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:
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811-07420
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Exact name of registrant as specified in
charter:
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Delaware Investments
®
Minnesota
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Municipal Income Fund II, Inc.
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Address of principal executive
offices:
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2005 Market Street
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Philadelphia, PA 19103
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Name and address of agent for
service:
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David F. Connor, Esq.
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2005 Market Street
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Philadelphia, PA 19103
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Registrants telephone number, including
area code:
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(800) 523-1918
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Date of fiscal year end:
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March 31
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Date of reporting period:
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September 30,
2012
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Item 1. Reports to Stockholders
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Semiannual Report
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Delaware
Investments
®
Closed-End
Municipal
Bond
Funds
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September 30, 2012
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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.
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Closed-end funds
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Table of contents
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> Fund basics
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1
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> Security type/Sector/State
allocations
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2
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> Statements of net assets
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4
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> Statements of assets and
liabilities
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17
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> Statements of operations
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18
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> Statements of changes in net
assets
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19
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> Financial highlights
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20
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> Notes to financial
statements
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23
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> Other Fund information
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30
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> About the organization
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36
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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.
Unless otherwise noted, views expressed
herein are current as of Sept. 30, 2012, and subject to change. Information is
as of the date indicated and subject to change.
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.
Investments in Delaware
Investments
®
Closed-End Municipal Bond Funds are not and will not be
deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and
its holding companies, including their subsidiaries or related companies
(Macquarie Group), and are subject to investment risk, including possible delays
in repayment and loss of income and capital invested. No Macquarie Group company
guarantees or will guarantee the performance of the Funds, the repayment of
capital from the Funds, or any particular rate of return.
©
2012 Delaware Management
Holdings, Inc.
All third-party marks cited are the
property of their respective owners.
Fund basics
Delaware Investments
®
Colorado
Municipal Income Fund, Inc.
As of September 30, 2012
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.
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Total Fund net assets
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$75
million
|
Fund start date
|
July 29,
1993
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Delaware
Investments
National Municipal Income
Fund
As of September 30, 2012
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
|
$68
million
|
Fund start date
|
Feb. 26,
1993
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Delaware
Investments
Minnesota Municipal Income
Fund II, Inc.
As of September 30, 2012
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
|
$179
million
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Fund start date
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Feb. 26,
1993
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1
Security type/Sector/State
allocations
As of September 30, 2012
Sector designations may be different than
the sector designations presented in other Fund materials.
Delaware Investments
®
Colorado
Municipal Income Fund, Inc.
|
Percentage
|
Security type/Sector
|
of Net Assets
|
Municipal Bonds
|
138.45
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%
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|
Corporate-Backed Revenue Bond
|
1.27
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%
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Education Revenue
Bonds
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21.12
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%
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Electric Revenue Bonds
|
5.81
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%
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Healthcare Revenue
Bonds
|
30.35
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%
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Housing Revenue Bonds
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2.48
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%
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Lease Revenue
Bonds
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10.62
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%
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Local General Obligation
Bonds
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13.77
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%
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|
Pre-Refunded
Bonds
|
3.16
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%
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|
Special Tax Revenue Bonds
|
34.27
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%
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|
State & Territory
General Obligation Bonds
|
2.48
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%
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|
Transportation Revenue Bonds
|
8.37
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%
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Water & Sewer Revenue Bonds
|
4.75
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%
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|
Total Value of Securities
|
138.45
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%
|
|
Liquidation Value of Preferred
Stock
|
(39.74
|
%)
|
|
Receivables and Other Assets Net of
Liabilities
|
1.29
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%
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|
Total Net Assets
|
100.00
|
%
|
|
Delaware
Investments
Minnesota Municipal Income
Fund II, Inc.
|
Percentage
|
Security
type/Sector
|
of Net Assets
|
Municipal
Bonds
|
142.88
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%
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Corporate-Backed Revenue Bonds
|
11.58
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%
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Education Revenue Bonds
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16.56
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%
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Electric Revenue Bonds
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6.44
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%
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Healthcare Revenue Bonds
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38.09
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%
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Housing Revenue Bonds
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6.65
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%
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Lease Revenue Bonds
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8.72
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%
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Local General Obligation Bonds
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10.20
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%
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Pre-Refunded/Escrowed to Maturity
Bonds
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21.75
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%
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Special Tax Revenue Bonds
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9.27
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%
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State & Territory General
Obligation Bonds
|
9.85
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%
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Transportation Revenue Bonds
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2.16
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%
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Water & Sewer Revenue Bonds
|
1.61
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%
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Total
Value of Securities
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142.88
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%
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Liquidation Value of Preferred
Stock
|
(42.01
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%)
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|
Liabilities Net of Receivables and Other Assets
|
(0.87
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%)
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Total Net Assets
|
100.00
|
%
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|
2
Sector designations may be different than
the sector designations presented in other Fund materials.
Delaware Investments
®
National
Municipal Income Fund
|
Percentage
|
Security
type/Sector
|
of Net Assets
|
Municipal
Bonds
|
142.25
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%
|
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Corporate-Backed Revenue Bonds
|
17.22
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%
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|
Education Revenue Bonds
|
22.15
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%
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|
Electric Revenue Bonds
|
5.13
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%
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|
Healthcare Revenue Bonds
|
24.18
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%
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Housing Revenue Bonds
|
2.47
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%
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Lease Revenue Bonds
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12.59
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%
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Local General Obligation Bonds
|
3.61
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%
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Pre-Refunded Bond
|
1.86
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%
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Special Tax Revenue Bonds
|
18.41
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%
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State & Territory General
Obligation Bonds
|
9.53
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%
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Transportation Revenue Bonds
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19.44
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%
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Water & Sewer Revenue Bonds
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5.66
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%
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Short-Term Investments
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1.10
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%
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Total Value of Securities
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143.35
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%
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Liquidation Value of Preferred Stock
|
(44.15
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%)
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|
Receivables and Other Assets Net of
Liabilities
|
0.80
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%
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Total
Net Assets
|
100.00
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%
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State
|
(as a % of fixed income investments)
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Alaska
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0.34
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%
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Arizona
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15.12
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%
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California
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13.09
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%
|
Colorado
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1.11
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%
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Delaware
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0.56
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%
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Florida
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4.13
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%
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Georgia
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1.61
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%
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Guam
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1.14
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%
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Hawaii
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0.34
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%
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Idaho
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1.14
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%
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Illinois
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1.13
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%
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Iowa
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|
0.54
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%
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Kansas
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|
0.17
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%
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Louisiana
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1.76
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%
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Maine
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0.36
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%
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Maryland
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|
2.56
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%
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Massachusetts
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1.03
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%
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Minnesota
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|
0.26
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%
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Missouri
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|
2.26
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%
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New Hampshire
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|
0.36
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%
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New Jersey
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3.83
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%
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New Mexico
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|
0.56
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%
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New York
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|
18.75
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%
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Ohio
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1.75
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%
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Oregon
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2.59
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%
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Pennsylvania
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|
7.80
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%
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Puerto Rico
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6.45
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%
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Tennessee
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|
0.58
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%
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Texas
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|
5.62
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%
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Virginia
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|
1.86
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%
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Washington D.C.
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0.28
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%
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West Virginia
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0.63
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%
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Wyoming
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|
0.29
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%
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Total
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100.00
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%
|
3
Statements of net assets
Delaware Investments
®
Colorado
Municipal Income Fund, Inc.
September 30,
2012 (Unaudited)
|
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Principal
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Amount
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Value
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Municipal Bonds 138.45%
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Corporate-Backed Revenue Bond 1.27%
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Public Authority for
Colorado Energy
|
|
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Natural Gas Revenue Series 2008
|
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6.50% 11/15/38
|
$
|
750,000
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$
|
958,343
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958,343
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Education Revenue Bonds 21.12%
|
|
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Colorado Educational &
Cultural
|
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Facilities Authority Revenue
|
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(Academy Charter School Project)
|
|
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|
5.50% 5/1/36 (SGI)
|
|
1,720,000
|
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|
1,752,542
|
|
(Bromley Charter School Project)
|
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|
5.25% 9/15/32 (SGI)
|
|
3,245,000
|
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|
3,350,398
|
|
(Johnson & Wales University Project)
|
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|
Series A 5.00% 4/1/28 (SGI)
|
|
3,000,000
|
|
|
3,011,700
|
|
(Littleton Charter School Project)
|
|
|
|
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|
|
4.375% 1/15/36 (ASSURED GTY)
|
|
1,200,000
|
|
|
1,193,856
|
|
(Student Housing - Campus
|
|
|
|
|
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|
Village Apartments) 5.00% 6/1/23
|
|
1,065,000
|
|
|
1,196,400
|
|
Colorado State Board
of Governors
|
|
|
|
|
|
|
Revenue (University Enterprise
|
|
|
|
|
|
|
System) Series A 5.00% 3/1/39
|
|
700,000
|
|
|
774,137
|
|
University of Colorado 5.00%
6/1/31
|
|
3,185,000
|
|
|
3,776,486
|
|
University of
Colorado Enterprise
|
|
|
|
|
|
|
Systems Revenue Series A
|
|
|
|
|
|
|
5.375% 6/1/38
|
|
750,000
|
|
|
884,558
|
|
|
|
|
|
|
15,940,077
|
Electric Revenue Bonds 5.81%
|
|
|
|
|
|
|
Colorado Springs Utilities
System
|
|
|
|
|
|
|
Improvement Revenue Series C
|
|
|
|
|
|
|
5.50% 11/15/48
|
|
750,000
|
|
|
882,165
|
|
Platte River Power
Authority Revenue
|
|
|
|
|
|
|
Series HH 5.00% 6/1/28
|
|
1,500,000
|
|
|
1,748,730
|
|
Puerto Rico Electric Power
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
Series TT 5.00% 7/1/37
|
|
685,000
|
|
|
685,952
|
|
Series WW 5.50% 7/1/38
|
|
300,000
|
|
|
314,661
|
|
Series XX 5.25% 7/1/40
|
|
750,000
|
|
|
755,880
|
|
|
|
|
|
|
4,387,388
|
Healthcare Revenue Bonds 30.35%
|
|
|
|
|
|
|
Aurora Hospital
Revenue (Childrens
|
|
|
|
|
|
|
Hospital Association Project)
|
|
|
|
|
|
|
Series A 5.00% 12/1/40
|
|
2,000,000
|
|
|
2,208,080
|
|
Colorado Health Facilities
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
(Boulder Community Hospital
|
|
|
|
|
|
|
Project) 5.00% 10/1/32
|
|
500,000
|
|
|
559,505
|
|
(Catholic Health Initiatives)
|
|
|
|
|
|
|
Series A 5.00% 7/1/39
|
|
750,000
|
|
|
809,415
|
|
Series A 5.00% 2/1/41
|
|
2,400,000
|
|
|
2,630,184
|
|
Series A 5.25% 2/1/33
|
|
1,625,000
|
|
|
1,881,945
|
|
Series C-1 5.10% 10/1/41 (AGM)
|
|
1,000,000
|
|
|
1,072,380
|
|
Series D 6.125% 10/1/28
|
|
750,000
|
|
|
889,073
|
|
(Christian Living
|
|
|
|
|
|
|
Communities Project)
|
|
|
|
|
|
|
6.375% 1/1/41
|
|
615,000
|
|
|
680,030
|
|
Series A 5.75% 1/1/37
|
|
885,000
|
|
|
912,833
|
|
(Covenant Retirement
|
|
|
|
|
|
|
Communities) 5.00% 12/1/33
|
|
1,000,000
|
|
|
1,055,030
|
|
(Evangelical Lutheran Good
|
|
|
|
|
|
|
Samaritan Society) 5.25% 6/1/23
|
|
1,000,000
|
|
|
1,076,610
|
|
(National Jewish Health Project)
|
|
|
|
|
|
|
5.00% 1/1/27
|
|
500,000
|
|
|
536,140
|
|
(Sisters of Charity of Leavenworth
|
|
|
|
|
|
|
Health System) 5.00% 1/1/40
|
|
4,750,000
|
|
|
5,175,932
|
|
(Total Long-Term Care) Series A
|
|
|
|
|
|
|
6.00% 11/15/30
|
|
400,000
|
|
|
452,224
|
|
Colorado Springs Hospital
Revenue
|
|
|
|
|
|
|
6.25% 12/15/33
|
|
750,000
|
|
|
856,050
|
|
Denver Health &
Hospital Authority
|
|
|
|
|
|
|
Revenue (Recovery Zone Facilities)
|
|
|
|
|
|
|
5.625% 12/1/40
|
|
750,000
|
|
|
820,275
|
|
University of Colorado
Hospital
|
|
|
|
|
|
|
Authority Revenue Series A
|
|
|
|
|
|
|
5.00% 11/15/37
|
|
500,000
|
|
|
533,910
|
|
6.00% 11/15/29
|
|
650,000
|
|
|
758,199
|
|
|
|
|
|
|
22,907,815
|
Housing Revenue Bonds 2.48%
|
|
|
|
|
|
|
Colorado Housing
& Finance
|
|
|
|
|
|
|
Authority (Single Family
|
|
|
|
|
|
|
Mortgage - Class 1) Series A
|
|
|
|
|
|
|
5.50% 11/1/29 (FHA) (VA) (HUD)
|
|
400,000
|
|
|
415,184
|
|
Puerto Rico Housing Finance
|
|
|
|
|
|
|
Authority Subordinated-Capital
|
|
|
|
|
|
|
Fund Modernization
|
|
|
|
|
|
|
5.125% 12/1/27
|
|
1,000,000
|
|
|
1,106,870
|
|
5.50% 12/1/18
|
|
300,000
|
|
|
351,135
|
|
|
|
|
|
|
1,873,189
|
Lease Revenue Bonds 10.62%
|
|
|
|
|
|
|
Aurora Certificates
of Participation
|
|
|
|
|
|
|
Refunding Series A
|
|
|
|
|
|
|
5.00% 12/1/30
|
|
630,000
|
|
|
715,775
|
|
Colorado State Building
Excellent
|
|
|
|
|
|
|
Schools Today Certificates of
|
|
|
|
|
|
|
Participation Series G
|
|
|
|
|
|
|
5.00% 3/15/32
|
|
2,000,000
|
|
|
2,294,599
|
|
Glendale Certificates
of Participation
|
|
|
|
|
|
|
5.00% 12/1/25 (SGI)
|
|
1,500,000
|
|
|
1,624,065
|
|
Pueblo County Certificates of
|
|
|
|
|
|
|
Participation (County Judicial
|
|
|
|
|
|
|
Complex Project)
|
|
|
|
|
|
|
5.00% 9/15/42 (AGM)
|
|
2,000,000
|
|
|
2,267,600
|
4
|
|
Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Lease Revenue Bonds
(continued)
|
|
|
|
|
|
|
Puerto Rico Public Buildings
|
|
|
|
|
|
|
Authority Revenue (Guaranteed
|
|
|
|
|
|
|
Government Facilities) Series M-2
|
|
|
|
|
|
|
5.50% 7/1/35 (AMBAC)
|
$
|
550,000
|
|
$
|
590,563
|
|
Regional Transportation
District
|
|
|
|
|
|
|
Certificates of Participation
|
|
|
|
|
|
|
Series A 5.375% 6/1/31
|
|
460,000
|
|
|
528,264
|
|
|
|
|
|
|
8,020,866
|
Local General Obligation Bonds 13.77%
|
|
|
|
|
|
|
Arapahoe County
School District #1
|
|
|
|
|
|
|
Englewood 5.00% 12/1/31
|
|
2,935,000
|
|
|
3,534,502
|
|
Boulder, Larimer & Weld
Counties
|
|
|
|
|
|
|
St. Vrain Valley School District
|
|
|
|
|
|
|
No. Re-1J 5.00% 12/15/33
|
|
750,000
|
|
|
863,558
|
|
Bowles Metropolitan
District
|
|
|
|
|
|
|
5.00% 12/1/33 (AGM)
|
|
2,000,000
|
|
|
2,042,139
|
|
Denver City & County
|
|
|
|
|
|
|
(Better Denver & Zoo)
|
|
|
|
|
|
|
Series A 5.00% 8/1/25
|
|
1,150,000
|
|
|
1,379,966
|
|
Denver International
Business Center
|
|
|
|
|
|
|
Metropolitan District #1
|
|
|
|
|
|
|
5.00% 12/1/30
|
|
650,000
|
|
|
685,861
|
|
Jefferson County School District
#R-1
|
|
|
|
|
|
|
5.25% 12/15/24
|
|
750,000
|
|
|
995,423
|
|
Rangely Hospital
District
|
|
|
|
|
|
|
6.00% 11/1/26
|
|
750,000
|
|
|
894,585
|
|
|
|
|
|
|
10,396,034
|
§Pre-Refunded Bonds 3.16%
|
|
|
|
|
|
|
Adams & Arapahoe Counties
Joint
|
|
|
|
|
|
|
School District #28J (Aurora)
|
|
|
|
|
|
|
6.00% 12/1/28-18
|
|
600,000
|
|
|
780,120
|
|
Arapahoe County Water
&
|
|
|
|
|
|
|
Wastewater Public Improvement
|
|
|
|
|
|
|
District Series A 5.125%
|
|
|
|
|
|
|
12/1/32-12 (NATL-RE)
|
|
635,000
|
|
|
640,499
|
|
Colorado Health Facilities
Authority
|
|
|
|
|
|
|
Revenue (Evangelical Lutheran
|
|
|
|
|
|
|
Good Samaritan Society) Series A
|
|
|
|
|
|
|
6.125% 6/1/38-14
|
|
750,000
|
|
|
822,292
|
|
Sand Creek
Metropolitan District
|
|
|
|
|
|
|
5.00% 12/1/31-13 (SGI)
|
|
135,000
|
|
|
142,362
|
|
|
|
|
|
|
2,385,273
|
Special Tax Revenue Bonds 34.27%
|
|
|
|
|
|
|
Denver Convention Center
Hotel
|
|
|
|
|
|
|
Authority Revenue Refunding
|
|
|
|
|
|
|
5.00% 12/1/35 (SGI)
|
|
2,795,000
|
|
|
2,874,965
|
|
Guam Government
Business Privilege
|
|
|
|
|
|
|
Tax Revenue Series A
|
|
|
|
|
|
|
5.125% 1/1/42
|
|
435,000
|
|
|
486,269
|
|
5.25% 1/1/36
|
|
565,000
|
|
|
641,388
|
|
Puerto Rico Infrastructure
Financing
|
|
|
|
|
|
|
Authority Special Tax Revenue
|
|
|
|
|
|
|
Series B 5.00% 7/1/41
|
|
2,475,000
|
|
|
2,472,921
|
|
Puerto Rico Sales Tax
Financing
|
|
|
|
|
|
|
Revenue First Subordinate
|
|
|
|
|
|
|
Series A 5.50% 8/1/37
|
|
700,000
|
|
|
752,591
|
|
Series A 5.50% 8/1/42
|
|
1,000,000
|
|
|
1,067,990
|
|
Series A 5.75% 8/1/37
|
|
590,000
|
|
|
654,399
|
|
Series A-1 5.00% 8/1/43
|
|
2,000,000
|
|
|
2,084,760
|
|
Series C 5.00% 8/1/40
|
|
1,000,000
|
|
|
1,080,380
|
|
Series C 5.00% 8/1/46
|
|
750,000
|
|
|
804,893
|
|
Series C 6.00% 8/1/39
|
|
500,000
|
|
|
562,235
|
|
Regional Transportation
District
|
|
|
|
|
|
|
Revenue (FasTracks Project) Series A
|
|
|
|
|
|
|
4.375% 11/1/31 (AMBAC)
|
|
1,250,000
|
|
|
1,316,425
|
|
4.50% 11/1/36 (AGM)
|
|
3,000,000
|
|
|
3,170,970
|
|
5.00% 11/1/28 (AMBAC)
|
|
2,500,000
|
|
|
2,870,950
|
|
5.00% 11/1/38
|
|
4,085,000
|
|
|
4,660,126
|
|
Sand Creek
Metropolitan District
|
|
|
|
|
|
|
5.00% 12/1/31 (SGI)
|
|
365,000
|
|
|
367,894
|
|
|
|
|
|
|
25,869,156
|
State & Territory General Obligation Bonds
2.48%
|
|
|
|
|
Puerto Rico Commonwealth
|
|
|
|
|
|
|
(Public Improvement)
|
|
|
|
|
|
|
Series A 5.00% 7/1/41
|
|
500,000
|
|
|
502,455
|
|
Series C 6.00% 7/1/39
|
|
505,000
|
|
|
534,058
|
|
Western State College
5.00% 5/15/34
|
|
750,000
|
|
|
838,365
|
|
|
|
|
|
|
1,874,878
|
Transportation Revenue Bonds 8.37%
|
|
|
|
|
|
|
Denver City & County Airport
System
|
|
|
|
|
|
|
Revenue Series A 5.25% 11/15/36
|
|
750,000
|
|
|
847,050
|
|
E-470 Public Highway
Authority
|
|
|
|
|
|
|
Revenue Series C 5.25% 9/1/25
|
|
310,000
|
|
|
339,391
|
|
Puerto Rico Highway &
Transportation
|
|
|
|
|
|
|
Authority Revenue Series K
|
|
|
|
|
|
|
5.00% 7/1/30
|
|
2,580,000
|
|
|
2,602,601
|
|
Regional
Transportation District
|
|
|
|
|
|
|
Revenue (Denver Transit Partners)
|
|
|
|
|
|
|
6.00% 1/15/41
|
|
2,175,000
|
|
|
2,526,197
|
|
|
|
|
|
|
6,315,239
|
Water & Sewer Revenue Bonds 4.75%
|
|
|
|
|
|
|
Colorado Water Resources &
Power
|
|
|
|
|
|
|
Development Authority Revenue
|
|
|
|
|
|
|
(Parker Water & Sanitation
|
|
|
|
|
|
|
District) Series D
|
|
|
|
|
|
|
5.125% 9/1/34 (NATL-RE)
|
|
1,500,000
|
|
|
1,537,500
|
|
5.25% 9/1/43 (NATL-RE)
|
|
2,000,000
|
|
|
2,047,120
|
|
|
|
|
|
|
3,584,620
|
Total Municipal Bonds
|
|
|
|
|
|
|
(cost $96,709,911)
|
|
|
|
|
104,512,878
|
(continues)
5
Statements of net
assets
Delaware
Investments
®
Colorado Municipal Income Fund, Inc.
|
Total Value of Securities
138.45%
|
|
|
|
(cost
$96,709,911)
|
$
|
104,512,878
|
|
Liquidation Value of Preferred
|
|
|
|
Stock
(39.74%)
|
|
(30,000,000
|
)
|
Receivables and Other Assets
|
|
|
|
Net of Liabilities 1.29%
|
|
976,219
|
|
Net Assets Applicable to 4,837,100
|
|
|
|
Shares Outstanding;
Equivalent to
|
|
|
|
$15.61 Per Share
100.00%
|
$
|
75,489,097
|
|
|
Components of Net Assets at September 30,
2012:
|
|
|
|
Common stock, $0.01 par value, 200 million shares
|
|
|
|
authorized to the
Fund
|
$
|
66,918,121
|
|
Undistributed net investment
income
|
|
711,778
|
|
Accumulated net realized gain on investments
|
|
56,231
|
|
Net unrealized appreciation of
investments
|
|
7,802,967
|
|
Total net assets
|
$
|
75,489,097
|
|
|
Variable rate security.
The rate shown is the rate as of September 30, 2012. Interest rates reset
periodically.
|
§
|
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. See Note 9 in Notes to financial
statements.
|
|
See Note 6 in Notes to
financial statements.
|
Summary of
Abbreviations:
AGM Insured by Assured
Guaranty Municipal Corporation
AMBAC Insured by AMBAC Assurance
Corporation
ASSURED GTY Insured by Assured Guaranty Corporation
FHA
Federal Housing Administration
HUD Housing & Urban Development Section
8
NATL-RE Insured by National Public Finance
Guarantee Corporation
SGI Insured by Syncora Guarantee
Inc.
VA Veterans Administration
collateral
See accompanying notes, which are an
integral part of the financial statements.
6
Delaware Investments
®
Minnesota Municipal Income Fund II, Inc.
September 30, 2012 (Unaudited)
|
|
Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds 142.88%
|
|
|
|
|
|
Corporate-Backed Revenue Bonds 11.58%
|
|
|
|
|
Cloquet Pollution
Control Revenue
|
|
|
|
|
|
|
(Potlatch Project) 5.90% 10/1/26
|
$
|
5,500,000
|
|
$
|
5,515,620
|
|
Laurentian Energy Authority
|
|
|
|
|
|
|
Cogeneration Revenue
|
|
|
|
|
|
|
Series
A 5.00% 12/1/21
|
|
3,325,000
|
|
|
3,490,851
|
|
Sartell Environmental
Improvement
|
|
|
|
|
|
|
Revenue (International Paper)
|
|
|
|
|
|
|
Series
A 5.20% 6/1/27
|
|
1,000,000
|
|
|
1,017,250
|
|
Tobacco Securitization
Authority
|
|
|
|
|
|
|
Revenue (Tobacco Settlement)
|
|
|
|
|
|
|
Series
B 5.25% 3/1/26
|
|
2,000,000
|
|
|
2,289,060
|
|
5.25%
3/1/31
|
|
7,400,000
|
|
|
8,365,182
|
|
|
|
|
|
|
20,677,963
|
Education Revenue Bonds 16.56%
|
|
|
|
|
|
|
Baytown Township
Lease Revenue
|
|
|
|
|
|
|
(St.
Croix Preparatory Academy)
|
|
|
|
|
|
|
5.75%
8/1/42
|
|
300,000
|
|
|
301,746
|
|
Minnesota Higher Education
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
(Augsburg College)
|
|
|
|
|
|
|
Series
6-J1 5.00% 5/1/28
|
|
1,500,000
|
|
|
1,546,035
|
|
(Carleton College)
|
|
|
|
|
|
|
Series
D 5.00% 3/1/30
|
|
1,120,000
|
|
|
1,289,165
|
|
Series
6-T 5.00% 1/1/28
|
|
1,000,000
|
|
|
1,159,020
|
|
(College of St. Benedict)
|
|
|
|
|
|
|
Series
5-W 5.00% 3/1/20
|
|
2,000,000
|
|
|
2,019,160
|
|
Series
7-M
|
|
|
|
|
|
|
5.00%
3/1/31
|
|
300,000
|
|
|
320,988
|
|
5.125%
3/1/36
|
|
275,000
|
|
|
292,245
|
|
(St.
Catherine University)
|
|
|
|
|
|
|
Series
7-Q 5.00% 10/1/32
|
|
700,000
|
|
|
795,291
|
|
(St.
Marys University)
|
|
|
|
|
|
|
Series
5-U 4.80% 10/1/23
|
|
1,400,000
|
|
|
1,423,226
|
|
(St.
Scholastic College)
|
|
|
|
|
|
|
Series
H 5.25% 12/1/35
|
|
1,000,000
|
|
|
1,101,800
|
|
(University of St. Thomas)
|
|
|
|
|
|
|
Series
6-X 5.00% 4/1/29
|
|
2,250,000
|
|
|
2,459,768
|
|
Series
7-A 5.00% 10/1/39
|
|
1,000,000
|
|
|
1,121,200
|
|
Minnesota
State
|
|
|
|
|
|
|
Colleges & Universities
|
|
|
|
|
|
|
Series
A 4.00% 10/1/17
|
|
750,000
|
|
|
864,683
|
|
St. Paul Housing &
Redevelopment
|
|
|
|
|
|
|
Authority Charter School
|
|
|
|
|
|
|
Lease
Revenue
|
|
|
|
|
|
|
(Nova
Classical Academy)
|
|
|
|
|
|
|
Series
A 6.375% 9/1/31
|
|
750,000
|
|
|
822,068
|
|
University of
Minnesota
|
|
|
|
|
|
|
Series
A
|
|
|
|
|
|
|
5.00%
12/1/27
|
|
1,110,000
|
|
|
1,375,867
|
|
5.00%
12/1/28
|
|
1,880,000
|
|
|
2,321,292
|
|
5.00%
12/1/29
|
|
2,265,000
|
|
|
2,781,850
|
|
5.00%
12/1/31
|
|
1,000,000
|
|
|
1,216,150
|
|
5.00%
12/1/36
|
|
3,000,000
|
|
|
3,547,979
|
|
5.25%
4/1/29
|
|
1,000,000
|
|
|
1,187,010
|
|
Series
C 5.00% 12/1/19
|
|
1,290,000
|
|
|
1,609,804
|
|
|
|
|
|
|
29,556,347
|
Electric Revenue Bonds 6.44%
|
|
|
|
|
|
|
Central Minnesota Municipal
|
|
|
|
|
|
|
Power
Agency Revenue
|
|
|
|
|
|
|
(Brookings Southeast Twin
|
|
|
|
|
|
|
Cities
Transportation)
|
|
|
|
|
|
|
5.00%
1/1/32
|
|
1,130,000
|
|
|
1,307,998
|
|
Chaska Electric
Revenue
|
|
|
|
|
|
|
(Generating Facilities)
|
|
|
|
|
|
|
Series
A 5.25% 10/1/25
|
|
250,000
|
|
|
269,843
|
|
Minnesota Municipal Power
Agency
|
|
|
|
|
|
|
Electric Revenue Series A
|
|
|
|
|
|
|
5.00%
10/1/34
|
|
1,900,000
|
|
|
2,037,142
|
|
5.25%
10/1/19
|
|
1,610,000
|
|
|
1,745,111
|
|
Southern Minnesota
Municipal
|
|
|
|
|
|
|
Power
Agency Supply Revenue
|
|
|
|
|
|
|
Series
A 5.25% 1/1/30
|
|
1,000,000
|
|
|
1,143,720
|
|
Western Minnesota Municipal
Power
|
|
|
|
|
|
|
Agency
Supply Revenue Series A
|
|
|
|
|
|
|
5.00%
1/1/25
|
|
3,000,000
|
|
|
3,747,209
|
|
5.00%
1/1/26
|
|
1,000,000
|
|
|
1,238,730
|
|
|
|
|
|
|
11,489,753
|
Healthcare Revenue Bonds 38.09%
|
|
|
|
|
|
|
Anoka Health Care
Facility
|
|
|
|
|
|
|
Revenue (Homestead
|
|
|
|
|
|
|
Anoka
Income Project)
|
|
|
|
|
|
|
Series
A 7.00% 11/1/46
|
|
1,200,000
|
|
|
1,281,588
|
|
Center City Health Care
|
|
|
|
|
|
|
Facilities Revenue (Hazelden
|
|
|
|
|
|
|
Foundation Project)
|
|
|
|
|
|
|
4.75%
11/1/31
|
|
850,000
|
|
|
912,603
|
|
5.00%
11/1/41
|
|
1,600,000
|
|
|
1,740,608
|
|
Duluth Economic
Development
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
(St.
Lukes Hospital
|
|
|
|
|
|
|
Authority Obligation Group)
|
|
|
|
|
|
|
5.75%
6/15/32
|
|
200,000
|
|
|
206,746
|
|
6.00%
6/15/39
|
|
800,000
|
|
|
830,320
|
|
Fergus Falls Health Care
Facilities
|
|
|
|
|
|
|
Revenue (Lake Region Healthcare)
|
|
|
|
|
|
|
5.00%
8/1/30
|
|
1,000,000
|
|
|
1,048,730
|
|
Glencoe Health Care
Facilities
|
|
|
|
|
|
|
Revenue (Glencoe Regional
|
|
|
|
|
|
|
Health
Services Project)
|
|
|
|
|
|
|
5.00%
4/1/25
|
|
2,000,000
|
|
|
2,030,460
|
|
Maple Grove Health Care
System
|
|
|
|
|
|
|
Revenue (Maple Grove Hospital)
|
|
|
|
|
|
|
5.25%
5/1/37
|
|
1,100,000
|
|
|
1,156,881
|
|
Minneapolis Health
Care System
|
|
|
|
|
|
|
Revenue (Fairview Health Services)
|
|
|
|
|
|
|
Series
A 6.375% 11/15/23
|
|
605,000
|
|
|
732,909
|
|
Series
A 6.625% 11/15/28
|
|
850,000
|
|
|
1,024,242
|
|
Series
B 6.50% 11/15/38
|
|
|
|
|
|
|
(ASSURED GTY)
|
|
2,295,000
|
|
|
2,851,744
|
|
Series
D 5.00% 11/15/34
|
|
|
|
|
|
|
(AMBAC)
|
|
2,000,000
|
|
|
2,074,600
|
(continues)
7
Statements of net
assets
Delaware
Investments
®
Minnesota Municipal Income Fund II, Inc.
|
|
Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Healthcare Revenue Bonds
(continued)
|
|
|
|
|
|
|
Minneapolis Revenue
(National
|
|
|
|
|
|
|
Marrow Donor Program Project)
|
|
|
|
|
|
|
4.875% 8/1/25
|
$
|
1,000,000
|
|
$
|
1,040,530
|
|
Minnesota Agricultural &
Economic
|
|
|
|
|
|
|
Development Board Revenue
|
|
|
|
|
|
|
Un-Refunded Balance Series A
|
|
|
|
|
|
|
5.75% 11/15/26 (NATL-RE)
|
|
100,000
|
|
|
100,180
|
|
6.375% 11/15/29
|
|
195,000
|
|
|
195,421
|
|
Rochester Health Care
& Housing
|
|
|
|
|
|
|
Revenue (Samaritan Bethany)
|
|
|
|
|
|
|
Series A 7.375% 12/1/41
|
|
1,220,000
|
|
|
1,378,417
|
|
Rochester Health Care
Facilities
|
|
|
|
|
|
|
Revenue (Mayo Clinic)
|
|
|
|
|
|
|
4.00% 11/15/41
|
|
8,780,000
|
|
|
9,264,743
|
|
Series
C 4.50% 11/15/38
|
|
2,000,000
|
|
|
2,433,580
|
|
Sartell Health Care
Facility Revenue
|
|
|
|
|
|
|
(Country Manor Campus Project)
|
|
|
|
|
|
|
5.25% 9/1/30
|
|
1,000,000
|
|
|
1,015,810
|
|
Shakopee Health Care
Facilities
|
|
|
|
|
|
|
Revenue (St. Francis Regional
|
|
|
|
|
|
|
Medical Center) 5.25% 9/1/34
|
|
1,560,000
|
|
|
1,594,710
|
|
St. Cloud Health Care
Revenue
|
|
|
|
|
|
|
(Centracare Health System Project)
|
|
|
|
|
|
|
5.50% 5/1/39 (ASSURED GTY)
|
|
1,500,000
|
|
|
1,672,560
|
|
Series A 5.125% 5/1/30
|
|
4,425,000
|
|
|
4,917,767
|
|
St. Louis Park Health Care
|
|
|
|
|
|
|
Facilities Revenue
|
|
|
|
|
|
|
(Park Nicollet Health Services)
|
|
|
|
|
|
|
5.75% 7/1/39
|
|
3,315,000
|
|
|
3,746,414
|
|
Series C 5.50% 7/1/23
|
|
1,000,000
|
|
|
1,127,310
|
|
St. Paul Housing
& Redevelopment
|
|
|
|
|
|
|
Authority Health Care Revenue
|
|
|
|
|
|
|
(Allina Health System)
|
|
|
|
|
|
|
Series A 5.00% 11/15/18 (NATL-RE)
|
|
1,380,000
|
|
|
1,613,165
|
|
Series A-1 5.25% 11/15/29
|
|
1,395,000
|
|
|
1,568,887
|
|
(Childrens Health Care Facilities)
|
|
|
|
|
|
|
Series A1 5.00% 8/15/34 (AGM)
|
|
500,000
|
|
|
551,790
|
|
(Franciscan Health Elderly Project)
|
|
|
|
|
|
|
5.40% 11/20/42 (GNMA) (FHA)
|
|
2,700,000
|
|
|
2,705,373
|
|
(Health East Project)
|
|
|
|
|
|
|
6.00% 11/15/30
|
|
2,775,000
|
|
|
2,931,621
|
|
6.00% 11/15/35
|
|
2,500,000
|
|
|
2,626,075
|
|
(Health Partners Obligation Group
|
|
|
|
|
|
|
Project) 5.25% 5/15/36
|
|
2,000,000
|
|
|
2,090,740
|
|
(Regions Hospital Project)
|
|
|
|
|
|
|
5.30% 5/15/28
|
|
1,000,000
|
|
|
1,001,110
|
|
(Senior Carondelet Village Project)
|
|
|
|
|
|
|
Series A 6.00% 8/1/42
|
|
770,000
|
|
|
820,212
|
|
Washington County Housing
&
|
|
|
|
|
|
|
Redevelopment Authority
|
|
|
|
|
|
|
Revenue (Birchwood & Woodbury
|
|
|
|
|
|
|
Projects) Series A 5.625% 6/1/37
|
|
1,500,000
|
|
|
1,529,460
|
|
Wayzata Senior
Housing Revenue
|
|
|
|
|
|
|
(Folkestone Senior Living
|
|
|
|
|
|
|
Community) Series A
|
|
|
|
|
|
|
5.50% 11/1/32
|
|
420,000
|
|
|
434,204
|
|
5.75% 11/1/39
|
|
945,000
|
|
|
987,251
|
|
6.00% 5/1/47
|
|
1,475,000
|
|
|
1,555,845
|
|
Winona Health Care Facilities
|
|
|
|
|
|
|
Revenue (Winona Health
|
|
|
|
|
|
|
Obligated Group)
|
|
|
|
|
|
|
4.65% 7/1/26
|
|
465,000
|
|
|
488,492
|
|
4.75% 7/1/27
|
|
785,000
|
|
|
824,540
|
|
5.00% 7/1/23
|
|
1,010,000
|
|
|
1,099,607
|
|
5.00% 7/1/34
|
|
750,000
|
|
|
793,823
|
|
|
|
|
|
|
68,001,068
|
Housing Revenue Bonds 6.65%
|
|
|
|
|
|
|
Minneapolis
Multifamily
|
|
|
|
|
|
|
Housing Revenue
|
|
|
|
|
|
|
(Gaar
Scott Loft Project)
|
|
|
|
|
|
|
5.95% 5/1/30 (AMT)
|
|
|
|
|
|
|
(LOC-U.S. Bank N.A.)
|
|
845,000
|
|
|
847,527
|
|
(Olson Townhomes Project)
|
|
|
|
|
|
|
6.00% 12/1/19 (AMT)
|
|
655,000
|
|
|
655,269
|
|
(Seward Towers Project)
|
|
|
|
|
|
|
5.00% 5/20/36 (GNMA)
|
|
2,000,000
|
|
|
2,057,320
|
|
(Sumner Housing Project) Series A
|
|
|
|
|
|
|
5.15% 2/20/45 (GNMA) (AMT)
|
|
2,000,000
|
|
|
2,021,840
|
|
Minnesota State Housing
Finance
|
|
|
|
|
|
|
Agency Revenue (Mortgage
|
|
|
|
|
|
|
Backed Securities Program)
|
|
|
|
|
|
|
4.40% 7/1/32 (GNMA)
|
|
|
|
|
|
|
(FNMA) (FHLMC)
|
|
1,485,000
|
|
|
1,532,772
|
|
(Rental Housing)
|
|
|
|
|
|
|
Series A 5.00% 2/1/35 (AMT)
|
|
1,000,000
|
|
|
1,008,600
|
|
(Residential Housing)
|
|
|
|
|
|
|
Series
D 4.75% 7/1/32 (AMT)
|
|
915,000
|
|
|
943,026
|
|
Series I 5.15% 7/1/38 (AMT)
|
|
635,000
|
|
|
655,396
|
|
Series L 5.10% 7/1/38 (AMT)
|
|
1,345,000
|
|
|
1,397,778
|
|
Washington County
Housing &
|
|
|
|
|
|
|
Redevelopment Authority
|
|
|
|
|
|
|
Revenue (Woodland Park
|
|
|
|
|
|
|
Apartments Project)
|
|
|
|
|
|
|
4.70% 10/1/32
|
|
750,000
|
|
|
752,430
|
|
|
|
|
|
|
11,871,958
|
Lease Revenue Bonds 8.72%
|
|
|
|
|
|
|
Andover Economic Development
|
|
|
|
|
|
|
Authority Public Facilities
|
|
|
|
|
|
|
Lease Revenue (Andover
|
|
|
|
|
|
|
Community Center)
|
|
|
|
|
|
|
5.125% 2/1/24
|
|
205,000
|
|
|
216,347
|
|
5.20% 2/1/29
|
|
410,000
|
|
|
433,104
|
8
|
|
Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Lease Revenue Bonds
(continued)
|
|
|
|
|
|
|
St. Paul Port
Authority Lease Revenue
|
|
|
|
|
|
|
(Cedar
Street Office Building Project)
|
|
|
|
|
|
|
5.00%
12/1/22
|
$
|
2,385,000
|
|
$
|
2,404,080
|
|
5.25%
12/1/27
|
|
2,800,000
|
|
|
2,820,804
|
|
(Robert Street Office
|
|
|
|
|
|
|
Building Project)
|
|
|
|
|
|
|
Series
3-11 5.00% 12/1/27
|
|
2,000,000
|
|
|
2,083,740
|
|
University of Minnesota
|
|
|
|
|
|
|
Special Purpose Revenue
|
|
|
|
|
|
|
(State
Supported Biomed
|
|
|
|
|
|
|
Science Research)
|
|
|
|
|
|
|
5.00%
8/1/35
|
|
1,040,000
|
|
|
1,202,822
|
|
5.00%
8/1/36
|
|
4,000,000
|
|
|
4,690,000
|
|
Virginia Housing
& Redevelopment
|
|
|
|
|
|
|
Authority Health Care Facility
|
|
|
|
|
|
|
Lease
Revenue
|
|
|
|
|
|
|
5.25%
10/1/25
|
|
680,000
|
|
|
707,778
|
|
5.375%
10/1/30
|
|
965,000
|
|
|
1,014,688
|
|
|
|
|
|
|
15,573,363
|
Local General Obligation Bonds 10.20%
|
|
|
|
|
|
|
City of Willmar (Rice
Memorial
|
|
|
|
|
|
|
Hospital Project)
|
|
|
|
|
|
|
Series
A 4.00% 2/1/32
|
|
2,940,000
|
|
|
3,213,331
|
|
Dakota County
Community
|
|
|
|
|
|
|
Development Agency
|
|
|
|
|
|
|
(Senior Housing Facilities)
|
|
|
|
|
|
|
Series
A 5.00% 1/1/23
|
|
1,100,000
|
|
|
1,203,565
|
|
Hopkins Independent School
|
|
|
|
|
|
|
District #270 Series A 5.00% 2/1/28
|
|
1,000,000
|
|
|
1,212,720
|
|
Minneapolis Special
School
|
|
|
|
|
|
|
District #1 5.00% 2/1/19 (AGM)
|
|
1,175,000
|
|
|
1,191,920
|
|
Morris Independent School
|
|
|
|
|
|
|
District #769 5.00% 2/1/28
|
|
|
|
|
|
|
(NATL-RE)
|
|
3,750,000
|
|
|
3,803,999
|
|
Rocori Independent
School District #750
|
|
|
|
|
|
|
(School Building) Series B
|
|
|
|
|
|
|
5.00%
2/1/22
|
|
1,010,000
|
|
|
1,202,052
|
|
5.00%
2/1/24
|
|
1,075,000
|
|
|
1,264,125
|
|
5.00%
2/1/25
|
|
1,115,000
|
|
|
1,306,167
|
|
5.00%
2/1/26
|
|
1,155,000
|
|
|
1,347,943
|
|
Thief River Falls Independent
School
|
|
|
|
|
|
|
District # 564 (School Building)
|
|
|
|
|
|
|
Series
A 4.00% 2/1/32
|
|
1,160,000
|
|
|
1,288,296
|
|
Washington County
Housing &
|
|
|
|
|
|
|
Redevelopment Authority Series B
|
|
|
|
|
|
|
5.50%
2/1/22 (NATL-RE)
|
|
525,000
|
|
|
526,901
|
|
5.50%
2/1/32 (NATL-RE)
|
|
655,000
|
|
|
656,369
|
|
|
|
|
|
|
18,217,388
|
§Pre-Refunded/Escrowed to Maturity Bonds 21.75%
|
|
|
|
|
Dakota-Washington Counties
|
|
|
|
|
|
|
Housing & Redevelopment
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
(Bloomington Single Family
|
|
|
|
|
|
|
Residential Mortgage)
|
|
|
|
|
|
|
Series
B 8.375% 9/1/21
|
|
|
|
|
|
|
(GNMA)
(FHA) (VA) (AMT)
|
|
7,055,000
|
|
|
10,387,570
|
|
Minneapolis-St. Paul
Metropolitan
|
|
|
|
|
|
|
Airports Commission Revenue
|
|
|
|
|
|
|
Series
A 5.00% 1/1/22-13 (NATL-RE)
|
|
600,000
|
|
|
607,488
|
|
Southern Minnesota Municipal
|
|
|
|
|
|
|
Power
Agency Supply
|
|
|
|
|
|
|
Revenue Refunding
|
|
|
|
|
|
|
Series
A 5.75% 1/1/18-13
|
|
3,715,000
|
|
|
3,981,886
|
|
St. Paul Housing
& Redevelopment
|
|
|
|
|
|
|
Authority Sales Tax
|
|
|
|
|
|
|
(Civic
Center Project)
|
|
|
|
|
|
|
5.55%
11/1/23
|
|
2,300,000
|
|
|
2,659,904
|
|
5.55%
11/1/23 (NATL-RE) (IBC)
|
|
4,200,000
|
|
|
4,857,216
|
|
University of Minnesota Hospital
&
|
|
|
|
|
|
|
Clinics 6.75% 12/1/16
|
|
2,580,000
|
|
|
3,093,523
|
|
University of
Minnesota Series A
|
|
|
|
|
|
|
5.50%
7/1/21
|
|
4,000,000
|
|
|
5,047,280
|
|
5.75%
7/1/18
|
|
2,500,000
|
|
|
3,134,175
|
|
Western Minnesota Municipal
Power
|
|
|
|
|
|
|
Agency
Supply Revenue Series A
|
|
|
|
|
|
|
5.00%
1/1/30-13 (NATL-RE)
|
|
5,000,000
|
|
|
5,062,250
|
|
|
|
|
|
|
38,831,292
|
Special Tax Revenue Bonds 9.27%
|
|
|
|
|
|
|
Guam Government
Business
|
|
|
|
|
|
|
Privilege Tax Revenue
|
|
|
|
|
|
|
Series
A 5.25% 1/1/36
|
|
500,000
|
|
|
567,600
|
|
Hennepin County Sales Tax
Revenue
|
|
|
|
|
|
|
(Second Lien-Ballpark Project)
|
|
|
|
|
|
|
Series
B 4.75% 12/15/27
|
|
1,905,000
|
|
|
2,176,805
|
|
Minneapolis Community
Planning &
|
|
|
|
|
|
|
Economic Development
|
|
|
|
|
|
|
Department (Limited Tax
|
|
|
|
|
|
|
Supported Common Bond Fund)
|
|
|
|
|
|
|
6.25%
12/1/30
|
|
1,000,000
|
|
|
1,240,980
|
|
Series
1 5.50% 12/1/24 (AMT)
|
|
1,000,000
|
|
|
1,047,860
|
|
Series
1 6.75% 12/1/25 (AMT)
|
|
865,000
|
|
|
869,377
|
|
Series
5 5.70% 12/1/27
|
|
375,000
|
|
|
377,370
|
|
Minnesota Public Safety Radio
|
|
|
|
|
|
|
5.00%
6/1/23
|
|
2,845,000
|
|
|
3,371,069
|
|
Puerto Rico Sales
Tax
|
|
|
|
|
|
|
Financing Revenue
|
|
|
|
|
|
|
^(Capital
Appreciation) Series A
|
|
|
|
|
|
|
5.73%
8/1/44 (NATL-RE)
|
|
8,485,000
|
|
|
1,398,498
|
|
5.82%
8/1/45 (NATL-RE)
|
|
8,690,000
|
|
|
1,345,212
|
|
First
Subordinate
|
|
|
|
|
|
|
Series
A 5.75% 8/1/37
|
|
1,200,000
|
|
|
1,330,980
|
|
Series
A-1 5.00% 8/1/43
|
|
1,750,000
|
|
|
1,824,165
|
(continues)
9
Statements of net
assets
Delaware
Investments
®
Minnesota Municipal Income Fund II, Inc.
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
|
Municipal Bonds
(continued)
|
|
|
|
|
|
|
Special Tax Revenue
Bonds
(continued)
|
|
|
|
|
|
|
|
St. Paul Port
Authority (Brownsfields
|
|
|
|
|
|
|
|
Redevelopment
Tax) Series 2
|
|
|
|
|
|
|
|
5.00%
3/1/37
|
$
|
895,000
|
|
$
|
1,007,627
|
|
|
|
|
|
|
|
16,557,543
|
|
State & Territory General Obligation Bonds
9.85%
|
|
|
|
|
|
Minnesota State Refunding
|
|
|
|
|
|
|
|
(State
Various Purpose)
|
|
|
|
|
|
|
|
Series
D 5.00% 8/1/24
|
|
2,700,000
|
|
|
3,441,744
|
|
|
Minnesota State
(State Trunk Highway)
|
|
|
|
|
|
|
|
Series
B
|
|
|
|
|
|
|
|
5.00%
10/1/22
|
|
5,500,000
|
|
|
7,007,385
|
|
|
5.00%
10/1/29
|
|
3,715,000
|
|
|
4,559,122
|
|
|
Puerto Rico Commonwealth
|
|
|
|
|
|
|
|
Public
Improvement Series A
|
|
|
|
|
|
|
|
5.00%
7/1/41
|
|
1,000,000
|
|
|
1,004,910
|
|
|
5.75%
7/1/41
|
|
1,500,000
|
|
|
1,572,915
|
|
|
|
|
|
|
|
17,586,076
|
|
Transportation
Revenue Bonds 2.16%
|
|
|
|
|
|
|
|
Minneapolis - St.
Paul Metropolitan
|
|
|
|
|
|
|
|
Airports
Commission
|
|
|
|
|
|
|
|
Revenue
Series A
|
|
|
|
|
|
|
|
5.00%
1/1/28 (NATL-RE)
|
|
1,335,000
|
|
|
1,342,676
|
|
|
5.00%
1/1/35 (AMBAC)
|
|
2,000,000
|
|
|
2,081,061
|
|
|
St. Paul Port Authority
Revenue
|
|
|
|
|
|
|
|
(Amherst
H. Wilder Foundation)
|
|
|
|
|
|
|
|
Series
3 5.00% 12/1/36
|
|
380,000
|
|
|
424,642
|
|
|
|
|
|
|
|
3,848,379
|
|
Water & Sewer
Revenue Bonds 1.61%
|
|
|
|
|
|
|
|
Metropolitan Council
Wastewater
|
|
|
|
|
|
|
|
Series
B 4.00% 9/1/27
|
|
1,145,000
|
|
|
1,288,469
|
|
|
St. Paul Sewer Revenue
|
|
|
|
|
|
|
|
Series
D 5.00% 12/1/21
|
|
1,325,000
|
|
|
1,582,328
|
|
|
|
|
|
|
|
2,870,797
|
|
|
|
Total Municipal Bonds
|
|
|
|
|
|
|
|
(cost
$236,711,360)
|
|
|
|
|
255,081,927
|
|
|
|
Total Value of Securities
142.88%
|
|
|
|
|
|
|
|
(cost
$236,711,360)
|
|
|
|
|
255,081,927
|
|
Liquidation Value of Preferred
|
|
|
|
|
|
|
|
Stock
(42.01%)
|
|
|
|
|
(75,000,000
|
)
|
Liabilities Net of Receivables
and
|
|
|
|
|
|
|
|
Other Assets (0.87%)
|
|
|
|
|
(1,549,431
|
)
|
Net
Assets Applicable to 11,504,975
|
|
|
|
|
|
|
|
Shares Outstanding;
Equivalent to
|
|
|
|
|
|
|
|
$15.52 Per Share
100.00%
|
|
|
|
$
|
178,532,496
|
|
|
|
|
|
|
|
|
|
Components of Net Assets at September
30, 2012:
|
|
|
|
|
|
|
Common stock, $0.01 par value, 200 million
shares
|
|
|
|
|
|
|
|
authorized to the Fund
|
|
|
|
$
|
157,931,075
|
|
Undistributed net investment income
|
|
|
|
|
1,716,382
|
|
Accumulated net realized gain on
investments
|
|
|
|
|
514,472
|
|
Net unrealized appreciation of investments
|
|
|
|
|
18,370,567
|
|
Total net assets
|
|
|
|
$
|
178,532,496
|
|
|
Variable rate security. The rate
shown is the rate as of September 30, 2012. Interest rates reset
periodically.
|
§
|
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. See Note 9 in Notes to financial statements.
|
^
|
Zero coupon security. The rate shown
is the yield at the time of purchase.
|
|
See Note 6 in Notes to financial
statements.
|
Summary of
Abbreviations:
AGM Insured by Assured
Guaranty Municipal Corporation
AMBAC Insured by AMBAC Assurance
Corporation
AMT Subject to Alternative Minimum Tax
ASSURED GTY Insured
by Assured Guaranty Corporation
FHA Federal Housing Administration
FHLMC
Federal Home Loan Mortgage Corporation collateral
FNMA Federal National
Mortgage Association collateral
GNMA Government National Mortgage
Association collateral
IBC Insured Bond Certificate
LOC Letter of
Credit
NATL-RE Insured by National Public Finance Guarantee
Corporation
VA Veterans Administration collateral
See accompanying notes, which are an
integral part of the financial statements.
10
Delaware Investments
®
National Municipal Income Fund
September
30, 2012 (Unaudited)
|
|
Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds 142.25%
|
|
|
|
|
|
Corporate-Backed Revenue Bonds 17.22%
|
|
|
|
|
|
|
Buckeye, Ohio Tobacco
Settlement
|
|
|
|
|
|
|
Financing Authority Asset-Backed
|
|
|
|
|
|
|
Senior Turbo Series A-2
|
|
|
|
|
|
|
5.875% 6/1/47
|
$
|
480,000
|
|
$
|
388,483
|
|
6.50% 6/1/47
|
|
430,000
|
|
|
381,371
|
|
Delaware State Economic
|
|
|
|
|
|
|
Development Authority Exempt
|
|
|
|
|
|
|
Facilities (Indian River Power)
|
|
|
|
|
|
|
5.375% 10/1/45
|
|
500,000
|
|
|
548,150
|
|
Golden State,
California Tobacco
|
|
|
|
|
|
|
Securitization Corporate Settlement
|
|
|
|
|
|
|
Revenue (Asset-Backed Senior
|
|
|
|
|
|
|
Notes) Series A-1
|
|
|
|
|
|
|
5.125% 6/1/47
|
|
370,000
|
|
|
286,003
|
|
5.75% 6/1/47
|
|
1,615,000
|
|
|
1,382,456
|
|
Harris County, Texas
Industrial
|
|
|
|
|
|
|
Development Solid Waste
|
|
|
|
|
|
|
Disposal Revenue (Deer Park
|
|
|
|
|
|
|
Refining Project) 5.00% 2/1/23
|
|
150,000
|
|
|
167,700
|
|
Illinois Railsplitter
Tobacco Settlement
|
|
|
|
|
|
|
Authority 6.25% 6/1/24
|
|
500,000
|
|
|
563,060
|
|
Louisiana Local Government
|
|
|
|
|
|
|
Environmental Facilities &
|
|
|
|
|
|
|
Community Development
|
|
|
|
|
|
|
Authority (Westlake Chemical)
|
|
|
|
|
|
|
Series A 6.50% 8/1/29
|
|
645,000
|
|
|
761,139
|
|
Series A-1 6.50% 11/1/35
|
|
255,000
|
|
|
298,110
|
|
Maryland Economic
Development
|
|
|
|
|
|
|
Port Facilities Revenue (CNX
|
|
|
|
|
|
|
Marine Terminals) 5.75% 9/1/25
|
|
260,000
|
|
|
283,442
|
|
M-S-R Energy Authority
California
|
|
|
|
|
|
|
Gas Series C 7.00% 11/1/34
|
|
1,000,000
|
|
|
1,378,730
|
|
Navajo County,
Arizona Pollution
|
|
|
|
|
|
|
Control Revenue
|
|
|
|
|
|
|
Series D 5.75% 6/1/34
|
|
500,000
|
|
|
564,715
|
|
New Jersey Economic
Development
|
|
|
|
|
|
|
Authority Special Facilities
|
|
|
|
|
|
|
Revenue (Continental Airlines
|
|
|
|
|
|
|
Project) 5.25% 9/15/29 (AMT)
|
|
500,000
|
|
|
511,080
|
|
New Jersey Tobacco
Settlement
|
|
|
|
|
|
|
Financing Series 1A 5.00% 6/1/41
|
|
1,000,000
|
|
|
835,320
|
|
New York Liberty Development
|
|
|
|
|
|
|
Revenue (Goldman Sachs
|
|
|
|
|
|
|
Headquarters) 5.25% 10/1/35
|
|
500,000
|
|
|
587,180
|
|
Ohio State Air
Quality Development
|
|
|
|
|
|
|
Authority Revenue (First Energy
|
|
|
|
|
|
|
Generation) Series A
|
|
|
|
|
|
|
5.70% 8/1/20
|
|
260,000
|
|
|
304,556
|
|
Pennsylvania Economic
Development
|
|
|
|
|
|
|
Financing Authority Exempt
|
|
|
|
|
|
|
Facilities Revenue (Allegheny
|
|
|
|
|
|
|
Energy Supply) 7.00% 7/15/39
|
|
345,000
|
|
|
414,062
|
|
Pima County, Arizona
Industrial
|
|
|
|
|
|
|
Development Authority Pollution
|
|
|
|
|
|
|
Control Revenue (Tucson Electric
|
|
|
|
|
|
|
Power San Juan) 5.75% 9/1/29
|
|
250,000
|
|
|
266,890
|
|
Salt Verde Financial, Arizona
Gas
|
|
|
|
|
|
|
Revenue Senior Note
|
|
|
|
|
|
|
5.00% 12/1/37
|
|
400,000
|
|
|
440,116
|
|
St. John the Baptist
Parish, Louisiana
|
|
|
|
|
|
|
(Marathon Oil)
|
|
|
|
|
|
|
Series A 5.125% 6/1/37
|
|
500,000
|
|
|
532,295
|
|
Suffolk County, New York
Tobacco
|
|
|
|
|
|
|
Asset Securitization
|
|
|
|
|
|
|
Series B 5.00% 6/1/32
|
|
750,000
|
|
|
804,968
|
|
|
|
|
|
|
11,699,826
|
Education Revenue Bonds 22.15%
|
|
|
|
|
|
|
Arizona Board of
Regents System
|
|
|
|
|
|
|
Revenue (University of Arizona)
|
|
|
|
|
|
|
Series A 5.00% 6/1/39
|
|
500,000
|
|
|
554,795
|
|
Bowling Green, Ohio Student
|
|
|
|
|
|
|
Housing Revenue (CFP I State
|
|
|
|
|
|
|
University Project) 6.00% 6/1/45
|
|
270,000
|
|
|
291,835
|
|
California Statewide
Communities
|
|
|
|
|
|
|
Development Authority School
|
|
|
|
|
|
|
Facility Revenue (Aspire Public
|
|
|
|
|
|
|
Schools) 6.125% 7/1/46
|
|
625,000
|
|
|
647,056
|
|
California Statewide
Communities
|
|
|
|
|
|
|
Development Authority Student
|
|
|
|
|
|
|
Housing Revenue (Irvine, LLC -
|
|
|
|
|
|
|
UCI East Campus) 6.00% 5/15/23
|
|
470,000
|
|
|
525,986
|
|
Iowa Higher Education
Loan
|
|
|
|
|
|
|
Authority Revenue (Private
|
|
|
|
|
|
|
College Facility) 5.00% 10/1/38
|
|
500,000
|
|
|
529,360
|
|
Lakeland Florida Educational
Facilities
|
|
|
|
|
|
|
Revenue (Florida Southern
|
|
|
|
|
|
|
College) 5.00% 9/1/42
|
|
1,110,000
|
|
|
1,185,612
|
|
Marietta, Georgia
Development
|
|
|
|
|
|
|
Authority Revenue (Life University
|
|
|
|
|
|
|
Project) 7.00% 6/15/39
|
|
430,000
|
|
|
452,184
|
|
Maryland Health & Higher
|
|
|
|
|
|
|
Educational Facilities Authority
|
|
|
|
|
|
|
(Loyola University) Series A
|
|
|
|
|
|
|
5.00% 10/1/39
|
|
650,000
|
|
|
747,422
|
|
Maryland State
Economic
|
|
|
|
|
|
|
Development Student Housing
|
|
|
|
|
|
|
Revenue (University of Maryland
|
|
|
|
|
|
|
College Park Projects)
|
|
|
|
|
|
|
5.75% 6/1/33
|
|
370,000
|
|
|
406,993
|
|
Massachusetts State Health
&
|
|
|
|
|
|
|
Educational Facilities Authority
|
|
|
|
|
|
|
Revenue (Harvard University)
|
|
|
|
|
|
|
Series A 5.00% 12/15/29
|
|
600,000
|
|
|
732,462
|
|
Metropolitan
Government Nashville &
|
|
|
|
|
|
|
Davidson Counties, Tennessee
|
|
|
|
|
|
|
Health and Educational Facilities
|
|
|
|
|
|
|
Building (Belmont University
|
|
|
|
|
|
|
Project) 5.00% 11/1/29
|
|
515,000
|
|
|
565,645
|
|
Missouri State Health &
Educational
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
(Washington University)
|
|
|
|
|
|
|
Series B 5.00% 11/15/30
|
|
600,000
|
|
|
738,546
|
(continues)
11
Statements of net
assets
Delaware
Investments
®
National Municipal Income Fund
|
|
Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Education Revenue Bonds
(continued)
|
|
|
|
|
|
|
Monroe County, New
York Industrial
|
|
|
|
|
|
|
Development Revenue (Nazareth
|
|
|
|
|
|
|
College Rochester Project)
|
|
|
|
|
|
|
5.50%
10/1/41
|
$
|
500,000
|
|
$
|
558,065
|
|
Montgomery County,
Pennsylvania
|
|
|
|
|
|
|
Higher
Education & Health
|
|
|
|
|
|
|
Authority Revenue (Arcadia
|
|
|
|
|
|
|
University) 5.25% 4/1/30
|
|
550,000
|
|
|
600,732
|
|
New Jersey Economic
Development
|
|
|
|
|
|
|
Authority Revenue (MSU Student
|
|
|
|
|
|
|
Housing Project) 5.875% 6/1/42
|
|
735,000
|
|
|
819,606
|
|
New York City, New York Trust
for
|
|
|
|
|
|
|
Cultural Resources (Whitney
|
|
|
|
|
|
|
Museum
of American Art)
|
|
|
|
|
|
|
5.00%
7/1/31
|
|
500,000
|
|
|
567,750
|
|
New York State
Dormitory Authority
|
|
|
|
|
|
|
(Columbia University)
|
|
|
|
|
|
|
5.00%
10/1/41
|
|
600,000
|
|
|
701,052
|
|
Oregon State Facilities
Authority
|
|
|
|
|
|
|
Revenue (CHFAshland)
|
|
|
|
|
|
|
5.00%
7/1/44 (AGM)
|
|
1,000,000
|
|
|
1,082,180
|
|
#(Concordia
University Project)
|
|
|
|
|
|
|
144A
Series A 6.125% 9/1/30
|
|
135,000
|
|
|
147,227
|
|
Pennsylvania State
Higher
|
|
|
|
|
|
|
Educational Facilities Authority
|
|
|
|
|
|
|
Student Housing Revenue
|
|
|
|
|
|
|
(Edinboro University Foundation)
|
|
|
|
|
|
|
5.80%
7/1/30
|
|
400,000
|
|
|
449,292
|
|
(University Properties East
|
|
|
|
|
|
|
Stroudsburg University)
|
|
|
|
|
|
|
5.25%
7/1/19
|
|
510,000
|
|
|
570,104
|
|
Phoenix, Arizona Industrial
|
|
|
|
|
|
|
Development Authority Revenue
|
|
|
|
|
|
|
(Rowan
University) 5.00% 6/1/42
|
|
1,000,000
|
|
|
1,084,120
|
|
Private Colleges
& Universities
|
|
|
|
|
|
|
Authority Revenue (Mercer
|
|
|
|
|
|
|
University Project) Series A
|
|
|
|
|
|
|
5.00%
10/1/32
|
|
135,000
|
|
|
146,349
|
|
Troy, New York Capital
Resource
|
|
|
|
|
|
|
Revenue (Rensselaer Polytechnic)
|
|
|
|
|
|
|
Series
A 5.125% 9/1/40
|
|
600,000
|
|
|
667,176
|
|
Wyoming Community
Development
|
|
|
|
|
|
|
Authority Student Housing
|
|
|
|
|
|
|
Revenue (CHF-Wyoming LLC)
|
|
|
|
|
|
|
6.50%
7/1/43
|
|
250,000
|
|
|
277,433
|
|
|
|
|
|
|
15,048,982
|
Electric Revenue Bonds 5.13%
|
|
|
|
|
|
|
Long Island, New York Power
|
|
|
|
|
|
|
Authority Series A 5.00% 9/1/42
|
|
1,000,000
|
|
|
1,120,820
|
|
Puerto Rico Electric
Power
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
Series
A 5.00% 7/1/42
|
|
1,000,000
|
|
|
994,550
|
|
Series
WW 5.50% 7/1/38
|
|
200,000
|
|
|
209,774
|
|
Series
XX 5.25% 7/1/40
|
|
805,000
|
|
|
811,311
|
|
Series
ZZ 5.25% 7/1/26
|
|
330,000
|
|
|
348,688
|
|
|
|
|
|
|
3,485,143
|
Healthcare Revenue Bonds 24.18%
|
|
|
|
|
|
|
Arizona Health Facilities
Authority
|
|
|
|
|
|
|
Revenue (Catholic Healthcare
|
|
|
|
|
|
|
West)
Series D 5.00% 7/1/28
|
|
500,000
|
|
|
547,445
|
|
Brevard County,
Florida Health
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
(Heath
First Project) 7.00% 4/1/39
|
|
90,000
|
|
|
112,014
|
|
Butler County, Pennsylvania
Hospital
|
|
|
|
|
|
|
Authority Revenue (Butler Health
|
|
|
|
|
|
|
System
Project) 7.125% 7/1/29
|
|
300,000
|
|
|
360,822
|
|
California State
Health Facilities
|
|
|
|
|
|
|
Financing Authority Revenue
|
|
|
|
|
|
|
(Stanford Hospital Clinics)
|
|
|
|
|
|
|
5.00%
8/15/42
|
|
1,000,000
|
|
|
1,123,899
|
|
California Statewide
Communities
|
|
|
|
|
|
|
Development Authority (Kaiser
|
|
|
|
|
|
|
Permanente) Series A
|
|
|
|
|
|
|
5.00%
4/1/42
|
|
1,000,000
|
|
|
1,102,980
|
|
Dauphin County,
Pennsylvania
|
|
|
|
|
|
|
General Authority Revenue
|
|
|
|
|
|
|
(Pinnacle Health System Project)
|
|
|
|
|
|
|
5.00%
6/1/42
|
|
770,000
|
|
|
832,840
|
|
Hawaii Pacific Health Special
Purpose
|
|
|
|
|
|
|
Revenue Series A 5.50% 7/1/40
|
|
300,000
|
|
|
329,007
|
|
Illinois Finance
Authority Revenue
|
|
|
|
|
|
|
(Silver Cross & Medical Centers)
|
|
|
|
|
|
|
7.00%
8/15/44
|
|
450,000
|
|
|
540,212
|
|
Koyukuk, Alaska Revenue
(Tanana
|
|
|
|
|
|
|
Chiefs
Conference Health Care
|
|
|
|
|
|
|
Facility Project) 7.75% 10/1/41
|
|
300,000
|
|
|
329,499
|
|
Louisiana Public
Facilities Authority
|
|
|
|
|
|
|
Revenue (Ochsner Clinic
|
|
|
|
|
|
|
Foundation Project) 6.50% 5/15/37
|
|
105,000
|
|
|
126,504
|
|
Lycoming County, Pennsylvania
|
|
|
|
|
|
|
Authority Health System Revenue
|
|
|
|
|
|
|
(Susquehanna Health System
|
|
|
|
|
|
|
Project) Series A 5.50% 7/1/28
|
|
500,000
|
|
|
548,495
|
|
Maine Health &
Higher Educational
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
(Maine
General Medical Center)
|
|
|
|
|
|
|
6.75%
7/1/41
|
|
300,000
|
|
|
353,505
|
|
Maricopa County, Arizona
Industrial
|
|
|
|
|
|
|
Development Authority Health
|
|
|
|
|
|
|
Facilities Revenue (Catholic
|
|
|
|
|
|
|
Healthcare West) Series A
|
|
|
|
|
|
|
6.00%
7/1/39
|
|
500,000
|
|
|
577,060
|
|
Maryland Health &
Higher Educational
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
(Carroll Hospital) Series A
|
|
|
|
|
|
|
5.00%
7/1/37
|
|
500,000
|
|
|
554,320
|
|
Monroe County, Pennsylvania
|
|
|
|
|
|
|
Hospital Authority Revenue
|
|
|
|
|
|
|
(Pocono Medical Center) Series A
|
|
|
|
|
|
|
5.00%
1/1/41
|
|
500,000
|
|
|
536,540
|
|
Montgomery County,
Pennsylvania
|
|
|
|
|
|
|
Industrial Development Authority
|
|
|
|
|
|
|
Revenue (Mtg-Whitemarsh
|
|
|
|
|
|
|
Continuing Care) 6.25% 2/1/35
|
|
675,000
|
|
|
686,516
|
12
|
|
Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Healthcare Revenue Bonds
(continued)
|
|
|
|
|
|
|
New Hampshire Health
& Education
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
(Dartmouth-Hitchcock Medical
|
|
|
|
|
|
|
Center) 6.00% 8/1/38
|
$
|
300,000
|
|
$
|
353,757
|
|
New Jersey Health Care
Facilities
|
|
|
|
|
|
|
Financing Authority Revenue
|
|
|
|
|
|
|
Refunding (St. Peters University
|
|
|
|
|
|
|
Hospital) 6.25% 7/1/35
|
|
300,000
|
|
|
339,372
|
|
New Mexico State
Hospital
|
|
|
|
|
|
|
Equipment Loan Council Revenue
|
|
|
|
|
|
|
(Presbyterian Healthcare)
|
|
|
|
|
|
|
5.00%
8/1/39
|
|
500,000
|
|
|
541,935
|
|
New York State Dormitory
Authority
|
|
|
|
|
|
|
Revenue Non State Supported
|
|
|
|
|
|
|
Debt
(Orange Regional Medical
|
|
|
|
|
|
|
Center) 6.25% 12/1/37
|
|
500,000
|
|
|
547,810
|
|
Ohio State Hospital
Facilities Revenue
|
|
|
|
|
|
|
Refunding (Cleveland Clinic
|
|
|
|
|
|
|
Health) Series A 5.50% 1/1/39
|
|
300,000
|
|
|
337,479
|
|
Orange County Health
Facilities
|
|
|
|
|
|
|
Authority Revenue (Mayflower
|
|
|
|
|
|
|
Retirement Center)
|
|
|
|
|
|
|
5.00%
6/1/32
|
|
400,000
|
|
|
419,628
|
|
5.00%
6/1/36
|
|
250,000
|
|
|
259,883
|
|
5.125%
6/1/42
|
|
750,000
|
|
|
786,330
|
|
Pennsylvania Higher
Educational
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
(University of Pennsylvania Health
|
|
|
|
|
|
|
System) Series A 5.00% 8/15/42
|
|
1,000,000
|
|
|
1,115,939
|
|
Philadelphia, Pennsylvania Hospitals
&
|
|
|
|
|
|
|
Higher
Education Facilities
|
|
|
|
|
|
|
Authority Revenue (Temple
|
|
|
|
|
|
|
University Health System) Series A
|
|
|
|
|
|
|
5.50%
7/1/30
|
|
300,000
|
|
|
314,139
|
|
University Medical
Center, Tucson,
|
|
|
|
|
|
|
Arizona Hospital Revenue
|
|
|
|
|
|
|
6.50%
7/1/39
|
|
500,000
|
|
|
582,840
|
|
West Virginia Hospital
Finance
|
|
|
|
|
|
|
Authority (Highland Hospital
|
|
|
|
|
|
|
Obligation Group) 9.125% 10/1/41
|
|
500,000
|
|
|
617,120
|
|
Yavapai County,
Arizona Industrial
|
|
|
|
|
|
|
Development Authority Revenue
|
|
|
|
|
|
|
(Yavapai Regional Medical Center)
|
|
|
|
|
|
|
Series
A 5.25% 8/1/21 (RADIAN)
|
|
1,500,000
|
|
|
1,554,254
|
|
|
|
|
|
|
16,432,144
|
Housing Revenue Bonds 2.47%
|
|
|
|
|
|
|
California Municipal Finance
Authority
|
|
|
|
|
|
|
Mobile
Home Park Revenue
|
|
|
|
|
|
|
(Caritas Projects) Series A
|
|
|
|
|
|
|
5.50%
8/15/47
|
|
750,000
|
|
|
793,905
|
|
6.40%
8/15/45
|
|
430,000
|
|
|
475,266
|
|
Florida Housing
Finance Homeowner
|
|
|
|
|
|
|
Mortgage Revenue Series 2
|
|
|
|
|
|
|
5.90%
7/1/29 (NATL-RE) (AMT)
|
|
205,000
|
|
|
207,327
|
|
Puerto Rico Housing Finance
|
|
|
|
|
|
|
Authority (Subordinated-Capital
|
|
|
|
|
|
|
Fund
Modernization)
|
|
|
|
|
|
|
5.50%
12/1/18
|
|
175,000
|
|
|
204,829
|
|
|
|
|
|
|
1,681,327
|
Lease Revenue Bonds 12.59%
|
|
|
|
|
|
|
California State
Public Works Board
|
|
|
|
|
|
|
Lease
Revenue (Various Capital
|
|
|
|
|
|
|
Projects) Series A 5.00% 4/1/37
|
|
1,000,000
|
|
|
1,090,420
|
|
Capital Area, Austin, Texas
Cultural
|
|
|
|
|
|
|
Education Facilities Finance
|
|
|
|
|
|
|
Revenue (Roman Catholic
|
|
|
|
|
|
|
Diocese) Series B 6.125% 4/1/45
|
|
105,000
|
|
|
115,910
|
|
Hudson Yards, New
York
|
|
|
|
|
|
|
Infrastructure Revenue Series A
|
|
|
|
|
|
|
5.75%
2/15/47
|
|
1,100,000
|
|
|
1,301,080
|
|
Idaho State Building
Authority
|
|
|
|
|
|
|
Revenue (Health & Welfare
|
|
|
|
|
|
|
Project) Series A 5.00% 9/1/24
|
|
135,000
|
|
|
167,597
|
|
(State
Police) Series I
|
|
|
|
|
|
|
5.00%
9/1/23
|
|
760,000
|
|
|
944,596
|
|
New Jersey Economic
Development
|
|
|
|
|
|
|
Authority (School Facilities
|
|
|
|
|
|
|
Construction) Series EE
|
|
|
|
|
|
|
5.00%
9/1/18
|
|
100,000
|
|
|
121,192
|
|
New York City, New York
Industrial
|
|
|
|
|
|
|
Development Agency (Senior Trips)
|
|
|
|
|
|
|
Series
A 5.00% 7/1/28 (AMT)
|
|
250,000
|
|
|
265,143
|
|
New York Liberty
Development
|
|
|
|
|
|
|
Revenue (4 World Trade Center)
|
|
|
|
|
|
|
5.75%
11/15/51
|
|
1,970,000
|
|
|
2,333,228
|
|
(7
World Trade Center)
|
|
|
|
|
|
|
Class
1 5.00% 9/15/40
|
|
360,000
|
|
|
411,124
|
|
Class
2 5.00% 9/15/43
|
|
640,000
|
|
|
705,645
|
|
Pima County, Arizona
Industrial
|
|
|
|
|
|
|
Development Authority Metro
|
|
|
|
|
|
|
Police
Facility Revenue
|
|
|
|
|
|
|
(Nevada Project) Series A
|
|
|
|
|
|
|
5.25%
7/1/31
|
|
500,000
|
|
|
547,035
|
|
5.375%
7/1/39
|
|
500,000
|
|
|
550,275
|
|
|
|
|
|
|
8,553,245
|
Local General Obligation Bonds 3.61%
|
|
|
|
|
|
|
Gila County, Arizona
Unified School
|
|
|
|
|
|
|
District #10 (Payson School
|
|
|
|
|
|
|
Improvement Project of 2006)
|
|
|
|
|
|
|
Series
A 5.25% 7/1/27 (AMBAC)
|
|
500,000
|
|
|
556,910
|
|
Maricopa County, Arizona
School
|
|
|
|
|
|
|
District #6 (Washington)
|
|
|
|
|
|
|
Refunding Series A
|
|
|
|
|
|
|
5.375% 7/1/13
(AGM)
|
|
1,250,000
|
|
|
1,297,375
|
|
New
York City, New York
|
|
|
|
|
|
|
Series
A-1 5.25% 8/15/21
|
|
250,000
|
|
|
307,015
|
|
Series
I-1 5.375% 4/1/36
|
|
250,000
|
|
|
290,560
|
|
|
|
|
|
|
2,451,860
|
(continues)
13
Statements of net
assets
Delaware
Investments
®
National Municipal Income Fund
|
|
Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
§Pre-Refunded Bond 1.86%
|
|
|
|
|
|
|
Salt River Project,
Arizona
|
|
|
|
|
|
|
Agricultural Improvement &
|
|
|
|
|
|
|
Power
District Revenue Series B
|
|
|
|
|
|
|
5.00%
1/1/25-13
|
$
|
1,250,000
|
|
$
|
1,265,600
|
|
|
|
|
|
|
1,265,600
|
Special Tax Revenue Bonds 18.41%
|
|
|
|
|
|
|
Anne Arundel County, Maryland
|
|
|
|
|
|
|
Special Obligation Revenue
|
|
|
|
|
|
|
(National Business Park-North
|
|
|
|
|
|
|
Project) 6.10% 7/1/40
|
|
200,000
|
|
|
217,132
|
|
Brooklyn Arena Local
Development,
|
|
|
|
|
|
|
New
York Pilot Revenue
|
|
|
|
|
|
|
(Barclays Center Project)
|
|
|
|
|
|
|
6.25%
7/15/40
|
|
940,000
|
|
|
1,096,585
|
|
6.50%
7/15/30
|
|
300,000
|
|
|
360,495
|
|
California State Economic
Recovery
|
|
|
|
|
|
|
Series
A 5.25% 7/1/21
|
|
260,000
|
|
|
320,874
|
|
California Statewide
Communities
|
|
|
|
|
|
|
Development Authority Revenue
|
|
|
|
|
|
|
(Statewide Inland Regional Center
|
|
|
|
|
|
|
Project) 5.375% 12/1/37
|
|
500,000
|
|
|
511,390
|
|
Glendale, Arizona Municipal
Property
|
|
|
|
|
|
|
Series
A 5.00% 7/1/33 (AMBAC)
|
|
1,000,000
|
|
|
1,014,880
|
|
Guam Government
Business Privilege
|
|
|
|
|
|
|
Tax
Revenue Series B-1
|
|
|
|
|
|
|
5.00%
1/1/42
|
|
1,000,000
|
|
|
1,108,100
|
|
Massachusetts Bay
Transportation
|
|
|
|
|
|
|
Authority Senior Series A
|
|
|
|
|
|
|
5.25%
7/1/29
|
|
200,000
|
|
|
271,128
|
|
Miami-Dade County,
Florida Special
|
|
|
|
|
|
|
Obligation (Capital Appreciation &
|
|
|
|
|
|
|
Income) 5.00% 10/1/35 (NATL-RE)
|
|
1,000,000
|
|
|
1,050,210
|
|
Mosaic District, Virginia
Community
|
|
|
|
|
|
|
Development Authority Series A
|
|
|
|
|
|
|
6.875%
3/1/36
|
|
520,000
|
|
|
588,635
|
|
New York City, New
York Industrial
|
|
|
|
|
|
|
Development Agency Civic Facility
|
|
|
|
|
|
|
Revenue (YMCA of Greater New
|
|
|
|
|
|
|
York
Project) 5.00% 8/1/36
|
|
1,000,000
|
|
|
1,050,310
|
|
New York State Dormitory
Authority
|
|
|
|
|
|
|
(State
Personal Income Tax
|
|
|
|
|
|
|
Revenue-Education) Series A
|
|
|
|
|
|
|
5.00%
3/15/38
|
|
570,000
|
|
|
657,427
|
|
Peoria, Arizona
Municipal
|
|
|
|
|
|
|
Development Authority Sales Tax &
|
|
|
|
|
|
|
Excise
Shared Revenue (Senior
|
|
|
|
|
|
|
Lien
& Subordinate Lien)
|
|
|
|
|
|
|
5.00%
1/1/18
|
|
1,085,000
|
|
|
1,286,863
|
|
Puerto Rico Sales Tax
Financing
|
|
|
|
|
|
|
Revenue Series C 5.00% 8/1/40
|
|
600,000
|
|
|
648,228
|
|
First
Subordinated
|
|
|
|
|
|
|
Series
A 5.75% 8/1/37
|
|
245,000
|
|
|
271,742
|
|
Series
C 6.00% 8/1/39
|
|
300,000
|
|
|
337,341
|
|
W
(Convertible
Capital Appreciation
|
|
|
|
|
|
|
Bonds)
6.75% 8/1/32
|
|
220,000
|
|
|
228,012
|
|
San Mateo, California
Special Tax
|
|
|
|
|
|
|
Community Facilities District
|
|
|
|
|
|
|
#2008-1 (Bay
Meadows)
|
|
|
|
|
|
|
6.00%
9/1/42
|
|
95,000
|
|
|
103,756
|
|
Virginia Public Building
Authority
|
|
|
|
|
|
|
Series
A 5.00% 8/1/26
|
|
1,000,000
|
|
|
1,218,900
|
^
|
Wyandotte County,
Kansas City,
|
|
|
|
|
|
|
Kansas
Unified Government
|
|
|
|
|
|
|
Special Obligation Revenue
|
|
|
|
|
|
|
(Capital Appreciation) Sales Tax
|
|
|
|
|
|
|
Subordinate Lien Series B
|
|
|
|
|
|
|
6.07%
6/1/21
|
|
250,000
|
|
|
170,093
|
|
|
|
|
|
|
12,512,101
|
State & Territory General Obligation Bonds
9.53%
|
|
|
|
|
California State Various
Purposes
|
|
|
|
|
|
|
5.00%
9/1/41
|
|
460,000
|
|
|
510,071
|
|
5.00%
10/1/41
|
|
440,000
|
|
|
488,286
|
|
5.25%
11/1/40
|
|
320,000
|
|
|
367,536
|
|
6.00%
4/1/38
|
|
105,000
|
|
|
125,658
|
|
New Jersey Economic
Development
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
5.00%
6/15/28
|
|
200,000
|
|
|
222,164
|
|
5.00%
6/15/29
|
|
800,000
|
|
|
883,144
|
|
New York State Series A
|
|
|
|
|
|
|
5.00%
2/15/39
|
|
300,000
|
|
|
351,261
|
|
Oregon State Series K
5.00% 5/1/22
|
|
1,000,000
|
|
|
1,296,970
|
|
Puerto Rico Commonwealth
|
|
|
|
|
|
|
(Public Improvement) Series A
|
|
|
|
|
|
|
5.00%
7/1/41
|
|
1,100,000
|
|
|
1,105,401
|
|
5.50%
7/1/39
|
|
235,000
|
|
|
243,140
|
|
5.75%
7/1/41
|
|
500,000
|
|
|
524,305
|
|
Series
C 6.00% 7/1/39
|
|
335,000
|
|
|
354,276
|
|
|
|
|
|
|
6,472,212
|
Transportation Revenue Bonds 19.44%
|
|
|
|
|
|
|
Bay Area, California
Toll Authority
|
|
|
|
|
|
|
Revenue (San Francisco Bay Area)
|
|
|
|
|
|
|
5.00%
4/1/27
|
|
750,000
|
|
|
915,825
|
|
Central Texas Regional
Mobility
|
|
|
|
|
|
|
Authority Revenue Senior Lien
|
|
|
|
|
|
|
6.00%
1/1/41
|
|
520,000
|
|
|
608,436
|
|
Harris County, Texas
Metropolitan
|
|
|
|
|
|
|
Transit Authority Series A
|
|
|
|
|
|
|
5.00%
11/1/24
|
|
500,000
|
|
|
613,025
|
|
Maryland State Economic
|
|
|
|
|
|
|
Development Revenue
|
|
|
|
|
|
|
(Transportation Facilities Project)
|
|
|
|
|
|
|
Series
A 5.75% 6/1/35
|
|
255,000
|
|
|
279,898
|
|
Metropolitan
Transportation
|
|
|
|
|
|
|
Authority, New York
|
|
|
|
|
|
|
Series
A 5.00% 11/15/41
|
|
500,000
|
|
|
556,305
|
|
Series
E 4.00% 11/15/38
|
|
1,000,000
|
|
|
1,030,150
|
14
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
|
Municipal Bonds
(continued)
|
|
|
|
|
|
|
Transportation Revenue Bonds
(continued)
|
|
|
|
|
|
|
|
Metropolitan
Washington D.C.
|
|
|
|
|
|
|
|
Airports Authority Dulles Toll
|
|
|
|
|
|
|
|
Road Revenue (First Senior Lien)
|
|
|
|
|
|
|
|
Series A 5.25% 10/1/44
|
$
|
245,000
|
|
$
|
272,648
|
|
|
New York Liberty Development
|
|
|
|
|
|
|
|
Revenue (1 World Trade Center
|
|
|
|
|
|
|
|
Port Authority Construction)
|
|
|
|
|
|
|
|
5.00% 12/15/41
|
|
500,000
|
|
|
563,435
|
|
|
North Texas Tollway
Authority Special
|
|
|
|
|
|
|
|
Projects System Series A
|
|
|
|
|
|
|
|
5.00% 9/1/20
|
|
250,000
|
|
|
311,720
|
|
|
Pennsylvania Turnpike
Commission
|
|
|
|
|
|
|
|
Subordinate (Special Motor
|
|
|
|
|
|
|
|
License Fund)
|
|
|
|
|
|
|
|
5.00% 12/1/22
|
|
500,000
|
|
|
600,980
|
|
|
Series B 5.00% 12/1/41
|
|
500,000
|
|
|
564,470
|
|
|
Phoenix, Arizona
Civic Improvement
|
|
|
|
|
|
|
|
Airport Revenue (Senior Lien)
|
|
|
|
|
|
|
|
Series B 5.25% 7/1/27 (NATL-RE)
|
|
|
|
|
|
|
|
(FGIC) (AMT)
|
|
1,000,000
|
|
|
1,001,570
|
|
|
Port Authority of New York &
New
|
|
|
|
|
|
|
|
Jersey Special Obligation Revenue
|
|
|
|
|
|
|
|
(JFK International Air Terminal)
|
|
|
|
|
|
|
|
6.00% 12/1/42
|
|
230,000
|
|
|
268,691
|
|
|
6.50% 12/1/28
|
|
500,000
|
|
|
548,540
|
|
|
Regional
Transportation, Colorado
|
|
|
|
|
|
|
|
District Revenue (Denver Transit
|
|
|
|
|
|
|
|
Partners) 6.00% 1/15/41
|
|
500,000
|
|
|
580,735
|
|
|
St. Louis, Missouri Airport
Revenue
|
|
|
|
|
|
|
|
(Lambert St. Louis International)
|
|
|
|
|
|
|
|
5.00% 7/1/32 (AMT)
|
|
1,000,000
|
|
|
1,073,800
|
|
|
Series A-1 6.625% 7/1/34
|
|
325,000
|
|
|
385,739
|
|
|
Texas Private
Activity Bond Surface
|
|
|
|
|
|
|
|
Transportation Senior
|
|
|
|
|
|
|
|
Lien Revenue
|
|
|
|
|
|
|
|
(LBJ Infrastructure)
|
|
|
|
|
|
|
|
7.00% 6/30/40
|
|
285,000
|
|
|
349,610
|
|
|
7.50% 6/30/33
|
|
665,000
|
|
|
847,888
|
|
|
(NTE Mobility Partners)
|
|
|
|
|
|
|
|
6.875% 12/31/39
|
|
1,000,000
|
|
|
1,206,001
|
|
|
7.50% 12/31/31
|
|
500,000
|
|
|
628,230
|
|
|
|
|
|
|
|
13,207,696
|
|
Water & Sewer Revenue Bonds 5.66%
|
|
|
|
|
|
|
|
Atlanta, Georgia Water &
|
|
|
|
|
|
|
|
Wastewater Revenue Series A
|
|
|
|
|
|
|
|
6.25% 11/1/39
|
|
800,000
|
|
|
964,952
|
|
|
New York City, New
York Municipal
|
|
|
|
|
|
|
|
Water Finance Authority (Second
|
|
|
|
|
|
|
|
Generation Resolution) Fiscal
|
|
|
|
|
|
|
|
2012 Series BB 5.25% 6/15/44
|
|
525,000
|
|
|
616,912
|
|
|
Phoenix, Arizona Civic
Improvement
|
|
|
|
|
|
|
|
Wastewater Systems Revenue
|
|
|
|
|
|
|
|
(Junior Lien) Series A
|
|
|
|
|
|
|
|
5.00% 7/1/39
|
|
900,000
|
|
|
1,037,142
|
|
|
San Francisco,
California City &
|
|
|
|
|
|
|
|
County Public Utilities
|
|
|
|
|
|
|
|
Commission Subordinate Series F
|
|
|
|
|
|
|
|
5.00% 11/1/27
|
|
500,000
|
|
|
600,660
|
|
|
Texas State Series C 5.00%
8/1/22
|
|
500,000
|
|
|
628,555
|
|
|
|
|
|
|
|
3,848,221
|
|
Total Municipal Bonds
|
|
|
|
|
|
|
|
(cost $88,585,350)
|
|
|
|
|
96,658,357
|
|
|
|
|
Short-Term Investments 1.10%
|
|
|
|
|
|
|
¤Variable Rate Demand Notes 1.10%
|
|
|
|
|
|
|
|
Colorado Educational
& Cultural
|
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
|
(National Jewish Federation
|
|
|
|
|
|
|
|
Bond Program) Series D-7 0.20%
|
|
|
|
|
|
|
|
2/1/35 (LOC-JPMorgan Chase
|
|
|
|
|
|
|
|
Bank N.A.)
|
|
500,000
|
|
|
500,000
|
|
|
St. Paul, Minnesota Port
Authority
|
|
|
|
|
|
|
|
Revenue (Minnesota Public Radio
|
|
|
|
|
|
|
|
Project) Series 7 0.21% 5/1/25
|
|
|
|
|
|
|
|
(LOC-JPMorgan Chase Bank N.A.)
|
|
250,000
|
|
|
250,000
|
|
Total Short-Term
Investments
|
|
|
|
|
|
|
|
(cost
$750,000)
|
|
|
|
|
750,000
|
|
|
|
Total Value of Securities
143.35%
|
|
|
|
|
|
|
|
(cost
$89,335,350)
|
|
|
|
|
97,408,357
|
|
Liquidation Value of
Preferred
|
|
|
|
|
|
|
|
Stock
(44.15%)
|
|
|
|
|
(30,000,000
|
)
|
Receivables and Other
Assets
|
|
|
|
|
|
|
|
Net of Liabilities
0.80%
|
|
|
|
|
541,671
|
|
Net Assets Applicable to
4,528,443
|
|
|
|
|
|
|
|
Shares Outstanding;
Equivalent to
|
|
|
|
|
|
|
|
$15.01 Per Share
100.00%
|
|
|
|
$
|
67,950,028
|
|
|
|
Components of Net Assets at September
30, 2012:
|
|
|
|
|
Common stock, $0.01 par value, unlimited
shares
|
|
|
|
|
|
authorized to the Fund
|
|
|
|
$
|
60,617,476
|
|
Undistributed net investment income
|
|
|
|
|
648,862
|
|
Accumulated net realized loss on
investments
|
|
|
|
|
(1,389,317
|
)
|
Net unrealized appreciation of investments
|
|
|
|
|
8,073,007
|
|
Total net assets
|
|
|
|
$
|
67,950,028
|
|
(continues)
15
Statements of net assets
Delaware
Investments
®
National Municipal Income Fund
|
|
|
Variable rate security. The rate shown is the rate as of September
30, 2012. Interest rates reset periodically.
|
#
|
Security exempt from registration under Rule 144A of the Securities
Act of 1933, as amended. At September 30, 2012, the aggregate value of
Rule 144A securities was $147,227, which represented 0.22% of the Funds
net assets. See Note 9 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. See
Note 9 in Notes to financial statements.
|
Ω
|
Step coupon bond. Indicates security that has a zero coupon that
remains in effect until a predetermined date at which time the stated
interest rate becomes effective.
|
^
|
Zero coupon security. The rate shown is the yield at the time of
purchase.
|
¤
|
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.
|
|
See Note 6 in Notes to financial
statements.
|
Summary of
Abbreviations:
AGM Insured by Assured
Guaranty Municipal Corporation
AMBAC Insured by AMBAC Assurance
Corporation
AMT Subject to Alternative Minimum Tax
FGIC Insured by
Financial Guaranty Insurance Company
LOC Letter of Credit
NATL-RE Insured by National Public Finance Guarantee
Corporation
RADIAN Insured by Radian Asset Assurance
See accompanying notes, which are an
integral part of the financial statements.
16
Statements of assets and
liabilities
Delaware Investments
®
Closed-End
Municipal Bond Funds
September 30, 2012
(Unaudited)
|
|
Delaware
|
|
Delaware
|
|
Delaware
|
|
|
Investments
|
|
Investments
|
|
Investments
|
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Income
|
|
Income
|
|
Income
|
|
|
Fund, Inc.
|
|
Fund II,
Inc.
|
|
Fund
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments, at value
|
|
$
|
104,512,878
|
|
$
|
255,081,927
|
|
$
|
96,658,357
|
Short-term investments,
at value
|
|
|
|
|
|
|
|
|
750,000
|
Cash
|
|
|
206,904
|
|
|
1,342,667
|
|
|
165,765
|
Receivable for
securities sold
|
|
|
|
|
|
2,447,240
|
|
|
15,221
|
Interest income receivable
|
|
|
1,370,568
|
|
|
3,518,020
|
|
|
1,291,741
|
Organization expense for
preferred shareholders
|
|
|
211,242
|
|
|
362,284
|
|
|
60,212
|
Other assets
|
|
|
|
|
|
|
|
|
218,403
|
Total assets
|
|
|
106,301,592
|
|
|
262,752,138
|
|
|
99,159,699
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Liquidation value of preferred stock
|
|
|
30,000,000
|
|
|
75,000,000
|
|
|
30,000,000
|
Payable for securities
purchased
|
|
|
|
|
|
8,367,462
|
|
|
893,558
|
Due to manager and affiliates
|
|
|
36,099
|
|
|
86,615
|
|
|
33,412
|
Other accrued
expenses
|
|
|
19,613
|
|
|
19,938
|
|
|
|
Distributions payable
|
|
|
756,783
|
|
|
745,627
|
|
|
282,701
|
Total
liabilities
|
|
|
30,812,495
|
|
|
84,219,642
|
|
|
31,209,671
|
|
Total net assets
|
|
$
|
75,489,097
|
|
$
|
178,532,496
|
|
$
|
67,950,028
|
|
Investments, at
cost
|
|
$
|
96,709,911
|
|
$
|
236,711,360
|
|
$
|
88,585,350
|
Short-term investments, at cost
|
|
|
|
|
|
|
|
|
750,000
|
See accompanying notes, which are an
integral part of the financial statements.
17
Statements of operations
Delaware Investments
®
Closed-End
Municipal Bond Funds
Six Months Ended
September 30, 2012 (Unaudited)
|
|
Delaware
|
|
Delaware
|
|
Delaware
|
|
|
Investments
|
|
Investments
|
|
Investments
|
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Income
|
|
Income
|
|
Income
|
|
|
Fund, Inc.
|
|
Fund II, Inc.
|
|
Fund
|
Investment
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
2,319,932
|
|
|
$
|
5,444,837
|
|
|
$
|
2,122,895
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
|
209,552
|
|
|
|
502,631
|
|
|
|
192,547
|
|
Legal fees
|
|
|
31,205
|
|
|
|
69,796
|
|
|
|
60,517
|
|
Accounting and
administration expenses
|
|
|
20,392
|
|
|
|
48,912
|
|
|
|
18,737
|
|
Dividend disbursing and transfer agent fees and expenses
|
|
|
18,065
|
|
|
|
36,428
|
|
|
|
21,649
|
|
Rating agency
fees
|
|
|
15,848
|
|
|
|
15,631
|
|
|
|
15,835
|
|
Audit and tax
|
|
|
8,762
|
|
|
|
10,539
|
|
|
|
8,813
|
|
Reports and
statements to shareholders
|
|
|
7,456
|
|
|
|
12,644
|
|
|
|
8,518
|
|
Pricing fees
|
|
|
3,508
|
|
|
|
5,648
|
|
|
|
6,936
|
|
Taxes (Pennsylvania franchise tax)
|
|
|
2,500
|
|
|
|
6,000
|
|
|
|
|
|
Stock exchange fees
|
|
|
2,339
|
|
|
|
5,616
|
|
|
|
2,045
|
|
Directors/Trustees fees
|
|
|
1,624
|
|
|
|
3,828
|
|
|
|
1,435
|
|
Dues and services
|
|
|
702
|
|
|
|
1,954
|
|
|
|
1,006
|
|
Custodian
fees
|
|
|
653
|
|
|
|
1,602
|
|
|
|
739
|
|
Insurance fees
|
|
|
511
|
|
|
|
1,883
|
|
|
|
607
|
|
Consulting
fees
|
|
|
390
|
|
|
|
906
|
|
|
|
311
|
|
Registration fees
|
|
|
308
|
|
|
|
308
|
|
|
|
308
|
|
Directors/Trustees expenses
|
|
|
57
|
|
|
|
143
|
|
|
|
48
|
|
Total operating expenses
|
|
|
323,872
|
|
|
|
724,469
|
|
|
|
340,051
|
|
Net Investment Income
|
|
|
1,996,060
|
|
|
|
4,720,368
|
|
|
|
1,782,844
|
|
|
Net Realized and
Unrealized Gain:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
gain on investments
|
|
|
20,905
|
|
|
|
642,526
|
|
|
|
333,320
|
|
Net change in unrealized appreciation (depreciation) of
investments
|
|
|
3,183,782
|
|
|
|
5,823,264
|
|
|
|
3,821,951
|
|
Net Realized and Unrealized
Gain
|
|
|
3,204,687
|
|
|
|
6,465,790
|
|
|
|
4,155,271
|
|
|
Dividends and
Distributions to Preferred Shareholders
|
|
|
(211,226
|
)
|
|
|
(519,009
|
)
|
|
|
(207,603
|
)
|
Net Increase in Net Assets Resulting
from Operations
|
|
$
|
4,989,521
|
|
|
$
|
10,667,149
|
|
|
$
|
5,730,512
|
|
See accompanying notes, which are an
integral part of the financial statements.
18
Statements of changes in net
assets
Delaware Investments
®
Closed-End
Municipal Bond Funds
|
|
Delaware
Investments
|
|
Delaware
Investments
|
|
|
Colorado
Municipal
|
|
Minnesota
Municipal
|
|
|
Income Fund,
Inc.
|
|
Income Fund II,
Inc.
|
|
|
Six Months
|
|
Year
|
|
Six Months
|
|
Year
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
9/30/12
|
|
3/31/12
|
|
9/30/12
|
|
3/31/12
|
|
|
(Unaudited)
|
|
|
|
|
|
(Unaudited)
|
|
|
Increase (Decrease) in Net Assets from
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
1,996,060
|
|
|
$
|
3,233,923
|
|
|
$
|
4,720,368
|
|
|
$
|
7,747,076
|
|
Net realized
gain
|
|
|
20,905
|
|
|
|
976,769
|
|
|
|
642,526
|
|
|
|
1,701,330
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
3,183,782
|
|
|
|
6,668,604
|
|
|
|
5,823,264
|
|
|
|
11,778,378
|
|
Dividends and
distributions to preferred shareholders
|
|
|
(211,226
|
)
|
|
|
(149,762
|
)
|
|
|
(519,009
|
)
|
|
|
(374,404
|
)
|
Net increase in net assets resulting from operations
|
|
|
4,989,521
|
|
|
|
10,729,534
|
|
|
|
10,667,149
|
|
|
|
20,852,380
|
|
|
Dividends and Distributions to Common
Shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(1,668,800
|
)
|
|
|
(2,805,518
|
)
|
|
|
(3,969,216
|
)
|
|
|
(6,672,886
|
)
|
Net realized
gain
|
|
|
(445,013
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,113,813
|
)
|
|
|
(2,805,518
|
)
|
|
|
(3,969,216
|
)
|
|
|
(6,672,886
|
)
|
|
Net Increase in Net Assets
|
|
|
2,875,708
|
|
|
|
7,924,016
|
|
|
|
6,697,933
|
|
|
|
14,179,494
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
72,613,389
|
|
|
|
64,689,373
|
|
|
|
171,834,563
|
|
|
|
157,655,069
|
|
End of period
|
|
$
|
75,489,097
|
|
|
$
|
72,613,389
|
|
|
$
|
178,532,496
|
|
|
$
|
171,834,563
|
|
|
Undistributed net
investment income
|
|
$
|
711,778
|
|
|
$
|
598,215
|
|
|
$
|
1,716,382
|
|
|
$
|
1,504,205
|
|
|
|
Delaware Investments
|
|
|
National Municipal
|
|
|
Income Fund
|
|
|
Six Months
|
|
Year
|
|
|
Ended
|
|
Ended
|
|
|
9/30/12
|
|
3/31/12
|
|
|
(Unaudited)
|
|
|
|
|
Increase (Decrease) in Net
Assets from Operations:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
1,782,844
|
|
|
$
|
2,343,640
|
|
Net realized gain
|
|
|
333,320
|
|
|
|
909,697
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
3,821,951
|
|
|
|
4,515,112
|
|
Dividends and distributions to preferred shareholders
|
|
|
(207,603
|
)
|
|
|
(18,904
|
)
|
Net increase in net assets resulting from operations
|
|
|
5,730,512
|
|
|
|
7,749,545
|
|
|
Dividends and
Distributions to Common Shareholders from:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(1,267,964
|
)
|
|
|
(2,295,215
|
)
|
Net realized gain
|
|
|
|
|
|
|
|
|
|
|
|
(1,267,964
|
)
|
|
|
(2,295,215
|
)
|
|
Capital Share
Transactions:
|
|
|
|
|
|
|
|
|
Net assets from merger to Common Shareholders*
|
|
|
|
|
|
|
40,715,147
|
|
Tender offer**
|
|
|
|
|
|
|
(13,240,759
|
)
|
|
|
|
|
|
|
|
27,474,388
|
|
|
Net Increase in Net
Assets
|
|
|
4,462,548
|
|
|
|
32,928,718
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
63,487,480
|
|
|
|
30,558,762
|
|
End of period
|
|
$
|
67,950,028
|
|
|
$
|
63,487,480
|
|
|
Undistributed net investment
income
|
|
$
|
648,862
|
|
|
$
|
376,432
|
|
*
|
See Note 7 in Notes to
financial statements.
|
**
|
See Note 6 in Notes to
financial statements.
|
See accompanying notes, which are an
integral part of the financial statements.
19
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
|
|
Year
Ended
|
|
|
9/30/12
1
|
|
|
3/31/12
|
|
3/31/11
|
|
3/31/10
|
|
3/31/09
|
|
3/31/08
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
|
$15.010
|
|
|
|
|
$13.370
|
|
|
$13.990
|
|
|
$13.220
|
|
|
$14.260
|
|
|
$15.100
|
|
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
0.413
|
|
|
|
|
0.669
|
|
|
0.601
|
|
|
0.607
|
|
|
0.755
|
|
|
0.937
|
|
|
Net
realized and unrealized gain (loss)
|
|
|
0.668
|
|
|
|
|
1.582
|
|
|
(0.651
|
)
|
|
0.733
|
|
|
(0.965
|
)
|
|
(0.604
|
)
|
|
Dividends and
distributions on preferred stock from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(0.044
|
)
|
|
|
|
(0.031
|
)
|
|
|
|
|
|
|
|
(0.173
|
)
|
|
(0.264
|
)
|
|
Net realized gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.050
|
)
|
|
Total
dividends and distributions on preferred stock
|
|
|
(0.044
|
)
|
|
|
|
(0.031
|
)
|
|
|
|
|
|
|
|
(0.173
|
)
|
|
(0.314
|
)
|
|
Total from investment
operations
|
|
|
1.037
|
|
|
|
|
2.220
|
|
|
(0.050
|
)
|
|
1.340
|
|
|
(0.383
|
)
|
|
0.019
|
|
|
|
|
Less dividends and distributions to common shareholders
from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(0.345
|
)
|
|
|
|
(0.580
|
)
|
|
(0.570
|
)
|
|
(0.570
|
)
|
|
(0.657
|
)
|
|
(0.720
|
)
|
|
Net
realized gain
|
|
|
(0.092
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.139
|
)
|
|
Total dividends and
distributions
|
|
|
(0.437
|
)
|
|
|
|
(0.580
|
)
|
|
(0.570
|
)
|
|
(0.570
|
)
|
|
(0.657
|
)
|
|
(0.859
|
)
|
|
|
|
Net asset value, end of period
|
|
|
$15.610
|
|
|
|
|
$15.010
|
|
|
$13.370
|
|
|
$13.990
|
|
|
$13.220
|
|
|
$14.260
|
|
|
|
|
Market value, end of period
|
|
|
$15.150
|
|
|
|
|
$14.600
|
|
|
$12.450
|
|
|
$13.390
|
|
|
$11.240
|
|
|
$15.060
|
|
|
|
|
Total investment return based on:
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
value
|
|
|
6.72%
|
|
|
|
|
22.41%
|
|
|
(3.00%
|
)
|
|
24.49%
|
|
|
(21.63%
|
)
|
|
(0.14%
|
)
|
|
Net
asset value
|
|
|
6.96%
|
|
|
|
|
17.19%
|
|
|
(0.30%
|
)
|
|
10.55%
|
|
|
(2.66%
|
)
|
|
(0.19%
|
)
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable
to common shares, end of period (000 omitted)
|
|
|
$75,489
|
|
|
|
|
$72,613
|
|
|
$64,689
|
|
|
$67,651
|
|
|
$63,952
|
|
|
$68,973
|
|
|
Ratio
of expenses to average net assets applicable to common
shares
3
|
|
|
0.87%
|
|
|
|
|
0.73%
|
|
|
0.56%
|
|
|
0.56%
|
|
|
0.91%
|
|
|
1.03%
|
|
|
Ratio of net
investment income to average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common
shares
3
|
|
|
5.34%
|
|
|
|
|
4.68%
|
|
|
4.31%
|
|
|
4.41%
|
|
|
5.55%
|
|
|
6.37%
|
|
|
Ratio
of net investment income to average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common shares
net of dividends to preferred shares
4
|
|
|
4.78%
|
|
|
|
|
4.46%
|
|
|
4.31%
|
|
|
4.41%
|
|
|
4.28%
|
|
|
4.23%
|
|
|
Portfolio
turnover
|
|
|
2%
|
|
|
|
|
64%
|
|
|
10%
|
|
|
20%
|
|
|
16%
|
|
|
16%
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred
shares outstanding (000 omitted)
5
|
|
|
$30,000
|
|
|
|
|
$30,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$40,000
|
|
|
Net
asset coverage per share of preferred shares, end of
period
5
|
|
|
$351,630
|
|
|
|
|
$342,045
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$136,216
|
|
|
Liquidation value per share of preferred
shares
5,6
|
|
|
$100,000
|
|
|
|
|
$100,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$50,000
|
|
|
1
Ratios have been
annualized and total return and portfolio turnover have not been
annualized.
2
Total investment
return is calculated assuming a purchase of common stock on the opening of the
first day and a sale on the closing of the last day of each period reported.
Dividends and distributions, if any, are assumed for the purposes of this
calculation to be reinvested at prices obtained under the Funds dividend
reinvestment plan. Generally, total investment return based on net asset value
will be higher than total investment return based on market value in periods
where there is an increase in the discount or a decrease in the premium of the
market value to the net asset value from the beginning to the end of such
periods. Conversely, total investment return based on net asset value will be
lower than total investment return based on market value in periods where there
is a decrease in the discount or an increase in the premium of the market value
to the net asset value from the beginning to the end of such
periods.
3
Ratios do not reflect
the effect of dividend payments to preferred shareholders, if
applicable.
4
Ratio reflects
total net investment income less dividends paid to preferred shareholders, if
applicable, divided by average net assets applicable to common
shareholders.
5
In 2008, the
Fund redeemed all of its preferred shares at par plus accumulated dividends
amounting to $40,042,778. In November 2011, the Fund issued a new series of 300
variable rate preferred shares, with a liquidation preference of $100,000 per
share.
6
Excluding any
accumulated but unpaid dividends.
See accompanying notes, which are an
integral part of the financial statements.
20
Delaware Investments
®
Minnesota
Municipal Income Fund II, Inc.
Selected data for each share of the Fund
outstanding throughout each period were as follows:
|
|
Six
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
Year Ended
|
|
|
9/30/12
1
|
|
|
3/31/12
|
|
3/31/11
|
|
3/31/10
|
|
3/31/09
|
|
3/31/08
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
asset value, beginning of period
|
|
|
$14.940
|
|
|
|
|
$13.700
|
|
|
$14.060
|
|
|
$13.140
|
|
|
$14.190
|
|
|
$14.880
|
|
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
0.410
|
|
|
|
|
0.673
|
|
|
0.612
|
|
|
0.602
|
|
|
0.776
|
|
|
0.962
|
|
|
Net
realized and unrealized gain (loss)
|
|
|
0.560
|
|
|
|
|
1.180
|
|
|
(0.402
|
)
|
|
0.888
|
|
|
(1.013
|
)
|
|
(0.674
|
)
|
|
Dividends and
distributions on preferred stock from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(0.045
|
)
|
|
|
|
(0.033
|
)
|
|
|
|
|
|
|
|
(0.175
|
)
|
|
(0.318
|
)
|
|
Total dividends and
distributions on preferred stock
|
|
|
(0.045
|
)
|
|
|
|
(0.033
|
)
|
|
|
|
|
|
|
|
(0.175
|
)
|
|
(0.318
|
)
|
|
Total
from investment operations
|
|
|
0.925
|
|
|
|
|
1.820
|
|
|
0.210
|
|
|
1.490
|
|
|
(0.412
|
)
|
|
(0.030
|
)
|
|
|
|
Less
dividends to common shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(0.345
|
)
|
|
|
|
(0.580
|
)
|
|
(0.570
|
)
|
|
(0.570
|
)
|
|
(0.638
|
)
|
|
(0.660
|
)
|
|
Total
dividends
|
|
|
(0.345
|
)
|
|
|
|
(0.580
|
)
|
|
(0.570
|
)
|
|
(0.570
|
)
|
|
(0.638
|
)
|
|
(0.660
|
)
|
|
|
|
Net
asset value, end of period
|
|
|
$15.520
|
|
|
|
|
$14.940
|
|
|
$13.700
|
|
|
$14.060
|
|
|
$13.140
|
|
|
$14.190
|
|
|
|
|
Market value, end of period
|
|
|
$15.420
|
|
|
|
|
$14.230
|
|
|
$12.600
|
|
|
$12.740
|
|
|
$11.250
|
|
|
$13.450
|
|
|
|
|
Total
investment return based on:
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value
|
|
|
10.87%
|
|
|
|
|
17.95%
|
|
|
3.32%
|
|
|
18.58%
|
|
|
(11.91%
|
)
|
|
(3.58%
|
)
|
|
Net
asset value
|
|
|
6.29%
|
|
|
|
|
13.90%
|
|
|
1.80%
|
|
|
12.04%
|
|
|
(2.48%
|
)
|
|
0.08%
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to
common shares, end of period (000 omitted)
|
|
|
$178,532
|
|
|
|
|
$171,835
|
|
|
$157,655
|
|
|
$161,723
|
|
|
$151,184
|
|
|
$163,305
|
|
|
Ratio of
expenses to average net assets applicable to common
shares
3,5
|
|
|
0.82%
|
|
|
|
|
0.70%
|
|
|
0.56%
|
|
|
0.56%
|
|
|
0.98%
|
|
|
1.18%
|
|
|
Ratio of net investment
income to average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common
shares
3
|
|
|
5.36%
|
|
|
|
|
4.67%
|
|
|
4.35%
|
|
|
4.36%
|
|
|
5.74%
|
|
|
6.61%
|
|
|
Ratio of
net investment income to average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common shares
net of dividends to preferred shares
4
|
|
|
4.77%
|
|
|
|
|
4.44%
|
|
|
4.35%
|
|
|
4.36%
|
|
|
4.45%
|
|
|
4.43%
|
|
|
Portfolio
turnover
|
|
|
11%
|
|
|
|
|
44%
|
|
|
9%
|
|
|
19%
|
|
|
15%
|
|
|
6%
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred
shares outstanding (000 omitted)
6
|
|
|
$75,000
|
|
|
|
|
$75,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$95,000
|
|
|
Net
asset coverage per share of preferred shares, end of
period
6
|
|
|
$338,043
|
|
|
|
|
$329,113
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$135,950
|
|
|
Liquidation value per share of preferred
shares
6,7
|
|
|
$100,000
|
|
|
|
|
$100,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$50,000
|
|
|
1
Ratios have been
annualized and total return and portfolio turnover have not been
annualized.
2
Total investment
return is calculated assuming a purchase of common stock on the opening of the
first day and a sale on the closing of the last day of each period reported.
Dividends and distributions, if any, are assumed for the purposes of this
calculation to be reinvested at prices obtained under the Funds dividend
reinvestment plan. Generally, total investment return based on net asset value
will be higher than total investment return based on market value in periods
where there is an increase in the discount or a decrease in the premium of the
market value to the net asset value from the beginning to the end of such
periods. Conversely, total investment return based on net asset value will be
lower than total investment return based on market value in periods where there
is a decrease in the discount or an increase in the premium of the market value
to the net asset value from the beginning to the end of such
periods.
3
Ratios do not reflect
the effect of dividend payments to preferred shareholders, if
applicable.
4
Ratio reflects
total net investment income less dividends paid to preferred shareholders, if
applicable, divided by average net assets applicable to common
shareholders.
5
The ratio of
expenses to average net assets applicable to common shares includes interest and
related expenses which include, but are not limited to, interest expense,
remarketing fees, liquidity fees, and trustees fees in connection with the
Funds participation in inverse floater programs for the years ended March 31,
2009 and 2008. See Notes 1 and 8 in Notes to financial
statements.
6
In 2008, the Fund
redeemed all of its preferred shares at par plus accumulated dividends amounting
to $95,083,577. In November 2011, the Fund issued a new series of 750 variable
rate preferred shares, with a liquidation preference of $100,000 per
share.
7
Excluding any
accumulated but unpaid dividends.
See accompanying notes, which are an
integral part of the financial statements.
(continues)
21
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
|
|
Year
Ended
|
|
|
9/30/12
1
|
|
|
3/31/12
|
|
3/31/11
|
|
3/31/10
|
|
3/31/09
|
|
3/31/08
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
|
$14.020
|
|
|
|
|
$12.620
|
|
|
$13.070
|
|
|
$11.960
|
|
|
$13.360
|
|
|
$14.560
|
|
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
0.394
|
|
|
|
|
0.535
|
|
|
0.610
|
|
|
0.571
|
|
|
0.704
|
|
|
0.919
|
|
|
Net
realized and unrealized gain (loss)
|
|
|
0.922
|
|
|
|
|
1.409
|
|
|
(0.532
|
)
|
|
1.049
|
|
|
(1.367
|
)
|
|
(1.081
|
)
|
|
Dividends and
distributions on preferred stock from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(0.046
|
)
|
|
|
|
(0.004
|
)
|
|
|
|
|
|
|
|
(0.172
|
)
|
|
(0.311
|
)
|
|
Net realized gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.015
|
)
|
|
Total
dividends and distributions on preferred stock
|
|
|
(0.046
|
)
|
|
|
|
(0.004
|
)
|
|
|
|
|
|
|
|
(0.172
|
)
|
|
(0.326
|
)
|
|
Total from investment
operations
|
|
|
1.270
|
|
|
|
|
1.940
|
|
|
0.078
|
|
|
1.620
|
|
|
(0.835
|
)
|
|
(0.488
|
)
|
|
|
|
Less dividends and distributions to common shareholders
from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(0.280
|
)
|
|
|
|
(0.540
|
)
|
|
(0.528
|
)
|
|
(0.510
|
)
|
|
(0.565
|
)
|
|
(0.668
|
)
|
|
Net
realized gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.044
|
)
|
|
Total dividends and
distributions
|
|
|
(0.280
|
)
|
|
|
|
(0.540
|
)
|
|
(0.528
|
)
|
|
(0.510
|
)
|
|
(0.565
|
)
|
|
(0.712
|
)
|
|
|
|
Net asset value, end of period
|
|
|
$15.010
|
|
|
|
|
$14.020
|
|
|
$12.620
|
|
|
$13.070
|
|
|
$11.960
|
|
|
$13.360
|
|
|
|
|
Market value, end of period
|
|
|
$14.180
|
|
|
|
|
$13.240
|
|
|
$12.200
|
|
|
$12.140
|
|
|
$10.850
|
|
|
$11.950
|
|
|
|
|
Total investment return based on:
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
value
|
|
|
9.28%
|
|
|
|
|
13.19%
|
|
|
4.78%
|
|
|
16.69%
|
|
|
(4.31%
|
)
|
|
(13.11%
|
)
|
|
Net
asset value
|
|
|
9.24%
|
|
|
|
|
15.87%
|
|
|
0.67%
|
|
|
13.97%
|
|
|
(5.65%
|
)
|
|
(3.05%
|
)
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable
to common shares, end of period (000 omitted)
|
|
|
$67,950
|
|
|
|
|
$63,487
|
|
|
$30,559
|
|
|
$31,650
|
|
|
$28,967
|
|
|
$32,365
|
|
|
Ratio
of expenses to average net assets applicable to common
shares
3
|
|
|
1.03%
|
|
|
|
|
0.99%
|
|
|
0.65%
|
|
|
0.63%
|
|
|
1.06%
|
|
|
1.16%
|
|
|
Ratio of net
investment income to average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common
shares
3
|
|
|
5.39%
|
|
|
|
|
3.99%
|
|
|
4.64%
|
|
|
4.48%
|
|
|
5.63%
|
|
|
6.54%
|
|
|
Ratio
of net investment income to average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common shares
net of dividends to preferred shares
4
|
|
|
4.76%
|
|
|
|
|
3.96%
|
|
|
4.64%
|
|
|
4.48%
|
|
|
4.25%
|
|
|
4.22%
|
|
|
Portfolio
turnover
|
|
|
19%
|
|
|
|
|
101%
|
|
|
50%
|
|
|
69%
|
|
|
36%
|
|
|
17%
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred
shares outstanding (000 omitted)
5
|
|
|
$30,000
|
|
|
|
|
$30,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$20,000
|
|
|
Net
asset coverage per share of preferred shares, end of
period
5
|
|
|
$326,500
|
|
|
|
|
$311,625
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$130,914
|
|
|
Liquidation value per share of preferred
shares
5,6
|
|
|
$100,000
|
|
|
|
|
$100,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$50,000
|
|
|
1
Ratios have been
annualized and total return and portfolio turnover have not been
annualized.
2
Total investment
return is calculated assuming a purchase of common stock on the opening of the
first day and a sale on the closing of the last day of each period reported.
Dividends and distributions, if any, are assumed for the purposes of this
calculation to be reinvested at prices obtained under the Funds dividend
reinvestment plan. Generally, total investment return based on net asset value
will be higher than total investment return based on market value in periods
where there is an increase in the discount or a decrease in the premium of the
market value to the net asset value from the beginning to the end of such
periods. Conversely, total investment return based on net asset value will be
lower than total investment return based on market value in periods where there
is a decrease in the discount or an increase in the premium of the market value
to the net asset value from the beginning to the end of such
periods.
3
Ratios do not reflect
the effect of dividend payments to preferred shareholders, if
applicable.
4
Ratio reflects
total net investment income less dividends paid to preferred shareholders, if
applicable, divided by average net assets applicable to common
shareholders.
5
In 2008, the
Fund redeemed all of its preferred shares at par plus accumulated dividends
amounting to $20,019,516. In March 2012, the Fund issued a new series of 300
variable rate preferred shares, with a liquidation preference of $100,000 per
share.
6
Excluding any
accumulated but unpaid dividends.
See accompanying notes, which are an
integral part of the financial statements.
22
Notes to financial statements
Delaware Investments
®
Closed-End
Municipal Bond Funds
September 30, 2012
(Unaudited)
Delaware Investments Colorado Municipal
Income Fund, Inc. (Colorado Municipal Fund) and Delaware Investments Minnesota
Municipal Income Fund II, Inc. (Minnesota Municipal Fund II) are organized as
Minnesota corporations and Delaware Investments National Municipal Income Fund
(National Municipal Fund) is organized as a Massachusetts business trust (each
referred to as a Fund and collectively as the Funds). Colorado Municipal Fund,
Minnesota Municipal Fund II and National Municipal Fund are considered
diversified closed-end management investment companies under the Investment
Company Act of 1940, as amended. The Funds shares trade on the NYSE MKT, the
successor to the American Stock Exchange.
The investment objective of each Fund is
to provide current income exempt from federal income tax and from state personal
income tax, if any, consistent with the preservation of capital. Each of
Colorado Municipal Fund and Minnesota Municipal Fund II seek to achieve its
investment objective by investing substantially all of its net assets in
investment grade, tax-exempt municipal obligations of its respective state 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 Funds Board of Directors/Trustees (each a Board, and
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 the Funds tax returns to determine whether the tax positions are
more-likely-than-not of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold are recorded as
a tax benefit or expense in the current year. Management has analyzed the Funds
tax positions taken for all open federal income tax years and has concluded that
no provision for federal income tax is required in the Funds financial
statements.
Interest and Related Expenses
Interest and related expenses include, but
are not limited to, interest expense, remarketing fees, liquidity fees, and
trustees fees from the Funds participation in inverse floater programs where a
Fund has transferred its own bonds to a trust that issues floating rate
securities with an aggregate principal amount equal to the principal of the
transferred bonds. In conveyance of the bond, the Funds receive the inverse
floating rate securities and cash from the trust. As a result of certain rights
retained by the Funds, the transfer of the bond is not considered a sale, but
rather a form of financing for accounting purposes whereby the cash received is
recorded as a liability and interest expense is recorded based on the interest
rate of the floating rate securities. Remarketing fees, liquidity fees, and
trustees expenses are recorded on the accrual basis. There were no interest and
related expenses for the six months ended September 30, 2012.
Use of Estimates
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 a Fund are charged directly to that
Fund. Other expenses common to various funds within the Delaware
Investments
®
Family of Funds are generally allocated amongst such
funds on the basis of average net assets. Management fees and some other
expenses are paid monthly. Security transactions are recorded on the date the
securities are purchased or sold (trade date) for financial reporting purposes.
Costs used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums on debt securities are
amortized to interest income 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 income dividends and
capital gains more frequently, if necessary for tax purposes. Dividends and
distributions, if any, are recorded on the ex-dividend date.
The Funds may receive earnings credits
from their custodian when positive cash balances are maintained, which are used
to offset custody fees. There were no earnings credits for the six months ended
September 30, 2012.
The Funds may receive earnings credits
from their transfer agent when positive cash balances are maintained, which are
used to offset transfer agent fees. There were no earnings credits for the six
months ended September 30, 2012.
(continues)
23
Notes to financial
statements
Delaware
Investments
®
Closed-End Municipal Bond Funds
2. Investment Management,
Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its
respective investment management agreement, each Fund pays Delaware Management
Company (DMC), a series of Delaware Management Business Trust and the investment
manager, an annual fee of 0.40% which is calculated daily based on the adjusted
average daily net assets of each Fund.
Delaware Service Company, Inc. (DSC), an
affiliate of DMC, provides fund accounting and financial administration
oversight services to the Funds. For these services, the Funds pay DSC fees
based on the aggregate daily net assets of the Delaware Investments
®
Family of Funds at the following annual rate: 0.0050% of the first $30 billion;
0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of
aggregate average daily net assets in excess of $50 billion. The fees payable to
DSC under the service agreement described above are allocated among all Funds in
the Delaware Investments Family of Funds on a relative net asset value basis.
For the six months ended September 30, 2012, the Funds were charged as
follows:
|
Colorado
|
|
Minnesota
|
|
National
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
Fund
|
|
Fund II
|
|
Fund
|
|
$2,556
|
|
$6,132
|
|
$2,349
|
At September 30, 2012, each Fund had
liabilities payable to affiliates as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Investment management
fees payable to DMC
|
|
|
$
|
34,542
|
|
|
|
$
|
82,925
|
|
|
|
$
|
32,008
|
|
Accounting administration and other
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
payable to DSC
|
|
|
|
420
|
|
|
|
|
1,009
|
|
|
|
|
389
|
|
Other expenses
payable to DMC and affiliates*
|
|
|
|
1,137
|
|
|
|
|
2,681
|
|
|
|
|
1,015
|
|
*DMC, as part of its administrative
services, pays operating expenses on behalf of each Fund and is reimbursed on a
periodic basis. Expenses include items such as printing of shareholder reports,
fees for audit, legal and tax services, registration fees and
directors/trustees fees.
As provided in the investment management
agreement, each Fund bears the cost of certain legal and tax services, including
internal legal and tax services provided to each Fund by DMC and/or its
affiliates employees. For the six months ended September 30, 2012, each Fund
was charged for internal legal and tax services provided by DMC and/or its
affiliates employees as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
|
|
$5,377
|
|
$12,633
|
|
$13,230
|
Directors/Trustees fees include expenses
accrued by the Funds for each Directors/Trustees 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.
3. Investments
For the six months ended September 30,
2012, the Funds made purchases and sales of investment securities other than
short-term investments as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Purchases
|
|
|
$
|
2,535,022
|
|
|
|
$
|
31,203,565
|
|
|
|
$
|
33,546,545
|
|
Sales
|
|
|
|
1,759,456
|
|
|
|
|
27,020,189
|
|
|
|
|
17,398,713
|
|
At September 30, 2012, the cost of
investments for federal income tax purposes has been estimated since final tax
characteristics cannot be determined until fiscal year end. At September 30,
2012, the cost of investments and unrealized appreciation (depreciation) for
each Fund were as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Cost of
investments
|
|
|
$
|
96,696,237
|
|
|
|
$
|
236,583,479
|
|
|
|
|
$
|
89,339,508
|
|
|
Aggregate unrealized
appreciation
|
|
|
$
|
7,816,641
|
|
|
|
$
|
18,510,003
|
|
|
|
|
$
|
8,094,838
|
|
|
Aggregate unrealized
depreciation
|
|
|
|
|
|
|
|
|
(11,555
|
)
|
|
|
|
|
(25,989
|
)
|
|
Net unrealized appreciation
|
|
|
$
|
7,816,641
|
|
|
|
$
|
18,498,448
|
|
|
|
|
$
|
8,068,849
|
|
|
24
U.S. GAAP defines fair value as the price
that the Funds would receive to sell an asset or pay to transfer a liability in
an orderly transaction between market participants at the measurement date under
current market conditions. A three level hierarchy for fair value measurements
has been established based upon the transparency of inputs to the valuation of
an asset or liability. Inputs may be observable or unobservable and refer
broadly to the assumptions that market participants would use in pricing the
asset or liability. Observable inputs reflect the assumptions market
participants would use in pricing the asset or liability based on market data
obtained from sources independent of the reporting entity. Unobservable inputs
reflect the reporting entitys own assumptions about the assumptions that market
participants would use in pricing the asset or liability developed based on the
best information available under the circumstances. Each Funds 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 (e.g., 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) (e.g., 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
|
inputs are significant unobservable inputs
(including the Funds own assumptions used to determine the fair value of
investments)
(e.g., broker-quoted securities, fair
valued securities)
|
Level 3 investments are valued using
significant unobservable inputs, which may include prior transaction prices
(acquisition cost) that did not occur during the period, financial or news
information released by the company, and other relevant information for the
investment to determine the fair value of the investment. The 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 table summarizes the
valuation of each Funds investments by fair value hierarchy levels as of
September 30, 2012:
|
|
Colorado Municipal Fund
|
|
|
Level 2
|
Municipal
Bonds
|
|
|
$
|
104,512,878
|
|
|
|
|
|
Minnesota Municipal Fund
II
|
|
|
Level 2
|
Municipal
Bonds
|
|
|
$
|
255,081,927
|
|
|
|
|
|
National Municipal Fund
|
|
|
Level 2
|
Municipal
Bonds
|
|
|
$
|
96,658,357
|
|
Short-Term Investments
|
|
|
|
750,000
|
|
Total
|
|
|
$
|
97,408,357
|
|
During the six months ended September 30,
2012, 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.
(continues)
25
Notes to financial
statements
Delaware
Investments
®
Closed-End Municipal Bond Funds
4. Dividend and Distribution
Information
Income and long-term capital gain
distributions are determined in accordance with federal income tax regulations,
which may differ from U.S. GAAP. Additionally, distributions from net short-term
gains on sales of investment securities are treated as ordinary income for
federal income tax purposes. The tax character of dividends and distributions
paid during the six months ended September 30, 2012 and the year ended March 31,
2012 was as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Six Months Ended
9/30/12*
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
5,144
|
|
$
|
89,753
|
|
$
|
7,263
|
Tax-exempt income
|
|
|
1,663,656
|
|
|
3,879,463
|
|
|
1,260,701
|
Long-term capital gain
|
|
|
445,013
|
|
|
|
|
|
|
Total
|
|
$
|
2,113,813
|
|
$
|
3,969,216
|
|
$
|
1,267,964
|
|
Year Ended
3/31/12
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
959
|
|
$
|
533
|
|
$
|
8,868
|
Tax-exempt income
|
|
|
2,804,559
|
|
|
6,672,353
|
|
|
2,286,347
|
Total
|
|
$
|
2,805,518
|
|
$
|
6,672,886
|
|
$
|
2,295,215
|
*Tax information for the six months ended
September 30, 2012 is an estimate and the tax character of dividends and
distributions may be redesigned at fiscal year end.
5. Components of Net Assets on a Tax
Basis
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Shares of beneficial interest
|
|
$
|
66,918,121
|
|
|
$
|
157,931,075
|
|
|
$
|
60,617,476
|
|
Undistributed tax-exempt income
|
|
|
1,468,561
|
|
|
|
2,462,009
|
|
|
|
897,927
|
|
Undistributed ordinary income
|
|
|
19,828
|
|
|
|
316,780
|
|
|
|
|
|
Undistributed long-term capital gains
|
|
|
22,729
|
|
|
|
69,811
|
|
|
|
|
|
Distribution payable
|
|
|
(756,783
|
)
|
|
|
(745,627
|
)
|
|
|
(249,065
|
)
|
Realized gains 4/1/12 9/30/12
|
|
|
|
|
|
|
257,166
|
|
|
|
362,677
|
|
Capital loss carryforwards as of
3/31/12
|
|
|
|
|
|
|
(257,166
|
)
|
|
|
(1,747,836
|
)
|
Unrealized appreciation
|
|
|
7,816,641
|
|
|
|
18,498,448
|
|
|
|
8,068,849
|
|
Net assets
|
|
$
|
75,489,097
|
|
|
$
|
178,532,496
|
|
|
$
|
67,950,028
|
|
The differences between book basis and tax
basis components of net assets are primarily attributable to tax treatment of
market discount on debt instruments.
For financial reporting purposes, capital
accounts are adjusted to reflect the tax character of permanent book/tax
differences. Reclassifications are primarily due to tax treatment of market
discount on debt instruments. Results of operations and net assets were not
affected by these reclassifications. For the six months ended September 30,
2012, the Funds recorded an estimate of these differences since final tax
characteristics cannot be determined until fiscal year end.
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Undistributed net investment
income
|
|
$
|
(2,471
|
)
|
|
$
|
(19,966
|
)
|
|
$
|
(34,847
|
)
|
Accumulated net realized gain (loss)
|
|
|
2,471
|
|
|
|
19,966
|
|
|
|
34,847
|
|
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, 2012 will expire as
follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
Year of Expiration
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
2017
|
|
|
$
|
|
|
|
|
$
|
|
|
|
$
|
888,041
|
2018
|
|
|
|
|
|
|
|
|
257,166
|
|
|
|
859,795
|
Total
|
|
|
$
|
|
|
|
|
$
|
257,166
|
|
|
$
|
1,747,836
|
26
On December 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 are 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.
For the six months ended September 30,
2012, the Funds had capital gains, as follows, which may reduce the capital loss
carryforwards:
|
Colorado
|
|
Minnesota
|
|
National
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
Fund
|
|
Fund II
|
|
Fund
|
|
$
|
|
$257,166
|
|
$362,677
|
6. 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. The Funds did not repurchase any shares under the Share
Repurchase Program during the six months ended September 30, 2012. Shares
issuable under the Funds dividend reinvestment plan are purchased by the Funds
transfer agent, Computershare Shareowner Services LLC (Computershare), in the
open market.
On February 18, 2011, the National Municipal Funds Board approved
a tender offer for shares of the Arizona Municipal Funds common stock. The
tender offer authorized the National Municipal Fund to purchase for cash up to
18% of the then-outstanding shares of the Arizona Municipal Funds common stock
after the reorganization (Common Stock) at a per share price equal to 99% of the
net asset value per share of the Common Stock at the expiration of the tender
offer.
In connection with the tender offer, the
National Municipal Fund purchased 994,051 shares of capital stock at a total
cost of approximately $13,240,759. The tender offer was oversubscribed and all
tenders of shares were subject to pro-ration (at a ratio of approximately
0.58504231) in accordance with the terms of its tender offer.
On November 15, 2011, Colorado Municipal
Fund and Minnesota Municipal Fund II, issued $30,000,000 and $75,000,000,
respectively, of Series 2016 Variable Rate MuniFund Term Preferred (VMTP)
Shares, with $100,000 liquidation value per share in a privately negotiated
offering. On March 15, 2012, National Municipal Fund (VFL) issued $30,000,000
Series 2017 VMTP Shares, with $100,000 liquidation value per share in a
privately negotiated offering. Proceeds from the issuance of VMTP Shares, net of
offering expenses, were invested in accordance with each funds investment
objective. The VMTP Shares were offered to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933.
Colorado Municipal Fund and Minnesota
Municipal Fund II are obligated to redeem their VMTP Shares on December 1, 2016,
unless earlier redeemed or repurchased by the Fund. National Municipal Fund is
obligated to redeem its VMTP Shares on April 1, 2017, unless earlier redeemed or
repurchased by the Fund. VMTP Shares are subject to optional and mandatory
redemption in certain circumstances. The VMTP Shares may be redeemed at the
option of a Fund, subject to payment of a premium until December 1, 2013 (with
respect to VMM and VCF) and April 1, 2014 (with respect to VFL), and at par
thereafter. 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 (which are
treated as interest payments for financial reporting purposes) are set
weekly.
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 funds 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 Moodys Investor Service, funding dividend payments or funding redemptions),
that Fund will pay additional fees with respect to the
leverage.
(continues)
27
Notes to financial
statements
Delaware
Investments
®
Closed-End Municipal Bond Funds
7. Fund Merger
On June 20, 2011, the National Municipal
Fund acquired all of the assets of the Delaware Investments Arizona Municipal
Fund, Inc. (Acquired Fund), a closed-end investment company, in exchange for the
shares of the National Municipal Fund (Acquiring Fund) pursuant to a Plan and
Agreement of Reorganization (Reorganization). The shareholders of the Acquired
Fund received shares of the Acquiring Fund equal to the aggregate net asset
value of their share in the Acquired Fund prior to the Reorganization, as shown
in the following table:
|
|
Acquiring
|
|
Acquired
|
|
|
|
|
Fund
|
|
Fund
|
|
|
|
|
Shares
|
|
Shares
|
|
Value
|
Common Stock
|
|
2,422,200
|
|
3,100,925
|
|
$40,715,147
|
The Reorganization was treated as a
non-taxable event and, accordingly, the Acquired Funds basis in securities
acquired reflected historical cost basis as of the date of transfer. The net
assets and net unrealized appreciation of the Acquired Fund as of the close of
business on June 17, 2011, were as follows:
Net assets
|
|
$40,715,147
|
Net unrealized appreciation
|
|
65,229
|
The net assets of the Acquiring Fund
before the acquisition were $31,792,649. The net assets of the Acquiring Fund
immediately following the acquisition were $72,507,796.
Assuming that the acquisition had been
completed on April 1, 2011, the beginning of the Acquiring Funds reporting
period, the Acquiring Funds pro forma results of operations for the year ended
March 31, 2012, are as follows:
Net investment income
|
|
$
|
2,611,659
|
Net realized gain on investments
|
|
|
909,699
|
Change in unrealized
appreciation
|
|
|
5,974,605
|
Net increase in net assets resulting from
operations
|
|
|
9,477,059
|
Because the combined investment portfolios
have been managed as a single integrated portfolio since the acquisition was
completed, it is not practicable to separate the amounts of revenue and earnings
of the Acquired Fund that have been included in the National Municipal Funds
statement of operations since June 20, 2011.
8. Derivatives
U.S. GAAP requires disclosures that enable
investors to understand: 1) how and why an entity uses derivatives; 2) how they
are accounted for; and 3) how they affect an entitys results of operations and
financial position.
Inverse Floaters
Each Fund may participate in inverse floater programs where a
fund transfers its own bonds to a trust that issues floating rate securities and
inverse floating rate securities (inverse floaters) with an aggregate principal
amount equal to the principal of the transferred bonds. The inverse floaters
received by the Funds are derivative tax-exempt obligations with floating or
variable interest rates that move in the opposite direction of short-term
interest rates, usually at an accelerated speed. Consequently, the market values
of the inverse floaters will generally be more volatile than other tax-exempt
investments. The Funds typically use inverse floaters to adjust the duration of
their portfolio. Duration measures a portfolios sensitivity to changes in
interest rates. By holding inverse floaters with a different duration than the
underlying bonds that a Fund transferred to the trust, the Fund seeks to adjust
its portfolios sensitivity to changes in interest rates. The Funds may also
invest in inverse floaters to add additional income to the Funds or to adjust
the Funds exposure to a specific segment of the yield curve. At September 30,
2012, and during the period then ended, the Funds held no investments in inverse
floaters.
9. Credit and Market
Risk
The Funds concentrate their investments in
securities issued by municipalities. The value of these investments may be
adversely affected by new legislation within the states, regional or local and
national economic conditions, as applicable and differing levels of supply and
demand for municipal bonds. 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 September 30, 2012, the percentages of each Funds net assets
insured by insurers are listed below and these securities have been identified
in the statements of net assets.
Colorado Municipal
Fund
|
|
41%
|
Minnesota Municipal Fund II
|
|
12%
|
National Municipal
Fund
|
|
11%
|
28
The Funds invest a portion of their assets
in high yield fixed income securities, which are securities rated BB or lower by
Standard & Poors (S&P) and/or Ba or lower by Moodys Investors Service,
Inc. (Moodys), 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 issues 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 Moodys, 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.
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 of
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, each Funds Board
has delegated to DMC the day-to-day functions of determining whether individual
securities are liquid for purposes of each Funds limitation on investments in
illiquid securities. Securities eligible for resale pursuant to Rule 144A, which
are determined to be liquid, are not subject to the Funds 15% limit on
investments in illiquid securities. As of September 30, 2012, no securities have
been determined to be illiquid under the Funds Liquidity Procedures. Rule 144A
securities have been identified on the statements of net assets.
10. Contractual
Obligations
The Funds enter into contracts in the
normal course of business that contain a variety of indemnifications. The Funds
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 Funds existing contracts and expects the risk of loss to be
remote.
11. Investments in Municipal Securities
Issued by the State of Arizona
On May 23, 2011, shareholders of the
National Municipal Fund and shareholders of the Delaware Investments Arizona
Municipal Income Fund, Inc. (Arizona Muni Fund) approved the acquisition of
substantially all of the assets of Arizona Muni Fund in exchange for newly
issued common shares of the National Municipal Fund, which was structured as a
tax-free transaction. This acquisition was completed after the close of business
on June 17, 2011. As of September 30, 2012, municipal bonds issued by the state
of Arizona constitute approximately 15% of the Funds portfolio. These
investments could make the National Municipal Fund more sensitive to economic
conditions in Arizona than other more geographically diversified national
municipal income funds.
12. Subsequent Events
Management has determined that no material
events or transactions occurred subsequent to September 30, 2012 that would
require recognition or disclosure in the Funds financial statements.
29
Other Fund information
(Unaudited)
Delaware Investments
®
Closed-End
Municipal Bond Funds
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 departments
investment strategy. He is also a co-portfolio manager of the firms 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 bachelors 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
firms municipal fixed income portfolio management team with primary
responsibility for portfolio construction and strategic asset allocation. He is
a co-portfolio manager of the firms 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 bachelors degree in finance and
economics from Duquesne University.
Denise A. Franchetti, CFA
Vice President, Portfolio Manager, Senior Research
Analyst
Denise A. Franchetti is a senior 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 bachelors degree and an MBA from La Salle
University. She is a member of the Financial Analysts of
Philadelphia.
Gregory A. Gizzi
Senior Vice President, Portfolio Manager,
Head of Convertible Bond and Municipal Bond Trading
Gregory A. Gizzi is a member of the firms
municipal fixed income portfolio management team and municipal trading team, and
head of the municipal bond trading staff. Additionally, Gizzi serves as
portfolio manager and head of the convertible bond trading staff. 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 firms 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 bachelors degree
in economics from Harvard University.
30
Proxy Results
At the Annual Meeting on August 22, 2012,
the Funds Shareholders elected nine directors/trustees. The results of the
voting at the meeting were as follows:
Delaware Investments
®
Colorado
Municipal Income Fund, Inc.
|
|
Common
Shareholders
|
|
Preferred
Shareholders
|
|
|
|
|
Shares voted
|
|
|
|
Shares voted
|
|
|
Shares
|
|
Withheld
|
|
Shares
|
|
Withheld
|
|
|
Voted For
|
|
Authority
|
|
Voted For
|
|
Authority
|
Thomas L.
Bennett
|
|
4,464,878.156
|
|
106,130.539
|
|
300
|
|
0
|
Patrick P. Coyne
|
|
4,465,008.087
|
|
106,000.608
|
|
300
|
|
0
|
John A. Fry
|
|
4,453,631.108
|
|
117,377.587
|
|
300
|
|
0
|
Anthony D. Knerr
|
|
4,401,636.130
|
|
169,372.565
|
|
300
|
|
0
|
Lucinda S.
Landreth
|
|
4,464,878.156
|
|
106,130.539
|
|
300
|
|
0
|
Ann R. Leven
|
|
4,460,660.482
|
|
110,348.213
|
|
300
|
|
0
|
Frances
Sevilla-Sacasa
|
|
4,405,872.358
|
|
165,136.337
|
|
300
|
|
0
|
Janet L. Yeomans
|
|
|
|
|
|
300
|
|
0
|
J. Richard
Zecher
|
|
|
|
|
|
300
|
|
0
|
|
Delaware Investments
Minnesota Municipal Income Fund II, Inc.
|
|
|
|
Common
Shareholders
|
|
Preferred
Shareholders
|
|
|
|
|
Shares voted
|
|
|
|
Shares voted
|
|
|
Shares
|
|
Withheld
|
|
Shares
|
|
Withheld
|
|
|
Voted For
|
|
Authority
|
|
Voted For
|
|
Authority
|
Thomas L.
Bennett
|
|
10,197,036.559
|
|
274,443.055
|
|
750
|
|
0
|
Patrick P. Coyne
|
|
10,124,676.956
|
|
346,802.658
|
|
750
|
|
0
|
John A. Fry
|
|
10,188,434.342
|
|
283,045.272
|
|
750
|
|
0
|
Anthony D. Knerr
|
|
10,147,425.018
|
|
324,054.596
|
|
750
|
|
0
|
Lucinda S.
Landreth
|
|
10,207,627.569
|
|
263,852.045
|
|
750
|
|
0
|
Ann R. Leven
|
|
10,182,214.447
|
|
289,265.167
|
|
750
|
|
0
|
Frances
Sevilla-Sacasa
|
|
10,136,010.616
|
|
335,468.998
|
|
750
|
|
0
|
Janet L. Yeomans
|
|
|
|
|
|
750
|
|
0
|
J. Richard
Zecher
|
|
|
|
|
|
750
|
|
0
|
|
Delaware Investments
National Municipal Income Fund
|
|
|
|
Common
Shareholders
|
|
Preferred
Shareholders
|
|
|
|
|
Shares voted
|
|
|
|
Shares voted
|
|
|
Shares
|
|
Withheld
|
|
Shares
|
|
Withheld
|
|
|
Voted For
|
|
Authority
|
|
Voted For
|
|
Authority
|
Thomas L.
Bennett
|
|
4,040,259.193
|
|
264,632.122
|
|
300
|
|
0
|
Patrick P. Coyne
|
|
4,041,180.676
|
|
263,710.639
|
|
300
|
|
0
|
John A. Fry
|
|
4,041,660.668
|
|
263,230.647
|
|
300
|
|
0
|
Anthony D. Knerr
|
|
4,041,831.165
|
|
263,060.150
|
|
300
|
|
0
|
Lucinda S.
Landreth
|
|
4,040,198.694
|
|
264,692.621
|
|
300
|
|
0
|
Ann R. Leven
|
|
4,039,257.023
|
|
265,634.292
|
|
300
|
|
0
|
Frances
Sevilla-Sacasa
|
|
4,040,395.691
|
|
264,495.624
|
|
300
|
|
0
|
Janet L. Yeomans
|
|
|
|
|
|
300
|
|
0
|
J. Richard
Zecher
|
|
|
|
|
|
300
|
|
0
|
(continues)
31
Other Fund information
(Unaudited)
Delaware
Investments
®
Closed-End Municipal Bond Funds
Dividend Reinvestment
Plan
Each Fund offers an automatic dividend
reinvestment program (Plan). Under the current policies of Minnesota Municipal
Income Fund II and National Municipal Income Fund all distributions of net
investment income and capital gains to common shareholders are automatically
reinvested in additional shares unless shareholders elect to receive all
dividends and other distributions in cash paid by check mailed directly to
shareholders by the dividend plan agent. Under the current policies of Colorado Municipal
Income Fund, distributions of net investment income and capital gains to common
shareholders will be paid in cash unless shareholders notify Computershare
Shareowner Services LLC (formerly BNY Mellon Shareowner Services LLC)
(Computershare) of their desire to participate in the dividend reinvestment
program. Shareholders who hold their shares through a bank, broker or other
nominee should request the bank, broker or nominee to participate in the Plan on
their behalf. This can be done as long as the bank, broker or nominee provides a
dividend reinvestment service for the Funds. If the bank, broker or nominee does
not provide this service, such shareholders must have their shares taken out of
street or nominee name and re-registered in their own name in order to
participate in the Plan.
Computershare will apply all cash
dividends, capital gains and other distributions (collectively, Distributions)
on each Funds shares of common stock which become payable to each Plan
participant to the purchase of outstanding shares of each Funds common stock
for such participant. These purchases may be made on a securities exchange or in
the over-the-counter market, and may be subject to such terms of price, delivery
and related matters to which Computershare may agree. The Funds will not issue
new shares in connection with the Plan.
Distributions reinvested for participants
are subject to income taxes just as if they had been paid directly to the
shareholder in cash. Participants will receive a year-end statement showing
distributions reinvested, and any brokerage commissions paid on such
participants behalf.
Shareholders holding shares of a Fund in
their own names who wish to terminate their participation in the Plan may do so
by sending written instruction to Computershare so that Computershare receives
such instructions at least 10 days prior to the Distribution record date.
Shareholders with shares held in account by a bank, broker or other nominee
should contact such bank, broker or other nominee to determine the procedure for
withdrawal from the Plan.
If written instructions are not received
by Computershare at least 10 days prior to the record date for a particular
Distribution, that Distribution may be reinvested at the sole discretion of
Computershare. After a shareholders instructions to terminate participation in
the Plan become effective, Distributions will be paid to shareholders in cash.
Upon termination, a shareholder may elect to receive either stock or cash for
all the full shares in the account. If cash is elected, Computershare will sell
such shares at the then current market value and then send the net proceeds to
the shareholder, after deducting brokerage commissions and related expenses. Any
fractional shares at the time of termination will be paid in cash at the current
market price, less brokerage commissions and related expenses, if any.
Shareholders may at any time request a full or partial withdrawal of shares from
the Plan, without terminating participation in the Plan. When shares outside of
the Plan are liquidated, Distributions on shares held under the Plan will
continue to be reinvested unless Computershare is notified of the shareholders
withdrawal from the Plan.
An investor holding shares that
participate in the Plan in a brokerage account may not be able to transfer the
shares to another broker and continue to participate in the Plan. Please contact
your broker/dealer for additional details.
Computershare will charge participants
their proportional share of brokerage commissions on market purchases.
Participants may obtain a certificate or certificates for all or part of the
full shares credited to their accounts at any time by making a request in
writing to Computershare. A fee may be charged to the participant for each
certificate issuance.
If you have any questions and shares are
registered in street name, contact the broker/dealer holding the shares or
your financial advisor. If you have any questions and shares are registered in
your name, contact Computershare at
866 437-0252.
32
Board Consideration of Delaware
Investments
®
Colorado Municipal Income Fund, Inc.; Delaware Investments
National Municipal Income Fund; and Delaware Investments Minnesota Municipal
Income Fund II, Inc. Investment Advisory Agreement
At a meeting held on August 21-23, 2012
(the Annual Meeting), the Board of Directors (the Board), including a
majority of disinterested or independent Directors, approved the renewal of the
Investment Advisory Agreements for each of the Delaware Investments Colorado
Municipal Income Fund, Inc.; Delaware Investments National Municipal Income
Fund; and Delaware Investments Minnesota Municipal Income Fund II, Inc. (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 Advisory
Agreements 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 financial
condition and profitability of Delaware Investments. In addition, in connection
with the Annual Meeting, reports were provided in May 2012 and included
independent historical and comparative reports provided by Lipper, Inc., an
independent statistical compilation organization (Lipper). The Lipper reports
compared each Funds investment performance and expenses with those of other
comparable mutual funds. The Independent Directors reviewed and discussed the
Lipper reports with independent legal counsel to the Independent Directors. The
Board requested and received information regarding DMCs policy with respect to
advisory fee levels and its breakpoint philosophy; the structure of portfolio
manager compensation; the investment managers profitability; comparative client
fee information; and any constraints or limitations on the availability of
securities in certain investment styles, which had in the past year inhibited,
or which were likely in the future to inhibit, DMCs ability to invest fully in
accordance with Fund policies.
In considering information relating to the
approval of each Funds advisory agreement, the Independent Directors received
assistance and advice from and met separately with independent legal counsel to
the Independent Directors. 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
Delaware Investments 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 DMCs receipt of several industry
distinctions. The Board gave favorable consideration to DMCs 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 Delaware Investments.
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 Lipper reports furnished for the
Annual Meeting. The Lipper reports prepared for each Fund showed the investment
performance of its shares in comparison to a group of similar funds as selected
by Lipper (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 one-, three-, five- and ten-year periods ended March 31, 2012. The
Boards objective is that each Funds performance for the periods considered be
at or above the median of its Performance Universe. The following paragraphs summarize the
performance results for the Funds and the Boards view of such
performance.
Delaware Investments Colorado Municipal
Income Fund, Inc. The Performance Universe for the Fund consisted of the Fund
and all closedend other state municipal debt funds as selected by Lipper. The
Lipper report comparison showed that the Funds total return for the one-year
period was in the third quartile of its Performance Universe. The report further
showed that the Funds total return for the three-, five- and ten- year periods
was in the fourth quartile. The Funds performance results were not in line with
the Boards objective. In evaluating the Funds performance, the Board
considered the numerous investment and performance reports delivered by
Management personnel to the Boards Investments Committee. The Board was
satisfied that Management was taking action to improve Fund performance and meet
the Boards performance objective.
Delaware Investments Minnesota Municipal
Income Fund II, Inc. The Performance Universe for the Fund consisted of the
Fund and all closedend other state municipal debt funds as selected by Lipper.
The Lipper report comparison showed that the Funds total return for the one-,
three-, five- and ten-year periods was in the fourth quartile of its Performance
Universe. The Funds performance results were not in line with the Boards
objective. In evaluating the Funds performance, the Board considered the
numerous investment and performance reports delivered by Management personnel to
the Boards Investments Committee. The Board was satisfied that Management was
taking action to improve Fund performance and to meet the Boards performance
objective.
(continues)
33
Other Fund information
(Unaudited)
Delaware
Investments
®
Closed-End Municipal Bond Funds
Board Consideration of Delaware
Investments Colorado Municipal Income Fund, Inc.; Delaware Investments National
Municipal Income Fund; and Delaware Investments Minnesota Municipal Income Fund
II, Inc. Investment Advisory Agreement (continued)
Delaware Investments National Municipal
Income Fund The Performance Universe for the Fund consisted of the Fund and
all non-leveraged closedend general and insured municipal debt funds as
selected by Lipper. The Lipper report comparison showed that the Funds total
return for the one-year period was in the first quartile of its Performance
Universe. The report further showed that the Funds total return for the
three-year period was in the second quartile and that the Funds total return
for the five- and ten-year periods was ranked fourth and third of the four funds
in the Performance Universe, respectively. In evaluating the Funds performance,
the Board considered the limited size of the Funds Performance Universe. The
Board also considered the numerous investment and performance reports delivered
by Management personnel to the Boards Investments Committee. The Board was
satisfied that Management was taking effective action to enhance Fund
performance and meet the Boards 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 Lipper (the Expense Group). In reviewing comparative costs, each
Funds 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 Funds total expenses were also
compared with those of its Expense Group. The Board considered fees paid to
Delaware Investments for non-management services. The Boards objective is to
limit each Funds total expense ratio to be competitive with that of the Expense
Group. The following paragraphs summarize the expense results for the Funds and the
Boards view of such expenses.
Delaware Investments Colorado Municipal
Income Fund, Inc. The expense comparisons for the Fund showed that its actual
management fee and total expenses were in the quartile with the lowest expenses
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
management fee and total expenses were in the quartile with the lowest expenses
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 management
fee was ranked first of the three funds in the Expense Group and its total
expenses were ranked second of the three funds in the Expense Group. In
evaluating the Funds total expenses, the Board considered the limited number of
funds in the Expense Group. The Board was satisfied with Managements efforts to
improve the Funds total expense ratio and bring it in line with the Boards
objective.
Management
Profitability.
The Board considered the level
of profits, if any, realized by Delaware Investments 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
Delaware Investments 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 Delaware Investments, to a certain extent, reflects recent
operational cost savings and efficiencies initiated by Delaware Investments. The
Board considered Delaware Investments 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 Delaware Investments
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 Delaware
Investments.
Economies of Scale.
As
closed-end funds, the Funds do not issue shares on a continuous basis. Fund assets increase only to the extent that the
values of the underlying securities in the Fund increase. 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.
34
Change in Independent Registered Public
Accounting Firm
Due to independence matters under the
Securities and Exchange Commissions auditor independence rules relating to the
January 4, 2010 acquisition of Delaware Investments (including DMC) by Macquarie
Group, Ernst & Young LLP (E&Y) has resigned as the independent
registered public accounting firm for Delaware Investments
®
Colorado
Municipal Income Fund, Inc., Delaware Investments Minnesota Municipal Income
Fund II, Inc., and Delaware Investments National Municipal Income Fund (the
Funds) effective May 27, 2010. At a meeting held on February 18, 2010, the Board
of Directors/Trustees of the Funds, upon recommendation of the Audit Committee,
selected PricewaterhouseCoopers LLP (PwC) to serve as the independent registered
public accounting firm for the Funds for the fiscal year ending March 31, 2011.
During the fiscal years ended March 31, 2010 and 2009, E&Ys audit reports
on the financial statements of the Funds did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles. In addition, there were no disagreements
between the Funds and E&Y on accounting principles, financial statements
disclosures or audit scope, which, if not resolved to the satisfaction of
E&Y, would have caused them to make reference to the disagreement in their
reports. None of the Funds nor anyone on its behalf has consulted with PwC at
any time prior to their selection with respect to the application of accounting
principles to a specified transaction, either completed or proposed or the type
of audit opinion that might be rendered on the Funds financial
statements.
35
About the
organization
This
semiannual report is for the information of Delaware Investments
®
Closed-End Municipal Bond Funds shareholders. Notice is hereby given in
accordance with Section 23(c) of the Investment Company Act of 1940 that the
Funds may, from time to time, purchase shares of their common stock on the open
market at market prices.
Board of
directors/trustees
Patrick P. Coyne
Chairman, President,
and Chief Executive
Officer
Delaware Investments
Family of Funds
Philadelphia, PA
Thomas L. Bennett
Private Investor
Rosemont, PA
John A. Fry
President
Drexel University
Philadelphia,
PA
Anthony D. Knerr
Founder and Managing Director
Anthony Knerr &
Associates
New York, NY
Lucinda S. Landreth
Former Chief Investment Officer
Assurant,
Inc.
Philadelphia, PA
Frances A.
Sevilla-Sacasa
Chief Executive Officer
Banco Itaú Europa International
Miami,
FL
Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul,
MN
J. Richard Zecher
Founder
Investor Analytics
Scottsdale, AZ
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 Shareowner Services
LLC 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.
Affiliated
officers
David F.
Connor
Vice President, Deputy 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
David P. OConnor
Executive Vice President, General Counsel and Chief Legal
Officer
Delaware Investments Family of Funds
Philadelphia, PA
Richard Salus
Senior Vice President and
Chief Financial
Officer
Delaware Investments Family of Funds
Philadelphia, PA
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 Funds 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 800 523-1918; and (ii) on
the SECs website at sec.gov. In addition, a description of the policies and
procedures that the Fund uses to determine how to vote proxies (if any) relating
to portfolio securities and each Funds Schedule of Investments are available
without charge on the Funds website at delawareinvestments.com. Each Funds Forms
N-Q may be reviewed and copied at the SECs 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; and (ii) on the SECs website
at sec.gov.
Contact
information
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 Shareowner
Services LLC
480 Washington Blvd.
Jersey
City, NJ 07310
866 437-0252
For securities dealers
and
financial institutions
representatives
800 362-7500
Website
delawareinvestments.com
Delaware Investments is the marketing
name of Delaware Management Holdings, Inc. and its
subsidiaries.
Number of recordholders as
of
|
|
|
September 30,
2012
|
|
|
Colorado Municipal
|
|
|
Income Fund
|
|
88
|
Minnesota Municipal
Income
|
|
|
Fund II
|
|
455
|
National
Municipal Income Fund
|
|
109
|
36
Item 2. Code of Ethics
Not
applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and
Services
Not applicable.
Item 5. Audit Committee of Listed
Registrants
Not applicable.
Item 6. Investments
(a) Included as part of report to shareholders filed under Item 1 of this
Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the
Investment Company Act of 1940.
Not applicable.
Item 7. Disclosure of Proxy Voting
Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End
Management Investment Companies
Applicable to Form N-CSRs filed after fiscal years ending on or after
December 31, 2005.
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 registrants principal executive officer and principal financial
officer have evaluated the registrants 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 registrants 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 registrants second
fiscal quarter) that have materially affected, or are reasonably likely to
materially affect, the registrants 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.
Name of Registrant: DELAWARE
INVESTMENTS
®
MINNESOTA MUNICIPAL INCOME FUND II, INC.
/s/ PATRICK P. COYNE
|
By:
|
Patrick P. Coyne
|
Title:
|
Chief Executive Officer
|
Date:
|
December 3,
2012
|
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/ PATRICK P. COYNE
|
By:
|
Patrick P. Coyne
|
Title:
|
Chief Executive Officer
|
Date:
|
December 3, 2012
|
|
/s/ RICHARD SALUS
|
By:
|
Richard Salus
|
Title:
|
Chief Financial Officer
|
Date:
|
December 3,
2012
|
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