UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number: 811-07810
 
Exact name of registrant as specified in charter: Delaware Investments Colorado Municipal
Income Fund, Inc.
 
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
 
Name and address of agent for service: David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
 
Registrant’s telephone number, including area code: (800) 523-1918
 
Date of fiscal year end: March 31
 
Date of reporting period: September 30, 2018


Item 1. Reports to Stockholders

Table of Contents

LOGO

 

Closed-end funds

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

September 30, 2018

 

 

 

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.

 

LOGO


Table of Contents

Table of contents

 

Fund basics

     1  

Security type / sector / state allocations

     2  

Schedules of investments

     4  

Statements of assets and liabilities

     24  

Statements of operations

     25  

Statements of changes in net assets

     26  

Statements of cash flows

     28  

Financial highlights

     29  

Notes to financial statements

     32  

Other Fund information

     39  

About the organization

     43  

Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following registered investment advisors: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, and Macquarie Capital Investment Management LLC. For more information, including press releases, please visit delawarefunds.com/closed-end.

Unless otherwise noted, views expressed herein are current as of Sept. 30, 2018, 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.

Advisory services provided by Delaware Management Company, a series of MIMBT, 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.

©2018 Macquarie Management Holdings, Inc.


Table of Contents

Fund basics

 

Delaware Investments®

Colorado Municipal Income Fund, Inc.

As of September 30, 2018 (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

$71 million

Number of holdings

110

Fund start date

July 29, 1993

NYSE American symbol

VCF

CUSIP number

246101109

Delaware Investments

Minnesota Municipal Income Fund II, Inc.

As of September 30, 2018 (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

$162 million

Number of holdings

202

Fund start date

Feb. 26, 1993

NYSE American symbol

VMM

CUSIP number

24610V103

Delaware Investments

National Municipal Income Fund

As of September 30, 2018 (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

$64 million

Number of holdings

194

Fund start date

Feb. 26, 1993

NYSE American symbol

VFL

CUSIP number

24610T108

 

 

1


Table of Contents

Security type / sector / state allocations

As of September 30, 2018 (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*

       140.53 %

Corporate Revenue Bonds

       5.17 %

Education Revenue Bonds

       17.89 %

Electric Revenue Bonds

       3.61 %

Healthcare Revenue Bonds

       42.02 %

Lease Revenue Bonds

       4.91 %

Local General Obligation Bonds

       13.34 %

Pre-Refunded/Escrowed to Maturity Bonds

       15.57 %

Special Tax Revenue Bonds

       24.90 %

Transportation Revenue Bonds

       12.19 %

Water & Sewer Revenue Bonds

       0.93 %

Short-Term Investment

       0.39 %

Total Value of Securities

       140.92 %

Liquidation Value of Preferred Stock

       (42.54 )%

Receivables and Other Assets Net of Liabilities

       1.62 %

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 US as follows:

 

State / territory   

Percentage    

of net    

assets    

Colorado

       138.14 %

Guam

       2.04 %

US Virgin Islands

 

       0.74 %

 

Total Value of Securities

 

      

 

140.92

 

%

 

Delaware Investments

Minnesota Municipal Income Fund II, Inc.

 

 

Security type / sector    Percentage    
of net    
assets    

Municipal Bonds*

   147.73%    

Corporate Revenue Bonds

   0.98%    

Education Revenue Bonds

   20.05%    

Electric Revenue Bonds

   15.56%    

Healthcare Revenue Bonds

   36.14%    

Housing Revenue Bonds

   1.98%    

Lease Revenue Bonds

   10.13%    

Local General Obligation Bonds

   12.42%    

Pre-Refunded/Escrowed to Maturity Bonds

   24.12%    

Special Tax Revenue Bonds

   1.52%    

State General Obligation Bonds

   14.38%    

Transportation Revenue Bonds

   6.84%    

Water & Sewer Revenue Bonds

   3.61%    

Short-Term Investment

   0.06%    

Total Value of Securities

   147.79%    

Liquidation Value of Preferred Stock

   (46.34)%   

Liabilities Net of Receivables and Other Assets

   (1.45)%   

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 US as follows:

State / territory    Percentage    
of net    
assets    

Guam

   1.15%    

Minnesota

 

   146.64%    

 

Total

 

  

 

147.79%    

 

 

 

2


Table of Contents

Delaware Investments®

National Municipal Income Fund

 

Security type / sector   

Percentage    

of net    

assets    

Municipal Bonds*

   144.55%    

Corporate Revenue Bonds

   15.63%    

Education Revenue Bonds

   23.52%    

Electric Revenue Bonds

   2.66%    

Healthcare Revenue Bonds

   27.43%    

Lease Revenue Bonds

   7.87%    

Local General Obligation Bonds

   3.68%    

Pre-Refunded/Escrowed to Maturity Bonds

   18.23%    

Special Tax Revenue Bonds

   11.88%    

State General Obligation Bonds

   6.22%    

Transportation Revenue Bonds

   24.50%    

Water & Sewer Revenue Bonds

 

   2.93%    

Short-Term Investments

   0.78%    

Total Value of Securities

   145.33%    

Liquidation Value of Preferred Stock

   (46.97)%   

Receivables and Other Assets Net of Liabilities

   1.64%    

 

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 US as follows:

 

State / territory   

Percentage    

of net    

assets    

Alabama

   0.86%    

Alaska

   0.50%    

Arizona

   6.94%    

California

   19.71%    

Colorado

   1.40%    

Delaware

   0.19%    

District of Columbia

   1.78%    

Florida

   5.63%    

Georgia

   2.46%    

Guam

   0.88%    

Hawaii

   0.50%    

Idaho

   0.23%    

Illinois

   10.19%    

Indiana

   0.98%    

Kansas

   0.37%    

Louisiana

   4.98%    

Maine

   0.50%    

Maryland

   2.75%    

Massachusetts

   0.86%    

Michigan

   1.70%    

Minnesota

   1.70%    

Mississippi

   0.55%    

Missouri

   4.28%    

Montana

   1.14%    

Nebraska

   0.88%    

New Hampshire

   0.48%    

New Jersey

   9.52%    

New York

   19.60%    

Ohio

   4.07%    

Oklahoma

   0.37%    

Oregon

   1.03%    

Pennsylvania

   20.41%    

Texas

   10.61%    

Utah

   1.09%    

Virginia

   1.27%    

Washington

   1.32%    

Wisconsin

   3.19%    

Wyoming

 

  

0.41%    

 

 

Total Value of Securities

 

  

145.33%    

 

 

 

3


Table of Contents

Schedules of investments

Delaware Investments® Colorado Municipal Income Fund, Inc.

September 30, 2018 (Unaudited)

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds – 140.53%

 

Corporate Revenue Bonds – 5.17%

 

Denver City & County
(United Airlines Project)
5.00% 10/1/32 (AMT)

    215,000     $       229,059  

Public Authority for Colorado Energy Natural Gas Revenue Series 2008 6.50% 11/15/38

    1,750,000       2,353,575  

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

    865,000       1,064,538  
   

 

 

 
   

 

 

 

3,647,172

 

 

   

 

 

 

Education Revenue Bonds – 17.89%

 

Colorado Educational & Cultural Facilities Authority Revenue

   

144A 5.00% 7/1/36 #

    500,000       501,665  

5.125% 11/1/49

    765,000       756,172  

144A 5.25% 7/1/46 #

    500,000       500,520  

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

    1,720,000       1,723,423  

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

    760,000       858,405  

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

    700,000       682,752  

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

    500,000       567,300  

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

    1,000,000       1,073,980  

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

    500,000       518,940  

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

    900,000       966,177  

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

    1,000,000       1,053,010  

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

    1,200,000       1,200,096  

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

    625,000       634,981  
     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     $       766,965  

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

    25,000       23,868  

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

    500,000       486,770  

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

    270,000       294,627  

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

    10,000       10,111  
   

 

 

 
   

 

 

 

12,619,762

 

 

   

 

 

 

Electric Revenue Bonds – 3.61%

 

City of Fort Collins Electric Utility Enterprise Revenue
Series A 5.00% 12/1/42

    500,000       566,285  

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

    1,700,000       1,976,658  
   

 

 

 
   

 

 

 

2,542,943

 

 

   

 

 

 

Healthcare Revenue Bonds – 42.02%

 

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

    2,000,000       2,083,260  

Colorado Health Facilities Authority Revenue
(Adventist Health System/Sunbelt Obligated Group)
Series A 5.00% 11/15/48

    1,000,000       1,112,940  

(Catholic Health Initiatives)

   

Series A 5.00% 7/1/39

    750,000       760,133  

Series A 5.00% 2/1/41

    2,400,000       2,471,640  

Series A 5.25% 2/1/33

    1,625,000       1,696,191  

Series A 5.25% 1/1/45

    1,000,000       1,061,150  

Series D 6.125% 10/1/28

    750,000       752,213  

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

    615,000       656,316  
 

 

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     $       1,065,160  

Series A 5.75% 12/1/36

    1,000,000       1,125,000  

(Evangelical Lutheran Good Samaritan Society)

   

5.00% 6/1/28

    1,250,000       1,347,275  

5.50% 6/1/33

    2,000,000       2,188,660  

5.625% 6/1/43

    1,000,000       1,085,280  

(Frasier Meadows Retirement Community Project)

   

Series A 5.25% 5/15/37

    265,000       286,330  

Series B 5.00% 5/15/48

    340,000       355,511  

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

    500,000       566,135  

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

    1,500,000       1,650,495  

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

    500,000       511,230  

(NCMC Project) 4.00% 5/15/32

    1,000,000       1,038,580  

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

    4,000,000       4,117,920  

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

    505,000       530,179  

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

    1,250,000       1,384,000  

(Valley View Hospital Association Project) Series A 4.00% 5/15/34

    330,000       336,504  

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

    750,000       778,447  

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

    650,000       676,702  
   

 

 

 
   

 

 

 

 

29,637,251

 

 

 

 

   

 

 

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Lease Revenue Bonds – 4.91%

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

    630,000     $       649,776  

Denver Health & Hospital Authority (550 ACOMA, Inc.) 4.00% 12/1/38

    500,000       486,465  

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

    1,250,000       1,336,737  

State of Colorado Department of Transportation Certificates of Participation

   

5.00% 6/15/34

    340,000       381,966  

5.00% 6/15/36

    545,000       606,361  
   

 

 

 
   

 

 

 

3,461,305

 

 

   

 

 

 

Local General Obligation Bonds – 13.34%

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

    700,000       744,800  

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

    250,000       291,133  

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

    600,000       674,346  

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

    650,000       665,853  

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

    650,000       663,449  

Eaton Area Park & Recreation District

   

5.25% 12/1/34

    190,000       198,793  

5.50% 12/1/38

    245,000       258,664  

Grand River Hospital District 5.25% 12/1/37 (AGM)

    675,000       763,540  

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

    750,000       874,357  

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

    250,000       274,665  
 

 

(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     $       813,180  

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

    500,000       508,315  

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

    500,000       572,215  

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

    1,000,000       1,130,450  

Weld County School District No. RE-8

   

5.00% 12/1/31

    510,000       587,341  

5.00% 12/1/32

    340,000       390,759  
   

 

 

 
   

 

 

 

9,411,860

 

 

   

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 15.57%

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

    500,000       544,950  

Colorado Building Excellent Schools Today Certificates of Participation Series G 5.00% 3/15/32-21§

    2,000,000       2,140,920  

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

    400,000       431,816  

Colorado School of Mines Series B 5.00% 12/1/42-22§

    2,230,000       2,473,315  

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

    175,000       177,215  

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

    3,085,000       3,323,008  

Series A 5.00% 6/1/33-23§

    1,000,000       1,122,020  

Series A 5.375% 6/1/38-19§

    750,000       767,040  
   

 

 

 
   

 

 

 

10,980,284

 

 

   

 

 

 

Special Tax Revenue Bonds – 24.90%

Canyons Metropolitan District No 5

   

Series A 6.125% 12/1/47

    500,000       506,445  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

               

Special Tax Revenue Bonds (continued)

 

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

    375,000     $       394,823  

Commerce City 5.00% 8/1/44 (AGM)

    1,000,000       1,085,030  

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

    1,370,000       1,395,646  

Guam Government Business Privilege Tax Revenue

   

Series A 5.125% 1/1/42

    435,000       453,100  

Series A 5.25% 1/1/36

    565,000       593,651  

Lincoln Park Metropolitan District 5.00% 12/1/46 (AGM)

    500,000       551,330  

Prairie Center Metropolitan District No. 3 Series A 144A 5.00% 12/15/41 #

    500,000       507,355  

Regional Transportation District Revenue Series A

   

5.375% 6/1/31

    460,000       482,098  

Series B 5.00% 11/1/33

    500,000       579,825  

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

    2,175,000       2,263,240  

(FasTracks Project) Series A 5.00% 11/1/30

    330,000       382,170  

Series A 5.00% 11/1/31

    755,000       871,406  

Series A 5.00% 11/1/38

    4,085,000       4,309,471  

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

    500,000       511,675  

Southlands Metropolitan District No. 1

   

Series A1 5.00% 12/1/37

    200,000       211,744  

Series A1 5.00% 12/1/47

    300,000       314,823  

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

    525,000       536,219  

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

    295,000       309,207  
 

 

6


Table of Contents

    

    

    

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Special Tax Revenue Bonds (continued)

 

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

   

Series B 5.00% 12/1/35

    265,000     $       293,983  

Series B 5.00% 12/1/36

    440,000       487,080  

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

    500,000       522,015  
   

 

 

 
   

 

 

 

17,562,336

 

 

   

 

 

 

Transportation Revenue Bonds – 12.19%

 

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

    1,110,000       1,209,534  

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

    1,000,000       1,070,140  

Denver City & County Airport System Revenue

   

Series A 5.00% 11/15/30 (AMT)

    750,000       849,675  

Series A 5.00% 12/1/48 (AMT)

    1,000,000       1,101,230  

Series A 5.25% 11/15/36

    750,000       775,395  

Series B 5.00% 11/15/28

    1,000,000       1,091,520  

Series B 5.00% 11/15/37

    2,000,000       2,168,380  

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

    310,000       328,461  
   

 

 

 
   

 

 

 

8,594,335

 

 

   

 

 

 

Water & Sewer Revenue Bonds – 0.93%

 

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

    250,000       263,673  

Guam Government Waterworks Authority Revenue 5.00% 7/1/40

    360,000       391,874  
   

 

 

 
   

 

 

 

655,547

 

 

   

 

 

 

Total Municipal Bonds
(cost $95,434,434)

      99,112,795  
   

 

 

 
     Principal
Amount°
   

Value

(US $)

 

Short-Term Investment – 0.39%

 

       

Variable Rate Demand Note – 0.39%¤

 

 

Colorado Educational & Cultural Facilities Authority Revenue Series B4 (National Jewish Federation Bond Program) 1.48% 12/1/35 (LOC-TD Bank N.A.)

    275,000     $       275,000  
   

 

 

 

Total Short-Term Investment
(cost $275,000)

 

    275,000  
   

 

 

 

Total Value of Securities – 140.92%
(cost $95,709,434)

 

    $99,387,795  
   

 

 

 

                                         

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Sept. 30, 2018, the aggregate value of Rule 144A securities was $4,611,187, which represents 6.54% 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, 2018.

§

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 will be pre-refunded. See Note 5 in “Notes to financial statements.”

°

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

BAM – Build America Mutual Assurance Company

LOC – Letter of Credit

N.A. – National Association

SGI – Insured by Syncora Guarantee Inc.

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, 2018

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds – 147.73%

 

Corporate Revenue Bonds – 0.98%

 

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

    1,715,000     $       1,590,748  
   

 

 

 
   

 

 

 

1,590,748

 

 

   

 

 

 

Education Revenue Bonds – 20.05%

 

Bethel Charter School Lease Revenue (Spectrum High School Project) Series A 4.375% 7/1/52

    1,100,000       1,074,315  

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

   

Series A 5.00% 3/1/34

    990,000       1,008,988  

Series A 5.00% 3/1/39

    170,000       170,921  

Cologne Charter School Lease Revenue (Cologne Academy Project)

   

Series A 5.00% 7/1/29

    270,000       283,333  

Series A 5.00% 7/1/45

    445,000       441,720  

Deephaven Charter School (Eagle Ridge Academy Project)

   

Series A 5.25% 7/1/37

    590,000       617,907  

Series A 5.25% 7/1/40

    500,000       521,875  

Duluth Housing & Redevelopment Authority (Duluth Public Schools Academy Project) Series A 5.00% 11/1/48

    1,200,000       1,215,552  

Forest Lake Minnesota Charter School Revenue (Lake International Language Academy) 5.75% 8/1/44

    705,000       744,973  

Hugo Charter School Lease Revenue (Noble Academy Project)

   

Series A 5.00% 7/1/34

    255,000       263,986  

Series A 5.00% 7/1/44

    775,000       790,841  

Minneapolis Charter School Lease Revenue (Hiawatha Academies Project)

   

Series A 5.00% 7/1/36

    750,000       750,420  

Series A 5.00% 7/1/47

    900,000       875,844  
    Principal     Value  
     Amount°     (US $)  

Municipal Bonds (continued)

               

Education Revenue Bonds (continued)

 

Minneapolis Student Housing Revenue
(Riverton Community Housing Project)

   

5.25% 8/1/39

    205,000     $       213,971  

5.50% 8/1/49

    990,000       1,040,728  

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

    1,250,000       1,329,713  

(Carleton College)

4.00% 3/1/36

    485,000       502,528  

5.00% 3/1/44

    905,000       1,017,908  

(College of St. Benedict) 4.00% 3/1/36

    410,000       414,485  

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

    2,100,000       2,308,992  

(Macalester College)

4.00% 3/1/42

    900,000       921,969  

4.00% 3/1/48

    600,000       610,722  

(St. Catherine University)

Series A 4.00% 10/1/38

    920,000       921,509  

Series A 5.00% 10/1/45

    785,000       865,494  

(St. Johns University)

Series 8-I 5.00% 10/1/31

    235,000       262,580  

Series 8-I 5.00% 10/1/34

    35,000       38,852  

(St. Olaf College)

Series 8-N 4.00% 10/1/35

    590,000       616,290  

(St. Scholastic College)

Series H 5.25% 12/1/35

    1,000,000       1,026,320  

(Trustees Of The Hamline

University Of Minnesota)

Series B 5.00% 10/1/47

    1,055,000       1,126,603  

(University of St. Thomas)

Series 7-U 5.00% 4/1/22

    750,000       819,525  

Series A 4.00% 10/1/37

    500,000       512,545  

Otsego Charter School (Kaleidoscope Charter School)

   

Series A 5.00% 9/1/34

    230,000       231,511  

Series A 5.00% 9/1/44

    400,000       394,264  

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

    1,250,000       1,311,500  
 

 

8


Table of Contents

    

    

    

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Education Revenue Bonds (continued)

 

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

    375,000     $       222,210  

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue (Academia Cesar Chavez School Project) Series A 5.25% 7/1/50

    825,000       766,178  

(Great River School Project)

   

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

    100,000       100,491  

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

    240,000       246,857  

(Nova Classical Academy Project)

   

Series A 4.125% 9/1/47

    750,000       717,600  

Series A 6.375% 9/1/31

    750,000       816,375  

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

    630,000       642,102  

University of Minnesota

   

Series A 5.00% 9/1/40

    1,240,000       1,410,847  

Series A 5.00% 9/1/42

    2,000,000       2,270,580  
   

 

 

 
   

 

 

 

32,441,924

 

 

   

 

 

 

Electric Revenue Bonds – 15.56%

 

Central Minnesota Municipal Power Agency Revenue (Brookings Southeast Twin Cities Transportation) 5.00% 1/1/32

    1,130,000       1,207,687  

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

    1,000,000       1,061,720  

Chaska Electric Revenue Series A 5.00% 10/1/28

    445,000       505,306  

Minnesota Municipal Power Agency Electric Revenue

   

5.00% 10/1/25

    500,000       568,620  

5.00% 10/1/26

    500,000       567,425  

5.00% 10/1/27

    320,000       362,202  

5.00% 10/1/47

    1,755,000       1,944,996  

Northern Municipal Power Agency

   

Series A 5.00% 1/1/26

    100,000       109,125  

Series A 5.00% 1/1/30

    340,000       367,054  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

               

Electric Revenue Bonds (continued)

 

Rochester Electric Utility Revenue

   

Series A 5.00% 12/1/42

    605,000     $       678,514  

Series A 5.00% 12/1/47

    985,000       1,100,954  

Series B 5.00% 12/1/30

    1,300,000       1,447,147  

Series B 5.00% 12/1/43

    1,000,000       1,096,980  

Southern Minnesota Municipal Power Agency Supply Revenue

   

Series A 5.00% 1/1/41

    240,000       265,118  

Series A 5.00% 1/1/47

    1,650,000       1,848,149  

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue

   

Series A 4.00% 10/1/33

    285,000       294,359  

Series B 4.00% 10/1/37

    800,000       812,096  

Western Minnesota Municipal Power Agency Supply Revenue

   

Series A 5.00% 1/1/25

    3,000,000       3,315,630  

Series A 5.00% 1/1/26

    1,000,000       1,103,500  

Series A 5.00% 1/1/33

    1,000,000       1,117,490  

Series A 5.00% 1/1/40

    750,000       828,810  

Series A 5.00% 1/1/46

    2,500,000       2,747,350  

Series A 5.00% 1/1/49

    1,610,000       1,826,416  
   

 

 

 
   

 

 

 

25,176,648

 

 

   

 

 

 

Healthcare Revenue Bonds – 36.14%

 

Anoka Health Care Facilities Revenue 5.375% 11/1/34

    610,000       642,403  

Apple Valley Senior Housing Revenue (PHS Senior Housing, Inc. Orchard Path Project)

   

4.50% 9/1/53

    2,000,000       1,979,060  

5.00% 9/1/58

    1,605,000       1,660,838  

Apple Valley Senior Living Revenue (Senior Living LLC Project)

   

Series B 5.00% 1/1/47

    750,000       766,163  

Series D 7.00% 1/1/37

    720,000       711,144  

Series D 7.25% 1/1/52

    1,000,000       1,002,290  

Center City Health Care Facilities Revenue (Hazelden Betty Ford Foundation Project) 5.00% 11/1/27

    500,000       560,505  
 

 

(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)

 

Center City Health Care Facilities Revenue (Hazelden Foundation Project) 5.00% 11/1/41

    1,600,000     $       1,635,968  

City of Bethel (The Lodge at Lakes at Stillwater Project) 5.25% 6/1/58

    900,000       918,171  

Cloquet Housing Facilities Revenue (HADC Cloquet Project) Series A 5.00% 8/1/48

    500,000       504,955  

Dakota County Community Development Agency Senior Housing Revenue (Walker Highview Hills Project)

   

Series A 144A 5.00% 8/1/46 #

    370,000       372,024  

Series A 144A 5.00% 8/1/51 #

    755,000       757,816  

Deephaven Housing & Healthcare Revenue (St. Therese Senior Living Project)

   

Series A 5.00% 4/1/38

    280,000       280,445  

Series A 5.00% 4/1/40

    270,000       270,216  

Duluth Economic Development Authority (St. Luke’s Hospital Authority Obligation Group)

   

5.75% 6/15/32

    1,400,000       1,510,950  

6.00% 6/15/39

    1,000,000       1,088,960  

Fergus Falls Health Care Facilities Revenue (Lake Region Healthcare) 5.00% 8/1/30

    1,000,000       1,001,360  

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

    500,000       508,860  

Hayward Health Care Facilities Revenue (St. John’s Lutheran Home of Albert Lea) 5.375% 10/1/44

    400,000       415,876  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Healthcare Revenue Bonds (continued)

 

Maple Grove Health Care Facilities Revenue (Maple Grove Hospital Corporation) 4.00% 5/1/37

    1,000,000     $       996,080  

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

    865,000       950,730  

Minneapolis Health Care System Revenue

   

(Fairview Health Services)

   

Series A 4.00% 11/15/48

    1,500,000       1,479,255  

Series A 5.00% 11/15/33

    500,000       560,255  

Series A 5.00% 11/15/34

    500,000       558,565  

Series A 5.00% 11/15/49

    2,000,000       2,194,360  

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

    1,940,000       1,950,786  

Minneapolis Senior Housing & Healthcare Revenue

   

(Ecumen Mill City Quarter) 5.25% 11/1/45

    850,000       873,961  

5.375% 11/1/50

    200,000       206,244  

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

    220,000       224,864  

Minneapolis – St. Paul Housing & Redevelopment Authority Health Care Revenue (Allina Health System) Series A 5.00% 11/15/29

    585,000       672,785  

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

    500,000       522,305  

Rochester Health Care & Housing Revenue (The Homestead at Rochester Project) Series A 6.875% 12/1/48

    1,220,000       1,371,207  

Rochester Health Care Facilities Revenue (Mayo Clinic) 4.00% 11/15/41

    4,860,000       4,980,042  

Sartell Health Care Facilities Revenue (Country Manor Campus Project)

   

5.25% 9/1/30

    1,000,000       1,076,350  

Series A 5.30% 9/1/37

    600,000       648,348  
 

 

10


Table of Contents

    

    

    

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Healthcare Revenue Bonds (continued)

 

 

Shakopee Health Care Facilities Revenue (St. Francis Regional Medical Center)

   

4.00% 9/1/31

    205,000     $       210,869  

5.00% 9/1/34

    165,000       178,205  

St. Cloud Health Care Revenue (Centracare Health System Project)

   

Series A 4.00% 5/1/37

    1,295,000       1,330,794  

Series A 5.00% 5/1/46

    4,800,000       5,242,224  

Series B 5.00% 5/1/24

    1,400,000       1,581,230  

(Unrefunded - Centracare Health System Project) 5.125% 5/1/30

    95,000       99,306  

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

   

(Allina Health System)

Series A1 5.25% 11/15/29

    640,000       665,875  

(Fairview Health Services)

Series A 4.00% 11/15/43

    905,000       905,652  

Series A 5.00% 11/15/47

    680,000       742,363  

(Health Partners Obligation Group Project) 5.00% 7/1/29

    2,000,000       2,255,620  

Series A 5.00% 7/1/32

    1,100,000       1,227,732  

St. Paul Housing & Redevelopment Authority Housing & Health Care Facilities Revenue (Senior Episcopal Homes Project) 5.125% 5/1/48

    1,200,000       1,195,416  

Series A 4.75% 11/1/31

    740,000       737,832  

Wayzata Senior Housing Revenue (Folkestone Senior Living Community)

   

Series A 5.50% 11/1/32

    420,000       433,028  

Series A 5.75% 11/1/39

    945,000       974,881  

Series A 6.00% 5/1/47

    1,475,000       1,522,952  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Healthcare Revenue Bonds (continued)

 

 

Winona Health Care Facilities Revenue (Winona Health Obligation)

   

4.65% 7/1/26

    465,000     $ 475,314  

4.75% 7/1/27

    785,000       804,028  

5.00% 7/1/34

    750,000       768,300  

Woodbury Housing & Redevelopment Authority Revenue

   

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

    1,250,000       1,290,213  
   

 

 

 
   

 

 

 

58,495,975

 

 

   

 

 

 

Housing Revenue Bonds – 1.98%

 

Minneapolis Multifamily Housing Revenue

   

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

    270,000       270,432  

Minnesota Housing Finance Agency

   

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

    1,390,000       1,556,578  

Minnesota State Housing Finance Agency Homeownership (Mortgage-Backed Securities Program) 4.40% 7/1/32 (GNMA) (FNMA)

    785,000       801,548  

Northwest Multi-County Housing & Redevelopment Authority (Pooled Housing Program) 5.50% 7/1/45

    560,000       566,468  
   

 

 

 
   

 

 

 

3,195,026

 

 

   

 

 

 

Lease Revenue Bonds – 10.13%

 

Minnesota State General Fund Revenue Appropriations

   

Series A 5.00% 6/1/32

    780,000       863,140  

Series A 5.00% 6/1/38

    5,500,000       6,032,950  

Series A 5.00% 6/1/43

    1,750,000       1,913,958  

Series B 5.00% 3/1/29

    1,000,000       1,089,170  

Minnesota State Housing Finance Agency (Non Ace - State Appropriated Housing)

   

Series C 5.00% 8/1/36

    1,000,000       1,116,410  
 

 

(continues)    11


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

       

Lease Revenue Bonds (continued)

 

University of Minnesota Special Purpose Revenue (State Supported Biomed Science Research)

   

5.00% 8/1/35

    1,040,000     $       1,091,553  

5.00% 8/1/36

    4,000,000       4,285,120  
   

 

 

 
   

 

 

 

16,392,301

 

 

   

 

 

 

Local General Obligation Bonds – 12.42%

 

Brainerd Independent School District No 181 (General Obligation School Building Bonds) Series A 4.00% 2/1/38

    1,500,000       1,547,160  

Brainerd Independent School District No. 181 (General Obligation School Building Bonds) Series A 4.00% 2/1/43

    1,500,000       1,523,340  

Burnsville-Eagan-Savage Independent School District No 191 (Alternative Facilities) Series A 4.00% 2/1/28

    1,185,000       1,267,642  

Duluth Independent School District No 709 Series A 4.00% 2/1/27

    600,000       635,550  

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

    545,000       616,613  

Edina Independent School District No. 273 Series A 5.00% 2/1/27

    1,500,000       1,721,100  

Hennepin County

   

Series A 5.00% 12/1/36

    1,190,000       1,358,385  

Series A 5.00% 12/1/37

    1,240,000       1,427,711  

Series A 5.00% 12/1/41

    1,060,000       1,197,715  

Hopkins Independent School District No. 270 Series A 5.00% 2/1/28

    1,000,000       1,063,950  

Mahtomedi Independent School District No. 832 (School Building) Series A 5.00% 2/1/28

    515,000       589,608  

Mounds View Independent School District No. 621 (School Building) Series A 4.00% 2/1/43

    2,000,000       2,045,480  
    

Principal

Amount°

   

Value

(US $)

 

Municipal Bonds (continued)

       

Local General Obligation Bonds (continued)

 

St. Michael-Albertville Independent School District No. 885 (School Building) Series A 5.00% 2/1/27

    1,300,000     $       1,510,743  

St. Paul Independent School District No. 625 (School Building) Series B 5.00% 2/1/26

    1,000,000       1,106,300  

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

    2,440,000       2,490,581  
   

 

 

 
   

 

 

 

20,101,878

 

 

   

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 24.12%

 

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

    1,200,000       1,273,392  

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       8,175,898  

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

    500,000       571,790  

Minneapolis Health Care System Revenue (Fairview Health Services) Series A 6.625% 11/15/28-18 §

    500,000       502,885  

Minnesota Higher Education Facilities Authority Revenue (College of St. Benedict)

   

Series 7-M 5.00% 3/1/31-20 §

    300,000       312,351  

Series 7-M 5.125% 3/1/36-20 §

    275,000       286,798  

(St. Catherine University) Series 7-Q 5.00% 10/1/32-22 §

    700,000       770,658  

(University of St. Thomas) Series 7-A 5.00% 10/1/39-19 §

    1,000,000       1,029,370  
 

 

12


Table of Contents

    

    

    

 

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

Minnesota State (Various Purposes) Series D 5.00% 8/1/24-20 §

    65,000     $ 68,450  

Rochester Health Care & Housing Revenue (Samaritan Bethany) Series A 7.375% 12/1/41-19 §

    1,220,000       1,294,139  

Rocori Independent School District No. 750 (School Building)

   

Series B 5.00%
2/1/24-19 §

    1,075,000       1,086,320  

Series B 5.00%
2/1/25-19 §

    1,115,000       1,126,741  

Series B 5.00%
2/1/26-19 §

    1,155,000       1,167,162  

St. Cloud Health Care Revenue (Centracare Health System Project) 5.50% 5/1/39-19 (AGC) §

    1,500,000       1,530,570  

Series A 5.125% 5/1/30-20 §

    3,830,000       4,012,806  

St. Louis Park Health Care Facilities Revenue (Park Nicollet Health Services) 5.75% 7/1/39-19 §

    2,000,000       2,054,980  

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue (Allina Health System) Series A1 5.25% 11/15/29-19 §

    755,000       781,923  

St. Paul Housing & Redevelopment Authority Hospital Facility (Healtheast Care System Project)

   

Series A 5.00%

11/15/29-25 §

    395,000       458,749  

Series A 5.00%

11/15/30-25 §

    290,000       336,803  

University of Minnesota

   

Series A 5.25%
4/1/29-19 §

    1,000,000       1,016,800  

Series A 5.50%
7/1/21

    4,000,000       4,229,200  

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

               

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

University of Minnesota

   

Series D 5.00%
12/1/27-21 §

    1,110,000     $ 1,209,789  

Series D 5.00%
12/1/29-21 §

    1,265,000       1,378,724  

Series D 5.00%
12/1/31-21 §

    1,000,000       1,089,900  

Series D 5.00%
12/1/36-21 §

    3,000,000       3,269,700  
   

 

 

 
   

 

 

 

39,035,898

 

 

   

 

 

 

Special Tax Revenue Bonds – 1.52%

 

Guam Government Business Privilege Tax Revenue Series A 5.25% 1/1/36

    150,000       157,607  

Minneapolis Community Planning & Economic Development Department (Limited Tax Supported Common Bond Fund) 6.25% 12/1/30

    1,000,000       1,083,760  

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

    165,000       173,101  

St. Paul Sales Tax Revenue Series G 5.00% 11/1/30

    935,000       1,047,032  
   

 

 

 
   

 

 

 

2,461,500

 

 

   

 

 

 

State General Obligation Bonds – 14.38%

 

 

Minnesota State

   

Series A 5.00% 8/1/24

    2,500,000       2,864,800  

Series A 5.00% 8/1/29

    700,000       803,082  

Series E 5.00% 10/1/26

    1,480,000       1,750,218  

(State Trunk Highway)

Series B 5.00% 10/1/22

    5,500,000       5,962,660  

Series B 5.00% 10/1/29

    3,315,000       3,575,791  

(Various Purposes)

Series D 5.00% 8/1/24

    2,635,000       2,775,841  

Series F 5.00% 10/1/22

    5,000,000       5,545,050  
   

 

 

 
   

 

 

 

23,277,442

 

 

   

 

 

 

Transportation Revenue Bonds – 6.84%

 

 

Minneapolis – St. Paul Metropolitan Airports Commission Revenue

   

5.00% 1/1/22

    670,000       711,346  

Subordinate
Series A 5.00% 1/1/31

    410,000       473,386  

Series A 5.00% 1/1/32

    1,255,000       1,443,062  

Series B 5.00% 1/1/26

    540,000       584,118  
 

 

(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)

 

Minneapolis – St. Paul Metropolitan Airports Commission Revenue

   

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

    500,000     $       553,055  

Series B 5.00% 1/1/27

    1,190,000       1,286,449  

Series B 5.00% 1/1/30

    500,000       536,150  

Series B 5.00% 1/1/31

    250,000       267,833  

Series C 5.00% 1/1/33

    2,000,000       2,291,820  

Series C 5.00% 1/1/36

    1,000,000       1,133,400  

Series C 5.00% 1/1/46

    1,245,000       1,391,898  

St. Paul Port Authority Revenue

   

(Amherst H. Wilder Foundation)

Series 3 5.00% 12/1/36

    380,000       394,337  
   

 

 

 
   

 

 

 

11,066,854

 

 

   

 

 

 

Water & Sewer Revenue Bonds – 3.61%

 

 

Guam Government Waterworks Authority

   

5.00% 7/1/40

    840,000       914,374  

5.00% 1/1/46

    725,000       779,846  

Metropolitan Council Waste Water Revenue

   

Series B 4.00% 9/1/27

    1,145,000       1,208,639  

Series C 4.00% 3/1/31

    1,355,000       1,450,907  

Series C 4.00% 3/1/32

    1,405,000       1,493,712  
   

 

 

 
   

 

 

 

5,847,478

 

 

   

 

 

 

Total Municipal Bonds

   

(cost $235,696,452)

      239,083,672  
   

 

 

 
     Principal
Amount°
   

Value

(US $)

 

Short-Term Investment – 0.06%

 

Variable Rate Demand Notes – 0.06%¤

 

 

Minneapolis – St. Paul, Minnesota Housing & Redevelopment Authority Health Care Revenue Series B (Children’s Hospitals & Clinics) 1.48% 8/15/25 (AGM) (SPA – US Bank N.A.)

    100,000     $ 100,000  
   

 

 

 

Total Short-Term Investment
(cost $100,000)

 

    100,000  
   

 

 

 

Total Value of Securities – 147.79%
(cost $235,796,452)

 

  $ 239,183,672  
   

 

 

 

 

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Sept. 30, 2018, the aggregate value of Rule 144A securities was $4,379,436, which represents 2.71% 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, 2018.

§

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 will be pre-refunded. See Note 5 in “Notes to financial statements.”

°

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, 2018 (Unaudited)

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds – 144.55%

 

Corporate Revenue Bonds – 15.63%

 

Buckeye, Ohio Tobacco Settlement Financing Authority Asset-Backed -2

   

Series A-2 5.875% 6/1/47

    500,000     $       500,000  

Series A-2 6.50% 6/1/47

    430,000       438,604  

Central Plains Energy Project Revenue, Nebraska (Project No. 3)

   

Series A 5.00% 9/1/36

    225,000       259,526  

Series A 5.00% 9/1/42

    260,000       300,659  

Commonwealth Financing Authority Revenue, Pennsylvania (Tobacco Master Settlement Payment) 4.00% 6/1/39 (AGM)

    1,015,000       1,017,385  

Florida Development Finance Corporation Surface Transportation Facility Revenue (Brightline Passenger Rail Project) 144A 5.625%
1/1/47 (AMT)#

    300,000       312,867  

Golden State Tobacco Securitization, California

   

Series A-1 5.00% 6/1/47

    350,000       358,561  

Series A-1 5.25% 6/1/47

    350,000       363,181  

Louisiana Local Government Environmental Facilities & Community Development Authority (Westlake Chemical)

   

Series A 6.50% 8/1/29

    645,000       694,471  

Series A-1 6.50% 11/1/35

    255,000       275,872  

M-S-R Energy Authority, California Gas

   

Series B 6.50% 11/1/39

    250,000       342,825  

Series C 7.00% 11/1/34

    1,000,000       1,397,220  

New York City, New York Industrial Development Agency (Brooklyn Navy Yard Cogeneration Partners, L.P. Project) 5.75% 10/1/36 (AMT)

    500,000       504,790  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

               

Corporate Revenue Bonds (continued)

 

New York Transportation Development (Delta Air Lines, Inc. - LaGuardia Airport Terminals C&D Redevelopment Project) 4.00% 1/1/36 (AMT)

    750,000     $       746,265  

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

    310,000       344,900  

Suffolk County, New York Tobacco Asset Securitization Series B 5.00% 6/1/32

    750,000       800,040  

Tobacco Settlement Financing Corporation, Louisiana Asset-Backed Note Series A 5.25% 5/15/35

    460,000       492,278  

Tobacco Settlement Financing Corporation, New Jersey

   

Series A 5.00% 6/1/46

    130,000       139,789  

Series B 5.00% 6/1/46

    335,000       353,907  

TSASC Revenue, New York (Settlement) Series A 5.00% 6/1/41

    60,000       64,217  

Valparaiso, Indiana (Pratt Paper Project) 7.00% 1/1/44 (AMT)

    240,000       278,558  
   

 

 

 
   

 

 

 

9,985,915

 

 

   

 

 

 

Education Revenue Bonds – 23.52%

 

 

Arizona Industrial Development Authority Revenue (American Charter Schools Foundation Project) 144A 6.00% 7/1/47 #

    330,000       343,626  

California Educational Facilities Authority Revenue (Loma Linda University) Series A 5.00% 4/1/47

    500,000       551,625  

East Hempfield Township, Pennsylvania Industrial Development Authority (Student Services Income - Student Housing Project) 5.00% 7/1/35

    1,000,000       1,054,730  
 

 

(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)

 

Health & Educational Facilities Authority of the State of Missouri (St. Louis College of Pharmacy Project) 5.25% 5/1/33

    500,000     $       539,575  

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

    600,000       648,666  

Illinois Finance Authority Revenue (CHF - Chicago, L.L.C. - University Of Illinois at Chicago Project) Series A 5.00% 2/15/50

    460,000       490,148  

(Chicago International Charter School Project) 5.00% 12/1/47

    535,000       549,210  

Kent County, Delaware Student Housing and Dining Facilities Revenue (CHF-Dover, L.L.C. - Delaware State University Project) Series A 5.00% 7/1/53

    115,000       120,724  

Louisiana Public Facilities Authority Revenue (Provident Group-Flagship Properties) Series A 5.00% 7/1/56

    500,000       529,240  

Maryland Health & Higher Educational Facilities Authority (Loyola University) Series A 5.00% 10/1/39

    650,000       700,147  

Massachusetts Development Finance Agency (Umass Boston Student Housing Project) 5.00% 10/1/48

    285,000       304,947  

Montgomery County, Pennsylvania Higher Education & Health Authority Revenue (Arcadia University) 5.25% 4/1/30

    550,000       566,110  

New Hope, Texas Cultural Education Facilities (Chief-Collegiate Housing- Tarleton St.) 5.00% 4/1/34

    1,000,000       1,059,020  

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Education Revenue Bonds (continued)

 

New York City, New York Trust For Cultural Resources (Whitney Museum of American Art) 5.00% 7/1/31

    500,000     $       527,355  

New York State Dormitory Authority (Columbia University) 5.00% 10/1/41

    600,000       637,296  

Pennsylvania State University Series A 5.00% 9/1/47

    1,000,000       1,128,680  

Philadelphia, Pennsylvania Authority for Industrial Development (1st Philadelphia Preparatory College) 7.25% 6/15/43

    370,000       415,702  

Phoenix, Arizona Industrial Development Authority Revenue (Downtown Phoenix Student Housing, LLC - Arizona State University Project) Series A 5.00% 7/1/42

    100,000       108,084  

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

    1,000,000       1,053,930  

Pima County, Arizona Industrial Development Authority Education Revenue (Edkey Charter School Project) 6.00% 7/1/48

    500,000       464,030  

Private Colleges & Universities Authority Revenue, Georgia (Mercer University) Series A 5.00% 10/1/32

    135,000       140,246  

Swarthmore Borough Authority, Pennsylvania (Swarthmore College Project) 5.00% 9/15/32

    490,000       549,638  

Troy, New York Capital Resource Revenue (Rensselaer Polytechnic) Series A 5.125% 9/1/40

    600,000       623,982  

University of California

   

Series AI 5.00% 5/15/32

    1,000,000       1,114,870  

Series AZ 5.25% 5/15/58

    465,000       536,298  
 

 

16


Table of Contents

    

    

    

 

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Education Revenue Bonds (continued)

 

Wyoming Community Development Authority Student Housing Revenue (CHF-Wyoming LLC) 6.50% 7/1/43

    250,000     $       262,765  
   

 

 

 
   

 

 

 

15,020,644

 

 

   

 

 

 

Electric Revenue Bonds – 2.66%

 

JEA Electric System Revenue, Florida Series A 5.00% 10/1/33

    355,000       389,967  

Long Island Power Authority, New York

   

Series A 5.00% 9/1/44

    250,000       274,065  

Series B 5.00% 9/1/46

    130,000       143,468  

Long Island Power Authority, New York Electric System Revenue 5.00% 9/1/47

    305,000       339,270  

Philadelphia, Pennsylvania Gas Works Revenue (1998 General Ordinance Fifteenth Series) 5.00% 8/1/47

    500,000       549,745  
   

 

 

 
   

 

 

 

1,696,515

 

 

   

 

 

 

Healthcare Revenue Bonds – 27.43%

 

Alabama Special Care Facilities Financing Authority-Birmingham Alabama (Methodist Home for the Aging) 6.00% 6/1/50

    500,000       548,465  

Allegheny County Hospital, Pennsylvania Development Authority (Allegheny Health Network Obligated Group Issue) Series A 4.00% 4/1/44

    300,000       292,500  

Arizona Health Facilities Authority Revenue (Catholic Healthcare West) Series D 5.00% 7/1/28

    500,000       508,880  

Berks County Industrial Development Authority Revenue (Tower Health Project) 5.00% 11/1/50

    1,000,000       1,077,850  

 

     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     $       498,756  

California Statewide Communities Development Authority (Loma Linda University Medical Center) Series A 144A 5.25% 12/1/56 #

    760,000       810,244  

Capital Trust Agency, Florida (Tuscan Gardens Senior Living Center) Series A 7.00% 4/1/49

    375,000       361,763  

Colorado Health Facilities Authority Revenue (Healthcare Facilities - American Baptist) 8.00% 8/1/43

    330,000       373,649  

Cuyahoga County, Ohio Hospital Revenue (The Metrohealth System) 5.50% 2/15/57

    1,000,000       1,079,900  

Kalispell, Montana (Immanuel Lutheran Corporation Project) Series A 5.25% 5/15/37

    700,000       728,504  

Lycoming County, Pennsylvania Authority Health System Revenue (Susquehanna Health System Project) Series A 5.50% 7/1/28

    500,000       512,975  

Maine Health & Higher Educational Facilities Authority Revenue (Maine General Medical Center) 6.75% 7/1/41

    300,000       320,514  

Maricopa County, Arizona Industrial Development Authority Health Facilities Revenue (Catholic Healthcare West) Series A 6.00% 7/1/39

    500,000       513,605  

Maryland Health & Higher Educational Facilities Authority (University Of Maryland Medical System Issue) Series D 4.00% 7/1/48

    255,000       254,107  
 

 

(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)

 

 

Miami-Dade County, Florida Health Facilities Authority Revenue (Nicklaus Children’s Hospital Project) 5.00% 8/1/47

    200,000     $       217,852  

Michigan Finance Authority Revenue (Beaumont Health Credit Group) 5.00% 11/1/44

    1,000,000       1,084,840  

Montgomery County Higher Education & Health Authority Revenue (Thomas Jefferson University) 4.00% 9/1/49

    750,000       735,615  

Moon, Pennsylvania Industrial Development Authority (Baptist Homes Society Obligation) 6.125% 7/1/50

    750,000       797,310  

New Hope, Texas Cultural Education Facilities (Cardinal Bay Inc.)

   

Series A1 4.00% 7/1/36

    55,000       55,989  

Series A1 5.00% 7/1/46

    135,000       146,625  

Series A1 5.00% 7/1/51

    135,000       146,530  

Series B 4.25% 7/1/36

    80,000       80,521  

Series B 4.75% 7/1/51

    160,000       163,526  

Series B 5.00% 7/1/46

    135,000       140,620  

New Jersey Health Care Facilities Financing Authority Revenue (St. Peters University Hospital) 6.25% 7/1/35

    300,000       318,336  

New York State Dormitory Authority (Orange Regional Medical Center) 144A 5.00% 12/1/35 #

    500,000       545,070  

Oklahoma Development Finance Authority Revenue (OU Medicine Project) Series B 5.50% 8/15/57

    215,000       237,382  

Orange County, Florida Health Facilities Authority Revenue (Mayflower Retirement Center)

   

5.00% 6/1/32

    400,000       415,528  

5.00% 6/1/36

    250,000       258,610  

5.125% 6/1/42

    750,000       774,338  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

               

Healthcare Revenue Bonds (continued)

 

 

Oregon State Facilities Authority Revenue (Peacehealth Project) Series A 5.00% 11/15/29

    500,000     $       554,890  

Palm Beach County Health Facilities Authority, Florida (Sinai Residences Boca Raton Project)

   

7.25% 6/1/34

    20,000       22,642  

7.50% 6/1/49

    105,000       119,604  

Palomar Health, California 5.00% 11/1/39

    130,000       139,082  

Tarrant County, Texas Cultural Education Facilities Finance (Buckner Senior Living - Ventana Project) 6.75% 11/15/47

    250,000       274,985  

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

    500,000       531,330  

Wisconsin Health & Educational Facilities Authority (Covenant Communities, Inc. Project)

   

Series A1 4.00% 7/1/48

    95,000       90,390  

Series B 5.00% 7/1/53

    1,000,000       1,006,950  

Yavapai County, Arizona Industrial Development Authority Revenue (Yavapai Regional Medical Center) Series A 5.00% 8/1/28

    720,000       776,880  
   

 

 

 
   

 

 

 

17,517,157

 

 

   

 

 

 

Lease Revenue Bonds – 7.87%

 

California State Public Works Board Lease Revenue (Various Capital Projects) Series A 5.00% 4/1/37

    1,000,000       1,082,170  

Idaho State Building Authority Revenue (Health & Welfare Project) Series A 5.00% 9/1/24

    135,000       146,736  

Minnesota State General Revenue Appropriations Series B 5.00% 3/1/29

    1,000,000       1,089,170  

New Jersey Economic Development Authority Series WW 5.25% 6/15/30

    1,000,000       1,101,810  
 

 

18


Table of Contents

    

    

    

 

 

    

Principal

Amount°

   

Value

(US $)

 

Municipal Bonds (continued)

 

Lease Revenue Bonds (continued)

 

New Jersey Transportation Trust Fund Authority (Federal Highway Reimbursement Revenue Refunding Notes) Series A 5.00% 6/15/29

    1,000,000     $       1,106,150  

Public Finance Authority, Wisconsin Airport Facilities Revenue (AFCO Investors II Portfolio) 144A 5.75% 10/1/31 #

    500,000       502,120  
   

 

 

 
   

 

 

 

5,028,156

 

 

   

 

 

 

Local General Obligation Bonds – 3.68%

 

Chicago Board of Education, Illinois

   

5.00% 4/1/42

    205,000       219,188  

5.00% 4/1/46

    210,000       223,910  

Chicago, Illinois

   

Series A 5.50% 1/1/34

    225,000       241,038  

Series C 5.00% 1/1/38

    500,000       519,355  

District of Columbia Series A 5.00% 6/1/37

    1,000,000       1,136,840  

New York, New York Series I-1 5.375% 4/1/36

    10,000       10,166  
   

 

 

 
   

 

 

 

2,350,497

 

 

   

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 18.23%

 

Atlanta, Georgia Water & Wastewater Revenue Series A 6.25% 11/1/39-19§

    300,000       313,854  

Bowling Green, Ohio Student Housing Revenue (CFP I State University Project) 6.00% 6/1/45-20§

    260,000       276,929  

Brooklyn Arena Local Development, New York Pilot Revenue (Barclays Center Project)

   

6.25% 7/15/40-20§

    940,000       992,414  

6.50% 7/15/30-20§

    300,000       317,679  

Butler County, Pennsylvania Hospital Authority Revenue

   

(Butler Health System Project) 7.125% 7/1/29-19§

    300,000       311,403  
    

Principal

Amount°

   

Value

(US $)

 

Municipal Bonds (continued)

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

California Municipal Finance Authority Mobile Home Park Revenue (Caritas Project) Series A 6.40% 8/15/45-20§

    400,000     $       428,852  

California State 6.00% 4/1/38-19§

    35,000       35,754  

California Statewide Communities Development Authority School Facility Revenue (Aspire Public Schools) 6.125% 7/1/46-19§

    625,000       631,925  

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

    520,000       563,191  

Hawaii Pacific Health Special Purpose Revenue Series A 5.50% 7/1/40-20§

    300,000       318,090  

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

    950,000       990,793  

JEA Electric System Revenue, Florida Series A 5.00% 10/1/33-23§

    645,000       725,793  

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

    300,000       316,611  

Louisiana Public Facilities Authority Revenue (Ochsner Clinic Foundation Project) 6.50% 5/15/37-21§

    105,000       116,712  

Maryland State Economic Development Revenue (Transportation Facilities Project) Series A 5.75% 6/1/35-20§

    255,000       270,782  

Metropolitan Transportation Authority Revenue, New York

   

Series A 5.00% 11/15/41-21§

    190,000       207,391  

(Unrefunded) Series A
5.00% 11/15/41-21§

    310,000       338,374  
 

 

(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)

 

Monroe County, New York Industrial Development Revenue (Nazareth College Rochester Project) 5.50% 10/1/41-21§

    495,000     $       544,248  

Monroe County, Pennsylvania Hospital Authority Revenue (Pocono Medical Center) Series A 5.00% 1/1/41-22§

    500,000       544,450  

New Hampshire Health and Education Facilities Authority Revenue (Dartmouth - Hitchcock Medical Center) 6.00% 8/1/38-19§

    300,000       309,852  

New Jersey Economic Development Authority Revenue (MSU Student Housing Project) 5.875% 6/1/42-20§

    450,000       478,764  

New Jersey Turnpike Authority

   

Series A 5.00% 1/1/27-22§

    475,000       524,557  

Series A 5.00% 1/1/27-22§

    25,000       27,608  

New York City, New York Water & Sewer System Revenue 5.00% 6/15/47-23§

    160,000       180,976  

New York, New York Series I-1 5.375% 4/1/36-19§

    240,000       244,241  

Ohio State (Cleveland Clinic Health) Series A 5.50% 1/1/39-19§

    300,000       302,745  

Oregon State Facilities Authority Revenue (Concordia University Project) Series A 144A 6.125% 9/1/30-20#§

    100,000       106,435  

Pennsylvania State Higher Educational Facilities Authority Revenue (Edinboro University Foundation) 5.80% 7/1/30-20§

    400,000       425,104  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

Pennsylvania Turnpike Commission Subordinate (Motor License Fund) Series B 5.00% 12/1/41-21§

    260,000     $       282,955  

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

    500,000       516,700  
   

 

 

 
 

 

 

 

11,645,182

 

 

   

 

 

 

Special Tax Revenue Bonds – 11.88%

 

 

Central Puget Sound, Washington Regional Transit Authority (Green Bond - Improvement) Series S-1 5.00% 11/1/35

    750,000       844,013  

Guam Government Business Privilege Tax Revenue Series B-1 5.00% 1/1/42

    540,000       559,256  

Kansas City, Missouri Redevelopment Authority Revenue (Convention Centre Hotel Project - TIF Financing) Series B 144A 5.00% 2/1/40 #

    135,000       138,901  

Massachusetts Bay Transportation Authority Senior Series A 5.25% 7/1/29

    200,000       245,822  

Mosaic District, Virginia Community Development Authority Revenue Series A 6.875% 3/1/36

    520,000       559,016  

New Jersey Economic Development Authority Revenue

   

(Cigarette Tax)
5.00% 6/15/28

    200,000       211,606  

5.00% 6/15/29

    800,000       843,856  

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

    295,000       300,927  
 

 

20


Table of Contents

    

    

    

 

 

     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     $       819,470  

New York State Dormitory Authority Series A 5.00% 3/15/33

    1,000,000       1,098,520  

Northampton County, Pennsylvania Industrial Development Authority Revenue (Route 33 Project) 7.00% 7/1/32

    205,000       231,240  

Public Finance Authority, Wisconsin Airport Facilities Revenue (American Dream @ Meadowlands Project) 144A 7.00% 12/1/50 #

    380,000       435,594  

Regional Transportation District, Colorado Tax Revenue (Denver Transit Partners) 6.00% 1/15/41

    500,000       520,285  

Sales Tax Securitization, Illinois Series A 5.00% 1/1/40

    500,000       545,980  

Wyandotte County, Kansas City, Kansas Unified Government Special Obligation Revenue (Sales Tax - Vacation Village Project A) Series A 5.75% 9/1/32

    220,000       234,159  
   

 

 

 
   

 

 

 

7,588,645

 

 

   

 

 

 

State General Obligation Bonds – 6.22%

 

 

California State 5.25% 11/1/40

    320,000       341,085  

(Unrefunded-Various Purpose) 6.00% 4/1/38

    70,000       71,406  

(Various Purposes) 5.00% 10/1/41

    440,000       476,080  

5.00% 11/1/47

    1,000,000       1,141,700  

Illinois State

   

5.00% 5/1/36

    90,000       92,285  

5.00% 11/1/36

    1,170,000       1,209,218  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

State General Obligation Bonds (continued)

 

 

Illinois State

   

5.00% 2/1/39

    160,000     $ 163,061  

Series A 5.00% 4/1/38

    170,000       173,495  

New York State

   

Series A 5.00% 2/15/39

    300,000       303,285  
   

 

 

 
   

 

 

 

    3,971,615

 

 

   

 

 

 

Transportation Revenue Bonds – 24.50%

 

 

Alameda Corridor, California Transportation Authority (2nd Sub Lien) Series B 5.00% 10/1/37

    430,000       468,390  

Atlanta, Georgia Department of Aviation Series B 5.00% 1/1/29

    1,000,000       1,115,930  

California Municipal Finance Authority Mobile Home Park Revenue (LINXS APM Project) 5.00% 12/31/47 (AMT)

    615,000       670,411  

Chicago, Illinois O’Hare International Airport Revenue (General-Senior Lien) Series D 5.25% 1/1/34

    1,000,000       1,091,550  

Harris County, Texas Toll Road Authority Revenue (Senior Lien) Series A 4.00% 8/15/48

    500,000       504,655  

New Jersey Turnpike Authority Series B 5.00% 1/1/40

    250,000       280,443  

New Orleans, Louisiana Aviation Board Series B 5.00% 1/1/45 (AMT)

    1,000,000       1,072,440  

New York Liberty Development Revenue (1 World Trade Center Port Authority Construction) 5.00% 12/15/41

    500,000       537,110  

New York Transportation Development (La Guardia Airport) Series A 5.25% 1/1/50 (AMT)

    700,000       745,969  

Pennsylvania Turnpike Commission Subordinate

   

Series A-1 5.00% 12/1/43

    500,000       538,935  

Series A-1 5.00% 12/1/47

    210,000       230,530  
 

 

(continues)    21


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Transportation Revenue Bonds (continued)

 

Pennsylvania Turnpike Commission Subordinate (Motor License Fund) Series B 5.00% 12/1/41

    240,000     $ 255,497  

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

    900,000       974,475  

Port Authority of New York & New Jersey Special Project (JFK International Air Terminal)

   

6.00% 12/1/42

    230,000       248,872  

6.50% 12/1/28

    500,000       523,535  

Salt Lake City, Utah Airport Revenue Series B 5.00% 7/1/42

    625,000       699,081  

South Jersey Port, New Jersey (Subordinated Marine Terminal Revenue)

   

Series A 5.00% 1/1/49

    85,000       91,921  

Series B 5.00% 1/1/42 (AMT)

    85,000       91,104  

Series B 5.00% 1/1/48 (AMT)

    195,000       208,073  

St. Louis, Missouri Airport Revenue (Lambert St. Louis International)

   

5.00% 7/1/32 (AMT)

    1,000,000           1,073,280  

Series A-1 6.625% 7/1/34

    325,000       335,439  

Texas Private Activity Bond Surface Transportation (Senior Lien - Blueridge Transportation)

   

5.00% 12/31/40 (AMT)

    110,000       117,784  

5.00% 12/31/45 (AMT)

    110,000       117,425  

5.00% 12/31/50 (AMT)

    160,000       170,386  

5.00% 12/31/55 (AMT)

    160,000       169,867  

Texas Private Activity Bond Surface Transportation Corporate Senior Lien Revenue (LBJ Infrastructure)

   

7.00% 6/30/40

    285,000       305,982  

7.50% 6/30/33

    665,000       721,013  

(Mobility Partners) 7.50% 12/31/31

    500,000       531,185  
     Principal
Amount°
   

Value

(US $)

 

Municipal Bonds (continued)

 

Transportation Revenue Bonds (continued)

 

Texas Private Activity Bond Surface Transportation Corporate Senior Lien Revenue (NTE Mobility Partners)

   

6.75% 6/30/43 (AMT)

    225,000     $       259,607  

6.875% 12/31/39

    1,000,000       1,052,200  

7.00% 12/31/38 (AMT)

    165,000       192,968  

Virginia Small Business Financing Authority (Transform 66 P3 Project) 5.00% 12/31/56 (AMT)

    235,000       250,573  
   

 

 

 
   

 

 

 

15,646,630

 

 

   

 

 

 

Water & Sewer Revenue Bonds – 2.93%

 

New York City, New York Water & Sewer System Revenue (Unrefunded Balance) 5.00% 6/15/47

    185,000       200,686  

Philadelphia, Pennsylvania Water & Wastewater Revenue Series A 5.00% 7/1/45

    500,000       544,690  

Southern California Water Replenishment District 5.00% 8/1/41

    1,000,000       1,126,600  
   

 

 

 
   

 

 

 

1,871,976

 

 

   

 

 

 

Total Municipal Bonds
(cost $88,935,365)

      92,322,932  
   

 

 

 
                 

Short-Term Investments – 0.78%

 

Variable Rate Demand Notes – 0.78%¤

 

 

Arizona Health Facilities Authority Series C (Banner Health) 1.50% 1/1/46 (LOC – Bank of America N.A.)

    150,000       150,000  
 

 

22


Table of Contents

    

    

    

 

 

     Principal
Amount°
   

Value

(US $)

 

Short-Term Investments (continued)

 

       

Variable Rate Demand Notes¤ (continued)

 

 

Mississippi Business Finance Corporation Gulf Opportunity Zone Industrial Development Revenue Series 2011A (Chevron USA) 1.48% 11/1/35

    350,000     $ 350,000  
   

 

 

 

Total Short-Term Investments
(cost $500,000)

 

    500,000  
   

 

 

 

Total Value of Securities – 145.33%
(cost $89,435,365)

 

  $ 92,822,932  
   

 

 

 

 

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Sept. 30, 2018, the aggregate value of Rule 144A securities was $3,194,857, which represents 5.00% 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, 2018.

§

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 will be pre-refunded. See Note 5 in “Notes to financial statements.”

°

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

Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at Sept. 30, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above.

Summary of abbreviations:

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

ICE – Intercontinental Exchange

LIBOR – London Interbank Offered Rate

LIBOR03M – ICE LIBOR USD 3 Month

LIBOR06M – ICE LIBOR USD 6 Month

LOC – Letter of Credit

N.A. – National Association

USD – US Dollar

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

 

 

   23


Table of Contents

Statements of assets and liabilities

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

September 30, 2018 (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

  $ 99,387,795     $ 239,183,672     $ 92,822,932  

Interest income receivable

    1,435,439       3,161,250       1,329,902  

Offering cost for preferred shareholders

    76,901       95,247       83,536  

Prepaid rating agency fee

    2,083       1,167       6,250  
 

 

 

   

 

 

   

 

 

 

Total assets

    100,902,218       242,441,336       94,242,620  
 

 

 

   

 

 

   

 

 

 

Liabilities:

     

Cash due to custodian

    293,051       580,893       286,324  

Liquidation value of preferred stock

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

Investment management fees payable

    33,140       78,050       30,961  

Other accrued expenses

    21,944       40,147       28,460  

Audit and tax fees payable

    21,041       21,041       20,970  

Interest expense payable for leverage

    2,211       5,527       2,211  

Legal fees payable to affiliates

    1,932       2,751       1,867  

Accounting and administration expenses payable to affiliates

    638       1,057       618  

Directors’/Trustees’ fees and expenses payable

    179       410       162  

Reports and statements to shareholders expenses payable to affiliates

    50       116       46  

Payable for securities purchased

          4,866,395        
 

 

 

   

 

 

   

 

 

 

Total liabilities

    30,374,186       80,596,387       30,371,619  
 

 

 

   

 

 

   

 

 

 

Total Net Assets Applicable to Common Shareholders

  $ 70,528,032     $ 161,844,949     $ 63,871,001  
 

 

 

   

 

 

   

 

 

 

Net Assets Applicable to Common Shareholders Consist of:

     

Paid-in capital ($0.001 par value)2,3

  $ 66,918,121     $ 157,931,075     $ 60,209,588  

Undistributed net investment income

    222,379       606,702       318,776  

Accumulated net realized loss on investments

    (290,829     (80,048     (44,930

Net unrealized appreciation of investments

    3,678,361       3,387,220       3,387,567  
 

 

 

   

 

 

   

 

 

 

Total Net Assets Applicable to Common Shareholders

  $ 70,528,032     $ 161,844,949     $ 63,871,001  
 

 

 

   

 

 

   

 

 

 

Net Asset Value per Common Share

  $ 14.58     $ 14.07     $ 14.10  
 

 

 

   

 

 

   

 

 

 

1Investments, at cost

    95,709,434       235,796,452       89,435,365  

2Common shares outstanding

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

3Common shares authorized

    200 million       200 million       unlimited  

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

 

24


Table of Contents

Statements of operations

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

Six months ended September 30, 2018 (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

  $ 2,176,178     $ 4,472,965     $ 2,098,205  
 

 

 

   

 

 

   

 

 

 

Expenses:

     

Management fees

    203,497       478,515       189,977  

Interest expense

    393,049       982,624       393,049  

Rating agency fees

    31,462       26,838       26,546  

Accounting and administration expenses

    23,525       35,668       22,928  

Audit and tax fees

    21,042       21,042       21,113  

Dividend disbursing and transfer agent fees and expenses

    17,286       36,303       17,736  

Legal fees

    14,389       26,350       15,286  

Offering costs

    9,017       12,119       10,455  

Reports and statements to shareholders

    6,451       18,096       9,550  

Stock exchange fees

    2,396       5,441       2,156  

Directors’/Trustees’ fees and expenses

    1,663       3,803       1,506  

Custodian fees

    1,169       1,967       1,151  

Registration fees

    380       470       560  

Other

    6,549       10,128       9,622  
 

 

 

   

 

 

   

 

 

 
    731,875       1,659,364       721,635  

Less expense paid indirectly

    (279     (578     (207
 

 

 

   

 

 

   

 

 

 

Total operating expenses

    731,596       1,658,786       721,428  
 

 

 

   

 

 

   

 

 

 

Net Investment Income

    1,444,582       2,814,179       1,376,777  
 

 

 

   

 

 

   

 

 

 

Net Realized and Unrealized Gain (Loss):

     

Net realized gain on investments

    15,341       51,233       192,138  

Net change in unrealized appreciation (depreciation) of investments

    (1,409,936     (2,624,704     (1,262,925
 

 

 

   

 

 

   

 

 

 

Net Realized and Unrealized Loss

    (1,394,595     (2,573,471     (1,070,787
 

 

 

   

 

 

   

 

 

 

Net Increase in Net Assets Resulting from Operations

  $ 49,987     $ 240,708     $ 305,990  
 

 

 

   

 

 

   

 

 

 

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

 

25


Table of Contents

Statements of changes in net assets

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

    Delaware Investments
Colorado Municipal

Income Fund, Inc.
 
    Six months
ended
9/30/18
(Unaudited)
    Year ended
3/31/18
 

Increase (Decrease) in Net Assets from Operations:

   

Net investment income

  $ 1,444,582     $ 3,029,327  

Net realized gain

    15,341       226,210  

Net change in unrealized appreciation (depreciation)

    (1,409,936     (131,684
 

 

 

   

 

 

 

Net increase in net assets resulting from operations

    49,987       3,123,853  
 

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

   

Net investment income

    (1,572,058     (3,313,414
 

 

 

   

 

 

 
    (1,572,058     (3,313,414
 

 

 

   

 

 

 

Net Decrease in Net Assets Applicable to Common Shareholders

    (1,522,071     (189,561

Net Assets Applicable to Common Shareholders:

   

Beginning of period

    72,050,103       72,239,664  
 

 

 

   

 

 

 

End of period

  $ 70,528,032     $ 72,050,103  
 

 

 

   

 

 

 

Undistributed net investment income

  $ 222,379     $ 349,855  
 

 

 

   

 

 

 
    Delaware Investments
Minnesota Municipal
Income Fund II, Inc.
 
    Six months
ended
9/30/18
(Unaudited)
    Year ended
3/31/18
 

Increase (Decrease) in Net Assets from Operations:

   

Net investment income

  $ 2,814,179     $ 5,833,082  

Net realized gain

    51,233       671,697  

Net change in unrealized appreciation (depreciation)

    (2,624,704     (1,968,736
 

 

 

   

 

 

 

Net increase in net assets resulting from operations

    240,708       4,536,043  
 

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

   

Net investment income

    (2,588,619     (6,097,637
 

 

 

   

 

 

 
    (2,588,619     (6,097,637
 

 

 

   

 

 

 

Net Decrease in Net Assets Applicable to Common Shareholders

    (2,347,911     (1,561,594

Net Assets Applicable to Common Shareholders:

   

Beginning of period

    164,192,860       165,754,454  
 

 

 

   

 

 

 

End of period

  $ 161,844,949     $ 164,192,860  
 

 

 

   

 

 

 

Undistributed net investment income

  $ 606,702     $ 381,142  
 

 

 

   

 

 

 

 

26


Table of Contents

    

    

    

 

 

    Delaware Investments
National Municipal
Income Fund
 
    Six months
ended
9/30/18
(Unaudited)
    Year ended
3/31/18
 

Increase (Decrease) in Net Assets from Operations:

   

Net investment income

  $ 1,376,777     $ 2,877,111  

Net realized gain

    192,138       601,740  

Net change in unrealized appreciation (depreciation)

    (1,262,925     (630,594
 

 

 

   

 

 

 

Net increase in net assets resulting from operations

    305,990       2,848,257  
 

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

   

Net investment income

    (1,358,533     (2,717,066
 

 

 

   

 

 

 
    (1,358,533     (2,717,066
 

 

 

   

 

 

 

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

    (1,052,543     131,191  

Net Assets Applicable to Common Shareholders:

   

Beginning of period

    64,923,544       64,792,353  
 

 

 

   

 

 

 

End of period

  $ 63,871,001     $ 64,923,544  
 

 

 

   

 

 

 

Undistributed net investment income

  $ 318,776     $ 300,532  
 

 

 

   

 

 

 

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

 

   27


Table of Contents

Statements of cash flows

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

Six months ended September 30, 2018 (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

   $ 49,987     $ 240,708     $ 305,990  
  

 

 

   

 

 

   

 

 

 

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

     232,723       1,072,696       235,118  

Purchase of investment securities

     (4,446,166     (25,442,889     (9,575,152

Proceeds from disposition of investment securities

     4,034,343       14,817,214       9,780,009  

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

     225,000       2,900,000       (200,000

Net realized gain on investments

     (15,341     (51,233     (192,138

Net change in net unrealized appreciation (depreciation)

     1,409,936       2,624,704       1,262,925  

Decrease in receivable for securities sold

           1,464,263        

Increase (decrease) in interest receivable

     12,301       44,283       (5,608

Decrease in other accrued expenses receivable

     24,000       18,500       19,083  

Decrease in offering costs for preferred shareholders

     16,480       20,457       17,917  

Increase (decrease) in payable for securities purchased

           4,866,395       (367,497

Decrease in investment management fees payable

     (1,504     (3,127     (1,256

Decrease in Trustees’ fees and expenses payable

     (246     (558     (221

Increase in audit fees payable

     16,318       16,318       16,390  

Increase (decrease) in other affiliates payable

     217       (651     282  

Decrease in other accrued expenses

     (8,351     (13,846     (5,347
  

 

 

   

 

 

   

 

 

 

Total Adjustments

     1,499,710       2,332,526       984,505  
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     1,549,697       2,573,234       1,290,495  
  

 

 

   

 

 

   

 

 

 

Cash Flows Used for Financing Activities:

      

Cash dividends and distributions paid to common shareholders

     (1,569,847     (2,583,092     (1,356,322

Increase in bank overdraft

     20,150       9,858       65,827  
  

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (1,549,697     (2,573,234     (1,290,495
  

 

 

   

 

 

   

 

 

 

Net decrease in cash

                  

Cash at beginning of year

                  
  

 

 

   

 

 

   

 

 

 

Cash at end of year

   $     $     $  
  

 

 

   

 

 

   

 

 

 

Cash paid for interest expense for leverage

   $ 393,049     $ 982,624     $ 393,049  
  

 

 

   

 

 

   

 

 

 

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

 

28


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

9/30/181

   

Year ended

 
     (Unaudited)     3/31/18     3/31/17     3/31/16     3/31/15     3/31/14  

Net asset value, beginning of period

  $ 14.90     $ 14.93     $ 15.66     $ 15.55     $ 14.43     $ 15.37  

Income (loss) from investment operations:

           

Net investment income2

    0.30       0.63       0.67       0.71       0.71       0.70  

Net realized and unrealized gain (loss)

    (0.29     0.03       (0.68     0.12       1.10       (0.93
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    0.01       0.66       (0.01     0.83       1.81       (0.23
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less dividends and distributions to common shareholders from:

           

Net investment income

    (0.33     (0.69     (0.72     (0.72     (0.69     (0.69

Net realized gain

                                  (0.02
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total dividends and distributions

    (0.33     (0.69     (0.72     (0.72     (0.69     (0.71
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

  $ 14.58     $ 14.90     $ 14.93     $ 15.66     $ 15.55     $ 14.43  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market value, end of period

  $ 14.35     $ 14.39     $ 14.70     $ 15.07     $ 14.35     $ 13.33  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment return based on:3

           

Market value

    1.97%       2.44%       2.24%       10.38%       13.01%       (5.25%

Net asset value

    0.06%       4.44%       (0.07%     5.85%       13.12%       (0.97%

Ratios and supplemental data:

           

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

  $ 70,528     $ 72,050     $ 72,240     $ 75,771     $ 75,226     $ 69,781  

Ratio of expenses to average net assets applicable to common shareholders4

    2.04%       1.82%       1.60%       1.52%       1.43%       1.49%  

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

    4.03%       4.14%       4.32%       4.59%       4.65%       4.90%  

Portfolio turnover

    3%       11%       12%       13%       14%       26%  

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

  $ 335,093     $ 340,167     $ 340,799     $ 352,571     $ 350,753     $ 332,602  

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 $0.081, $0.135, $0.110, $0.079, $0.077, and $0.078 per share for the six months ended Sept. 30, 2018 and the years ended March 31, 2018, 2017, 2016, 2015, and 2014, respectively, and from realized capital gains of $0.002 per share for the year ended March 31, 2014.

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, 2018 and the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 0.94%, 0.93%, 0.90%, 1.01%, 0.92%, and 0.94%, respectively.

5 

The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30, 2018 and the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 5.13%, 5.03%, 5.11%, 5.16%, and 5.45% 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.

 

(continues)    29


Table of Contents

Financial highlights

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

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

 

   

Six months

ended

9/30/181

   

Year ended

 
     (Unaudited)     3/31/18     3/31/17     3/31/16     3/31/15     3/31/14  

Net asset value, beginning of period

  $ 14.27     $ 14.41     $ 15.05     $ 14.97     $ 14.31     $ 15.27  

Income (loss) from investment operations:

           

Net investment income2

    0.25       0.51       0.55       0.63       0.64       0.65  

Net realized and unrealized gain (loss)

    (0.22     (0.12     (0.59     0.08       0.69       (0.80
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    0.03       0.39       (0.04     0.71       1.33       (0.15
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less dividends and distributions to common shareholders from:

           

Net investment income

    (0.23     (0.53     (0.60     (0.63     (0.67     (0.69

Net realized gain

                                  (0.12
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total dividends and distributions

    (0.23     (0.53     (0.60     (0.63     (0.67     (0.81
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

  $ 14.07     $ 14.27     $ 14.41     $ 15.05     $ 14.97     $ 14.31  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market value, end of period

  $ 11.90     $ 12.63     $ 14.56     $ 14.70     $ 13.85     $ 13.34  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment return based on:3

           

Market value

    (4.06%     (9.94%     3.16%       11.17%       8.97%       (9.26%

Net asset value

    0.40%       2.82%       (0.27%     5.30%       9.80%       (0.36%

Ratios and supplemental data:

           

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

  $ 161,845     $ 164,193     $ 165,754     $ 173,119     $ 172,280     $ 164,599  

Ratio of expenses to average net assets applicable to common shareholders4

    2.02%       1.78%       1.59%       1.46%       1.40%       1.51%  

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

    3.43%       3.48%       3.69%       4.24%       4.33%       4.54%  

Portfolio turnover

    6%       22%       9%       16%       10%       17%  

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

  $ 315,793     $ 318,924     $ 321,006     $ 330,825     $ 329,707     $ 319,465  

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 $0.085, $0.142, $0.115, $0.083, $0.081 and $0.076 per share for six months ended Sept. 30, 2018 and the years ended March 31, 2018, 2017, 2016, 2015, and 2014, respectively, and from realized capital gains of $0.014 per share for the year ended March 31, 2014.

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, 2018 and the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 0.82%, 0.81%, 0.82%, 0.90%, 0.85%, and 0.88%, respectively.

5 

The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30, 2018 and the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 4.63%, 4.45%, 4.46%, 4.80%, 4.88%, and 5.17%, 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.

 

30


Table of Contents

    

Delaware Investments® National Municipal Income Fund     

    

 

 

 

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

 

   

Six months

ended

9/30/181

   

Year ended

 
     (Unaudited)     3/31/18     3/31/17     3/31/16     3/31/15     3/31/14  

Net asset value, beginning of period

  $ 14.34     $ 14.31     $ 15.02     $ 14.97     $ 13.81     $ 14.99  

Income (loss) from investment operations:

           

Net investment income2

    0.30       0.64       0.66       0.70       0.71       0.71  

Net realized and unrealized gain (loss)

    (0.24     (0.01     (0.69     0.11       1.22       (1.18
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    0.06       0.63       (0.03     0.81       1.93       (0.47
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less dividends and distributions to common shareholders from:

           

Net investment income

    (0.30     (0.60     (0.68     (0.76     (0.77     (0.71
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total dividends and distributions

    (0.30     (0.60     (0.68     (0.76     (0.77     (0.71
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

  $ 14.10     $ 14.34     $ 14.31     $ 15.02     $ 14.97     $ 13.81  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market value, end of period

  $ 12.12     $ 12.62     $ 12.94     $ 13.80     $ 13.14     $ 12.35  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment return based on:3

           

Market value

    (1.62%     2.04%       (1.50%     11.32%       12.87%       (9.65%

Net asset value

    0.72%       4.84%       0.01%       6.35%       14.99%       (2.41%

Ratios and supplemental data:

           

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

  $ 63,871     $ 64,924     $ 64,792     $ 68,008     $ 67,804     $ 62,526  

Ratio of expenses to average net assets applicable to common shareholders4

    2.22%       1.97%       1.73%       1.70%       1.60%       1.58%  

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

    4.24%       4.36%       4.45%       4.72%       4.86%       5.17%  

Portfolio turnover

    10%       50%       13%       25%       38%       40%  

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

  $ 312,903     $ 316,412     $ 315,898     $ 326,693     $ 326,013     $ 308,420  

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 $0.087, $0.144, $0.117, $0.084, $0.083, and $0.085 per share for the six months ended Sept. 30, 2018 and the years ended March 31, 2018, 2017, 2016, 2015, and 2014, 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, 2018 and the years ended March 31, 2018, 2017, 2016, 2015 and 2014 were 1.01%, 0.98%, 0.94%, 1.13%, 1.03%, 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, 2018 and the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 5.45% 5.35%, 5.24%, 5.29%, 5.44%, and 5.79%, 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.

 

   31


Table of Contents

Notes to financial statements

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

September 30, 2018 (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 NYSE American, the successor to the American Stock Exchange, formerly known as NYSE Market.

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. Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services – Investment Companies.

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. Restricted securities are valued at fair value using methods approved by the Boards.

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 or expected to be taken on each Fund’s federal income tax returns through the six months ended Sept. 30, 2018 and for all open tax years (years ended March 31, 2015–March 31, 2018), 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, 2018, 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 each 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® 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

 

32


Table of Contents

    

    

    

 

interest income, respectively, over the lives of the respective securities using the effective interest method. Each Fund declares and pays 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 included under “Less expense paid indirectly.” For the six months ended Sept. 30, 2018, each Fund earned the following amounts under this arrangement:

 

     Colorado
      Municipal      
Fund
         Minnesota      
Municipal
Fund II
   National
Municipal
Fund
        $279    $578    $207

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 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 are calculated daily and paid monthly based on the aggregate daily net assets of all funds within 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 then pays its portion of the remainder of the Total Fee on a relative net asset value (NAV) basis. These amounts are included on the “Statements of operations” under “Accounting and administration expenses.” For the six months ended Sept. 30, 2018, the Funds were charged for these services as follows:

 

     Colorado
      Municipal      
Fund
   Minnesota
      Municipal      
Fund II
   National
Municipal
Fund
   $3,917    $6,501    $3,790

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, 2018, 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
   $11,906    $20,547    $13,548

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, 2018, 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 scheduled meetings, the Boards review such transactions for compliance with the procedures adopted by the Boards.

 

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Notes to financial statements

 

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

 

2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)

Pursuant to these procedures, for the six months ended Sept. 30, 2018, the Funds engaged in Rule 17a-7 securities purchases and securities sales, which resulted in net realized gains or losses as follows:

 

     Colorado
      Municipal      
Fund
           Minnesota      
Municipal
Fund II
    National
Municipal
Fund
 

Purchases

   $ 900,540      $ 9,462,302     $ 450,105  

Sales

     1,350,478        7,896,138       2,925,692  

Net realized loss

            (46,360      

3. Investments

For the six months ended Sept. 30, 2018, 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

   $ 4,446,166      $ 25,442,889      $ 9,575,152  

Sales

     4,034,343        14,817,214        9,780,009  

At Sept. 30, 2018, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At Sept. 30, 2018, the cost and unrealized appreciation (depreciation) of investments for each Fund were as follows:

 

     Colorado
      Municipal      
Fund
          Minnesota      
Municipal
Fund II
    National
Municipal
Fund
 

Cost of investments

   $ 95,700,477     $ 235,777,362     $ 89,423,748  
  

 

 

   

 

 

   

 

 

 

Aggregate unrealized appreciation of investments

   $ 3,964,457     $ 5,332,379     $  3,802,341  

Aggregate unrealized depreciation of investments

     (277,139     (1,926,069     (403,157
  

 

 

   

 

 

   

 

 

 

Net unrealized appreciation of investments

   $ 3,687,318     $ 3,406,310     $ 3,399,184  
  

 

 

   

 

 

   

 

 

 

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, 2018, capital loss carryforwards available to offset future realized capital gains were as follows:

 

     No expiration
Post-enactment capital loss character
    
     Short-term    Long-term    Total

Colorado Municipal Fund

     $ 216,338      $ 97,920      $ 314,258

Minnesota Municipal Fund II

       105,394               105,394

National Municipal Fund

       233,278               233,278

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

 

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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, 2018:

 

    

Colorado

Municipal Fund

 

Securities

   Level 2  

Assets:

  

Municipal Bonds

   $ 99,112,795  

Short-Term Investments

     275,000  
  

 

 

 

Total Value of Securities

   $ 99,387,795  
  

 

 

 
     Minnesota
Municipal Fund II
 

Securities

   Level 2  

Assets:

  

Municipal Bonds

   $ 239,083,672  

Short-Term Investments

     100,000  
  

 

 

 

Total Value of Securities

   $ 239,183,672  
  

 

 

 
     National
Municipal Fund
 

Securities

   Level 2  

Assets:

  

Municipal Bonds

   $ 92,322,932  

Short-Term Investments

     500,000  
  

 

 

 

Total Value of Securities

   $ 92,822,932  
  

 

 

 

During the six months ended Sept. 30, 2018, there were no 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.

 

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Table of Contents

Notes to financial statements

 

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds        

 

 

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, 2018 and the year ended March 31, 2018, the Funds did not issue any shares under their 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 are 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, 2018 were as follows:

 

    

Colorado
Municipal
Fund

 

Minnesota
Municipal
Fund II

 

National
Municipal
Fund

   2.6%   2.6%   2.6%

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

 

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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, 2018, the National Municipal Fund has invested 20.41%, 19.71%, 19.60%, 10.61% and 10.19% (each as a percentage of net assets) in securities issued by the Commonwealth of Pennsylvania, the State of California, the State of New York, the State of Texas, and the State of Illinois, 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, 2018, 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
Fund II
  National
Municipal
Income Fund

Assured Guaranty Corporation

  1.70%       2.15 %      

Assured Guaranty Municipal Corporation

  7.81%       0.38 %       1.59 %

Build America Mutual Assurance Company

  1.60%            

Syncora Guarantee

    2.44%            
     

 

 

     

 

 

 

Total

  13.55%       2.53 %       1.59 %
     

 

 

     

 

 

 

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

 

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Table of Contents

Notes to financial statements

 

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds        

 

 

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

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.” Restricted securities are valued pursuant to the security valuation procedures noted in Note 1.

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 March 2017, the FASB issued an Accounting Standards Update, ASU 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. The ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018. At this time, management is evaluating the implications of these changes on the financial statements.

In August 2018, the FASB issued an Accounting Standards Update, ASU 2018-13, which changes certain fair value measurement disclosure requirements. The ASU 2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, management is evaluating the implications of these changes on the financial statements.

8. Subsequent Events

Management has determined that no material events or transactions occurred subsequent to Sept. 30, 2018, that would require recognition or disclosure in the Funds’ financial statements.

 

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Other Fund information

(Unaudited)

 

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

Fund management

Joseph R. Baxter

Senior Vice President, Head of Municipal Bonds, Senior Portfolio Manager

Joseph R. Baxter is head of municipal bonds 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) 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 J. Czepiel

Senior Vice President, Senior Portfolio Manager

Stephen J. 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) 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

Senior Vice President, Co-Head of Municipal Credit Research, Portfolio Manager

Denise A. Franchetti is co-head of the company’s municipal research operations, a role she assumed in January 2018. Previously, she was a senior municipal analyst for the municipal bond department, responsible for following the airport, education, hotel, cogeneration, and cargo sectors. 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) 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 CFA Institute, the Financial Analysts of Philadelphia, and the National Federation of Municipal Analysts.

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) 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 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

At a meeting held on Aug. 15-16, 2018 (the “Annual Meeting”), the Board of 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 contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreements with Delaware Management Company (“DMC”), a series of Macquarie Investment Management Business Trust (“MIMBT”) included materials provided by DMC and its affiliates (collectively, “Macquarie Investment Management”) concerning, among other

 

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Other Fund information

(Unaudited)

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

Board Consideration of 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 (continued)

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, materials were provided to the Trustees in May 2018, including reports provided by Broadridge Financial Solutions (“Broadridge”). 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 independent 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 services. 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 and Delaware Distributors, L.P. (together, “Management”) personnel with the Code of Ethics adopted throughout the Delaware Funds 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 DMC and the emphasis placed on research in the investment process. The Board recognized DMC’s receipt of certain favorable industry distinctions during the past several years. The Board gave favorable consideration to DMC’s efforts to control expenses 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 Investment Committee 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 Class A shares in comparison to a group of similar funds as selected by Broadridge (the “Performance Universe”). A fund with the best performance ranked first, and a fund with the poorest performance 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 poorest/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, 2018. 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 first quartile of its Performance Universe. The report further showed that the Fund’s total return for the 10-year period was in the third 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 3-year periods was in the third quartile of its Performance Universe. The report further showed that the Fund’s total return for the 5- and 10-year periods 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 comparative Fund performance and meet the Board’s performance objective.

 

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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 second quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3-year period was in third quartile of its Performance Universe and the Fund’s total return for the 5- and 10-year periods was in the fourth 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 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 the 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 Broadridge total expenses, for comparative consistency, were shown by Broadridge for Class A shares and comparative total expenses including 12b-1 and non-12b-1 service fees. The Board’s objective is for each Fund’s total expense ratio to be competitive with those of the peer funds within its 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 used by DMC 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. As part of its work, the Board also reviewed a report prepared by JDL regarding MIMBT profitability as compared to certain peer fund complexes and the Independent Trustees 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.

 

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Other Fund information

(Unaudited)

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

Proxy results

At the annual meeting on Aug. 15, 2018, 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.

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

   3,969,311    138,358    300    0

Ann D. Borowiec

   3,913,157    194,512    300    0

Joseph W. Chow

   3,969,311    138,358    300    0

John A. Fry

   3,944,881    162,788    300    0

Shawn K. Lytle

   3,969,901    137,768    300    0

Frances A. Sevilla-Sacasa

   3,908,247    199,422    300    0

Thomas K. Whitford

   3,969,901    137,768    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

   9,739,098    161,793    750    0

Ann D. Borowiec

   9,745,532    155,359    750    0

Joseph W. Chow

   9,739,098    161,793    750    0

John A. Fry

   9,740,933    159,958    750    0

Shawn K. Lytle

   9,733,265    167,626    750    0

Frances A. Sevilla-Sacasa

   9,748,388    152,503    750    0

Thomas K. Whitford

   9,745,008    155,883    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