ||||||
| Refunding 5.95% 5/15/12 (MBIA) | 880,000 | 894,529 | ||||
| (Porter Place) Series A | ||||||
| 6.00% 1/20/36 (GNMA) | 2,515,000 | 2,536,428 | ||||
| 4,330,407 | ||||||
| Housing Revenue Bonds – 1.93% | ||||||
| Puerto Rico Housing Finance | ||||||
| Authority Sub-Cap | ||||||
| Foundation Modernization | ||||||
| 5.125% 12/1/27 | 1,000,000 | 920,260 | ||||
| 5.50% 12/1/18 | 300,000 | 312,429 | ||||
| 1,232,689 | ||||||
| Lease Revenue Bonds – 5.72% | ||||||
| Glendale Certificates of Participation | ||||||
| 5.00% 12/1/25 (XLCA) | 1,500,000 | 1,392,060 | ||||
| Puerto Rico Public Buildings | ||||||
| Authority Revenue (Guaranteed | ||||||
| Government Facilities) Series M-2 | ||||||
| 5.50% 7/1/35 (AMBAC) | 700,000 | 699,937 | ||||
| Westminster Building Authority | ||||||
| Certificates of Participation | ||||||
| 5.25% 12/1/22 (MBIA) | 1,555,000 | 1,559,385 | ||||
| 3,651,382 | ||||||
| Local General Obligation Bonds – 13.26% | ||||||
| Adams & Arapahoe Counties Joint | ||||||
| School District #28J (Aurora) | ||||||
| 5.25% 12/1/25 (MBIA) | 2,000,000 | 1,959,960 | ||||
| Adams County School District #14 | ||||||
| 5.125% 12/1/31 (FSA) | 500,000 | 478,090 | ||||
| Arapahoe County Water & | ||||||
| Wastewater Public Improvement | ||||||
| District Refunding Series A | ||||||
| 5.125% 12/1/32 (MBIA) | 1,000,000 | 952,680 | ||||
| Bowles Metropolitan District | ||||||
| Refunding 5.00% 12/1/33 (FSA) | 2,000,000 | 1,867,020 | ||||
| Centennial Downs Metropolitan | ||||||
| District Refunding | ||||||
| 5.00% 12/1/28 (AMBAC) | 215,000 | 201,236 | ||||
| Green Valley Ranch Metropolitan | ||||||
| District Refunding | ||||||
| 5.75% 12/1/19 (AMBAC) | 1,000,000 | 1,024,340 | ||||
| Larimer County School District # R1 | ||||||
| Poudre Refunding | ||||||
| 5.00% 12/15/16 | 500,000 | 524,420 | ||||
| Sand Creek Metropolitan District | ||||||
| Refunding & Improvement | ||||||
| 5.00% 12/1/31 (XLCA) | 500,000 | 422,370 | ||||
| Weld County School District #Re-4 | ||||||
| 5.00% 12/1/18 (FSA) | 1,000,000 | 1,042,130 | ||||
| 8,472,246 | ||||||
| §Pre-Refunded Bonds – 63.58% | ||||||
| Auraria Higher Education Center | ||||||
| Parking Facilities System | ||||||
| 5.50% 4/1/26-10 (AMBAC) | 2,485,000 | 2,595,980 | ||||
| Aurora Certificates of Participation | ||||||
| 5.50% 12/1/30-10 (AMBAC) | 2,000,000 | 2,119,360 | ||||
| Burlingame Multifamily | ||||||
| Housing Revenue Series A | ||||||
| 6.00% 11/1/29-09 (MBIA) | 2,290,000 | 2,402,439 | ||||
| Colorado Educational & Cultural | ||||||
| Facilities Authority | ||||||
| (University of Colorado | ||||||
| Foundation Project) | ||||||
| 5.00% 7/1/27-12 (AMBAC) | 4,000,000 | 4,248,880 | ||||
| (University of Denver Project) | ||||||
| Refunding & Improvement | ||||||
| 5.50% 3/1/21-11 (AMBAC) | 3,200,000 | 3,395,136 | ||||
| Series B 5.25% 3/1/35-16 (FGIC) | 1,500,000 | 1,625,805 | ||||
| Colorado Water Resources & Power | ||||||
| Development Authority Revenue | ||||||
| Series A 5.80% 11/1/20-10 (FGIC) | 1,220,000 | 1,298,690 | ||||
| Denver City & County Excise | ||||||
| Tax Revenue (Colorado | ||||||
| Convention Center Project) | ||||||
| 5.00% 9/1/20-11 (FSA) | 3,500,000 | 3,672,795 | ||||
| Denver Convention Center | ||||||
| Hotel Authority Series A | ||||||
| 5.00% 12/1/33-13 (XLCA) | 3,000,000 | 3,158,010 | ||||
(continues) 7
Statements of net assets
Delaware Investments Colorado Municipal Income Fund, Inc.
| Principal | |||||||
| Amount | Value | ||||||
| Municipal Bonds (continued) | |||||||
| §Pre-Refunded Bonds (continued) | |||||||
| E-470 Public Highway Authority | |||||||
| Series A | |||||||
| 5.75% 9/1/29-10 (MBIA) | $ | 3,000,000 | $ | 3,219,960 | |||
| 5.75% 9/1/35-10 (MBIA) | 1,700,000 | 1,824,644 | |||||
| Eagle County Certificates of Participation | |||||||
| 5.40% 12/1/18-09 (MBIA) | 1,000,000 | 1,045,360 | |||||
| Garfield Pitkin & Eagle County | |||||||
| School District #Re-1 (Roaring | |||||||
| Fork County) Series A | |||||||
| 5.00% 12/15/27-14 (FSA) | 1,500,000 | 1,614,705 | |||||
| Northwest Parkway Public | |||||||
| Highway Authority Series A | |||||||
| 5.25% 6/15/41-11 (FSA) | 4,150,000 | 4,424,481 | |||||
| Pueblo County (Library District Project) | |||||||
| 5.80% 11/1/19-09 (AMBAC) | 1,395,000 | 1,447,368 | |||||
| Puerto Rico Commonwealth | |||||||
| Highway & Transportation | |||||||
| Authority Revenue Series K | |||||||
| 5.00% 7/1/40-15 | 500,000 | 536,180 | |||||
| Puerto Rico Electric Power | |||||||
| Authority Revenue Series RR | |||||||
| 5.00% 7/1/35-15 (FGIC) | 1,000,000 | 1,079,170 | |||||
| Weld & Adams Counties | |||||||
| School District #Re-3J | |||||||
| 5.00% 12/15/24-14 (FSA) | 830,000 | 893,470 | |||||
| 40,602,433 | |||||||
| Special Tax Revenue Bonds – 13.48% | |||||||
| Broomfield Sales & Use Tax Revenue | |||||||
| Refunding & Improvement | |||||||
| Series A 5.00% 12/1/31 (AMBAC) | 650,000 | 591,058 | |||||
| Denver Convention Center Hotel | |||||||
| Authority Revenue Refunding | |||||||
| 5.00% 12/1/35 (XLCA) | 1,690,000 | 1,301,537 | |||||
| Golden Sales & Use Tax Revenue | |||||||
| Improvement Series B | |||||||
| 5.10% 12/1/20 (AMBAC) | 1,000,000 | 1,001,960 | |||||
| Gypsum Sales Tax & General | |||||||
| Funding Revenue 5.25% 6/1/30 | |||||||
| (Assured Gty) | 1,000,000 | 992,250 | |||||
| Regional Transportation District | |||||||
| Colorado Sales Tax Revenue | |||||||
| (Fastracks Project) Series A | |||||||
| 4.375% 11/1/31 (AMBAC) | 1,250,000 | 1,043,688 | |||||
| 4.50% 11/1/36 (FSA) | 3,000,000 | 2,526,210 | |||||
| Westminster Supply Purpose Sales | |||||||
| & Use Tax Revenue Post Project | |||||||
| Series D 5.00% 12/1/22 (FSA) | 1,180,000 | 1,152,069 | |||||
| 8,608,772 | |||||||
| State General Obligation Bond – 3.50% | |||||||
| Puerto Rico Commonwealth | |||||||
| Refunding (Public Improvement) | |||||||
| Series A 5.50% 7/1/19 (MBIA) | 2,250,000 | 2,233,575 | |||||
| 2,233,575 | |||||||
| Transportation Revenue Bond – 1.43% | |||||||
| Denver City & County | |||||||
| Airport Revenue Series A | |||||||
| 5.00% 11/15/25 (FGIC) | 1,000,000 | 912,800 | |||||
| 912,800 | |||||||
| Water & Sewer Revenue Bonds – 10.88% | |||||||
| Aurora Water Improvement Revenue | |||||||
| First Lien Series A | |||||||
| 5.00% 8/1/32 (AMBAC) | 750,000 | 703,305 | |||||
| Colorado Water Resources & Power | |||||||
| Development Authority Revenue | |||||||
| Un-Refunded Balance Series A | |||||||
| 5.80% 11/1/20 (FGIC) | 780,000 | 781,225 | |||||
| Colorado Water Resources & Power | |||||||
| Development Authority Water | |||||||
| Resources Revenue (Parker Water | |||||||
| & Sanitation District) Series D | |||||||
| 5.125% 9/1/34 (MBIA) | 1,500,000 | 1,387,680 | |||||
| 5.25% 9/1/43 (MBIA) | 2,000,000 | 1,864,480 | |||||
| Ute Water Conservancy District | |||||||
| Revenue 5.75% 6/15/20 (MBIA) | 2,155,000 | 2,209,974 | |||||
| 6,946,664 | |||||||
| Total Municipal Bonds | |||||||
| (cost $95,523,910) | 93,277,097 | ||||||
| ·Short-Term Investments – 1.94% | |||||||
| Variable Rate Demand Notes – 1.94% | |||||||
| Colorado Educational & Cultural | |||||||
| Facilities Authority Revenue | |||||||
| (National Jewish Federation) | |||||||
| Series D3 4.25% 12/1/37 | |||||||
| (LOC – JP Morgan Chase Bank) | 700,000 | 700,000 | |||||
| Series D6 4.25% 9/1/38 | |||||||
| (LOC – JP Morgan Chase Bank) | 300,000 | 300,000 | |||||
| Colorado Health Facilities Authority | |||||||
| Revenue (Sisters Charity Health | |||||||
| Systems) Series B 7.95% 12/1/38 | |||||||
| (SPA - JP Morgan Chase Bank) | 240,000 | 240,000 | |||||
| Total Short-Term Investments | |||||||
| (cost $1,240,000) | 1,240,000 | ||||||
| Total Value of Securities – 148.00% | |||||||
| (cost $96,763,910) | 94,517,097 | ||||||
| Receivables and Other Assets | |||||||
| Net of Liabilities – 14.63%z | 9,347,412 | ||||||
| Liquidation Value of Preferred Stock – (62.63%) | (40,000,000 | ) | |||||
| Net Assets Applicable to 4,837,100 | |||||||
| Shares Outstanding – 100.00% | $ | 63,864,509 | |||||
| Net Asset Value Per Common Share | |||||||
| ($63,864,509 / 4,837,100 Shares) | $13.20 | ||||||
8
| Components of Net Assets at September 30, 2008: | |||
| Common stock, $0.01 par value, 200 million shares | |||
| authorized to the Fund | $ | 67,202,571 | |
| Distribution in excess of net investment income | (152,248 | ) | |
| Accumulated net realized loss on investments | (939,001 | ) | |
| Net unrealized depreciation of investments | (2,246,813 | ) | |
| Total net assets | $ | 63,864,509 | |
| § | Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
| · | Variable rate security. The rate shown is the rate as of September 30, 2008. |
| z | Of this amount, $5,907,627 represents receivables for securities sold as of September 30, 2008. |
Summary of
Abbreviations:
AMBAC — Insured by the
AMBAC Assurance Corporation
Assured Gty — Insured by the Assured Guaranty
Corporation
CIFG — CDC IXIS Financial Guaranty
FGIC — Insured by the
Financial Guaranty Insurance Company
FSA — Insured by Financial Security
Assurance
GNMA — Insured by Government National Mortgage Association
LOC
— Letter of Credit
MBIA — Insured by the Municipal Bond Insurance
Association
SPA — Stand by Purchase Agreement
XLCA — Insured by XL
Capital Assurance
See accompanying notes
(continues) 9
Statements of net assets
Delaware Investments Minnesota Municipal Income Fund II, Inc.
September 30, 2008 (Unaudited)
| Principal | |||||||
| Amount | Value | ||||||
| Municipal Bonds – 144.72% | |||||||
| Corporate-Backed Revenue Bonds – 6.33% | |||||||
| Anoka County Solid Waste | |||||||
| Disposal (National Rural Utility) | |||||||
| Series A 6.95% 12/1/08 (AMT) | $ | 155,000 | $ | 155,646 | |||
| Cloquet Pollution Control Revenue | |||||||
| Refunding (Potlatch Project) | |||||||
| 5.90% 10/1/26 | 5,500,000 | 4,850,341 | |||||
| Laurentian Energy Authority I | |||||||
| Cogeneration Revenue Series A | |||||||
| 5.00% 12/1/21 | 3,325,000 | 2,893,182 | |||||
| Minneapolis Community Development | |||||||
| Agency Supported (Limited Tax | |||||||
| Common Bond Fund) | |||||||
| Series A 6.75% 12/1/25 (AMT) | 865,000 | 868,806 | |||||
| Sartell Environmental Improvement | |||||||
| Revenue Refunding | |||||||
| (International Paper) Series A | |||||||
| 5.20% 6/1/27 | 1,000,000 | 788,340 | |||||
| 9,556,315 | |||||||
| Education Revenue Bonds – 5.52% | |||||||
| Minnesota State Higher Education | |||||||
| Facilities Authority Revenue | |||||||
| (Augsburg College) Series 6-J1 | |||||||
| 5.00% 5/1/28 | 1,500,000 | 1,276,245 | |||||
| (College of St. Benedict) Series 5-W | |||||||
| 5.00% 3/1/20 | 2,000,000 | 1,878,460 | |||||
| 5.25% 3/1/24 | 300,000 | 275,574 | |||||
| (St. Catherine College) Series 5-N1 | |||||||
| 5.375% 10/1/32 | 1,500,000 | 1,319,370 | |||||
| (St. Mary‘s University) Series 5-U | |||||||
| 4.80% 10/1/23 | 1,400,000 | 1,230,040 | |||||
| (St. Thomas University) Series 5-Y | |||||||
| 5.00% 10/1/24 | 1,000,000 | 936,120 | |||||
| St. Cloud Housing & | |||||||
| Redevelopment Authority | |||||||
| Revenue (State University | |||||||
| Foundation Project) | |||||||
| 5.00% 5/1/23 | 1,000,000 | 972,710 | |||||
| University of the Virgin Islands Series A | |||||||
| 5.375% 6/1/34 | 500,000 | 434,640 | |||||
| 8,323,159 | |||||||
| Electric Revenue Bonds – 20.98% | |||||||
| Chaska Electric Revenue Refunding | |||||||
| (Generating Facilities) Series A | |||||||
| 5.25% 10/1/25 | 250,000 | 241,015 | |||||
| Minnesota State Municipal Power | |||||||
| Agency Electric Revenue Series A | |||||||
| 5.00% 10/1/34 | 4,500,000 | 3,997,620 | |||||
| 5.25% 10/1/19 | 1,610,000 | 1,612,045 | |||||
| Southern Minnesota Municipal | |||||||
| Power Agency Supply System | |||||||
| Revenue Series A | |||||||
| 5.25% 1/1/14 (AMBAC) | 14,000,000 | 14,841,260 | |||||
| 5.25% 1/1/15 (AMBAC) | 3,000,000 | 3,185,010 | |||||
| 5.25% 1/1/16 (AMBAC) | 1,500,000 | 1,588,845 | |||||
| Western Minnesota Municipal | |||||||
| Power Agency Supply Revenue | |||||||
| Series A 5.00% 1/1/30 (MBIA) | 6,790,000 | 6,208,097 | |||||
| 31,673,892 | |||||||
| Escrowed to Maturity Bonds – 17.90% | |||||||
| Dakota-Washington Counties | |||||||
| Housing & Redevelopment | |||||||
| Authority Revenue | |||||||
| (Bloomington Single Family | |||||||
| Residential Mortgage) | |||||||
| 8.375% 9/1/21 (GNMA) | |||||||
| (FHA) (VA) (AMT) | 8,055,000 | 10,222,762 | |||||
| Southern Minnesota Municipal | |||||||
| Power Agency Supply System | |||||||
| Revenue Series B | |||||||
| 5.75% 1/1/11 (FGIC) | 770,000 | 790,282 | |||||
| Refunding 5.50% 1/1/15 (AMBAC) | 390,000 | 405,085 | |||||
| St. Paul Housing & Redevelopment | |||||||
| Authority Sales Tax | |||||||
| (Civic Center Project) | |||||||
| 5.55% 11/1/23 | 2,300,000 | 2,365,412 | |||||
| 5.55% 11/1/23 (MBIA) | 4,200,000 | 4,319,448 | |||||
| University of Minnesota Hospital & | |||||||
| Clinics 6.75% 12/1/16 | 2,580,000 | 2,938,362 | |||||
| University of Minnesota Series A | |||||||
| 5.50% 7/1/21 | 4,000,000 | 4,262,080 | |||||
| Western Minnesota Municipal | |||||||
| Power Agency Supply Revenue | |||||||
| Series A 6.625% 1/1/16 | 1,535,000 | 1,721,303 | |||||
| 27,024,734 | |||||||
| Health Care Revenue Bonds – 14.25% | |||||||
| Bemidji Health Care Facilities First | |||||||
| Mortgage Revenue (North | |||||||
| Country Health Services) | |||||||
| 5.00% 9/1/24 (RADIAN) | 1,500,000 | 1,353,180 | |||||
| Glencoe Health Care Facilities | |||||||
| Revenue (Glencoe Regional | |||||||
| Health Services Project) | |||||||
| 5.00% 4/1/25 | 2,000,000 | 1,706,280 | |||||
| Maple Grove Health Care | |||||||
| Facilities Revenue | |||||||
| (Maple Grove Hospital) | |||||||
| 5.25% 5/1/37 | 1,750,000 | 1,501,605 | |||||
| (North Memorial Health Care) | |||||||
| 5.00% 9/1/29 | 1,515,000 | 1,324,307 | |||||
10
| Principal | |||||||
| Amount | Value | ||||||
| Municipal Bonds (continued) | |||||||
| Health Care Revenue Bonds (continued) | |||||||
| Minneapolis Health Care | |||||||
| System Revenue (Fairview | |||||||
| Health Services) Series D | |||||||
| 5.00% 11/15/34 (AMBAC) | $ | 3,250,000 | $ | 2,796,982 | |||
| Minnesota Agricultural & Economic | |||||||
| Development Board Revenue | |||||||
| Un-Refunded Balance (Fairview | |||||||
| Health Care System) Series A | |||||||
| 5.75% 11/15/26 (MBIA) | 100,000 | 100,273 | |||||
| 6.375% 11/15/29 | 195,000 | 197,369 | |||||
| North Oaks Senior Housing | |||||||
| Revenue (Presbyterian Homes) | |||||||
| 6.25% 10/1/47 | 1,500,000 | 1,353,915 | |||||
| Northfield Hospital Revenue | |||||||
| 5.375% 11/1/31 | 750,000 | 633,255 | |||||
| Shakopee Health Care Facilities | |||||||
| Revenue (St. Francis Regional | |||||||
| Medical Center) 5.25% 9/1/34 | 1,560,000 | 1,301,789 | |||||
| St. Louis Park Health Care | |||||||
| Facilities Revenue Refunding | |||||||
| (Park Nicollet Health Services) | |||||||
| Series C 5.50% 7/1/23 | 1,000,000 | 942,070 | |||||
| St. Paul Housing & Redevelopment | |||||||
| Authority Health Care Facilities | |||||||
| Revenue (Allina Health System) | |||||||
| Series A 5.00% 11/15/18 (MBIA) | 2,380,000 | 2,362,697 | |||||
| (Health Partners Obligation | |||||||
| Group Project) 5.25% 5/15/36 | 2,000,000 | 1,645,720 | |||||
| (Regions Hospital Project) | |||||||
| 5.30% 5/15/28 | 1,000,000 | 872,920 | |||||
| St. Paul Housing & Redevelopment | |||||||
| Authority Revenue (Franciscan | |||||||
| Health Project-Elderly) | |||||||
| 5.40% 11/20/42 (GNMA) (FHA) | 2,700,000 | 2,528,658 | |||||
| Winona Health Care Facilities | |||||||
| Revenue Refunding (Winona | |||||||
| Health Obligation Group) | |||||||
| 5.00% 7/1/23 | 1,010,000 | 890,265 | |||||
| 21,511,285 | |||||||
| Housing Revenue Bonds – 9.36% | |||||||
| Chanhassen Multifamily Housing | |||||||
| Revenue Refunding (Heritage | |||||||
| Park Apartments Project) | |||||||
| 6.20% 7/1/30 (FHA) (AMT) | |||||||
| (HUD Section 8) | 1,105,000 | 1,081,132 | |||||
| Dakota County Housing & | |||||||
| Redevelopment Authority | |||||||
| Single Family Mortgage | |||||||
| Revenue 5.85% 10/1/30 | |||||||
| (GNMA) (FNMA) (AMT) | 11,000 | 10,333 | |||||
| @ | Harmony Multifamily Housing | ||||||
| Revenue Refunding (Zedakah | |||||||
| Foundation Project) Series A | |||||||
| 5.95% 9/1/20 (HUD Section 8) | 1,000,000 | 877,750 | |||||
| Minneapolis Multifamily | |||||||
| Housing Revenue | |||||||
| ·(Gaar Scott Loft Project) | |||||||
| 5.95% 5/1/30 (AMT) | |||||||
| (LOC - U.S Bank N.A.) | 930,000 | 933,971 | |||||
| (Olson Townhomes Project) | |||||||
| 6.00% 12/1/19 (AMT) | 845,000 | 845,025 | |||||
| (Seward Towers Project) | |||||||
| 5.00% 5/20/36 (GNMA) | 2,000,000 | 1,798,520 | |||||
| (Sumner Housing Project) | |||||||
| Series A 5.15% 2/20/45 | |||||||
| (GNMA) (AMT) | 3,575,000 | 2,917,271 | |||||
| · | Minnesota Housing Finance | ||||||
| Agency Residential Housing | |||||||
| Series D 4.75% 7/1/32 (AMT) | 1,000,000 | 788,580 | |||||
| Minnesota State Housing Finance | |||||||
| Agency Revenue | |||||||
| (Rental Housing) | |||||||
| Series A 5.00% 2/1/35 (AMT) | 1,000,000 | 811,950 | |||||
| Series D 5.95% 2/1/18 (MBIA) | 130,000 | 130,277 | |||||
| (Residential Housing) | |||||||
| Series B-1 5.35% 1/1/33 (AMT) | 1,770,000 | 1,548,325 | |||||
| Series I 5.15% 7/1/38 (AMT) | 1,000,000 | 839,180 | |||||
| (Single Family Mortgage) | |||||||
| Series J 5.90% 7/1/28 (AMT) | 935,000 | 887,100 | |||||
| Washington County Housing & | |||||||
| Redevelopment Authority | |||||||
| Revenue Refunding (Woodland | |||||||
| Park Apartments Project) | |||||||
| 4.70% 10/1/32 | 750,000 | 664,733 | |||||
| 14,134,147 | |||||||
| Lease Revenue Bonds – 9.56% | |||||||
| Andover Economic Development | |||||||
| Authority Public Facilities | |||||||
| Lease Revenue (Andover | |||||||
| Community Center) | |||||||
| 5.125% 2/1/24 | 202,294 | 215,268 | |||||
| 5.20% 2/1/29 | 402,370 | 432,804 | |||||
| Puerto Rico Public Buildings | |||||||
| Authority Revenue Un-Refunded | |||||||
| Balance (Guaranteed | |||||||
| Government Facilities Bonds) | |||||||
| Series D 5.25% 7/1/27 | 530,000 | 480,026 | |||||
| St. Paul Port Authority | |||||||
| Lease Revenue | |||||||
| (Cedar Street Office | |||||||
| Building Project) | |||||||
| 5.00% 12/1/22 | 2,385,000 | 2,330,884 | |||||
| 5.25% 12/1/27 | 4,800,000 | 4,697,472 | |||||
| (Robert Street Office | |||||||
| Building Project) | |||||||
| Series 3-11 5.00% 12/1/27 | 3,045,000 | 2,910,929 | |||||
| Series 9 5.25% 12/1/27 | 2,000,000 | 1,957,280 | |||||
(continues) 11
Statements of net assets
Delaware Investments Minnesota Municipal Income Fund II, Inc.
| Principal | |||||||
| Amount | Value | ||||||
| Municipal Bonds (continued) | |||||||
| Lease Revenue Bonds (continued) | |||||||
| Virginia Housing & Redevelopment | |||||||
| Authority Health Care Facility | |||||||
| Lease Revenue | |||||||
| 5.25% 10/1/25 | $ | 680,000 | $ | 590,777 | |||
| 5.375% 10/1/30 | 965,000 | 817,944 | |||||
| 14,433,384 | |||||||
| Local General Obligation Bonds – 22.70% | |||||||
| Anoka-Hennepin Minnesota | |||||||
| Independent School District #11 | |||||||
| Refunding Series A 5.00% 2/1/17 | 1,000,000 | 1,055,360 | |||||
| Centennial Independent | |||||||
| School District #12 Series A | |||||||
| 5.00% 2/1/20 (FSA) | 800,000 | 833,752 | |||||
| Dakota County Community | |||||||
| Development Agency | |||||||
| Governmental Housing | |||||||
| Refunding (Senior Housing | |||||||
| Facilities) Series A | |||||||
| 5.00% 1/1/23 | 1,100,000 | 1,070,410 | |||||
| Duluth Independent School | |||||||
| District #709 Revenue | |||||||
| Certificates of Participation | |||||||
| Series A 4.25% 2/1/20 (FSA) | 1,000,000 | 948,680 | |||||
| Farmington Independent School | |||||||
| District #192 | |||||||
| Series A 5.00% 2/1/23 (FSA) | 2,280,000 | 2,234,149 | |||||
| Series B 5.00% 2/1/27 (FSA) | 1,500,000 | 1,457,805 | |||||
| Hennepin County Regional | |||||||
| Railroad Authority | |||||||
| 5.00% 12/1/26 | 2,000,000 | 1,953,200 | |||||
| Hennepin County Series B | |||||||
| 5.00% 12/1/18 | 2,300,000 | 2,350,968 | |||||
| Metropolitan Council Minneapolis- | |||||||
| St. Paul Metropolitan Area | |||||||
| Waste Water Treatment | |||||||
| Series C 5.00% 3/1/28 | 500,000 | 489,640 | |||||
| Minneapolis Refunding (Sports | |||||||
| Arena Project) 5.125% 10/1/20 | 750,000 | 750,915 | |||||
| Minneapolis Special School District #1 | |||||||
| 5.00% 2/1/19 (FSA) | 1,175,000 | 1,192,296 | |||||
| Moorhead Economic Development | |||||||
| Authority Tax Increment Revenue | |||||||
| Series A 5.25% 2/1/25 (MBIA) | 1,000,000 | 1,002,760 | |||||
| Moorhead Improvement Series B | |||||||
| 5.00% 2/1/33 (MBIA) | 3,250,000 | 3,066,440 | |||||
| Morris Independent School | |||||||
| District #769 5.00% 2/1/28 (MBIA) | 3,750,000 | 3,924,038 | |||||
| Mounds View Independent | |||||||
| School District #621 Series A | |||||||
| 5.00% 2/1/23 (FSA) | 2,020,000 | 1,999,497 | |||||
| Robbinsdale Independent School | |||||||
| District #281 5.00% 2/1/21 (FSA) | 500,000 | 501,030 | |||||
| St. Michael Independent School | |||||||
| District #885 | |||||||
| 5.00% 2/1/22 (FSA) | 2,000,000 | 2,084,380 | |||||
| 5.00% 2/1/24 (FSA) | 1,125,000 | 1,172,464 | |||||
| Washington County Housing & | |||||||
| Redevelopment Authority | |||||||
| Refunding Series B | |||||||
| 5.50% 2/1/22 (MBIA) | 1,705,000 | 1,707,950 | |||||
| 5.50% 2/1/32 (MBIA) | 2,140,000 | 2,082,263 | |||||
| Willmar (Rice Memorial Hospital | |||||||
| Project) 5.00% 2/1/32 (FSA) | 2,500,000 | 2,393,600 | |||||
| 34,271,597 | |||||||
| §Pre-Refunded Bonds – 22.53% | |||||||
| Andover Economic Development | |||||||
| Authority Public Facilities | |||||||
| Lease Revenue (Andover | |||||||
| Community Center) | |||||||
| 5.125% 2/1/24-14 | 291,106 | 309,777 | |||||
| 5.20% 2/1/29-14 | 579,021 | 622,816 | |||||
| Duluth Economic Development | |||||||
| Authority Health Care Facilities | |||||||
| Revenue (Benedictine Health | |||||||
| System-St. Mary‘s Hospital) | |||||||
| 5.25% 2/15/33-14 | 5,000,000 | 5,396,649 | |||||
| Metropolitan Council Minneapolis- | |||||||
| St. Paul Metropolitan Area | |||||||
| Transportation Revenue | |||||||
| Series C 5.00% 2/1/22-11 | 1,000,000 | 1,040,320 | |||||
| Minneapolis Community | |||||||
| Development Agency (Limited | |||||||
| Tax Common Bond Fund) | |||||||
| Series G-1 5.70% 12/1/19-11 | 1,100,000 | 1,170,290 | |||||
| Series G-3 5.45% 12/1/31-11 | 1,000,000 | 1,065,140 | |||||
| Minneapolis Health Care | |||||||
| System Revenue | |||||||
| (Allina Health Systems) Series A | |||||||
| 5.75% 11/15/32-12 | 3,200,000 | 3,497,984 | |||||
| (Fairview Health Services) Series A | |||||||
| 5.625% 5/15/32-12 | 2,750,000 | 2,984,190 | |||||
| Minnesota Agricultural & Economic | |||||||
| Development Board Revenue | |||||||
| (Fairview Health Care System) | |||||||
| Series A 6.375% 11/15/29-10 | 6,105,000 | 6,626,732 | |||||
| Puerto Rico Commonwealth | |||||||
| Highway & Transportation | |||||||
| Authority Revenue Series D | |||||||
| 5.25% 7/1/38-12 | 1,000,000 | 1,067,700 | |||||
| Puerto Rico Commonwealth Public | |||||||
| Improvement Revenue Series A | |||||||
| 5.00% 7/1/27-12 | 1,250,000 | 1,326,863 | |||||
| Puerto Rico Public Buildings | |||||||
| Authority Revenue (Guaranteed | |||||||
| Government Facilities) Series D | |||||||
| 5.25% 7/1/27-12 | 1,470,000 | 1,553,555 | |||||
12
| Principal | |||||||
| Amount | Value | ||||||
| Municipal Bonds (continued) | |||||||
| §Pre-Refunded Bonds (continued) | |||||||
| Rochester Electric Utility Revenue | |||||||
| 5.25% 12/1/30-10 (AMBAC) | $ | 600,000 | $ | 632,670 | |||
| Southern Minnesota Municipal | |||||||
| Power Agency Supply | |||||||
| Revenue Refunding Series A | |||||||
| 5.75% 1/1/18-13 | 3,715,000 | 3,889,642 | |||||
| St. Louis Park Health Care | |||||||
| Facilities Revenue (Park Nicollet | |||||||
| Health Services) Series B | |||||||
| 5.25% 7/1/30-14 | 1,250,000 | 1,351,850 | |||||
| Waconia Health Care Facilities | |||||||
| Revenue (Ridgeview Medical | |||||||
| Center Project) Series A | |||||||
| 6.10% 1/1/19-10 (RADIAN) | 1,405,000 | 1,467,565 | |||||
| 34,003,743 | |||||||
| Special Tax Revenue Bonds – 4.43% | |||||||
| Minneapolis Art Center Facilities | |||||||
| Revenue (Walker Art Center | |||||||
| Project) 5.125% 7/1/21 | 4,250,000 | 4,250,722 | |||||
| Minneapolis Community | |||||||
| Development Agency | |||||||
| Supported Common Bond Fund | |||||||
| Series 5 5.70% 12/1/27 | 375,000 | 372,848 | |||||
| Minneapolis Development Revenue | |||||||
| (Limited Tax Supported | |||||||
| Common Bond Fund) Series 1 | |||||||
| 5.50% 12/1/24 (AMT) | 1,000,000 | 926,090 | |||||
| Puerto Rico Commonwealth | |||||||
| Infrastructure Financing | |||||||
| Authority Special Tax Revenue | |||||||
| Series B 5.00% 7/1/46 | 800,000 | 673,448 | |||||
| Virgin Islands Public Finance | |||||||
| Authority Revenue (Senior Lien | |||||||
| Matching Fund Loan Notes) | |||||||
| Series A 5.25% 10/1/23 | 500,000 | 454,950 | |||||
| 6,678,058 | |||||||
| State General Obligation Bonds – 3.30% | |||||||
| Puerto Rico Commonwealth Public | |||||||
| Improvement Refunding Series A | |||||||
| 5.00% 7/1/16 (Assured Gty) | 750,000 | 762,473 | |||||
| 5.25% 7/1/15 | 1,100,000 | 1,113,310 | |||||
| 5.50% 7/1/17 | 1,100,000 | 1,109,405 | |||||
| Refunding 5.50% 7/1/19 (MBIA) | 1,000,000 | 992,700 | |||||
| Puerto Rico Government | |||||||
| Development Bank Senior | |||||||
| Notes Series B 5.00% 12/1/14 | 1,000,000 | 1,006,630 | |||||
| 4,984,518 | |||||||
| Transportation Revenue Bonds – 7.86% | |||||||
| Minneapolis-St. Paul Metropolitan | |||||||
| Airports Commission Revenue | |||||||
| Series A | |||||||
| 5.00% 1/1/22 (MBIA) | 3,000,000 | 2,887,200 | |||||
| 5.00% 1/1/28 (MBIA) | 2,120,000 | 1,964,053 | |||||
| 5.25% 1/1/16 (MBIA) | 1,000,000 | 1,035,320 | |||||
| Series B | |||||||
| 5.00% 1/1/35 (AMBAC) | 2,000,000 | 1,820,480 | |||||
| 5.25% 1/1/24 (FGIC) (AMT) | 1,000,000 | 885,390 | |||||
| St. Paul Housing & Redevelopment | |||||||
| Authority Parking Revenue | |||||||
| (Block 19 Ramp Project) | |||||||
| Series A 5.35% 8/1/29 (FSA) | 3,350,000 | 3,271,643 | |||||
| 11,864,086 | |||||||
| Total Municipal Bonds | |||||||
| (cost $225,454,462) | 218,458,918 | ||||||
| ·Short-Term Investment – 0.20% | |||||||
| Variable Rate Demand Note – 0.20% | |||||||
| St. Paul Housing & Redevelopment | |||||||
| Authority Revenue | |||||||
| (Pur-Cretin-Derham Hall Project) | |||||||
| 8.07% 2/1/26 | 300,000 | 300,000 | |||||
| Total Short-Term Investment | |||||||
| (cost $300,000) | 300,000 | ||||||
| Total Value of Securities – 144.92% | |||||||
| (cost $225,754,462) | 218,758,918 | ||||||
| Receivables and Other Assets | |||||||
| Net of Liabilities – 18.01%z | 27,191,459 | ||||||
| Liquidation Value of Preferred Stock – (62.93%) | (95,000,000 | ) | |||||
| Net Assets Applicable to 11,504,975 | |||||||
| Shares Outstanding – 100.00% | $ | 150,950,377 | |||||
| Net Asset Value Per Common Share | |||||||
| ($150,950,377 / 11,504,975 Shares) | $ 13.12 | ||||||
| Components of Net Assets at September 30, 2008: | |||||||
| Common stock, $0.01 par value, 200 million shares | |||||||
| authorized to the Fund | $ | 158,750,422 | |||||
| Distributions in excess of net investment income | (39,949 | ) | |||||
| Accumulated net realized loss on investments | (764,552 | ) | |||||
| Net unrealized depreciation of investments | (6,995,544 | ) | |||||
| Total net assets | $ | 150,950,377 | |||||
| § | Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
| · | Variable rate security. The rate shown is the rate as of September 30, 2008. |
| z | Of this amount, $42,418,567 represents receivables for securities sold and $18,400,524 represents payables for securities purchased as of September 30, 2008. |
| @ | Illiquid Security. At September 30, 2008 the aggregate amount of illiquid securities was $877,750, which represented 0.58% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
(continues) 13
Statements of net assets
Delaware Investments Minnesota Municipal Income Fund II, Inc.
| Summary of Abbreviations: |
| AMBAC — Insured by the AMBAC Assurance Corporation |
| AMT — Subject to Alternative Minimum Tax |
| Assured Gty — Insured by Assured Guaranty 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 |
| HUD — Housing and Urban Development |
| LOC — Letter of Credit |
| MBIA — Insured by the Municipal Bond Insurance Association |
| RADIAN — Insured by Radian Asset Assurance |
| VA — Insured by the Veterans Administration |
See accompanying notes
14
Delaware Investments National Municipal Income Fund
September 30, 2008 (Unaudited)
| Principal | ||||||
| Amount | Value | |||||
| Municipal Bonds – 151.63% | ||||||
| Corporate-Backed Revenue Bonds – 7.66% | ||||||
| · | Brazos, Texas Harbor Industrial | |||||
| Development Environmental | ||||||
| Facilities Revenue (Dow Chemical | ||||||
| Project) 5.90% 5/1/38 | $ | 250,000 | $ | 221,390 | ||
| · | Chesapeake, Virginia Economic | |||||
| Development Authority Pollution | ||||||
| Control Revenue (Virginia | ||||||
| Electric & Power Project) Series A | ||||||
| 3.60% 2/1/32 | 500,000 | 490,625 | ||||
| Iowa Finance Authority Pollution | ||||||
| Control Facilities Revenue | ||||||
| Refunding (Interstate Power) | ||||||
| 5.00% 7/1/14 (FGIC) | 500,000 | 491,875 | ||||
| Jasper County, Indiana Pollution | ||||||
| Control Revenue Refunding | ||||||
| Series B 5.60% 11/1/16 (MBIA) | 265,000 | 261,468 | ||||
| Tobacco Settlement Financing | ||||||
| Revenue, New York | ||||||
| (Asset-Backed) Series A-1 | ||||||
| 5.25% 6/1/21 (AMBAC) | 500,000 | 496,309 | ||||
| Tobacco Settlement Revenue | ||||||
| Management Authority, | ||||||
| South Carolina Refunding | ||||||
| 5.00% 6/1/18 | 295,000 | 283,153 | ||||
| 2,244,820 | ||||||
| Education Revenue Bonds – 3.45% | ||||||
| California Statewide Communities | ||||||
| Development Authority | ||||||
| Student Housing Revenue | ||||||
| (Irvine, LLC - UCI East Campus) | ||||||
| 6.00% 5/15/23 | 470,000 | 460,562 | ||||
| Marietta, Georgia Development | ||||||
| Authority Revenue Refunding | ||||||
| (Life University Income Project) | ||||||
| 7.00% 6/15/39 | 230,000 | 211,612 | ||||
| Maryland State Economic | ||||||
| Development Student Housing | ||||||
| Revenue (University of | ||||||
| Maryland College Park Projects) | ||||||
| 5.75% 6/1/33 | 370,000 | 339,046 | ||||
| 1,011,220 | ||||||
| Electric Revenue Bond – 3.22% | ||||||
| JEA Florida Electric Systems Revenue | ||||||
| Series 3-A 5.00% 10/1/34 (FSA) | 1,000,000 | 944,460 | ||||
| 944,460 | ||||||
| Health Care Revenue Bonds – 20.91% | ||||||
| Albany, New York Industrial | ||||||
| Development Agency Civic | ||||||
| Facility Revenue (St. Peter‘s | ||||||
| Hospital Project) Series A | ||||||
| 5.25% 11/15/32 | 500,000 | 425,970 | ||||
| Allegheny County, Pennsylvania | ||||||
| Hospital Development Authority | ||||||
| Revenue (University of Pittsburgh | ||||||
| Medical Center) Series A |
| |||||
| 5.00% 9/1/14 | 500,000 | 507,655 | ||||
| Arizona Health Facilities Authority | ||||||
| Revenue (Banner Health) Series A | ||||||
| 5.00% 1/1/17 | 310,000 | 306,063 | ||||
| Escambia County, Florida Health | ||||||
| Facilities Authority | ||||||
| (VHA Loan Program) | ||||||
| 5.95% 7/1/20 (AMBAC) | 355,000 | 360,392 | ||||
| Lee Memorial Health System Board | ||||||
| of Directors Florida Revenue | ||||||
| Refunding Series A | ||||||
| 5.00% 4/1/20 (FSA) | 1,000,000 | 986,670 | ||||
| · | Maryland State Health & Higher | |||||
| Education Facilities Authority | ||||||
| Revenue (Johns Hopkins Health | ||||||
| Systems) 5.00% 5/15/48 | 115,000 | 119,123 | ||||
| Massachusetts State Health & | ||||||
| Education Facilities Authority | ||||||
| Revenue (Caregroup) Refunding | ||||||
| Series E-2 5.375% 7/1/19 | 500,000 | 491,355 | ||||
| Ohio State Higher Education Facility | ||||||
| Commission Revenue (Cleveland | ||||||
| Clinic Health System Obligation | ||||||
| Group) Series A 5.25% 1/1/21 | 475,000 | 460,361 | ||||
| Orange County, Florida Health | ||||||
| Facilities Authority Revenue | ||||||
| (Orlando Regional Healthcare) | ||||||
| Series A 6.25% 10/1/18 (MBIA) | 2,000,000 | 2,142,999 | ||||
| Scottsdale, Arizona Industrial | ||||||
| Development Authority | ||||||
| Hospital Revenue Refunding | ||||||
| (Scottsdale Healthcare) | ||||||
| Series A 5.00% 9/1/23 | 360,000 | 324,821 | ||||
| 6,125,409 | ||||||
| Housing Revenue Bonds – 14.78% | ||||||
| California Housing Finance Agency | ||||||
| Revenue (Home Mortgage) | ||||||
| Series M 5.95% 8/1/25 (AMT) | 250,000 | 238,038 | ||||
| Florida Housing Finance Agency | ||||||
| (Homeowner Mortgage) Series 2 | ||||||
| 5.90% 7/1/29 (MBIA) (AMT) | 330,000 | 333,746 | ||||
| Leigh Meadows Apartments) | ||||||
| Series N 6.30% 9/1/36 (AMBAC) | ||||||
| (AMT) (HUD Section 8) | 2,510,000 | 2,439,267 | ||||
| Volusia County, Florida Multifamily | ||||||
| Housing Finance Authority | ||||||
| (San Marco Apartments) Series A | ||||||
| 5.60% 1/1/44 (FSA) (AMT) | 1,500,000 | 1,317,270 | ||||
| 4,328,321 | ||||||
| Lease Revenue Bonds – 20.02% | ||||||
| Broward County, Florida School | ||||||
| Board Certificates of Participation | ||||||
| Series A 5.25% 7/1/24 (FSA) | 1,000,000 | 955,530 | ||||
| Florida State Municipal Loan | ||||||
| Council Revenue Series A | ||||||
| 5.00% 2/1/35 (MBIA) | 2,000,000 | 1,792,620 | ||||
(continues) 15
Statements of net assets
Delaware Investments National Municipal Income Fund
| Principal | ||||||
| Amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Lease Revenue Bonds (continued) | ||||||
| New York State Dormitory Authority | ||||||
| Revenues State Supported | ||||||
| Debt (Mental Health Services | ||||||
| Facilities Improvement) Series B | ||||||
| 5.00% 2/15/19 (FSA) | $ | 550,000 | $ | 553,548 | ||
| Orange County, Florida School | ||||||
| Board Certificates of Participation | ||||||
| Series A 5.00% 8/1/27 (MBIA) | 1,250,000 | 1,160,550 | ||||
| Palm Beach County, Florida School | ||||||
| Board Certificates of Participation | ||||||
| Series D 5.00% 8/1/28 (FSA) | 1,500,000 | 1,403,130 | ||||
| 5,865,378 | ||||||
| Local General Obligation Bonds – 9.64% | ||||||
| Harris County, Texas Flood Control | ||||||
| District Refunding Series A | ||||||
| 5.25% 10/1/18 | 1,000,000 | 1,043,900 | ||||
| New York City, New York Fiscal 2009 | ||||||
| Sub-Series A-1 5.25% 8/15/21 | 250,000 | 248,783 | ||||
| Northside, Texas Independent School | ||||||
| District 5.25% 8/15/21 | ||||||
| (PSF Guaranteed) | 1,000,000 | 1,015,960 | ||||
| Waco, Texas Independent | ||||||
| School District Refunding | ||||||
| 5.25% 8/15/19 (PSF Guaranteed) | 500,000 | 514,730 | ||||
| 2,823,373 | ||||||
| §Pre-Refunded Bonds – 9.05% | ||||||
| Florida State Board of Education | ||||||
| (Capital Outlay Public Education) | ||||||
| Series C 6.00% 6/1/21-10 (FGIC) | 1,000,000 | 1,066,110 | ||||
| Puerto Rico Commonwealth | ||||||
| Highway & Transportation | ||||||
| Authority Revenue Series K | ||||||
| 5.00% 7/1/40-15 | 500,000 | 536,180 | ||||
| Tampa, Florida Utility Tax | ||||||
| Improvement Series A | ||||||
| 6.125% 10/1/19-09 (AMBAC) | 1,000,000 | 1,047,530 | ||||
| 2,649,820 | ||||||
| Special Tax Revenue Bonds – 26.52% | ||||||
| Florida State Department of | ||||||
| Transportation (Right of Way) | ||||||
| 5.00% 7/1/31 (FGIC) | 1,525,000 | 1,451,266 | ||||
| Jacksonville, Florida Sales Tax | ||||||
| Revenue (Better Jacksonville) | ||||||
| 5.00% 10/1/30 (MBIA) | 1,500,000 | 1,434,450 | ||||
| Jacksonville, Florida Transportation | ||||||
| Revenue 5.25% 10/1/29 (MBIA) | 2,000,000 | 1,979,919 | ||||
| W | Miami-Dade County, Florida | |||||
| Special Obligation (Capital | ||||||
| Appreciation & Income) Series B | ||||||
| 5.00% 10/1/35 (MBIA) | 2,000,000 | 1,563,080 | ||||
| New York State Toll Way Authority | ||||||
| (State Personal Income Tax | ||||||
| Revenue - Transportation) | ||||||
| Series A 5.00% 3/15/22 | 425,000 | 419,178 | ||||
| Seminole County, Florida Sales | ||||||
| Tax Revenue Series A | ||||||
| 5.00% 10/1/31 (MBIA) | 1,000,000 | 920,510 | ||||
| 7,768,403 | ||||||
| State General Obligation Bonds – 5.10% | ||||||
| Puerto Rico Commonwealth | ||||||
| Refunding (Public Improvement) | ||||||
| Series A | ||||||
| 5.00% 7/1/16 (Assured Gty) | 250,000 | 254,158 | ||||
| 5.50% 7/1/19 (MBIA) | 1,250,000 | 1,240,875 | ||||
| 1,495,033 | ||||||
| Transportation Revenue Bonds – 13.09% | ||||||
| Florida Ports Financing Commission | ||||||
| Revenue (State Transportation | ||||||
| Trust Fund) 5.375% 6/1/27 | ||||||
| (MBIA) (AMT) | 1,000,000 | 874,860 | ||||
| Miami-Dade County, Florida | ||||||
| Aviation Revenue (Miami | ||||||
| International Airport) Series B | ||||||
| 5.00% 10/1/37 (FGIC) | 1,960,000 | 1,721,291 | ||||
| North Texas Tollway Authority | ||||||
| Revenue (First Tier) Refunding | ||||||
| Series A 6.00% 1/1/19 | 500,000 | 523,055 | ||||
| Triborough, New York Bridge & | ||||||
| Tunnel Authority | ||||||
| Series A 5.00% 11/15/17 | 335,000 | 349,931 | ||||
| ·Series B-3 5.00% 11/15/38 | 350,000 | 365,166 | ||||
| 3,834,303 | ||||||
| Water & Sewer Revenue Bonds – 18.19% | ||||||
| Arizona Water Quality Infrastructure | ||||||
| Finance Authority Series A | ||||||
| 5.00% 10/1/19 | 500,000 | 517,920 | ||||
| California State Department Water | ||||||
| Resources (Central Valley Project) | ||||||
| Series AE 5.00% 12/1/20 | 450,000 | 460,085 | ||||
| Cape Coral, Florida Water & | ||||||
| Sewer Revenue | ||||||
| 4.75% 10/1/31 (AMBAC) | 1,000,000 | 876,760 | ||||
| JEA Florida Water & Sewer Systems | ||||||
| Revenue Sub-Second Crossover | ||||||
| Series B 5.00% 10/1/25 (MBIA) | 1,000,000 | 941,020 | ||||
| Riviera Beach, Florida Utility Special | ||||||
| District Water & Sewer Revenue | ||||||
| 5.00% 10/1/34 (FGIC) | 1,200,000 | 1,031,747 | ||||
| Village Center Community | ||||||
| Development District, Florida | ||||||
| Utility Revenue | ||||||
| 5.00% 10/1/36 (MBIA) | 670,000 | 582,103 | ||||
| Winter Haven, Florida Utility Systems | ||||||
| Revenue 5.00% 10/1/30 (MBIA) | 1,000,000 | 919,900 | ||||
| 5,329,535 | ||||||
| Total Municipal Bonds | ||||||
| (cost $47,629,193) | 44,420,075 | |||||
16
| Principal | ||||||||
| Amount | Value | |||||||
| ·Short-Term Investments – 5.29% | ||||||||
| Variable Rate Demand Notes – 5.29% | ||||||||
| Allegheny County, Pennsylvania | ||||||||
| Industrial Development Authority | ||||||||
| Revenue (Oakland Catholic High | ||||||||
| School Project) 8.25% 6/1/38 | ||||||||
| (LOC – PNC Bank N.A.) | $ | 250,000 | $ | 250,000 | ||||
| Colorado Educational & Cultural | ||||||||
| Facilities Authority (National | ||||||||
| Jewish Federation) | ||||||||
| Series D-3 4.25% 12/1/37 | ||||||||
| (LOC - JP Morgan Chase Bank) | 200,000 | 200,000 | ||||||
| Series D-6 4.25% 9/1/38 | ||||||||
| (LOC – JP Morgan Chase Bank) | 500,000 | 500,000 | ||||||
| Massachusetts State Health & | ||||||||
| Educational Facilities Authority | ||||||||
| (Harvard University) Series R | ||||||||
| 3.75% 11/1/49 | 600,000 | 600,000 | ||||||
| Total Short-Term Investments | ||||||||
| (cost $1,550,000) | 1,550,000 | |||||||
| Total Value of Securities – 156.92% | ||||||||
| (cost $49,179,193) | 45,970,075 | |||||||
| Receivables and Other Assets | ||||||||
| Net of Liabilities – 11.35%z | 3,324,366 | |||||||
| Liquidation Value of Preferred Stock – (68.27%) | (20,000,000 | ) | ||||||
| Net Assets Applicable to 2,422,200 | ||||||||
| Shares Outstanding – 100.00% | $ | 29,294,441 | ||||||
| Net Asset Value Per Common Share | ||||||||
| ($29,294,441 / 2,422,200 Shares) | $12.09 | |||||||
| Components of Net Assets at September 30, 2008: | ||||||||
| Common stock, $0.01 par value, unlimited shares | ||||||||
| authorized to the Fund | $ | 33,300,621 | ||||||
| Distributions in excess of net investment income | (13,608 | ) | ||||||
| Accumulated net realized loss on investments | (783,454 | ) | ||||||
| Net unrealized depreciation of investments | (3,209,118 | ) | ||||||
| Total net assets | $ | 29,294,441 | ||||||
| W | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
| § | Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
| · | Variable rate security. The rate shown is the rate as of September 30, 2008. |
| z | Of this amount, $3,006,598 represents receivables for securities sold as of September 30, 2008. |
| Summary of Abbreviations: |
| AMBAC — Insured by the AMBAC Assurance Corporation |
| AMT — Subject to Alternative Minimum Tax |
| Assured Gty — Insured by Assured Guaranty Corporation |
| FGIC — Insured by the Financial Guaranty Insurance Company |
| FSA — Insured by Financial Security Assurance |
| HUD — Housing and Urban Development |
| LOC — Letter of Credit |
| MBIA — Insured by the Municipal Bond Insurance Association |
| PSF — Permanent School Fund |
| VHA — Veterans Health Administration |
See accompanying notes
17
Statements of operations
Delaware Investments Closed-End Municipal Bond Funds
Six Months Ended September 30, 2008 (Unaudited)
| Delaware | Delaware | Delaware | Delaware | |||||||||||||
| Investments | Investments | Investments | Investments | |||||||||||||
| Arizona | Colorado | Minnesota | National | |||||||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||||||
| Income | Income | Income | Income | |||||||||||||
| Fund, Inc. | Fund, Inc. | Fund II, Inc. | Fund | |||||||||||||
| Investment Income: | ||||||||||||||||
| Interest | $ | 1,555,451 | $ | 2,575,189 | $ | 6,424,846 | $ | 1,243,783 | ||||||||
| Expenses: | ||||||||||||||||
| Management fees | 132,685 | 217,369 | 516,499 | 104,893 | ||||||||||||
| Interest and related expenses | — | — | 152,154 | — | ||||||||||||
| Remarketing agent fees | 31,772 | 51,389 | 120,729 | 25,833 | ||||||||||||
| Legal fees | 14,345 | 24,151 | 41,493 | 13,744 | ||||||||||||
| Accounting and administration expenses | 13,269 | 21,737 | 51,652 | 10,490 | ||||||||||||
| Reports and statements to shareholders | 9,782 | 13,405 | 28,034 | 6,783 | ||||||||||||
| Dividend disbursing and transfer agent fees and expenses | 8,708 | 12,938 | 35,956 | 15,026 | ||||||||||||
| Rating agency fees | 6,713 | 6,400 | 17,081 | 6,713 | ||||||||||||
| Audit and tax | 6,537 | 7,244 | 9,672 | 6,335 | ||||||||||||
| Taxes (other than taxes on income) | 3,000 | 4,763 | 2,251 | — | ||||||||||||
| Pricing fees | 2,229 | 2,614 | 5,827 | 1,609 | ||||||||||||
| Stock exchange fees | 1,371 | 2,224 | 5,698 | 1,114 | ||||||||||||
| Directors’/Trustees’ fees | 1,070 | 1,780 | 4,228 | 842 | ||||||||||||
| Insurance fees | 722 | 951 | 7,815 | 460 | ||||||||||||
| Custodian fees | 443 | 646 | 1,399 | 438 | ||||||||||||
| Registration fees | 254 | 254 | 254 | 254 | ||||||||||||
| Dues and services | 247 | 647 | 1,448 | 362 | ||||||||||||
| Consulting fees | 187 | 308 | 738 | 143 | ||||||||||||
| Directors’/Trustees’ expenses | 80 | 133 | 315 | 63 | ||||||||||||
| 233,414 | 368,953 | 1,003,243 | 195,102 | |||||||||||||
| Less expense paid indirectly | (420 | ) | (606 | ) | (1,352 | ) | (416 | ) | ||||||||
| Total operating expenses | 232,994 | 368,347 | 1,001,891 | 194,686 | ||||||||||||
| Net Investment Income | 1,322,457 | 2,206,842 | 5,422,955 | 1,049,097 | ||||||||||||
| Net Realized and Unrealized Loss on Investments: | ||||||||||||||||
| Net realized loss on investments | (115,854 | ) | (701,187 | ) | (815,802 | ) | (582,764 | ) | ||||||||
| Net change in unrealized appreciation/depreciation of investments | (3,066,599 | ) | (4,190,499 | ) | (11,537,797 | ) | (2,487,064 | ) | ||||||||
| Net Realized and Unrealized Loss on Investments | (3,182,453 | ) | (4,891,686 | ) | (12,353,599 | ) | (3,069,828 | ) | ||||||||
| Dividends on Preferred Stock | (419,715 | ) | (713,832 | ) | (1,627,191 | ) | (335,772 | ) | ||||||||
| Net Decrease in Net Assets Resulting from Operations | $ | (2,279,711 | ) | $ | (3,398,676 | ) | $ | (8,557,835 | ) | $ | (2,356,503 | ) | ||||
See accompanying notes
18
Statements of changes in net assets
Delaware Investments Closed-End Municipal Bond Funds
| Delaware Investments | Delaware Investments | |||||||||||||||
| Arizona Municipal | Colorado Municipal | |||||||||||||||
| Income Fund, Inc. | Income Fund, Inc. | |||||||||||||||
| Six Months | Year | Six Months | Year | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| 9/30/08 | 3/31/08 | 9/30/08 | 3/31/08 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Increase (Decrease) in Net Assets from Operations: | ||||||||||||||||
| Net investment income | $ | 1,322,457 | $ | 2,702,193 | $ | 2,206,842 | $ | 4,531,590 | ||||||||
| Net realized gain (loss) on investments | (115,854 | ) | (28,897 | ) | (701,187 | ) | 258,749 | |||||||||
| Net change in unrealized appreciation/depreciation of investments | (3,066,599 | ) | (2,303,717 | ) | (4,190,499 | ) | (3,201,151 | ) | ||||||||
| Dividends on preferred stock | (419,715 | ) | (999,630 | ) | (713,832 | ) | (1,516,756 | ) | ||||||||
| Net increase (decrease) in net assets resulting from operations | (2,279,711 | ) | (630,051 | ) | (3,398,676 | ) | 72,432 | |||||||||
| Dividends and Distributions to Common Shareholders from: | ||||||||||||||||
| Net investment income | (894,660 | ) | (1,819,142 | ) | (1,709,915 | ) | (3,482,712 | ) | ||||||||
| Net realized gain on investments | — | (172,967 | ) | — | (672,357 | ) | ||||||||||
| (894,660 | ) | (1,992,109 | ) | (1,709,915 | ) | (4,155,069 | ) | |||||||||
| Net Decrease in Net Assets | (3,174,371 | ) | (2,622,160 | ) | (5,108,591 | ) | (4,082,637 | ) | ||||||||
| Net Assets: | ||||||||||||||||
| Beginning of period | 41,293,973 | 43,916,133 | 68,973,100 | 73,055,737 | ||||||||||||
| End of period | $ | 38,119,602 | $ | 41,293,973 | $ | 63,864,509 | $ | 68,973,100 | ||||||||
| Undistributed (Distributions in excess of) net investment income | $ | (3,697 | ) | $ | (15,481 | ) | $ | (152,248 | ) | $ | 37,773 | |||||
| Delaware Investments | Delaware Investments | |||||||||||||||
| Minnesota Municipal | National Municipal | |||||||||||||||
| Income Fund II, Inc. | Income Fund | |||||||||||||||
| Six Months | Year | Six Months | Year | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| 9/30/08 | 3/31/08 | 9/30/08 | 3/31/08 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Increase (Decrease) in Net Assets from Operations: | ||||||||||||||||
| Net investment income | $ | 5,422,955 | $ | 11,067,616 | $ | 1,049,097 | $ | 2,225,929 | ||||||||
| Net realized gain (loss) on investments | (815,802 | ) | 95,113 | (582,764 | ) | (200,690 | ) | |||||||||
| Net change in unrealized appreciation/depreciation of investments | (11,537,797 | ) | (7,753,436 | ) | (2,487,064 | ) | (2,402,718 | ) | ||||||||
| Dividends on preferred stock | (1,627,191 | ) | (3,654,473 | ) | (335,772 | ) | (789,957 | ) | ||||||||
| Net decrease in net assets resulting from operations | (8,557,835 | ) | (245,180 | ) | (2,356,503 | ) | (1,167,436 | ) | ||||||||
| Dividends and Distributions to Common Shareholders from: | ||||||||||||||||
| Net investment income | (3,796,642 | ) | (7,593,284 | ) | (714,549 | ) | (1,616,819 | ) | ||||||||
| Net realized gain on investments | — | — | — | (106,577 | ) | |||||||||||
| (3,796,642 | ) | (7,593,284 | ) | (714,549 | ) | (1,723,396 | ) | |||||||||
| Net Decrease in Net Assets | (12,354,477 | ) | (7,838,464 | ) | (3,071,052 | ) | (2,890,832 | ) | ||||||||
| Net Assets: | ||||||||||||||||
| Beginning of period | 163,304,854 | 171,143,318 | 32,365,493 | 35,256,325 | ||||||||||||
| End of period | $ | 150,950,377 | $ | 163,304,854 | $ | 29,294,441 | $ | 32,365,493 | ||||||||
| Distributions in excess of net investment income | $ | (39,949 | ) | $ | (58,932 | ) | $ | (13,608 | ) | $ | (12,384 | ) | ||||
See accompanying notes
19
Financial highlights
Delaware Investments Arizona Municipal Income Fund, Inc.
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Six Months | ||||||||||||||||||
| Ended | Year Ended | |||||||||||||||||
| 9/30/081 | 3/31/08 | 3/31/07 | 3/31/06 | 3/31/05 | 3/31/04 | |||||||||||||
| (Unaudited) | ||||||||||||||||||
| Net asset value, beginning of period | $13.850 | $14.730 | $14.730 | $15.070 | $15.570 | $15.480 | ||||||||||||
| Income (loss) from investment operations: | ||||||||||||||||||
| Net investment income | 0.444 | 0.906 | 0.932 | 0.951 | 0.956 | 1.020 | ||||||||||||
| Net realized and unrealized gain (loss) on investments | (1.073 | ) | (0.783 | ) | 0.160 | (0.177 | ) | (0.332 | ) | 0.276 | ||||||||
| Dividends on preferred stock from: | ||||||||||||||||||
| Net investment income | (0.141 | ) | (0.312 | ) | (0.297 | ) | (0.232 | ) | (0.118 | ) | (0.075 | ) | ||||||
| Net realized gain on investments | — | (0.023 | ) | (0.013 | ) | (0.002 | ) | (0.003 | ) | (0.016 | ) | |||||||
| Total dividends on preferred stock | (0.141 | ) | (0.335 | ) | (0.310 | ) | (0.234 | ) | (0.121 | ) | (0.091 | ) | ||||||
| Total from investment operations | (0.770 | ) | (0.212 | ) | 0.782 | 0.540 | 0.503 | 1.205 | ||||||||||
| Less dividends and distributions to common shareholders from: | ||||||||||||||||||
| Net investment income | (0.300 | ) | (0.610 | ) | (0.750 | ) | (0.860 | ) | (0.960 | ) | (0.960 | ) | ||||||
| Net realized gain on investments | — | (0.058 | ) | (0.032 | ) | (0.020 | ) | (0.043 | ) | (0.155 | ) | |||||||
| Total dividends and distributions | (0.300 | ) | (0.668 | ) | (0.782 | ) | (0.880 | ) | (1.003 | ) | (1.115 | ) | ||||||
| Net asset value, end of period | $12.780 | $13.850 | $14.730 | $14.730 | $15.070 | $15.570 | ||||||||||||
| Market value, end of period | $12.050 | $12.390 | $14.790 | $15.980 | $15.390 | $16.560 | ||||||||||||
| Total investment return based on:2 | ||||||||||||||||||
| Market value | (0.37% | ) | (11.86% | ) | (2.58% | ) | 9.74% | (0.78% | ) | 14.64% | ||||||||
| Net asset value | (5.47% | ) | (1.08% | ) | 5.26% | 3.31% | 3.34% | 7.86% | ||||||||||
| Ratios and supplemental data: | ||||||||||||||||||
| Net assets applicable to common shares, end of period (000 omitted) | $38,120 | $41,294 | $43,916 | $43,923 | $44,936 | $46,429 | ||||||||||||
| Ratio of expenses to average net assets applicable to common shares3 | 1.12% | 1.07% | 1.05% | 1.03% | 1.18% | 1.05% | ||||||||||||
| Ratio of net investment income to average net assets | ||||||||||||||||||
| applicable to common shares3 | 6.38% | 6.34% | 6.34% | 6.28% | 6.34% | 6.63% | ||||||||||||
| Ratio of net investment income to average net assets | ||||||||||||||||||
| applicable to common shares net of dividends to preferred shares4 | 4.35% | 3.99% | 4.23% | 4.72% | 5.54% | 6.04% | ||||||||||||
| Portfolio turnover | 5% | 18% | 17% | 2% | 8% | 30% | ||||||||||||
| 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 | $126,239 | $132,588 | $137,832 | $137,847 | $139,872 | $142,858 | ||||||||||||
| Liquidation value per share of preferred shares5 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | ||||||||||||
|
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
|
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 divided by average net assets applicable to common shareholders. |
|
5 Excluding any accumulated but unpaid dividends. |
See accompanying notes
20
Delaware Investments Colorado Municipal Income Fund, Inc.
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Six Months | ||||||||||||||||||
| Ended | Year Ended | |||||||||||||||||
| 9/30/081 | 3/31/08 | 3/31/07 | 3/31/06 | 3/31/05 | 3/31/04 | |||||||||||||
| (Unaudited) | ||||||||||||||||||
| Net asset value, beginning of period | $14.260 | $15.100 | $15.260 | $15.580 | $16.110 | $15.920 | ||||||||||||
| Income (loss) from investment operations: | ||||||||||||||||||
| Net investment income | 0.456 | 0.937 | 0.985 | 1.018 | 1.019 | 1.043 | ||||||||||||
| Net realized and unrealized gain (loss) on investments | (1.015 | ) | (0.604 | ) | 0.069 | (0.129 | ) | (0.432 | ) | 0.324 | ||||||||
| Dividends on preferred stock from: | ||||||||||||||||||
| Net investment income | (0.148 | ) | (0.264 | ) | (0.274 | ) | (0.213 | ) | (0.124 | ) | (0.077 | ) | ||||||
| Net realized gain on investments | — | (0.050 | ) | (0.019 | ) | (0.006 | ) | (0.003 | ) | (0.013 | ) | |||||||
| Total dividends on preferred stock | (0.148 | ) | (0.314 | ) | (0.293 | ) | (0.219 | ) | (0.127 | ) | (0.090 | ) | ||||||
| Total from investment operations | (0.707 | ) | 0.019 | 0.761 | 0.670 | 0.460 | 1.277 | |||||||||||
| Less dividends and distributions to common shareholders from: | ||||||||||||||||||
| Net investment income | (0.353 | ) | (0.720 | ) | (0.850 | ) | (0.960 | ) | (0.960 | ) | (0.960 | ) | ||||||
| Net realized gain on investments | — | (0.139 | ) | (0.071 | ) | (0.030 | ) | (0.030 | ) | (0.127 | ) | |||||||
| Total dividends and distributions | (0.353 | ) | (0.859 | ) | (0.921 | ) | (0.990 | ) | (0.990 | ) | (1.087 | ) | ||||||
| Net asset value, end of period | $13.200 | $14.260 | $15.100 | $15.260 | $15.580 | $16.110 | ||||||||||||
| Market value, end of period | $12.550 | $15.060 | $15.940 | $18.650 | $17.180 | $16.960 | ||||||||||||
| Total investment return based on:2 | ||||||||||||||||||
| Market value | (14.61% | ) | (0.14% | ) | (9.86% | ) | 14.64% | 7.42% | 8.76% | |||||||||
| Net asset value | (5.15% | ) | (0.19% | ) | 4.35% | 3.44% | 2.56% | 8.05% | ||||||||||
| Ratios and supplemental data: | ||||||||||||||||||
| Net assets applicable to common shares, end of period (000 omitted) | $63,865 | $68,973 | $73,056 | $73,833 | $75,364 | $77,903 | ||||||||||||
| Ratio of expenses to average net assets applicable to common shares3 | 1.07% | 1.03% | 1.01% | 0.95% | 1.03% | 1.01% | ||||||||||||
| Ratio of net investment income to average net assets | ||||||||||||||||||
| applicable to common shares3 | 6.41% | 6.37% | 6.49% | 6.51% | 6.51% | 6.54% | ||||||||||||
| Ratio of net investment income to average net assets | ||||||||||||||||||
| applicable to common shares net of dividends to preferred shares4 | 4.34% | 4.23% | 4.56% | 5.11% | 5.69% | 5.98% | ||||||||||||
| Portfolio turnover | 9% | 16% | 11% | 12% | 5% | 13% | ||||||||||||
| Leverage analysis: | ||||||||||||||||||
| Value of preferred shares outstanding (000 omitted) | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | ||||||||||||
| Net asset coverage per share of preferred shares, end of period | $129,831 | $136,216 | $141,320 | $142,291 | $144,205 | $147,379 | ||||||||||||
| Liquidation value per share of preferred shares5 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | ||||||||||||
|
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
|
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 divided by average net assets applicable to common shareholders. |
|
5 Excluding any accumulated but unpaid dividends. |
See accompanying notes
(continues) 21
Financial highlights
Delaware Investments Minnesota Municipal Income Fund II, Inc.
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Six Months | ||||||||||||||||||
| Ended | Year Ended | |||||||||||||||||
| 9/30/081 | 3/31/08 | 3/31/07 | 3/31/06 | 3/31/05 | 3/31/04 | |||||||||||||
| (Unaudited) | ||||||||||||||||||
| Net asset value, beginning of period | $14.190 | $14.880 | $14.730 | $14.890 | $15.280 | $15.060 | ||||||||||||
| Income (loss) from investment operations: | ||||||||||||||||||
| Net investment income | 0.471 | 0.962 | 0.963 | 0.971 | 1.025 | 1.093 | ||||||||||||
| Net realized and unrealized gain (loss) on investments | (1.070 | ) | (0.674 | ) | 0.225 | 0.012 | (0.237 | ) | 0.207 | |||||||||
| Dividends on preferred stock from: | ||||||||||||||||||
| Net investment income | (0.141 | ) | (0.318 | ) | (0.298 | ) | (0.243 | ) | (0.128 | ) | (0.082 | ) | ||||||
| Total dividends on preferred stock | (0.141 | ) | (0.318 | ) | (0.298 | ) | (0.243 | ) | (0.128 | ) | (0.082 | ) | ||||||
| Total from investment operations | (0.740 | ) | (0.030 | ) | 0.890 | 0.740 | 0.660 | 1.218 | ||||||||||
| Less dividends to common shareholders from: | ||||||||||||||||||
| Net investment income | (0.330 | ) | (0.660 | ) | (0.740 | ) | (0.900 | ) | (1.050 | ) | (0.998 | ) | ||||||
| Total dividends | (0.330 | ) | (0.660 | ) | (0.740 | ) | (0.900 | ) | (1.050 | ) | (0.998 | ) | ||||||
| Net asset value, end of period | $13.120 | $14.190 | $14.880 | $14.730 | $14.890 | $15.280 | ||||||||||||
| Market value, end of period | $11.670 | $13.450 | $14.640 | $16.200 | $16.370 | $16.800 | ||||||||||||
| Total investment return based on:2 | ||||||||||||||||||
| Market value | (11.05% | ) | (3.58% | ) | (5.13% | ) | 4.73% | 4.02% | 16.87% | |||||||||
| Net asset value | (5.22% | ) | 0.08% | 6.05% | 4.69% | 4.03% | 7.99% | |||||||||||
| Ratios and supplemental data: | ||||||||||||||||||
| Net assets applicable to common shares, end of period (000 omitted) | $150,950 | $163,305 | $171,143 | $169,481 | $107,958 | $110,828 | ||||||||||||
| Ratio of expenses to average net assets | ||||||||||||||||||
| applicable to common shares3, 5 | 1.22% | 1.18% | 1.20% | 1.07% | 1.00% | 0.93% | ||||||||||||
| Ratio of net investment income to average net assets | ||||||||||||||||||
| applicable to common shares3 | 6.63% | 6.61% | 6.52% | 6.45% | 6.85% | 7.23% | ||||||||||||
| Ratio of net investment income to average net assets | ||||||||||||||||||
| applicable to common shares net of dividends to preferred shares4 | 4.64% | 4.43% | 4.50% | 4.86% | 6.00% | 6.69% | ||||||||||||
| Portfolio turnover | 20% | 6% | 3% | 8% | 15% | 34% | ||||||||||||
| Leverage analysis: | ||||||||||||||||||
| Value of preferred shares outstanding (000 omitted) | $95,000 | $95,000 | $95,000 | $95,000 | $60,000 | $60,000 | ||||||||||||
| Net asset coverage per share of preferred shares, end of period | $129,448 | $135,950 | $140,075 | $139,200 | $139,965 | $142,357 | ||||||||||||
| Liquidation value per share of preferred shares6 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | ||||||||||||
|
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
|
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 divided by average net assets applicable to common shareholders. |
|
5 The ratio of expenses to average net assets applicable to common shares includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs for the period ended September 30, 2008 and years ended March 31, 2008 and 2007. See Notes 1 and 7 in “Notes to financial statements”. |
|
6 Excluding any accumulated but unpaid dividends. |
See accompanying notes
22
Delaware Investments National Municipal Income Fund
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Six Months | ||||||||||||||||||
| Ended | Year Ended | |||||||||||||||||
| 9/30/081 | 3/31/08 | 3/31/07 | 3/31/06 | 3/31/05 | 3/31/04 | |||||||||||||
| (Unaudited) | ||||||||||||||||||
| Net asset value, beginning of period | $13.360 | $14.560 | $14.650 | $15.340 | $16.200 | $16.370 | ||||||||||||
| Income (loss) from investment operations: | ||||||||||||||||||
| Net investment income | 0.433 | 0.919 | 0.960 | 1.017 | 1.057 | 1.088 | ||||||||||||
| Net realized and unrealized gain (loss) on investments | (1.269 | ) | (1.081 | ) | 0.141 | (0.236 | ) | (0.675 | ) | (0.130 | ) | |||||||
| Dividends on preferred stock from: | ||||||||||||||||||
| Net investment income | (0.139 | ) | (0.311 | ) | (0.285 | ) | (0.202 | ) | (0.114 | ) | (0.082 | ) | ||||||
| Net realized gain on investments | — | (0.015 | ) | (0.018 | ) | (0.055 | ) | (0.009 | ) | (0.005 | ) | |||||||
| Total dividends on preferred stock | (0.139 | ) | (0.326 | ) | (0.303 | ) | (0.257 | ) | (0.123 | ) | (0.087 | ) | ||||||
| Total from investment operations | (0.975 | ) | (0.488 | ) | 0.798 | 0.524 | 0.259 | 0.871 | ||||||||||
| Less dividends and distributions to common shareholders from: | ||||||||||||||||||
| Net investment income | (0.295 | ) | (0.668 | ) | (0.820 | ) | (0.970 | ) | (1.020 | ) | (0.995 | ) | ||||||
| Net realized gain on investments | — | (0.044 | ) | (0.068 | ) | (0.244 | ) | (0.099 | ) | (0.046 | ) | |||||||
| Total dividends and distributions | (0.295 | ) | (0.712 | ) | (0.888 | ) | (1.214 | ) | (1.119 | ) | (1.041 | ) | ||||||
| Net asset value, end of period | $12.090 | $13.360 | $14.560 | $14.650 | $15.340 | $16.200 | ||||||||||||
| Market value, end of period | $9.350 | $11.950 | $14.530 | $16.050 | $15.050 | $16.650 | ||||||||||||
| Total investment return based on:2 | ||||||||||||||||||
| Market value | (19.74% | ) | (13.11% | ) | (4.12% | ) | 14.75% | (3.02% | ) | 18.04% | ||||||||
| Net asset value | (7.18% | ) | (3.05% | ) | 5.27% | 2.76% | 1.59% | 5.59% | ||||||||||
| Ratios and supplemental data: | ||||||||||||||||||
| Net assets applicable to common shares, end of period (000 omitted) | $29,294 | $32,365 | $35,256 | $35,492 | $37,166 | $39,244 | ||||||||||||
| Ratio of expenses to average net assets | ||||||||||||||||||
| applicable to common shares3 | 1.20% | 1.16% | 1.10% | 1.07% | 1.24% | 1.11% | ||||||||||||
| Ratio of net investment income to average net assets | ||||||||||||||||||
| applicable to common shares3 | 6.45% | 6.54% | 6.58% | 6.70% | 6.75% | 6.70% | ||||||||||||
| Ratio of net investment income to average net assets | ||||||||||||||||||
| applicable to common shares net of dividends to preferred shares4 | 4.38% | 4.22% | 4.51% | 5.01% | 5.97% | 6.16% | ||||||||||||
| Portfolio turnover | 40% | 17% | 9% | 28% | 11% | 3% | ||||||||||||
| 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 | $123,236 | $130,914 | $138,141 | $138,731 | $142,915 | $148,110 | ||||||||||||
| Liquidation value per share of preferred shares5 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | ||||||||||||
|
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
|
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 divided by average net assets applicable to common shareholders. |
|
5 Excluding any accumulated but unpaid dividends. |
See accompanying notes
23
Notes to financial statements
Delaware Investments Closed-End Municipal Bond Funds
September 30, 2008 (Unaudited)
Delaware Investments Arizona Municipal Income Fund, Inc. (Arizona Municipal Fund), Delaware Investments Colorado Municipal Income Fund, Inc. (Colorado Municipal Fund) and Delaware Investments Minnesota Municipal Income Fund II, Inc. (Minnesota Municipal Fund II) are organized as Minnesota corporations and Delaware Investments National Municipal Income Fund, (National Municipal Fund) is organized as a Massachusetts Business Trust (each referred to as a Fund and collectively as the Funds). Arizona Municipal Fund, Colorado Municipal Fund, Minnesota Municipal Fund II and National Municipal Fund are considered diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. The Funds’ common shares trade on the NYSE Alternext, the successor to the American Stock Exchange. The Funds’ preferred shares are traded privately through a remarketing agent.
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. Each Fund, except National Municipal Income 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 or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Short-term debt securities having less than 60 days to maturity are valued at amortized cost, which approximates market value. Generally, 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 each Fund’s Board of Directors/Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures, or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities at 4:00 p.m. Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading or news events, may have occurred in the interim. To account for this, the Fund may frequently value many foreign securities at one time using fair value prices based on third-party vendor modeling tools (“international fair value pricing”).
Federal Income Taxes — The Funds intend to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements.
The Funds evaluate tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax benefit or expense in the current period.
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.
Interest and Related Expenses — Interest and related expenses include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees from the Minnesota Municipal Fund II’s participation in inverse floater programs where the Fund has transferred its own bonds to a trust that issues floating rate securities with an aggregate principal amount equal to the principal of the transferred bonds. In conveyance of the bond, the Fund receives the inverse floating rate securities and cash from the trust. As a result of certain rights retained by the Fund, the transfer of the bond is not considered a sale, but rather a form of financing for accounting purposes whereby the cash received is recorded as a liability and interest expense is recorded based on the interest rate of the floating rate securities. Remarketing fees, liquidity fees, and trustees’ fees expenses are recorded on the accrual basis.
The Minnesota Municipal Fund II sold out of its inverse floater positions on September 29, 2008. As of the period ended September 29, 2008, the Fund had an average daily liability from the participation in inverse floater programs of $8,500,000 and recorded interest expense at an average rate of 3.57%.
Other — Expenses directly attributable to a Fund are charged directly to that Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such 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) for financial reporting purposes. 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 or December 31 of the prior year.
The Funds receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under this arrangement is included in custodian fees and on the statements of operations with the corresponding expense offset shown as “expense paid indirectly.”
24
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 weekly net assets of each Fund, excluding the liquidation value of the preferred stock.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, the Funds pay DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% o of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. For the six months ended September 30, 2008, the Funds were charged as follows:
| Arizona | Colorado | Minnesota | National | ||||
| Municipal | Municipal | Municipal | Municipal | ||||
| Fund | Fund | Fund II | Fund | ||||
| $1,659 | $2,717 | $6,456 | $1,311 |
At September 30, 2008, each Fund had liabilities payable to affiliates as follows:
| Arizona | Colorado | Minnesota | National | |||||
| Municipal | Municipal | Municipal | Municipal | |||||
| Fund | Fund | Fund II | Fund | |||||
| Investment management fee payable to DMC | $21,837 | $35,762 | $84,980 | $17,142 | ||||
| Accounting administration and other expenses | ||||||||
| payable to DSC | 10,950 | 9,767 | 1,325 | 12,353 | ||||
| Other expenses payable to DMC and affiliates* | 11,261 | 17,546 | 31,086 | 14,595 |
* DMC as part of its administrative services pays operating expenses on behalf of each Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, stock exchange fees, custodian fees and directors/trustees’ fees.
As provided in the investment management agreement, each Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to each Fund by DMC and/or its affiliates’ employees. For the six months ended September 30, 2008, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:
| Arizona | Colorado | Minnesota | National | ||||
| Municipal | Municipal | Municipal | Municipal | ||||
| Fund | Fund | Fund II | Fund | ||||
| $1,362 | $2,264 | $5,379 | $1,066 |
Directors’/Trustees’ fees include expenses accrued by the Funds for each Director’s/Trustee’s retainer and meeting fees. 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, 2008, the Funds made purchases and sales of investment securities other than short-term investments as follows:
| Arizona | Colorado | Minnesota | National | |||||||||||||
| Municipal | Municipal | Municipal | Municipal | |||||||||||||