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: 811-07420
   
Exact name of registrant as specified in charter: Delaware Investments Minnesota Municipal
Income Fund II, 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 31
 
Date of reporting period: September 30, 2017


Item 1. Reports to Stockholders

Table of Contents

 

LOGO

Closed-end funds

Delaware Funds by Macquarie Closed-End Municipal Bond Funds

September 30, 2017

The figures in the semiannual report for Delaware Funds by Macquarie Closed-End Municipal Bond Funds represent past results, which are not a guarantee of future results. A rise or fall in interest rates can have a significant impact on bond prices. Funds that invest in bonds can lose their value as interest rates rise.

 


Table of Contents

Table of contents

 

Fund basics

     1  

Security type / sector / state allocations

     2  

Schedules of investments

     4  

Statements of assets and liabilities

     23  

Statements of operations

     24  

Statements of changes in net assets

     25  

Statements of cash flows

     27  

Financial highlights

     28  

Notes to financial statements

     31  

Other Fund information

     38  

About the organization

     43  

Macquarie Investment Management (MIM), a member of Macquarie Group, refers to the companies comprising the asset management division of Macquarie Group Limited (MGL) and its subsidiaries and affiliates worldwide. MGL is a global provider of banking, financial, advisory, investment, and funds management services. For more information, including press releases, please visit delawarefunds.com/closed-end.

Unless otherwise noted, views expressed herein are current as of Sept. 30, 2017, and subject to change for events occurring after such date.

The 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 MIMBT, which is a US registered investment advisor.

Other than Macquarie Bank Limited (MBL), none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Funds are governed by US laws and regulations.

All third-party marks cited are the property of their respective owners.

©2017 Macquarie Management Holdings, Inc. (formerly, Delaware Management Holdings, Inc.)


Table of Contents

Fund basics

 

 

Delaware Investments®

Colorado Municipal Income Fund, Inc.

As of September 30, 2017 (Unaudited)

Fund objective

The Fund seeks to provide current income exempt from both regular federal income tax and Colorado state personal income tax, consistent with the preservation of capital.

Total Fund net assets

$73 million

Number of holdings

103

Fund start date

July 29, 1993

NYSE MKT symbol

VCF

CUSIP number

246101109

Delaware Investments

Minnesota Municipal Income Fund II, Inc.

As of September 30, 2017 (Unaudited)

Fund objective

The Fund seeks to provide current income exempt from both regular federal income tax and Minnesota state personal income tax, consistent with the preservation of capital.

Total Fund net assets

$168 million

Number of holdings

191

Fund start date

Feb. 26, 1993

NYSE MKT symbol

VMM

CUSIP number

24610V103

 

 

 

Delaware Investments

National Municipal Income Fund

As of September 30, 2017 (Unaudited)

Fund objective

The Fund seeks to provide current income exempt from regular federal income tax, consistent with the preservation of capital.

Total Fund net assets

$66 million

Number of holdings

182

Fund start date

Feb. 26, 1993

NYSE MKT symbol

VFL

CUSIP number

24610T108

 

 

1


Table of Contents

Security type / sector / state allocations

As of September 30, 2017 (Unaudited)

 

Sector designations may be different than the sector designations presented in other Fund materials.

 

Delaware Investments®

Colorado Municipal Income Fund, Inc.

 

Security type / sector    Percentage
of net
assets
 

Municipal Bonds*

     140.47%   

Corporate-Backed Revenue Bonds

     5.15%   

Education Revenue Bonds

     23.95%   

Electric Revenue Bonds

     2.84%   

Healthcare Revenue Bonds

     38.84%   

Lease Revenue Bonds

     7.22%   

Local General Obligation Bonds

     14.04%   

Pre-Refunded/Escrowed to Maturity Bonds

     11.54%   

Special Tax Revenue Bonds

     26.75%   

Transportation Revenue Bonds

     9.42%   

Water & Sewer Revenue Bonds

     0.72%   

Short-Term Investment

     0.41%   

Total Value of Securities

     140.88%   

Liquidation Value of Preferred Stock

     (40.85)%   

Liabilities Net of Receivables and Other Assets

     (0.03)%   

Total Net Assets

     100.00%   

* As of the date of this report, Delaware Investments Colorado Municipal Income Fund, Inc. held bonds issued by or on behalf of territories and the states of the United States as follows:

 

State / territory    Percentage
of net
assets
 

Colorado

     138.73%   

Guam

     1.43%   

US Virgin Islands

 

    

 

0.72% 

 

 

 

Total Value of Securities

 

    

 

140.88% 

 

 

 

 

Delaware Investments
Minnesota Municipal Income Fund II, Inc.

 

 
Sector type / sector    Percentage
of net
assets
 

Municipal Bonds*

     143.21%   

Corporate-Backed Revenue Bonds

     2.90%   

Education Revenue Bonds

     16.63%   

Electric Revenue Bonds

     13.17%   

Healthcare Revenue Bonds

     29.23%   

Housing Revenue Bonds

     2.03%   

Lease Revenue Bonds

     9.76%   

Local General Obligation Bonds

     13.84%   

Pre-Refunded/Escrowed to Maturity Bonds

     29.13%   

Special Tax Revenue Bonds

     2.66%   

State General Obligation Bonds

     14.99%   

Transportation Revenue Bonds

     7.66%   

Water & Sewer Revenue Bonds

     1.21%   

Short-Term Investments

     0.37%   

Total Value of Securities

     143.58%   

Liquidation Value of Preferred Stock

     (44.51)%   

Receivables and Other Assets Net of Liabilities

     0.93%   

Total Net Assets

     100.00%   

* As of the date of this report, Delaware Investments Minnesota Municipal Income Fund II, Inc. held bonds issued by or on behalf of territories and the states of the United States as follows:

 

State / territory    Percentage
of net
assets
 

Guam

     0.55%   

Minnesota

 

    

 

143.03% 

 

 

 

 

Total

 

    

 

143.58% 

 

 

 

 

 

2


Table of Contents

 

 

 

 

 

Delaware Investments®

National Municipal Income Fund

 

Security type / sector    Percentage
of net
assets
 

Municipal Bonds*

     142.57%   

Corporate-Backed Revenue Bonds

     10.60%   

Education Revenue Bonds

     22.42%   

Electric Revenue Bonds

     3.35%   

Healthcare Revenue Bonds

     24.65%   

Housing Revenue Bond

     0.66%   

Lease Revenue Bonds

     10.44%   

Local General Obligation Bonds

     3.45%   

Pre-Refunded/Escrowed to Maturity Bonds

     18.78%   

Special Tax Revenue Bonds

     12.34%   

State General Obligation Bonds

     6.82%   

Transportation Revenue Bonds

     24.56%   

 

Water & Sewer Revenue Bonds

     4.50%   

Short-Term Investment

     0.53%   

 

Total Value of Securities

     143.10%   

 

Liquidation Value of Preferred Stock

     (45.19)%   

 

Receivables and Other Assets Net of Liabilities

     2.09%   

 

Total Net Assets

     100.00%   

* As of the date of this report, Delaware Investments National Municipal Income Fund held bonds issued by or on behalf of territories and the states of the United States as follows:

 

State / territory    Percentage
of net
assets
 

Alabama

     0.84

Alaska.

     0.51

Arizona

     7.23

California

     20.87

Colorado

     1.40

District of Columbia

     1.78

Florida

     5.67

Georgia

     3.15

Guam

     2.13

Hawaii

     0.49

Idaho

     1.55

Illinois

     6.38

Indiana

     0.97

Kansas

     0.36

Louisiana

     4.97

Maine

     0.49

Maryland

     2.63

Massachusetts

     1.67

Michigan

     1.68

Minnesota

     5.20

Mississippi

     0.53

Missouri

     4.03

Montana

     1.10

New Hampshire

     0.49

New Jersey

     6.34

New Mexico

     0.81

New York

     19.61

Ohio

     3.96

Oregon

     3.73

Pennsylvania

     15.48

Texas

     11.88

Utah

     1.10

Virginia

     0.86

Washington

     1.34

Wisconsin

     1.46

Wyoming

 

    

 

0.41

 

 

 

Total Value of Securities

 

    

 

143.10

 

 

 

 

3


Table of Contents

Schedules of investments

Delaware Investments® Colorado Municipal Income Fund, Inc.

September 30, 2017 (Unaudited)

 

     Principal  
Amount°  
         Value  
    (US $)  
 

 

 

Municipal Bonds – 140.47%

 

  

 

 

Corporate-Backed Revenue Bonds – 5.15%

 

Denver City & County

     

(United Airlines Project) 5.00% 10/1/32 (AMT)

     215,000      $   234,410  

Public Authority for Colorado Energy Revenue 6.25% 11/15/28

     865,000        1,093,611  

Public Authority of Colorado Energy Natural Gas Revenue

     

Series 2008 6.50% 11/15/38

     1,750,000        2,457,437  
     

 

 

 
           

 

3,785,458

 
     

 

 

 

Education Revenue Bonds – 23.95%

 

Colorado Educational & Cultural Facilities Authority Revenue

     

144A 5.00% 7/1/36 #

     500,000        510,595  

5.125% 11/1/49

     765,000        780,560  

144A 5.25% 7/1/46 #

     500,000        512,840  

(Academy Charter School Project) 5.50% 5/1/36 (SGI)

     1,720,000        1,725,401  

(Alexander Dawson School-Nevada Project) 5.00% 5/15/29

     760,000        900,646  

(Charter School - Atlas Preparatory School) 144A 5.25% 4/1/45 #

     700,000        700,000  

(Charter School - Community Leadership Academy) 7.45% 8/1/48

     500,000        579,705  

(Charter School - Peak to Peak Charter) 5.00% 8/15/34

     1,000,000        1,092,220  

(Improvement - Charter School - University Lab School Building) 144A 5.00% 12/15/45 #

     500,000        525,380  

(Johnson & Wales University) Series A 5.25% 4/1/37

     900,000        1,004,967  

(Liberty Charter School) Series A 5.00% 1/15/44

     1,000,000        1,074,090  

(Littleton Charter School Project) 4.375% 1/15/36 (AGC)

     1,200,000        1,202,316  

(Loveland Classical Schools) 144A 5.00% 7/1/36 #

     625,000        639,775  
     Principal  
Amount°  
         Value  
    (US $)  
 

 

 

Municipal Bonds (continued)

 

 

 

Education Revenue Bonds (continued)

 

Colorado Educational & Cultural Facilities Authority Revenue (Skyview Charter School) 144A 5.50% 7/1/49 #

     750,000      $   769,313  

(Student Housing - Campus Village Apartments) 5.00% 6/1/23

     1,065,000        1,096,545  

(Vail Mountain School Project) 4.00% 5/1/46

     25,000        24,999  

(Windsor Charter Academy Project) 144A 5.00% 9/1/46 #

     500,000        499,475  

Colorado School of Mines Series B 5.00% 12/1/42

     2,500,000        2,782,125  

Colorado State Board of Governors (University Enterprise System) Series A 5.00% 3/1/39

     10,000        10,508  

University of Colorado Series A 5.00% 6/1/33

     1,000,000        1,153,130  
     

 

 

 
     

 

 

 

17,584,590

 

 

     

 

 

 

Electric Revenue Bonds – 2.84%

 

Platte River Power Authority Revenue Series JJ 5.00% 6/1/27

     1,700,000        2,083,945  
     

 

 

 
     

 

 

 

2,083,945

 

 

     

 

 

 

Healthcare Revenue Bonds – 38.84%

 

Aurora Hospital Revenue (Children’s Hospital Association Project) Series A 5.00% 12/1/40

     2,000,000        2,138,580  

Colorado Health Facilities Authority Revenue (Catholic Health Initiatives)

     

Series A 5.00% 7/1/39

     750,000        766,643  

Series A 5.00% 2/1/41

     2,400,000        2,501,640  

Series A 5.25% 2/1/33

     1,625,000        1,728,561  

Series A 5.25% 1/1/45

     1,000,000        1,066,960  

Series D 6.125% 10/1/28

     750,000        786,420  

(Christian Living Community Project) 6.375% 1/1/41

     615,000        671,838  
 

 

4


Table of Contents

 

 

 

 

 

 

 

     Principal  
Amount°  
         Value  
    (US $)  
 

 

 

Municipal Bonds (continued)

 

 

 

Healthcare Revenue Bonds (continued)

 

Colorado Health Facilities Authority Revenue (Covenant Retirement Communities Inc.)

     

5.00% 12/1/35

     1,000,000      $   1,086,790  

Series A 5.75% 12/1/36

     1,000,000        1,129,200  

(Evangelical Lutheran Good Samaritan Society)

     

5.00% 6/1/28

     1,250,000        1,392,625  

5.50% 6/1/33

     2,000,000        2,272,320  

5.625% 6/1/43

     1,000,000        1,126,490  

(Frasier Meadows Retirement Community Project) Series A 5.25% 5/15/37

     265,000        287,053  

(Healthcare Facilities - American Baptist) 8.00% 8/1/43

     500,000        580,875  

(Mental Health Center of Denver Project) Series A 5.75% 2/1/44

     1,500,000        1,664,205  

(National Jewish Health Project) 5.00% 1/1/27

     500,000        526,555  

(NCMC Project) 4.00% 5/15/32

     1,000,000        1,074,710  

(Sisters of Charity of Leavenworth Health System) Series A 5.00% 1/1/40

     4,000,000        4,250,480  

(Sunny Vista Living Center) Series A 144A 6.25% 12/1/50 #

     505,000        534,381  

(Vail Valley Medical Center Project) 5.00% 1/15/35

     1,250,000        1,424,437  

Denver Health & Hospital Authority Health Care Revenue (Recovery Zone Facilities) 5.625% 12/1/40

     750,000        803,707  

University of Colorado Hospital Authority Revenue Series A 6.00% 11/15/29

     650,000        705,653  
     

 

 

 
     

 

 

 

28,520,123

 

 

     

 

 

 

Lease Revenue Bonds – 7.22%

 

  

Aurora Certificates of Participation Series A 5.00% 12/1/30

     630,000        676,765  
     Principal  
Amount°  
         Value  
    (US $)  
 

 

 

Municipal Bonds (continued)

 

 

 

Lease Revenue Bonds (continued)

 

Colorado Building Excellent Schools Today Certificates of Participation Series G 5.00% 3/15/32

     2,000,000      $   2,227,340  

Pueblo County Certificates of Participation (County Judicial Complex Project) 5.00% 9/15/42 (AGM)

     1,250,000        1,385,700  

State of Colorado Department of Transportation Certificates of Participation

     

5.00% 6/15/34

     340,000        391,493  

5.00% 6/15/36

     545,000        623,496  
     

 

 

 
     

 

 

 

5,304,794

 

 

     

 

 

 

Local General Obligation Bonds – 14.04%

 

Adams & Weld Counties School District No 27J Brighton 4.00% 12/1/30

     700,000        772,387  

Adams 12 Five Star Schools 5.00% 12/15/25

     250,000        306,647  

Arapahoe County School District No. 1 Englewood 4.00% 12/1/31

     500,000        548,905  

Beacon Point Metropolitan District 5.00% 12/1/30 (AGM)

     600,000        688,014  

Denver City & County (Better Denver & Zoo) Series A 5.00% 8/1/25

     650,000        696,001  

Denver International Business Center Metropolitan District No. 1 5.00% 12/1/30

     650,000        680,264  

Eaton Area Park & Recreation District 5.25% 12/1/34

     190,000        205,411  

5.50% 12/1/38

     245,000        266,585  

Garfield Pitkin & Eagle Counties School District No. RE-1 Roaring Fork 4.00% 12/15/31

     700,000        772,562  

Jefferson County School District No. R-1 5.25% 12/15/24

     750,000        924,037  

Pueblo County School District No. 70 5.00% 12/1/31

     250,000        281,690  
 

 

      (continues)    5


Table of Contents

Schedules of investments

Delaware Investments® Colorado Municipal Income Fund, Inc.

 

 

   

Principal  

Amount°  

   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Local General Obligation Bonds (continued)

 

 

Rangely Hospital District 6.00% 11/1/26

    750,000     $ 856,943  

Sierra Ridge Metropolitan District No. 2 Series A 5.50% 12/1/46

    500,000       510,495  

Weld County School District No. RE-1 5.00% 12/15/30 (AGM)

    500,000       597,320  

Weld County School District No. RE-3J 5.00% 12/15/34

    1,000,000       1,179,270  

Weld County School District No. RE-8

   

5.00% 12/1/31

    510,000       613,448  

5.00% 12/1/32

    340,000       407,116  
   

 

 

 
   

 

 

 

  10,307,095

 

 

   

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 11.54%

 

Adams & Arapahoe Counties Joint School District No. 28J (Aurora) 6.00% 12/1/28-18§

    600,000       635,544  

Arapahoe County School District No. 1 Englewood 5.00% 12/1/31-21§

    2,500,000       2,882,850  

Colorado Health Facilities Authority Revenue (Total Long-Term Care) Series A 6.00% 11/15/30-20§

    400,000       459,060  

Colorado State Board of Governors Series A 5.00% 3/1/39-19§

    175,000       184,826  

University of Colorado 5.00% 6/1/31-21§

    3,085,000       3,507,244  

Series A 5.375% 6/1/38-19§

    750,000       803,835  
   

 

 

 
      8,473,359  
   

 

 

 

Special Tax Revenue Bonds – 26.75%

 

Broomfield City & County 4.00% 12/1/37

    1,000,000       1,073,240  

Canyons Metropolitan District No 5 Series A 6.125% 12/1/47

    500,000       503,940  

Central Platte Valley Metropolitan District 5.00% 12/1/43

    375,000       386,903  

 

    Principal  
Amount°  
    Value (US $)  

Municipal Bonds (continued)

 

 

 

Special Tax Revenue Bonds (continued)

 

 

Commerce City 5.00% 8/1/44 (AGM)

    1,000,000     $     1,112,330  

Fountain Urban Renewal Authority Tax Increment Revenue (Academy Highlands Project) Series A 5.50% 11/1/44

    1,405,000       1,476,177  

Guam Government Business Privilege Tax Revenue

   

Series A 5.125% 1/1/42

    435,000       453,344  

Series A 5.25% 1/1/36

    565,000       597,787  

Regional Transportation District Revenue

   

Series A 5.375% 6/1/31

    460,000       502,536  

Series B 5.00% 11/1/33

    935,000       1,130,219  

(Denver Transit Partners) 6.00% 1/15/41

    2,175,000       2,386,236  

(FasTracks Project)

   

Series A 4.50% 11/1/36 (AGM)

    1,500,000       1,505,010  

Series A 5.00% 11/1/30

    330,000       399,231  

Series A 5.00% 11/1/31

    755,000       908,273  

Series A 5.00% 11/1/38

    4,085,000       4,504,039  

Solaris Metropolitan District No. 3 (Limited Tax Convertible) Series A 5.00% 12/1/46

    500,000       518,875  

Sterling Ranch Community Authority Board Series A 5.75% 12/1/45

    525,000       529,694  

Tallyns Reach Metropolitan District No. 3 (Limited Tax Convertible) 5.125% 11/1/38

    295,000       308,231  

Thornton Development Authority (East 144th Avenue & I-25 Project)

   

Series B 5.00% 12/1/35

    265,000       309,380  

Series B 5.00% 12/1/36

    440,000       512,116  

Virgin Islands Public Finance Authority (Matching Fund Senior Lien) 5.00% 10/1/29 (AGM)

    500,000       528,830  
   

 

 

 
   

 

 

 

19,646,391

 

 

   

 

 

 
 

 

6


Table of Contents

 

 

 

 

 

 

 

    Principal  
Amount°  
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Transportation Revenue Bonds – 9.42%

 

Colorado High Performance Transportation Enterprise Revenue (Senior U.S. 36 & I-25 Managed Lanes) 5.75% 1/1/44 (AMT)

    1,110,000     $ 1,247,007  

C-470 Express Lanes 5.00% 12/31/56

    1,000,000       1,097,220  

Denver City & County Airport System Revenue

   

Series A 5.25% 11/15/36

    750,000       813,885  

Series B 5.00% 11/15/28

    1,000,000       1,156,060  

Series B 5.00% 11/15/37

    2,000,000       2,269,340  

E-470 Public Highway Authority Series C 5.25% 9/1/25

    310,000       335,879  
   

 

 

 
      6,919,391  
   

 

 

 

Water & Sewer Revenue Bonds – 0.72%

 

Castle Rock, Colorado Water & Sewer Enterprise Revenue 4.00% 12/1/34

    250,000       267,217  

Dominion Water & Sanitation District 6.00% 12/1/46

    250,000       263,115  
   

 

 

 
   

 

 

 

530,332

 

 

   

 

 

 

Total Municipal Bonds
(cost $96,649,299)

      103,155,478  
   

 

 

 
     Principal  
Amount°  
    

Value

(US $)

 

 

 

Short-Term Investment – 0.41%

 

 

 

Variable Rate Demand Note – 0.41%¤

 

  

Denver City & County Series A1 0.85% 12/1/29 (SPA-JPMorgan Chase Bank N. A.)

     300,000      $ 300,000  
     

 

 

 

Total Short-Term Investment (cost $300,000)

        300,000  
     

 

 

 

Total Value of Securities –140.88% (cost $96,949,299)

      $ 103,455,478  
     

 

 

 

 

 

  #

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Sept. 30, 2017, the aggregate value of Rule 144A securities was $4,691,759, which represents 6.39% of the Fund’s net assets. See Note 5 in “Notes to financial statements.”

  ¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Sept. 30, 2017.

  §

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded.

  °

Principal amount shown is stated in US dollars unless noted that the security is denominated in another currency.

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

N.A. – National Association

SGI – Insured by Syncora Guarantee Inc.

SPA – Stand-by Purchase Agreement

See accompanying notes, which are an integral part of the financial statements.

 

 

         7


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

September 30, 2017 (Unaudited)

     Principal
Amount°
     Value (US $)  

 

 

Municipal Bonds – 143.21%

 

 

 

Corporate-Backed Revenue Bonds – 2.90%

 

Laurentian Energy Authority I Cogeneration Revenue Series A 5.00% 12/1/21

     3,325,000      $     3,317,353  

St. Paul Port Authority Revenue (Gerdau St. Paul Steel Mill Project) Series 7 144A 4.50% 10/1/37 (AMT) #

     1,715,000        1,560,839  
     

 

 

 
     

 

 

 

4,878,192

 

 

     

 

 

 

Education Revenue Bonds – 16.63%

 

  

Brooklyn Park Charter School Lease Revenue (Prairie Seeds Academy Project)

     

Series A 5.00% 3/1/34

     990,000        1,031,689  

Series A 5.00% 3/1/39

     170,000        175,523  

Cologne Charter School Lease Revenue (Cologne Academy Project)

     

Series A 5.00% 7/1/29

     270,000        284,359  

Series A 5.00% 7/1/45

     445,000        455,462  

Deephaven Charter School (Eagle Ridge Academy Project)

     

Series A 5.25% 7/1/37

     590,000        624,598  

Series A 5.25% 7/1/40

     500,000        528,310  

Forest Lake Minnesota Charter School Revenue (Lake International Language Academy)

     

5.75% 8/1/44

     705,000        760,984  

Hugo Charter School Lease Revenue (Noble Academy Project)

     

Series A 5.00% 7/1/34

     255,000        264,899  

Series A 5.00% 7/1/44

     775,000        795,491  

Minneapolis Charter School Lease Revenue (Hiawatha Academies Project)

     

Series A 5.00% 7/1/36

     750,000        770,280  

Series A 5.00% 7/1/47

     900,000        911,871  

Minneapolis Student Housing Revenue (Riverton Community Housing Project)

     

5.25% 8/1/39

     205,000        210,670  

5.50% 8/1/49

     990,000        1,022,779  
     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Education Revenue Bonds (continued)

 

Minnesota Charter School Lease Revenue (Beacon Academy Project) Series A 5.00% 7/1/46

     300,000      $ 299,634  

Minnesota Higher Education Facilities Authority Revenue (Bethel University) 5.00% 5/1/47

     1,250,000        1,384,387  

(Carleton College)

     

4.00% 3/1/36

     485,000        520,832  

5.00% 3/1/44

     905,000        1,055,818  

(College of St. Benedict)

     

Series 7-M 5.00% 3/1/31

     300,000        321,519  

Series 7-M 5.125% 3/1/36

     275,000        295,443  

(Gustavus Adolphus College) 5.00% 10/1/47

     2,100,000        2,391,501  

(St. Catherine University) Series 7-Q 5.00% 10/1/32

     700,000        769,062  

(St. Johns University) Series 8-I 5.00% 10/1/31

     235,000        272,945  

Series 8-I 5.00% 10/1/34

     35,000        40,083  

(St. Olaf College) Series 8-N 4.00% 10/1/35

     590,000        636,256  

(St. Scholastic College) Series H 5.25% 12/1/35

     1,000,000        1,045,210  

(University of St. Thomas)

     

Series 7-A 5.00% 10/1/39

     1,000,000        1,066,480  

Series 7-U 5.00% 4/1/22

     750,000        861,225  

Otsego Charter School (Kaleidoscope Charter School)

     

Series A 5.00% 9/1/34

     230,000        239,124  

Series A 5.00% 9/1/44

     400,000        410,812  

Rice County Educational Facilities Revenue (Shattuck-St. Mary’s School) Series A 144A 5.00% 8/1/22 #

     1,250,000        1,323,600  

St. Cloud Charter School Lease Revenue (Stride Academy Project) Series A 5.00% 4/1/46

     375,000        263,989  
 

 

8


Table of Contents

 

 

 

 

 

 

 

    Principal  
Amount°  
   

Value

(US $)

 

Municipal Bonds (continued)

               

Education Revenue Bonds (continued)

 

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue

   

(Academia Cesar Chavez School Project) Series A 5.25% 7/1/50

    825,000     $ 833,827  

(Great River School Project)

   

Series A 144A 4.75% 7/1/29 #

    100,000       101,555  

Series A 144A 5.50% 7/1/38 #

    240,000       245,434  

(Nova Classical Academy Project)

   

Series A 4.125% 9/1/47

    750,000       744,240  

Series A 6.375% 9/1/31

    750,000       826,913  

(Twin Cities Academy Project) Series A 5.30% 7/1/45

    630,000       648,585  

University of Minnesota

   

Series A 5.00% 9/1/42

    2,000,000       2,369,320  

State Supported Stadium Debt Series A 5.00% 8/1/26

    1,000,000       1,215,020  
   

 

 

 
          28,019,729  
   

 

 

 

Electric Revenue Bonds – 13.17%

 

Central Minnesota Municipal Power Agency Revenue

   

(Brookings Southeast Twin Cities Transportation) 5.00% 1/1/32

    1,130,000       1,251,034  

(Brookings Twin Cities Transmission Project) 5.00% 1/1/42

    1,000,000       1,094,370  

Chaska Electric Revenue

   

Series A 5.00% 10/1/28

    445,000       523,409  

Minnesota Municipal Power Agency Electric Revenue

   

5.00% 10/1/25

    500,000       599,590  

5.00% 10/1/26

    500,000       595,620  

5.00% 10/1/27

    320,000       379,360  

5.00% 10/1/47

    1,755,000       2,001,946  

Northern Municipal Power Agency

   

Series A 5.00% 1/1/26

    100,000       114,839  

Series A 5.00% 1/1/30

    340,000       384,288  
    Principal  
Amount°  
   

Value

(US $)

 

Municipal Bonds (continued)

               

Electric Revenue Bonds (continued)

 

Rochester Electric Utility Revenue

   

Series A 5.00% 12/1/42

    605,000     $ 704,535  

Series A 5.00% 12/1/47

    985,000           1,141,044  

Series B 5.00% 12/1/30

    1,300,000       1,527,214  

Series B 5.00% 12/1/43

    1,000,000       1,148,300  

Southern Minnesota Municipal Power Agency Supply Revenue

   

Series A 5.00% 1/1/41

    240,000       273,917  

Series A 5.00% 1/1/47

    810,000       940,831  

Western Minnesota Municipal Power Agency Supply Revenue

   

Series A 5.00% 1/1/25

    3,000,000       3,505,500  

Series A 5.00% 1/1/26

    1,000,000       1,163,570  

Series A 5.00% 1/1/33

    1,000,000       1,155,810  

Series A 5.00% 1/1/40

    750,000       855,135  

Series A 5.00% 1/1/46

    2,500,000       2,836,525  
   

 

 

 
          22,196,837  
   

 

 

 

Healthcare Revenue Bonds – 29.23%

 

Anoka Health Care Facilities Revenue

   

5.375% 11/1/34

    610,000       633,997  

Apple Valley Senior Living Revenue

   

(Senior Living LLC Project)

   

Series B 5.00% 1/1/47

    750,000       764,910  

Series D 7.00% 1/1/37

    720,000       709,949  

Series D 7.25% 1/1/52

    1,000,000       988,610  

Center City Health Care Facilities Revenue

   

(Hazelden Betty Ford Foundation Project)

   

5.00% 11/1/27

    500,000       574,305  

(Hazelden Foundation Project)

   

5.00% 11/1/41

    1,600,000       1,662,304  

Cloquet Housing Facilities Revenue

   

(HADC Cloquet Project)

   

Series A 5.00% 8/1/48

    500,000       504,605  
 

 

      (continues)    9


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

    Principal  
Amount°  
   

Value

(US $)

 

Municipal Bonds (continued)

 

Healthcare Revenue Bonds (continued)

 

Dakota County Community Development Agency Senior Housing Revenue

   

(Walker Highview Hills Project)

   

Series A 144A 5.00% 8/1/46 #

    370,000     $ 374,410  

Series A 144A 5.00% 8/1/51 #

    755,000       761,395  

Deephaven Housing & Healthcare Revenue

   

(St. Therese Senior Living Project)

   

Series A 5.00% 4/1/38

    280,000       283,492  

Series A 5.00% 4/1/40

    270,000       272,846  

Duluth Economic Development Authority

   

(St. Luke’s Hospital Authority Obligation Group)

   

5.75% 6/15/32

    1,400,000       1,515,402  

6.00% 6/15/39

    1,000,000             1,086,820  

Fergus Falls Health Care Facilities Revenue

   

(Lake Region Healthcare) 5.00% 8/1/30

    1,000,000       1,001,010  

Hayward

   

(American Baptist Homes Midwest) 5.75% 2/1/44

    500,000       518,820  

Hayward Health Care Facilities Revenue

   

(St. John’s Lutheran Home of Albert Lea) 5.375% 10/1/44

    680,000       683,148  

Maple Grove Health Care Facilities Revenue

   

(Maple Grove Hospital Corporation) 4.00% 5/1/37

    1,000,000       1,032,170  

(North Memorial Health Care) 5.00% 9/1/30

    865,000       989,871  

Minneapolis Health Care System Revenue

   

(Fairview Health Services)

   

Series A 5.00% 11/15/33

    500,000       578,665  

Series A 5.00% 11/15/34

    500,000       576,700  

(Unrefunded - Fairview Health Services) Series B 6.50% 11/15/38 (AGC)

    1,940,000       2,048,000  
    Principal  
Amount°  
   

Value

(US $)

 

Municipal Bonds (continued)

 

Healthcare Revenue Bonds (continued)

 

Minneapolis Senior Housing & Healthcare Revenue

   

(Ecumen-Abiitan Mill City Project) 5.00% 11/1/35

    220,000     $ 226,358  

(Ecumen Mill City Quarter)

   

5.25% 11/1/45

    850,000       872,287  

5.375% 11/1/50

    200,000       205,224  

Minneapolis - St. Paul

   

Housing & Redevelopment Authority Health Care Revenue

   

(Allina Health System)

   

Series A 5.00% 11/15/29

    585,000       705,966  

(Children’s Health Care Facilities) Series A1 5.00% 8/15/34 (AGM)

    500,000       537,660  

Rochester Health Care & Housing Revenue

   

(The Homestead at Rochester Project) Series A 6.875% 12/1/48

    1,220,000       1,348,832  

Rochester Health Care Facilities Revenue

   

(Mayo Clinic) 4.00% 11/15/41

    4,860,000       5,019,505  

Sartell Health Care Facilities Revenue

   

(Country Manor Campus Project)

   

5.25% 9/1/30

    1,000,000             1,041,700  

Series A 5.30% 9/1/37

    600,000       623,490  

Shakopee Health Care Facilities Revenue

   

(St. Francis Regional Medical Center)

   

4.00% 9/1/31

    205,000       219,180  

5.00% 9/1/34

    165,000       185,156  

St. Cloud Health Care Revenue

   

(Centracare Health System Project)

   

Series A 4.00% 5/1/37

    1,295,000       1,373,231  

Series A 5.00% 5/1/46

    2,800,000       3,164,588  

Series B 5.00% 5/1/24

    1,400,000       1,675,576  

(Unrefunded - Centracare Health System Project)

   

5.125% 5/1/30

    95,000       102,837  
 

 

10


Table of Contents

 

 

 

 

 

 

 

    Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Healthcare Revenue Bonds (continued)

 

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

   

(Allina Health System) Series A1 5.25% 11/15/29

    640,000     $ 694,675  

(Fairview Health Services)

   

Series A 4.00% 11/15/43

    905,000       941,707  

Series A 5.00% 11/15/47

    680,000       781,973  

(Health Partners Obligation Group Project)

   

5.00% 7/1/29

    2,000,000       2,338,180  

Series A 5.00% 7/1/32

    1,100,000       1,265,132  

St. Paul Housing & Redevelopment Authority Housing & Health Care Facilities Revenue

   

(Senior Episcopal Homes Project)

   

5.125% 5/1/48

    1,200,000       1,205,532  

Series A 4.75% 11/1/31

    740,000       741,021  

Wayzata Senior Housing Revenue

   

(Folkestone Senior Living Community)

   

Series A 5.50% 11/1/32

    420,000       446,275  

Series A 5.75% 11/1/39

    945,000       1,004,705  

Series A 6.00% 5/1/47

    1,475,000       1,565,535  

Winona Health Care Facilities Revenue

   

(Winona Health Obligation)

   

4.65% 7/1/26

    465,000       494,509  

4.75% 7/1/27

    785,000       834,141  

5.00% 7/1/34

    750,000       795,195  

Woodbury Housing & Redevelopment Authority Revenue

   

(St. Therese of Woodbury) 5.125% 12/1/44

    1,250,000       1,273,937  
   

 

 

 
      49,245,536  
   

 

 

 

Housing Revenue Bonds – 2.03%

 

Minneapolis Multifamily Housing Revenue

   

(Olson Townhomes Project) 6.00% 12/1/19 (AMT)

    345,000       345,200  
    Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Housing Revenue Bonds (continued)

 

Minnesota Housing Finance Agency

   

(Non Ace – State Appropriated Housing) 5.00% 8/1/33

    1,390,000     $ 1,579,082  

Minnesota State Housing Finance Agency Homeownership

   

(Mortgage-Backed Securities Program) 4.40% 7/1/32 (GNMA) (FNMA)

    875,000       933,957  

Northwest Multi-County Housing & Redevelopment Authority

   

(Pooled Housing Program) 5.50% 7/1/45

    560,000       565,718  
   

 

 

 
      3,423,957  
   

 

 

 

Lease Revenue Bonds – 9.76%

 

 

Minnesota State General Fund Revenue Appropriations

   

Series A 5.00% 6/1/32

    780,000       902,600  

Series A 5.00% 6/1/38

    5,500,000           6,282,155  

Series A 5.00% 6/1/43

    1,750,000       1,989,890  

University of Minnesota Special Purpose Revenue

   

(State Supported Biomed Science Research)

   

5.00% 8/1/35

    1,040,000       1,142,045  

5.00% 8/1/36

    4,000,000       4,477,640  

Virginia Housing & Redevelopment Authority Health Care Facility Lease Revenue

   

5.25% 10/1/25

    680,000       681,639  

5.375% 10/1/30

    965,000       967,065  
   

 

 

 
      16,443,034  
   

 

 

 

Local General Obligation Bonds – 13.84%

 

 

Burnsville-Eagan-Savage Independent School District No 191

   

(Alternative Facilities) Series A 4.00% 2/1/28

    1,185,000       1,326,584  

Duluth Independent School District No 709

   

Series A 4.00% 2/1/27

    600,000       673,266  
 

 

      (continues)    11


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

   

Principal  

Amount°  

   

Value

(US $)

 

Municipal Bonds (continued)

 

Local General Obligation Bonds (continued)

 

Duluth, Minnesota
(Improvement DECC) Series A 5.00% 2/1/34 Hennepin County

    545,000     $ 637,132  

Series A 5.00% 12/1/36

    1,300,000       1,549,600  

Series A 5.00% 12/1/41

    1,060,000       1,252,146  

Series C 5.00% 12/1/37

    5,235,000       6,221,326  

Hopkins Independent School District No. 270

   

Series A 5.00% 2/1/28

    1,000,000       1,117,410  

Mahtomedi Independent School District No. 832

   

(School Building) Series A 5.00% 2/1/28

    515,000       612,376  

Metropolitan Council Waste Water Revenue

   

Series C 4.00% 3/1/31

    1,355,000       1,529,510  

Series C 4.00% 3/1/32

    1,405,000       1,574,654  

Mountain Iron-Buhl Independent School District No. 712

   

(School Building) Series A 4.00% 2/1/26

    1,315,000       1,512,750  

St Michael-Albertville Independent School District No. 885

   

(School Building) Series A 5.00% 2/1/27

    1,300,000       1,585,103  

St. Paul Independent School District No. 625

   

(School Building) Series B 5.00% 2/1/26

    1,000,000       1,165,680  

Willmar

   

(Rice Memorial Hospital Project) Series A 4.00% 2/1/32

    2,440,000       2,565,294  
   

 

 

 
        23,322,831  
   

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 29.13%

 

Anoka Health Care Facilities Revenue

   

(Homestead Anoka Project) Series A 7.00% 11/1/46-19 §

    1,200,000       1,354,212  
   

Principal  

Amount°  

   

Value

(US $)

 

Municipal Bonds (continued)

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

Dakota-Washington Counties Housing & Redevelopment Authority Single Family Residential Mortgage Revenue

   

(City of Bloomington) Series B 8.375% 9/1/21 (GNMA) (AMT)

    7,055,000     $   8,854,660  

Deephaven Charter School

   

(Eagle Ridge Academy Project) Series A 5.50% 7/1/43-23 §

    500,000       598,295  

Minneapolis Health Care System Revenue

   

(Fairview Health Services)

   

Series A 6.625% 11/15/28-18 §

    500,000       531,705  

Series B 6.50% 11/15/38-18 (AGC) §

    355,000       377,035  

Minneapolis Revenue

   

(National Marrow Donor Program Project) Series NMDP 4.875% 8/1/25-18 §

    1,000,000       1,032,660  

Minnesota Higher Education Facilities Authority Revenue

   

(Carleton College) Series D 5.00% 3/1/30-19 §

    1,120,000       1,183,381  

Rochester Health Care & Housing Revenue

   

(Samaritan Bethany) Series A 7.375% 12/1/41-19 §

    1,220,000       1,381,821  

Rocori Independent School District No. 750

   

(School Building)

   

Series B 5.00% 2/1/22-19 §

    1,010,000       1,064,045  

Series B 5.00% 2/1/24-19 §

    1,075,000       1,132,523  

Series B 5.00% 2/1/25-19 §

    1,115,000       1,174,664  

Series B 5.00% 2/1/26-19 §

    1,155,000       1,216,804  

St. Cloud Health Care Revenue

   

(Centracare Health System Project) 5.50% 5/1/39-19 (AGC) §

    1,500,000       1,605,960  
 

 

12


Table of Contents

 

 

 

 

 

 

 

    Principal  
Amount°  
   

Value

(US $)

 

Municipal Bonds (continued)

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

St. Cloud Health Care Revenue

   

Series A 5.125%
5/1/30-20 §

    5,080,000     $     5,605,475  

St. Louis Park Health Care Facilities Revenue

   

(Park Nicollet Health Services)

   

5.75% 7/1/39-19 §

    2,000,000       2,164,520  

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

   

(Allina Health System)

   

Series A1 5.25% 11/15/29-19 §

    755,000       821,916  

St. Paul Housing & Redevelopment Authority Hospital Facility

   

(Healtheast Care System Project)

   

Series A 5.00% 11/15/29-25 §

    395,000       487,481  

Series A 5.00% 11/15/30-25 §

    290,000       357,898  

St. Paul Sewer Revenue

   

Series D 5.00%
12/1/21-18 §

    1,325,000       1,361,437  

University of Minnesota

   

Series A 5.25%
12/1/28-20 §

    500,000       564,365  

Series A 5.25%
4/1/29-19 §

    1,000,000       1,063,350  

Series A 5.50% 7/1/21

    4,000,000       4,474,160  

Series D 5.00%
12/1/27-21 §

    1,110,000       1,279,009  

Series D 5.00%
12/1/28-21 §

    1,880,000       2,166,249  

Series D 5.00%
12/1/29-21 §

    2,265,000       2,609,869  

Series D 5.00%
12/1/31-21 §

    1,000,000       1,152,260  

Series D 5.00%
12/1/36-21 §

    3,000,000       3,456,780  
   

 

 

 
      49,072,534  
   

 

 

 

Special Tax Revenue Bonds – 2.66%

 

Guam Government Business Privilege Tax Revenue

   

Series A 5.25% 1/1/36

    150,000       158,705  
    Principal  
Amount°  
   

Value

(US $)

 

Municipal Bonds (continued)

 

Special Tax Revenue Bonds (continued)

 

Hennepin County Sales Tax Revenue

   

(Second Lien-Ballpark Project) Series B 4.75% 12/15/27

    1,905,000     $     1,920,259  

Minneapolis Community Planning & Economic Development Department

   

(Limited Tax Supported Common Bond Fund) 6.25% 12/1/30

    1,000,000       1,133,820  

Minneapolis Revenue

   

(YMCA Greater Twin Cities Project) 4.00% 6/1/29

    165,000       176,796  

St. Paul Sales Tax Revenue

   

Series G 5.00% 11/1/30

    935,000       1,093,127  
   

 

 

 
      4,482,707  
   

 

 

 

State General Obligation Bonds – 14.99%

 

 

Minnesota State

   

Series A 5.00% 8/1/24

    4,500,000       5,470,470  

Series A 5.00% 8/1/29

    700,000       844,039  

(State Trunk Highway)

   

Series B 5.00% 10/1/22

    5,500,000       6,302,175  

Series B 5.00% 10/1/29

    3,315,000       3,787,321  

(State Various Purpose) Series D 5.00% 8/1/24

    2,700,000       2,991,330  

(Various Purposes) Series F 5.00% 10/1/22

    5,000,000       5,865,900  
   

 

 

 
      25,261,235  
   

 

 

 

Transportation Revenue Bonds – 7.66%

 

 

Minneapolis – St. Paul

   

Metropolitan Airports Commission Revenue

   

5.00% 1/1/21

    600,000       672,978  

5.00% 1/1/22

    670,000       747,164  

Subordinate

   

Series A 5.00% 1/1/31

    410,000       496,096  

Series A 5.00% 1/1/32

    1,255,000       1,505,875  

Series B 5.00% 1/1/26

    540,000       614,509  

Series B 5.00% 1/1/26 (AMT)

    500,000       574,450  

Series B 5.00% 1/1/27

    1,190,000       1,353,149  

Series B 5.00% 1/1/30

    500,000       558,935  

Series B 5.00% 1/1/31

    250,000       278,820  

Series C 5.00% 1/1/33

    2,000,000       2,385,260  

Series C 5.00% 1/1/36

    1,000,000       1,179,140  

Series C 5.00% 1/1/46

    1,245,000       1,439,432  
 

 

      (continues)    13


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

    Principal  
Amount°  
   

Value

(US $)

 

Municipal Bonds (continued)

 

Transportation Revenue Bonds (continued)

 

St. Paul Housing & Redevelopment Authority

   

Health Care Facilities Revenue

   

Series A 3.00% 8/1/29

    710,000     $ 705,435  

St. Paul Port Authority Revenue

   

(Amherst H. Wilder Foundation) Series 3 5.00% 12/1/36

    380,000       399,053  
   

 

 

 
      12,910,296  
   

 

 

 

Water & Sewer Revenue Bonds – 1.21%

 

Guam Government Waterworks Authority 5.00% 1/1/46

    725,000       774,199  

Metropolitan Council Waste Water Revenue

   

Series B 4.00% 9/1/27

    1,145,000       1,259,729  
   

 

 

 
      2,033,928  
   

 

 

 

Total Municipal Bonds
(cost $230,983,298)

      241,290,816  
   

 

 

 

Short-Term Investment – 0.37%

 

Variable Rate Demand Notes – 0.37%¤

 

Minneapolis – St. Paul Housing & Redevelopment Authority Health Care Revenue Series A-II

   

(Children’s Hospitals & Clinics) 0.84% 8/15/37 (AGM) (SPA – US Bank N.A.)

    625,000       625,000  
   

 

 

 

Total Short-Term Investment
(cost $625,000)

      625,000  
   

 

 

 

Total Value of Securities – 143.58%
(cost $231,608,298)

   $ 241,915,816  
  

 

 

 

 

# Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended.At Sept. 30, 2017, the aggregate value of Rule 144A securities was $4,367,233, which represents 2.59% of the Fund’s net assets. See Note 5 in “Notes to financial statements.”
¤ Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Sept. 30, 2017.
§ Pre-refunded bonds. Municipal bonds that are generally backed or secured by USTreasury bonds.For pre-refunded bonds,the stated maturity is followed by the year in which the bond is pre-refunded.
° Principal amount shown is stated in US dollars unless noted that the security is denominated in another currency.

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal   Corporation

AMT – Subject to Alternative Minimum Tax

FNMA – Federal National Mortgage Association Collateral

GNMA – Government National Mortgage Association   Collateral

N.A. – National Association

SPA – Stand-by Purchase Agreement

See accompanying notes, which are an integral part of the financial statements.

 

 

14


Table of Contents

 

 

 

 

 

 

 

Delaware Investments® National Municipal Income Fund

September 30, 2017 (Unaudited)

 

     Principal   
Amount°   
    

Value

(US $)

 

 

 

Municipal Bonds – 142.57%

     

 

 

Corporate-Backed Revenue Bonds – 10.60%

 

Buckeye, Ohio Tobacco Settlement Financing Authority

     

Asset-Backed -2

     

Series A-2 5.875% 6/1/47

     500,000      $ 480,970  

Series A-2 6.50% 6/1/47

     430,000        429,940  

Golden State, California Tobacco Securitization Corporate Settlement Revenue

     790,000        790,000  

(Asset-Backed Senior Notes) Series A-1 5.75% 6/1/47

     

Illinois Railsplitter Tobacco Settlement Authority 6.25% 6/1/24

     500,000        510,195  

Louisiana Local Government Environmental Facilities & Community Development Authority

     

(Westlake Chemical)

     

Series A 6.50% 8/1/29

     645,000        727,495  

Series A-1 6.50% 11/1/35

     255,000        288,260  

M-S-R Energy Authority, California Gas

     

Series B 6.50% 11/1/39

     250,000        353,103  

Series C 7.00% 11/1/34

     1,000,000        1,429,490  

Shoals, Indiana

     

(National Gypsum Project) 7.25% 11/1/43 (AMT)

     310,000        355,747  

Suffolk County, New York Tobacco Asset Securitization

     

Series B 5.00% 6/1/32

     750,000        809,813  

Tobacco Settlement Financing Corporation, Louisiana

     

Asset-Backed Note Series A 5.25% 5/15/35

     460,000        506,455  

TSASC Revenue, New York

     

(Settlement) Series A 5.00% 6/1/41

     60,000        66,563  

Valparaiso, Indiana

     

(Pratt Paper Project) 7.00% 1/1/44 (AMT)

     240,000        287,479  
     

 

 

 
        7,035,510  
     

 

 

 
     Principal   
Amount°   
    

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Education Revenue Bonds – 22.42%

 

Arizona Industrial Development Authority Revenue

     

(American Charter Schools Foundation Project) 144A 6.00% 7/1/47 #

     330,000      $ 354,938  

California Educational Facilities Authority Revenue

     

(Loma Linda University) Series A 5.00% 4/1/47

     500,000        563,650  

California State University

     

(Systemwide) Series A 5.00% 11/1/42

     200,000        235,668  

East Hempfield Township, Pennsylvania Industrial Development Authority

     

(Student Services Income - Student Housing Project) 5.00% 7/1/35

     1,000,000        1,067,850  

Health & Educational Facilities Authority of the State of Missouri

     

(St. Louis College of Pharmacy Project) 5.25% 5/1/33

     500,000        550,715  

(Washington University) Series B 5.00% 11/15/30

     600,000        683,808  

Louisiana Public Facilities Authority Revenue

     

(Provident Group-Flagship Properties) Series A 5.00% 7/1/56

     500,000        547,765  

Maryland Health & Higher Educational Facilities Authority

     

(Loyola University) Series A 5.00% 10/1/39

     650,000        724,393  

Massachusetts Development Finance Agency

     

(Umass Boston Student Housing Project) 5.00% 10/1/48

     285,000        312,243  

Monroe County, New York Industrial Development Revenue

     

(Nazareth College Rochester Project) 5.50% 10/1/41

     495,000        540,208  
 

 

      (continues)    15


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

    Principal  
Amount°  
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Education Revenue Bonds (continued)

 

Montgomery County, Pennsylvania Higher Education & Health Authority Revenue

   

(Arcadia University) 5.25% 4/1/30

    550,000     $ 576,537  

New Hope, Texas Cultural Education Facilities

   

(Chief-Collegiate Housing- Tarleton St.) 5.00% 4/1/34

    1,000,000       1,082,970  

New Jersey Economic Development Authority Revenue

   

(MSU Student Housing Project) 5.875% 6/1/42

    450,000       488,700  

New York City, New York Trust For Cultural Resources

   

(Whitney Museum of American Art) 5.00% 7/1/31

    500,000       555,725  

New York State Dormitory Authority

   

(Columbia University) 5.00% 10/1/41

    600,000       672,882  

Pennsylvania State University

   

Series A 5.00% 9/1/47

    1,000,000       1,169,580  

Philadelphia, Pennsylvania Authority for Industrial Development

   

(1st Philadelphia Preparatory College) 7.25% 6/15/43

    370,000       430,436  

Phoenix, Arizona Industrial Development Authority Revenue

   

(Rowan University Project) 5.00% 6/1/42

    1,000,000       1,078,850  

Pima County, Arizona Industrial Development Authority Education Revenue

   

(Edkey Charter School Project) 6.00% 7/1/48

    500,000       420,985  

Private Colleges & Universities Authority Revenue, Georgia

   

(Mercer University) Series A 5.00% 10/1/32

    135,000       145,013  
    Principal  
Amount°  
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Education Revenue Bonds (continued)

 

Swarthmore Borough Authority, Pennsylvania

   

(Swarthmore College Project) 5.00% 9/15/32

    490,000     $ 580,993  

Troy, New York Capital Resource Revenue

   

(Rensselaer Polytechnic) Series A 5.125% 9/1/40

    600,000       656,592  

University of California

   

Series AI 5.00% 5/15/32

    1,000,000       1,171,690  

Wyoming Community Development Authority Student Housing Revenue

   

(CHF-Wyoming LLC) 6.50% 7/1/43

    250,000       273,673  
   

 

 

 
        14,885,864  
   

 

 

 

Electric Revenue Bonds – 3.35%

 

Imperial Irrigation District Electric System Revenue, California

   

Series C 5.00% 11/1/28

    60,000       73,466  

JEA Electric System Revenue, Florida

   

Series A 5.00% 10/1/33

    1,000,000       1,151,250  

Long Island Power Authority, New York

   

Series A 5.00% 9/1/44

    250,000       282,540  

Series B 5.00% 9/1/46

    130,000       148,794  

Philadelphia, Pennsylvania Gas Works Revenue

   

(1998 General Ordinance Fifteenth Series) 5.00% 8/1/47

    500,000       567,745  
   

 

 

 
        2,223,795  
   

 

 

 

Healthcare Revenue Bonds – 24.65%

 

Alabama Special Care Facilities Financing Authority-Birmingham Alabama

   

(Methodist Home for the Aging) 6.00% 6/1/50

    500,000       554,840  

Arizona Health Facilities Authority Revenue

   

(Catholic Healthcare West)

   

Series D 5.00% 7/1/28

    500,000       525,025  
 

 

16


Table of Contents

 

 

 

 

 

 

 

    Principal   
Amount°   
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Healthcare Revenue Bonds (continued)

 

California Health Facilities Financing Authority Revenue

   

(Kaiser Permanente)

   

Series A-2 5.00% 11/1/47

    400,000     $ 515,268  

California Statewide Communities Development Authority

   

(Loma Linda University Medical Center) Series A 144A 5.25% 12/1/56 #

    760,000       836,600  

Capital Trust Agency, Florida

   

(Tuscan Gardens Senior Living Center) Series A 7.00% 4/1/49

    375,000       371,280  

Colorado Health Facilities Authority Revenue

   

(Healthcare Facilities - American Baptist) 8.00% 8/1/43

    330,000       383,377  

Cuyahoga County, Ohio

   

Hospital Revenue

   

(The Metrohealth System) 5.50% 2/15/57

    1,000,000       1,104,730  

Hawaii Pacific Health Special Purpose Revenue

   

Series A 5.50% 7/1/40

    300,000       324,141  

Housing & Redevelopment Authority of The City of St. Paul Minnesota

   

(Healthpartners Obligation Group) 5.00% 7/1/29

    1,000,000       1,169,090  

Kalispell, Montana

   

(Immanuel Lutheran Corporation Project)

   

Series A 5.25% 5/15/37

    700,000       732,816  

Lycoming County, Pennsylvania Authority Health System Revenue

   

(Susquehanna Health System Project) Series A 5.50% 7/1/28

    500,000       533,925  

Maine Health & Higher Educational Facilities Authority Revenue

   

(Maine General Medical Center) 6.75% 7/1/41

    300,000       327,060  
    Principal   
Amount°   
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Healthcare Revenue Bonds (continued)

 

Maricopa County, Arizona Industrial Development Authority Health Facilities Revenue

   

(Catholic Healthcare West)

   

Series A 6.00% 7/1/39

    500,000     $ 533,510  

Miami-Dade County, Florida

   

Health Facilities Authority Revenue

   

(Nicklaus Children’s Hospital Project) 5.00% 8/1/47

    200,000       225,846  

Michigan Finance Authority Revenue

   

(Beaumont Health Credit Group) 5.00% 11/1/44

    1,000,000       1,115,290  

Moon, Pennsylvania Industrial Development Authority

   

(Baptist Homes Society Obligation) 6.125% 7/1/50

    750,000       813,405  

New Hampshire Health and Education Facilities Authority Revenue

   

(Dartmouth - Hitchcock Medical Center) 6.00% 8/1/38

    300,000       325,761  

New Hope, Texas Cultural Education Facilities

   

(Cardinal Bay Inc.)

   

Series A1 4.00% 7/1/36

    55,000       56,930  

Series A1 5.00% 7/1/46

    135,000       149,828  

Series A1 5.00% 7/1/51

    135,000       149,614  

Series B 4.25% 7/1/36

    80,000       81,520  

Series B 4.75% 7/1/51

    160,000       165,803  

Series B 5.00% 7/1/46

    135,000       143,956  

New Jersey Health Care

   

Facilities Financing Authority Revenue

   

(St. Peters University Hospital) 6.25% 7/1/35

    300,000       328,413  

New York State Dormitory Authority

   

(Orange Regional Medical Center) 144A 5.00% 12/1/35 #

    500,000       548,160  
 

 

      (continues)    17


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

    Principal  
Amount°  
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Healthcare Revenue Bonds (continued)

 

Orange County, Florida Health Facilities Authority Revenue

   

(Mayflower Retirement Center) 5.00% 6/1/32

    400,000     $ 425,740  

5.00% 6/1/36

    250,000       264,220  

5.125% 6/1/42

    750,000       791,887  

Oregon State Facilities Authority Revenue

   

(Peacehealth Project)

   

Series A 5.00% 11/15/29

    500,000       580,120  

Palm Beach County Health Facilities Authority, Florida

   

(Sinai Residences Boca Raton Project)

   

7.25% 6/1/34

    20,000       24,134  

7.50% 6/1/49

    105,000       127,844  

Palomar Health, California 5.00% 11/1/39

    130,000       143,573  

Tarrant County, Texas Cultural Education Facilities Finance

   

(Baylor Scott & White Health) Series A 5.00% 11/15/45

    330,000       373,398  

(Buckner Senior Living - Ventana Project) 6.75% 11/15/47

    250,000       271,150  

Westminster, Maryland (Lutheran Village Millers Grant Inc.) 6.00% 7/1/34

    500,000       540,510  

Yavapai County, Arizona

   

Industrial Development Authority Revenue

   

(Yavapai Regional Medical Center) Series A 5.00% 8/1/28

    720,000       803,894  
   

 

 

 
        16,362,658  
   

 

 

 

Housing Revenue Bond – 0.66%

 

California Municipal Finance Authority Mobile Home Park Revenue

   

(Caritas Project) Series A 6.40% 8/15/45

    405,000       438,255  
   

 

 

 
      438,255  
   

 

 

 
   

Principal  

Amount°  

   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Lease Revenue Bonds – 10.44%

 

California State Public Works Board Lease Revenue

   

(Various Capital Projects)

   

Series A 5.00% 4/1/37

    1,000,000     $ 1,127,260  

Idaho State Building Authority Revenue

   

(Health & Welfare Project)

   

Series A 5.00% 9/1/24

    135,000       155,015  

(State Police) Series I 5.00% 9/1/23

    760,000       873,529  

Minnesota State General Revenue Appropriations

   

Series B 5.00% 3/1/29

    2,000,000       2,285,880  

MTA Hudson Rail Yards Trust Obligations, New York

   

Series A 5.00% 11/15/56

    735,000       823,575  

New Jersey Economic Development Authority

   

Series WW 5.25% 6/15/30

    1,000,000       1,114,980  

(School Facilities Construction) 5.00% 9/1/18

    25,000       25,780  

Public Finance Authority, Wisconsin Airport Facilities Revenue

   

(AFCO Investors II Portfolio) 5.75% 10/1/31

    500,000       526,975  
   

 

 

 
      6,932,994  
   

 

 

 

Local General Obligation Bonds – 3.45%

 

Chicago, Illinois

   

Series A 5.50% 1/1/34

    225,000       247,246  

Series C 5.00% 1/1/38

    500,000       532,660  

District of Columbia

   

Series A 5.00% 6/1/37

    1,000,000       1,183,380  

New York, New York

   

Series A-1 5.25% 8/15/21

    250,000       259,467  

Series I-1 5.375% 4/1/36

    65,000       69,135  
   

 

 

 
      2,291,888  
   

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 18.78%

 

Atlanta, Georgia Water & Wastewater Revenue

   

Series A 6.25%

   

11/1/39-19§

    300,000       332,541  

Bowling Green, Ohio Student Housing Revenue

   

(CFP I State University Project) 6.00% 6/1/45-20§

    260,000       292,669  
 

 

18


Table of Contents

 

 

 

 

 

 

 

    Principal  
Amount°  
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

Brevard County, Florida Health Facilities Authority Revenue

   

(Health First Project) 7.00% 4/1/39-19§

    350,000     $ 381,441  

Brooklyn Arena Local Development, New York Pilot Revenue

   

(Barclays Center Project)

    940,000       1,052,527  

6.25% 7/15/40-20§

   

6.50% 7/15/30-20§

    300,000       337,611  

Butler County, Pennsylvania Hospital Authority Revenue

   

(Butler Health System Project)

   

7.125% 7/1/29-19§

    300,000       330,834  

California State Economic Recovery

   

(Unrefunded) Series A 5.25% 7/1/21-19§

    95,000       102,163  

California Statewide Communities Development Authority School Facility Revenue

   

(Aspire Public Schools) 6.125% 7/1/46-19§

    625,000       665,913  

Central Texas Regional Mobility Authority Revenue Senior Lien 6.00% 1/1/41-21§

    520,000       598,905  

Harris County, Texas Industrial Development Corporation Solid Waste Disposal Revenue

   

(Deer Park Refining Project) 5.00% 2/1/23-19§

    150,000       162,684  

Illinois Finance Authority Revenue

   

(Silver Cross & Medical Centers) 7.00% 8/15/44-19§

    950,000       1,053,825  

Koyukuk, Alaska Revenue

   

(Tanana Chiefs Conference Health Care Facility Project) 7.75% 10/1/41-19§

    300,000       338,610  

Louisiana Public Facilities Authority Revenue

   

(Ochsner Clinic Foundation Project) 6.50% 5/15/37-21§

    105,000       124,636  
   

Principal

Amount°

   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

Marietta, Georgia Development Authority Revenue

   

(Life University Income Project) 7.00%

   

6/15/39-18§

    430,000     $ 448,133  

Metropolitan Transit Authority of Harris County, Texas

   

Series A 5.00%

   

11/1/24-21§

    500,000       575,005  

Monroe County, Pennsylvania Hospital Authority Revenue

   

(Pocono Medical Center)

   

Series A 5.00% 1/1/41-22§

    500,000       576,115  

New Jersey Turnpike Authority

   

Series A 5.00% 1/1/27-22§

    25,000       29,158  

New Mexico Hospital Equipment Loan Council Revenue

   

(Presbyterian Healthcare) 5.00% 8/1/39-19§

    500,000       535,885  

New York State Dormitory Authority

   

(State Personal Income Tax Revenue-Education)

   

Series A 5.00% 3/15/38-19§

    570,000       603,499  

New York, New York

   

Series I-1 5.375% 4/1/36-19§

    185,000       197,193  

Ohio State

   

(Cleveland Clinic Health)

   

Series A 5.50% 1/1/39-19§

    300,000       317,148  

Oregon State Department of Transportation

   

Series A 5.00% 11/15/26-23§

    1,000,000       1,202,390  

Oregon State Facilities Authority Revenue

   

(Concordia University Project) Series A 144A 6.125% 9/1/30-20#§

    100,000       114,120  

Pennsylvania State Higher Educational Facilities Authority Revenue

   

(Edinboro University Foundation) 5.80% 7/1/30-20§

    400,000       450,068  
 

 

      (continues)    19


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

    Principal  
Amount°  
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

San Francisco, California City & County Public Utilities Commission Water Revenue

   

Series F 5.00% 11/1/27-20§

    500,000     $ 560,950  

University Medical Center, Tucson, Arizona Hospital Revenue 6.50% 7/1/39-19§

    500,000       547,265  

University of Arizona

   

Series A 5.00% 6/1/39-19§

    500,000       533,220  
   

 

 

 
      12,464,508  
   

 

 

 

Special Tax Revenue Bonds – 12.34%

 

Anne Arundel County, Maryland Special Obligation Revenue

   

(National Business Park - North Project) 6.10% 7/1/40

    200,000       206,048  

Central Puget Sound, Washington Regional Transit Authority

   

(Green Bond - Improvement) Series S-1 5.00% 11/1/35

    750,000       888,337  

Guam Government Business Privilege Tax Revenue

   

Series A 5.00% 1/1/22

    775,000       856,026  

Series B-1 5.00% 1/1/42

    540,000       559,408  

Massachusetts Bay Transportation Authority Senior

   

Series A 5.25% 7/1/29

    200,000       256,896  

Mosaic District, Virginia Community Development Authority Revenue

   

Series A 6.875% 3/1/36

    520,000       571,714  

New Jersey Economic Development Authority Revenue

   

(Cigarette Tax)

   

5.00% 6/15/28

    200,000       215,700  

5.00% 6/15/29

    800,000       859,312  

(School Facilities Construction) Series AA 5.50% 12/15/29

    295,000       308,759  
    Principal  
Amount°  
   

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Special Tax Revenue Bonds (continued)

 

New York City, New York Transitional Finance Authority Future Tax Secured Revenue

   

(Future Tax Secured - Subordinated Fiscal) Series E-1 5.00% 2/1/41

    745,000     $ 852,489  

New York State Dormitory Authority

   

Series A 5.00% 3/15/33

    1,000,000       1,152,230  

Northampton County, Pennsylvania Industrial Development Authority Revenue

   

(Route 33 Project) 7.00% 7/1/32

    205,000       239,188  

Public Finance Authority, Wisconsin Airport Facilities Revenue

   

(American Dream @ Meadowlands Project) 144A 7.00% 12/1/50 #

    380,000       442,795  

Regional Transportation District, Colorado Tax Revenue

   

(Denver Transit Partners) 6.00% 1/15/41

    500,000       548,560  

Wyandotte County, Kansas City, Kansas Unified Government Special Obligation Revenue

   

(Sales Tax - Vacation Village Project A) Series A 5.75% 9/1/32

    235,000       236,920  
   

 

 

 
      8,194,382  
   

 

 

 

State General Obligation Bonds – 6.82%

 

California State

   

5.25% 11/1/40

    320,000       359,142  

(Various Purposes)

   

4.00% 11/1/34

    205,000       222,913  

4.00% 11/1/47

    200,000       211,750  

5.00% 8/1/27

    500,000       616,485  

5.00% 10/1/41

    440,000       498,551  

5.00% 11/1/47

    1,000,000       1,172,020  

6.00% 4/1/38

    105,000       112,740  

Illinois State

   

5.00% 5/1/36

    90,000       94,685  

5.00% 2/1/39

    160,000       167,413  

Series A 5.00% 4/1/38

    170,000       177,047  
 

 

20


Table of Contents

 

 

 

 

 

 

 

     Principal  
Amount°  
    

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

State General Obligation Bonds (continued)

 

New York State

     

Series A 5.00% 2/15/39

     300,000      $ 316,479  

Oregon State

     

Series K 5.00% 5/1/22

     500,000        581,270  
     

 

 

 
            4,530,495  
     

 

 

 

Transportation Revenue Bonds – 24.56%

 

Alameda Corridor, California Transportation Authority

     

(2nd Sub Lien) Series B 5.00% 10/1/37

     430,000        490,144  

Atlanta, Georgia Department of Aviation

     

Series B 5.00% 1/1/29

     1,000,000        1,167,860  

Chicago, Illinois O’Hare International Airport Revenue

     

(General-Senior Lien) Series D 5.25% 1/1/34

     1,000,000        1,128,830  

Maryland State Economic Development Revenue

     

(Transportation Facilities Project) Series A 5.75% 6/1/35

     255,000        272,901  

Metropolitan Transportation Authority, New York

     

Series A 5.00% 11/15/41

     500,000        561,935  

New Jersey Turnpike Authority

     

Series A 5.00% 1/1/27

     475,000        546,317  

Series B 5.00% 1/1/40

     250,000        292,163  

New Orleans, Louisiana Aviation Board

     

Series B 5.00% 1/1/45 (AMT)

     1,000,000        1,106,130  

New York Liberty Development Revenue

     

(1 World Trade Center Port Authority Construction)

     

5.00% 12/15/41

     500,000        562,645  

New York Transportation Development

     

(La Guardia Airport)

     

Series A 5.25% 1/1/50 (AMT)

     700,000        779,639  

North Texas Tollway Authority Special Projects System

     

Series A 5.00% 9/1/20

     250,000        277,220  

Pennsylvania Turnpike Commission Subordinate

     

Series A-1 5.00% 12/1/43

     500,000        548,845  
     Principal  
Amount°  
    

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

 

 

Transportation Revenue Bonds (continued)

 

Pennsylvania Turnpike Commission Subordinate

     

Series A-1 5.00% 12/1/47

     210,000      $ 240,028  

(Special Motor License Foundation) Series B 5.00% 12/1/41

     500,000        552,350  

Port Authority of Allegheny County, Pennsylvania 5.75% 3/1/29

     900,000        1,030,806  

Port Authority of New York & New Jersey Special Project

     

(JFK International Air Terminal)

     

6.00% 12/1/42

     230,000        256,855  

6.50% 12/1/28

     500,000        520,000  

Salt Lake City, Utah Airport Revenue

     

Series B 5.00% 7/1/42

     625,000        729,437  

St. Louis, Missouri Airport Revenue

     

(Lambert St. Louis International)

     

5.00% 7/1/32 (AMT)

     1,000,000        1,089,830  

Series A-1 6.625% 7/1/34

     325,000        354,071  

Texas Private Activity Bond Surface Transportation

     

(Senior Lien - Blueridge Transportation)

     

5.00% 12/31/40 (AMT)

     110,000        120,839  

5.00% 12/31/45 (AMT)

     110,000        120,248  

5.00% 12/31/50 (AMT)

     160,000        174,312  

5.00% 12/31/55 (AMT)

     160,000        173,720  

Texas Private Activity Bond Surface Transportation Corporate Senior Lien Revenue

     

(LBJ Infrastructure)

     

7.00% 6/30/40

     285,000        322,241  

7.50% 6/30/33

     665,000        758,206  

(Mobility Partners) 7.50% 12/31/31

     500,000        561,970  

(NTE Mobility Partners)

     

6.75% 6/30/43 (AMT)

     225,000        260,348  

6.875% 12/31/39

     1,000,000        1,112,010  

7.00% 12/31/38 (AMT)

     165,000        190,950  
     

 

 

 
            16,302,850  
     

 

 

 
 

 

      (continues)    21


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

 

     Principal   
Amount°   
    

Value

(US $)

 

 

 

Municipal Bonds (continued)

 

Water & Sewer Revenue Bonds – 4.50%

 

City of Chicago, Illinois Waterworks Revenue (2nd Lien) 5.00% 11/1/29

     280,000      $ 323,968  

Massachusetts Water Resources Authority

     

(Green Bond) Series B 4.00% 8/1/36

     500,000        536,945  

New York City Water & Sewer

     

System, New York

     

(2nd Generation Fiscal 2013) Series CC 5.00% 6/15/47

     345,000        393,583  

Philadelphia, Pennsylvania Water & Wastewater Revenue

     

Series A 5.00% 7/1/45

     500,000        570,560  

Southern California Water

     

Replenishment District 5.00% 8/1/41

     1,000,000        1,161,480  
     

 

 

 
            2,986,536  
     

 

 

 

Total Municipal Bonds

 

(cost $88,099,486)

            94,649,735  
     

 

 

 
     

 

 

Short-Term Investment – 0.53%

 

Variable Rate Demand Note – 0.53%¤

 

Mississippi Business Finance

     

Corporation Gulf

     

Opportunity Zone Industrial

     

Development Revenue

     

Series I

     

(Chevron USA Inc. Project) 0.87% 11/1/35

     

(SPA - US Bank N.A.)

     350,000        350,000  
     

 

 

 

Total Short-Term Investment

 

(cost $350,000)

        350,000  
     

 

 

 

Total Value of Securities – 143.10%
(cost $88,449,486)

  

   $

94,999,735

 

  

 

 

 

 

 #

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended.At Sept. 30, 2017, the aggregate value of Rule 144A securities was $2,296,613, which represents 3.46% of the Fund’s net assets. See Note 5 in “Notes to financial statements.”

 ¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Sept. 30, 2017.

 §

Pre-refunded bonds. Municipal bonds that are generally backed or secured by USTreasury bonds.For pre-refunded bonds,the stated maturity is followed by the year in which the bond is pre-refunded.

 °

Principal amount shown is stated in US dollars unless noted that the security is denominated in another currency.

Summary of abbreviations:

AMT – Subject to Alternative Minimum Tax

N.A. – National Association

SPA – Stand-by Purchase Agreement

See accompanying notes, which are an integral part of the financial statements.

 

 

22


Table of Contents

Statements of assets and liabilities

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

September 30, 2017 (Unaudited)

 

     Delaware
Investments
Colorado
Municipal
Income
Fund, Inc.
  Delaware
Investments
Minnesota
Municipal
Income
Fund II, Inc.
  Delaware
Investments
National
Municipal
Income
Fund

Assets:

            

Investments, at value1

     $ 103,155,478     $ 241,290,816     $ 94,649,735

Short-term investments, at value2

       300,000       625,000       350,000

Cash

                   265,680

Interest income receivable

       1,451,135       3,097,338       1,297,253

Offering cost for preferred shareholders

       109,770       136,050       119,273

Prepaid rating agency fee

       24,917       24,083       28,833
    

 

 

     

 

 

     

 

 

 

Total assets

       105,041,300       245,173,287       96,710,774
    

 

 

     

 

 

     

 

 

 

Liabilities:

            

Cash overdraft

       448,891       562,063      

Liquidation value of preferred stock

       30,000,000       75,000,000       30,000,000

Payable for securities purchased

       1,070,540       938,523       240,347

Investment management fees payable

       34,131       80,391       31,800

Other accrued expenses

       32,106       76,402       29,715

Audit and tax fees payable

       21,042       20,970       20,970

Legal fees payable to affiliates

       1,082       1,787       1,859

Accounting and administration expenses payable to affiliates

       653       1,093       631

Directors’/Trustees’ fees and expenses payable

       179       411       162

Reports and statements to shareholders payable to affiliates

       35       80       32
    

 

 

     

 

 

     

 

 

 

Total liabilities

       31,608,659       76,681,720       30,325,516
    

 

 

     

 

 

     

 

 

 

Total Net Assets Applicable to Common Shareholders

     $ 73,432,641     $ 168,491,567     $ 66,385,258
    

 

 

     

 

 

     

 

 

 

Net Assets Applicable to Common Shareholders Consist of:

            

Paid-in capital ($0.001 par value)3,4

     $ 66,918,121     $ 157,931,075     $ 60,617,476

Undistributed net investment income

       462,254       359,122       223,004

Accumulated net realized loss on investments

       (453,913 )       (106,148 )       (1,005,471 )

Net unrealized appreciation of investments

       6,506,179       10,307,518       6,550,249
    

 

 

     

 

 

     

 

 

 

Total Net Assets Applicable to Common Shareholders

     $ 73,432,641     $ 168,491,567     $ 66,385,258
    

 

 

     

 

 

     

 

 

 

Net Asset Value per Common Share

     $ 15.18     $ 14.65     $ 14.66
    

 

 

     

 

 

     

 

 

 

1Investments, at cost

       96,649,299       230,983,298       88,099,486

2Short-term investments, at cost

       300,000       625,000       350,000

3Common shares outstanding

       4,837,100       11,504,975       4,528,443

4Common shares authorized

       200 million       200 million       unlimited

See accompanying notes, which are an integral part of the financial statements.

 

23


Table of Contents

Statements of operations

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

Six months ended September 30, 2017 (Unaudited)

 

     Delaware
Investments
Colorado
Municipal
Income
Fund, Inc.
  Delaware
Investments
Minnesota
Municipal
Income
Fund II, Inc.
  Delaware
Investments
National
Municipal
Income
Fund

Investment Income:

            

Interest

     $ 2,188,350     $ 4,436,250     $ 2,065,671
    

 

 

     

 

 

     

 

 

 

Expenses:

            

Management fees

       207,241       488,277       192,692

Interest expense

       305,174       762,935       305,174

Rating agency fees

       29,462       25,339       24,962

Audit and tax fees

       24,101       26,172       20,970

Accounting and administration expenses

       19,404       36,724       18,502

Dividend disbursing and transfer agent fees and expenses

       16,513       35,425       17,013

Reports and statements to shareholders

       11,346       25,145       10,479

Legal fees

       9,439       14,384       8,202

Offering costs

       9,017       12,119       10,455

Stock exchange fees

       2,388       5,471       2,141

Custodian fees

       1,755       5,732       1,821

Directors’/Trustees’ fees and expenses

       1,621       3,678       1,442

Registration fees

       398       507       430

Other

       7,827       15,843       12,034
    

 

 

     

 

 

     

 

 

 
       645,686       1,457,751       626,317

Less expense paid indirectly

       (1,149 )       (1,284 )       (775 )
    

 

 

     

 

 

     

 

 

 

Total operating expenses

       644,537       1,456,467       625,542
    

 

 

     

 

 

     

 

 

 

Net Investment Income

       1,543,813       2,979,783       1,440,129
    

 

 

     

 

 

     

 

 

 

Net Realized and Unrealized Gain:

            

Net realized gain on investments

       80,137       651,865       242,146

Net change in unrealized appreciation (depreciation) of investments

       1,286,198       2,326,858       1,269,163
    

 

 

     

 

 

     

 

 

 

Net Realized and Unrealized Gain

       1,366,335       2,978,723       1,511,309
    

 

 

     

 

 

     

 

 

 

Net Increase in Net Assets Resulting from Operations

     $ 2,910,148     $ 5,958,506     $ 2,951,438
    

 

 

     

 

 

     

 

 

 

See accompanying notes, which are an integral part of the financial statements.

 

24


Table of Contents

Statements of changes in net assets

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

 

     Delaware Investments
Colorado Municipal

Income Fund, Inc.
 
     Six months
ended
9/30/17
(Unaudited)
    Year ended
3/31/17
 

Increase (Decrease) in Net Assets from Operations:

    

Net investment income

   $ 1,543,813     $ 3,240,164  

Net realized gain

     80,137       608,285  

Net change in unrealized appreciation (depreciation)

     1,286,198       (3,897,264
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     2,910,148       (48,815
  

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

    

Net investment income

     (1,717,171     (3,482,712
  

 

 

   

 

 

 
     (1,717,171     (3,482,712
  

 

 

   

 

 

 

Net Increase (Decrease) in Net Assets Applicable to Common Shareholders

     1,192,977       (3,531,527

Net Assets Applicable to Common Shareholders:

    

Beginning of period

     72,239,664       75,771,191  
  

 

 

   

 

 

 

End of period

   $ 73,432,641     $ 72,239,664  
  

 

 

   

 

 

 

Undistributed net investment income

   $ 462,254     $ 635,612  
  

 

 

   

 

 

 

 

     Delaware Investments
Minnesota Municipal
Income Fund II, Inc.
 
     Six months
ended
9/30/17
(Unaudited)
    Year ended
3/31/17
 

Increase (Decrease) in Net Assets from Operations:

    

Net investment income

   $ 2,979,783     $ 6,309,240  

Net realized gain

     651,865       619,214  

Net change in unrealized appreciation (depreciation)

     2,326,858       (7,447,417
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     5,958,506       (518,963
  

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

    

Net investment income

     (3,221,393     (6,845,460
  

 

 

   

 

 

 
     (3,221,393     (6,845,460
  

 

 

   

 

 

 

Net Increase (Decrease) in Net Assets Applicable to Common Shareholders

     2,737,113       (7,364,423

Net Assets Applicable to Common Shareholders:

    

Beginning of period

     165,754,454       173,118,877  
  

 

 

   

 

 

 

End of period

   $ 168,491,567     $ 165,754,454  
  

 

 

   

 

 

 

Undistributed net investment income

   $ 359,122     $ 600,732  
  

 

 

   

 

 

 

 

25


Table of Contents

Statements of changes in net assets

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

 

     Delaware Investments
National Municipal
Income Fund
 
     Six months
ended
9/30/17
(Unaudited)
    Year ended
3/31/17
 

Increase (Decrease) in Net Assets from Operations:

    

Net investment income

   $ 1,440,129     $ 2,995,863  

Net realized gain

     242,146       147,253  

Net change in unrealized appreciation (depreciation)

     1,269,163       (3,279,316
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     2,951,438       (136,200
  

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

    

Net investment income

     (1,358,533     (3,079,341
  

 

 

   

 

 

 
     (1,358,533     (3,079,341
  

 

 

   

 

 

 

Net Increase (Decrease) in Net Assets Applicable to Common Shareholders

     1,592,905       (3,215,541

Net Assets Applicable to Common Shareholders:

    

Beginning of period

     64,792,353       68,007,894  
  

 

 

   

 

 

 

End of period

   $ 66,385,258     $ 64,792,353  
  

 

 

   

 

 

 

Undistributed net investment income

   $ 223,004     $ 141,408  
  

 

 

   

 

 

 

See accompanying notes, which are an integral part of the financial statements.

 

26


Table of Contents

Statements of cash flows

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

Six months ended September 30, 2017 (Unaudited)

 

     Delaware
Investments
Colorado
Municipal
Income
Fund, Inc.
  Delaware
Investments
Minnesota
Municipal
Income
Fund II, Inc.
  Delaware
Investments
National
Municipal
Income
Fund

Net Cash Provided by (Used for) Operating Activities:

            

Net increase in net assets resulting from operations

     $ 2,910,148     $ 5,958,506     $ 2,951,438
    

 

 

     

 

 

     

 

 

 

Adjustments to reconcile net increase in net assets from operations to cash provided by (used for) operating activities:

            

Amortization of premium and accretion of discount on investments

       214,104       1,129,192       252,578

Purchase of investment securities

       (4,022,980 )       (24,438,517 )       (11,981,572 )

Proceeds from disposition of investment securities

       2,427,615       22,207,319       11,930,508

(Purchase) sale from disposition of short-term investment securities, net

       300,000       975,000       (350,000 )

Net realized gain on investments

       (80,137 )       (651,865 )       (242,146 )

Net change in net unrealized (appreciation) depreciation

       (1,286,198 )       (2,326,858 )       (1,269,163 )

Decrease in receivable for securities sold

       4,904       25,275      

Increase (decrease) in interest receivable

       (25,034 )       137,398       42,869

Increase in other accrued expenses receivable

       (1,000 )       (6,000 )       (19,500 )

Amortization of offering costs for preferred shareholders

       16,479       20,458       17,918

Increase in payable for securities purchased

       800,359       248,433       240,347

Decrease in interest payable

                  

Decrease in investment management fees payable

       (465 )       (1,055 )       (286 )

Decrease in Trustees’ fees and expenses payable

       (11 )       (24 )       (8 )

Decrease in audit fees payable

       21,042       20,970       20,970

(Increase) decrease in other affiliates payable

       (532 )       (2,046 )       419

Decrease in other accrued expenses

       (5,272 )       (14,804 )       (9,580 )
    

 

 

     

 

 

     

 

 

 

Total adjustments

       (1,637,126 )       (2,677,124 )       (1,366,646 )
    

 

 

     

 

 

     

 

 

 

Net cash provided by operating activities

       1,273,022       3,281,382       1,584,792
    

 

 

     

 

 

     

 

 

 

Cash Flows Used for Financing Activities:

            

Cash dividends and distributions paid to common shareholders

       (2,007,397 )       (3,767,879 )       (1,584,935 )

Increase in bank overdraft

       448,891       562,063      
    

 

 

     

 

 

     

 

 

 

Net cash used for financing activities

       (1,558,506 )       (3,205,816 )       (1,584,935 )
    

 

 

     

 

 

     

 

 

 

Net increase (decrease) in cash

       (285,484 )       75,566       (143 )

Cash at beginning of year

       285,484       (75,566 )       265,823
    

 

 

     

 

 

     

 

 

 

Cash at end of year

     $     $     $ 265,680
    

 

 

     

 

 

     

 

 

 

Cash paid for interest expense for leverage

     $ 305,149     $ 762,872     $ 305,149
    

 

 

     

 

 

     

 

 

 

See accompanying notes, which are an integral part of the financial statements.

 

27


Table of Contents

Financial highlights

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
9/30/171
  Year ended
      (Unaudited)   3/31/17   3/31/16   3/31/15   3/31/14   3/31/13

Net asset value, beginning of period

     $ 14.93     $ 15.66     $ 15.55     $ 14.43     $ 15.37     $ 15.01

Income (loss) from investment operations:

                        

Net investment income2

       0.32       0.67       0.71       0.71       0.70       0.73

Net realized and unrealized gain (loss)

       0.29       (0.68 )       0.12       1.10       (0.93 )       0.42
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total from investment operations

       0.61       (0.01 )       0.83       1.81       (0.23 )       1.15
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Less dividends and distributions to common shareholders from:

                        

Net investment income

       (0.36 )       (0.72 )       (0.72 )       (0.69 )       (0.69 )       (0.69 )

Net realized gain

       —         —         —         —         (0.02 )       (0.10 )
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total dividends and distributions

       (0.36 )       (0.72 )       (0.72 )       (0.69 )       (0.71 )       (0.79 )
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of period

     $ 15.18     $ 14.93     $ 15.66     $ 15.55     $ 14.43     $ 15.37
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Market value, end of period

     $ 15.22     $ 14.70     $ 15.07     $ 14.35     $ 13.33     $ 14.84
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total investment return based on:3

                        

Market value

       5.98 %       2.24 %       10.38 %       13.01 %       (5.25 %)       6.92 %

Net asset value

       4.07 %       (0.07 %)       5.85 %       13.12 %       (0.97 %)       7.71 %

Ratios and supplemental data:

                        

Net assets applicable to common shares, end of period (000 omitted)

     $ 73,433     $ 72,240     $ 75,771     $ 75,226     $ 69,781     $ 74,349

Ratio of expenses to average net assets applicable to common shareholders4

       1.75 %       1.60 %       1.52 %       1.43 %       1.49 %       1.44 %

Ratio of net investment income to average net assets applicable to common shareholders5

       4.20 %       4.32 %       4.59 %       4.65 %       4.90 %       4.72 %

Portfolio turnover

       2 %       12 %       13 %       14 %       26 %       8 %

Leverage analysis:

                        

Value of preferred shares outstanding (000 omitted)6

     $ 30,000     $ 30,000     $ 30,000     $ 30,000     $ 30,000     $ 30,000

Net asset coverage per share of preferred shares, end of period6

     $ 344,775     $ 340,799     $ 352,571     $ 350,753     $ 332,602     $ 347,829

Liquidation value per share of preferred shares6

 

     $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

 

1 

Ratios have been annualized and total return and portfolio turnover have not been annualized.

2 

Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.063, $0.110, $0.079, $0.077, $0.078, and $0.079 per share for the six months ended Sept. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013, respectively, and from realized capital gains of $0.002, and $0.006 per share for the years ended March 31, 2014 and 2013, respectively.

3 

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.

4 

The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the six months ended Sept. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013 were 0.92%, 0.90%, 1.01%, 0.92%, 0.94%, and 0.89%, respectively.

5 

The ratio of net investment income excluding interest expense for the six months ended Sept. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013 were 5.03%, 5.03%, 5.11%, 5.16%, 5.45%, and 5.27%, respectively.

6 

In November 2011, the Fund issued a series of 300 variable rate preferred shares, with a liquidation preference of $100,000 per share (Series 2016 Shares).The Series 2016 Shares were redeemed on Feb. 2, 2016 and replaced with Series 2021 Shares, which are the same amount and value as the Fund’s Series 2016 Shares.

See accompanying notes, which are an integral part of the financial statements.

 

28


Table of Contents

    

 

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
9/30/171
  Year ended
      (Unaudited)   3/31/17   3/31/16   3/31/15   3/31/14   3/31/13

Net asset value, beginning of period

     $ 14.41     $ 15.05     $ 14.97     $ 14.31     $ 15.27     $ 14.94

Income (loss) from investment operations:

                        

Net investment income2

       0.26       0.55       0.63       0.64       0.65       0.72

Net realized and unrealized gain (loss)

       0.26       (0.59 )       0.08       0.69       (0.81 )       0.35
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total from investment operations

       0.52       (0.04 )       0.71       1.33       (0.16 )       1.07
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Less dividends and distributions to common shareholders from:

                        

Net investment income

       (0.28 )       (0.60 )       (0.63 )       (0.67 )       (0.69 )       (0.69 )

Net realized gain

                               (0.12 )       (0.04 )
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total dividends and distributions

       (0.28 )       (0.60 )       (0.63 )       (0.67 )       (0.81 )       (0.73 )
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of period

     $ 14.65     $ 14.41     $ 15.05     $ 14.97     $ 14.31     $ 15.27
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Market value, end of period

     $ 14.25     $ 14.56     $ 14.70     $ 13.85     $ 13.34     $ 15.63
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total investment return based on:3

                        

Market value

       (0.26% )       3.16%       11.17%       8.97%       (9.26% )       15.18%

Net asset value

       3.61%       (0.27% )       5.30%       9.80%       (0.36% )       7.18%

Ratios and supplemental data:

                        

Net assets applicable to common shares, end of period (000 omitted)

     $ 168,492     $ 165,754     $ 173,119     $ 172,280     $ 164,599     $ 175,629

Ratio of expenses to average net assets applicable to common shareholders4

       1.72%       1.59%       1.46%       1.40%       1.51%       1.40%

Ratio of net investment income to average net assets applicable to common shareholders5

       3.53%       3.69%       4.24%       4.33%       4.54%       4.65%

Portfolio turnover

       7%       9%       16%       10%       17%       24%

Leverage analysis:

                        

Value of preferred shares outstanding (000 omitted)6

     $ 75,000     $ 75,000     $ 75,000     $ 75,000     $ 75,000     $ 75,000

Net asset coverage per share of preferred shares, end of period6

     $ 324,655     $ 321,006     $ 330,825     $ 329,707     $ 319,465     $ 334,172

Liquidation value per share of preferred shares6

 

     $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

 

1 

Ratios have been annualized and total return and portfolio turnover have not been annualized.

2 

Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.066, $0.115, $0.083, $0.081, $0.076, and $0.084 per share for the six months ended Sept. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013, respectively, and from realized capital gains of $0.014, and $0.005 per share for the years ended March 31, 2014 and 2013, respectively.

3 

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.

4 

The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the six months ended Sep. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013 were 0.82%, 0.82%, 0.90%, 0.85%, 0.88%, and 0.82%, respectively.

5 

The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013 were 4.43%, 4.46%, 4.80%, 4.88%, 5.17%, and 5.23%, respectively.

6 

In November 2011, the Fund issued a series of 750 variable rate preferred shares, with a liquidation preference of $100,000 per share (Series 2016 Shares).The Series 2016 Shares were redeemed on Feb. 2, 2016 and replaced with Series 2021 Shares, which are the same amount and value as the Fund’s Series 2016 Shares.

See accompanying notes, which are an integral part of the financial statements.

 

      (continues)    29


Table of Contents

Financial highlights

 

Delaware Investments® National Municipal Income Fund

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    

Six months
ended
9/30/171

 

  Year ended
      (Unaudited)   3/31/17   3/31/16   3/31/15   3/31/14   3/31/13

Net asset value, beginning of period

     $ 14.31     $ 15.02     $ 14.97     $ 13.81     $ 14.99     $ 14.02

Income (loss) from investment operations:

                        

Net investment income2

       0.32       0.66       0.70       0.71       0.71       0.72

Net realized and unrealized gain (loss)

       0.33       (0.69 )       0.11       1.22       (1.18 )       0.86
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total from investment operations

       0.65       (0.03 )       0.81       1.93       (0.47 )       1.58
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Less dividends and distributions to common shareholders from:

                        

Net investment income

       (0.30 )       (0.68 )       (0.76 )       (0.77 )       (0.71 )       (0.61 )
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total dividends and distributions

       (0.30 )       (0.68 )       (0.76 )       (0.77 )       (0.71 )       (0.61 )
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of period

     $ 14.66     $ 14.31     $ 15.02     $ 14.97     $ 13.81     $ 14.99
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Market value, end of period

     $ 13.53     $ 12.94     $ 13.80     $ 13.14     $ 12.35     $ 14.48
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total investment return based on:3

                        

Market value

       6.92%       (1.50% )       11.32%       12.87%       (9.65% )       14.12%

Net asset value

       4.83%       0.01%       6.35%       14.99%       (2.41% )       11.56%

Ratios and supplemental data:

                        

Net assets applicable to common shares, end of period (000 omitted)

     $ 66,385     $ 64,792     $ 68,008     $ 67,804     $ 62,526     $ 67,876

Ratio of expenses to average net assets applicable to common shareholders4

       1.89%       1.73%       1.70%       1.60%       1.58%       1.56%

Ratio of net investment income to average net assets applicable to common shareholders5

       4.35%       4.45%       4.72%       4.86%       5.17%       4.86%

Portfolio turnover

       10%       13%       25%       38%       40%       42%

Leverage analysis:

                        

Value of preferred shares outstanding (000 omitted)6

     $ 30,000     $ 30,000     $ 30,000     $ 30,000     $ 30,000     $ 30,000

Net asset coverage per share of preferred shares, end of period6

     $ 321,284     $ 315,898     $ 326,693     $ 326,013     $ 308,420     $ 326,254

Liquidation value per share of preferred shares6

 

     $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

    $

 

100,000

 

 

 

1 

Ratios have been annualized and total return and portfolio turnover have not been annualized.

2 

Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.067, $0.117, $0.084, $0.083, $0.085, and $0.090 per share for the six months ended Sept. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013, respectively.

3 

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.

4 

The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the six months ended Sept. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013 were 0.97%, 0.94%, 1.13%, 1.03%, 0.96%, and 0.96%, respectively.

5 

The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30, 2017 and the years ended March 31, 2017, 2016, 2015, 2014, and 2013 were 5.27%, 5.24%, 5.29%, 5.44%, 5.79%, and 5.46%, respectively.

6 

In March 2012, the Fund issued a series of 300 variable rate preferred shares, with a liquidation preference of $100,000 per share (Series 2017 Shares). The Series 2017 Shares were redeemed on Feb. 2, 2016 and replaced with Series 2021 Shares, which are the same amount and value as the Fund’s Series 2017 Shares.

See accompanying notes, which are an integral part of the financial statements.

 

30


Table of Contents

Notes to financial statements

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

September 30, 2017 (Unaudited)

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). 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’ shares trade on the New York Stock Exchange MKT, the successor to the American Stock Exchange.

The investment objective of each of Colorado Municipal Fund and Minnesota Municipal Fund II is to provide current income exempt from federal income tax and from state personal income tax, if any, consistent with the preservation of capital. The investment objective of National Municipal Fund is to provide current income exempt from federal income tax, consistent with the preservation of capital. Each of Colorado Municipal Fund and Minnesota Municipal Fund II seeks to achieve its investment objective by investing substantially all of its net assets in investment grade, tax-exempt municipal obligations of its respective state at the time of investment. National Municipal Fund seeks to achieve its investment objective by investing at least 80% of its net assets in securities the income from which is exempt from federal income tax.

1. Significant Accounting Policies

The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Funds.

Security Valuation — Debt securities are valued based upon valuations provided by an independent pricing service or broker and reviewed by management. 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. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. 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 (each a Board, or collectively, the Boards). 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 foregoing valuation policies apply to restricted and unrestricted securities.

Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends 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. The Funds evaluate tax positions taken or expected to be taken in the course of preparing each Fund’s 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. Management has analyzed each Fund’s tax positions taken on the Fund’s federal income tax returns through the six months ended Sept. 30, 2017 and for all open tax years (years ended March 31, 2014–March 31, 2017), and has concluded that no provision for federal income tax is required in each Fund’s financial statements. If applicable, each Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in other expenses on the “Statements of operations.” During the six months ended Sept. 30, 2017, the Funds did not incur any interest or tax penalties.

Cash and Cash Equivalents — Cash and cash equivalents include deposits held at financial institutions, which are available for the Fund’s use with no restrictions, with original maturities of 90 days or less.

Use of Estimates — Each Fund is an investment company, whose financial statements are prepared in conformity with US GAAP. Therefore, each Fund follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent 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 and the differences could be material.

Other — Expenses directly attributable to each Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds SM by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain 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 on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Each Fund declares and pays

 

      (continues)   

31


Table of Contents

Notes to financial statements

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

 

 

1. Significant Accounting Policies (continued)

 

dividends from net investment income monthly and distributions from net realized gain on investments, if any, annually. Each Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.

Each Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expense paid under this arrangement is included on the “Statements of operations” under “Custodian fees” with the corresponding expense offset shown under “Less expense paid indirectly.” For the six months ended Sept. 30, 2017, each Fund earned the following amounts under this agreement:

 

Colorado
      Municipal      
Fund

 

      Minnesota      
Municipal

Fund II

 

National
Municipal
Fund

$1,149   $1,284   $775

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 Macquarie Investment Management Business Trust (formerly, Delaware Management Business Trust) and the investment manager, an annual fee of 0.40% which is calculated based on each Fund’s adjusted average daily net assets.

Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. For these services, DIFSC’s fees were calculated daily and paid monthly based on the aggregate daily net assets of the Delaware Funds from April 1, 2017 through Aug. 31, 2017 at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DIFSC under the service agreement described above were allocated among all funds in the Delaware Funds on a relative net asset value (NAV) basis. Effective Sept. 1, 2017, the Funds entered into an amendment to the DIFSC agreement. Under the amendment to the DIFSC agreement, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of the Delaware Funds at the following annual rate: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each Fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each Fund in the Delaware Funds then pays its relative portion of the remainder of the Total Fee on a relative NAV basis. These amounts are included on the “Statements of operations” under “Accounting and administration expenses.” For the six months ended Sept. 30, 2017, each Fund was charged for these services as follows:

 

      Colorado      
Municipal

Fund

 

      Minnesota      
Municipal

Fund II

 

National
Municipal
Fund

$2,653   $5,806   $2,490

As provided in the investment management agreement, each Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to each Fund. These amounts are included on the “Statements of operations” under “Legal fees.” For the six months ended Sept. 30, 2017, each Fund was charged for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees as follows:

 

      Colorado      
Municipal

Fund

 

      Minnesota      
Municipal

Fund II

 

National
Municipal
Fund

$8,201   $13,243   $8,628

Directors’/Trustees’ fees include expenses accrued by each Fund for each Director’s/Trustee’s retainer and meeting fees. Certain officers of DMC and DIFSC are officers and/or Directors/Trustees of the Funds. These officers and Directors/Trustees are paid no compensation by the Funds.

Cross trades for the six months ended Sept. 30, 2017, were executed by the Funds pursuant to procedures adopted by the Boards designed to ensure compliance with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies, or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common investment advisor (or affiliated investment advisors), common directors/trustees and/or common officers. At their regularly

 

32


Table of Contents

 

 

 

 

 

 

 

scheduled meetings, the Boards review such transactions for compliance with the procedures adopted by the Boards. Pursuant to these procedures, for the six months ended Sept. 30, 2017, the Funds engaged in securities purchases and securities sales, which did not result in any realized gains or losses as follows:

 

     Colorado
       Municipal       
Fund
         Minnesota      
Municipal
Fund II
   National
Municipal
Fund

Purchases

     $ 100,058      $ 900,301      $ 200,096

Sales

       400,169        3,901,455        450,113

3. Investments

For the six months ended Sept. 30, 2017, each Fund made purchases and sales of investment securities other than short-term investments as follows:

 

     Colorado
       Municipal       
Fund
        Minnesota      
Municipal
Fund II
  National
Municipal
Fund

Purchases

     $ 4,022,980     $ 24,438,517     $ 11,981,572

Sales

       (2,427,615 )       (22,207,319 )       (11,930,508 )

At Sept. 30, 2017, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At Sept. 30, 2017, the cost and unrealized appreciation (depreciation) of investments for the Fund were as follows:

 

     Colorado
       Municipal       
Fund
        Minnesota      
Municipal
Fund II
  National
Municipal
Fund

Cost of investments

     $ 96,942,051     $ 231,587,623     $ 88,428,404
    

 

 

     

 

 

     

 

 

 

Aggregate unrealized appreciation of investments

     $ 6,562,973     $ 10,996,637     $ 6,706,906

Aggregate unrealized depreciation of investments

       (49,546 )       (668,444 )       (135,575 )
    

 

 

     

 

 

     

 

 

 

Net unrealized appreciation of investments

     $ 6,513,427     $ 10,328,193     $ 6,571,331
    

 

 

     

 

 

     

 

 

 

Under the Regulated Investment Company Modernization Act of 2010 (Act), net capital losses recognized for tax years beginning after Dec. 22, 2010 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.

At March 31, 2017, capital loss carryforwards available to offset future realized capital gains, through the indicated expiration dates were as follows:

 

     Pre-enactment capital loss
Expiration date
   No expiration
Post-enactment capital loss character
  

 

     2018    Short-term    Long-term    Total

Colorado Municipal Fund

       $        —        $216,568        $323,934        $    540,502

Minnesota Municipal Fund II

              778,237               778,237

National Municipal Fund

       407,888        795,309        40,087        1,243,284

US GAAP defines fair value as the price that each Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the

 

      (continues)   

33


Table of Contents

Notes to financial statements

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

 

 

3. Investments (continued)

 

asset or liability based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below.

 

Level 1 –   

Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, exchange-traded options contracts)

 

Level 2 –   

Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities)

 

Level 3 –    Significant unobservable inputs, including each Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities, fair valued securities)

Level 3 investments are valued using significant unobservable inputs. Each Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.

The following tables summarize the valuation of each Fund’s investments by fair value hierarchy levels as of Sept. 30, 2017:

 

    

Colorado

Municipal Fund

Securities

  

Level 2

Assets:

    

Municipal Bonds

     $ 103,155,478  

Short-Term Investments

       300,000  
    

 

 

 

Total Value of Securities

     $ 103,455,478  
    

 

 

 
    

Minnesota

Municipal Fund II

Securities

  

Level 2

Assets:

    

Municipal Bonds

     $ 241,290,816  

Short-Term Investments

       625,000  
    

 

 

 

Total Value of Securities

     $ 241,915,816  
    

 

 

 
    

National

Municipal Fund

Securities

  

Level 2

Assets:

    

Municipal Bonds

     $ 94,649,735  

Short-Term Investments

       350,000  
    

 

 

 

Total Value of Securities

     $ 94,999,735  
    

 

 

 

During the six months ended Sept. 30, 2017, there were no material transfers between Level 1 investments, Level 2 investments or Level 3 investments. The Funds’ policy is to recognize transfers between levels based on fair value at the beginning of the reporting period.

 

34


Table of Contents

 

 

 

 

 

 

 

4. Capital Stock

Pursuant to their articles of incorporation, Colorado Municipal Fund and Minnesota Municipal Fund II each have 200 million shares of $0.01 par value common shares authorized. National Municipal Fund has been authorized to issue an unlimited amount of $0.01 par value common shares. Shares issuable under each Fund’s dividend reinvestment plan are purchased by each Fund’s transfer agent, Computershare, Inc., in the open market. During the six months ended Sept. 30, 2017 and the year ended March 31, 2017, the Funds did not issue any shares under each Fund’s dividend reinvestment plan.

On Jan. 22, 2016, Colorado Municipal Fund, Minnesota Municipal Fund II, and National Municipal Fund successfully issued $30,000,000, $75,000,000 and $30,000,000, respectively, of Variable Rate MuniFund Term Preferred (“VMTP”) Shares with a $100,000 liquidation value per share in a privately negotiated offering. The net proceeds from each offering were used to redeem the Series 2016 (in the case of Colorado Municipal Fund and Minnesota Municipal Fund II) and Series 2017 (in the case of National Municipal Fund) VMTP Shares previously outstanding. The VMTP Shares were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. Each Fund’s Series 2016 and Series 2017 VMTP Shares were the same amount and value as the respective Fund’s Series 2021 VMTP Shares.

Each of the Funds is obligated to redeem its VMTP Shares on Feb. 1, 2021, unless earlier redeemed or repurchased by a Fund. VMTP Shares are subject to optional and mandatory redemption in certain circumstances. VMTP Shares are redeemable at par. A Fund may be obligated to redeem certain of the VMTP Shares if the Fund fails to maintain certain asset coverage and leverage ratio requirements and such failures are not cured by the applicable cure date. The redemption price per share is equal to the sum of the liquidation value per share plus any accumulated but unpaid dividends. Dividends on VMTP shares as set weekly, and are based on a short-term index rate plus an additional spread that is subject to adjustment in certain circumstances, including a change in the credit rating assigned to the VMTP Shares by Fitch Ratings (“Fitch”) and Moody’s Investors Service (“Moody’s”).

The weighted average dividend rates for the six months ended Sept. 30, 2017 were as follows:

 

Colorado
Municipal
Fund

 

Minnesota
Municipal
Fund II

 

National
Municipal
Fund

2.0%   2.0%   2.0%

The Funds use leverage because their managers believe that, over time, leveraging may provide opportunities for additional income and total return for common shareholders. However, the use of leverage also can expose common shareholders to additional volatility. For example, as the prices of securities held by a Fund decline, the negative impact of these valuation changes on common share net asset value and common shareholder total return is magnified by the use of leverage; accordingly, the use of structural leverage may hurt a Fund’s overall performance.

Leverage may also cause the Funds to incur certain costs. In the event that a Fund is unable to meet certain criteria (including, but not limited to, maintaining certain ratings with Fitch and Moody’s, funding dividend payments, or funding redemptions), that Fund will pay additional fees with respect to the leverage.

For financial reporting purposes, the VMTP Shares are considered debt of the issuer; therefore, the liquidation value which approximates fair value of the VMTP Shares is recorded as a liability in the statements of assets and liabilities. Dividends accrued and paid on the VMTP Shares are included as a component of interest expense in the statements of operations. The VMTP Shares are treated as equity for legal and tax purposes. Dividends paid to holders of the VMTP Shares are generally classified as tax-exempt income for tax-reporting purposes.

Offering costs for VMTP Shares are recorded as a deferred charge and amortized over the 5-year life of the VMTP Shares. These are presented as “Offering cost for preferred shareholders” on the “Statements of assets and liabilities” and “Offering costs” on the “Statements of operations.”

5. Geographic, Credit, and Market Risk

The Funds concentrate their investments in securities issued by municipalities. Because each of the Colorado Municipal Fund and the Minnesota Municipal Fund II invests substantially all of its net assets in municipal obligations of its respective state at the time of investment, events in that state may have a significant impact on the performance and investments of the Colorado Municipal Fund and the Minnesota Municipal Fund II. These events may include economic or political policy changes, tax base erosion, state constitutional limits on tax increases, budget deficits and other financial difficulties, changes in the credit ratings assigned to the state’s municipal issuers, the effects of natural or human-made disasters, or other economic, legislative, or political or social issues. Any downgrade to the credit rating of the securities issued by the US government may result in a downgrade of securities issued by the states or US territories. The National Municipal Fund will be subject to these

 

      (continues)    35


Table of Contents

Notes to financial statements

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

 

 

5. Geographic, Credit, and Market Risk (continued)

 

risks as well but to a lesser extent because it invests at least 80% of its net assets in securities, the income from which is exempt from federal income tax and is not limited to investing substantially all of its assets in municipal obligations of a single state. From time to time and consistent with its investment policies, the National Municipal Fund may invest a considerable portion of its assets in certain municipalities. As of Sept. 30, 2017, the National Municipal Fund has invested 20.87%, 19.61%, 15.48%, and 11.88%, (each as a percentage of net assets) in securities issued by the State of California, the State of New York, the Commonwealth of Pennsylvania, and the State of Texas, respectively. These investments could make the National Municipal Fund more sensitive to economic conditions in those states than other more geographically diversified national municipal income funds.

Each Fund may invest a percentage of assets in obligations of governments of US territories, commonwealths, and possessions such as Puerto Rico, the US Virgin Islands, or Guam. To the extent a Fund invests in such obligations, that Fund may be adversely affected by local political and economic conditions and developments within these US territories, commonwealths, and possessions.

From time to time, a fund may invest in industrial development bonds (IDBs) or pollution control revenue (PCR) bonds that are issued by a conduit authority on behalf of a corporation that is either foreign owned or has international affiliates or operations. While the bonds may be issued to finance a facility located in the United States, the bonds may be secured by a payment obligation or guaranty of the corporation. To the extent the Fund invests in such securities, that Fund may be exposed to risks associated with international investments. The risk of international investments not ordinarily associated with US investments includes fluctuation in currency values, differences in accounting principles, and/or economic or political instability in other nations.

Many municipalities insure repayment for their obligations. Although bond insurance may reduce the risk of loss due to default by an issuer, such bonds remain subject to the risk that market value may fluctuate for other reasons, and there is no assurance that the insurance company will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in each Fund. At Sept. 30, 2017, the percentages of each Fund’s net assets insured by insurers are listed below and these securities have been identified on the “Schedules of investments.”

 

     Colorado
Municipal
Fund
  Minnesota Municipal
Income Fund II

Assured Guaranty Corporation

       1.64 %       2.39 %

Assured Guaranty Municipal Corporation

       7.92 %       0.69 %

Syncora Guarantee

       2.35 %      
    

 

 

     

 

 

 

Total

       11.91 %       3.08 %
    

 

 

     

 

 

 

Each Fund invests a portion of its assets in high yield fixed income securities, which are securities rated BB or lower by Standard & Poor’s (S&P) and/or Ba or lower by Moody’s, or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.

The Funds may invest in advanced refunded bonds, escrow secured bonds, or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current refunding.” “Advance refunded bonds” are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high-grade interest-bearing debt securities which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.

Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to

 

36


Table of Contents

 

 

 

 

 

 

 

the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s, S&P, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.

To the extent that the Funds invest in securities with longer duration, they may be more sensitive to fluctuation of interest rates.

Each Fund invests in certain obligations that may have liquidity protection designed to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies, or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction, or through a combination of such approaches. The Funds will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Boards have delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of each Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. Rule 144A securities held by each Fund have been identified on the “Schedules of investments.”

6. Contractual Obligations

Each Fund enters into contracts in the normal course of business that contain a variety of indemnifications. Each Fund’s maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed each Fund’s existing contracts and expects the risk of loss to be remote.

7. Recent Accounting Pronouncements

In October 2016, the Securities and Exchange Commission released its Final Rule on Investment Company Reporting Modernization (Rule). The Rule contains amendments to Regulation S-X which impact financial statement presentation, particularly the presentation of derivative investments. The financial statements presented are in compliance with the most recent Regulation S-X amendments.

8. Subsequent Events

Management has determined that no material events or transactions occurred subsequent to Sept. 30, 2017 that would require recognition or disclosure in the Funds’ financial statements.

 

      (continues)    37


Table of Contents

Other Fund information

(Unaudited)

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

Fund management

Joseph R. Baxter

Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager — Macquarie Investment Management, Americas

Joseph R. Baxter is the head of the municipal bond department in the Americas and is responsible for setting the department’s investment strategy. He is also a co-portfolio manager of the firm’s municipal bond funds and several client accounts. Before joining Macquarie Investment Management (MIM), which includes the former Delaware Investments, in 1999 as head municipal bond trader, he held investment positions with First Union, most recently as a municipal portfolio manager with the Evergreen Funds. Baxter received a bachelor’s degree in finance and marketing from La Salle University.

Stephen Czepiel

Senior Vice President, Senior Portfolio Manager

Steve Czepiel is a member of the firm’s municipal fixed income portfolio management team with primary responsibility for portfolio construction and strategic asset allocation. He is a co-portfolio manager of the firm’s municipal bond funds and client accounts. He joined Macquarie Investment Management (MIM), which includes the former Delaware Investments, in July 2004 as a senior bond trader. Previously, he was vice president at both Mesirow Financial and Loop Capital Markets. He began his career in the securities industry in 1982 as a municipal bond trader at Kidder Peabody and now has more than 20 years of experience in the municipal securities industry. Czepiel earned his bachelor’s degree in finance and economics from Duquesne University.

Denise A. Franchetti, CFA

Vice President, Portfolio Manager, Senior Municipal Analyst

Denise A. Franchetti is a senior municipal analyst for the municipal bond department. Currently, she is responsible for following the airport, education, hotel, cogeneration, and cargo sectors for the group. In 2003, she was also named as portfolio manager on the tax-exempt closed-end funds in addition to her research duties. Prior to joining Macquarie Investment Management (MIM), which includes the former Delaware Investments, in 1997 as a municipal bond analyst, she was a fixed income trader at Provident Mutual Life Insurance and an investment analyst at General Accident Insurance. Franchetti received her bachelor’s degree and an MBA from La Salle University. She is a member of the Financial Analysts of Philadelphia.

Gregory A. Gizzi

Senior Vice President, Senior Portfolio Manager

Gregory A. Gizzi is a member of the firm’s municipal fixed income portfolio management team. He is also a co-portfolio manager of the firm’s municipal bond funds and several client accounts. Before joining Macquarie Investment Management (MIM), which includes the former Delaware Investments, in January 2008 as head of municipal bond trading, he spent six years as a vice president at Lehman Brothers for the firm’s tax-exempt institutional sales effort. Prior to that, he spent two years trading corporate bonds for UBS before joining Lehman Brothers in a sales capacity. Gizzi has more than 20 years of trading experience in the municipal securities industry, beginning at Kidder Peabody in 1984, where he started as a municipal bond trader and worked his way up to institutional block trading desk manager. He later worked in the same capacity at Dillon Read. Gizzi earned his bachelor’s degree in economics from Harvard University.

Board Consideration of Delaware Investments Colorado Municipal Income Fund, Inc.; Delaware Investments National Municipal Income Fund; and Delaware Investments Minnesota Municipal Income Fund II, Inc. Investment Management Agreements

At a meeting held on Aug. 16-17, 2017 (the “Annual Meeting”), the Board of Trustees/Directors (collectively, “Trustees”) (the “Board”), including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory Agreements for Delaware Investments Colorado Municipal Income Fund, Inc.; Delaware Investments Minnesota Municipal Income Fund II, Inc.; and Delaware Investments National Municipal Income Fund (each, a “Fund” and together, the “Funds”). In making its decision, the Board considered information furnished at regular quarterly Board meetings, including reports detailing Fund performance, investment strategies, and expenses, as well as information prepared specifically in connection with the renewal of the investment advisory and sub-advisory contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreements with Delaware Management Company (“DMC”), a

 

38


Table of Contents

 

 

 

 

 

 

 

series of Macquarie Investment Management Business Trust (formerly, Delaware Management Business Trust), included materials provided by DMC and its affiliates concerning, among other things, the nature, extent, and quality of services provided to the Funds; the costs of such services to the Funds; economies of scale; and the investment manager’s financial condition and profitability. In addition, in connection with the Annual Meeting, reports were provided to the Trustees in May 2017 and included reports provided by Broadridge Financial Solutions (formerly Lipper) (“Broadridge” or “Lipper”). The Broadridge reports compared each Fund’s investment performance and expenses with those of other comparable mutual funds. The Independent Trustees reviewed and discussed the Broadridge reports with independent legal counsel to the Independent Trustees. In addition to the information noted above, the Board also requested and received information regarding DMC’s policy with respect to advisory fee levels and its breakpoint philosophy; the structure of portfolio manager compensation; comparative client fee information; and any constraints or limitations on the availability of securities for certain investment styles, which had in the past year inhibited, or which were likely in the future to inhibit, the investment manager’s ability to invest fully in accordance with Fund policies.

In considering information relating to the approval of each Fund’s advisory agreement, the Independent Trustees received assistance and advice from and met separately with independent legal counsel to the Independent Trustees and also from an experienced and knowledgeable fund consultant, JDL Consultants, LLC (“JDL”). Although the Board gave attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.

Nature, extent, and quality of service. The Board considered the services provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered reports furnished to it throughout the year, which covered matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; compliance by DMC (“Management”) personnel with the Code of Ethics adopted throughout the Delaware FundsSM by Macquarie (“Delaware Funds”); and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of the Fund’s investment advisor and the emphasis placed on research in the investment process. The Board recognized DMC’s receipt of several industry distinctions during the past several years. The Board gave favorable consideration to DMC’s efforts to control expenditures while maintaining service levels committed to Fund matters. The Board was satisfied with the nature, extent, and quality of the overall services provided by DMC.

Investment performance. The Board placed significant emphasis on the investment performance of the Funds in view of the importance of investment performance to shareholders. Although the Board considered performance reports and discussions with portfolio managers at Board meetings throughout the year, the Board gave particular weight to the Broadridge reports furnished for the Annual Meeting. The Broadridge reports prepared for each Fund showed the investment performance of its shares in comparison to a group of similar funds as selected by Broadridge (the “Performance Universe”). A fund with the highest performance ranked first, and a fund with the lowest ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25%, the second quartile; the next 25%, the third quartile; and the lowest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for each Fund was shown for the past 1-, 3-, 5-, and 10-year periods, to the extent applicable, ended Jan. 31, 2017. The Board’s objective is that each Fund’s performance for the 1-, 3-, and 5-year periods be at or above the median of its Performance Universe.

Delaware Investments Colorado Municipal Income Fund, Inc. — The Performance Universe for the Fund consisted of the Fund and all leveraged closed-end “other states” municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, and 5-year periods was in the second quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Investments Minnesota Municipal Income Fund II, Inc. — The Performance Universe for the Fund consisted of the Fund and all leveraged closed-end “other states” municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1- and 5-year periods was in the third quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3-year period was in the fourth quartile of its Performance Universe. The Fund’s performance results were not in line with the Board’s objective. In evaluating the Fund’s performance, the Board considered the numerous investment and performance reports delivered by Management personnel to the Board’s Investments Committee. The Board was satisfied that Management was taking action to improve Fund performance and meet the Board’s performance objective.

Delaware Investments National Municipal Income Fund — The Performance Universe for the Fund consisted of the Fund and all leveraged closed-end general and insured municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-year period was in the third quartile of its Performance Universe. The report further showed that the Fund’s total return for the

 

      (continues)    39


Table of Contents

Other Fund information

(Unaudited)

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

 

Board Consideration of Delaware Investments Colorado Municipal Income Fund, Inc.; Delaware Investments National Municipal Income Fund; and Delaware Investments Minnesota Municipal Income Fund II, Inc. Investment Management Agreements (continued)

 

3- and 5-year periods was in second quartile of its Performance Universe. The Board observed that the Fund’s performance results were mixed but tended toward median, which was acceptable.

Comparative expenses. The Board considered expense data for the Delaware Funds. Management provided the Board with information on pricing levels and fee structures for each Fund as of its most recently completed fiscal year. The Board also focused on the comparative analysis of effective management fees and total expense ratios of each Fund versus effective management fees and total expense ratios of a group of similar closed-end funds as selected by Broadridge (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by each Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) within the Expense Group, taking into account any applicable breakpoints and fee waivers. Each Fund’s total expenses were also compared with those of its Expense Group. The Board’s objective is to limit each Fund’s total expense ratio to be competitive with that of the Expense Group.

Delaware Investments Colorado Municipal Income Fund, Inc. — The expense comparisons for the Fund showed that its actual management fee and total expenses were both the lowest of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense Group.

Delaware Investments Minnesota Municipal Income Fund II, Inc. — The expense comparisons for the Fund showed that its actual management fee and total expenses were both the lowest of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense Group.

Delaware Investments National Municipal Income Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the lowest expenses of its Expense Group and its total expenses were in the quartile with the second highest expenses of its Expense Group. The Board gave favorable consideration to the Fund’s management fee, but noted that the Fund’s total expenses were not in line with the Board’s objective. In evaluating total expenses, the Board considered the limited number of funds in the Expense Group. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Management profitability. The Board considered the level of profits, if any, realized by DMC in connection with the operation of the Funds. In this respect, the Board reviewed the Investment Management Profitability Analysis that addressed the overall profitability of DMC’s business in providing management and other services to each of the individual funds and the Delaware Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability. Management stated that the level of profits of DMC, to a certain extent, reflects recent operational cost savings and efficiencies initiated by DMC. The Board considered DMC’s efforts to improve services provided to fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide Securities and Exchange Commission initiatives. The Board also considered the extent to which DMC might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Funds and the benefits from allocation of fund brokerage to improve trading efficiencies. Finally, the Board also reviewed a report prepared by JDL regarding DMC profitability in the context of sub-advised funds and met with JDL personnel to discuss DMC’s profitability in such context. The Board found that the management fees were reasonable in light of the services rendered and the profitability of DMC.

Economies of scale. As closed-end funds, the Funds do not issue shares on a continuous basis. Fund assets, therefore, increase primarily as a result of the increase in value of the underlying securities in the Fund. Accordingly, the Board determined that the Funds were not likely to experience significant economies of scale due to asset growth and, therefore, a fee schedule with breakpoints to pass the benefit of economies of scale on to shareholders was not likely to provide the intended effect.

Proxy results

At the annual meeting on Aug. 16, 2017, the shareholders of the Funds voted to elect a Board of Directors. A quorum was present and the votes passed with a majority of those shares. All shareholders of each Fund vote together with respect to the election of each Director with one exception. The holders of preferred shares of the Funds that have issued one or more classes of preferred shares have the exclusive right to separately elect two Directors, Ms. Landreth and Ms. Yeomans.

 

40


Table of Contents

 

 

 

 

 

 

 

The results of the voting at the meeting were as follows:

Delaware Investments® Colorado Municipal Income Fund, Inc.

 

     Common shareholders    Preferred shareholders
     Shares
voted for
   Shares voted
withheld
authority
   Shares
voted for
   Shares voted
withheld
authority

Thomas L. Bennett

   4,184,837      89,951    300    0

Ann D. Borowiec

   4,173,534    101,254    300    0

Joseph W. Chow

   4,211,585      63,203    300    0

John A. Fry

   4,156,836    117,952    300    0

Shawn K. Lytle

   4,211,585      63,203    300    0

Frances A. Sevilla-Sacasa

   4,170,297    104,491    300    0

Thomas K. Whitford

   4,211,585      63,203    300    0

Lucinda S. Landreth

         300    0

Janet L. Yeomans

         300    0

Delaware Investments Minnesota Municipal Income Fund II, Inc.

 

     Common shareholders    Preferred shareholders
     Shares
voted for
   Shares voted
withheld
authority
   Shares
voted for
   Shares voted
withheld
authority

Thomas L. Bennett

   10,021,934    144,286    750    0

Ann D. Borowiec

   10,040,549    125,670    750    0

Joseph W. Chow

   10,022,423    143,797    750    0

John A. Fry

   10,022,423    143,797    750    0

Shawn K. Lytle

   10,023,019    143,201    750    0

Frances A. Sevilla-Sacasa

   10,040,433    125,787    750    0

Thomas K. Whitford

   10,021,960    144,260    750    0

Lucinda S. Landreth

         750    0

Janet L. Yeomans

         750    0

Delaware Investments National Municipal Income Fund

 

     Common shareholders    Preferred shareholders
     Shares
voted for
   Shares voted
withheld
authority
   Shares
voted for
   Shares voted
withheld
authority

Thomas L. Bennett

   4,115,909      85,219    300    0

Ann D. Borowiec

   4,113,960      87,168    300    0

Joseph W. Chow

   4,115,904      85,224    300    0

John A. Fry

   4,115,909      85,219    300    0

Shawn K. Lytle

   4,072,003    129,125    300    0

Frances A. Sevilla-Sacasa

   4,113,793      87,335    300    0

Thomas K. Whitford

   4,115,450      85,678    300    0

Lucinda S. Landreth

         300    0

Janet L. Yeomans

         300    0

 

      (continues)    41


Table of Contents

Other Fund information

(Unaudited)

Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds

Dividend reinvestment plan for Delaware Investments Colorado Municipal Income Fund, Inc. (“VCF“), Delaware Investments National Municipal Income Fund (“VFL”), and Delaware Investments Minnesota Municipal Income Fund II, Inc. (“VMM”)

Each Fund offers a dividend reinvestment program (“Plan”). Shareholders of VFL and VMM who have shares registered in their own names are automatically considered participants in the Plan, unless they elect to withdraw from the Plan. Shareholders of VCF who have shares registered in their own names are eligible to elect to participate in the Plan by notifying Computershare Trust Company, N.A. (“Computershare”).

Shareholders who hold their shares through a bank, broker, or other nominee should request the bank, broker, or nominee to participate in the Plan on their behalf. This can be done as long as the bank, broker, or nominee provides a dividend reinvestment service for the Fund. If the bank, broker, or nominee does not provide this service, such shareholders must have their shares taken out of “street” or nominee name and re-registered in their own name in order to participate in the Plan.

Computershare will apply all cash dividends, capital gains and other distributions (collectively, “Distributions”) on the Fund’s shares of common stock which become payable to each Plan participant to the purchase of outstanding shares of the Fund’s common stock for such participant. These purchases may be made on a securities exchange or in the over-the-counter market, and may be subject to such terms of price, delivery, and related matters to which Computershare may agree. The Fund will not issue new shares in connection with the Plan.

Most shareholders of VFL and VMM holding shares in nominee name will receive their Distributions in cash, if they either fail to notify their bank, broker or nominee of their wish to participate, or if they fail to have their shares taken out of “street” name when their nominee does not provide a dividend reinvestment service for the Fund. Shareholders of VCF will receive their Distributions in cash unless they notify Computershare and their bank, broker or nominee of their desire to enroll in the Plan.

Distributions reinvested for participants are subject to income taxes just as if they had been paid directly to the shareholder in cash. For convenient record keeping and to assist in preparing taxes, participants will receive a year-end statement showing distributions reinvested, and any brokerage commissions that Computershare is required to pay.

Shareholders holding shares of the Fund in their own names who wish to terminate their participation in the Plan may do so by providing telephonic, electronic, or written instructions to Computershare so that Computershare receives such instructions by the Distribution record date. Shareholders with shares held in an account by a bank, broker or other nominee should contact such bank, broker or other nominee to determine the procedure for withdrawal from the Plan. Shareholders owning shares of more than one Fund must specify the Fund or Funds to which their termination request pertains.

If instructions are not received by Computershare by the record date for a particular Distribution, that Distribution may be reinvested at the sole discretion of Computershare. After a shareholder’s instructions to terminate participation in the Plan become effective, Distributions will be paid to the shareholder in cash. Upon termination, a shareholder may elect to receive either stock or cash for all the full shares in the account. If cash is elected, Computershare will sell such shares at the weighted average sale price obtained by Computershare’s broker for all shares sold in such batch on the applicable trade date or dates and then send the net proceeds to the shareholder, after deducting any applicable transaction fees, per share fees and related expenses, if any. Any fractional shares at the time of termination will be paid in cash at the current market price, less any applicable transaction fees, per share fees and related expenses, if any. Shareholders may at any time request a full or partial withdrawal of shares from the Plan, without terminating participation in the Plan, by contacting Computershare or their bank or broker as appropriate. Shareholders may elect to receive such withdrawals in stock or in cash as described above.

When shares outside of the Plan are liquidated, Distributions on shares held under the Plan will continue to be reinvested unless Computershare is notified of the shareholder’s withdrawal from the Plan.

An investor holding shares that participate in the Plan in a brokerage account may not be able to transfer the shares to another broker and continue to participate in the Plan. Please contact your broker/dealer for additional details.

Computershare will charge participants their proportional share of brokerage commissions on market purchases. Participants may obtain a certificate or certificates for all or part of the full shares credited to their accounts at any time by making a request in writing to Computershare. A fee may be charged to the participant for each certificate issuance.

If you have any questions and shares are registered in your name, contact Computershare at 866 437-0252 or P.O. Box 50500, Louisville, KY 40233-5000. If you have any questions and shares are registered in “street” name, contact the broker/dealer holding the shares or your financial advisor.

 

42


Table of Contents

About the organization

This semiannual report is for the information of Delaware FundsSM by Macquarie Closed-End Municipal Bond Funds shareholders.

 

Board of directors/trustees

Shawn K. Lytle

President and

Chief Executive Officer

Delaware Funds by Macquarie

Philadelphia, PA

Thomas L. Bennett

Chairman of the Board

Delaware Funds by Macquarie

Private Investor

Rosemont, PA

Ann D. Borowiec

Former Chief Executive Officer

Private Wealth Management

J.P. Morgan Chase & Co.

New York, NY

Joseph W. Chow

Former Executive Vice President

State Street Corporation

Boston, MA

John A. Fry

President

Drexel University

Philadelphia, PA

Lucinda S. Landreth

Former Chief Investment Officer

Assurant, Inc.

New York, NY

Frances A. Sevilla-Sacasa

Former Chief Executive Officer

Banco Itaú International

Miami, FL

Thomas K. Whitford

Former Vice Chairman

PNC Financial Services Group

Pittsburgh, PA

Janet L. Yeomans

Former Vice President and Treasurer

3M Company

St. Paul, MN

 

Affiliated officers

David F. Connor

Senior Vice President, General

Counsel, and Secretary

Delaware Funds by Macquarie

Philadelphia, PA

Daniel V. Geatens

Vice President and Treasurer

Delaware Funds by Macquarie

Philadelphia, PA

Richard Salus

Senior Vice President and

Chief Financial Officer

Delaware Funds by Macquarie

Philadelphia, PA

Investment manager

Delaware Management Company, a series of Macquarie Investment Management Business Trust (MIMBT) Philadelphia, PA

Principal office of the Funds

2005 Market Street

Philadelphia, PA 19103-7057

Independent registered public

accounting firm

PricewaterhouseCoopers LLP

2001 Market Street

Philadelphia, PA 19103

Registrar and stock transfer agent

Computershare, Inc.

480 Washington Blvd.

Jersey City, NJ 07310

866 437-0252

For securities dealers and financial institutions representatives

800 362-7500

 

Website

delawarefunds.com/closed-end

Number of recordholders as of

Sept. 30, 2017

 

Colorado Municipal Income Fund

     61  

Minnesota Municipal Income Fund II

     321  

National Municipal Income Fund

     65  

Your reinvestment options

Each of the Funds offers an automatic dividend reinvestment program. If you would like to reinvest dividends, and shares are registered in your name, contact Computershare, Inc. at 866 437-0252. You will be asked to put your request in writing. If you have shares registered in “street” name, contact the broker/dealer holding the shares or your financial advisor. If you choose to receive your dividends in cash, you may now elect to receive them by ACH transfer. Contact Computershare at the number above for more information.

Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. Each Fund’s Forms N-Q, as well as a description of the policies and procedures that each Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 866 437-0252; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities and the Schedules of Investments included in the Funds’ most recent Forms N-Q are available without charge on the Funds’ website at delawarefunds.com/ closed-end. Each Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how each Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Funds’ website at delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.

 

 

43


Item 2. Code of Ethics

Not applicable.

Item 3. Audit Committee Financial Expert

Not applicable.

Item 4. Principal Accountant Fees and Services

Not applicable.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Investments

(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.

(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.

Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 11. Controls and Procedures

The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.


There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits

(a) (1) Code of Ethics

Not applicable.

(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.

(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.

Not applicable.

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.

DELAWARE INVESTMENTS MINNESOTA MUNICIPAL INCOME FUND II, INC.

SHAWN K. LYTLE
By: Shawn K. Lytle
Title:       President and Chief Executive Officer
Date: December 5, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SHAWN K. LYTLE
By: Shawn K. Lytle
Title:       President and Chief Executive Officer
Date: December 5, 2017
   
RICHARD SALUS
By: Richard Salus
Title:       Chief Financial Officer
Date: December 5, 2017