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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March 31, 2012
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Item 1. Reports to
Stockholders
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Annual
Report
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Delaware
Investments
Closed-End
Municipal
Bond
Funds
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March 31, 2012
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The
figures in the annual 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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> Portfolio
management review
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1
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> Fund
basics
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3
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> Security
type/Sector/State allocations
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4
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> Statements of
net assets
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6
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> Statements of
assets and liabilities
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18
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> Statements of
operations
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19
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> Statements of
changes in net assets
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20
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> Financial
highlights
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21
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> Notes to
financial statements
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24
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> Report of
independent registered public accounting firm
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31
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> Other Fund
information
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32
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> Board of
trustees/directors and officers addendum
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36
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> About the
organization
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39
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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
www.delawareinvestments.com.
Unless otherwise noted, views expressed
herein are current as of March 31, 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.
Portfolio management review
Delaware Investments Closed-End
Municipal Bond Funds
April 10,
2012
Market environment, in brief:
-
The municipal markets, in general, had a strong
year,
posting positive total returns across all
maturities,
ratings, and
sectors.
-
Municipal bonds became increasingly appealing
to
income-oriented investors seeking relatively
high yields
in an environment of low interest
rates.
-
A favorable supply-demand imbalance was an
important source of support for municipal bond
prices.
National economic
environment
As the Funds fiscal year ended March 31,
2012 began, many investors were concerned about a U.S. economy that was growing
quite weak and suffering through a historically high unemployment rate. Moving
into summer 2011, additional challenges rattled investors, including
Washingtons political battles over government spending and the decision by
credit-rating agency Standard & Poors to issue a downgrade of U.S. Treasury
bonds.
Starting in late 2011 and continuing into
early 2012, however, the macroeconomic backdrop began to show mild signs of
improvement. The U.S. job market, while still weak, appeared to be moving in a
better direction, with the unemployment rate falling from 9.0% in September 2011
to 8.3% by January 2012 the lowest level since February 2009. At the same
time, fourth-quarter economic growth reached an estimated rate of 3.0%, up from
1.8% in the prior quarter.
Data: U.S. Labor Department, U.S. Commerce
Department.
Municipal market trends
Driven by significant risk aversion, many
investors were drawn toward U.S. Treasury securities, pushing interest rates to
historically low levels. This development was among the prominent factors that
helped drive municipal bond prices upward during the Funds fiscal year, as
municipal bonds increasingly appealed to income-oriented investors seeking
relatively high yields in an environment of low interest rates.
Municipal bond markets also benefited from
a substantial easing of credit fears. Early in the fiscal year, municipal
markets were weighed down by media reports of pending defaults; as this period
progressed, however, these dire predictions were shown to be unwarranted.
A favorable supply-demand imbalance was a
third source of support for municipal bond prices. Consider the supply-demand
relationship as it played out over the course of calendar year 2011: On the
supply side, the availability of municipal bonds was significantly lower than it
was in 2010. According to Municipal Bond Buyer, issuance of tax-exempt debt was
approximately $295 billion during 2011, almost one-third below the level of debt
seen in the prior year. At the same time, demand for the municipal bond asset
class was strengthening, due in part to increased attention from individual
investors as well as hedge funds and other nontraditional institutional
investors.
Generally speaking, the longer a bonds
maturity, the more likely it was to outperform during the Funds fiscal year. As
a result, the municipal yield curve flattened during the period, indicating that
yields on long-term bonds were falling faster than those of short-term bonds.
The same was true of credit ratings; lower-rated bonds tended to outperform
their higher-rated counterparts as investors generally became comfortable
accepting slightly more credit risk in exchange for the potential for additional
income.
Fund positioning
At the start of the fiscal year, the
Funds portfolios were positioned somewhat less aggressively in lower-rated
credits. At that time, we expected the 2010 conclusion of the Build America Bond
program (which had been diverting supply away from the municipal bond market) to
precipitate an increase in 2011 municipal bond supply, putting pressure on bond
prices. We believed the Funds relatively conservative stance would more
effectively accommodate this steadier stream of supply.
As the period progressed, this increase in
bond supply failed to materialize, we believe, in part because state and
municipal governments had become more reluctant to
(continues)
1
Portfolio management
review
Delaware Investments
Closed-End Municipal Bond Funds
add to their debt burdens. The prevailing
environment of reduced supply and strong investor demand led us to gradually
increase each Funds allocation to securities at the lower end of the investment
grade spectrum, and we generally maintained this stance throughout the rest of
the fiscal year. (Its important to note that these allocation changes took
place primarily at the margins of each Funds portfolio. They did not represent
a meaningful departure from each Funds long-standing risk-reward
profile.)
Performance effects
Overall, the best-performing bonds within
the Funds tended to have lower credit ratings and longer maturity dates, as was
the performance trend in the broad municipal market.
On an individual security basis, the two
best-performing bonds within
Delaware
Investments Colorado Municipal Income Fund, Inc.
(the Colorado Fund) were revenue bonds issued by the Denver Convention
Center Hotel Authority and the Public Authority for Colorado Energy, maturing in
2035 and 2038, respectively. The bonds were issued with coupon rates of 5.0% and
6.5%, respectively. Additionally, both bonds were rated medium grade by Standard
& Poors. The Colorado Funds worst-performing bonds had maturity dates of
2016 and 2013. A bond issued by the Colorado Educational and Cultural Facilities
Authority to fund a project at the University of Denver (maturing in 2016)
generated a return of 5.27% while another bond issued by the Denver Convention
Center Hotel Authority, with a 2013 maturity date, returned slightly less than
2.50% for the fiscal year. Both securities were removed from the Funds
portfolio in the final months of the fiscal year.
Similar to the Colorado Fund,
Delaware Investments Minnesota Municipal
Income Fund II, Inc.
(the Minnesota Fund)
benefited from holdings with longer maturity dates and lower credit qualities.
Both of its best-performing securities were rated BBB (medium grade) by S&P
and had maturity dates in the mid- to late 2030s. A bond issued by the Puerto
Rico Commonwealth Infrastructure Fund, for example, generated a notable 34%
return. The second best-performing bond, an unrated
education bond issued by the University of the Virgin Islands,
experienced a notable return of almost 31%. Both of these bonds were liquidated
from the Funds portfolio in the late months of the fiscal year. Both of the
poorest-performing bonds within the Minnesota Fund a general obligation bond
issued by Olmsted County (3.5% coupon, 2027 maturity) and a bond issued by the
Western Minnesota Municipal Power Agency were rated AAA by S&P. Both of
these bonds were liquidated from the Funds portfolio in the late months of the
fiscal year.
The top two contributors within
Delaware Investments National Municipal Income
Fund
(the National Fund) were best
characterized by their long maturity dates, as neither bond was rated by
S&P. The top contributor was a student housing bond issued by the New Jersey
Economic Development Authority to benefit Montclair State University. Its
maturity date is 2042. The second best performing bond was issued by the
California Statewide Communities Development Authority with a maturity date of
2046. The National Funds greatest detractor (declining 5.09%) was an airline
bond issued by the New York City Industrial Development Agency to support the
construction of a new American Airlines terminal at the John F. Kennedy
International Airport. The second worst-performing bond was issued by the Puerto
Rico Sales Tax Financing Corporation, and had an A+ (upper medium grade) rating
by S&P. All four bond issues were removed from the Funds portfolio before
the fiscal year came to a close.
2
Fund basics
Delaware
Investments
Colorado Municipal Income
Fund, Inc.
As of March 31, 2012
Fund objective
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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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$73
million
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Fund start date
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July 29,
1993
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Delaware
Investments
Minnesota Municipal Income
Fund II, Inc.
As of March 31, 2012
Fund objective
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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.
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Total Fund net assets
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$172
million
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Fund start date
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Feb. 26,
1993
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Delaware
Investments
National Municipal Income
Fund
As of March 31, 2012
Fund objective
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The Fund seeks to provide current
income exempt from regular federal income tax, consistent with the
preservation of capital.
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Total Fund net assets
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$63
million
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Fund start date
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Feb. 26,
1993
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3
Security type/Sector/State
allocations
As of March 31, 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
|
138.63
|
%
|
Corporate-Backed Revenue Bond
|
1.28
|
%
|
Education Revenue
Bonds
|
22.43
|
%
|
Electric Revenue Bonds
|
5.93
|
%
|
Healthcare Revenue
Bonds
|
29.23
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%
|
Housing Revenue Bonds
|
2.51
|
%
|
Lease Revenue
Bonds
|
10.64
|
%
|
Local General Obligation
Bonds
|
17.75
|
%
|
Pre-Refunded
Bond
|
1.07
|
%
|
Special Tax Revenue Bonds
|
33.83
|
%
|
State & Territory
General Obligation Bond
|
0.74
|
%
|
Transportation Revenue Bonds
|
8.33
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%
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Water & Sewer Revenue Bonds
|
4.89
|
%
|
Total Value of Securities
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138.63
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%
|
Liquidation Value of Preferred
Stock
|
(41.32
|
%)
|
Receivables and Other Assets Net of
Liabilities
|
2.69
|
%
|
Total Net Assets
|
100.00
|
%
|
Delaware
Investments
Minnesota Municipal Income
Fund II, Inc.
|
Percentage
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Security type/Sector
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of Net Assets
|
Municipal Bonds
|
142.49
|
%
|
Corporate-Backed Revenue
Bonds
|
11.76
|
%
|
Education Revenue
Bonds
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17.33
|
%
|
Electric Revenue Bonds
|
5.94
|
%
|
Healthcare Revenue
Bonds
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30.82
|
%
|
Housing Revenue Bonds
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8.40
|
%
|
Lease Revenue
Bonds
|
7.22
|
%
|
Local General Obligation
Bonds
|
12.04
|
%
|
Pre-Refunded/Escrowed
to Maturity Bonds
|
20.36
|
%
|
Special Tax Revenue Bonds
|
12.93
|
%
|
State & Territory
General Obligation Bonds
|
11.84
|
%
|
Transportation Revenue Bonds
|
2.21
|
%
|
Water & Sewer Revenue Bonds
|
1.64
|
%
|
Total Value of Securities
|
142.49
|
%
|
Liquidation Value of Preferred
Stock
|
(43.65
|
%)
|
Receivables and Other Assets Net of
Liabilities
|
1.16
|
%
|
Total Net Assets
|
100.00
|
%
|
4
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
|
120.52
|
%
|
Corporate-Backed Revenue Bonds
|
15.13
|
%
|
Education Revenue Bonds
|
16.19
|
%
|
Electric Revenue Bonds
|
2.21
|
%
|
Healthcare Revenue Bonds
|
18.75
|
%
|
Housing Revenue Bonds
|
2.59
|
%
|
Lease Revenue Bonds
|
12.39
|
%
|
Local General Obligation Bonds
|
3.85
|
%
|
Pre-Refunded Bonds
|
3.65
|
%
|
Special Tax Revenue Bonds
|
16.78
|
%
|
State & Territory General
Obligation Bonds
|
7.74
|
%
|
Transportation Revenue Bonds
|
15.40
|
%
|
Water & Sewer Revenue Bonds
|
5.84
|
%
|
Short-Term Investments
|
36.54
|
%
|
Total Value of Securities
|
157.06
|
%
|
Liquidation Value of Preferred Stock
|
(47.25
|
%)
|
Liabilities Net of Receivables and
Other Assets
|
(9.81
|
%)
|
Total
Net Assets
|
100.00
|
%
|
State
|
(as a % of fixed income investments)
|
Alaska
|
0.32
|
%
|
Arizona
|
16.25
|
%
|
California
|
9.85
|
%
|
Colorado
|
0.53
|
%
|
Delaware
|
0.51
|
%
|
Florida
|
1.98
|
%
|
Georgia
|
1.50
|
%
|
Hawaii
|
0.31
|
%
|
Idaho
|
1.05
|
%
|
Illinois
|
1.06
|
%
|
Kansas
|
0.17
|
%
|
Louisiana
|
1.66
|
%
|
Maine
|
0.33
|
%
|
Maryland
|
6.16
|
%
|
Massachusetts
|
1.37
|
%
|
Minnesota
|
1.20
|
%
|
Mississippi
|
5.02
|
%
|
Missouri
|
1.08
|
%
|
New Hampshire
|
0.34
|
%
|
New Jersey
|
1.63
|
%
|
New Mexico
|
0.53
|
%
|
New York
|
18.62
|
%
|
Ohio
|
1.62
|
%
|
Oregon
|
1.39
|
%
|
Pennsylvania
|
12.44
|
%
|
Puerto Rico
|
5.00
|
%
|
Texas
|
5.24
|
%
|
Virginia
|
1.75
|
%
|
Washington D.C.
|
0.26
|
%
|
West Virginia
|
0.56
|
%
|
Wyoming
|
0.27
|
%
|
Total
|
100.00
|
%
|
5
Statements of net assets
Delaware Investments Colorado Municipal
Income Fund, Inc.
March 31,
2012
|
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Principal
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds 138.63%
|
|
|
|
|
|
Corporate-Backed Revenue Bond 1.28%
|
|
|
|
|
|
|
Public Authority for
Colorado Energy
|
|
|
|
|
|
|
Natural Gas Revenue
|
|
|
|
|
|
|
Series 2008 6.50% 11/15/38
|
$
|
750,000
|
|
$
|
932,408
|
|
|
|
|
|
|
932,408
|
Education Revenue Bonds 22.43%
|
|
|
|
|
|
|
Colorado Educational &
Cultural
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
(Academy Charter School Project)
|
|
|
|
|
|
|
5.50% 5/1/36 (SGI)
|
|
1,720,000
|
|
|
1,737,940
|
|
(Bromley Charter School Project)
|
|
|
|
|
|
|
5.25% 9/15/32 (SGI)
|
|
3,245,000
|
|
|
3,287,347
|
|
(Johnson & Wales University Project)
|
|
|
|
|
|
|
Series A 5.00% 4/1/28 (SGI)
|
|
3,000,000
|
|
|
3,000,720
|
|
(Littleton Charter School Project)
|
|
|
|
|
|
|
4.375% 1/15/36 (ASSURED GTY)
|
|
1,200,000
|
|
|
1,064,916
|
|
(Student Housing - Campus Village
|
|
|
|
|
|
|
Apartments) 5.00% 6/1/23
|
|
1,065,000
|
|
|
1,155,908
|
|
Colorado State Board
of Governors
|
|
|
|
|
|
|
Revenue (University
|
|
|
|
|
|
|
Enterprise System)
|
|
|
|
|
|
|
Series A 5.00% 3/1/39
|
|
700,000
|
|
|
753,095
|
|
University of Colorado 5.00%
6/1/31
|
|
3,185,000
|
|
|
3,625,103
|
|
University of
Colorado Enterprise
|
|
|
|
|
|
|
Systems Revenue
|
|
|
|
|
|
|
Series A 5.375% 6/1/38
|
|
750,000
|
|
|
851,423
|
|
Western State College 5.00%
5/15/34
|
|
750,000
|
|
|
809,325
|
|
|
|
|
|
|
16,285,777
|
Electric Revenue Bonds 5.93%
|
|
|
|
|
|
|
Colorado Springs
Utilities System
|
|
|
|
|
|
|
Improvement Revenue
|
|
|
|
|
|
|
Series C 5.50% 11/15/48
|
|
750,000
|
|
|
830,453
|
|
Platte River Power Authority
Revenue
|
|
|
|
|
|
|
Series HH 5.00% 6/1/28
|
|
1,500,000
|
|
|
1,693,724
|
|
Puerto Rico Electric
Power
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
Series TT 5.00% 7/1/37
|
|
685,000
|
|
|
691,083
|
|
Series WW 5.50% 7/1/38
|
|
300,000
|
|
|
314,421
|
|
Series XX 5.25% 7/1/40
|
|
750,000
|
|
|
776,595
|
|
|
|
|
|
|
4,306,276
|
Healthcare Revenue Bonds 29.23%
|
|
|
|
|
|
|
Aurora Hospital Revenue
(Childrens
|
|
|
|
|
|
|
Hospital Association Project)
|
|
|
|
|
|
|
Series A 5.00% 12/1/40
|
|
2,000,000
|
|
|
2,107,440
|
|
Colorado Health
Facilities
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
(Catholic Health Initiatives)
|
|
|
|
|
|
|
Series A 5.00% 7/1/39
|
|
750,000
|
|
|
783,075
|
|
Series A 5.00% 2/1/41
|
|
2,400,000
|
|
|
2,521,391
|
|
Series A 5.25% 2/1/33
|
|
1,625,000
|
|
|
1,799,720
|
|
Series C-1 5.10% 10/1/41 (AGM)
|
|
1,000,000
|
|
|
1,042,640
|
|
Series D 6.125% 10/1/28
|
|
750,000
|
|
|
867,150
|
|
(Christian Living Communities Project)
|
|
|
|
|
|
|
6.375% 1/1/41
|
|
615,000
|
|
|
642,712
|
|
Series A 5.75% 1/1/37
|
|
885,000
|
|
|
885,637
|
|
(Evangelical Lutheran Good
|
|
|
|
|
|
|
Samaritan Society)
|
|
|
|
|
|
|
5.25% 6/1/23
|
|
1,000,000
|
|
|
1,045,320
|
|
Series A 6.125% 6/1/38
|
|
750,000
|
|
|
770,888
|
|
(National Jewish Health Project)
|
|
|
|
|
|
|
5.00% 1/1/27
|
|
500,000
|
|
|
513,760
|
|
(Sisters of Charity of Leavenworth
|
|
|
|
|
|
|
Health System) 5.00% 1/1/40
|
|
4,750,000
|
|
|
4,949,452
|
|
(Total Long-Term Care)
|
|
|
|
|
|
|
Series A 6.00% 11/15/30
|
|
400,000
|
|
|
436,352
|
|
Colorado Springs Hospital
Revenue
|
|
|
|
|
|
|
6.25% 12/15/33
|
|
750,000
|
|
|
827,183
|
|
Denver Health &
Hospital Authority
|
|
|
|
|
|
|
Revenue (Recovery Zone Facilities)
|
|
|
|
|
|
|
5.625% 12/1/40
|
|
750,000
|
|
|
785,010
|
|
University of Colorado
Hospital
|
|
|
|
|
|
|
Authority Revenue Series A
|
|
|
|
|
|
|
5.00% 11/15/37
|
|
500,000
|
|
|
510,330
|
|
6.00% 11/15/29
|
|
650,000
|
|
|
735,820
|
|
|
|
|
|
|
21,223,880
|
Housing Revenue Bonds 2.51%
|
|
|
|
|
|
|
Colorado Housing
& Finance Authority
|
|
|
|
|
|
|
(Single Family Mortgage - Class 1)
|
|
|
|
|
|
|
Series A 5.50% 11/1/29
|
|
|
|
|
|
|
(FHA) (VA) (HUD)
|
|
400,000
|
|
|
415,272
|
|
Puerto Rico Housing Finance
|
|
|
|
|
|
|
Authority Subordinated-Capital
|
|
|
|
|
|
|
Fund Modernization
|
|
|
|
|
|
|
5.125% 12/1/27
|
|
1,000,000
|
|
|
1,068,670
|
|
5.50% 12/1/18
|
|
300,000
|
|
|
341,691
|
|
|
|
|
|
|
1,825,633
|
Lease Revenue Bonds 10.64%
|
|
|
|
|
|
|
Aurora Certificates
of Participation
|
|
|
|
|
|
|
Refunding Series A 5.00% 12/1/30
|
|
630,000
|
|
|
686,637
|
|
Colorado State Building
Excellent
|
|
|
|
|
|
|
Schools Today Certificates
|
|
|
|
|
|
|
of Participation
|
|
|
|
|
|
|
Series G 5.00% 3/15/32
|
|
2,000,000
|
|
|
2,189,500
|
|
Glendale Certificates
of Participation
|
|
|
|
|
|
|
5.00% 12/1/25 (SGI)
|
|
1,500,000
|
|
|
1,593,960
|
|
Pueblo County Certificates of
|
|
|
|
|
|
|
Participation (County Judicial
|
|
|
|
|
|
|
Complex Project)
|
|
|
|
|
|
|
5.00% 9/15/42 (AGM)
|
|
2,000,000
|
|
|
2,152,700
|
6
|
|
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
|
|
$
|
599,302
|
|
Regional Transportation
District
|
|
|
|
|
|
|
Certificates of Participation
|
|
|
|
|
|
|
Series A 5.375% 6/1/31
|
|
460,000
|
|
|
505,531
|
|
|
|
|
|
|
7,727,630
|
Local General Obligation Bonds 17.75%
|
|
|
|
|
|
|
Arapahoe County
School District #1
|
|
|
|
|
|
|
Englewood 5.00% 12/1/31
|
|
2,935,000
|
|
|
3,375,221
|
|
Arapahoe County Water &
Wastewater
|
|
|
|
|
|
|
Public Improvement District
|
|
|
|
|
|
|
Series A 5.125% 12/1/32 (NATL-RE)
|
|
635,000
|
|
|
642,264
|
|
Boulder, Larimer
& Weld Counties
|
|
|
|
|
|
|
St. Vrain Valley School District
|
|
|
|
|
|
|
No. Re-1J 5.00% 12/15/33
|
|
750,000
|
|
|
831,600
|
|
Bowles Metropolitan District
|
|
|
|
|
|
|
5.00% 12/1/33 (AGM)
|
|
2,000,000
|
|
|
2,034,960
|
|
Denver City &
County (Better Denver
|
|
|
|
|
|
|
& Zoo) Series A 5.00% 8/1/25
|
|
1,150,000
|
|
|
1,344,764
|
|
Denver City & County
School
|
|
|
|
|
|
|
District #1 4.00% 12/1/28
|
|
500,000
|
|
|
528,970
|
|
Denver International
Business
|
|
|
|
|
|
|
Center Metropolitan District #1
|
|
|
|
|
|
|
5.00% 12/1/30
|
|
650,000
|
|
|
660,699
|
|
Ignacio School District 11JT
|
|
|
|
|
|
|
5.00% 12/1/28
|
|
210,000
|
|
|
241,498
|
|
5.00% 12/1/29
|
|
410,000
|
|
|
468,560
|
|
5.00% 12/1/31
|
|
415,000
|
|
|
470,589
|
|
Jefferson County
School District #R-1
|
|
|
|
|
|
|
5.25% 12/15/24
|
|
750,000
|
|
|
952,418
|
|
Rangely Hospital District
|
|
|
|
|
|
|
6.00% 11/1/26
|
|
750,000
|
|
|
838,515
|
|
Sand Creek
Metropolitan District
|
|
|
|
|
|
|
Refunding & Improvement
|
|
|
|
|
|
|
5.00% 12/1/31 (SGI)
|
|
500,000
|
|
|
495,945
|
|
|
|
|
|
|
12,886,003
|
§Pre-Refunded Bond 1.07%
|
|
|
|
|
|
|
Adams & Arapahoe Counties
Joint
|
|
|
|
|
|
|
School District #28J (Aurora)
|
|
|
|
|
|
|
6.00% 12/1/28-18
|
|
600,000
|
|
|
777,450
|
|
|
|
|
|
|
777,450
|
Special Tax Revenue Bonds 33.83%
|
|
|
|
|
|
|
Denver Convention
Center Hotel
|
|
|
|
|
|
|
Authority Revenue Refunding
|
|
|
|
|
|
|
5.00% 12/1/35 (SGI)
|
|
2,330,000
|
|
|
2,260,636
|
|
Guam Government Business
Privilege
|
|
|
|
|
|
|
Tax Revenue Series A
|
|
|
|
|
|
|
5.125% 1/1/42
|
|
435,000
|
|
|
467,442
|
|
5.25% 1/1/36
|
|
565,000
|
|
|
620,336
|
|
Puerto Rico
Infrastructure Financing
|
|
|
|
|
|
|
Authority Special Tax Revenue
|
|
|
|
|
|
|
Series B 5.00% 7/1/41
|
|
2,475,000
|
|
|
2,500,319
|
|
Puerto Rico Sales Tax
Financing
|
|
|
|
|
|
|
Revenue First Subordinate
|
|
|
|
|
|
|
Series A 5.50% 8/1/37
|
|
700,000
|
|
|
752,206
|
|
Series A 5.50% 8/1/42
|
|
1,000,000
|
|
|
1,073,210
|
|
Series A 5.75% 8/1/37
|
|
590,000
|
|
|
651,301
|
|
Series A-1 5.00% 8/1/43
|
|
2,000,000
|
|
|
2,099,540
|
|
Series C 5.00% 8/1/40
|
|
1,000,000
|
|
|
1,063,190
|
|
Series C 5.00% 8/1/46
|
|
750,000
|
|
|
788,445
|
|
Series C 6.00% 8/1/39
|
|
500,000
|
|
|
570,455
|
|
Regional
Transportation District
|
|
|
|
|
|
|
Revenue (FasTracks Project) Series A
|
|
|
|
|
|
|
4.375% 11/1/31 (AMBAC)
|
|
1,250,000
|
|
|
1,287,650
|
|
4.50% 11/1/36 (AGM)
|
|
3,000,000
|
|
|
3,084,180
|
|
5.00% 11/1/28 (AMBAC)
|
|
2,500,000
|
|
|
2,850,000
|
|
5.00% 11/1/38
|
|
4,085,000
|
|
|
4,499,301
|
|
|
|
|
|
|
24,568,211
|
State & Territory General Obligation Bond
0.74%
|
|
|
|
|
Puerto Rico Commonwealth
|
|
|
|
|
|
|
(Public Improvement)
|
|
|
|
|
|
|
Series C 6.00% 7/1/39
|
|
505,000
|
|
|
534,573
|
|
|
|
|
|
|
534,573
|
Transportation Revenue Bonds 8.33%
|
|
|
|
|
|
|
Denver City &
County Airport System
|
|
|
|
|
|
|
Revenue Series A 5.25% 11/15/36
|
|
750,000
|
|
|
822,675
|
|
E-470 Public Highway
Authority
|
|
|
|
|
|
|
Revenue Series C 5.25% 9/1/25
|
|
310,000
|
|
|
325,469
|
|
Puerto Rico Highway
& Transportation
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
Series K 5.00% 7/1/30
|
|
2,580,000
|
|
|
2,582,477
|
|
Regional Transportation
District
|
|
|
|
|
|
|
Revenue (Denver Transit Partners)
|
|
|
|
|
|
|
6.00% 1/15/41
|
|
2,175,000
|
|
|
2,314,896
|
|
|
|
|
|
|
6,045,517
|
Water & Sewer Revenue Bonds 4.89%
|
|
|
|
|
|
|
Colorado Water
Resources & Power
|
|
|
|
|
|
|
Development Authority Revenue
|
|
|
|
|
|
|
(Parker Water & Sanitation District)
|
|
|
|
|
|
|
Series D 5.125% 9/1/34 (NATL-RE)
|
|
1,500,000
|
|
|
1,521,030
|
|
5.25% 9/1/43 (NATL-RE)
|
|
2,000,000
|
|
|
2,025,940
|
|
|
|
|
|
|
3,546,970
|
Total Municipal Bonds
|
|
|
|
|
|
|
(cost
$96,041,143)
|
|
|
|
|
100,660,328
|
(continues)
7
Statements of net
assets
Delaware Investments
Colorado Municipal Income Fund, Inc.
|
Value
|
|
|
Total Value of Securities
138.63%
|
|
|
|
(cost $96,041,143)
|
$
|
100,660,328
|
|
Liquidation Value
of Preferred
|
|
|
|
Stock (41.32%)
|
|
(30,000,000
|
)
|
Receivables and Other
Assets
|
|
|
|
Net of Liabilities 2.69%
|
|
1,953,061
|
|
Net Assets
Applicable to 4,837,100
|
|
|
|
Shares Outstanding; Equivalent to
|
|
|
|
$15.01 Per Share 100.00%
|
$
|
72,613,389
|
|
|
Components of Net Assets at March 31,
2012:
|
|
|
|
Common stock, $0.01 par value, 200
million shares
|
|
|
|
authorized to the Fund
|
$
|
66,918,121
|
|
Undistributed net
investment income
|
|
598,215
|
|
Accumulated net realized gain on
investments
|
|
477,868
|
|
Net unrealized
appreciation of investments
|
|
4,619,185
|
|
Total net assets
|
$
|
72,613,389
|
|
|
Variable rate security. The rate shown is
the rate as of March 31, 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.
8
Delaware Investments Minnesota
Municipal Income Fund II, Inc.
March 31,
2012
|
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds 142.49%
|
|
|
|
|
|
Corporate-Backed Revenue Bonds 11.76%
|
|
|
|
|
|
|
Cloquet Pollution Control Revenue
|
|
|
|
|
|
|
|
(Potlatch Project)
5.90% 10/1/26
|
$
|
5,500,000
|
|
$
|
5,514,135
|
|
Laurentian Energy Authority
|
|
|
|
|
|
|
|
Cogeneration Revenue
|
|
|
|
|
|
|
|
Series A 5.00% 12/1/21
|
|
3,325,000
|
|
|
3,459,131
|
|
Sartell Environmental Improvement
|
|
|
|
|
|
|
|
Revenue
(International Paper)
|
|
|
|
|
|
|
|
Series A 5.20%
6/1/27
|
|
1,000,000
|
|
|
1,014,210
|
|
Tobacco Securitization Authority
|
|
|
|
|
|
|
|
Revenue (Tobacco Settlement)
|
|
|
|
|
|
|
|
Series B 5.25% 3/1/26
|
|
2,000,000
|
|
|
2,199,020
|
|
|
5.25% 3/1/31
|
|
7,400,000
|
|
|
8,021,674
|
|
|
|
|
|
|
|
20,208,170
|
Education Revenue Bonds 17.33%
|
|
|
|
|
|
|
Minnesota Higher Education Facilities
|
|
|
|
|
|
|
|
Authority
Revenue
|
|
|
|
|
|
|
|
(Augsburg
College)
|
|
|
|
|
|
|
|
Series 6-J1 5.00%
5/1/28
|
|
1,500,000
|
|
|
1,531,515
|
|
|
(Carleton
College)
|
|
|
|
|
|
|
|
Series D 5.00%
3/1/30
|
|
1,120,000
|
|
|
1,246,784
|
|
|
Series 6-T 5.00%
1/1/28
|
|
1,000,000
|
|
|
1,104,630
|
|
|
(College of St.
Benedict)
|
|
|
|
|
|
|
|
Series 5-W 5.00%
3/1/20
|
|
2,000,000
|
|
|
2,034,500
|
|
|
Series 7-M 5.00%
3/1/31
|
|
300,000
|
|
|
311,814
|
|
|
5.125%
3/1/36
|
|
275,000
|
|
|
283,286
|
|
|
(St. Marys
University)
|
|
|
|
|
|
|
|
Series 5-U 4.80%
10/1/23
|
|
1,400,000
|
|
|
1,425,816
|
|
|
(St. Scholastic
College)
|
|
|
|
|
|
|
|
Series H 5.25%
12/1/35
|
|
1,000,000
|
|
|
1,051,770
|
|
|
(University of St.
Thomas)
|
|
|
|
|
|
|
|
Series 6-X 5.00%
4/1/29
|
|
2,250,000
|
|
|
2,399,940
|
|
|
Series 7-A 5.00%
10/1/39
|
|
1,000,000
|
|
|
1,083,470
|
|
St. Paul Housing & Redevelopment
|
|
|
|
|
|
|
|
Authority Charter School
|
|
|
|
|
|
|
|
Lease Revenue
|
|
|
|
|
|
|
|
(Nova Classical Academy)
|
|
|
|
|
|
|
|
Series A 6.375% 9/1/31
|
|
750,000
|
|
|
784,515
|
|
University of Minnesota
|
|
|
|
|
|
|
|
Series A 5.00%
12/1/27
|
|
1,110,000
|
|
|
1,316,194
|
|
|
5.00%
12/1/28
|
|
1,880,000
|
|
|
2,215,091
|
|
|
5.00%
12/1/31
|
|
1,000,000
|
|
|
1,163,560
|
|
|
5.00%
12/1/36
|
|
3,000,000
|
|
|
3,415,140
|
|
|
5.25%
4/1/29
|
|
1,000,000
|
|
|
1,149,670
|
|
|
Series C 5.00%
12/1/19
|
|
1,290,000
|
|
|
1,582,714
|
|
University of Minnesota Special
|
|
|
|
|
|
|
|
Purpose Revenue (State
|
|
|
|
|
|
|
|
Supported Biomed Science)
|
|
|
|
|
|
|
|
5.00% 8/1/35
|
|
1,040,000
|
|
|
1,163,469
|
|
|
Series B 5.00% 8/1/36
|
|
4,000,000
|
|
|
4,516,639
|
|
|
|
|
|
|
|
29,780,517
|
Electric Revenue Bonds 5.94%
|
|
|
|
|
|
|
Chaska Electric Revenue
|
|
|
|
|
|
|
|
(Generating
Facilities)
|
|
|
|
|
|
|
|
Series A 5.25%
10/1/25
|
|
250,000
|
|
|
267,498
|
|
Minnesota Municipal Power Agency
|
|
|
|
|
|
|
|
Electric Revenue Series A
|
|
|
|
|
|
|
|
5.00% 10/1/34
|
|
1,900,000
|
|
|
2,050,898
|
|
|
5.25% 10/1/19
|
|
1,610,000
|
|
|
1,733,954
|
|
Southern Minnesota Municipal
|
|
|
|
|
|
|
|
Power Agency Supply
Revenue
|
|
|
|
|
|
|
|
Series A 5.25%
1/1/30
|
|
1,000,000
|
|
|
1,103,430
|
|
Western Minnesota Municipal
|
|
|
|
|
|
|
|
Power Agency Supply Revenue
|
|
|
|
|
|
|
|
Series A 5.00% 1/1/30
(NATL-RE)
|
|
5,000,000
|
|
|
5,052,549
|
|
|
|
|
|
|
|
10,208,329
|
Healthcare Revenue Bonds 30.82%
|
|
|
|
|
|
|
Anoka Health Care Facility
|
|
|
|
|
|
|
|
Revenue
(Homestead
|
|
|
|
|
|
|
|
Anoka Income
Project)
|
|
|
|
|
|
|
|
Series A 7.00%
11/1/46
|
|
1,200,000
|
|
|
1,240,032
|
|
Center City Health Care
|
|
|
|
|
|
|
|
Facilities Revenue (Hazelden
|
|
|
|
|
|
|
|
Foundation Project)
|
|
|
|
|
|
|
|
4.75% 11/1/31
|
|
850,000
|
|
|
881,467
|
|
|
5.00% 11/1/41
|
|
1,600,000
|
|
|
1,675,472
|
|
Fergus Falls Health Care Facilities
|
|
|
|
|
|
|
|
Revenue (Lake Region
Healthcare)
|
|
|
|
|
|
|
|
5.00%
8/1/30
|
|
1,000,000
|
|
|
1,020,810
|
|
Glencoe Health Care Facilities
|
|
|
|
|
|
|
|
Revenue (Glencoe Regional
|
|
|
|
|
|
|
|
Health Services Project)
|
|
|
|
|
|
|
|
5.00% 4/1/25
|
|
2,000,000
|
|
|
2,029,480
|
|
Maple Grove Health Care System
|
|
|
|
|
|
|
|
Revenue (Maple Grove
Hospital)
|
|
|
|
|
|
|
|
5.25%
5/1/37
|
|
1,100,000
|
|
|
1,127,291
|
|
Minneapolis & St. Paul Housing &
|
|
|
|
|
|
|
|
Redevelopment Authority
Health
|
|
|
|
|
|
|
|
Care Facilities (Childrens
Hospital)
|
|
|
|
|
|
|
|
Series A1 5.00% 8/15/34 (AGM)
|
|
500,000
|
|
|
531,055
|
|
Minneapolis Health Care System
|
|
|
|
|
|
|
|
Revenue (Fairview
Health Services)
|
|
|
|
|
|
|
|
Series A 6.625%
11/15/28
|
|
600,000
|
|
|
696,324
|
|
|
Series B 6.50%
11/15/38
|
|
|
|
|
|
|
|
(ASSURED
GTY)
|
|
1,295,000
|
|
|
1,510,799
|
|
|
Series D 5.00%
11/15/34
|
|
|
|
|
|
|
|
(AMBAC)
|
|
2,000,000
|
|
|
2,042,060
|
|
Minneapolis Revenue (National
|
|
|
|
|
|
|
|
Marrow Donor Program Project)
|
|
|
|
|
|
|
|
4.875% 8/1/25
|
|
1,000,000
|
|
|
1,011,950
|
(continues)
9
Statements of net
assets
Delaware Investments
Minnesota Municipal Income Fund II, Inc.
|
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Healthcare Revenue Bonds
(continued)
|
|
|
|
|
|
|
Minnesota Agricultural & Economic
|
|
|
|
|
|
|
|
Development Board
Revenue
|
|
|
|
|
|
|
|
Un-Refunded Balance
Series A
|
|
|
|
|
|
|
|
5.75% 11/15/26
(NATL-RE)
|
$
|
100,000
|
|
$
|
100,119
|
|
|
6.375%
11/15/29
|
|
195,000
|
|
|
195,322
|
|
Rochester Health Care & Housing
|
|
|
|
|
|
|
|
Revenue (Samaritan Bethany)
|
|
|
|
|
|
|
|
Series A 7.375% 12/1/41
|
|
1,220,000
|
|
|
1,319,284
|
|
Rochester Health Care Facilities
|
|
|
|
|
|
|
|
Revenue (Mayo
Clinic)
|
|
|
|
|
|
|
|
4.00%
11/15/41
|
|
3,500,000
|
|
|
3,419,570
|
|
|
Series C 4.50%
11/15/38
|
|
4,150,000
|
|
|
4,817,112
|
|
Shakopee Health Care Facilities
|
|
|
|
|
|
|
|
Revenue (St. Francis Regional
|
|
|
|
|
|
|
|
Medical Center) 5.25% 9/1/34
|
|
1,560,000
|
|
|
1,579,516
|
|
St. Cloud Health Care Revenue
|
|
|
|
|
|
|
|
(Centracare Health
System Project)
|
|
|
|
|
|
|
|
5.50% 5/1/39 (ASSURED
GTY)
|
|
1,500,000
|
|
|
1,621,440
|
|
|
Series A 5.125%
5/1/30
|
|
4,425,000
|
|
|
4,754,794
|
|
St. Louis Park Health Care
|
|
|
|
|
|
|
|
Facilities Revenue
|
|
|
|
|
|
|
|
(Park Nicollet Health
Services)
|
|
|
|
|
|
|
|
5.75% 7/1/39
|
|
3,000,000
|
|
|
3,279,090
|
|
|
Series C 5.50% 7/1/23
|
|
1,000,000
|
|
|
1,104,300
|
|
St. Paul Housing & Redevelopment
|
|
|
|
|
|
|
|
Authority Health Care
Revenue
|
|
|
|
|
|
|
|
(Allina Health
System)
|
|
|
|
|
|
|
|
Series A 5.00%
11/15/18 (NATL-RE)
|
|
1,380,000
|
|
|
1,612,061
|
|
|
Series A-1 5.25%
11/15/29
|
|
1,395,000
|
|
|
1,518,597
|
|
|
(Franciscan Health
Elderly Project)
|
|
|
|
|
|
|
|
5.40% 11/20/42 (GNMA)
(FHA)
|
|
2,700,000
|
|
|
2,712,933
|
|
|
(Health East
Project)
|
|
|
|
|
|
|
|
6.00%
11/15/30
|
|
2,775,000
|
|
|
2,818,928
|
|
|
6.00%
11/15/35
|
|
2,000,000
|
|
|
2,018,600
|
|
|
(Health Partners
Obligation Group
|
|
|
|
|
|
|
|
Project) 5.25%
5/15/36
|
|
2,000,000
|
|
|
2,041,380
|
|
|
(Regions Hospital
Project)
|
|
|
|
|
|
|
|
5.30%
5/15/28
|
|
1,000,000
|
|
|
1,000,620
|
|
|
(Senior Carondelet
Village Project)
|
|
|
|
|
|
|
|
Series A 6.00%
8/1/42
|
|
770,000
|
|
|
797,050
|
|
Washington County Housing &
|
|
|
|
|
|
|
|
Redevelopment Authority
|
|
|
|
|
|
|
|
Revenue (Birchwood &
Woodbury
|
|
|
|
|
|
|
|
Projects) Series A 5.625%
6/1/37
|
|
1,500,000
|
|
|
1,452,810
|
|
Winona Health Care Facilities
|
|
|
|
|
|
|
|
Revenue (Winona
Health
|
|
|
|
|
|
|
|
Obligated Group)
5.00% 7/1/23
|
|
1,010,000
|
|
|
1,032,372
|
|
|
|
|
|
|
|
52,962,638
|
Housing Revenue Bonds 8.40%
|
|
|
|
|
|
|
Chanhassen Multifamily Housing
|
|
|
|
|
|
|
|
Revenue (Heritage Park
|
|
|
|
|
|
|
|
Apartments Project)
|
|
|
|
|
|
|
|
6.20% 7/1/30 (FHA) (HUD)
(AMT)
|
|
1,105,000
|
|
|
1,106,403
|
|
Minneapolis Multifamily
|
|
|
|
|
|
|
|
Housing
Revenue
|
|
|
|
|
|
|
|
(Gaar Scott Loft
Project)
|
|
|
|
|
|
|
|
5.95% 5/1/30
(AMT)
|
|
|
|
|
|
|
|
(LOC-U.S. Bank
N.A.)
|
|
860,000
|
|
|
861,789
|
|
|
(Olson Townhomes
Project)
|
|
|
|
|
|
|
|
6.00% 12/1/19
(AMT)
|
|
655,000
|
|
|
655,000
|
|
|
(Seward Towers
Project)
|
|
|
|
|
|
|
|
5.00% 5/20/36
(GNMA)
|
|
2,000,000
|
|
|
2,047,679
|
|
|
(Sumner Housing
Project) Series A
|
|
|
|
|
|
|
|
5.15% 2/20/45 (GNMA)
(AMT)
|
|
2,000,000
|
|
|
2,016,820
|
|
Minnesota State Housing Finance
|
|
|
|
|
|
|
|
Agency Revenue (Mortgage
|
|
|
|
|
|
|
|
Backed Securities Program)
|
|
|
|
|
|
|
|
4.40% 7/1/32 (GNMA)
|
|
|
|
|
|
|
|
(FNMA) (FHLMC)
|
|
1,500,000
|
|
|
1,506,480
|
|
|
(Rental Housing)
|
|
|
|
|
|
|
|
Series A 5.00% 2/1/35 (AMT)
|
|
1,000,000
|
|
|
1,005,640
|
|
|
Series D 5.95% 2/1/18
(NATL-RE)
|
|
90,000
|
|
|
90,400
|
|
|
(Residential Housing)
|
|
|
|
|
|
|
|
Series B-1 5.35% 1/1/33 (AMT)
|
|
1,240,000
|
|
|
1,240,682
|
|
|
Series D 4.75% 7/1/32 (AMT)
|
|
985,000
|
|
|
993,806
|
|
|
Series I 5.15% 7/1/38 (AMT)
|
|
675,000
|
|
|
685,172
|
|
|
Series L 5.10% 7/1/38 (AMT)
|
|
1,445,000
|
|
|
1,468,944
|
|
Washington County Housing &
|
|
|
|
|
|
|
|
Redevelopment
Authority
|
|
|
|
|
|
|
|
Revenue (Woodland
Park
|
|
|
|
|
|
|
|
Apartments
Project)
|
|
|
|
|
|
|
|
4.70%
10/1/32
|
|
750,000
|
|
|
752,993
|
|
|
|
|
|
|
|
14,431,808
|
Lease Revenue Bonds 7.22%
|
|
|
|
|
|
|
Andover Economic Development
|
|
|
|
|
|
|
|
Authority Public Facilities
|
|
|
|
|
|
|
|
Lease Revenue (Andover
|
|
|
|
|
|
|
|
Community Center)
|
|
|
|
|
|
|
|
5.125% 2/1/24
|
|
205,000
|
|
|
219,674
|
|
|
5.20% 2/1/29
|
|
410,000
|
|
|
439,905
|
|
St. Paul Port Authority Lease Revenue
|
|
|
|
|
|
|
|
(Cedar Street Office
Building Project)
|
|
|
|
|
|
|
|
5.00%
12/1/22
|
|
2,385,000
|
|
|
2,454,928
|
|
|
5.25%
12/1/27
|
|
2,800,000
|
|
|
2,838,444
|
|
|
(Robert Street Office
Building Project)
|
|
|
|
|
|
|
|
Series 3-11 5.00%
12/1/27
|
|
2,000,000
|
|
|
2,086,200
|
|
University of Minnesota
|
|
|
|
|
|
|
|
Series A 5.00% 12/1/29
|
|
2,265,000
|
|
|
2,656,188
|
|
Virginia Housing & Redevelopment
|
|
|
|
|
|
|
|
Authority Health Care
Facility
|
|
|
|
|
|
|
|
Lease
Revenue
|
|
|
|
|
|
|
|
5.25%
10/1/25
|
|
680,000
|
|
|
698,952
|
|
|
5.375%
10/1/30
|
|
965,000
|
|
|
1,002,693
|
|
|
|
|
|
|
|
12,396,984
|
10
|
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal
Bonds
(continued)
|
|
|
|
|
|
Local General Obligation Bonds 12.04%
|
|
|
|
|
|
|
City of Willmar (Rice Memorial
|
|
|
|
|
|
|
|
Hospital Project)
|
|
|
|
|
|
|
|
Series A 4.00% 2/1/32
|
$
|
2,940,000
|
|
$
|
3,049,662
|
|
County of Olmsted
|
|
|
|
|
|
|
|
Series A 3.50% 2/1/27
|
|
1,290,000
|
|
|
1,360,769
|
|
Dakota County Community
|
|
|
|
|
|
|
|
Development Agency
|
|
|
|
|
|
|
|
(Senior Housing Facilities)
|
|
|
|
|
|
|
|
Series A 5.00% 1/1/23
|
|
1,100,000
|
|
|
1,167,991
|
|
Hopkins Independent School
|
|
|
|
|
|
|
|
District #270 Series A 5.00% 2/1/28
|
|
1,000,000
|
|
|
1,165,590
|
|
Minneapolis Special School
|
|
|
|
|
|
|
|
District #1 5.00% 2/1/19 (AGM)
|
|
1,175,000
|
|
|
1,214,739
|
|
Morris Independent School
|
|
|
|
|
|
|
|
District #769 5.00% 2/1/28
|
|
|
|
|
|
|
|
(NATL-RE)
|
|
3,750,000
|
|
|
3,883,274
|
|
Rocori Independent School District
#750
|
|
|
|
|
|
|
|
(School Building) Series B
|
|
|
|
|
|
|
|
5.00% 2/1/22
|
|
1,010,000
|
|
|
1,180,589
|
|
|
5.00% 2/1/24
|
|
1,075,000
|
|
|
1,234,874
|
|
|
5.00% 2/1/25
|
|
1,115,000
|
|
|
1,272,717
|
|
|
5.00% 2/1/26
|
|
1,155,000
|
|
|
1,310,821
|
|
Washington County Housing &
|
|
|
|
|
|
|
|
Redevelopment Authority Series B
|
|
|
|
|
|
|
|
5.50% 2/1/22 (NATL-RE)
|
|
1,705,000
|
|
|
1,710,746
|
|
|
5.50% 2/1/32 (NATL-RE)
|
|
2,140,000
|
|
|
2,143,146
|
|
|
|
|
|
|
|
20,694,918
|
§Pre-Refunded/Escrowed to Maturity Bonds 20.36%
|
|
|
|
|
|
|
Bemidji Health Care Facilities
|
|
|
|
|
|
|
|
Revenue (North Country
|
|
|
|
|
|
|
|
Health Services)
|
|
|
|
|
|
|
|
5.00% 9/1/24-12 (RADIAN)
|
|
1,500,000
|
|
|
1,504,815
|
|
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
|
|
|
10,241,108
|
|
Minneapolis-St. Paul Metropolitan
|
|
|
|
|
|
|
|
Airports Commission Revenue
|
|
|
|
|
|
|
|
Series A 5.00% 1/1/22-13 (NATL-RE)
|
|
600,000
|
|
|
621,534
|
|
Southern Minnesota Municipal
|
|
|
|
|
|
|
|
Power Agency Supply
|
|
|
|
|
|
|
|
Revenue Refunding
|
|
|
|
|
|
|
|
Series A 5.75% 1/1/18-13
|
|
3,715,000
|
|
|
4,000,758
|
|
St. Paul Housing &
Redevelopment
|
|
|
|
|
|
|
|
Authority Sales Tax
|
|
|
|
|
|
|
|
(Civic Center Project)
|
|
|
|
|
|
|
|
5.55% 11/1/23
|
|
2,300,000
|
|
|
2,599,736
|
|
|
5.55% 11/1/23 (NATL-RE) (IBC)
|
|
4,200,000
|
|
|
4,747,344
|
|
University of Minnesota Hospital &
|
|
|
|
|
|
|
|
Clinics 6.75% 12/1/16
|
|
2,580,000
|
|
|
3,124,922
|
|
University of Minnesota Series A
|
|
|
|
|
|
|
|
5.50% 7/1/21
|
|
4,000,000
|
|
|
5,020,600
|
|
|
5.75% 7/1/18
|
|
2,500,000
|
|
|
3,125,900
|
|
|
|
|
|
|
|
34,986,717
|
Special Tax Revenue Bonds 12.93%
|
|
|
|
|
|
|
Guam Government Business
|
|
|
|
|
|
|
|
Privilege Tax Revenue
|
|
|
|
|
|
|
|
Series A 5.25% 1/1/36
|
|
1,360,000
|
|
|
1,493,198
|
|
Hennepin County Sales Tax Revenue
|
|
|
|
|
|
|
|
(Second Lien-Ballpark Project)
|
|
|
|
|
|
|
|
Series B 4.75% 12/15/27
|
|
1,905,000
|
|
|
2,087,518
|
|
Minneapolis Community Planning
|
|
|
|
|
|
|
|
& Economic Development
|
|
|
|
|
|
|
|
Department (Limited Tax
|
|
|
|
|
|
|
|
Supported Common Bond Fund)
|
|
|
|
|
|
|
|
6.25% 12/1/30
|
|
1,000,000
|
|
|
1,144,090
|
|
|
Series 1 5.50% 12/1/24 (AMT)
|
|
1,000,000
|
|
|
1,040,620
|
|
|
Series 1 6.75% 12/1/25 (AMT)
|
|
865,000
|
|
|
868,270
|
|
|
Series 5 5.70% 12/1/27
|
|
375,000
|
|
|
376,939
|
|
Minnesota Public Safety Radio
|
|
|
|
|
|
|
|
5.00% 6/1/23
|
|
2,845,000
|
|
|
3,301,395
|
|
Puerto Rico Sales Tax
|
|
|
|
|
|
|
|
Financing Revenue
|
|
|
|
|
|
|
|
Series C 5.00% 8/1/46
|
|
4,600,000
|
|
|
4,835,795
|
|
^
|
(Capital Appreciation) Series A
|
|
|
|
|
|
|
|
5.73% 8/1/44 (NATL-RE)
|
|
8,485,000
|
|
|
1,377,116
|
|
|
5.82% 8/1/45 (NATL-RE)
|
|
8,690,000
|
|
|
1,329,396
|
|
|
First Subordinate
|
|
|
|
|
|
|
|
Series A-1 5.00% 8/1/43
|
|
2,000,000
|
|
|
2,099,540
|
|
|
Series A 5.75% 8/1/37
|
|
1,200,000
|
|
|
1,324,680
|
|
St. Paul Port Authority
|
|
|
|
|
|
|
|
(Brownsfields Redevelopment Tax)
|
|
|
|
|
|
|
|
Series 2 5.00% 3/1/37
|
|
895,000
|
|
|
938,041
|
|
|
|
|
|
|
|
22,216,598
|
State & Territory General Obligation
Bonds 11.84%
|
|
|
|
|
|
|
Minnesota State Refunding
|
|
|
|
|
|
|
|
(State Various Purpose)
|
|
|
|
|
|
|
|
Series D 5.00% 8/1/24
|
|
2,700,000
|
|
|
3,234,195
|
|
Minnesota State (State Trunk
Highway)
|
|
|
|
|
|
|
|
Series B
|
|
|
|
|
|
|
|
5.00% 8/1/21
|
|
1,000,000
|
|
|
1,231,080
|
|
|
5.00% 10/1/22
|
|
8,000,000
|
|
|
9,942,400
|
|
|
5.00% 10/1/29
|
|
3,715,000
|
|
|
4,370,735
|
|
Puerto Rico Commonwealth
|
|
|
|
|
|
|
|
Public Improvement
|
|
|
|
|
|
|
|
Series A 5.75% 7/1/41
|
|
1,500,000
|
|
|
1,565,670
|
|
|
|
|
|
|
|
20,344,080
|
(continues)
11
Statements of net
assets
Delaware Investments
Minnesota Municipal Income Fund II, Inc.
|
|
|
Principal
|
|
|
|
|
|
|
|
Amount
|
|
Value
|
|
Municipal Bonds
(continued)
|
|
|
|
|
|
|
Transportation Revenue Bonds 2.21%
|
|
|
|
|
|
|
|
Minneapolis - St. Paul Metropolitan
|
|
|
|
|
|
|
|
|
Airports
Commission
|
|
|
|
|
|
|
|
|
Revenue Series
A
|
|
|
|
|
|
|
|
|
5.00% 1/1/28
(NATL-RE)
|
$
|
1,335,000
|
|
$
|
1,345,960
|
|
|
|
5.00% 1/1/35
(AMBAC)
|
|
2,000,000
|
|
|
2,050,220
|
|
|
St. Paul Port
Authority Revenue
|
|
|
|
|
|
|
|
|
(Amherst H. Wilder
Foundation)
|
|
|
|
|
|
|
|
|
Series 3 5.00% 12/1/36
|
|
380,000
|
|
|
407,444
|
|
|
|
|
|
|
|
|
3,803,624
|
|
Water & Sewer Revenue Bonds 1.64%
|
|
|
|
|
|
|
|
Minnesota Public Facilities Authority
|
|
|
|
|
|
|
|
|
Revolving Fund
Revenue
|
|
|
|
|
|
|
|
|
Series A 5.00%
3/1/22
|
|
1,000,000
|
|
|
1,258,340
|
|
|
St. Paul Sewer
Revenue
|
|
|
|
|
|
|
|
|
Series D 5.00% 12/1/21
|
|
1,325,000
|
|
|
1,550,237
|
|
|
|
|
|
|
|
|
2,808,577
|
|
|
|
Total Municipal Bonds
|
|
|
|
|
|
|
|
(cost $232,295,657)
|
|
|
|
|
244,842,960
|
|
|
|
Total Value of Securities
142.49%
|
|
|
|
|
|
|
|
(cost $232,295,657)
|
|
|
|
|
244,842,960
|
|
Liquidation Value of Preferred
|
|
|
|
|
|
|
|
Stock
(43.65%)
|
|
|
|
|
(75,000,000
|
)
|
Receivables and Other Assets
|
|
|
|
|
|
|
|
Net of Liabilities 1.16%
|
|
|
|
|
1,991,603
|
|
Net Assets Applicable to
11,504,975
|
|
|
|
|
|
|
|
Shares
Outstanding; Equivalent to
|
|
|
|
|
|
|
|
$
14.94 Per Share
100.00%
|
|
|
|
$
|
171,834,563
|
|
|
|
Components of Net Assets at March 31,
2012:
|
|
|
|
|
Common stock, $0.01 par value, 200 million shares
|
|
|
|
|
|
authorized to the
Fund
|
|
|
|
$
|
157,931,075
|
|
Undistributed net investment income
|
|
|
|
|
1,504,205
|
|
Accumulated net realized loss on investments
|
|
|
(148,020
|
)
|
Net unrealized appreciation of investments
|
|
|
|
|
12,547,303
|
|
Total net assets
|
|
|
|
$
|
171,834,563
|
|
|
Variable rate security. The rate
shown is the rate as of March 31, 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
HUD Housing & Urban Development Section 8
IBC Insured Bond Certificate
LOC Letter of Credit
NATL-RE
Insured by National Public Finance Guarantee Corporation
RADIAN Insured by
Radian Asset Assurance
VA Veterans Administration collateral
See accompanying notes, which are an
integral part of the financial statements.
12
Delaware Investments National Municipal
Income Fund
March 31, 2012
|
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds 120.52%
|
|
|
|
|
|
Corporate-Backed Revenue Bonds 15.13%
|
|
|
|
|
|
Apache County, Arizona Industrial
|
|
|
|
|
|
|
|
Development Authority Pollution
|
|
|
|
|
|
|
Control Revenue (Tucson Electric
|
|
|
|
|
|
|
Power) Series A 4.50%
3/1/30
|
$
|
750,000
|
|
$
|
753,254
|
|
Buckeye, Ohio Tobacco Settlement
|
|
|
|
|
|
|
|
Financing Authority
Asset-Backed
|
|
|
|
|
|
|
Senior Turbo Series A-2
|
|
|
|
|
|
|
|
5.875% 6/1/47
|
|
480,000
|
|
|
361,843
|
|
|
6.50% 6/1/47
|
|
430,000
|
|
|
355,705
|
|
Delaware State Economic
|
|
|
|
|
|
|
|
Development Authority
Exempt
|
|
|
|
|
|
|
|
Facilities (Indian
River Power)
|
|
|
|
|
|
|
|
5.375%
10/1/45
|
|
500,000
|
|
|
511,990
|
|
Golden State, California Tobacco
|
|
|
|
|
|
|
|
Securitization
Corporate Settlement
|
|
|
|
|
|
|
Revenue (Asset-Backed Senior
|
|
|
|
|
|
|
|
Notes) Series A-1
|
|
|
|
|
|
|
|
5.125% 6/1/47
|
|
370,000
|
|
|
256,218
|
|
|
5.75% 6/1/47
|
|
1,615,000
|
|
|
1,240,739
|
|
Harris County, Texas Industrial
|
|
|
|
|
|
|
|
Development Solid Waste Disposal
|
|
|
|
|
|
|
Revenue (Deer Park
Refining
|
|
|
|
|
|
|
|
Project) 5.00%
2/1/23
|
|
150,000
|
|
|
160,541
|
|
Illinois Railsplitter Tobacco Settlement
|
|
|
|
|
|
|
Authority 6.25% 6/1/24
|
|
500,000
|
|
|
559,575
|
|
Louisiana Local Government
|
|
|
|
|
|
|
|
Environmental
Facilities &
|
|
|
|
|
|
|
|
Community
Development
|
|
|
|
|
|
|
|
Authority (Westlake
Chemical)
|
|
|
|
|
|
|
|
Series A 6.50%
8/1/29
|
|
645,000
|
|
|
731,875
|
|
|
Series A-1 6.50%
11/1/35
|
|
255,000
|
|
|
285,388
|
|
Maryland Economic Development
|
|
|
|
|
|
|
|
Port Facilities Revenue
|
|
|
|
|
|
|
|
(CNX Marine Terminals)
|
|
|
|
|
|
|
|
5.75% 9/1/25
|
|
260,000
|
|
|
270,608
|
|
Navajo County, Arizona Pollution
|
|
|
|
|
|
|
|
Control
Revenue
|
|
|
|
|
|
|
|
Series D 5.75%
6/1/34
|
|
500,000
|
|
|
565,425
|
|
New Jersey Tobacco Settlement
|
|
|
|
|
|
|
|
Financing Series 1A
5.00% 6/1/41
|
500,000
|
|
|
381,305
|
|
New York Liberty Development
|
|
|
|
|
|
|
|
Revenue (Goldman
Sachs
|
|
|
|
|
|
|
|
Headquarters) 5.25%
10/1/35
|
|
500,000
|
|
|
544,495
|
|
Ohio State Air Quality Development
|
|
|
|
|
|
|
|
Authority Revenue (First
Energy
|
|
|
|
|
|
|
|
Generation) Series A
5.70% 8/1/20
|
260,000
|
|
|
295,994
|
|
Pennsylvania Economic Development
|
|
|
|
|
|
|
Financing Authority
Exempt
|
|
|
|
|
|
|
|
Facilities Revenue
(Allegheny
|
|
|
|
|
|
|
|
Energy Supply) 7.00%
7/15/39
|
|
345,000
|
|
|
397,154
|
|
Pima County, Arizona Industrial
|
|
|
|
|
|
|
|
Development Authority
Pollution
|
|
|
|
|
|
|
Control Revenue
(Tucson Electric
|
|
|
|
|
|
|
Power San Juan) 5.75% 9/1/29
|
|
250,000
|
|
|
265,053
|
|
Salt Verde Financial, Arizona
|
|
|
|
|
|
|
|
Gas Revenue Senior
Note
|
|
|
|
|
|
|
|
5.00%
12/1/37
|
|
400,000
|
|
|
397,712
|
|
St. John the Baptist Parish, Louisiana
|
|
|
|
|
|
|
|
(Marathon Oil)
|
|
|
|
|
|
|
|
Series A 5.125% 6/1/37
|
|
500,000
|
|
|
517,150
|
|
Suffolk County, New York Tobacco
|
|
|
|
|
|
|
|
Asset
Securitization
|
|
|
|
|
|
|
|
Series B 5.00%
6/1/32
|
|
750,000
|
|
|
752,618
|
|
|
|
|
|
|
|
9,604,642
|
Education Revenue Bonds 16.19%
|
|
|
|
|
|
|
Arizona Board of Regents System
|
|
|
|
|
|
|
|
Revenue (University of
Arizona)
|
|
|
|
|
|
|
|
Series A 5.00% 6/1/39
|
|
500,000
|
|
|
539,110
|
|
Bowling Green, Ohio Student Housing
|
|
|
|
|
|
|
|
Revenue (CFP I State
University
|
|
|
|
|
|
|
|
Project) 6.00%
6/1/45
|
|
270,000
|
|
|
276,980
|
|
California State Educational Facilities
|
|
|
|
|
|
|
|
Authority Revenue (Chapman
|
|
|
|
|
|
|
|
University) 5.00% 4/1/31
|
|
725,000
|
|
|
775,118
|
|
California Statewide Communities
|
|
|
|
|
|
|
|
Development Authority
School
|
|
|
|
|
|
|
|
Facility Revenue
(Aspire Public
|
|
|
|
|
|
|
|
Schools) 6.125%
7/1/46
|
|
625,000
|
|
|
649,219
|
|
California Statewide Communities
|
|
|
|
|
|
|
|
Development Authority Student
|
|
|
|
|
|
|
|
Housing Revenue (Irvine, LLC -
UCI
|
|
|
|
|
|
|
|
East Campus) 6.00% 5/15/23
|
|
470,000
|
|
|
518,180
|
|
Marietta, Georgia Development
|
|
|
|
|
|
|
|
Authority Revenue
(Life University
|
|
|
|
|
|
|
|
Project) 7.00%
6/15/39
|
|
430,000
|
|
|
437,714
|
|
Maryland State Economic Development
|
|
|
|
|
|
|
|
Student Housing Revenue
|
|
|
|
|
|
|
|
(University of Maryland
College
|
|
|
|
|
|
|
|
Park Projects) 5.75% 6/1/33
|
|
370,000
|
|
|
397,432
|
|
Massachusetts State Health &
|
|
|
|
|
|
|
|
Educational
Facilities Authority
|
|
|
|
|
|
|
|
Revenue (Harvard
University)
|
|
|
|
|
|
|
|
Series A 5.00%
12/15/29
|
|
600,000
|
|
|
695,208
|
|
Missouri State Health & Educational
|
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
|
(Washington University)
|
|
|
|
|
|
|
|
Series B 5.00% 11/15/30
|
|
600,000
|
|
|
705,966
|
|
Monroe County, New York Industrial
|
|
|
|
|
|
|
|
Development Revenue
(Nazareth
|
|
|
|
|
|
|
|
College Rochester
Project)
|
|
|
|
|
|
|
|
5.50%
10/1/41
|
|
500,000
|
|
|
539,320
|
|
Montgomery County, Pennsylvania
|
|
|
|
|
|
|
|
Higher Education & Health
|
|
|
|
|
|
|
|
Authority Revenue (Arcadia
|
|
|
|
|
|
|
|
University) 5.25% 4/1/30
|
|
550,000
|
|
|
579,167
|
|
New Jersey Economic Development
|
|
|
|
|
|
|
|
Authority Revenue
(MSU Student
|
|
|
|
|
|
|
|
Housing Project)
5.875% 6/1/42
|
|
735,000
|
|
|
792,976
|
(continues)
13
Statements of net
assets
Delaware Investments
National Municipal Income Fund
|
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Education Revenue Bonds
(continued)
|
|
|
|
|
|
|
New York City, New York Trust for
|
|
|
|
|
|
|
|
Cultural Resources
(Whitney
|
|
|
|
|
|
|
|
Museum of American
Art)
|
|
|
|
|
|
|
|
5.00%
7/1/31
|
$
|
500,000
|
|
$
|
539,845
|
|
New York State Dormitory Authority
|
|
|
|
|
|
|
|
(Columbia University)
|
|
|
|
|
|
|
|
5.00% 10/1/41
|
|
600,000
|
|
|
676,644
|
#
|
Oregon State Facilities Authority
|
|
|
|
|
|
|
|
Revenue (Concordia
University
|
|
|
|
|
|
|
|
Project)
144A
|
|
|
|
|
|
|
|
Series A 6.125%
9/1/30
|
|
135,000
|
|
|
142,011
|
|
Pennsylvania State Higher Educational
|
|
|
|
|
|
|
|
Facilities Authority Student
|
|
|
|
|
|
|
|
Housing Revenue
|
|
|
|
|
|
|
|
(Edinboro University
Foundation)
|
|
|
|
|
|
|
|
5.80% 7/1/30
|
|
400,000
|
|
|
424,164
|
|
|
(University Properties East
|
|
|
|
|
|
|
|
Stroudsburg University)
|
|
|
|
|
|
|
|
5.25% 7/1/19
|
|
510,000
|
|
|
543,808
|
|
Private Colleges & Universities
|
|
|
|
|
|
|
|
Authority Revenue
(Mercer
|
|
|
|
|
|
|
|
University Project)
Series A
|
|
|
|
|
|
|
|
5.00%
10/1/32
|
|
135,000
|
|
|
136,322
|
|
Troy, New York Capital Resource
|
|
|
|
|
|
|
|
Revenue (Rensselaer
Polytechnic)
|
|
|
|
|
|
|
|
Series A 5.125% 9/1/40
|
|
600,000
|
|
|
640,530
|
|
Wyoming Community Development
|
|
|
|
|
|
|
|
Authority Student
Housing
|
|
|
|
|
|
|
|
Revenue (CHF-Wyoming
LLC)
|
|
|
|
|
|
|
|
6.50%
7/1/43
|
|
250,000
|
|
|
266,980
|
|
|
|
|
|
|
|
10,276,694
|
Electric Revenue Bonds 2.21%
|
|
|
|
|
|
|
Puerto Rico Electric Power
|
|
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
|
|
Series WW 5.50% 7/1/38
|
|
200,000
|
|
|
209,614
|
|
|
Series XX 5.25% 7/1/40
|
|
805,000
|
|
|
833,545
|
|
|
Series ZZ 5.25% 7/1/26
|
|
330,000
|
|
|
358,126
|
|
|
|
|
|
|
|
1,401,285
|
Healthcare Revenue Bonds 18.75%
|
|
|
|
|
|
|
Arizona Health Facilities Authority
|
|
|
|
|
|
|
|
Revenue (Catholic
Healthcare
|
|
|
|
|
|
|
|
West) Series D 5.00%
7/1/28
|
|
500,000
|
|
|
531,340
|
|
Brevard County, Florida Health
|
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
|
(Health First Project) 7.00%
4/1/39
|
|
90,000
|
|
|
104,648
|
|
Butler County, Pennsylvania Hospital
|
|
|
|
|
|
|
|
Authority Revenue
(Butler Health
|
|
|
|
|
|
|
|
System Project)
7.125% 7/1/29
|
|
300,000
|
|
|
350,568
|
|
California State Health Facilities
|
|
|
|
|
|
|
|
Financing Authority Revenue
|
|
|
|
|
|
|
|
(Lucile Packard Childrens
Hospital)
|
|
|
|
|
|
|
|
Series A 5.00% 8/15/51
|
|
1,185,000
|
|
|
1,252,261
|
|
Glendale, Arizona Industrial
|
|
|
|
|
|
|
|
Development Authority
Hospital
|
|
|
|
|
|
|
|
Revenue (John C.
Lincoln Health)
|
|
|
|
|
|
|
|
5.00%
12/1/42
|
|
1,000,000
|
|
|
973,170
|
|
Hawaii Pacific Health Special Purpose
|
|
|
|
|
|
|
|
Revenue Series A 5.50% 7/1/40
|
|
300,000
|
|
|
313,005
|
|
Illinois Finance Authority Revenue
|
|
|
|
|
|
|
|
(Silver Cross &
Medical Centers)
|
|
|
|
|
|
|
|
7.00%
8/15/44
|
|
450,000
|
|
|
497,318
|
|
Koyukuk, Alaska Revenue (Tanana
|
|
|
|
|
|
|
|
Chiefs Conference Health Care
|
|
|
|
|
|
|
|
Facility Project) 7.75%
10/1/41
|
|
300,000
|
|
|
315,456
|
|
Louisiana Public Facilities Authority
|
|
|
|
|
|
|
|
Revenue (Ochsner
Clinic
|
|
|
|
|
|
|
|
Foundation
Project)
|
|
|
|
|
|
|
|
6.50%
5/15/37
|
|
105,000
|
|
|
119,012
|
|
Lycoming County, Pennsylvania
|
|
|
|
|
|
|
|
Authority Health System
Revenue
|
|
|
|
|
|
|
|
(Susquehanna Health System
|
|
|
|
|
|
|
|
Project) Series A 5.50%
7/1/28
|
|
500,000
|
|
|
529,500
|
|
Maine Health & Higher Educational
|
|
|
|
|
|
|
|
Facilities Authority
Revenue
|
|
|
|
|
|
|
|
(Maine General
Medical Center)
|
|
|
|
|
|
|
|
6.75%
7/1/41
|
|
300,000
|
|
|
326,424
|
|
Maricopa County, Arizona Industrial
|
|
|
|
|
|
|
|
Development Authority Health
|
|
|
|
|
|
|
|
Facilities Revenue (Catholic
|
|
|
|
|
|
|
|
Healthcare West)
|
|
|
|
|
|
|
|
Series A 6.00% 7/1/39
|
|
500,000
|
|
|
558,215
|
|
Massachusetts State Health &
|
|
|
|
|
|
|
|
Education Facilities
Authority
|
|
|
|
|
|
|
|
Revenue
(Caregroup)
|
|
|
|
|
|
|
|
Series E-2 5.375%
7/1/19
|
|
360,000
|
|
|
418,874
|
|
Monroe County, Pennsylvania
|
|
|
|
|
|
|
|
Hospital Authority Revenue
|
|
|
|
|
|
|
|
(Pocono Medical Center)
|
|
|
|
|
|
|
|
Series A 5.00% 1/1/41
|
|
500,000
|
|
|
509,825
|
|
Montgomery County, Pennsylvania
|
|
|
|
|
|
|
|
Industrial
Development Authority
|
|
|
|
|
|
|
|
Revenue
(Mtg-Whitemarsh
|
|
|
|
|
|
|
|
Continuing Care)
6.25% 2/1/35
|
|
675,000
|
|
|
633,670
|
|
New Hampshire Health & Education
|
|
|
|
|
|
|
|
Facilities Authority Revenue
|
|
|
|
|
|
|
|
(Dartmouth-Hitchcock Medical
|
|
|
|
|
|
|
|
Center) 6.00% 8/1/38
|
|
300,000
|
|
|
342,408
|
|
New Jersey Health Care Facilities
|
|
|
|
|
|
|
|
Financing Authority
Revenue
|
|
|
|
|
|
|
|
Refunding (St. Peters
University
|
|
|
|
|
|
|
|
Hospital) 6.25%
7/1/35
|
|
300,000
|
|
|
333,471
|
|
New Mexico State Hospital
|
|
|
|
|
|
|
|
Equipment Loan Council
Revenue
|
|
|
|
|
|
|
|
(Presbyterian Healthcare)
|
|
|
|
|
|
|
|
5.00% 8/1/39
|
|
500,000
|
|
|
527,100
|
|
Ohio State Hospital Facilities Revenue
|
|
|
|
|
|
|
|
Refunding (Cleveland
Clinic
|
|
|
|
|
|
|
|
Health) Series A
5.50% 1/1/39
|
|
300,000
|
|
|
326,658
|
14
|
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Healthcare Revenue Bonds
(continued)
|
|
|
|
|
|
|
Philadelphia, Pennsylvania Hospitals
|
|
|
|
|
|
|
|
& Higher
Education Facilities
|
|
|
|
|
|
|
|
Authority Revenue
(Temple
|
|
|
|
|
|
|
|
University Health
System)
|
|
|
|
|
|
|
|
Series A 5.50%
7/1/30
|
$
|
300,000
|
|
$
|
303,447
|
|
University Medical Center, Tucson,
|
|
|
|
|
|
|
|
Arizona Hospital Revenue
|
|
|
|
|
|
|
|
6.50% 7/1/39
|
|
500,000
|
|
|
564,390
|
|
West Virginia Hospital Finance
|
|
|
|
|
|
|
|
Authority (Highland
Hospital
|
|
|
|
|
|
|
|
Obligation
Group)
|
|
|
|
|
|
|
|
9.125%
10/1/41
|
|
500,000
|
|
|
561,785
|
|
Yavapai County, Arizona Industrial
|
|
|
|
|
|
|
|
Development Authority Revenue
|
|
|
|
|
|
|
|
(Yavapai Regional Medical
Center)
|
|
|
|
|
|
|
|
Series A 5.25% 8/1/21
(RADIAN)
|
|
1,500,000
|
|
|
1,515,030
|
|
|
|
|
|
|
|
11,907,575
|
Housing Revenue Bonds 2.59%
|
|
|
|
|
|
|
California Municipal Finance
|
|
|
|
|
|
|
|
Authority Mobile Home
Park
|
|
|
|
|
|
|
|
Revenue (Caritas
Projects) Series A
|
|
|
|
|
|
|
|
5.50%
8/15/47
|
|
750,000
|
|
|
754,665
|
|
|
6.40%
8/15/45
|
|
435,000
|
|
|
463,901
|
|
Florida Housing Finance Homeowner
|
|
|
|
|
|
|
|
Mortgage Revenue Series 2
|
|
|
|
|
|
|
|
5.90% 7/1/29 (NATL-RE) (AMT)
|
|
225,000
|
|
|
227,619
|
|
Puerto Rico Housing Finance
|
|
|
|
|
|
|
|
Authority
(Subordinated-Capital
|
|
|
|
|
|
|
|
Fund
Modernization)
|
|
|
|
|
|
|
|
5.50%
12/1/18
|
|
175,000
|
|
|
199,320
|
|
|
|
|
|
|
|
1,645,505
|
Lease Revenue Bonds 12.39%
|
|
|
|
|
|
|
California State Public Works Board
|
|
|
|
|
|
|
|
Lease Revenue (Various
Capital
|
|
|
|
|
|
|
|
Projects) Series A 5.00%
4/1/37
|
|
1,000,000
|
|
|
1,016,930
|
|
Capital Area, Austin, Texas Cultural
|
|
|
|
|
|
|
|
Education Facilities
Finance
|
|
|
|
|
|
|
|
Revenue (Roman
Catholic Diocese)
|
|
|
|
|
|
|
|
Series B 6.125%
4/1/45
|
|
105,000
|
|
|
112,214
|
|
Hudson Yards, New York
|
|
|
|
|
|
|
|
Infrastructure Revenue
|
|
|
|
|
|
|
|
Series A 5.75% 2/15/47
|
|
1,100,000
|
|
|
1,232,528
|
|
Idaho State Building Authority
|
|
|
|
|
|
|
|
Revenue (Health &
Welfare Project)
|
|
|
|
|
|
|
|
Series A 5.00%
9/1/24
|
|
135,000
|
|
|
158,000
|
|
|
(State Police) Series
I 5.00% 9/1/23
|
|
760,000
|
|
|
890,614
|
|
New Jersey Economic Development
|
|
|
|
|
|
|
|
Authority (School Facilities
|
|
|
|
|
|
|
|
Construction) Series EE
|
|
|
|
|
|
|
|
5.00% 9/1/18
|
|
100,000
|
|
|
118,265
|
|
New York Liberty Development
|
|
|
|
|
|
|
|
Revenue (4 World
Trade Center)
|
|
|
|
|
|
|
|
5.75%
11/15/51
|
|
1,970,000
|
|
|
2,215,422
|
|
|
(7 World Trade
Center)
|
|
|
|
|
|
|
|
Class 1 5.00%
9/15/40
|
|
360,000
|
|
|
393,815
|
|
|
Class 2 5.00%
9/15/43
|
|
640,000
|
|
|
675,174
|
|
Pima County, Arizona Industrial
|
|
|
|
|
|
|
|
Development Authority Metro
|
|
|
|
|
|
|
|
Police Facility Revenue
|
|
|
|
|
|
|
|
(Nevada Project) Series A
|
|
|
|
|
|
|
|
5.25% 7/1/31
|
|
500,000
|
|
|
523,740
|
|
|
5.375% 7/1/39
|
|
500,000
|
|
|
529,795
|
|
|
|
|
|
|
|
7,866,497
|
Local General Obligation Bonds 3.85%
|
|
|
|
|
|
|
Gila County, Arizona Unified School
|
|
|
|
|
|
|
|
District #10 (Payson
School
|
|
|
|
|
|
|
|
Improvement Project
of 2006)
|
|
|
|
|
|
|
|
Series A 5.25% 7/1/27
(AMBAC)
|
|
500,000
|
|
|
544,505
|
|
Maricopa County, Arizona School
|
|
|
|
|
|
|
|
District #6 (Washington)
|
|
|
|
|
|
|
|
Refunding Series A
|
|
|
|
|
|
|
|
5.375% 7/1/13 (AGM)
|
|
1,250,000
|
|
|
1,327,387
|
|
New York City, New York
|
|
|
|
|
|
|
|
Series A-1 5.25%
8/15/21
|
|
250,000
|
|
|
294,223
|
|
|
Series I-1 5.375%
4/1/36
|
|
250,000
|
|
|
281,450
|
|
|
|
|
|
|
|
2,447,565
|
§Pre-Refunded Bonds 3.65%
|
|
|
|
|
|
|
Salt River Project, Arizona Agricultural
|
|
|
|
|
|
|
|
Improvement & Power
District
|
|
|
|
|
|
|
|
Revenue Series B 5.00%
1/1/25-13
|
|
1,250,000
|
|
|
1,294,863
|
|
Southern Arizona Capital Facilities
|
|
|
|
|
|
|
|
Finance (University
of Arizona
|
|
|
|
|
|
|
|
Project) 5.00%
9/1/23-12 (NATL-RE)
|
|
1,000,000
|
|
|
1,020,060
|
|
|
|
|
|
|
|
2,314,923
|
Special Tax Revenue Bonds 16.78%
|
|
|
|
|
|
|
Anne Arundel County, Maryland
|
|
|
|
|
|
|
|
Special Obligation Revenue
|
|
|
|
|
|
|
|
(National Business Park-North
|
|
|
|
|
|
|
|
Project) 6.10% 7/1/40
|
|
200,000
|
|
|
206,582
|
|
Brooklyn Arena Local Development,
|
|
|
|
|
|
|
|
New York Pilot
Revenue (Barclays
|
|
|
|
|
|
|
|
Center Project) 6.50%
7/15/30
|
|
300,000
|
|
|
337,572
|
|
California State Economic Recovery
|
|
|
|
|
|
|
|
Series A 5.25% 7/1/21
|
|
260,000
|
|
|
310,097
|
|
California Statewide Communities
|
|
|
|
|
|
|
|
Development Authority
Revenue
|
|
|
|
|
|
|
|
(Statewide Inland
Regional Center
|
|
|
|
|
|
|
|
Project) 5.375%
12/1/37
|
|
500,000
|
|
|
494,130
|
|
Glendale, Arizona Municipal Property
|
|
|
|
|
|
|
|
Series A 5.00% 7/1/33 (AMBAC)
|
|
1,000,000
|
|
|
1,015,530
|
|
Jacksonville, Florida Transportation
|
|
|
|
|
|
|
|
Revenue 5.25% 10/1/29
(NATL-RE)
|
|
600,000
|
|
|
601,746
|
(continues)
15
Statements of net
assets
Delaware Investments
National Municipal Income Fund
|
|
|
Principal
|
|
|
|
|
|
|
Amount
|
|
Value
|
Municipal Bonds
(continued)
|
|
|
|
|
|
Special Tax Revenue Bonds
(continued)
|
|
|
|
|
|
|
Massachusetts Bay Transportation
|
|
|
|
|
|
|
|
Authority
Senior
|
|
|
|
|
|
|
|
Series A 5.25%
7/1/29
|
$
|
200,000
|
|
$
|
248,728
|
|
Miami-Dade County, Florida Special
|
|
|
|
|
|
|
|
Obligation (Capital Appreciation
&
|
|
|
|
|
|
|
|
Income) Series B 5.00%
10/1/35
|
|
|
|
|
|
|
|
(NATL-RE)
|
|
1,000,000
|
|
|
1,036,850
|
|
Mosaic District, Virginia Community
|
|
|
|
|
|
|
|
Development Authority
Series A
|
|
|
|
|
|
|
|
6.875%
3/1/36
|
|
520,000
|
|
|
564,496
|
|
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
|
|
|
1,033,960
|
|
New York State Dormitory Authority
|
|
|
|
|
|
|
|
(State Personal
Income Tax
|
|
|
|
|
|
|
|
Revenue-Education)
|
|
|
|
|
|
|
|
Series A 5.00%
3/15/38
|
|
570,000
|
|
|
617,812
|
|
Peoria, Arizona Municipal
|
|
|
|
|
|
|
|
Development Authority Sales Tax
&
|
|
|
|
|
|
|
|
Excise Shared Revenue
|
|
|
|
|
|
|
|
(Senior Lien & Subordinate
Lien)
|
|
|
|
|
|
|
|
5.00% 1/1/18
|
|
1,085,000
|
|
|
1,277,478
|
|
Puerto Rico Sales Tax
|
|
|
|
|
|
|
|
Financing
Revenue
|
|
|
|
|
|
|
|
Series C 5.00%
8/1/40
|
|
600,000
|
|
|
637,914
|
|
|
First
Subordinate
|
|
|
|
|
|
|
|
Series A 5.75%
8/1/37
|
|
245,000
|
|
|
270,456
|
|
|
Series C 6.00%
8/1/39
|
|
300,000
|
|
|
342,273
|
|
W
|
(Convertible Capital
Appreciation
|
|
|
|
|
|
|
|
Bonds) 6.75%
8/1/32
|
|
220,000
|
|
|
212,938
|
|
San Mateo, California Special Tax
|
|
|
|
|
|
|
|
Community Facilities District
|
|
|
|
|
|
|
|
#2008-1 (Bay Meadows)
|
|
|
|
|
|
|
|
6.00% 9/1/42
|
|
95,000
|
|
|
98,877
|
|
Virginia Public Building Authority
|
|
|
|
|
|
|
|
Series A 5.00%
8/1/26
|
|
1,000,000
|
|
|
1,179,520
|
^
|
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
|
|
|
165,225
|
|
|
|
|
|
|
|
10,652,184
|
State & Territory General Obligation Bonds
7.74%
|
|
|
|
|
California State Various Purposes
|
|
|
|
|
|
|
|
5.00%
9/1/41
|
|
460,000
|
|
|
484,891
|
|
|
5.00%
10/1/41
|
|
440,000
|
|
|
463,993
|
|
|
5.25%
11/1/40
|
|
320,000
|
|
|
344,358
|
|
|
6.00%
4/1/38
|
|
105,000
|
|
|
120,302
|
|
New York State Series A
|
|
|
|
|
|
|
|
5.00% 2/15/39
|
|
300,000
|
|
|
328,713
|
|
Oregon State Series K 5.00% 5/1/22
|
|
1,000,000
|
|
|
1,244,029
|
|
Puerto Rico Commonwealth
|
|
|
|
|
|
|
|
(Public Improvement)
|
|
|
|
|
|
|
|
Series A
|
|
|
|
|
|
|
|
5.00% 7/1/41
|
|
1,100,000
|
|
|
1,048,773
|
|
|
5.75% 7/1/41
|
|
500,000
|
|
|
521,890
|
|
|
Series C 6.00% 7/1/39
|
|
335,000
|
|
|
354,618
|
|
|
|
|
|
|
|
4,911,567
|
Transportation Revenue Bonds 15.40%
|
|
|
|
|
|
|
Central Texas Regional Mobility
|
|
|
|
|
|
|
|
Authority Revenue
Senior Lien
|
|
|
|
|
|
|
|
6.00%
1/1/41
|
|
520,000
|
|
|
568,792
|
|
Harris County, Texas Metropolitan
|
|
|
|
|
|
|
|
Transit Authority
|
|
|
|
|
|
|
|
Series A 5.00% 11/1/24
|
|
500,000
|
|
|
594,780
|
|
Maryland State Economic
|
|
|
|
|
|
|
|
Development
Revenue
|
|
|
|
|
|
|
|
(Transportation
Facilities Project)
|
|
|
|
|
|
|
|
Series A 5.75%
6/1/35
|
|
255,000
|
|
|
269,604
|
|
Metropolitan Transportation
|
|
|
|
|
|
|
|
Authority, New York
|
|
|
|
|
|
|
|
Series A 5.00% 11/15/41
|
|
500,000
|
|
|
537,320
|
|
Metropolitan Washington D.C.
|
|
|
|
|
|
|
|
Airports Authority
Dulles Toll Road
|
|
|
|
|
|
|
|
Revenue (First Senior
Lien)
|
|
|
|
|
|
|
|
Series A 5.25%
10/1/44
|
|
245,000
|
|
|
261,491
|
|
New York Liberty Development
|
|
|
|
|
|
|
|
Revenue (1 World Trade Center
|
|
|
|
|
|
|
|
Port Authority Construction)
|
|
|
|
|
|
|
|
5.00% 12/15/41
|
|
500,000
|
|
|
541,045
|
|
North Texas Tollway Authority
|
|
|
|
|
|
|
|
Special Projects
System
|
|
|
|
|
|
|
|
Series A 5.00%
9/1/20
|
|
250,000
|
|
|
303,550
|
|
Pennsylvania Turnpike Commission
|
|
|
|
|
|
|
|
Subordinate (Special Motor
|
|
|
|
|
|
|
|
License Foundation)
|
|
|
|
|
|
|
|
5.00% 12/1/22
|
|
500,000
|
|
|
587,160
|
|
|
Series B 5.00% 12/1/41
|
|
500,000
|
|
|
544,135
|
|
Phoenix, Arizona Civic Improvement
|
|
|
|
|
|
|
|
Airport Revenue
(Senior Lien)
|
|
|
|
|
|
|
|
Series B 5.25%
7/1/27
|
|
|
|
|
|
|
|
(NATL-RE) (FGIC)
(AMT)
|
|
1,000,000
|
|
|
1,002,760
|
|
Port Authority of New York & New
|
|
|
|
|
|
|
|
Jersey Special Obligation
Revenue
|
|
|
|
|
|
|
|
(JFK International Air
Terminal)
|
|
|
|
|
|
|
|
6.00% 12/1/42
|
|
230,000
|
|
|
256,008
|
|
|
6.50% 12/1/28
|
|
500,000
|
|
|
539,665
|
|
Regional Transportation, Colorado
|
|
|
|
|
|
|
|
District Revenue
(Denver Transit
|
|
|
|
|
|
|
|
Partners) 6.00%
1/15/41
|
|
500,000
|
|
|
532,160
|
|
St. Louis, Missouri Airport Revenue
|
|
|
|
|
|
|
|
(Lambert-St Louis
International)
|
|
|
|
|
|
|
|
Series A-1 6.625% 7/1/34
|
|
325,000
|
|
|
373,045
|
16
|
|
|
Principal
|
|
|
|
|
|
|
|
Amount
|
|
Value
|
|
Municipal
Bonds
(continued)
|
|
|
|
|
|
|
Transportation Revenue Bonds
(continued)
|
|
|
|
|
|
|
|
Texas Private Activity Bond
Surface
|
|
|
|
|
|
|
|
|
Transportation Senior Lien Revenue
|
|
|
|
|
|
|
|
|
(LBJ Infrastructure)
|
|
|
|
|
|
|
|
|
7.00% 6/30/40
|
$
|
285,000
|
|
$
|
329,902
|
|
|
|
7.50% 6/30/33
|
|
665,000
|
|
|
799,889
|
|
|
|
(NTE Mobility Partners)
|
|
|
|
|
|
|
|
|
6.875% 12/31/39
|
|
1,000,000
|
|
|
1,142,259
|
|
|
|
7.50% 12/31/31
|
|
500,000
|
|
|
594,835
|
|
|
|
|
|
|
|
|
9,778,400
|
|
Water & Sewer Revenue Bonds
5.84%
|
|
|
|
|
|
|
|
Atlanta, Georgia Water & Wastewater
|
|
|
|
|
|
|
|
|
Revenue Series A 6.25% 11/1/39
|
|
800,000
|
|
|
924,672
|
|
|
New York City, New York Municipal
|
|
|
|
|
|
|
|
|
Water Finance Authority (Second
|
|
|
|
|
|
|
|
|
Generation Resolution) Fiscal 2012
|
|
|
|
|
|
|
|
|
Series BB 5.25% 6/15/44
|
|
525,000
|
|
|
583,816
|
|
|
Phoenix, Arizona Civic Improvement
|
|
|
|
|
|
|
|
|
Wastewater Systems Revenue
|
|
|
|
|
|
|
|
|
(Junior Lien) Series A 5.00% 7/1/39
|
|
900,000
|
|
|
1,006,731
|
|
|
San Francisco, California City
&
|
|
|
|
|
|
|
|
|
County Public Utilities
|
|
|
|
|
|
|
|
|
Commission Subordinate
|
|
|
|
|
|
|
|
|
Series F 5.00% 11/1/27
|
|
500,000
|
|
|
577,930
|
|
|
Texas State Series C 5.00% 8/1/22
|
|
500,000
|
|
|
612,215
|
|
|
|
|
|
|
|
|
3,705,364
|
|
Total Municipal Bonds
|
|
|
|
|
|
|
|
(cost $72,261,131)
|
|
|
|
|
76,512,201
|
|
|
|
|
|
Short-Term Investments 36.54%
|
|
|
|
|
|
|
¤Variable Rate Demand Notes 36.54%
|
|
|
|
|
|
|
|
Brooklyn Center, Minnesota Revenue
|
|
|
|
|
|
|
|
|
(Brookdale II Project) 0.21%
|
|
|
|
|
|
|
|
|
12/1/14 (LOC-U.S. Bank N.A.)
|
|
200,000
|
|
|
200,000
|
|
|
Maryland State Health & Higher
|
|
|
|
|
|
|
|
|
Educational Facilities Authority
|
|
|
|
|
|
|
|
|
Revenue (University Medical
|
|
|
|
|
|
|
|
|
System) Series D 0.19% 7/1/41
|
|
|
|
|
|
|
|
|
(LOC-TD Bank N.A.)
|
|
5,000,000
|
|
|
5,000,000
|
|
|
Mississippi State Business Finance
|
|
|
|
|
|
|
|
|
Commission Gulf Opportunity
|
|
|
|
|
|
|
|
|
(Chevron USA) Series G
|
|
|
|
|
|
|
|
|
0.17% 11/1/35
|
|
5,000,000
|
|
|
5,000,000
|
|
|
New York City, New York Subseries
|
|
|
|
|
|
|
|
|
D-3
0.17% 10/1/39 (LOC-Bank of
|
|
|
|
|
|
|
|
|
New
York Mellon)
|
|
5,000,000
|
|
|
5,000,000
|
|
|
Philadelphia, Pennsylvania
Authority
|
|
|
|
|
|
|
|
|
for Industrial Development
|
|
|
|
|
|
|
|
|
Revenue (Newcourtland Elder
|
|
|
|
|
|
|
|
|
Services Project) 0.17% 3/1/27
|
|
|
|
|
|
|
|
|
(LOC-PNC Bank N.A.)
|
|
1,000,000
|
|
|
1,000,000
|
|
|
Southeastern Pennsylvania
|
|
|
|
|
|
|
|
|
Transportation Authority 0.17%
|
|
|
|
|
|
|
|
|
3/1/22 (LOC-PNC Bank N.A.)
|
|
6,000,000
|
|
|
6,000,000
|
|
|
St. Paul, Minnesota Port Authority
|
|
|
|
|
|
|
|
|
(Minnesota Public Radio Project)
|
|
|
|
|
|
|
|
|
Series 7 0.21% 5/1/25 (LOC-JP
|
|
|
|
|
|
|
|
|
Morgan Chase Bank N.A.)
|
|
1,000,000
|
|
|
1,000,000
|
|
Total Short-Term Investments
|
|
|
|
|
|
|
|
(cost $23,200,000)
|
|
|
|
|
23,200,000
|
|
|
|
|
|
Total Value of Securities
157.06%
|
|
|
|
|
|
|
|
(cost $95,461,145)
|
|
|
|
|
99,712,201
|
|
Liquidation Value of
Preferred
|
|
|
|
|
|
|
|
Stock (47.25%)
|
|
|
|
|
(30,000,000
|
)
|
Liabilities Net of Receivables
and
|
|
|
|
|
|
|
|
Other Assets (9.81%)
|
|
|
|
|
(6,224,721
|
)
|
Net Assets Applicable to
4,528,443
|
|
|
|
|
|
|
|
Shares Outstanding; Equivalent
to
|
|
|
|
|
|
$14.02 Per Share 100.00%
|
|
|
|
$
|
63,487,480
|
|
|
|
|
|
Components of Net Assets at March 31,
2012:
|
|
|
|
|
Common stock, $0.01 par value, unlimited shares
|
|
|
|
|
|
authorized to the Fund
|
|
|
|
$
|
60,617,476
|
|
Undistributed net investment
income
|
|
|
|
|
376,432
|
|
Accumulated net realized loss on investments
|
|
|
(1,757,484
|
)
|
Net unrealized appreciation of
investments
|
|
|
4,251,056
|
|
Total net assets
|
|
|
|
$
|
63,487,480
|
|
|
Variable rate security. The rate
shown is the rate as of March 31, 2012. Interest rates reset
periodically.
|
#
|
Security exempt from registration
under Rule 144A of the Securities Act of 1933, as amended. At March 31,
2012, the aggregate value of Rule 144A securities was $142,011, 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.
|
W
|
Step coupon bond. Indicates security
that has a zero coupon that remains in effect until a predetermined date
at which time the stated interest rate becomes effective.
|
^
|
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.
17
Statements of assets and
liabilities
Delaware Investments Closed-End
Municipal Bond Funds
March 31, 2012
|
|
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
|
|
$
|
100,660,328
|
|
$
|
244,842,960
|
|
$
|
76,512,201
|
Short-term investments,
at value
|
|
|
|
|
|
|
|
|
23,200,000
|
Cash
|
|
|
159,204
|
|
|
|
|
|
259,654
|
Receivable for
securities sold
|
|
|
578,544
|
|
|
3,954,827
|
|
|
10,148
|
Interest income receivable
|
|
|
1,352,217
|
|
|
3,413,265
|
|
|
992,784
|
Organization expense for
preferred shareholders
|
|
|
241,167
|
|
|
417,025
|
|
|
98,451
|
Total assets
|
|
|
102,991,460
|
|
|
252,628,077
|
|
|
101,073,238
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Liquidation value of preferred stock
|
|
|
30,000,000
|
|
|
75,000,000
|
|
|
30,000,000
|
Payable for securities
purchased
|
|
|
|
|
|
4,894,808
|
|
|
7,214,787
|
Cash overdraft
|
|
|
|
|
|
11,468
|
|
|
|
Due to manager and
affiliates
|
|
|
35,822
|
|
|
85,984
|
|
|
76,469
|
Other accrued expenses
|
|
|
29,838
|
|
|
54,024
|
|
|
71,916
|
Distributions
payable
|
|
|
312,411
|
|
|
747,230
|
|
|
222,586
|
Total liabilities
|
|
|
30,378,071
|
|
|
80,793,514
|
|
|
37,585,758
|
|
Total net assets
|
|
$
|
72,613,389
|
|
$
|
171,834,563
|
|
$
|
63,487,480
|
|
Investments, at
cost
|
|
$
|
96,041,143
|
|
$
|
232,295,657
|
|
$
|
72,250,300
|
Short-term investments, at cost
|
|
|
|
|
|
|
|
|
23,200,000
|
See accompanying notes, which are an
integral part of the financial statements.
18
Statements of operations
Delaware Investments Closed-End
Municipal Bond Funds
Year Ended March 31,
2012
|
|
Delaware
|
|
Delaware
|
|
Delaware
|
|
|
Investments
|
|
Investments
|
|
Investments
|
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Income
|
|
Income
|
|
Income
|
|
|
Fund, Inc.
|
|
Fund II,
Inc.
|
|
Fund
|
Investment Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
3,738,239
|
|
|
$
|
8,914,949
|
|
|
$
|
2,924,814
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees
|
|
|
321,777
|
|
|
|
777,003
|
|
|
|
240,043
|
|
Legal fees
|
|
|
50,931
|
|
|
|
118,157
|
|
|
|
160,134
|
|
Accounting and administration expenses
|
|
|
31,613
|
|
|
|
76,337
|
|
|
|
23,588
|
|
Dividend disbursing and
transfer agent fees and expenses
|
|
|
27,812
|
|
|
|
65,817
|
|
|
|
61,970
|
|
Audit and tax
|
|
|
17,566
|
|
|
|
21,173
|
|
|
|
22,471
|
|
Reports and statements
to shareholders
|
|
|
15,328
|
|
|
|
29,051
|
|
|
|
32,670
|
|
Rating agency fees
|
|
|
13,735
|
|
|
|
13,978
|
|
|
|
3,273
|
|
Pricing fees
|
|
|
5,525
|
|
|
|
7,944
|
|
|
|
10,209
|
|
Taxes (Pennsylvania franchise tax)
|
|
|
5,000
|
|
|
|
26,100
|
|
|
|
|
|
Stock exchange
fees
|
|
|
4,678
|
|
|
|
11,232
|
|
|
|
16,992
|
|
Directors/Trustees fees
|
|
|
3,554
|
|
|
|
8,545
|
|
|
|
3,041
|
|
Insurance fees
|
|
|
2,449
|
|
|
|
3,932
|
|
|
|
1,547
|
|
Dues and services
|
|
|
1,657
|
|
|
|
3,723
|
|
|
|
2,101
|
|
Custodian fees
|
|
|
1,086
|
|
|
|
2,479
|
|
|
|
1,220
|
|
Registration fees
|
|
|
865
|
|
|
|
595
|
|
|
|
1,263
|
|
Consulting
fees
|
|
|
495
|
|
|
|
1,226
|
|
|
|
441
|
|
Directors/Trustees expenses
|
|
|
245
|
|
|
|
581
|
|
|
|
211
|
|
Total operating
expenses
|
|
|
504,316
|
|
|
|
1,167,873
|
|
|
|
581,174
|
|
Net Investment
Income
|
|
|
3,233,923
|
|
|
|
7,747,076
|
|
|
|
2,343,640
|
|
|
Net Realized and Unrealized Gain:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gain on investments
|
|
|
976,769
|
|
|
|
1,701,330
|
|
|
|
909,697
|
|
Net change in unrealized
appreciation (depreciation) of investments
|
|
|
6,668,604
|
|
|
|
11,778,378
|
|
|
|
4,515,112
|
|
Net Realized and
Unrealized Gain
|
|
|
7,645,373
|
|
|
|
13,479,708
|
|
|
|
5,424,809
|
|
|
Dividends and distributions to Preferred
Shareholders
|
|
|
(149,762
|
)
|
|
|
(374,404
|
)
|
|
|
(18,904
|
)
|
Net Increase in Net
Assets Resulting from Operations
|
|
$
|
10,729,534
|
|
|
$
|
20,852,380
|
|
|
$
|
7,749,545
|
|
See accompanying notes, which are an
integral part of the financial statements.
19
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.
|
|
|
|
Year Ended
|
|
Year Ended
|
|
|
3/31/12
|
|
3/31/11
|
|
3/31/12
|
|
3/31/11
|
Increase (Decrease) in Net
Assets from Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
$
|
3,233,923
|
|
|
$
|
2,907,637
|
|
|
$
|
7,747,076
|
|
|
$
|
7,039,279
|
|
Net realized gain
|
|
|
976,769
|
|
|
|
163,754
|
|
|
|
1,701,330
|
|
|
|
338,820
|
|
Net change in
unrealized appreciation (depreciation)
|
|
|
6,668,604
|
|
|
|
(3,275,673
|
)
|
|
|
11,778,378
|
|
|
|
(4,887,725
|
)
|
Dividends and distributions to preferred shareholders
|
|
|
(149,762
|
)
|
|
|
|
|
|
|
(374,404
|
)
|
|
|
|
|
Net increase
(decrease) in net assets resulting from operations
|
|
|
10,729,534
|
|
|
|
(204,282
|
)
|
|
|
20,852,380
|
|
|
|
2,490,374
|
|
|
Dividends and
distributions to Common Shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(2,805,518
|
)
|
|
|
(2,757,147
|
)
|
|
|
(6,672,886
|
)
|
|
|
(6,557,836
|
)
|
|
|
|
(2,805,518
|
)
|
|
|
(2,757,147
|
)
|
|
|
(6,672,886
|
)
|
|
|
(6,557,836
|
)
|
|
Net Increase (Decrease) in
Net Assets
|
|
|
7,924,016
|
|
|
|
(2,961,429
|
)
|
|
|
14,179,494
|
|
|
|
(4,067,462
|
)
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
period
|
|
|
64,689,373
|
|
|
|
67,650,802
|
|
|
|
157,655,069
|
|
|
|
161,722,531
|
|
End of period
|
|
$
|
72,613,389
|
|
|
$
|
64,689,373
|
|
|
$
|
171,834,563
|
|
|
$
|
157,655,069
|
|
|
Undistributed net investment income
|
|
$
|
598,215
|
|
|
$
|
323,399
|
|
|
$
|
1,504,205
|
|
|
$
|
827,677
|
|
|
|
|
Delaware Investments
|
|
|
|
|
|
|
|
|
|
|
National Municipal
|
|
|
|
|
|
|
|
|
|
|
Income Fund
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
|
|
|
3/31/12
|
|
3/31/11
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Net
Assets from Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
$
|
2,343,640
|
|
|
$
|
1,477,681
|
|
|
|
|
|
|
|
|
|
Net realized gain (loss)
|
|
|
909,697
|
|
|
|
(25,702
|
)
|
|
|
|
|
|
|
|
|
Net change in
unrealized appreciation (depreciation)
|
|
|
4,515,112
|
|
|
|
(1,265,634
|
)
|
|
|
|
|
|
|
|
|
Dividends and distributions to preferred shareholders
|
|
|
(18,904
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in
net assets resulting from operations
|
|
|
7,749,545
|
|
|
|
186,345
|
|
|
|
|
|
|
|
|
|
|
Dividends and
Distributions to Common Shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(2,295,215
|
)
|
|
|
(1,277,711
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(2,295,215
|
)
|
|
|
(1,277,711
|
)
|
|
|
|
|
|
|
|
|
|
Capital Share
Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets from
merger to Common Shareholders*
|
|
|
40,715,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tender offer**
|
|
|
(13,240,759
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,474,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in
Net Assets
|
|
|
32,928,718
|
|
|
|
(1,091,366
|
)
|
|
|
|
|
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
period
|
|
|
30,558,762
|
|
|
|
31,650,128
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
63,487,480
|
|
|
$
|
30,558,762
|
|
|
|
|
|
|
|
|
|
|
Undistributed net investment
income
|
|
$
|
376,432
|
|
|
$
|
344,090
|
|
|
|
|
|
|
|
|
|
*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.
20
Financial highlights
Delaware Investments Colorado Municipal
Income Fund, Inc.
Selected data for each share of the Fund
outstanding throughout each period were as follows:
|
|
Year
Ended
|
|
|
|
3/31/12
|
|
3/31/11
|
|
3/31/10
|
|
3/31/09
|
|
3/31/08
|
|
Net asset value, beginning of
period
|
|
$13.370
|
|
|
$13.990
|
|
|
$13.220
|
|
|
$14.260
|
|
|
$15.100
|
|
|
|
|
Income (loss) from investment
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
0.669
|
|
|
0.601
|
|
|
0.607
|
|
|
0.755
|
|
|
0.937
|
|
|
Net realized and unrealized gain (loss) on
investments
|
|
1.582
|
|
|
(0.651
|
)
|
|
0.733
|
|
|
(0.965
|
)
|
|
(0.604
|
)
|
|
Dividends and distributions on preferred stock from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
(0.031
|
)
|
|
|
|
|
|
|
|
(0.173
|
)
|
|
(0.264
|
)
|
|
Net realized gain on
investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.050
|
)
|
|
Total dividends and distributions on
preferred stock
|
|
(0.031
|
)
|
|
|
|
|
|
|
|
(0.173
|
)
|
|
(0.314
|
)
|
|
Total from investment operations
|
|
2.220
|
|
|
(0.050
|
)
|
|
1.340
|
|
|
(0.383
|
)
|
|
0.019
|
|
|
|
|
Less dividends and distributions to common
shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
(0.580
|
)
|
|
(0.570
|
)
|
|
(0.570
|
)
|
|
(0.657
|
)
|
|
(0.720
|
)
|
|
Net realized gain on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.139
|
)
|
|
Total dividends and distributions
|
|
(0.580
|
)
|
|
(0.570
|
)
|
|
(0.570
|
)
|
|
(0.657
|
)
|
|
(0.859
|
)
|
|
|
|
Net asset value, end of period
|
|
$15.010
|
|
|
$13.370
|
|
|
$13.990
|
|
|
$13.220
|
|
|
$14.260
|
|
|
|
|
Market value, end of period
|
|
$14.600
|
|
|
$12.450
|
|
|
$13.390
|
|
|
$11.240
|
|
|
$15.060
|
|
|
|
|
Total investment return based
on:
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value
|
|
22.41%
|
|
|
(3.00%
|
)
|
|
24.49%
|
|
|
(21.63%
|
)
|
|
(0.14%
|
)
|
|
Net asset value
|
|
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)
|
|
$72,613
|
|
|
$64,689
|
|
|
$67,651
|
|
|
$63,952
|
|
|
$68,973
|
|
|
Ratio of expenses to average net assets
applicable to common shares
2
|
|
0.73%
|
|
|
0.56%
|
|
|
0.56%
|
|
|
0.91%
|
|
|
1.03%
|
|
|
Ratio of net investment income to average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common
shares
2
|
|
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
3
|
|
4.46%
|
|
|
4.31%
|
|
|
4.41%
|
|
|
4.28%
|
|
|
4.23%
|
|
|
Portfolio turnover
|
|
64%
|
|
|
10%
|
|
|
20%
|
|
|
16%
|
|
|
16%
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred shares outstanding (000
omitted)
4
|
|
$30,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$40,000
|
|
|
Net asset coverage per share of preferred
shares, end of period
4
|
|
$342,045
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$136,216
|
|
|
Liquidation value per
share of preferred shares
4,5
|
|
$100,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$50,000
|
|
|
1
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.
2
Ratios do not reflect the effect of dividend
payments to preferred shareholders, if applicable.
3
Ratio reflects total net investment income less
dividends paid to preferred shareholders, if applicable, divided by average net
assets applicable to common shareholders.
4
In 2008, the Fund redeemed all of its preferred
shares then outstanding 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.
5
Excluding any accumulated but unpaid
dividends.
See accompanying notes, which are an
integral part of the financial statements.
(continues)
21
Financial highlights
Delaware Investments Minnesota
Municipal Income Fund II, Inc.
Selected data for each share of the Fund
outstanding throughout each period were as follows:
|
|
Year
Ended
|
|
|
|
3/31/12
|
|
3/31/11
|
|
3/31/10
|
|
3/31/09
|
|
3/31/08
|
|
Net asset value, beginning of
period
|
|
$13.700
|
|
|
$14.060
|
|
|
$13.140
|
|
|
$14.190
|
|
|
$14.880
|
|
|
|
|
Income (loss) from investment
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
0.673
|
|
|
0.612
|
|
|
0.602
|
|
|
0.776
|
|
|
0.962
|
|
|
Net realized and unrealized gain
(loss)
|
|
1.180
|
|
|
(0.402
|
)
|
|
0.888
|
|
|
(1.013
|
)
|
|
(0.674
|
)
|
|
Dividends and distributions on preferred stock from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
(0.033
|
)
|
|
|
|
|
|
|
|
(0.175
|
)
|
|
(0.318
|
)
|
|
Total dividends and distributions on preferred stock
|
|
(0.033
|
)
|
|
|
|
|
|
|
|
(0.175
|
)
|
|
(0.318
|
)
|
|
Total from investment operations
|
|
1.820
|
|
|
0.210
|
|
|
1.490
|
|
|
(0.412
|
)
|
|
(0.030
|
)
|
|
|
|
Less dividends to common shareholders
from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income
|
|
(0.580
|
)
|
|
(0.570
|
)
|
|
(0.570
|
)
|
|
(0.638
|
)
|
|
(0.660
|
)
|
|
Total dividends
|
|
(0.580
|
)
|
|
(0.570
|
)
|
|
(0.570
|
)
|
|
(0.638
|
)
|
|
(0.660
|
)
|
|
|
|
Net asset value, end of period
|
|
$14.940
|
|
|
$13.700
|
|
|
$14.060
|
|
|
$13.140
|
|
|
$14.190
|
|
|
|
|
Market value, end of period
|
|
$14.230
|
|
|
$12.600
|
|
|
$12.740
|
|
|
$11.250
|
|
|
$13.450
|
|
|
|
|
Total investment return based
on:
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value
|
|
17.95%
|
|
|
3.32%
|
|
|
18.58%
|
|
|
(11.91%
|
)
|
|
(3.58%
|
)
|
|
Net asset value
|
|
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)
|
|
$171,835
|
|
|
$157,655
|
|
|
$161,723
|
|
|
$151,184
|
|
|
$163,305
|
|
|
Ratio of expenses to average net assets
applicable to common shares
2,4
|
|
0.70%
|
|
|
0.56%
|
|
|
0.56%
|
|
|
0.98%
|
|
|
1.18%
|
|
|
Ratio of net investment income to average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common
shares
2
|
|
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
3
|
|
4.44%
|
|
|
4.35%
|
|
|
4.36%
|
|
|
4.45%
|
|
|
4.43%
|
|
|
Portfolio turnover
|
|
44%
|
|
|
9%
|
|
|
19%
|
|
|
15%
|
|
|
6%
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred shares outstanding (000
omitted)
5
|
|
$75,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$95,000
|
|
|
Net asset coverage per share of preferred
shares, end of period
5
|
|
$329,113
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$135,950
|
|
|
Liquidation value per
share of preferred shares
5,6
|
|
$100,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$50,000
|
|
|
1
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.
2
Ratios do not reflect the effect of dividend
payments to preferred shareholders, if applicable.
3
Ratio reflects total net investment income less
dividends paid to preferred shareholders, if applicable, divided by average net
assets applicable to common shareholders.
4
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.
5
In 2008, the Fund redeemed all of its preferred
shares then outstanding 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.
6
Excluding any accumulated
but unpaid dividends.
See accompanying notes, which are an
integral part of the financial statements.
22
Delaware Investments National Municipal
Income Fund
Selected data for each share of the Fund
outstanding throughout each period were as follows:
|
|
Year Ended
|
|
|
|
3/31/12
|
|
3/31/11
|
|
3/31/10
|
|
3/31/09
|
|
3/31/08
|
|
Net asset value, beginning of
period
|
|
$12.620
|
|
|
$13.070
|
|
|
$11.960
|
|
|
$13.360
|
|
|
$14.560
|
|
|
|
|
Income (loss) from investment
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
0.535
|
|
|
0.610
|
|
|
0.571
|
|
|
0.704
|
|
|
0.919
|
|
|
Net realized and
unrealized gain (loss)
|
|
1.409
|
|
|
(0.532
|
)
|
|
1.049
|
|
|
(1.367
|
)
|
|
(1.081
|
)
|
|
Dividends and distributions on
preferred stock from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
(0.004
|
)
|
|
|
|
|
|
|
|
(0.172
|
)
|
|
(0.311
|
)
|
|
Net realized gain on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.015
|
)
|
|
Total dividends and
distributions on preferred stock
|
|
(0.004
|
)
|
|
|
|
|
|
|
|
(0.172
|
)
|
|
(0.326
|
)
|
|
Total from investment
operations
|
|
1.940
|
|
|
0.078
|
|
|
1.620
|
|
|
(0.835
|
)
|
|
(0.488
|
)
|
|
|
|
Less dividends and distributions to
common shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
(0.540
|
)
|
|
(0.528
|
)
|
|
(0.510
|
)
|
|
(0.565
|
)
|
|
(0.668
|
)
|
|
Net realized gain on
investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.044
|
)
|
|
Total dividends and
distributions
|
|
(0.540
|
)
|
|
(0.528
|
)
|
|
(0.510
|
)
|
|
(0.565
|
)
|
|
(0.712
|
)
|
|
|
|
Net asset value, end of
period
|
|
$14.020
|
|
|
$12.620
|
|
|
$13.070
|
|
|
$11.960
|
|
|
$13.360
|
|
|
|
|
Market value, end of
period
|
|
$13.240
|
|
|
$12.200
|
|
|
$12.140
|
|
|
$10.850
|
|
|
$11.950
|
|
|
|
|
Total investment return based
on:
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value
|
|
13.19%
|
|
|
4.78%
|
|
|
16.69%
|
|
|
(4.31%
|
)
|
|
(13.11%
|
)
|
|
Net asset
value
|
|
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)
|
|
$63,487
|
|
|
$30,559
|
|
|
$31,650
|
|
|
$28,967
|
|
|
$32,365
|
|
|
Ratio of expenses to
average net assets applicable to common shares
2
|
|
0.99%
|
|
|
0.65%
|
|
|
0.63%
|
|
|
1.06%
|
|
|
1.16%
|
|
|
Ratio of net investment income to
average net assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to common shares
2
|
|
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
3
|
|
3.96%
|
|
|
4.64%
|
|
|
4.48%
|
|
|
4.25%
|
|
|
4.22%
|
|
|
Portfolio turnover
|
|
101%
|
|
|
50%
|
|
|
69%
|
|
|
36%
|
|
|
17%
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred shares outstanding
(000 omitted)
4
|
|
$30,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$20,000
|
|
|
Net asset coverage
per share of preferred shares, end of period
4
|
|
$311,625
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$130,914
|
|
|
Liquidation value per share of preferred
shares
4,5
|
|
$100,000
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$50,000
|
|
|
1
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.
2
Ratios do not reflect the effect of dividend payments to
preferred shareholders, if applicable.
3
Ratio reflects total net investment income less dividends
paid to preferred shareholders, if applicable, divided by average net assets
applicable to common shareholders.
4
In 2008, the Fund redeemed
all of its preferred shares then outstanding 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.
5
Excluding any accumulated
but unpaid dividends.
See accompanying notes, which are an
integral part of the financial statements.
23
Notes to financial statements
Delaware Investments Closed-End
Municipal Bond Funds
March 31,
2012
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 Amex
Equities, 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.
Short-term debt securities are valued at market value. Generally, other
securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith under the direction of each
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 on federal income tax returns for all open tax years (March
31, 2009 March 31, 2012), 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 year ended March 31, 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 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
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 year ended March
31, 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 year
ended March 31, 2012.
24
2. Investment Management,
Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its
respective investment management agreement, each Fund pays Delaware Management
Company (DMC), a series of Delaware Management Business Trust and the investment
manager, an annual fee of 0.40% which is calculated daily based on the 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 year ended March 31, 2012, the Funds were charged as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
|
|
$3,974
|
|
|
$9,596
|
|
|
$2,965
|
|
At March 31,
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
|
|
$34,859
|
|
|
$83,702
|
|
|
$27,071
|
|
Accounting administration and other
expenses
|
|
|
|
|
|
|
|
|
|
payable to
DSC
|
|
427
|
|
|
1,024
|
|
|
331
|
|
Other expenses
payable to DMC and affiliates*
|
|
536
|
|
|
1,258
|
|
|
49,067
|
|
*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 year ended March 31, 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
|
|
$29,513
|
|
$71,141
|
|
$23,084
|
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 year ended March 31, 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
|
|
|
$75,337,832
|
|
|
|
$147,865,652
|
|
|
|
$58,603,794
|
|
Sales
|
|
|
43,564,848
|
|
|
|
71,272,567
|
|
|
|
56,419,828
|
|
At March 31, 2012, the cost of investments
and unrealized appreciation (depreciation) for federal income tax purposes for
each Fund were as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Cost of
investments
|
|
|
$
|
96,030,992
|
|
|
|
$
|
232,186,511
|
|
|
|
$
|
95,470,793
|
|
Aggregate unrealized
appreciation
|
|
|
$
|
4,921,000
|
|
|
|
$
|
12,841,887
|
|
|
|
$
|
4,307,922
|
|
Aggregate unrealized
depreciation
|
|
|
|
(291,664
|
)
|
|
|
|
(185,438
|
)
|
|
|
|
(66,514
|
)
|
Net unrealized appreciation
|
|
|
$
|
4,629,336
|
|
|
|
$
|
12,656,449
|
|
|
|
$
|
4,241,408
|
|
(continues)
25
Notes to financial statements
Delaware Investments Closed-End
Municipal Bond Funds
3. Investments
(continued)
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,
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) The following table
summarizes the valuation of each Funds investments by fair
value hierarchy levels as of March 31,
2012:
|
|
|
Colorado Municipal Fund
|
|
|
Level 2
|
Municipal
Bonds
|
|
|
$
|
100,660,328
|
|
|
|
|
|
Minnesota Municipal Fund
II
|
|
|
Level 2
|
Municipal
Bonds
|
|
|
$
|
244,842,960
|
|
|
|
|
|
National Municipal Fund
|
|
|
Level 2
|
Municipal
Bonds
|
|
|
$
|
76,512,201
|
|
Short-Term Investments
|
|
|
|
23,200,000
|
|
Total
|
|
|
$
|
99,712,201
|
|
There were no unobservable inputs used to
value investments at the beginning or end of the year.
During the year ended March 31, 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 end of the reporting
period.
In May 2011, the Financial Accounting
Standards Board (FASB) issued ASU No. 2011-04 modifying Topic 820, Fair Value
Measurements and Disclosures. ASU No. 2011-04 requires reporting entities to
disclose i) the amounts of any transfers between Level 1 and Level 2, and the
reasons for the transfers, ii) for Level 3 fair value measurements, iii)
quantitative information about significant unobservable inputs used, iv) a
description of the valuation processes used by the reporting entity and v) a
narrative description of the sensitivity of the fair value measurement to
changes in unobservable inputs if a change in those inputs might result in a
significantly higher or lower fair value measurement. The effective date of ASU
No. 2011-04 is for interim and annual periods beginning after December 15, 2011.
Management is currently evaluating the implications of this guidance and the
impact it will have on the financial statement amounts and footnote disclosures,
if any.
26
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 years ended March 31, 2012 and 2011 was as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
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
|
|
|
|
Year Ended
3/31/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
|
$
|
|
|
|
|
$
|
395
|
|
|
|
$
|
24,594
|
|
Tax-exempt income
|
|
|
|
2,757,147
|
|
|
|
|
6,557,441
|
|
|
|
|
1,253,117
|
|
Total
|
|
|
$
|
2,757,147
|
|
|
|
$
|
6,557,836
|
|
|
|
$
|
1,277,711
|
|
5. Components of Net Assets on a Tax
Basis
As of March 31, 2012, the components of
net assets on a tax basis were as follows:
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Shares of beneficial interest
|
|
|
$
|
66,918,121
|
|
|
|
|
$
|
157,931,075
|
|
|
|
|
$
|
60,617,476
|
|
|
Undistributed long-term capital gains
|
|
|
|
467,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other temporary differences
|
|
|
|
(312,411
|
)
|
|
|
|
|
(747,230
|
)
|
|
|
|
|
(222,586
|
)
|
|
Undistributed tax-exempt income
|
|
|
|
910,626
|
|
|
|
|
|
2,251,435
|
|
|
|
|
|
599,018
|
|
|
Capital loss carryforwards
|
|
|
|
|
|
|
|
|
|
(257,166
|
)
|
|
|
|
|
(1,747,836
|
)
|
|
Unrealized appreciation
|
|
|
|
4,629,336
|
|
|
|
|
|
12,656,449
|
|
|
|
|
|
4,241,408
|
|
|
Net assets
|
|
|
$
|
72,613,389
|
|
|
|
|
$
|
171,834,563
|
|
|
|
|
$
|
63,487,480
|
|
|
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 year ended March 31, 2012, the
Funds recorded the following reclassifications.
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
Fund
|
|
Fund II
|
|
Fund
|
Undistributed net
investment income (loss)
|
|
$
|
(3,827
|
)
|
|
$
|
(23,258
|
)
|
|
$
|
2,821
|
|
Accumulated net realized gain
(loss)
|
|
|
3,827
|
|
|
|
23,258
|
|
|
|
8,024
|
|
Paid-in
capital
|
|
|
|
|
|
|
|
|
|
|
(10,845
|
)
|
For federal income tax purposes, capital
loss carryforwards may be carried forward and applied against future capital
gains. $509,083, $1,702,149, and $746,781 was utilized in 2012 for Colorado
Municipal Fund, Minnesota Municipal Fund II and National Municipal Fund,
respectively. 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
|
|
(continues)
27
Notes to financial
statements
Delaware Investments
Closed-End Municipal Bond Funds
5. Components of Net Assets on a Tax
Basis (continued)
On December 22, 2010, the Regulated
Investment Company Modernization Act of 2010 (the 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 Fund will be 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.
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 year ended March 31, 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, Delaware Investments
Colorado Municipal Income Fund, Inc. (VCF) and Delaware Investments Minnesota
Municipal Income Fund II, Inc. (VMM), 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, Delaware Investments National Municipal Income 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.
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
|
28
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 March 31, 2012,
and during the year 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 March 31, 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
|
|
42
|
%
|
Minnesota Municipal Fund II
|
|
16
|
%
|
National Municipal
Fund
|
|
11
|
%
|
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
(continues)
29
Notes to financial
statements
Delaware Investments Closed-End
Municipal Bond Funds
9. Credit and Market Risk (continued)
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 March 31, 2012, no securities have
been determined to be illiquid under the Funds Liquidity Procedures. Rule 144A
securities have been identified on the statement 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 March 31, 2012, municipal bonds issued by the state of
Arizona constitute approximately 16% 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 other
material events or transactions occurred subsequent to March 31, 2012 that would
require recognition or disclosure in the Funds financial statements.
13. Tax Information
(Unaudited)
The information set forth below is for
each Funds fiscal year as required by federal income tax laws. Shareholders,
however, must report distributions on a calendar year basis for income tax
purposes, which may include distributions for portions of two fiscal years of a
fund. Accordingly, the information needed by shareholders for income tax
purposes will be sent to them in January of each year. Please consult your tax
advisor for proper treatment of this information.
For the fiscal year ended March 31, 2012,
each Fund designates distributions paid during the year as follows:
|
|
(A)
|
|
(B)
|
|
|
|
|
|
|
Ordinary
|
|
Tax-Exempt
|
|
|
|
|
|
|
Income
|
|
Income
|
|
Total
|
|
|
Distributions
|
|
Distributions
|
|
Distributions
|
|
|
(Tax Basis)
|
|
(Tax Basis)
|
|
(Tax Basis)
|
Colorado Municipal
Fund
|
|
|
0.03%
|
|
|
|
99.97%
|
|
|
|
100.00%
|
|
Minnesota Municipal Fund II
|
|
|
0.01%
|
|
|
|
99.99%
|
|
|
|
100.00%
|
|
National Municipal
Fund
|
|
|
0.39%
|
|
|
|
99.61%
|
|
|
|
100.00%
|
|
(A) and (B) are based on a percentage of
each Funds total distributions.
30
Report of independent
registered public
accounting firm
To the Board of Directors and the
Shareholders of
Delaware Investments Colorado Municipal Income Fund,
Inc.,
Delaware Investments Minnesota Municipal Income Fund II, Inc.
and
Delaware Investments National Municipal Income Fund:
In our opinion, the accompanying
statements of net assets, statements of assets and liabilities, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Delaware Investments Colorado Municipal Income Fund, Inc., Delaware Investments
Minnesota Municipal Income Fund II, Inc. and Delaware Investments National
Municipal Income Fund (the Funds) at March 31, 2012, the results of each of
their operations for the year then ended and the changes in each of their net
assets and the financial highlights for each of the two years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as financial statements) are the responsibility of the
Funds management; our responsibility is to express an opinion on these
financial statements based on
our audits. We
conducted our audits of these financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 2012 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion. The financial highlights for each of the three years in the period
ended March 31, 2010 were audited by other independent accountants whose report
dated May 19, 2010 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
May 18,
2012
31
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 airports/airlines, education, hotels, leases, turnpike/ toll, and
transportation sectors for the group. In 2003, she was also named as portfolio
manager on several of the tax-exempt 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, and she is a member of the CFA Society of
Philadelphia.
Gregory A. Gizzi
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
served in the same capacity at Dillon Read. Gizzi earned his bachelors degree
in economics from Harvard University.
32
Proxy Results
At the Annual Meeting on August 17, 2011,
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.
|
|
|
|
% Of
|
|
% Of
|
|
Shares With
|
|
% Of
|
|
% Of
|
|
|
Shares
|
|
Outstanding
|
|
Shares
|
|
Authority
|
|
Outstanding
|
|
Shares
|
|
|
Voted For
|
|
Shares
|
|
Voted
|
|
Withheld
|
|
Shares
|
|
Voted
|
Thomas L.
Bennett
|
|
4,323,578.188
|
|
89.384%
|
|
97.247%
|
|
122,425.620
|
|
2.530%
|
|
2.753%
|
Patrick P. Coyne
|
|
4,333,881.756
|
|
89.597%
|
|
97.479%
|
|
112,122.052
|
|
2.317%
|
|
2.521%
|
John A. Fry
|
|
4,333,881.756
|
|
89.597%
|
|
97.479%
|
|
112,122.052
|
|
2.317%
|
|
2.521%
|
Anthony D. Knerr
|
|
4,287,557.188
|
|
88.639%
|
|
96.437%
|
|
158,446.620
|
|
3.275%
|
|
3.563%
|
Lucinda S.
Landreth
|
|
4,320,576.112
|
|
89.321%
|
|
97.179%
|
|
125,427.696
|
|
2.593%
|
|
2.821%
|
Ann R. Leven
|
|
4,309,622.544
|
|
89.095%
|
|
96.933%
|
|
136,381.264
|
|
2.819%
|
|
3.067%
|
Thomas F.
Madison
|
|
4,282,455.112
|
|
88.533%
|
|
96.322%
|
|
163,548.696
|
|
3.381%
|
|
3.678%
|
Janet L. Yeomans
|
|
4,319,342.112
|
|
89.296%
|
|
97.152%
|
|
126,661.696
|
|
2.618%
|
|
2.848%
|
J. Richard
Zecher
|
|
4,309,622.544
|
|
89.095%
|
|
96.933%
|
|
136,381.264
|
|
2.819%
|
|
3.067%
|
|
Delaware Investments
Minnesota Municipal Income Fund II, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Of
|
|
% Of
|
|
Shares With
|
|
% Of
|
|
% Of
|
|
|
Shares
|
|
Outstanding
|
|
Shares
|
|
Authority
|
|
Outstanding
|
|
Shares
|
|
|
Voted For
|
|
Shares
|
|
Voted
|
|
Withheld
|
|
Shares
|
|
Voted
|
Thomas L.
Bennett
|
|
10,050,811.915
|
|
87.361%
|
|
96.708%
|
|
342,238.303
|
|
2.974%
|
|
3.292%
|
Patrick P. Coyne
|
|
10,021,438.316
|
|
87.105%
|
|
96.425%
|
|
371,611.902
|
|
3.230%
|
|
3.575%
|
John A. Fry
|
|
10,036,585.674
|
|
87.237%
|
|
96.571%
|
|
356,464.544
|
|
3.098%
|
|
3.429%
|
Anthony D. Knerr
|
|
10,025,316.779
|
|
87.139%
|
|
96.462%
|
|
367,733.439
|
|
3.196%
|
|
3.538%
|
Lucinda S.
Landreth
|
|
10,057,858.159
|
|
87.422%
|
|
96.775%
|
|
335,192.059
|
|
2.913%
|
|
3.225%
|
Ann R. Leven
|
|
10,050,185.349
|
|
87.355%
|
|
96.702%
|
|
342,864.869
|
|
2.980%
|
|
3.298%
|
Thomas F.
Madison
|
|
10,026,580.742
|
|
87.150%
|
|
96.474%
|
|
366,469.476
|
|
3.185%
|
|
3.526%
|
Janet L. Yeomans
|
|
10,062,691.269
|
|
87.464%
|
|
96.822%
|
|
330,358.949
|
|
2.871%
|
|
3.178%
|
J. Richard
Zecher
|
|
10,039,482.239
|
|
87.262%
|
|
96.599%
|
|
353,567.979
|
|
3.073%
|
|
3.401%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware Investments National Municipal
Income Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Of
|
|
% Of
|
|
Shares With
|
|
% Of
|
|
% Of
|
|
|
Shares
|
|
Outstanding
|
|
Shares
|
|
Authority
|
|
Outstanding
|
|
Shares
|
|
|
Voted For
|
|
Shares
|
|
Voted
|
|
Withheld
|
|
Shares
|
|
Voted
|
Thomas L.
Bennett
|
|
4,281,855.159
|
|
77.535%
|
|
83.994%
|
|
815,980.678
|
|
14.775%
|
|
16.006%
|
Patrick P. Coyne
|
|
4,282,401.159
|
|
77.545%
|
|
84.005%
|
|
815,434.678
|
|
14.765%
|
|
15.995%
|
John A. Fry
|
|
4,284,077.159
|
|
77.575%
|
|
84.038%
|
|
813,758.678
|
|
14.735%
|
|
15.962%
|
Anthony D. Knerr
|
|
4,283,077.159
|
|
77.557%
|
|
84.018%
|
|
814,758.678
|
|
14.753%
|
|
15.982%
|
Lucinda S.
Landreth
|
|
4,276,618.406
|
|
77.440%
|
|
83.891%
|
|
821,217.431
|
|
14.870%
|
|
16.109%
|
Ann R. Leven
|
|
4,277,840.406
|
|
77.462%
|
|
83.915%
|
|
819,995.431
|
|
14.848%
|
|
16.085%
|
Thomas F.
Madison
|
|
4,283,077.159
|
|
77.557%
|
|
84.018%
|
|
814,758.678
|
|
14.753%
|
|
15.982%
|
Janet L. Yeomans
|
|
4,282,797.159
|
|
77.552%
|
|
84.013%
|
|
815,038.678
|
|
14.758%
|
|
15.987%
|
J. Richard
Zecher
|
|
4,276,782.406
|
|
77.443%
|
|
83.895%
|
|
821,053.431
|
|
14.867%
|
|
16.105%
|
(continues)
33
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 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 Investor Services, Inc.)
(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 800 851-9677.
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
Board of trustees/directors
and officers
addendum
Delaware Investments
®
Family of
Funds
A mutual fund is governed by a Board of
Trustees/Directors (Trustees), which has oversight responsibility for the
management of a funds business affairs. Trustees establish procedures and
oversee and review the performance of the investment manager, the distributor,
and others who perform services for the fund. The independent fund trustees, in
particular, are advocates for shareholder interests. Each trustee has served in
that capacity since he or she was elected to or appointed to the Board of
Trustees, and will continue to serve until his or her retirement or the election
of a new trustee in his or her place. The following is a list of the Trustees
and Officers with certain background and related information.
|
|
|
|
Number of
|
|
|
|
|
|
Portfolios in Fund
|
Other
|
Name,
|
|
|
|
Complex Overseen
|
Directorships
|
Address,
|
Position(s)
|
Length of
|
Principal Occupation(s)
|
by Trustee
|
Held by
|
and Birth Date
|
Held with Fund(s)
|
Time Served
|
During Past 5 Years
|
or Officer
|
Trustee or Officer
|
Interested Trustees
|
|
|
|
|
|
Patrick P. Coyne
1
2005 Market
Street
Philadelphia, PA
19103
April 1963
|
Chairman,
President,
Chief
Executive
Officer, and
Trustee
|
Chairman and Trustee
since August 16,
2006
President and
Chief Executive Officer
since August 1,
2006
|
Patrick P. Coyne has served in
various executive
capacities
at different times at
Delaware
Investments.
2
|
73
|
Director and Audit
Committee Member
Kaydon
Corp.
Board of Governors
Member
Investment
Company
Institute (ICI)
Finance Committee
Member
St.
John Vianney
Roman Catholic Church
Board of Trustees
Agnes
Irwin School
Member of Investment
Committee
Cradle of
Liberty
Council, BSA
(2007 2010)
|
Independent Trustees
|
|
|
|
|
|
Thomas L. Bennett
2005 Market
Street
Philadelphia, PA
19103
October 1947
|
Trustee
|
Since
March 2005
|
Private Investor
(March
2004Present)
Investment Manager
Morgan Stanley &
Co.
(January 1984March 2004)
|
73
|
Chairman of
Investment Committee
Pennsylvania
Academy
of Fine Arts
Investment Committee
and
Governance
Committee Member
Pennsylvania
Horticultural
Society
Director
Bryn Mawr
Bank Corp. (BMTC)
(2007
2011)
|
36
|
|
|
|
Number of
|
|
|
|
|
|
Portfolios in Fund
|
Other
|
Name,
|
|
|
|
Complex Overseen
|
Directorships
|
Address,
|
Position(s)
|
Length of
|
Principal Occupation(s)
|
by Trustee
|
Held by
|
and Birth Date
|
Held with Fund(s)
|
Time Served
|
During Past 5 Years
|
or Officer
|
Trustee or Officer
|
Independent Trustees
(continued)
|
|
|
|
|
John A. Fry
2005 Market Street
Philadelphia,
PA
19103
May 1960
|
Trustee
|
Since
January 2001
|
President
Drexel University
(August
2010Present)
President
Franklin & Marshall College
(July
2002Present)
|
73
|
Board of
Governors Member
NASDAQ OMIX
PHLX
LLC
Director and Audit
Committee Member
Community
Health
Systems
Director U.S. SQUASH
Director
Ecore
International
(2009 2010)
Director
Allied
Banton
Securities Holdings
(2005 2008)
|
Anthony D. Knerr
2005 Market
Street
Philadelphia, PA
19103
December 1938
|
Trustee
|
Since
April 1990
|
Managing Director
Anthony Knerr &
Associates
(Strategic Consulting)
(1990Present)
|
73
|
None
|
Lucinda S. Landreth
2005 Market
Street
Philadelphia, PA
19103
June 1947
|
Trustee
|
Since
March 2005
|
Chief Investment Officer
Assurant,
Inc.
(Insurance)
(20022004)
|
73
|
None
|
Ann R. Leven
2005 Market Street
Philadelphia,
PA
19103
November 1940
|
Trustee
|
Since
October 1989
|
Consultant
ARL Associates
(Financial
Planning)
(1983Present)
|
73
|
Director and Audit
Committee Chair
Systemax
Inc.
(2001 2009)
Director and Audit
Committee
Chairperson
Andy Warhol
Foundation
(1999 2007)
|
Frances A. Sevilla-Sacasa
2005 Market
Street
Philadelphia, PA
19103
January 1956
|
Trustee
|
Since
September 2011
|
Executive Advisor to Dean
(since August 2011)
and
Interim Dean
(January 2011July 2011)
University of Miami
School of
Business Administration
President U.S.
Trust,
Bank of America Private
Wealth Management
(Private
Banking)
(July 2007December 2008)
President and
Director
(November 2005June 2007) and
Chief Executive
Officer
(April 2007June 2007)
U.S. Trust Company
(Private
Banking)
|
73
|
Trust Manager
Camden
Property
Trust
(since August 2011)
Board of Trustees
Thunderbird
School of
Global Management
(20072011)
Board of
Trustees
Carrollton School of
the Sacred Heart
(since
2007)
Board Member
Foreign Policy
Association
(since
2006)
Board of
Trustees
Georgetown
Preparatory
School
(20052011)
Board
of Governors
Miami City Ballet
(20002011)
Board of
Trustees
St. Thomas
University
(20052011)
|
(continues)
37
|
|
|
|
Number of
|
|
|
|
|
|
Portfolios in Fund
|
Other
|
Name,
|
|
|
|
Complex Overseen
|
Directorships
|
Address,
|
Position(s)
|
Length of
|
Principal Occupation(s)
|
by Trustee
|
Held by
|
and Birth Date
|
Held with Fund(s)
|
Time Served
|
During Past 5 Years
|
or Officer
|
Trustee or Officer
|
Independent Trustees
(continued)
|
|
|
|
|
Janet L. Yeomans
2005 Market
Street
Philadelphia, PA
19103
July 1948
|
Trustee
|
Since
April 1999
|
Vice President and Treasurer
(January
2006Present)
Vice President Mergers & Acquisitions
(January
2003January 2006), and
Vice President
(July 1995January
2003)
3M Corporation
|
73
|
Director and Audit
Committee Member
Okabena
Company
Chair 3M Investment
Management
Company
|
J. Richard Zecher
2005 Market
Street
Philadelphia, PA
19103
July 1940
|
Trustee
|
Since
March 2005
|
Founder
Investor Analytics
(Risk
Management)
(May 1999Present)
Founder
Sutton Asset
Management
(Hedge Fund)
(September 1996Present)
|
73
|
Director and
Compensation
Committee Member
Investor Analytics
Director - Oxigene, Inc.
(2003
2008)
|
Officers
|
|
|
|
|
|
David F. Connor
2005 Market
Street
Philadelphia, PA
19103
December 1963
|
Vice President,
Deputy General
Counsel, and
Secretary
|
Vice President since
September 2000
and
Secretary
since
October 2005
|
David F. Connor has served as
Vice President and
Deputy
General Counsel of
Delaware Investments
since
2000.
|
73
|
None
3
|
Daniel V. Geatens
2005 Market
Street
Philadelphia, PA
19103
October 1972
|
Vice President
and Treasurer
|
Treasurer
since
October 2007
|
Daniel V. Geatens has served
in various
capacities at
different times at
Delaware Investments.
|
73
|
None
3
|
David P. OConnor
2005 Market
Street
Philadelphia, PA
19103
February 1966
|
Executive Vice
President,
General
Counsel
and Chief
Legal Officer
|
Executive Vice President
since February
2012;
Senior Vice President
October 2005
February
2012;
General Counsel and
Chief Legal Officer
since
October
2005
|
David P. OConnor has served in
various executive
and legal
capacities at different times
at Delaware
Investments.
|
73
|
None
3
|
Richard Salus
2005 Market Street
Philadelphia,
PA
19103
October 1963
|
Senior
Vice President
and
Chief
Financial
Officer
|
Chief Financial
Officer since
November
2006
|
Richard Salus has served in
various executive
capacities
at different times at
Delaware Investments.
|
73
|
None
3
|
1
Patrick P. Coyne
is considered to be an Interested Trustee because he is an executive
officer of the Funds(s) investment advisor.
|
2
Delaware
Investments is the marketing name for Delaware Management Holdings, Inc.
and its subsidiaries, including the Funds(s) investment advisor,
principal underwriter, and its transfer agent.
|
3
David F. Connor,
Daniel V. Geatens, David P. OConnor, and Richard Salus serve in similar
capacities for the six portfolios of the Optimum Fund Trust, which have
the same investment advisor, principal underwriter, and transfer agent as
the registrant.
|
The Statement
of Additional Information for the Fund(s) includes additional information about
the Trustees and Officers and is available, without charge, upon request by
calling 800 523-1918.
38
About the organization
This annual 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
|
Affiliated officers
|
Contact information
|
|
|
|
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
Ann R.
Leven
Consultant
ARL Associates
New York, NY
Frances A. Sevilla-Sacasa
Executive Advisor to Dean,
University of Miami School
of Business Administration
Coral Gables, FL
Janet L. Yeomans
Vice
President and Treasurer
3M Corporation
St. Paul, MN
J. Richard
Zecher
Founder
Investor Analytics
Scottsdale,
AZ
|
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
|
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
800 851-9677
|
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 800 851-9677. 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.
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 www.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 www.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 www.delawareinvestments.com; and
(ii) on the SECs website at www.sec.gov.
For securities dealers and financial
institutions representatives
800 362-7500
Website
www.delawareinvestments.com
Delaware Investments is the
marketing name of Delaware Management Holdings, Inc. and its
subsidiaries.
Number of recordholders as
of
March 31,
2012
Colorado
Municipal
|
|
|
Income Fund
|
|
90
|
Minnesota Municipal Income
|
|
|
Fund II
|
|
463
|
National Municipal
Income Fund
|
|
113
|
39
Item 2. Code of
Ethics
The
registrant has adopted a code of ethics that applies to the registrants
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. A
copy of the registrants Code of Business Ethics has been posted on the Delaware
Investments Internet Web site at
www.delawareinvestments.com
.
Any amendments to the Code of Business Ethics, and information on any waiver
from its provisions granted by the registrant, will also be posted on this Web
site within five business days of such amendment or waiver and will remain on
the Web site for at least 12 months.
Item 3. Audit Committee
Financial Expert
The registrants Board of
Trustees/Directors has determined that certain members of the registrants Audit
Committee are audit committee financial experts, as defined below. For purposes
of this item, an audit committee financial expert is a person who has the
following attributes:
a. An understanding of generally accepted
accounting principles and financial statements;
b. The ability to assess the general
application of such principles in connection with the accounting for estimates,
accruals, and reserves;
c. Experience preparing, auditing,
analyzing, or evaluating financial statements that present a breadth and level
of complexity of accounting issues that are generally comparable to the breadth
and complexity of issues that can reasonably be expected to be raised by
the registrants financial statements, or experience actively supervising one or
more persons engaged in such activities;
d. An understanding of internal controls
and procedures for financial reporting; and
e. An understanding of audit
committee functions.
An audit committee financial expert shall have acquired
such attributes through:
a. Education and experience as a
principal financial officer, principal accounting officer, controller, public
accountant, or auditor or experience in one or more positions that involve the
performance of similar functions;
b. Experience actively supervising a
principal financial officer, principal accounting officer, controller, public
accountant, auditor, or person performing similar functions;
c. Experience overseeing or assessing the
performance of companies or public accountants with respect to the preparation,
auditing, or evaluation of financial statements; or
d. Other relevant experience.
The registrants Board of
Trustees/Directors has also determined that each member of the registrants
Audit Committee is independent. In order to be independent for purposes of
this item, the Audit Committee member may not: (i) other than in his or her
capacity as a member of the Board of Trustees/Directors or any committee
thereof, accept directly or indirectly any consulting, advisory or other
compensatory fee from the issuer; or (ii) be an interested person of the
registrant as defined in Section 2(a)(19) of the Investment Company Act of
1940.
The
names of the audit committee financial experts on the registrants Audit
Committee are set forth below:
Thomas L.
Bennett
1
John A. Fry
Frances A.
Sevilla-Sacasa
Janet L. Yeomans
Item 4. Principal Accountant
Fees and Services
(a)
Audit fees
.
The aggregate fees billed for services
provided to the registrant by its independent auditors for the audit of the
registrants annual financial statements and for services normally provided by
the independent auditors in connection with statutory and regulatory filings or
engagements were $13,434 for the fiscal year ended March 31, 2012.
_______________________
1
The instructions to
Form N-CSR require disclosure on the relevant experience of persons who qualify
as audit committee financial experts based on other relevant experience. The
Board of Trustees/Directors has determined that Mr. Bennett qualifies as an
audit committee financial expert by virtue of: his education and Chartered
Financial Analyst designation; his experience as a credit analyst, portfolio
manager and the manager of other credit analysts and portfolio managers; and his
prior service on the audit committees of public companies.
The aggregate fees billed for services
provided to the registrant by its independent auditors for the audit of the
registrants annual financial statements and for services normally provided by
the independent auditors in connection with statutory and regulatory filings or
engagements were $15,900 for the fiscal year ended March 31, 2011.
(b)
Audit-related fees
.
The aggregate fees billed by the
registrants independent auditors for services relating to the performance of
the audit of the registrants financial statements and not reported under
paragraph (a) of this Item were $0 for the fiscal year ended March 31,
2012.
The aggregate fees billed by the
registrants independent auditors for services relating to the performance of
the audit of the financial statements of the registrants investment adviser and
other service providers under common control with the adviser and that relate
directly to the operations or financial reporting of the registrant were
$416,500 for the registrants fiscal year ended March 31, 2012. The percentage
of these fees relating to services approved by the registrants Audit Committee
pursuant to the
de
minimis
exception from the
pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These audit-related services were as follows: year end audit procedures;
reporting up and subsidiary statutory audits.
The aggregate fees billed by the
registrants independent auditors for services relating to the performance of
the audit of the registrants financial statements and not reported under
paragraph (a) of this Item were $0 for the fiscal year ended March 31,
2011.
The aggregate fees billed by the
registrants independent auditors for services relating to the performance of
the audit of the financial statements of the registrants investment adviser and
other service providers under common control with the adviser and that relate
directly to the operations or financial reporting of the registrant were
$593,000 for the registrants fiscal year ended March 31, 2011. The percentage
of these fees relating to services approved by the registrants Audit Committee
pursuant to the
de
minimis
exception from the
pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These audit-related services were as follows: audit procedures performed for
both the reporting up on Delaware balances for consolidation into the parent
company, Macquarie. Also, included are the fees for each of the statutory audits
performed on the advisor and its affiliates/subsidiaries.
(c)
Tax fees
.
The aggregate fees billed by the
registrants independent auditors for tax-related services provided to the
registrant were $2,650 for the fiscal year ended March 31, 2012. The percentage
of these fees relating to services approved by the registrants Audit Committee
pursuant to the
de
minimis
exception from the
pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These tax-related services were as follows: review of income tax returns and
review of annual excise distribution calculations.
The aggregate fees billed by the
registrants independent auditors for tax-related services provided to the
registrants investment adviser and other service providers under common control
with the adviser and that relate directly to the operations or financial
reporting of the registrant were $0 for the registrants fiscal year ended March
31, 2012.
The aggregate fees billed by the
registrants independent auditors for tax-related services provided to the
registrant were $2,950 for the fiscal year ended March 31, 2011. The percentage
of these fees relating to services approved by the registrants Audit Committee
pursuant to the
de
minimis
exception from the
pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These tax-related services were as follows: review of income tax returns and
review of annual excise distribution calculations.
The aggregate fees billed by the
registrants independent auditors for tax-related services provided to the
registrants investment adviser and other service providers under common control
with the adviser and that relate directly to the operations or financial
reporting of the registrant were $10,000 for the registrants fiscal year ended
March 31, 2011. The percentage of these fees relating to services approved by
the registrants Audit Committee pursuant to the
de
minimis
exception from the pre-approval requirement in
Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were
as follows: state and local tax services.
(d)
All other fees
.
The aggregate fees billed for all
services provided by the independent auditors to the registrant other than those
set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal
year ended March 31, 2012.
The aggregate fees billed for all
services other than those set forth in paragraphs (b) and (c) of this Item
provided by the registrants independent auditors to the registrants adviser
and other service providers under common control with the adviser and that
relate directly to the operations or financial reporting of the registrant were
$25,000 for the registrants fiscal year ended March 31, 2012. The percentage of
these fees relating to services approved by the registrants Audit Committee
pursuant to the
de
minimis
exception from the
pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These other services were as follows: attest examination of management's
assertion to the controls in place at the transfer agent to be in compliance
with Rule 17ad-13(a)(3) of the Securities Exchange Act of 1934.
The aggregate fees billed for all
services provided by the independent auditors to the registrant other than those
set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal
year ended March 31, 2011.
The aggregate fees billed for all
services other than those set forth in paragraphs (b) and (c) of this Item
provided by the registrants independent auditors to the registrants adviser
and other service providers under common control with the adviser and that
relate directly to the operations or financial reporting of the registrant were
$0 for the registrants fiscal year ended March 31, 2011.
(e) The registrants Audit Committee has
established pre-approval policies and procedures as permitted by Rule
2-01(c)(7)(i)(B) of Regulation S-X (the Pre-Approval Policy) with respect to
services provided by the registrants independent auditors. Pursuant to the
Pre-Approval Policy, the Audit Committee has pre-approved the services set forth
in the table below with respect to the registrant up to the specified fee
limits. Certain fee limits are based on aggregate fees to the registrant and
other registrants within the Delaware Investments
®
Family of
Funds.
Service
|
Range
of Fees
|
Audit
Services
|
|
Statutory audits or
financial audits for new Funds
|
up to $25,000 per
Fund
|
Services associated with
SEC registration statements (e.g., Form N-1A, Form N-14, etc.), periodic
reports and other documents filed with the SEC or other documents issued
in connection with securities offerings (e.g., comfort letters for
closed-end Fund offerings, consents), and assistance in responding to SEC
comment letters
|
up to $10,000 per
Fund
|
Consultations by Fund
management as to the accounting or disclosure treatment of transactions or
events and/or the actual or potential impact of final or proposed rules,
standards or interpretations by the SEC, FASB, or other regulatory or
standard-setting bodies (Note: Under SEC rules, some consultations may be
considered audit-related services rather than audit
services)
|
up to $25,000 in the
aggregate
|
Audit-Related
Services
|
|
Consultations by Fund
management as to the accounting or disclosure treatment of transactions or
events and /or the actual or potential impact of final or proposed rules,
standards or interpretations by the SEC, FASB, or other regulatory or
standard-setting bodies (Note: Under SEC rules, some consultations may be
considered audit services rather than audit-related
services)
|
up to $25,000 in the
aggregate
|
Tax
Services
|
|
U.S. federal, state and
local and international tax planning and advice (e.g., consulting on
statutory, regulatory or administrative developments, evaluation of Funds
tax compliance function, etc.)
|
up to $25,000 in the
aggregate
|
U.S. federal, state and
local tax compliance (e.g., excise distribution reviews,
etc.)
|
up to $5,000 per
Fund
|
Review of federal,
state, local and international income, franchise and other tax
returns
|
up to $5,000 per
Fund
|
Under
the Pre-Approval Policy, the Audit Committee has also pre-approved the services
set forth in the table below with respect to the registrants investment adviser
and other entities controlling, controlled by or under common control with the
investment adviser that provide ongoing services to the registrant (the Control
Affiliates) up to the specified fee limit. This fee limit is based on aggregate
fees to the investment adviser and its Control Affiliates.
Service
|
Range of Fees
|
Non-Audit
Services
|
|
Services associated with
periodic reports and other documents filed with the SEC and assistance in
responding to SEC comment letters
|
up to $10,000 in the
aggregate
|
The
Pre-Approval Policy requires the registrants independent auditors to report to
the Audit Committee at each of its regular meetings regarding all services
initiated since the last such report was rendered, including those services
authorized by the Pre-Approval Policy.
(f) Not applicable.
(g) The aggregate non-audit fees billed
by the registrants independent auditors for services rendered to the registrant
and to its investment adviser and other service providers under common control
with the adviser were $10,901,705 and $25,000 for the registrants fiscal years
ended March 31, 2012 and March 31, 2011, respectively.
(h) In connection with its selection of
the independent auditors, the registrants Audit Committee has considered the
independent auditors provision of non-audit services to the registrants
investment adviser and other service providers under common control with the
adviser that were not required to be pre-approved pursuant to Rule
2-01(c)(7)(ii) of Regulation S-X. The Audit Committee has determined that the
independent auditors provision of these services is compatible with maintaining
the auditors independence.
Item 5. Audit Committee of
Listed Registrants
The registrant has a
separately-designated standing Audit Committee established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the
registrants Audit Committee are Thomas L. Bennett, John A. Fry, Frances A.
Sevilla-Sacasa and Janet L. Yeomans.
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
The registrant has formally delegated to
its investment adviser(s) (the Adviser) the responsibility for making all
proxy voting decisions in relation to portfolio securities held by the
registrant. If and when proxies need to be voted on behalf of the registrant,
the Adviser will vote such proxies pursuant to its Proxy Voting Policies and
Procedures (the Procedures). The Adviser has established a Proxy Voting
Committee (the Committee) which is responsible for overseeing the Advisers
proxy voting process for the registrant. One of the main responsibilities of the
Committee is to review and approve the Procedures to ensure that the Procedures
are designed to allow the Adviser to vote proxies in a manner consistent with
the goal of voting in the best interests of the registrant.
In order to facilitate the actual process
of voting proxies, the Adviser has contracted with Institutional Shareholder
Services (ISS), a wholly owned subsidiary of RiskMetrics Group
(RiskMetrics), which is a subsidiary of MSCI Inc., to analyze proxy statements
on behalf of the registrant and other Adviser clients and vote proxies generally
in accordance with the Procedures. The Committee is responsible for overseeing
ISS/RiskMetricss proxy voting activities. If a proxy has been voted for the
registrant, ISS/RiskMetrics will create a record of the vote. By no later than
August 31 of each year, information (if any) regarding how the registrant voted
proxies relating to portfolio securities during the most recently disclosed
12-month period ended June 30 is available without charge (i) through the
registrants website at www.delawareinvestments.com; and (ii) on the
Commissions website at www.sec.gov.
The Procedures contain a general
guideline that recommendations of company management on an issue (particularly
routine issues) should be given a fair amount of weight in determining how proxy
issues should be voted. However, the Adviser will normally vote against
managements position when it runs counter to its specific Proxy Voting
Guidelines (the Guidelines), and the Adviser will also vote against
managements recommendation when it believes that such position is not in the
best interests of the registrant.
As stated above, the Procedures also list
specific Guidelines on how to vote proxies on behalf of the registrant. Some
examples of the Guidelines are as follows: (i) generally vote for shareholder
proposals asking that a majority or more of directors be independent; (ii)
generally vote against proposals to require a supermajority shareholder vote;
(iii) votes on mergers and acquisitions should be considered on a case-by-case
basis, determining whether the transaction enhances shareholder value; (iv)
generally vote against proposals at companies with more than one class of common
stock to increase the number of authorized shares of the class that has superior
voting rights; (v) generally vote re-incorporation proposals on a case-by-case
basis; (vi) votes with respect to equity-based compensation plans are generally
determined on a case-by-case basis; and (vii) generally vote for proposals
requesting reports on the level of greenhouse gas emissions from a companys
operations and products.
Because the registrant has delegated
proxy voting to the Adviser, the registrant is not expected to encounter any
conflict of interest issues regarding proxy voting and therefore does not have
procedures regarding this matter. However, the Adviser does have a section in
its Procedures that addresses the possibility of conflicts of interest. Most
proxies which the Adviser receives on behalf of the registrant are voted by
ISS/RiskMetrics in accordance with the Procedures. Because almost all registrant
proxies are voted by ISS/RiskMetrics pursuant to the pre-determined Procedures,
it normally will not be necessary for the Adviser to make an actual
determination of how to vote a particular proxy, thereby largely eliminating
conflicts of interest for the Adviser during the proxy voting process. In the
very limited instances where the Adviser is considering voting a proxy contrary
to ISS/RiskMetricss recommendation, the Committee will first assess the issue
to see if there is any possible conflict of interest involving the Adviser or
affiliated persons of the Adviser. If a member of the Committee has actual
knowledge of a conflict of interest, the Committee will normally use another
independent third party to do additional research on the particular proxy issue
in order to make a recommendation to the Committee on how to vote the proxy in
the best interests of the registrant. The Committee will then review the proxy
voting materials and recommendation provided by ISS/RiskMetrics and the
independent third party to determine how to vote the issue in a manner which the
Committee believes is consistent with the Procedures and in the best interests
of the registrant.
Item 8. Portfolio Managers of
Closed-End Management Investment Companies
Other Accounts
Managed
The following
chart lists certain information about types of other accounts for which each
portfolio manager is primarily responsible as of March 31, 2012, unless
otherwise noted. Any accounts managed in a personal capacity appear under Other
Accounts along with the other accounts managed on a professional basis. The
personal account information is current as of June 30, 2011.
|
|
|
No. of Accounts
with
|
Total Assets in
Accounts
|
|
No.
of
|
Total
Assets
|
Performance-
|
with
Performance-
|
|
Accounts
|
Managed
|
Based
Fees
|
Based
Fees
|
Joseph R. Baxter
|
|
|
|
|
Registered Investment
|
18
|
$4.9 billion
|
0
|
$0
|
Companies
|
|
|
|
|
Other Pooled
|
0
|
$0
|
0
|
$0
|
Investment Vehicles
|
|
|
|
|
Other Accounts
|
41
|
$1.9 billion
|
0
|
$0
|
Stephen J. Czepiel
|
|
|
|
|
Registered Investment
|
18
|
$4.9 billion
|
0
|
$0
|
Companies
|
|
|
|
|
Other Pooled
|
0
|
$0
|
0
|
$0
|
Investment Vehicles
|
|
|
|
|
Other Accounts
|
38
|
$2.7 billion
|
0
|
$0
|
Denise A. Franchetti
|
|
|
|
|
Registered Investment
|
3
|
$307.9 million
|
0
|
$0
|
Companies
|
|
|
|
|
Other Pooled
|
0
|
$0
|
0
|
$0
|
Investment Vehicles
|
|
|
|
|
Other Accounts
|
2
|
Under $1 million
|
0
|
$0
|
Gregory A. Gizzi
|
|
|
|
|
Registered Investment
|
3
|
$307.9 million
|
0
|
$0
|
Companies
|
|
|
|
|
Other Pooled
|
0
|
$0
|
0
|
$0
|
Investment Vehicles
|
|
|
|
|
Other Accounts
|
26
|
$343.1 million
|
0
|
$0
|
DESCRIPTION OF MATERIAL
CONFLICTS OF INTEREST
Individual portfolio managers may perform
investment management services for other funds or accounts similar to those
provided to the Funds and the investment action for such other fund or account
and the Funds may differ. For example, an account or fund may be selling a
security, while another account or Fund may be purchasing or holding the same
security. As a result, transactions executed for one fund or account may
adversely affect the value of securities held by another fund, account or Fund.
Additionally, the management of multiple other funds or accounts and the Funds
may give rise to potential conflicts of interest, as a portfolio manager must
allocate time and effort to multiple funds or accounts and the Funds. A
portfolio manager may discover an investment opportunity that may be suitable
for more than one account or fund. The investment opportunity may be limited,
however, so that all funds or accounts for which the investment would be
suitable may not be able to participate. The Manager has adopted procedures
designed to allocate investments fairly across multiple funds or
accounts.
A portfolio managers management of
personal accounts also may present certain conflicts of interest. While
Delawares code of ethics is designed to address these potential conflicts,
there is no guarantee that it will do so.
Compensation
Structure
Each portfolios
managers compensation consists of the following:
Base Salary
-
Each named portfolio manager receives a fixed base
salary. Salaries are determined by a comparison to industry data prepared by
third parties to ensure that portfolio manager salaries are in line with
salaries paid at peer investment advisory firms.
Bonus
-
An objective component is added to the bonus for each manager that is
reflective of account performance relative to an appropriate peer group or
database. The following paragraph describes the structure of the non-guaranteed
bonus.
Each portfolio manager is eligible to
receive an annual cash bonus, which is based on quantitative and qualitative
factors. There is one pool for bonus payments for the fixed income department.
The amount of the pool for bonus payments is determined by assets managed
(including investment companies, insurance product-related accounts and other
separate accounts), management fees and related expenses (including fund waiver
expenses) for registered investment companies, pooled vehicles, and managed
separate accounts. Generally, 60%-75% of the bonus is quantitatively determined.
For more senior portfolio managers, a higher percentage of the bonus is
quantitatively determined. For investment companies, each manager is compensated
according the Funds Lipper or Morningstar peer group percentile ranking on a
one-year, three-year, and five-year basis, with longer-term performance more
heavily weighted. For managed separate accounts the portfolio managers are
compensated according to the composite percentile ranking against the Frank
Russell and Callan Associates databases (or similar sources of relative
performance data) on a one-year, three-year, and five-year basis, with longer
term performance more heavily weighted. There is no objective award for a fund
that falls below the 50
th
percentile, but incentives reach maximum
potential at the 25
th
-30
th
percentile. There is a sliding
scale for investment companies that are ranked above the 50
th
percentile. The remaining 25%-40% portion of the bonus is discretionary as
determined by Delaware Investments and takes into account subjective
factors.
For new and recently transitioned
portfolio managers, the compensation may be weighted more heavily towards a
portfolio managers actual contribution and ability to influence performance,
rather than longer-term performance. Management intends to move the compensation
structure towards longer-term performance for these portfolio managers over
time.
Incentive Unit
Plan
- Portfolio
managers may be awarded incentive unit awards (Awards) relating to the
underlying shares of common stock of Delaware Management Holdings, Inc. issuable
pursuant to the terms of the Delaware Investments Incentive Unit Plan (the
Plan) adopted on November 30, 2010. Awards are no longer granted under the
Delaware Investments U.S., Inc. 2009 Incentive Compensation Plan or the Amended
and Restated Delaware Investments U.S., Inc. Incentive Compensation Plan, which
was established in 2001.
The Plan was adopted in order to: assist
the Manager in attracting, retaining, and rewarding key employees of the
company; enable such employees to acquire or increase an equity interest in the
company in order to align the interest of such employees and the Manager; and
provide such employees with incentives to expend their maximum efforts. Subject
to the terms of the Plan and applicable award agreements, Awards typically vest
in 25% increments on a four-year schedule, and shares of common stock underlying
the Awards are issued after vesting. The fair market value of the shares of
Delaware Management Holdings, Inc., is normally determined as of each March 31,
June 30, September 30 and December 31 by an independent appraiser. Generally, a
stockholder may put shares back to the company during the put period
communicated in connection with the applicable valuation.
Other
Compensation
-
Portfolio managers may also participate in benefit plans and programs available
generally to all employees.
Ownership of
Securities
As of April 30,
2012, the portfolio managers did not own any shares of the Fund.
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 fourth 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:
|
June 6, 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:
|
June 6, 2012
|
/s/ RICHARD SALUS
|
|
By:
|
Richard Salus
|
Title:
|
Chief Financial Officer
|
Date:
|
June 6, 2012
|
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