UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number:         811-07420
 
Exact name of registrant as specified in charter: Delaware Investments® Minnesota
Municipal Income Fund II, Inc.
 
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
 
Name and address of agent for service: David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
 
Registrant’s telephone number, including area code: (800) 523-1918
 
Date of fiscal year end: March 31
 
Date of reporting period: September 30, 2016



Item 1. Reports to Stockholders

Table of Contents

 

 

 

Delaware Investments® Closed-End Municipal Bond Funds

 

 

Semiannual report

 

September 30, 2016

 

 

 

The figures in the semiannual report for Delaware Investments 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.

 

Closed-end funds

 

 

 

LOGO


Table of Contents

Table of contents

 

Fund basics

     3   

Security type / sector / state allocations

     4   

Schedules of investments

     6   

Statements of assets and liabilities

     25   

Statements of operations

     26   

Statements of changes in net assets

     27   

Statements of cash flows

     29   

Financial highlights

     30   

Notes to financial statements

     33   

Other Fund information

     40   

About the organization

     44   

Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment, and funds management services. For more information, including press releases, please visit delawareinvestments.com/closed-end.

Unless otherwise noted, views expressed herein are current as of Sept. 30, 2016, and subject to change for events occurring after such date.

The Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.

Mutual fund advisory services are provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.

Neither Delaware Investments nor its affiliates referred to in this document 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 Macquarie Bank Limited (MBL), a subsidiary of Macquarie Group Limited and an affiliate of Delaware Investments. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Funds are governed by U.S. laws and regulations.

©2016 Delaware Management Holdings, Inc.

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


Table of Contents

Fund basics

 

 

Delaware Investments®

Colorado Municipal Income Fund, Inc.

As of September 30, 2016 (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

$77 million

Number of holdings

91

Fund start date

July 29, 1993

NYSE MKT symbol

VCF

CUSIP number

246101109

Delaware Investments

Minnesota Municipal Income Fund II, Inc.

As of September 30, 2016 (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

$175 million

Number of holdings

187

Fund start date

Feb. 26, 1993

NYSE MKT symbol

VMM

CUSIP number

24610V103

 

 

 

Delaware Investments

National Municipal Income Fund

As of September 30, 2016 (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

$69 million

Number of holdings

172

Fund start date

Feb. 26, 1993

NYSE MKT symbol

VFL

CUSIP number

24610T108

 

 

3


Table of Contents

Security type / sector / state allocations

As of September 30, 2016 (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*

     137.26%    

Corporate-Backed Revenue Bonds

     4.80%    

Education Revenue Bonds

     23.83%    

Electric Revenue Bonds

     1.17%    

Healthcare Revenue Bonds

     43.49%    

Lease Revenue Bonds

     5.79%    

Local General Obligation Bonds

     10.10%    

Pre-Refunded/Escrowed to Maturity Bonds

     15.24%    

Special Tax Revenue Bonds

     24.67%    

Transportation Revenue Bonds

     7.80%    

Water & Sewer Revenue Bonds

     0.37%    

 

Short-Term Investment

     0.13%    

 

Total Value of Securities

     137.39%    

 

Liquidation Value of Preferred Stock

     (39.03)%   

 

Receivables and Other Assets Net of Liabilities

     1.64%    

 

Total Net Assets

     100.00%    

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

 

State / territory    Percentage
of net
assets
 

Colorado

     135.23%    

Guam

     1.44%    

U.S. Virgin Islands

 

    

 

0.72% 

 

  

 

Total Value of Securities

 

    

 

137.39% 

 

  

 

Delaware Investments

Minnesota Municipal Income Fund II, Inc.

 

Security type / sector   

Percentage

of net

assets

 

Municipal Bonds*

     141.44%    

Corporate-Backed Revenue Bonds

     2.79%    

Education Revenue Bonds

     21.16%    

Electric Revenue Bonds

     10.56%    

Healthcare Revenue Bonds

     31.12%    

Housing Revenue Bonds

     2.76%    

Lease Revenue Bonds

     14.06%    

Local General Obligation Bonds

     10.78%    

Pre-Refunded/Escrowed to Maturity Bonds

     19.96%    

Special Tax Revenue Bonds

     5.52%    

State General Obligation Bonds

     15.07%    

Transportation Revenue Bonds

     5.62%    

Water & Sewer Revenue Bonds

     2.04%    

 

Short-Term Investments

     1.52%    

 

Total Value of Securities

     142.96%    

 

Liquidation Value of Preferred Stock

     (42.96)%   

 

Liabilities Net of Receivables and Other Assets

     0.00%    

 

Total Net Assets

     100.00%    

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

 

State / territory    Percentage
of net
assets
 

Guam

     0.57%    

Minnesota

 

    

 

 

142.39% 

 

 

  

 

 

 

Total Value of Securities

 

    

 

142.96% 

 

  

 

 

 

4


Table of Contents

 

 

 

 

 

Delaware Investments®

National Municipal Income Fund

 

Security type / sector    Percentage
of net
assets
 

Municipal Bonds*

     140.84%    

Corporate-Backed Revenue Bonds

     11.98%    

Education Revenue Bonds

     21.51%    

Electric Revenue Bonds

     2.28%    

Healthcare Revenue Bonds

     23.42%    

Housing Revenue Bond

     0.68%    

Lease Revenue Bonds

     10.34%    

Local General Obligation Bonds

     1.61%    

Pre-Refunded/Escrowed to Maturity Bonds

     17.66%    

Special Tax Revenue Bonds

     16.99%    

State General Obligation Bonds

     2.80%    

Transportation Revenue Bonds

     24.80%    

Water & Sewer Revenue Bonds

     6.77%    

 

Short-Term Investments

     0.94%    

 

Total Value of Securities

     141.78%    

 

Liquidation Value of Preferred Stock

     (43.41)%   

 

Receivables and Other Assets Net of Liabilities

     1.63%    

 

Total Net Assets

     100.00%    

 

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

 

State / territory   

Percentage

of net

assets

 

Alabama

     2.40%   

Alaska

     0.52%   

Arizona

     10.63%   

California

     18.73%   

Colorado

     1.41%   

District of Columbia

     0.39%   

Florida

     5.34%   

Georgia

     4.24%   

Guam

     2.15%   

Hawaii

     0.49%   

Idaho

     1.54%   

Illinois

     5.65%   

Indiana

     0.98%   

Kansas

     0.35%   

Louisiana

     5.16%   

Maine

     0.49%   

Maryland

     3.21%   

Massachusetts

     2.19%   

Michigan

     1.70%   

Minnesota

     5.19%   

Mississippi

     0.94%   

Missouri

     3.96%   

New Hampshire

     0.49%   

New Jersey

     7.76%   

New Mexico

     0.79%   

New York

     19.17%   

Ohio

     2.24%   

Oregon

     3.72%   

Pennsylvania

     14.29%   

Texas

     11.63%   

Virginia

     0.87%   

Washington

     1.32%   

West Virginia

     0.68%   

Wisconsin

     0.75%   

Wyoming

 

    

 

0.41%

 

  

 

 

Total Value of Securities

 

    

 

141.78%

 

  

 

 

 

5


Table of Contents

Schedules of investments

Delaware Investments® Colorado Municipal Income Fund, Inc.

September 30, 2016 (Unaudited)

 

   

Principal  

Amount°  

   

    Value  

    (U.S. $)  

 

 

 

Municipal Bonds – 137.26%

   

 

 

Corporate-Backed Revenue Bonds – 4.80%

  

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

    865,000      $  1,146,869   

Public Authority of Colorado Energy Natural Gas Revenue

   

Series 2008 6.50% 11/15/38

    1,750,000        2,539,967   
   

 

 

 
   

 

 

 

3,686,836

 

  

   

 

 

 

Education Revenue Bonds – 23.83%

  

Colorado Educational & Cultural Facilities Authority Revenue

   

144A 5.00% 7/1/36 #

    500,000        529,015   

5.125% 11/1/49

    765,000        804,298   

144A 5.25% 7/1/46 #

    500,000        531,030   

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

    1,720,000        1,725,968   

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

    700,000        717,360   

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

    500,000        603,280   

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

    1,000,000        1,147,630   

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

    500,000        530,650   

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

    900,000        1,049,454   

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

    1,000,000        1,123,800   

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

    1,200,000        1,204,008   

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

    625,000        651,919   

(Skyview Charter School) 144A 5.50% 7/1/49 #

    750,000        821,445   

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

    1,065,000        1,128,208   
   

Principal  

Amount°  

   

    Value  

    (U.S. $)  

 

 

 

Municipal Bonds (continued)

  

 

 

Education Revenue Bonds (continued)

  

Colorado Educational & Cultural Facilities Authority Revenue

   

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

    500,000      $ 507,670   

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

    2,500,000        2,886,100   

Colorado State Board of Governors

   

(University Enterprise System) Series A 5.00% 3/1/39

    10,000        10,901   

University of Colorado

   

Series A 5.00% 6/1/33

    1,000,000        1,198,150   

Series B-1 4.00% 6/1/38

    1,030,000        1,146,040   
   

 

 

 
   

 

 

 

 18,316,926

 

  

   

 

 

 

Electric Revenue Bonds – 1.17%

  

Colorado Springs Utilities System Improvement Revenue

   

Series A 5.00% 11/15/45

    750,000        896,707   
   

 

 

 
   

 

 

 

896,707

 

  

   

 

 

 

Healthcare Revenue Bonds – 43.49%

  

Aurora Hospital Revenue

   

(Children’s Hospital Association Project)

   

Series A 5.00% 12/1/40

    4,000,000        4,392,640   

Colorado Health Facilities Authority Revenue

   

(Catholic Health Initiatives)

   

Series A 5.00% 7/1/39

    750,000        806,287   

Series A 5.00% 2/1/41

    2,400,000        2,642,448   

Series A 5.25% 2/1/33

    1,625,000        1,820,634   

Series A 5.25% 1/1/45

    1,000,000        1,136,830   

Series D 6.125% 10/1/28

    750,000        818,730   

(Christian Living Community Project)

   

6.375% 1/1/41

    615,000        692,527   

Series A 5.75% 1/1/37

    885,000        895,921   

(Covenant Retirement Communities Inc.)

   

5.00% 12/1/35

    1,000,000        1,145,480   

Series A 5.75% 12/1/36

    1,000,000        1,178,640   
 

 

6


Table of Contents

 

 

 

 

 

 

 

   

Principal  

Amount°  

   

    Value  

    (U.S. $)  

 

 

 

Municipal Bonds (continued)

  

 

 

Healthcare Revenue Bonds (continued)

  

Colorado Health Facilities Authority Revenue

   

(Evangelical Lutheran Good Samaritan Society)

   

5.00% 6/1/28

    1,250,000      $ 1,452,637   

5.50% 6/1/33

    2,000,000        2,367,080   

5.625% 6/1/43

    1,000,000        1,186,450   

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

    500,000        601,510   

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

    1,500,000        1,754,145   

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

    500,000        536,795   

(NCMC Project) 4.00% 5/15/32

    1,000,000        1,114,450   

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

    4,750,000        5,243,857   

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

    505,000        559,000   

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

    1,250,000        1,505,900   

Denver Health & Hospital Authority Health Care Revenue

   

(Recovery Zone Facilities) 5.625% 12/1/40

    750,000        835,770   

University of Colorado Hospital Authority Revenue

   

Series A 6.00% 11/15/29

    650,000        740,162   
   

 

 

 
   

 

 

 

 33,427,893

 

  

   

 

 

 

Lease Revenue Bonds – 5.79%

  

Aurora Certificates of Participation

   

Series A 5.00% 12/1/30

    630,000        701,184   

Colorado Building Excellent Schools Today Certificates of Participation

   

Series G 5.00% 3/15/32

    2,000,000        2,301,900   
   

Principal  

Amount°  

   

    Value  

    (U.S. $)  

 

 

 

Municipal Bonds (continued)

  

 

 

Lease Revenue Bonds (continued)

  

Pueblo County Certificates of Participation

   

(County Judicial Complex Project) 5.00% 9/15/42 (AGM)

    1,250,000      $  1,445,950   
   

 

 

 
   

 

 

 

4,449,034

 

  

   

 

 

 

Local General Obligation Bonds – 10.10%

  

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

    700,000        797,237   

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

    250,000        322,815   

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

    500,000        565,480   

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

    600,000        718,998   

Denver City & County (Better Denver & Zoo)

   

Series A 5.00% 8/1/25

    650,000        720,363   

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

    650,000        689,279   

Eaton Area Park & Recreation District

   

5.25% 12/1/34

    190,000        202,021   

5.50% 12/1/38

    245,000        264,367   

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

    700,000        801,353   

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

    750,000        966,758   

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

    250,000        293,955   

Rangely Hospital District 6.00% 11/1/26

    750,000        895,110   

Sierra Ridge Metropolitan District No. 2

   

Series A 5.50% 12/1/46

    500,000        528,420   
   

 

 

 
   

 

 

 

7,766,156

 

  

   

 

 

 
 

 

      (continues)    7


Table of Contents

Schedules of investments

Delaware Investments® Colorado Municipal Income Fund, Inc.

 

   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 15.24%

  

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

    600,000      $ 666,228   

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

    2,500,000        2,996,250   

Aurora Water Revenue First Lien Series A 5.00% 8/1/36-17 (AMBAC)§

    2,000,000        2,070,580   

Colorado Health Facilities Authority Revenue

   

(Total Long-Term Care)

   

Series A 6.00% 11/15/30-20§

    400,000        478,156   

Colorado State Board of Governors

   

Series A 5.00% 3/1/39-19§

    175,000        191,979   

University of Colorado

   

5.00% 6/1/31-21§

    3,085,000        3,648,105   

Series A 5.375% 6/1/38-19§

    750,000        837,892   

Western State College 5.00% 5/15/34-19§

    750,000        829,642   
   

 

 

 
        11,718,832   
   

 

 

 

Special Tax Revenue Bonds – 24.67%

  

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

    375,000        402,469   

Commerce City 5.00% 8/1/44 (AGM)

    1,000,000        1,176,870   

Denver Convention Center Hotel Authority Revenue 5.00% 12/1/35 (SGI)

    2,875,000        2,881,210   

Fountain Urban Renewal Authority Tax Increment Revenue

   

(Academy Highlands Project) Series A 5.50% 11/1/44

    1,405,000        1,538,700   

Guam Government Business Privilege Tax Revenue

   

Series A 5.125% 1/1/42

    435,000        477,708   

Series A 5.25% 1/1/36

    565,000        626,907   

Regional Transportation District Revenue

   

Series A 5.375% 6/1/31

    460,000        521,971   
   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Special Tax Revenue Bonds (continued)

  

Regional Transportation District Revenue

   

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

    2,175,000      $ 2,503,121   

(FasTracks Project)

   

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

    1,500,000        1,554,255   

Series A 5.00% 11/1/38

    4,085,000        4,668,420   

Sterling Ranch Community Authority Board

   

Series A 5.75% 12/1/45

    525,000        538,975   

Tallyns Reach Metropolitan District No. 3

   

(Limited Tax Convertible) 5.125% 11/1/38

    295,000        320,057   

Thornton Development Authority

   

(East 144th Avenue & I-25 Project)

   

Series B 4.00% 12/1/37

    350,000        373,089   

Series B 5.00% 12/1/35

    265,000        311,529   

Series B 5.00% 12/1/36

    440,000        515,491   

Virgin Islands Public Finance Authority

   

(Matching Fund Senior Lien) 5.00% 10/1/29 (AGM)

    500,000        555,795   
   

 

 

 
        18,966,567   
   

 

 

 

Transportation Revenue Bonds – 7.80%

  

 

Colorado High Performance Transportation Enterprise Revenue

   

(Senior U.S. 36 & I-25 Managed Lanes) 5.75% 1/1/44 (AMT)

    1,110,000        1,230,491   

Denver City & County Airport System Revenue

   

Series A 5.25% 11/15/36

    750,000        848,040   

Series B 5.00% 11/15/28

    1,000,000        1,194,790   

Series B 5.00% 11/15/37

    2,000,000        2,374,660   

E-470 Public Highway Authority

   

Series C 5.25% 9/1/25

    310,000        349,125   
   

 

 

 
      5,997,106   
   

 

 

 
 

 

8


Table of Contents

 

 

 

 

 

 

 

   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Water & Sewer Revenue Bonds – 0.37%

  

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

    250,000      $ 284,688   
   

 

 

 
      284,688   
   

 

 

 

Total Municipal Bonds (cost $95,679,524)

      105,510,745   
   

 

 

 

 

 

Short-Term Investment – 0.13%

  

 

 

Variable Rate Demand Note – 0.13%¤

  

Colorado Educational & Cultural Facilities Authority Series D-3 (National Jewish Federation) 0.72% 12/1/37 (LOC-JPMorgan Chase Bank N. A.)

    100,000        100,000   
   

 

 

 

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

      100,000   
   

 

 

 

Total Value of Securities – 137.39% (cost $95,779,524)

      $ 105,610,745   
   

 

 

 

 

  #

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Sept. 30, 2016, the aggregate value of Rule 144A securities was $4,848,089, which represents 6.31% 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, 2016.

  §

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

  °

Principal amount shown is stated in U.S. 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

AMBAC – Insured by AMBAC Assurance Corporation

AMT – Subject to Alternative Minimum Tax

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.

 

 

         9


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

September 30, 2016 (Unaudited)

 

   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds – 141.44%

  

 

 

Corporate-Backed Revenue Bonds – 2.79%

  

Laurentian Energy Authority I Cogeneration Revenue

   

Series A 5.00% 12/1/21

    3,325,000      $     3,325,997   

St. Paul Port Authority Revenue

   

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

    1,715,000        1,543,826   
   

 

 

 
      4,869,823   
   

 

 

 

Education Revenue Bonds – 21.16%

  

Baytown Township Lease Revenue

   

(St. Croix Preparatory Academy) Series A 4.00% 8/1/36

    265,000        267,785   

Brooklyn Park Charter School Lease

   

(Prairie Seeds Academy Project)

   

Series A 5.00% 3/1/34

    990,000        1,057,231   

Series A 5.00% 3/1/39

    170,000        179,802   

Cologne Charter School Lease Revenue

   

(Cologne Academy Project)

   

Series A 5.00% 7/1/29

    270,000        301,096   

Series A 5.00% 7/1/45

    445,000        483,243   

Deephaven Charter School

   

(Eagle Ridge Academy Project)

   

Series A 5.25% 7/1/37

    590,000        654,552   

Series A 5.25% 7/1/40

    500,000        553,525   

Forest Lake Minnesota Charter School Revenue

   

(Lake International Language Academy) 5.75% 8/1/44

    705,000        784,193   

Hugo Charter School Lease Revenue

   

(Noble Academy Project)

   

Series A 5.00% 7/1/34

    255,000        267,676   

Series A 5.00% 7/1/44

    775,000        806,248   

Minneapolis Charter School Lease Revenue

   

(Hiawatha Academies Project)

   

Series A 5.00% 7/1/36

    750,000        785,325   

Series A 5.00% 7/1/47

    900,000        924,471   
   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Education Revenue Bonds (continued)

  

Minneapolis Student Housing Revenue

   

(Riverton Community Housing Project)

   

5.25% 8/1/39

    205,000      $ 216,154   

5.50% 8/1/49

    990,000            1,050,974   

Minnesota Charter School Lease Revenue

   

(Beacon Academy Project)

   

Series A 5.00% 7/1/46

    305,000        302,292   

Minnesota Higher Education Facilities Authority Revenue

   

(Carleton College)

   

Series 6-T 5.00% 1/1/28

    1,000,000        1,046,450   

Series D 5.00% 3/1/30

    1,120,000        1,220,957   

(College of St. Benedict)

   

Series 7-M 5.00% 3/1/31

    300,000        327,828   

Series 7-M 5.125% 3/1/36

    275,000        299,596   

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

    700,000        800,338   

(St. Johns University)

   

Series 8-I 5.00% 10/1/31

    235,000        285,692   

Series 8-I 5.00% 10/1/34

    35,000        42,046   

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

    590,000        662,340   

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

    1,000,000        1,075,030   

(University of St. Thomas)

   

Series 7-A 5.00% 10/1/39

    1,000,000        1,105,110   

Series 7-U 5.00% 4/1/22

    750,000        895,927   

Otsego Charter School

   

(Kaleidoscope Charter School)

   

Series A 5.00% 9/1/34

    335,000        360,125   

Series A 5.00% 9/1/44

    700,000        745,626   

Rice County Educational Facilities Revenue

   

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

    1,250,000        1,350,887   

St. Cloud Charter School Lease Revenue

   

(Stride Academy Project) Series A 5.00% 4/1/46

    375,000        382,136   
 

 

10


Table of Contents

 

 

 

 

 

 

 

   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Education Revenue Bonds (continued)

  

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue

   

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

    880,000      $ 923,358   

(Nova Classical Academy)

   

Series A 6.375% 9/1/31

    750,000        856,650   

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

    630,000        667,113   

University of Minnesota

   

Series A 5.25% 12/1/28

    500,000        585,310   

Series A 5.25% 4/1/29

    1,000,000        1,101,000   

Series C 5.00% 12/1/19

    1,290,000        1,431,113   

Series D 5.00% 12/1/27

    1,110,000        1,308,524   

Series D 5.00% 12/1/28

    1,880,000        2,212,140   

Series D 5.00% 12/1/29

    2,265,000        2,660,220   

Series D 5.00% 12/1/31

    1,000,000        1,177,990   

Series D 5.00% 12/1/36

    3,000,000        3,511,110   

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

    1,000,000        1,269,980   
   

 

 

 
        36,939,163   
   

 

 

 

Electric Revenue Bonds – 10.56%

  

Central Minnesota Municipal Power Agency Revenue

   

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

    1,130,000        1,306,133   

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

    1,000,000        1,139,750   

Chaska Electric Revenue

   

Series A 5.00% 10/1/28

    445,000        551,591   

Minnesota Municipal Power Agency Electric Revenue

   

5.00% 10/1/25

    500,000        621,915   

5.00% 10/1/26

    500,000        616,345   

5.00% 10/1/27

    320,000        392,659   

5.00% 10/1/47

    545,000        653,444   

Northern Municipal Power Agency

   

Series A 5.00% 1/1/26

    100,000        119,363   

Series A 5.00% 1/1/30

    340,000        397,049   
   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Electric Revenue Bonds (continued)

  

Rochester Electric Utility Revenue

   

Series B 5.00% 12/1/30

    1,300,000      $ 1,586,416   

Series B 5.00% 12/1/43

    1,000,000        1,197,210   

Western Minnesota Municipal Power Agency Supply Revenue

   

Series A 5.00% 1/1/25

    3,000,000        3,636,360   

Series A 5.00% 1/1/26

    1,000,000        1,209,460   

Series A 5.00% 1/1/33

    1,000,000        1,194,120   

Series A 5.00% 1/1/40

    750,000        883,440   

Series A 5.00% 1/1/46

    2,500,000        2,933,875   
   

 

 

 
        18,439,130   
   

 

 

 

Healthcare Revenue Bonds – 31.12%

  

Anoka Health Care Facilities Revenue

   

5.375% 11/1/34

    610,000        665,016   

(Homestead Anoka Project)

   

Series A 7.00% 11/1/46

    1,200,000        1,326,456   

Center City Health Care Facilities Revenue

   

(Hazelden Betty Ford Foundation Project)

   

5.00% 11/1/27

    500,000        612,230   

5.00% 11/1/29

    300,000        362,976   

(Hazelden Foundation Project)

   

4.75% 11/1/31

    850,000        902,675   

5.00% 11/1/41

    1,600,000        1,715,840   

Cloquet Housing Facilities Revenue

   

(HADC Cloquet Project)

   

Series A 5.00% 8/1/48

    500,000        510,380   

Dakota County Community Development Agency Senior Housing Revenue

   

(Walker Highview Hills Project)

   

Series A 144A 5.00% 8/1/46 #

    370,000        382,451   

Series A 144A 5.00% 8/1/51 #

    755,000        774,139   

Deephaven Housing & Healthcare Revenue

   

(St. Therese Senior Living Project)

   

Series A 5.00% 4/1/38

    280,000        294,748   

Series A 5.00% 4/1/40

    270,000        283,905   
 

 

      (continues)    11


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Healthcare Revenue Bonds (continued)

  

Duluth Economic Development Authority

   

(St. Luke’s Hospital Authority Obligation Group)

   

5.75% 6/15/32

    1,400,000      $     1,586,396   

6.00% 6/15/39

    1,000,000        1,140,490   

Fergus Falls Health Care Facilities Revenue

   

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

    1,000,000        1,013,660   

Hayward

   

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

    500,000        530,680   

Hayward Health Care Facilities Revenue

   

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

    680,000        716,577   

Maple Grove Health Care Facilities Revenue

   

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

    865,000        1,038,830   

Maple Grove Health Care System Revenue

   

(Maple Grove Hospital) 5.25% 5/1/37

    1,100,000        1,122,924   

Minneapolis Health Care System Revenue

   

(Fairview Health Services)

   

Series A 5.00% 11/15/33

    500,000        602,995   

Series A 5.00% 11/15/34

    500,000        598,930   

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

    1,940,000        2,146,455   

Minneapolis Senior Housing & Healthcare Revenue

   

(Ecumen Mill City Quarter)

   

5.00% 11/1/35

    220,000        229,898   

5.25% 11/1/45

    850,000        891,879   

5.375% 11/1/50

    200,000        206,818   

Minneapolis – St. Paul Housing & Redevelopment Authority Health Care Revenue

   

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

    500,000        559,815   
   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Healthcare Revenue Bonds (continued)

  

Rochester Health Care & Housing Revenue

   

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

    1,220,000      $     1,359,995   

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

    1,220,000        1,425,985   

Rochester Health Care Facilities Revenue

   

(Mayo Clinic)

   

4.00% 11/15/41

    4,860,000        5,237,573   

Series C 4.50% 11/15/38 

    975,000        1,131,819   

Sartell Health Care Facilities Revenue

   

(Country Manor Campus Project)

   

5.25% 9/1/30

    1,000,000        1,082,800   

Series A 5.30% 9/1/37

    600,000        650,946   

Shakopee Health Care Facilities Revenue

   

(St. Francis Regional Medical Center)

   

4.00% 9/1/31

    205,000        226,113   

5.00% 9/1/34

    165,000        194,403   

St. Cloud Health Care Revenue

   

(Centracare Health System Project)

   

Series A 4.00% 5/1/37

    1,295,000        1,428,851   

Series A 5.00% 5/1/46

    2,425,000        2,898,918   

Series B 5.00% 5/1/24

    1,400,000        1,746,892   

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

    95,000        107,032   

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

   

(Allina Health System) Series A-1 5.25% 11/15/29

    1,395,000        1,570,617   

(Health Partners Obligation Group Project)

   

5.00% 7/1/29

    2,000,000        2,427,620   

5.00% 7/1/32

    1,100,000        1,322,134   
 

 

12


Table of Contents

 

 

 

 

 

 

 

   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Healthcare Revenue Bonds (continued)

  

 

St. Paul Housing & Redevelopment Authority Hospital Facility

   

(Healtheast Care System Project)

   

Series A 5.00% 11/15/29

    395,000      $ 475,161   

Series A 5.00% 11/15/30

    290,000        348,423   

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

   

(Senior Carondelet Village Project) Series A 6.00% 8/1/42

    770,000        787,610   

(Senior Episcopal Homes Project)

   

5.125% 5/1/48

    1,200,000        1,281,780   

Series A 4.75% 11/1/31

    740,000        768,623   

Wayzata Senior Housing Revenue

   

(Folkestone Senior Living Community)

   

Series A 5.50% 11/1/32

    420,000        455,574   

Series A 5.75% 11/1/39

    945,000        1,020,997   

Series A 6.00% 5/1/47

    1,475,000        1,600,729   

Winona Health Care Facilities Revenue

   

(Winona Health Obligation)

   

4.65% 7/1/26

    465,000        509,091   

4.75% 7/1/27

    785,000        859,614   

5.00% 7/1/23

    1,010,000        1,034,220   

5.00% 7/1/34

    750,000        821,340   

Woodbury Housing & Redevelopment Authority Revenue

   

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

    1,250,000        1,340,350   
   

 

 

 
        54,332,373   
   

 

 

 

Housing Revenue Bonds – 2.76%

  

Minneapolis Multifamily Housing Revenue

   

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

    410,000        410,307   

Minnesota Housing Finance Agency

   

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

    1,390,000        1,640,186   
   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Housing Revenue Bonds (continued)

  

Minnesota State Housing Finance Agency Homeownership

   

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

    1,080,000      $ 1,167,696   

(Residential Housing) Series L 5.10% 7/1/38 (AMT)

    1,015,000        1,019,293   

Northwest Multi-County Housing & Redevelopment Authority

   

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

    560,000        578,099   
   

 

 

 
      4,815,581   
   

 

 

 

Lease Revenue Bonds – 14.06%

  

Minnesota State General Fund Revenue Appropriations

   

Series A 5.00% 6/1/32

    780,000        935,641   

Series A 5.00% 6/1/38

    5,500,000        6,536,640   

Series A 5.00% 6/1/43

    1,750,000        2,072,630   

Series B 4.00% 3/1/26

    3,000,000        3,366,840   

Series B 5.00% 3/1/29

    3,525,000        4,178,288   

University of Minnesota Special Purpose Revenue

   

(State Supported Biomed Science Research)

   

5.00% 8/1/35

    1,040,000        1,176,250   

5.00% 8/1/36

    4,000,000        4,641,880   

Virginia Housing & Redevelopment Authority Health Care Facility Lease Revenue

   

5.25% 10/1/25

    680,000        681,768   

5.375% 10/1/30

    965,000        967,306   
   

 

 

 
        24,557,243   
   

 

 

 

Local General Obligation Bonds – 10.78%

  

Burnsville-Eagan-Savage Independent School District No 191

   

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

    1,185,000        1,369,884   

Duluth Independent School District No 709

   

Series A 4.00% 2/1/27

    600,000        694,794   
 

 

      (continues)    13


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Local General Obligation Bonds (continued)

  

Duluth, Minnesota

   

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

    545,000      $ 669,527   

Hennepin County

   

Series A 5.00% 12/1/36

    1,000,000        1,255,940   

Series A 5.00% 12/1/41

    1,060,000        1,318,163   

Hopkins Independent School District No. 270

   

Series A 5.00% 2/1/28

    1,000,000        1,155,060   

Mahtomedi Independent School District No. 832

   

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

    515,000        639,697   

Mountain Iron-Buhl Independent School District No. 712

   

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

    1,315,000        1,579,236   

Rocori Independent School District No. 750

   

(School Building)

   

Series B 5.00% 2/1/22

    1,010,000        1,100,547   

Series B 5.00% 2/1/24

    1,075,000        1,170,331   

Series B 5.00% 2/1/25

    1,115,000        1,212,797   

Series B 5.00% 2/1/26

    1,155,000        1,256,305   

St. Paul Independent School District No. 625

   

(School Building)

   

Series B 5.00% 2/1/22

    1,300,000        1,559,909   

Series B 5.00% 2/1/26

    1,000,000        1,212,010   

Willmar

   

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

    2,440,000        2,621,682   
   

 

 

 
        18,815,882   
   

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 19.96%

  

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        9,323,535   

Deephaven Charter School

   

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

    500,000        622,525   
   

Principal  

Amount°  

   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

  

Minneapolis Health Care System Revenue

   

(Centracare Health System Project) Series A 5.125% 5/1/30-20 §

    5,080,000      $ 5,824,372   

(Fairview Health Services)

   

Series A 6.625% 11/15/28-18 §

    1,150,000        1,287,931   

Series B 6.50% 11/15/38-18 (AGC) §

    355,000        396,645   

Minneapolis Revenue

   

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

    1,000,000        1,072,470   

Minnesota Higher Education Facilities Authority Revenue

   

(University of St. Thomas) Series 6-X 5.00% 4/1/29-17 §

    250,000        255,315   

Southern Minnesota Municipal Power Agency Revenue

   

Series A 5.75% 1/1/18 §

    705,000        710,182   

Southern Minnesota Municipal Power Agency Supply Revenue

   

Series A 5.25% 1/1/30-19 §

    1,030,000        1,129,807   

St. Cloud Health Care Revenue

   

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

    1,500,000            1,676,190   

St. Louis Park Health Care Facilities Revenue

   

(Park Nicollet Health Services)

   

5.75% 7/1/39-19 §

    3,565,000        4,035,580   

Series C 5.50% 7/1/23-18 §

    1,000,000        1,080,990   

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

   

(Health Partners Obligation Group Project) 5.25% 5/15/36-16 §

    250,000        251,393   

University of Minnesota

   

Series A 5.50% 7/1/21

    4,000,000        4,648,040   
 

 

14


Table of Contents

 

 

 

 

 

 

 

    Principal   
Amount°   
   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

  

University of Minnesota Hospital & Clinics 6.75% 12/1/16

    970,000      $ 979,894   

Washington County Housing & Redevelopment Authority Revenue

   

(Birchwood & Woodbury Projects) Series A 5.625% 6/1/37-17 §

    1,500,000        1,547,745   
   

 

 

 
        34,842,614   
   

 

 

 

Special Tax Revenue Bonds – 5.52%

  

Guam Government Business Privilege Tax Revenue

   

Series A 5.25% 1/1/36

    150,000        166,435   

Hennepin County Sales Tax Revenue

   

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

    1,905,000        1,989,449   

Minneapolis Community Planning & Economic Development Department

   

(Limited Tax Supported Common Bond Fund)

   

6.25% 12/1/30

    1,000,000        1,182,550   

Series 1 5.50% 12/1/24 (AMT)

    920,000        927,130   

Minneapolis Revenue

   

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

    165,000        184,025   

Minnesota Public Safety Radio 5.00% 6/1/23

    2,845,000        3,154,479   

St. Paul Port Authority

   

(Brownfields Redevelopment Tax)

   

Series 2 5.00% 3/1/37

    895,000        910,063   

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

    935,000        1,131,799   
   

 

 

 
      9,645,930   
   

 

 

 

State General Obligation Bonds – 15.07%

  

Minnesota State

   

Series A 5.00% 8/1/24

    4,500,000        5,731,740   

Series A 5.00% 8/1/29

    700,000        888,825   

(State Trunk Highway)

   

Series B 5.00% 10/1/22

    5,500,000        6,540,600   

Series B 5.00% 10/1/29

    3,315,000        3,920,916   

(State Various Purpose)

   

Series D 5.00% 8/1/24

    2,700,000        3,100,005   
    Principal   
Amount°   
   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

State General Obligation Bonds (continued)

  

Minnesota State

   

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

    5,000,000      $ 6,128,900   
   

 

 

 
        26,310,986   
   

 

 

 

Transportation Revenue Bonds – 5.62%

  

Minneapolis – St. Paul

   

Metropolitan Airports Commission Revenue

   

5.00% 1/1/21

    2,600,000        3,020,134   

5.00% 1/1/22

    670,000        776,148   

Subordinate

   

Series A 5.00% 1/1/31

    410,000        516,030   

Series A 5.00% 1/1/32

    1,255,000        1,574,310   

Series B 5.00% 1/1/26

    540,000        634,516   

Series B 5.00% 1/1/26 (AMT)

    500,000        605,295   

Series B 5.00% 1/1/27

    1,190,000        1,397,631   

Series B 5.00% 1/1/30

    500,000        583,660   

Series B 5.00% 1/1/31

    250,000        291,010   

St. Paul Port Authority Revenue

   

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

    380,000        417,221   
   

 

 

 
      9,815,955   
   

 

 

 

Water & Sewer Revenue Bonds – 2.04%

  

Guam Government Waterworks Authority 5.00% 1/1/46

    725,000        836,839   

Metropolitan Council Waste Water Revenue

   

Series B 4.00% 9/1/27

    1,145,000        1,308,174   

St. Paul Sewer Revenue

   

Series D 5.00% 12/1/21

    1,325,000        1,413,007   
   

 

 

 
      3,558,020   
   

 

 

 

Total Municipal Bonds
(cost $229,972,088)

      246,942,700   
   

 

 

 
 

 

      (continues)    15


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

     Principal   
Amount°   
   

Value

(U.S. $)

 

 

 

Short-Term Investments – 1.52%

  

 

 

Variable Rate Demand Notes – 1.52%¤

  

Minneapolis-St. Paul Housing & Redevelopment Authority Health Care Revenue

    

(Allina Health System)

    

Series B-2 0.72% 11/15/35 (LOC- JPMorgan Chase Bank N.A.)

     950,000        $     950,000   

(Children’s Health Care Facilities) Series A 0.81% 8/15/34 (AGM)

     1,700,000        1,700,000   
    

 

 

 
       2,650,000   
    

 

 

 

Total Short-Term Investments
(cost $2,650,000)

       2,650,000   
    

 

 

 

Total Value of Securities – 142.96%
(cost $232,622,088)

       $ 249,592,700   
    

 

 

 

 

  #

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Sept. 30, 2016, the aggregate value of Rule 144A securities was $4,051,303, which represents 2.32% 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, 2016.

  §

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

  °

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

 

Variable rate security. Each rate shown is as of Sept. 30, 2016. Interest rates reset periodically.

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

LOC – Letter of Credit

N.A. – National Association

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

 

 

16


Table of Contents

    

 

Delaware Investments® National Municipal Income Fund

September 30, 2016 (Unaudited)

 

    Principal   
Amount°   
   

Value

(U.S. $)

 

 

 

Municipal Bonds – 140.84%

  

 

 

Corporate-Backed Revenue Bonds – 11.98%

  

Buckeye, Ohio Tobacco Settlement Financing Authority

   

Asset-Backed -2

   

Series A-2 5.875% 6/1/47

    500,000      $ 493,095   

Series A-2 6.50% 6/1/47

    430,000        437,564   

Golden State, California Tobacco Securitization Corporate Settlement Revenue

   

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

    830,000        842,682   

Harris County, Texas Industrial Development Corporation Solid Waste Disposal Revenue

   

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

    150,000        165,901   

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

    500,000        502,265   

Louisiana Local Government Environmental Facilities & Community Development Authority

   

(Westlake Chemical)

   

Series A 6.50% 8/1/29

    645,000        759,487   

Series A-1 6.50% 11/1/35

    255,000        304,562   

Louisiana Public Facilities Authority

   

(LA Pellets Inc. Project)

   

144A

   

7.75% 7/1/39 (AMT)#@‡

    240,000        138,389   

Lower Alabama Gas District Series A 5.00% 9/1/46

    820,000        1,085,631   

M-S-R Energy Authority, California Gas

   

Series C 7.00% 11/1/34

    1,000,000            1,511,540   

Shoals, Indiana

   

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

    310,000        373,742   

Suffolk County, New York Tobacco Asset Securitization

   

Series B 5.00% 6/1/32

    750,000        837,998   

Tobacco Settlement Financing Corporation, Louisiana

   

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

    460,000        525,012   
    Principal   
Amount°   
   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Corporate-Backed Revenue Bonds (continued)

  

Valparaiso, Indiana

   

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

    240,000      $ 303,482   
   

 

 

 
          8,281,350   
   

 

 

 

Education Revenue Bonds – 21.51%

  

Bowling Green, Ohio Student Housing Revenue

   

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

    260,000        284,651   

East Hempfield Township, Pennsylvania Industrial Development Authority

   

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

    1,000,000        1,110,400   

Health & Educational Facilities Authority of the State of Missouri

   

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

    500,000        565,175   

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

    600,000        707,592   

Louisiana Public Facilities Authority Revenue

   

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

    500,000        567,020   

Marietta, Georgia Development Authority Revenue

   

(Life University Income Project) 7.00% 6/15/39

    430,000        450,193   

Maryland Health & Higher Educational Facilities Authority

   

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

    650,000        751,426   

Massachusetts State Health & Educational Facilities Authority Revenue

   

(Harvard University) Series A 5.00% 12/15/29

    600,000        678,246   

Monroe County, New York Industrial Development Revenue

   

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

    495,000        562,681   
 

 

      (continues)    17


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

    Principal  
Amount°  
    Value
(U.S. $)
 

 

 

Municipal Bonds (continued)

  

 

 

Education Revenue Bonds (continued)

  

Montgomery County, Pennsylvania Higher Education & Health Authority Revenue

   

(Arcadia University) 5.25% 4/1/30

    550,000      $ 591,283   

New Hope Cultural Education Facilities, Texas

   

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

    1,000,000            1,149,590   

New Jersey Economic Development Authority Revenue

   

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

    450,000        503,505   

New York City, New York Trust For Cultural Resources

   

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

    500,000        573,160   

New York State Dormitory Authority

   

(Columbia University) 5.00% 10/1/41

    600,000        699,078   

Oregon State Facilities Authority Revenue

   

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

    100,000        108,061   

Pennsylvania State Higher Educational Facilities Authority Revenue

   

(University Properties - East Stroudsburg University) 5.25% 7/1/19

    510,000        546,241   

Philadelphia Authority for Industrial Development

   

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

    370,000        444,977   

Phoenix, Arizona Industrial Development Authority Revenue

   

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

    1,000,000        1,124,600   
    Principal  
Amount°  
    Value
(U.S. $)
 

 

 

Municipal Bonds (continued)

  

 

 

Education Revenue Bonds (continued)

  

Pima County, Arizona Industrial Development Authority Education Revenue

   

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

    500,000      $ 517,140   

Private Colleges & Universities Authority Revenue, Georgia

   

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

    135,000        152,609   

Swarthmore Borough Authority, Pennsylvania

   

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

    490,000        601,460   

Troy, New York Capital Resource Revenue

   

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

    600,000        680,436   

University of California

   

Series AI 5.00% 5/15/32

    1,000,000        1,210,800   

Wyoming Community Development Authority Student Housing Revenue

   

(CHF-Wyoming LLC) 6.50% 7/1/43

    250,000        284,728   
   

 

 

 
        14,865,052   
   

 

 

 

Electric Revenue Bonds – 2.28%

  

Imperial Irrigation District Electric System Revenue, California

   

Series C 5.00% 11/1/28

    60,000        76,763   

JEA Electric System Revenue, Florida

   

Series A 5.00% 10/1/33

    1,000,000        1,200,910   

Long Island Power Authority, New York

   

Series A 5.00% 9/1/44

    250,000        293,667   
   

 

 

 
      1,571,340   
   

 

 

 

Healthcare Revenue Bonds – 23.42%

  

Alabama Special Care Facilities Financing Authority-Birmingham Alabama

   

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

    500,000        570,460   
 

 

18


Table of Contents

 

 

 

 

 

 

 

    Principal  
Amount°  
    Value
(U.S. $)
 

 

 

Municipal Bonds (continued)

  

 

 

Healthcare Revenue Bonds (continued)

  

Arizona Health Facilities Authority Revenue

   

(Catholic Healthcare West) Series D 5.00% 7/1/28

    500,000      $ 543,755   

California Health Facilities Financing Authority Revenue

   

(Providence St. Joseph Health) Series A 4.00% 10/1/47

    355,000        385,161   

California Statewide Communities Development Authority

   

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

    760,000        873,992   

Capital Trust Agency, Florida

   

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

    375,000        399,435   

Colorado Health Facilities Authority Revenue

   

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

    330,000        396,997   

Hawaii Pacific Health Special Purpose Revenue

   

Series A 5.50% 7/1/40

    300,000        335,865   

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

   

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

    1,000,000           1,213,810   

Lycoming County, Pennsylvania Authority Health System Revenue

   

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

    500,000        558,690   

Maine Health & Higher Educational Facilities Authority Revenue

   

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

    300,000        341,202   

Maricopa County, Arizona Industrial Development Authority Health Facilities Revenue

   

(Catholic Healthcare West) Series A 6.00% 7/1/39

    500,000        558,860   
    Principal  
Amount°  
    Value
(U.S. $)
 

 

 

Municipal Bonds (continued)

  

 

 

Healthcare Revenue Bonds (continued)

  

Michigan Finance Authority Revenue

   

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

    1,000,000      $    1,176,710   

Monroe County, Pennsylvania Hospital Authority Revenue

   

(Pocono Medical Center) Series A 5.00% 1/1/41

    500,000        551,180   

Moon, Pennsylvania Industrial Development Authority

   

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

    750,000        857,437   

New Hampshire Health and Education Facilities Authority Revenue

   

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

    300,000        340,797   

New Hope Cultural Education Facilities

   

(Cardinal Bay Inc.)

   

Series A1 4.00% 7/1/36

    55,000        58,540   

Series A1 5.00% 7/1/46

    135,000        155,274   

Series A1 5.00% 7/1/51

    135,000        154,514   

Series B 4.25% 7/1/36

    80,000        85,088   

Series B 4.75% 7/1/51

    160,000        174,360   

Series B 5.00% 7/1/46

    135,000        154,059   

New Jersey Health Care Facilities Financing Authority Revenue

   

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

    300,000        329,475   

New Mexico Hospital Equipment Loan Council Revenue

   

(Presbyterian Healthcare) 5.00% 8/1/39

    500,000        545,775   

New York State Dormitory Authority Revenue Non State Supported Debt

   

(Orange Regional Medical Center) 6.25% 12/1/37

    500,000        542,210   

Ohio State

   

(Cleveland Clinic Health) Series A 5.50% 1/1/39

    300,000        329,709   

Orange County, Florida Health Facilities Authority Revenue

   

(Mayflower Retirement Center)

   
 

 

      (continues)    19


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

     Principal   
Amount°   
    Value
(U.S. $)
 

 

 

Municipal Bonds (continued)

  

 

 

Healthcare Revenue Bonds (continued)

  

Orange County, Florida Health Facilities Authority Revenue

    

5.00% 6/1/32

     400,000      $ 437,612   

5.00% 6/1/36

     250,000        272,250   

5.125% 6/1/42

     750,000        821,153   

Oregon State Facilities Authority Revenue

    

(Peacehealth Project) Series A 5.00% 11/15/29

     500,000        605,635   

Palm Beach County Health Facilities Authority, Florida

    

(Sinai Residences Boca Raton Project)

    

7.25% 6/1/34

     20,000        24,426   

7.50% 6/1/49

     105,000        129,586   

Tarrant County Cultural Education Facilities Finance

    

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

     330,000        393,944   

West Virginia Hospital Finance Authority Revenue

    

(Highland Hospital Obligation Group) 9.125% 10/1/41 @

     500,000        466,910   

Westminster, Maryland

    

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

     500,000        568,560   

Yavapai County, Arizona Industrial Development Authority Revenue

    

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

     720,000        828,454   
    

 

 

 
         16,181,885   
    

 

 

 

Housing Revenue Bond – 0.68%

  

California Municipal Finance Authority Mobile Home Park Revenue

    

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

     415,000        472,021   
    

 

 

 
       472,021   
    

 

 

 

Lease Revenue Bonds – 10.34%

  

California State Public Works Board Lease Revenue

    

(Various Capital Projects) Series A 5.00% 4/1/37

     1,000,000        1,164,660   
    Principal   
Amount°   
    Value
(U.S. $)
 

 

 

Municipal Bonds (continued)

  

 

 

Lease Revenue Bonds (continued)

  

Idaho State Building Authority Revenue

   

(Health & Welfare Project) Series A 5.00% 9/1/24

    135,000      $ 160,221   

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

    760,000        906,680   

Minnesota State General Revenue Appropriations

   

Series B 5.00% 3/1/29

    2,000,000        2,370,660   

Mta Hudson Rail Yards Trust Obligations, New York

   

Series A 5.00% 11/15/56

    735,000        848,381   

New Jersey Economic Development Authority

   

Series WW 5.25% 6/15/30

    1,000,000        1,151,400   

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

    25,000        26,644   

Public Finance Authority, Wisconsin Airport Facilities Revenue

   

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

    500,000        518,455   
   

 

 

 
        7,147,101   
   

 

 

 

Local General Obligation Bonds – 1.61%

  

Chicago, Illinois

   

Series A 5.50% 1/1/34

    225,000        244,391   

Series C 5.00% 1/1/38

    500,000        526,065   

New York, New York

   

Series A-1 5.25% 8/15/21

    250,000        270,697   

Series I-1 5.375% 4/1/36

    65,000        72,273   
   

 

 

 
      1,113,426   
   

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 17.66%

  

Atlanta, Georgia Water & Wastewater Revenue

   

Series A 6.25% 11/1/39-19§

    950,000        1,103,131   

Bay Area, California Toll Authority Toll Bridge Revenue

   

(San Francisco Bay Area) Series F1 5.00% 4/1/34-18§

    1,000,000        1,062,930   

Brevard County, Florida Health Facilities Authority Revenue

   

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

    350,000        402,909   
 

 

20


Table of Contents

 

 

 

 

 

 

 

   

Principal  

Amount°  

        Value  
    (U.S. $)  
 

 

 

Municipal Bonds (continued)

  

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

  

Brooklyn Arena Local Development, New York Pilot Revenue

   

(Barclays Center Project)

   

6.25% 7/15/40-20§

    940,000      $   1,099,509   

6.50% 7/15/30-20§

    300,000        353,328   

Butler County, Pennsylvania Hospital Authority Revenue

   

(Butler Health System Project)

   

7.125% 7/1/29-19§

    450,000        525,249   

California State Economic Recovery

   

Series A 5.25% 7/1/21-19§

    165,000        184,638   

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

    95,000        106,307   

California Statewide Communities Development Authority Revenue

   

(Statewide Inland Regional Center Project) 5.375% 12/1/37-17§

    500,000        527,140   

California Statewide Communities Development Authority School Facility Revenue

   

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

    625,000        697,281   

California Statewide Communities Development Authority Student Housing Revenue

   

(Irvine, LLC - UCI East Campus) 6.00% 5/15/23-18§

    470,000        509,677   

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

    520,000        626,652   

Gila County, Arizona Unified School District No. 10

   

(Payson School Improvement Project of 2006) Series A 5.25% 7/1/27-17 (AMBAC)

    500,000        516,870   

Illinois Finance Authority Revenue

   

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

    950,000        1,113,799   
   

Principal  

Amount°  

        Value  
    (U.S. $)  
 

 

 

Municipal Bonds (continued)

  

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

  

Koyukuk, Alaska Revenue

   

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

    300,000      $ 358,521   

Louisiana Public Facilities Authority Revenue

   

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

    105,000        130,943   

Maryland State Economic Development Student Housing Revenue

   

(University of Maryland College Park Projects) 5.75% 6/1/33-18§

    370,000        400,018   

Metropolitan Transit Authority of Harris County, Texas

   

Series A 5.00% 11/1/24-21§

    500,000        596,875   

New Jersey Economic Development Authority

   

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

    75,000        80,885   

New York, New York

   

Series I-1 5.375% 4/1/36-19§

    185,000        205,394   

Pennsylvania State Higher Educational Facilities Authority Revenue

   

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

    400,000        470,296   

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

    500,000        574,550   

University of Arizona

   

Series A 5.00% 6/1/39-19

    500,000        553,945   
   

 

 

 
        12,200,847   
   

 

 

 

Special Tax Revenue Bonds – 16.99%

  

Anne Arundel County, Maryland Special Obligation Revenue

   

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

    200,000        211,074   
 

 

      (continues)    21


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

    Principal  
Amount°  
   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Special Tax Revenue Bonds (continued)

  

Central Puget Sound, Washington Regional Transit Authority

   

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

    750,000      $ 914,483   

Guam Government Business Privilege Tax Revenue

   

Series A 5.00% 1/1/22

    775,000        894,544   

Series B-1 5.00% 1/1/42

    540,000        589,356   

Massachusetts Bay Transportation Authority Senior

   

Series A 5.25% 7/1/29

    200,000        270,828   

Mosaic District, Virginia Community Development Authority Revenue

   

Series A 6.875% 3/1/36

    520,000        598,390   

New Jersey Economic Development Authority Revenue

   

5.00% 6/15/28

    200,000        220,112   

5.00% 6/15/29

    800,000        877,056   

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

    900,000        985,113   

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        891,772   

New York State Dormitory Authority

   

Series A 5.00% 3/15/33

    1,000,000            1,194,950   

(State Personal Income Tax Revenue-Education)

   

Series A 5.00% 3/15/38

    570,000        625,313   

Northampton County, Pennsylvania Industrial Development Authority Revenue

   

(Route 33 Project) 7.00% 7/1/32

    230,000        255,381   

Oregon State Department of Transportation

   

Series A 5.00% 11/15/26

    1,000,000        1,255,630   
    Principal  
Amount°  
   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Special Tax Revenue Bonds (continued)

  

Peoria, Arizona Municipal Development Authority Sales Tax & Excise Shared Revenue

   

(Senior Lien & Subordinate Lien) 5.00% 1/1/18

    1,085,000      $ 1,138,740   

Regional Transportation District, Colorado Tax Revenue

   

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

    500,000        575,430   

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

   

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

    235,000        243,495   
   

 

 

 
          11,741,667   
   

 

 

 

State General Obligation Bonds – 2.80%

  

California State

   

5.25% 11/1/40

    320,000        368,458   

(Various Purposes)

   

5.00% 10/1/41

    440,000        516,974   

6.00% 4/1/38

    105,000        118,258   

New York State

   

Series A 5.00% 2/15/39

    300,000        328,695   

Oregon State

   

Series K 5.00% 5/1/22

    500,000        604,065   
   

 

 

 
      1,936,450   
   

 

 

 

Transportation Revenue Bonds – 24.80%

  

Alameda Corridor Transportation Authority

   

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

    430,000        515,772   

Atlanta, Georgia Department of Aviation

   

Series B 5.00% 1/1/29

    1,000,000        1,225,020   

Chicago, Illinois O’Hare International Airport Revenue

   

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

    1,000,000        1,183,000   

Maryland State Economic Development Revenue

   

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

    255,000        284,159   
 

 

22


Table of Contents

 

 

 

 

 

 

 

    Principal  
Amount°  
   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Transportation Revenue Bonds (continued)

  

Metropolitan Transportation Authority, New York

   

Series A 5.00% 11/15/41

    500,000      $ 583,725   

Metropolitan Washington D.C. Airports Authority Dulles Toll Road Revenue

   

(First Senior Lien) Series A 5.25% 10/1/44

    245,000        271,002   

New Jersey State Turnpike Authority Revenue

   

Series A 5.00% 1/1/27

    1,000,000            1,189,760   

New Orleans, Louisiana Aviation Board

   

Series B 5.00% 1/1/45 (AMT)

    1,000,000        1,143,630   

New York Liberty Development Revenue

   

(1 World Trade Center Port Authority Construction)

   

5.00% 12/15/41

    500,000        582,710   

New York Transportation Development

   

(La Guardia Airport)

   

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

    700,000        808,976   

North Texas Tollway Authority Special Projects System

   

Series A 5.00% 9/1/20

    250,000        287,470   

Pennsylvania Turnpike Commission

   

Series A-1 5.00% 12/1/43

    500,000        573,910   

Pennsylvania Turnpike Commission Subordinate

   

(Special Motor License Foundation)

   

5.00% 12/1/22

    500,000        574,050   

Series B 5.00% 12/1/41

    500,000        565,690   

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

    900,000        1,066,437   

Port Authority of New York & New Jersey Special Project

   

(JFK International Air Terminal)

   

6.00% 12/1/42

    230,000        268,932   

6.50% 12/1/28

    500,000        514,970   

St. Louis, Missouri Airport Revenue

   

(Lambert St. Louis International)

   
    Principal  
Amount°  
   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Transportation Revenue Bonds (continued)

  

St. Louis, Missouri Airport Revenue

   

5.00% 7/1/32 (AMT)

    1,000,000      $ 1,096,050   

Series A-1 6.625% 7/1/34

    325,000        368,001   

Texas Private Activity Bond Surface Transportation

   

(Senior Lien – Blueridge Transportation)

   

5.00% 12/31/40 (AMT)

    110,000        128,182   

5.00% 12/31/45 (AMT)

    110,000        127,699   

5.00% 12/31/50 (AMT)

    160,000        184,347   

5.00% 12/31/55 (AMT)

    160,000        182,098   

Texas Private Activity Bond Surface Transportation Corporate Senior Lien Revenue

   

(LBJ Infrastructure)

   

7.00% 6/30/40

    285,000        340,940   

7.50% 6/30/33

    665,000        808,587   

(Mobility Partners)

   

7.50% 12/31/31

    500,000        597,795   

(NTE Mobility Partners)

   

6.75% 6/30/43 (AMT)

    225,000        279,826   

6.875% 12/31/39

    1,000,000        1,176,120   

7.00% 12/31/38 (AMT)

    165,000        208,017   
   

 

 

 
        17,136,875   
   

 

 

 

Water & Sewer Revenue Bonds – 6.77%

  

City of Chicago, Illinois Waterworks Revenue

   

(2nd Lien) 5.00% 11/1/29

    280,000        335,062   

Massachusetts Water Resources Authority

   

(Green Bond) Series B 4.00% 8/1/36

    500,000        561,320   

New York City Water & Sewer System, New York

   

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

    345,000        407,524   

Philadelphia, Pennsylvania Water & Wastewater Revenue

   

Series A 5.00% 7/1/45

    500,000        585,660   

Phoenix, Arizona Civic Improvement Wastewater Systems Revenue

   

(Junior Lien) Series A 5.00% 7/1/39

    900,000        990,648   
 

 

      (continues)    23


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

    Principal  
Amount°  
   

Value

(U.S. $)

 

 

 

Municipal Bonds (continued)

  

 

 

Water & Sewer Revenue Bonds (continued)

  

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

   

Series F 5.00% 11/1/27

    500,000      $ 579,400   

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

    1,000,000        1,219,220   
   

 

 

 
      4,678,834   
   

 

 

 

Total Municipal Bonds
(cost $87,716,327)

          97,326,848   
   

 

 

 

 

 

Short-Term Investments – 0.94%

  

 

 

Variable Rate Demand Notes – 0.94%

  

County of Jackson, Mississippi (Chevron USA Inc. Project) 0.75% 6/1/23

    100,000        100,000   

Mississippi State Business Finance Commission Gulf Opportunity Zone (Chevron USA Inc. Project) Series C 0.75% 12/1/30

    550,000        550,000   
   

 

 

 

Total Short-Term Investments
(cost $650,000)

      650,000   
   

 

 

 

Total Value of Securities – 141.78%
(cost $88,366,327)

      $ 97,976,848   
  

 

 

 

 

 #

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Sept. 30, 2016, the aggregate value of Rule 144A securities was $1,120,442, which represents 1.62% of the Fund’s net assets. See Note 5 in “Notes to financial statements.”

 @

Illiquid security. At Sept. 30, 2016, the aggregate value of illiquid securities was $605,299, which represents 0.88% of the Fund’s net assets. See Note 5 in “Notes to financial statements.”

 §

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

 °

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

 ‡

Non-income-producing security. Security is currently in default.

Summary of abbreviations:

AMBAC – Insured by AMBAC Assurance Corporation

AMT – Subject to Alternative Minimum Tax

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

 

 

24


Table of Contents

Statements of assets and liabilities

Delaware Investments® Closed-End Municipal Bond Funds

September 30, 2016 (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

    $ 105,510,745       $ 246,942,700       $ 97,326,848  

Short-term investments, at value2

      100,000         2,650,000         650,000  

Interest income receivable

      1,454,760         3,162,344         1,311,754  

Receivables for securities sold

              30,330          

Prepaid rating agency fee

      1,750         1,000         5,417  

Offering cost for preferred shareholders

      142,638         176,853         155,010  
   

 

 

     

 

 

     

 

 

 

Total assets

      107,209,893         252,963,227         99,449,029  
   

 

 

     

 

 

     

 

 

 

Liabilities:

           

Cash overdraft

      257,939         614,009         268,270  

Liquidation value of preferred stock

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

Payable for securities purchased

              2,601,705          

Investment management fees payable

      35,231         82,204         32,656  

Other accrued expenses

      22,292         55,462         21,631  

Directors’/Trustees’ fees and expenses payable

      196         445         176  

Audit fees payable

      20,970         20,970         20,250  

Legal fees payable to affiliates

      1,181         2,601         810  

Accounting and administration expenses payable to affiliates

      413         964         383  

Reports and statements to shareholders payable to affiliates

      29         67         27  
   

 

 

     

 

 

     

 

 

 

Total liabilities

      30,338,251         78,378,427         30,344,203  
   

 

 

     

 

 

     

 

 

 

Total Net Assets Applicable to Common Shareholders

    $ 76,871,642       $ 174,584,800       $ 69,104,826  
   

 

 

     

 

 

     

 

 

 

Net Assets Applicable to Common Shareholders Consist of:

           

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

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

Undistributed net investment income

      781,811         769,310         108,610  

Accumulated net realized loss on investments

      (659,511 )       (1,086,197 )       (1,231,781 )

Net unrealized appreciation of investments

      9,831,221         16,970,612         9,610,521  
   

 

 

     

 

 

     

 

 

 

Total Net Assets Applicable to Common Shareholders

    $ 76,871,642       $ 174,584,800       $ 69,104,826  
   

 

 

     

 

 

     

 

 

 

Net Asset Value per Common Share

    $ 15.89       $ 15.17       $ 15.26  
   

 

 

     

 

 

     

 

 

 

1Investments, at cost

      95,679,524         229,972,088         87,716,327  

2Short-term investments, at cost

      100,000         2,650,000         650,000  

3Common shares outstanding

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

4Common shares authorized

      200 million         200 million         unlimited  

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

 

25


Table of Contents

Statements of operations

Delaware Investments® Closed-End Municipal Bond Funds

Six months ended September 30, 2016 (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

    $ 2,241,247       $ 4,556,805       $ 2,073,142  
   

 

 

     

 

 

     

 

 

 

Expenses:

           

Management fees

      214,990         502,202         199,163  

Interest expense

      253,701         634,253         253,669  

Rating agency fees

      27,462         23,839         23,462  

Audit and tax fees

      24,082         27,227         20,250  

Accounting and administration expenses

      17,364         39,865         20,151  

Legal fees

      15,324         25,032         4,471  

Dividend disbursing and transfer agent fees and expenses

      12,833         34,668         14,910  

Reports and statements to shareholders

      10,828         26,416         10,752  

Offering costs

      9,018         12,119         10,455  

Stock exchange fees

      2,385         5,477         2,138  

Directors’/Trustees’ fees and expenses

      1,755         3,993         1,566  

Custodian fees

      1,714         4,034         1,755  

Registration fees

      398         488         398  

Other

      6,203         11,596         10,062  
   

 

 

     

 

 

     

 

 

 

Total operating expenses

      598,057         1,351,209         573,202  
   

 

 

     

 

 

     

 

 

 

Net Investment Income

      1,643,190         3,205,596         1,499,940  
   

 

 

     

 

 

     

 

 

 

Net Realized and Unrealized Gain (Loss):

           

Net realized gain on investments

      484,641         284,334         154,470  

Net change in unrealized appreciation (depreciation) of investments

      713,976         1,542,535         1,050,119  
   

 

 

     

 

 

     

 

 

 

Net Realized and Unrealized Gain

      1,198,617         1,826,869         1,204,589  
   

 

 

     

 

 

     

 

 

 

Net Increase in Net Assets Resulting from Operations

    $ 2,841,807       $ 5,032,465       $ 2,704,529  
   

 

 

     

 

 

     

 

 

 

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

 

26


Table of Contents

Statements of changes in net assets

Delaware Investments® Closed-End Municipal Bond Funds

 

    Delaware Investments
Colorado Municipal
Income Fund, Inc.
 
    Six months
ended
9/30/16
(Unaudited)
    Year ended
3/31/16
 

Increase in Net Assets from Operations:

   

Net investment income

  $ 1,643,190      $ 3,408,420   

Net realized gain

    484,641        351,677   

Net change in unrealized appreciation (depreciation)

    713,976        243,591   
 

 

 

   

 

 

 

Net increase in net assets resulting from operations

    2,841,807        4,003,688   
 

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

   

Net investment income

    (1,741,356     (3,458,527
 

 

 

   

 

 

 
    (1,741,356     (3,458,527
 

 

 

   

 

 

 

Net Increase in Net Assets Applicable to Common Shareholders

    1,100,451        545,161   

Net Assets Applicable to Common Shareholders:

   

Beginning of period

    75,771,191        75,226,030   
 

 

 

   

 

 

 

End of period

  $ 76,871,642      $ 75,771,191   
 

 

 

   

 

 

 

Undistributed net investment income

  $ 781,811      $ 879,977   
 

 

 

   

 

 

 

 

    Delaware Investments
Minnesota Municipal
Income Fund II, Inc.
 
    Six months
ended
9/30/16
(Unaudited)
    Year ended
3/31/16
 

Increase in Net Assets from Operations:

   

Net investment income

  $ 3,205,596      $ 7,241,038   

Net realized gain

    284,334        350,327   

Net change in unrealized appreciation (depreciation)

    1,542,535        495,650   
 

 

 

   

 

 

 

Net increase in net assets resulting from operations

    5,032,465        8,087,015   
 

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

   

Net investment income

    (3,566,542     (7,248,134
 

 

 

   

 

 

 
    (3,566,542     (7,248,134
 

 

 

   

 

 

 

Net Increase in Net Assets Applicable to Common Shareholders

    1,465,923        838,881   

Net Assets Applicable to Common Shareholders:

   

Beginning of period

    173,118,877        172,279,996   
 

 

 

   

 

 

 

End of period

  $ 174,584,800      $ 173,118,877   
 

 

 

   

 

 

 

Undistributed net investment income

  $ 769,310      $ 1,130,256   
 

 

 

   

 

 

 

 

27


Table of Contents

Statements of changes in net assets

Delaware Investments® Closed-End Municipal Bond Funds

 

     Delaware Investments
National Municipal
Income Fund
 
     Six months
ended
9/30/16
(Unaudited)
    Year ended
3/31/16
 

Increase in Net Assets from Operations:

    

Net investment income

   $ 1,499,940      $ 3,150,504   

Net realized gain

     154,470        398,496   

Net change in unrealized appreciation (depreciation)

     1,050,119        96,636   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     2,704,529        3,645,636   
  

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

    

Net investment income

     (1,607,597     (3,441,617
  

 

 

   

 

 

 
     (1,607,597     (3,441,617
  

 

 

   

 

 

 

Net Increase in Net Assets Applicable to Common Shareholders

     1,096,932        204,019   

Net Assets Applicable to Common Shareholders:

    

Beginning of period

     68,007,894        67,803,875   
  

 

 

   

 

 

 

End of period

   $ 69,104,826      $ 68,007,894   
  

 

 

   

 

 

 

Undistributed net investment income

   $ 108,610      $ 216,267   
  

 

 

   

 

 

 

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

 

28


Table of Contents

Statements of cash flows

Delaware Investments® Closed-End Municipal Bond Funds

Six months ended September 30, 2016 (Unaudited)

 

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

Net Cash Provided by (Used for) Operating Activities:

            

Net increase in net assets resulting from operations

     $ 2,841,807       $ 5,032,465       $ 2,704,529  
    

 

 

     

 

 

     

 

 

 

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

       178,432         1,065,516         245,503  

Purchase of investment securities

       (4,183,506 )       (16,537,149 )       (8,971,038 )

Proceeds from disposition of investment securities

       5,023,491         15,054,343         8,269,077  

Purchase of short-term investment securities, net

       (100,000 )       (2,650,000 )       350,000  

Net realized gain on investments

       (484,641 )       (284,334 )       (154,470 )

Net change in net unrealized appreciation (depreciation) of investments

       (713,976 )       (1,542,535 )       (1,050,119 )

Increase in receivable for securities sold

               (15,165 )        

Decrease in interest receivable

       17,129         146,835         18,970  

Decrease in other accrued expenses receivable

       2,818                  

Decrease in offering costs for preferred shareholders

       (6,826 )       (2,767 )       (5,597 )

Increase (decrease) in payable for securities purchased

       (1,113,180 )       2,601,705         (179,133 )

Decrease in investment management fees payable

       (403 )       (1,498 )       (367 )

Decrease in Trustees’ fees and expenses payable

       (528 )       (1,214 )       (472 )

Decrease in audit fees payable

       (19,530 )       (19,530 )       (20,250 )

Decrease in other affiliates payable

       (1,051 )       (710 )       (1,333 )

Increase in other accrued expenses

       20,542         22,164         5,328  
    

 

 

     

 

 

     

 

 

 

Total adjustments

       (1,381,229 )       (2,164,339 )       (1,493,901 )
    

 

 

     

 

 

     

 

 

 

Net cash provided by operating activities

       1,460,578         2,868,126         1,210,628  
    

 

 

     

 

 

     

 

 

 

Cash Flows Used for Financing Activities:

            

Cash dividends and distributions paid to common shareholders

       (1,741,356 )       (3,566,542 )       (1,607,597 )
    

 

 

     

 

 

     

 

 

 

Net cash used for financing activities

       (1,741,356 )       (3,566,542 )       (1,607,597 )
    

 

 

     

 

 

     

 

 

 

Net increase (decrease) in cash

       (280,778 )       (698,416 )       (396,969 )

Cash at beginning of period

       22,839         84,407         128,699  
    

 

 

     

 

 

     

 

 

 

Cash at end of period

     $ (257,939 )     $ (614,009 )     $ (268,270 )
    

 

 

     

 

 

     

 

 

 

Cash paid for interest on leverage

     $ 253,701       $ 634,253       $ 253,669  
    

 

 

     

 

 

     

 

 

 

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

 

29


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
9/30/161
   Year ended
      (Unaudited)    3/31/16    3/31/15    3/31/14    3/31/13    3/31/12

Net asset value, beginning of period

     $ 15.660        $ 15.550        $ 14.430        $ 15.370        $ 15.010        $ 13.370  

Income (loss) from investment operations:

                             

Net investment income2

       0.340          0.705          0.706          0.700          0.733          0.638  

Net realized and unrealized gain (loss)

       0.250          0.120          1.104          (0.935 )        0.416          1.582  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total from investment operations

       0.590          0.825          1.810          (0.235 )        1.149          2.220  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Less dividends and distributions to common shareholders from:

                             

Net investment income

       (0.360 )        (0.715 )        (0.690 )        (0.690 )        (0.690 )        (0.580 )

Net realized gain

                                  (0.015 )        (0.099 )         
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total dividends and distributions

       (0.360 )        (0.715 )        (0.690 )        (0.705 )        (0.789 )        (0.580 )
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net asset value, end of period

     $ 15.890        $ 15.660        $ 15.550        $ 14.430        $ 15.370        $ 15.010  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Market value, end of period

     $ 15.300        $ 15.070        $ 14.350        $ 13.330        $ 14.840        $ 14.600  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total investment return based on:3

                             

Market value

       3.89%          10.38%          13.01%          (5.25% )        6.92%          22.41%  

Net asset value

       3.84%          5.85%          13.12%          (0.97% )        7.71%          17.19%  

Ratios and supplemental data:

                             

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

     $ 76,872        $ 75,771        $ 75,226        $ 69,781        $ 74,349        $ 72,613  

Ratio of expenses to average net assets applicable to common shareholders4

       1.55%          1.52%          1.43%          1.49%          1.44%          0.95%  

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

       4.24%          4.59%          4.65%          4.90%          4.72%          4.46%  

Portfolio turnover

       5%          13%          14%          26%          8%          64%  

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

     $ 356,239        $ 352,571        $ 350,753        $ 332,602        $ 347,829        $ 342,045  

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 $0.052, $0.079, $0.077, $0.078, $0.079, and $0.031 per share for the six months ended Sept. 30, 2016 and the years ended March 31, 2016, 2015, 2014, 2013, and 2012, respectively, and from realized capital gains of $0.002, $0.006, and $0.000 per share for the years ended March 31, 2014, 2013, and 2012, 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, 2016 and the years ended March 31, 2016, 2015, 2014, 2013, and 2012 were 0.89%, 1.01%, 0.92%, 0.94%, 0.89%, and 0.73%, respectively.

5 

The ratio of net investment income excluding interest expense for the six months ended Sept. 30, 2016 and the years ended March 31, 2016, 2015, 2014, 2013 and 2012 were 4.90%, 5.11%, 5.16%, 5.45%, 5.27%, and 4.68%, 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.

 

30


Table of Contents

    

 

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

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

 

     Six months
ended
9/30/161
   Year ended
      (Unaudited)    3/31/16    3/31/15    3/31/14    3/31/13    3/31/12

Net asset value, beginning of period

     $ 15.050        $ 14.970        $ 14.310        $ 15.270        $ 14.940        $ 13.700  

Income (loss) from investment operations:

                             

Net investment income2

       0.279          0.629          0.641          0.648          0.715          0.640  

Net realized and unrealized gain (loss)

       0.151          0.081          0.689          (0.802 )        0.345          1.180  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total from investment operations

       0.430          0.710          1.330          (0.154 )        1.060          1.820  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Less dividends and distributions to common shareholders from:

                             

Net investment income

       (0.310 )        (0.630 )        (0.670 )        (0.690 )        (0.690 )        (0.580 )

Net realized gain

                                  (0.116 )        (0.040 )         
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total dividends and distributions

       (0.310 )        (0.630 )        (0.670 )        (0.806 )        (0.730 )        (0.580 )
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net asset value, end of period

     $ 15.170        $ 15.050        $ 14.970        $ 14.310        $ 15.270        $ 14.940  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Market value, end of period

     $ 14.980        $ 14.700        $ 13.850        $ 13.340        $ 15.630        $ 14.230  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total investment return based on:3

                             

Market value

       4.02%          11.17%          8.97%          (9.26% )        15.18%          17.95%  

Net asset value

       2.89%          5.30%          9.80%          (0.36% )        7.18%          13.90%  

Ratios and supplemental data:

                             

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

     $ 174,585        $ 173,119        $ 172,280        $ 164,599        $ 175,629        $ 171,835  

Ratio of expenses to average net assets applicable to common shareholders4

       1.54%          1.46%          1.40%          1.51%          1.40%          0.93%  

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

       3.64%          4.24%          4.33%          4.54%          4.65%          4.44%  

Portfolio turnover

       9%          16%          10%          17%          24%          44%  

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

     $ 332,780        $ 330,825        $ 329,707        $ 319,465        $ 334,172        $ 329,113  

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 $0.055, $0.083, $0.081, $0.076, $0.084, and $0.033 per share for the six months ended Sept. 30, 2016 and the years ended March 31, 2016, 2015, 2014, 2013, and 2012, respectively, and from realized capital gains of $0.014, $0.005, and $0.000 per share for the years ended March 31, 2014, 2013, and 2012, 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, 2016 and the years ended March 31, 2016, 2015, 2014, 2013, and 2012 were 0.82%, 0.90%, 0.85%, 0.88%, 0.82%, and 0.70%, respectively.

5 

The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30, 2016 and the years ended March 31, 2016, 2015, 2014, 2013, and 2012 were 4.36%, 4.80%, 4.88%, 5.17%, 5.23%, and 4.67%, respectively.

6 

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

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

 

      (continues)    31


Table of Contents

Financial highlights

 

Delaware Investments® National Municipal Income Fund

 

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

 

     Six months
ended
9/30/161
   Year ended
      (Unaudited)    3/31/16    3/31/15    3/31/14    3/31/13    3/31/12

Net asset value, beginning of period

     $ 15.020        $ 14.970        $ 13.810        $ 14.990        $ 14.020        $ 12.620  

Income (loss) from investment operations:

                             

Net investment income2

       0.331          0.696          0.711          0.710          0.722          0.531  

Net realized and unrealized gain (loss)

       0.264          0.114          1.219          (1.180 )        0.858          1.409  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total from investment operations

       0.595          0.810          1.930          (0.470 )        1.580          1.940  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Less dividends and distributions to common shareholders from:

                             

Net investment income

       (0.355 )        (0.760 )        (0.770 )        (0.710 )        (0.610 )        (0.540 )
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total dividends and distributions

       (0.355 )        (0.760 )        (0.770 )        (0.710 )        (0.610 )        (0.540 )
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net asset value, end of period

     $ 15.260        $ 15.020        $ 14.970        $ 13.810        $ 14.990        $ 14.020  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Market value, end of period

     $ 14.070        $ 13.800        $ 13.140        $ 12.350        $ 14.480        $ 13.240  
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total investment return based on:3

                             

Market value

       4.51%          11.32%          12.87%          (9.65% )        14.12%          13.19%  

Net asset value

       4.14%          6.35%          14.99%          (2.41% )        11.56%          15.87%  

Ratios and supplemental data:

                             

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

     $ 69,105        $ 68,008        $ 67,804        $ 62,526        $ 67,876        $ 63,487  

Ratio of expenses to average net assets applicable to common shareholders4

       1.65%          1.70%          1.60%          1.58%          1.56%          1.02%  

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

       4.32%          4.72%          4.86%          5.17%          4.86%          3.96%  

Portfolio turnover

       12%          25%          38%          40%          42%          101%  

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

     $ 330,349        $ 326,693        $ 326,013        $ 308,420        $ 326,254        $ 311,625  

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 $0.056, $0.084, $0.083, $0.085, $0.090, and $0.004 per share for the six months ended Sept. 30, 2016 and the years ended March 31, 2016, 2015, 2014, 2013, and 2012, 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, 2016 and the years ended March 31, 2016, 2015, 2014, 2013, and 2012 were 0.92%, 1.13%, 1.03%, 0.96%, 0.96%, and 0.99%, respectively.

5 

The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30, 2016 and years ended March 31, 2016, 2015, 2014, 2013, and 2012 were 5.05%, 5.29%, 5.44%, 5.79%, 5.46%, and 3.99%, 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.

 

32


Table of Contents

Notes to financial statements

Delaware Investments® Closed-End Municipal Bond Funds

September 30, 2016 (Unaudited)

Delaware Investments Colorado Municipal Income Fund, Inc. (Colorado Municipal Fund) and Delaware Investments Minnesota Municipal Income Fund II, Inc. (Minnesota Municipal Fund II) are organized as Minnesota corporations and Delaware Investments National Municipal Income Fund (National Municipal Fund) is organized as a Massachusetts business trust (each referred to as a Fund and collectively as the Funds). Colorado Municipal Fund, Minnesota Municipal Fund II, and National Municipal Fund are considered diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. The Funds’ shares trade on the New York Stock Exchange MKT, the successor to the American Stock Exchange.

The investment objective of each of the 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 the 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. The 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 U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Funds.

Security Valuation — Debt securities are valued based upon valuations provided by an independent pricing service or broker and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund’s Board of Directors/Trustees (each a Board, or collectively, the Boards). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security.

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 for all open federal income tax years (March 31, 2013–March 31, 2016), and has concluded that no provision for federal income tax is required in any Fund’s financial statements.

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

Use of Estimates — Each Fund is an investment company, whose financial statements are prepared in conformity with U.S. GAAP. Therefore, each Fund follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with U.S. 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 Investments Family of Funds are generally allocated among such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Each Fund declares and pays 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.

 

      (continues)    33


Table of Contents

Notes to financial statements

Delaware Investments® Closed-End Municipal Bond Funds

 

1. Significant Accounting Policies (continued)

 

Each Fund may receive earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. There were no such earnings credits for the six months ended Sept. 30, 2016.

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

In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee of 0.40% which is calculated 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 based on the aggregate daily net assets of the Delaware Investments Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DIFSC under the service agreement described above are allocated among all funds in the Delaware Investments Family of Funds on a relative net asset value basis. These amounts are included on the “Statements of operations” under “Accounting and administration expenses.” For the six months ended Sept. 30, 2016, each Fund was charged for these services as follows:

 

Colorado
      Municipal      
Fund

 

      Minnesota      
Municipal

Fund II

 

National
Municipal
Fund

$2,532   $5,914   $2,345

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, 2016, 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

$9,283   $20,582   $6,605

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

Cross trades for the six months ended Sept. 30, 2016, 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. Pursuant to these procedures, for the six months ended Sept. 30, 2016, the Funds engaged in securities purchases and securities sales, which did not result in any net realized gains (losses) as follows:

 

     Colorado
      Municipal      
Fund
         Minnesota      
Municipal
Fund II
   National
Municipal
Fund

Purchases

     $ 1,000,139        $ 3,850,355        $ 1,750,148  

Sales

       1,100,183          4,150,791          1,800,441  

Net realized gain

                          

 

34


Table of Contents

 

 

 

 

 

 

 

3. Investments

For the six months ended Sept. 30, 2016, 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

     $ 4,183,506        $ 16,537,149        $ 8,971,038  

Sales

       5,023,491          15,054,343          8,269,077  

At Sept. 30, 2016, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At Sept. 30, 2016, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:

 

     Colorado
      Municipal      
Fund
         Minnesota      
Municipal
Fund II
   National
Municipal
Fund

Cost of investments

     $ 65,769,876        $ 232,651,151        $ 88,349,413  
    

 

 

      

 

 

      

 

 

 

Aggregate unrealized appreciation of investments

     $ 9,849,472        $ 17,165,315        $ 9,805,670  

Aggregate unrealized depreciation of investments

       (8,603 )        (223,766 )        (178,235 )
    

 

 

      

 

 

      

 

 

 

Net unrealized appreciation of investments

     $ 9,840,869        $ 16,941,549        $ 9,627,435  
    

 

 

      

 

 

      

 

 

 

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at March 31, 2016, if not utilized in future years, will expire as follows:

 

Year of Expiration

  Colorado
Municipal
Fund
   Minnesota
Municipal
Fund II
   National
Municipal
Fund

2018

  $—    $—    $407,888

On Dec. 22, 2010, the Regulated Investment Company Modernization Act of 2010 (Act) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes were generally effective for taxable years beginning after the date of enactment. Under the Act, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

Losses that will be carried forward under the Act are as follows:

 

     Colorado
Municipal
Fund
       Minnesota
Municipal
Fund II
       National
Municipal
Fund
 

Loss carryforward character:

            

Short-term

   $ 990,319           $798,305         $ 975,123   

Long-term

     163,249           618,200             

U.S. 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.

 

      (continues)    35


Table of Contents

Notes to financial statements

Delaware Investments® Closed-End Municipal Bond Funds

 

3. Investments (continued)

 

Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the 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, 2016:

 

    

Colorado Municipal Fund

Securities

  

Level 2

Municipal Bonds

     $ 105,510,745   

Short-Term Investments

       100,000   
    

 

 

 

Total Value of Securities

     $ 105,610,745   
    

 

 

 
     Minnesota
    

Municipal Fund II

Securities

  

Level 2

Municipal Bonds

     $ 246,942,700   

Short-Term Investments

       2,650,000   
    

 

 

 

Total Value of Securities

     $ 249,592,700   
    

 

 

 
    

National Municipal Fund

Securities

  

Level 2

Municipal Bonds

     $ 97,326,848   

Short-Term Investments

       650,000   
    

 

 

 

Total Value of Securities

     $ 97,976,848   
    

 

 

 

During the six months ended Sept. 30, 2016, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a material impact to the Funds. The Funds’ policy is to recognize transfers between levels at the beginning of the reporting period.

 

36


Table of Contents

 

 

 

 

 

 

 

4. Capital Stock

Pursuant to their articles of incorporation, Colorado Municipal Fund and Minnesota Municipal Fund II each have 200 million shares of $0.01 par value common shares authorized. National Municipal Fund has been authorized to issue an unlimited amount of $0.01 par value common shares. Shares issuable under each Fund’s dividend reinvestment plan are purchased by each Fund’s transfer agent, Computershare, Inc., in the open market.

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 their 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 the VMTP Shares are set weekly, subject to adjustments in certain circumstances.

The weighted average dividend rates for the six months ended Sept. 30, 2016 were as follows:

 

Colorado
Municipal
Fund

 

Minnesota
Municipal
Fund II

 

National
Municipal
Fund

0.8%   0.8%   0.8%

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 Ratings and Moody’s Investors Service (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 U.S. government may result in a downgrade of securities issued by the states or U.S. territories. The National Municipal Fund will be subject to these 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

 

      (continues)    37


Table of Contents

Notes to financial statements

Delaware Investments® Closed-End Municipal Bond Funds

 

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

 

of Sept. 30, 2016, the National Municipal Fund has invested 19.17%, 18.73%, 14.29%, 11.63%, and 10.63% (each as a percentage of net assets) in securities issued by the State of New York, the State of California, the Commonwealth of Pennsylvania, the State of Texas, and the State of Arizona, 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 U.S. territories, commonwealths, and possessions such as Puerto Rico, the U.S. 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 U.S. 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 U.S. 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, 2016, 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.”

 

     Delaware Investments
Colorado Municipal
Income Fund
  Delaware Investments
National Municipal
Income Fund
  Delaware Investments
Minnesota Municipal
Income Fund II

Assured Guaranty Corporation

       1.57 %       2.42 %        

Assured Guaranty Municipal Corporation

       7.09 %       1.29 %        

AMBAC Assurance Corporation

       2.69 %               0.75 %

Syncora Guarantee

         5.99 %          —            —  

Total

       17.34 %       3.71 %       0.75 %

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 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.

 

38


Table of Contents

 

 

 

 

 

 

 

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 and illiquid securities held by each Fund have been identified on the “Schedules of investments.”

When monitoring compliance with the Funds’ illiquid limit, certain holdings that are common to multiple clients of the investment manager may be aggregated and considered illiquid in the aggregate solely for monitoring purposes. For purposes of determining illiquidity for financial reporting purposes, only the holdings of each Fund will be considered.

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. Subsequent Events

Management has determined that no material events or transactions occurred subsequent to Sept. 30, 2016 that would require recognition or disclosure in the Funds’ financial statements.

 

      (continues)    39


Table of Contents

Other Fund information

(Unaudited)

Delaware Investments® Closed-End Municipal Bond Funds

Proxy Results

At the annual meeting on Aug. 17, 2016, 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

       4,270,994          99,867          300          0  

Ann D. Borowiec

       4,241,933          128,928          300          0  

Joseph W. Chow

       4,244,658          126,203          300          0  

John A. Fry

       4,244,962          125,899          300          0  

Shawn K. Lytle

       4,190,514          180,347          300          0  

Frances A. Sevilla-Sacasa

       4,264,058          106,803          300          0  

Thomas K. Whitford

       4,270,994          99,867          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

       9,671,704          179,290          750          0  

Ann D. Borowiec

       9,698,474          152,520          750          0  

Joseph W. Chow

       9,677,276          173,718          750          0  

John A. Fry

       9,676,747          174,247          750          0  

Shawn K. Lytle

       9,678,607          172,387          750          0  

Frances A. Sevilla-Sacasa

       9,697,022          153,972          750          0  

Thomas K. Whitford

       9,677,814          173,180          750          0  

Lucinda S. Landreth

                 750          0  

Janet L. Yeomans

                 750          0  

Delaware Investments National Municipal Income Fund

 

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

Thomas L. Bennett

       4,068,226          119,124          300          0  

Ann D. Borowiec

       4,079,194          108,156          300          0  

Joseph W. Chow

       4,077,295          110,055          300          0  

John A. Fry

       4,068,226          119,124          300          0  

Shawn K. Lytle

       4,020,394          166,956          300          0  

Frances A. Sevilla-Sacasa

       4,078,019          109,331          300          0  

Thomas K. Whitford

       4,077,295          110,055          300          0  

Lucinda S. Landreth

                 300          0  

Janet L. Yeomans

                 300          0  

 

40


Table of Contents

 

 

 

 

 

 

 

Fund management

Joseph R. Baxter

Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager

Joseph R. Baxter is the head of the municipal bond department 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 Delaware Investments in 1999 as head municipal bond trader, he held investment positions with First Union, most recently as a municipal portfolio manager with the Evergreen Funds. Baxter received a bachelor’s degree in finance and marketing from La Salle University.

Stephen 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 Delaware Investments in July 2004 as a senior bond trader. Previously, he was vice president at both Mesirow Financial and Loop Capital Markets. He began his career in the securities industry in 1982 as a municipal bond trader at Kidder Peabody and now has more than 20 years of experience in the municipal securities industry. Czepiel earned his bachelor’s degree in finance and economics from Duquesne University.

Denise A. Franchetti, CFA

Vice President, Portfolio Manager, Senior Municipal Research Analyst

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

Gregory A. Gizzi

Senior Vice President, Senior Portfolio Manager

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

Board consideration of Delaware Investments Colorado Municipal Income Fund, Inc.; Delaware Investments Minnesota Municipal Income Fund II, Inc.; and Delaware Investments National Municipal Income Fund investment manager agreements

At a meeting held on Aug. 17–19, 2016 (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 and sub-advisory contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreement with Delaware Management Company (“DMC”) included materials provided by DMC and its affiliates (“Delaware Investments”) concerning, among other things, the nature, extent, and quality of services provided to the Funds; the costs of such services to the Funds; economies of scale; and the investment manager’s financial condition and profitability. In addition, in connection with the Annual Meeting, reports were provided to the Trustees in May 2016 and included 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

 

      (continues)    41


Table of Contents

Other Fund information

(Unaudited)

Delaware Investments® Closed-End Municipal Bond Funds

 

Board consideration of Delaware Investments Colorado Municipal Income Fund, Inc.; Delaware Investments Minnesota Municipal Income Fund II, Inc.; and Delaware Investments National Municipal Income Fund investment manager agreements (continued)

 

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. Although the Board gave attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.

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

Investment performance. The Board placed significant emphasis on the investment performance of the Funds in view of the importance of investment performance to shareholders. Although the Board gave appropriate consideration to performance reports and discussions with portfolio managers at Board meetings throughout the year, the Board gave particular weight to the Broadridge reports furnished for the Annual Meeting. The Broadridge reports prepared for each Fund showed the investment performance of its shares in comparison to a group of similar funds as selected by Broadridge (the “Performance Universe”). A fund with the highest performance ranked first, and a fund with the lowest ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25%, the second quartile; the next 25%, the third quartile; and the lowest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for each Fund was shown for the past 1-, 3-, 5-, and 10-year periods, to the extent applicable, ended Jan. 31, 2016. The Board’s objective is that each Fund’s performance for the periods considered 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- and 3-year periods was in the second 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 third quartile and fourth quartile, respectively, of its Performance Universe. The Fund’s performance results were mixed but tended toward median, which was acceptable.

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-, 5-, and 10-year periods was in the fourth quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3-year period was in the third quartile of its Performance Universe. The Fund’s performance results were not in line with the Board’s objective. In evaluating the Fund’s performance, the Board considered the numerous investment and performance reports delivered by Management personnel to the Board’s Investments Committee. The Board was satisfied that Management was taking action to improve Fund performance and meet the Board’s performance objective.

Delaware Investments National Municipal Income Fund — The Performance Universe for the Fund consisted of the Fund and all leveraged closed-end general and insured municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-year period was in the third quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3-, 5-, and 10-year periods was in 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 performance attribution included in the Meeting materials, as well as

 

42


Table of Contents

 

 

 

 

 

 

 

the numerous investment and performance reports delivered by Management personnel to the Board’s Investments Committee. The Board was satisfied that Management was taking action to improve Fund performance and meet the Board’s performance objective.

Comparative expenses. The Board considered expense comparison data for the Delaware Investments Family of 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 expense ratios of a group of similar closed-end funds as selected by Broadridge (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by 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 Board’s objective is to limit each Fund’s total expense ratio to be competitive with that of the Expense Group.

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

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

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

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

 

      (continues)    43


Table of Contents

About the organization

This semiannual report is for the information of Delaware Investments® Closed-End Municipal Bond Funds shareholders.

 

Board of directors/trustees

Shawn K. Lytle

President and

Chief Executive Officer

Delaware Investments Family of Funds

Philadelphia, PA

Thomas L. Bennett

Chairman of the Board

Delaware Investments Family of Funds

Private Investor

Rosemont, PA

Ann D. Borowiec

Former Chief Executive Officer

Private Wealth Management

J.P. Morgan Chase & Co.

New York, NY

Joseph W. Chow

Former Executive Vice President

State Street Corporation

Boston, MA

John A. Fry

President

Drexel University

Philadelphia, PA

Lucinda S. Landreth

Former Chief Investment Officer

Assurant, Inc.

New York, NY

Frances A. Sevilla-Sacasa

Chief Executive Officer

Banco Itaú International

Miami, FL

Thomas K. Whitford

Former Vice Chairman

PNC Financial Services Group

Pittsburgh, PA

Janet L. Yeomans

Former Vice President and Treasurer

3M Company

St. Paul, MN

Affiliated officers

David F. Connor

Senior Vice President, General

Counsel, and Secretary

Delaware Investments Family of Funds

Philadelphia, PA

Daniel V. Geatens

Vice President and Treasurer

Delaware Investments Family of Funds

Philadelphia, PA

Richard Salus

Senior Vice President and

Chief Financial Officer

Delaware Investments Family of Funds

Philadelphia, PA

Investment manager

Delaware Management Company, a series of Delaware Management Business Trust

Philadelphia, PA

Principal office of the Funds

2005 Market Street

Philadelphia, PA 19103-7057

Independent registered public accounting firm

PricewaterhouseCoopers LLP

2001 Market Street

Philadelphia, PA 19103

Registrar and stock transfer agent

Computershare, Inc.

480 Washington Blvd.

Jersey City, NJ 07310

866 437-0252

For securities dealers and financial institutions representatives

800 362-7500

Website

delawareinvestments.com/closed-end

Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries.

Number of recordholders as of Sept. 30, 2016

 

Colorado Municipal Income Fund

    70   

Minnesota Municipal Income Fund II

    343   

National Municipal Income Fund

    69   

Your reinvestment options

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

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

 

 

44




Item 2. Code of Ethics

Not applicable.

Item 3. Audit Committee Financial Expert

Not applicable.

Item 4. Principal Accountant Fees and Services

PwC has informed the Trust that it has identified an issue related to its independence under Rule 2-01(c)(1)(ii)(A) of Regulation S-X (referred to as the “Loan Rule”). The Loan Rule prohibits accounting firms, such as PwC, from being considered independent if they have certain financial relationships with their audit clients or certain affiliates of those clients. The Trust is required under various securities laws to have its financial statements audited by an independent accounting firm. PwC has informed the Trust that PwC has relationships with lenders who hold or own more than ten percent of the shares of certain funds within the Delaware Investments® Family of Funds. These relationships call into question PwC’s independence under the Loan Rule with respect to those funds, as well as all other funds in the complex. The SEC has granted no-action relief to another fund complex in circumstances that appear to be substantially similar to the Trust’s (see Fidelity Management & Research Company et al., No-Action Letter (June 20, 2016)). In addition, PwC has advised the Trust’s Audit Committee that PwC believes that under the facts and circumstances surrounding PwC’s lending relationships, its ability to exercise objective and impartial judgment in connection with its audit engagement with the Trust has not been impaired and that a reasonable investor with knowledge of all relevant facts and circumstances would reach the same conclusion. If in the future, however, the independence of PwC is called into question under the Loan Rule by circumstances that are not addressed in the SEC’s no-action letter, the Trust will need to take other action in order for the Trust’s filings with the SEC containing financial statements to be deemed compliant with applicable securities laws. Finally, the SEC has indicated that its no-action relief will expire 18 months from its issuance, after which PwC and the Delaware Investments Family of Funds will no longer be able rely on the letter unless its term is extended or made permanent by the SEC Staff.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Investments

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

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

Not applicable.

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

Not applicable.



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

Not applicable.

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

Not applicable.

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

Not applicable.

Item 11. Controls and Procedures

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

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

Item 12. Exhibits

(a) (1) Code of Ethics

Not applicable.

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

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

Not applicable.

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



SIGNATURES

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

DELAWARE INVESTMENTS® MINNESOTA MUNICIPAL INCOME FUND II, INC.

/s/ SHAWN K. LYTLE  
By: Shawn K. Lytle
Title:      President and Chief Executive Officer
Date: December 5, 2016

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

/s/ SHAWN K. LYTLE  
By: Shawn K. Lytle
Title:      President and Chief Executive Officer
Date: December 5, 2016

/s/ RICHARD SALUS      
By: Richard Salus
Title:      Chief Financial Officer
Date: December 5, 2016