UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number: 811-07410
 
Exact name of registrant as specified in charter: Delaware Investments® National Municipal
Income Fund
 
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
 
Name and address of agent for service: David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
 
Registrant’s telephone number, including area code: (800) 523-1918
 
Date of fiscal year end: March 31
 
Date of reporting period: March 31, 2018


Item 1. Reports to Stockholders

Table of Contents

LOGO

 

Closed-end funds

Delaware Funds by Macquarie Closed-End Municipal Bond Funds

March 31, 2018

 

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

 

 

LOGO


Table of Contents

Table of contents

 

Portfolio management review

     1  

Fund basics

     3  

Security type / sector / state allocations

     4  

Schedules of investments

     6  

Statements of assets and liabilities

     26  

Statements of operations

     27  

Statements of changes in net assets

     28  

Statements of cash flows

     30  

Financial highlights

     31  

Notes to financial statements

     34  

Report of independent registered public accounting firm

     43  

Other Fund information

     44  

Board of trustees / directors and officers addendum

     46  

About the organization

     49  

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

Unless otherwise noted, views expressed herein are current as of March 31, 2018, and subject to change for events occurring after such date.

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

Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.

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

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

©2018 Macquarie Management Holdings, Inc.


Table of Contents

Portfolio management review

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

April 10, 2018 (Unaudited)

 

Economic conditions

For the fiscal year ended March 31, 2018, the US economy continued along its healthy growth trajectory. In the second calendar quarter of 2017, the country’s gross domestic product (GDP) — a measure of national economic output — rose by an annualized 3.1%. In the third and fourth calendar quarters of 2017, US GDP grew by 3.2% and an estimated 2.9%, respectively.

A robust employment environment matched this strong economic performance. By February 2018, the US jobless rate had reached 4.1%, down from 4.5% the previous March and the lowest level in 18 years.

In light of this healthy backdrop, the US Federal Reserve continued to pursue a strategy of raising short-term interest rates. The Fed initiated three such rate hikes during the Funds’ fiscal year — in June 2017, December 2017, and March 2018. As of fiscal year end, the federal funds rate stood at 1.50%, three-quarters of a percentage point higher than at the start of the fiscal year.

Municipal bond market conditions

The municipal bond market, as measured by the Bloomberg Barclays Municipal Bond Index, returned 2.66% for the fiscal year. Overall, the municipal yield curve significantly flattened, signifying that yields on short-maturity debt rose while yields on longer-maturity bonds modestly fell. In addition, credit spreads widened, meaning that municipal investors were willing to accept less income in exchange for investing in lower-rated, less-creditworthy securities.

That said, for much of the 12-month time frame, the municipal bond market experienced a steepening yield curve, as rates on long-term bonds rose faster than those on short-term bonds. The exception to this trend came in the fourth calendar quarter of 2017, as investors sought to understand the potential market impact of federal tax reform legislation, which ultimately passed in late December. As a result of the uncertainty, the yield curve significantly flattened in the final three months of 2017, with rising long-term yields accompanied by a more dramatic increase in short-term rates.

During this time, the supply of municipal bonds increased sharply, as issuers, anticipating potentially unfavorable tax-policy changes, rushed debt to market. One of these expected changes — the ability to issue so-called private-activity bonds (a broad category that includes healthcare, private education, and toll road bonds, among others) — did not make it into the final legislation. However, another proposed change did come to pass: the elimination of advance refundings. Under the new legislation, issuers wishing to refinance bonds through the issuance of newer debt must do so within 90 days of the bonds’ call dates.

 

The following tables show the returns experienced by municipal bonds of varying maturity lengths and credit ratings for the Funds’ fiscal year ended March 31, 2018:

 

Returns by maturity

        

1 year

     +0.61%          

3 years

     +0.40%  

10 years

     +2.31%  

22+ years

     +4.68%  

 

Returns by credit

rating

        

AAA

     +1.76%  

AA

     +2.26%  

A

     +3.24%  

BBB

     +5.36%  

Source: Barclays

A consistent management approach

Throughout the fiscal year, we maintained the same basic management strategy that we always do, irrespective of underlying market conditions. This bottom-up investment approach — where we select individual securities on an issuer-by-issuer basis, relying on individual credit research — emphasizes bonds that we believe provide a desirable risk-reward balance for the Funds’ investors.

We maintained our typical overweighting in bonds with lower-investment-grade credit ratings in all three Funds and to varying degrees depending on the availability of suitable opportunities. We also maintained an allocation to bonds rated below investment grade (investment grade bonds have credit ratings of BBB and higher). This willingness to embrace credit risk reflects our confidence in our research team’s capabilities and resources, as well as our belief that careful credit selection can provide opportunities to achieve favorable performance for shareholders over time.

In all three Funds, we limited new purchases throughout the fiscal year, reflecting our assessment of market conditions. Even as interest rates have risen in recent years, they remain low by historical standards. Accordingly, in all three Funds, we maintained a number of bonds originally purchased a decade or more ago at significantly higher yields. As many of these bonds have become advance refunded over time, they have acquired short durations in anticipation of their call dates, while their credit quality has improved because the bonds are backed by escrowed US government securities.

We have decided to hold onto the vast majority of these older issues. In addition to their high underlying credit quality, they continue to offer compelling yields, even compared to more recently issued longer-dated, lower-rated bonds.

 

 

(continues)                                     1


Table of Contents

Portfolio management review

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

One exception to our limited purchase activity came in the first calendar quarter of 2018, when a large interest rate increase provided us with attractive opportunities to engage in tax-loss swaps. Employing this strategy in Delaware Investments National Municipal Income Fund and Delaware Investments Minnesota Municipal Income Fund II, Inc., we exchanged bonds that were trading at a loss and reinvested proceeds in higher yielding issues offering similar risk characteristics. This strategy allowed us to improve each Fund’s yield while generating capital losses that we will be able to apply against future gains. In light of its different portfolio composition, we did not pursue this approach in Delaware Investments Colorado Municipal Income Fund, Inc.

Individual performance effects

As discussed earlier, lower-rated bonds generally outperformed higher-rated bonds, while longer-maturity issues tended to fare better than their shorter-maturity counterparts. Many of the Funds’ strongest- and weakest-performing individual securities clearly demonstrated this trend.

For example, Delaware Investments Colorado Municipal Income Fund, Inc. saw especially strong performance from its position in Evangelical Lutheran Good Samaritan Society senior housing bonds and University Schools charter school bonds, which returned more than 11% and 10%, respectively. These issues benefited from their lower credit ratings and relatively long maturity dates of 2043 and 2045, respectively.

In contrast, the Colorado Fund’s weakest-performing bonds were advance refunded issues whose short maturity dates resulted in weaker relative performance for the Fund’s fiscal year. Specifically, investments in senior care bonds for Total Long-Term Care and

education bonds for Arapahoe County, Englewood School District #1 turned in only slightly better than flat returns, trailing the overall municipal bond market during the fiscal year.

In Delaware Investments National Municipal Income Fund, the strongest-performing individual holding was City of Chicago general obligation debt (+15%). These bonds, rated BBB+ and maturing in 2038, experienced tightening credit spreads, as investors became more optimistic that recent political developments may have somewhat eased the city’s formidable fiscal challenges. The Fund’s investment in Methodist Home for the Aging, a senior care center in Birmingham, Ala. also added value. Bonds of this issuer mature in 2050 and gained close to 14% for the fiscal year.

The Fund’s weakest individual performers were, again, short-maturity issues: municipal lease holdings of the Idaho State Building Authority and advance refunded bonds of Louisiana Public Facilities Authority for the Ochsner Clinic Foundation. These bonds declined modestly.

The strongest-performing holding in Delaware Investments Minnesota Municipal Income Fund II, Inc. was corporate-backed industrial development revenue bonds issued for steel producer Gerdau Ameristeel (+19%). These lower-rated bonds saw their credit spreads narrow as investors became more confident in the issuer’s underlying credit quality. Nova Classical Academy charter school bonds (+13%), whose 2047 maturity date and BBB- credit rating proved attractive to investors, likewise outperformed.

The Fund had difficulty with two of its charter school holdings. Bonds issued for Academia Cesar Chavez and STRIDE Academy returned roughly -2% and -21%, respectively, for the fiscal year, reflecting the schools’ probationary statuses as they sought to address performance difficulties.

 

 

2


Table of Contents

Fund basics

 

    

 

Delaware Investments®

Colorado Municipal Income Fund, Inc.

As of March 31, 2018 (Unaudited)

Fund objective

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

Total Fund net assets

$72 million

Number of holdings

108

Fund start date

July 29, 1993

NYSE MKT symbol

VCF

CUSIP number

246101109

Delaware Investments

Minnesota Municipal Income Fund II, Inc.

As of March 31, 2018 (Unaudited)

Fund objective

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

Total Fund net assets

$164 million

Number of holdings

197

Fund start date

Feb. 26, 1993

NYSE MKT symbol

VMM

CUSIP number

24610V103

Delaware Investments

National Municipal Income Fund

As of March 31, 2018 (Unaudited)

Fund objective

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

Total Fund net assets

$65 million

Number of holdings

189

Fund start date

Feb. 26, 1993

NYSE MKT symbol

VFL

CUSIP number

24610T108

 

 

3


Table of Contents

Security type / sector / state allocations

As of March 31, 2018 (Unaudited)

 

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

 

Delaware Investments®

Colorado Municipal Income Fund, Inc.

 

Security type / sector    Percentage
of net
assets
 

Municipal Bonds*

     139.25

Corporate Revenue Bonds

     5.21

Education Revenue Bonds

     19.18

Electric Revenue Bonds

     2.79

Healthcare Revenue Bonds

     40.26

Lease Revenue Bonds

     4.19

Local General Obligation Bonds

     14.32

Pre-Refunded/Escrowed to Maturity Bonds

     16.30

Special Tax Revenue Bonds

     25.49

Transportation Revenue Bonds

     10.61

Water & Sewer Revenue Bonds

     0.90

Short-Term Investment

     0.69

Total Value of Securities

     139.94

Liquidation Value of Preferred Stock

     (41.64 )% 

Receivables and Other Assets Net of Liabilities

     1.70

Total Net Assets

     100.00

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

 

State / territory    Percentage
of net
assets
 

Colorado

     137.23

Guam

     1.98

US Virgin Islands

     0.73

Total Value of Securities

     139.94

Delaware Investments

Minnesota Municipal Income Fund II, Inc.

 

Security type / sector    Percentage
of net
assets
 

Municipal Bonds*

     141.36

Corporate Revenue Bonds

     2.63

Education Revenue Bonds

     19.41

Electric Revenue Bonds

     13.85

Healthcare Revenue Bonds

     29.77

Housing Revenue Bonds

     1.98

Lease Revenue Bonds

     10.49

Local General Obligation Bonds

     10.81

Pre-Refunded/Escrowed to Maturity Bonds

     26.65

Special Tax Revenue Bonds

     1.53

State General Obligation Bonds

     13.40

Transportation Revenue Bonds

     7.25

Water & Sewer Revenue Bonds

     3.59

Short-Term Investments

     1.83

Total Value of Securities

     143.19

Liquidation Value of Preferred Stock

     (45.68 )% 

Receivables and Other Assets Net of Liabilities

     2.49

Total Net Assets

     100.00

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

 

State / territory    Percentage
of net
assets
 

Guam

     1.12

Minnesota

     142.07

Total

     143.19
 

 

4


Table of Contents

    

 

    

 

Delaware Investments®

National Municipal Income Fund

 

Security type / sector    Percentage
of net
assets
 

Municipal Bonds*

     144.53

Corporate Revenue Bonds

     13.32

Education Revenue Bonds

     22.63

Electric Revenue Bonds

     2.77

Healthcare Revenue Bonds

     24.05

Lease Revenue Bonds

     8.59

Local General Obligation Bonds

     6.38

Pre-Refunded/Escrowed to Maturity Bonds

     18.56

Special Tax Revenue Bonds

     14.04

State General Obligation Bonds

     7.06

Transportation Revenue Bonds

     23.46

Water & Sewer Revenue Bonds

     3.67

Short-Term Investment

     0.46

Total Value of Securities

     144.99

Liquidation Value of Preferred Stock

     (46.21 )% 

Receivables and Other Assets Net of Liabilities

     1.22

Total Net Assets

     100.00

 

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

 

State / territory    Percentage
of net
assets
 

Alabama

     0.86

Alaska

     0.50

Arizona

     6.52

California

     18.38

Colorado

     1.41

District of Columbia

     1.79

Florida

     6.19

Georgia

     2.46

Guam

     2.13

Hawaii

     0.50

Idaho

     1.51

Illinois

     11.18

Indiana

     0.98

Kansas

     0.34

Louisiana

     5.00

Maine

     0.50

Maryland

     3.05

Massachusetts

     0.86

Michigan

     1.70

Minnesota

     2.16

Missouri

     4.26

Montana

     1.14

Nebraska

     0.48

New Hampshire

     0.49

New Jersey

     6.97

New York

     22.13

Ohio

     4.02

Oklahoma

     0.37

Oregon

     1.90

Pennsylvania

     18.98

Texas

     10.67

Utah

     1.10

Virginia

     1.27

Washington

     1.32

Wisconsin

     1.46

Wyoming

     0.41

Total Value of Securities

     144.99
 

 

5


Table of Contents

Schedules of investments

Delaware Investments® Colorado Municipal Income Fund, Inc.

March 31, 2018

 

      Principal
Amount°
    

Value

(US $)

 

Municipal Bonds – 139.25%

 

        

Corporate Revenue Bonds – 5.21%

 

  

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

     215,000      $ 232,781  

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

     1,750,000        2,436,630  

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

     865,000        1,082,245  
     

 

 

 
        3,751,656  
     

 

 

 

Education Revenue Bonds – 19.18%

 

  

Colorado Educational & Cultural Facilities Authority Revenue 144A 5.00% 7/1/36 #

     500,000        505,105  

5.125% 11/1/49

     765,000        768,144  

144A 5.25% 7/1/46 #

     500,000        505,055  

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

     1,720,000            1,723,543  

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

     760,000        872,890  

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

     700,000        690,060  

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

     500,000        567,620  

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

     1,000,000        1,078,810  

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

     500,000        525,045  

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

     900,000        990,648  

(Liberty Charter School)

Series A

5.00% 1/15/44

     1,000,000        1,071,370  

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

     1,200,000        1,200,264  

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

     625,000        635,513  
      Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Education Revenue Bonds (continued)

     

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

     750,000      $ 774,300  

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

     1,065,000        1,075,661  

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

     25,000        24,708  

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

     500,000        500,910  

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

     270,000        298,890  

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

     10,000        10,279  
     

 

 

 
        13,818,815  
     

 

 

 

Electric Revenue Bonds – 2.79%

 

  

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

     1,700,000        2,010,556  
     

 

 

 
        2,010,556  
     

 

 

 

Healthcare Revenue Bonds – 40.26%

 

  

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

     2,000,000        2,113,160  

Colorado Health Facilities Authority Revenue (Catholic Health Initiatives)
Series A 5.00% 7/1/39

     750,000        768,990  

Series A 5.00% 2/1/41

     2,400,000        2,499,288  

Series A 5.25% 2/1/33

     1,625,000        1,714,310  

Series A 5.25% 1/1/45

     1,000,000        1,073,570  

Series D 6.125% 10/1/28

     750,000        765,143  

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

     615,000        665,947  
 

 

6


Table of Contents

    

 

    

 

     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Healthcare Revenue Bonds (continued)

 

  

Colorado Health Facilities Authority Revenue
(Covenant Retirement Communities Inc.)
5.00% 12/1/35

     1,000,000      $ 1,094,900  

Series A 5.75% 12/1/36

     1,000,000        1,147,200  

(Evangelical Lutheran Good Samaritan Society)
5.00% 6/1/28

     1,250,000        1,365,537  

5.50% 6/1/33

     2,000,000        2,258,760  

5.625% 6/1/43

     1,000,000        1,121,050  

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

     265,000        290,935  

Series B 5.00% 5/15/48

     340,000        354,617  

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

     500,000        575,790  

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

     1,500,000        1,668,090  

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

     500,000        515,090  

(NCMC Project)
4.00% 5/15/32

     1,000,000        1,053,830  

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

     4,000,000        4,190,520  

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

     505,000        532,568  

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

     1,250,000        1,416,763  

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

     330,000        341,728  

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

     750,000        789,345  

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

     650,000        689,429  
     

 

 

 
        29,006,560  
     

 

 

 
      Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Lease Revenue Bonds – 4.19%

 

  

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

     630,000      $ 660,820  

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

     1,250,000        1,355,575  

State of Colorado Department of Transportation Certificates of Participation 5.00% 6/15/34

     340,000        388,827  

5.00% 6/15/36

     545,000        618,182  
     

 

 

 
        3,023,404  
     

 

 

 

Local General Obligation Bonds – 14.32%

 

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

     700,000        755,034  

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

     250,000        295,247  

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

     600,000        673,704  

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

     650,000        678,379  

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

     650,000        669,701  

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

     190,000        201,075  

5.50% 12/1/38

     245,000        261,653  

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

     700,000        755,279  

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

     675,000        785,201  

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

     750,000        887,647  

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

     250,000        277,913  
 

 

(continues)                                     7


Table of Contents

Schedules of investments

Delaware Investments® Colorado Municipal Income Fund, Inc.

 

     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Local General Obligation Bonds (continued)

 

Rangely Hospital District 6.00% 11/1/26

     750,000      $ 828,720  

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

     500,000        512,840  

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

     500,000        582,295  

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

     1,000,000        1,154,590  

Weld County School District No. RE-8 5.00% 12/1/31

     510,000        598,312  

5.00% 12/1/32

     340,000        398,018  
     

 

 

 
        10,315,608  
     

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 16.30%

 

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

     1,000,000        1,110,990  

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

     2,000,000        2,184,260  

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

     400,000        442,092  

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

     2,230,000        2,516,711  

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

     175,000        180,278  

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

     3,085,000        3,387,947  

Series A
5.00% 6/1/33-23§

     1,000,000        1,140,070  

Series A 5.375% 6/1/38-19§

     750,000        782,070  
     

 

 

 
        11,744,418  
     

 

 

 

Special Tax Revenue Bonds – 25.49%

 

Broomfield City & County
4.00% 12/1/37

     1,000,000        1,056,620  
     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Special Tax Revenue Bonds (continued)

 

  

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

     500,000      $ 505,885  

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

     375,000        399,281  

Commerce City 5.00% 8/1/44 (AGM)

     1,000,000        1,099,920  

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

     1,405,000        1,445,225  

Guam Government Business Privilege Tax Revenue
Series A
5.125% 1/1/42

     435,000        448,963  

Series A 5.25% 1/1/36

     565,000        589,261  

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

     500,000        512,715  

Regional Transportation District Revenue Series A 5.375% 6/1/31

     460,000        491,450  

Series B 5.00% 11/1/33

     500,000        590,920  

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

     2,175,000        2,339,321  

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

     330,000        389,146  

Series A 5.00% 11/1/31

     755,000        887,789  

Series A 5.00% 11/1/38

     4,085,000        4,388,148  

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

     500,000        516,255  

Southlands Metropolitan District No. 1
Series A1 5.00% 12/1/37

     200,000        215,718  

Series A1 5.00% 12/1/47

     300,000        320,109  

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

     525,000        537,663  

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

     295,000        312,567  
 

 

8


Table of Contents

    

 

    

 

     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Special Tax Revenue Bonds (continued)

 

Thornton Development Authority (East 144th Avenue & I-25 Project)
Series B 5.00% 12/1/35

     265,000      $ 298,650  

Series B 5.00% 12/1/36

     440,000        494,454  

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

     500,000        525,335  
     

 

 

 
        18,365,395  
     

 

 

 

Transportation Revenue Bonds – 10.61%

 

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

     1,110,000        1,231,034  

C-470 Express Lanes 5.00% 12/31/56

     1,000,000        1,084,990  

Denver City & County Airport System Revenue Series A 5.00% 11/15/30 (AMT)

     750,000        871,080  

Series A 5.25% 11/15/36

     750,000        791,775  

Series B 5.00% 11/15/28

     1,000,000        1,118,060  

Series B 5.00% 11/15/37

     2,000,000        2,212,080  

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

     310,000        333,368  
     

 

 

 
        7,642,387  
     

 

 

 

Water & Sewer Revenue Bonds – 0.90%

 

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

     250,000        261,923  

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

     360,000        387,569  
     

 

 

 
        649,492  
     

 

 

 

Total Municipal Bonds
(cost $95,239,994)

        100,328,291  
     

 

 

 
      Principal
Amount°
    

Value

(US $)

 

Short-Term Investment – 0.69%

 

        

Variable Rate Demand Note – 0.69%¤

 

  

Denver City & County Series A3 1.47% 12/1/31
(SPA-JPMorgan Chase Bank N. A.)

     500,000      $ 500,000  
     

 

 

 

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

        500,000  
     

 

 

 

Total Value of Securities – 139.94%
(cost $95,739,994)

      $ 100,828,291  
     

 

 

 

 

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended.At March 31, 2018, the aggregate value of Rule 144A securities was $4,656,226, which represents 6.46% of the Fund’s net assets. See Note 7 in “Notes to financial statements.”

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of March 31, 2018.

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 7 in “Notes to financial statements.”

°

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

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

BAM – Build America Mutual Assurance Company

N.A. – National Association

SGI – Insured by Syncora Guarantee Inc.

SPA – Stand-by Purchase Agreement

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

 

 

                                     9


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

March 31, 2018

 

     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds – 141.36%

 

 

 

Corporate Revenue Bonds – 2.63%

 

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

     2,725,000      $ 2,688,049  

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

     1,715,000        1,623,299  
     

 

 

 
        4,311,348  
     

 

 

 

Education Revenue Bonds – 19.41%

 

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

     1,100,000        1,115,400  

Brooklyn Park Charter School Lease Revenue
(Prairie Seeds Academy Project)
Series A 5.00% 3/1/34

     990,000        1,016,720  

Series A 5.00% 3/1/39

     170,000        172,373  

Cologne Charter School Lease Revenue (Cologne Academy Project) Series A 5.00% 7/1/29

     270,000        286,645  

Series A 5.00% 7/1/45

     445,000        447,336  

Deephaven Charter School
(Eagle Ridge Academy Project) Series A 5.25% 7/1/37

     590,000        624,155  

Series A 5.25% 7/1/40

     500,000        527,990  

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

     705,000        756,366  

Hugo Charter School Lease Revenue
(Noble Academy Project) Series A 5.00% 7/1/34

     255,000        263,961  

Series A 5.00% 7/1/44

     775,000        780,673  

Minneapolis Charter School Lease Revenue
(Hiawatha Academies Project) Series A 5.00% 7/1/36

     750,000        755,550  

Series A 5.00% 7/1/47

     900,000        895,815  
     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Education Revenue Bonds (continued)

 

Minneapolis Student Housing Revenue
(Riverton Community Housing Project) 5.25% 8/1/39

     205,000      $ 211,097  

5.50% 8/1/49

     990,000        1,027,363  

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

     1,250,000        1,362,213  

(Carleton College) 4.00% 3/1/36

     485,000        511,399  

5.00% 3/1/44

     905,000        1,041,773  

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

     410,000        424,945  

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

     2,100,000        2,361,618  

(Macalester College) 4.00% 3/1/42

     900,000        948,987  

4.00% 3/1/48

     600,000        628,872  

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

     700,000        766,969  

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

     235,000        266,166  

Series 8-I 5.00% 10/1/34

     35,000        39,317  

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

     590,000        625,766  

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

     1,000,000        1,040,280  

(Trustees Of The Hamline University Of Minnesota) Series B 5.00% 10/1/47

     1,055,000        1,142,196  

(University of St. Thomas) Series 7-U 5.00% 4/1/22

     750,000        829,275  

Series A 4.00% 10/1/37

     500,000        523,755  

Otsego Charter School (Kaleidoscope Charter School) Series A 5.00% 9/1/34

     230,000        235,049  

Series A 5.00% 9/1/44

     400,000        404,572  

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

     1,250,000        1,325,500  
 

 

10


Table of Contents

    

 

    

 

     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Education Revenue Bonds (continued)

 

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

     375,000      $ 228,247  

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

     825,000        763,579  

(Great River School Project)
Series A 144A
4.75% 7/1/29 #

     100,000        101,640  

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

     240,000        249,677  

(Nova Classical Academy Project) Series A 4.125% 9/1/47

     750,000        735,555  

Series A 6.375% 9/1/31

     750,000        830,437  

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

     630,000        648,648  

University of Minnesota
Series A 5.00% 9/1/40

     1,240,000        1,447,539  

Series A 5.00% 9/1/42

     2,000,000        2,331,160  

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

     1,000,000        1,178,140  
     

 

 

 
        31,874,718  
     

 

 

 

Electric Revenue Bonds – 13.85%

 

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

     1,130,000        1,221,507  

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

     1,000,000        1,072,130  

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

     445,000        507,865  

Minnesota Municipal Power Agency Electric Revenue 5.00% 10/1/25

     500,000        577,745  

5.00% 10/1/26

     500,000        575,800  

5.00% 10/1/27

     320,000        367,475  

5.00% 10/1/47

     1,755,000        1,977,218  
     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Electric Revenue Bonds (continued)

 

Northern Municipal Power Agency Series A 5.00% 1/1/26

     100,000      $ 110,643  

Series A 5.00% 1/1/30

     340,000        371,263  

Rochester Electric Utility Revenue Series A 5.00% 12/1/42

     605,000        694,177  

Series A 5.00% 12/1/47

     985,000        1,126,160  

Series B 5.00% 12/1/30

     1,300,000        1,469,065  

Series B 5.00% 12/1/43

     1,000,000        1,112,190  

Southern Minnesota Municipal Power Agency Supply Revenue
Series A
5.00% 1/1/41

     240,000        269,940  

Series A 5.00% 1/1/47

     810,000        924,631  

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue
Series A
4.00% 10/1/33

     285,000        296,659  

Series B 4.00% 10/1/37

     800,000        821,000  

Western Minnesota Municipal Power Agency Supply Revenue
Series A
5.00% 1/1/25

     3,000,000        3,366,300  

Series A 5.00% 1/1/26

     1,000,000        1,120,190  

Series A 5.00% 1/1/33

     1,000,000        1,128,970  

Series A 5.00% 1/1/40

     750,000        839,497  

Series A 5.00% 1/1/46

     2,500,000        2,798,325  
     

 

 

 
        22,748,750  
     

 

 

 

Healthcare Revenue Bonds – 29.77%

 

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

     610,000        643,629  

Apple Valley Senior Living Revenue (Senior Living LLC Project)
Series B
5.00% 1/1/47

     750,000        775,005  

Series D 7.00% 1/1/37

     720,000        722,225  

Series D 7.25% 1/1/52

     1,000,000        1,012,730  

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

     500,000        569,520  

(Hazelden Foundation Project) 5.00% 11/1/41

     1,600,000        1,654,672  
 

 

(continues)                                     11


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Healthcare Revenue Bonds (continued)

 

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

     500,000      $ 508,235  

Dakota County Community Development Agency Senior Housing Revenue
(Walker Highview Hills Project)
Series A
144A 5.00% 8/1/46 #

     370,000        370,688  

Series A 144A 5.00% 8/1/51 #

     755,000        754,947  

Deephaven Housing & Healthcare Revenue
(St. Therese Senior Living Project)
Series A
5.00% 4/1/38

     280,000        282,584  

Series A 5.00% 4/1/40

     270,000        272,252  

Duluth Economic Development Authority
(St. Luke’s Hospital Authority Obligation Group) 5.75% 6/15/32

     1,400,000        1,533,994  

6.00% 6/15/39

     1,000,000        1,110,000  

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

     1,000,000        1,001,420  

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

     500,000        513,815  

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

     680,000        680,551  

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

     1,000,000        1,016,750  

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

     865,000        965,167  

Minneapolis Health Care System Revenue
(Fairview Health Services) Series A 5.00% 11/15/33

     500,000        570,180  

Series A 5.00% 11/15/34

     500,000        568,720  
     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Healthcare Revenue Bonds (continued)

 

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

     1,940,000      $ 1,997,211  

Minneapolis Senior Housing & Healthcare Revenue
(Ecumen Mill City Quarter)
5.25% 11/1/45

     850,000        885,275  

5.375% 11/1/50

     200,000        208,964  

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

     220,000        228,067  

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

     585,000        684,824  

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

     500,000        529,245  

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

     1,220,000        1,381,516  

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

     4,860,000        4,976,640  

Sartell Health Care Facilities Revenue
(Country Manor Campus Project) 5.25% 9/1/30

     1,000,000        1,081,540  

Series A 5.30% 9/1/37

     600,000        649,416  

Shakopee Health Care Facilities Revenue
(St. Francis Regional Medical Center) 4.00% 9/1/31

     205,000        213,346  

5.00% 9/1/34

     165,000        180,885  

St. Cloud Health Care Revenue
(Centracare Health System Project)
Series A 4.00% 5/1/37

     1,295,000        1,355,982  

Series A 5.00% 5/1/46

     2,800,000        3,122,420  

Series B 5.00% 5/1/24

     1,400,000        1,606,388  
 

 

12


Table of Contents

    

 

    

 

     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Healthcare Revenue Bonds (continued)

 

St. Cloud Health Care Revenue
(Unrefunded - Centracare Health System Project) 5.125% 5/1/30

     95,000      $ 100,771  

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

     640,000        678,285  

(Fairview Health Services)
Series A 4.00% 11/15/43

     905,000        928,249  

Series A 5.00% 11/15/47

     680,000        767,394  

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

     2,000,000        2,271,160  

Series A 5.00% 7/1/32

     1,100,000        1,236,147  

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

     1,200,000        1,203,936  

Series A 4.75% 11/1/31

     740,000        742,287  

Wayzata Senior Housing Revenue
(Folkestone Senior Living Community) Series A 5.50% 11/1/32

     420,000        437,938  

Series A 5.75% 11/1/39

     945,000        985,881  

Series A 6.00% 5/1/47

     1,475,000        1,541,080  

Winona Health Care Facilities Revenue
(Winona Health Obligation) 4.65% 7/1/26

     465,000        478,797  

4.75% 7/1/27

     785,000        810,183  

5.00% 7/1/34

     750,000        775,335  

Woodbury Housing & Redevelopment Authority Revenue
(St. Therese of Woodbury) 5.125% 12/1/44

     1,250,000        1,300,300  
     

 

 

 
        48,886,546  
     

 

 

 
     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Housing Revenue Bonds – 1.98%

 

Minneapolis Multifamily Housing Revenue
(Olson Townhomes Project) 6.00% 12/1/19 (AMT)

     270,000      $ 270,473  

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

     1,390,000        1,580,833  

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

     810,000        835,766  

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

     560,000        561,092  
     

 

 

 
        3,248,164  
     

 

 

 

Lease Revenue Bonds – 10.49%

 

Minnesota State General Fund Revenue Appropriations Series A 5.00% 6/1/32

     780,000        881,104  

Series A 5.00% 6/1/38

     5,500,000        6,153,235  

Series A 5.00% 6/1/43

     1,750,000        1,951,565  

Series B 5.00% 3/1/29

     1,000,000        1,103,570  

University of Minnesota Special Purpose Revenue
(State Supported Biomed Science Research) 5.00% 8/1/35

     1,040,000        1,114,027  

5.00% 8/1/36

     4,000,000        4,364,120  

Virginia Housing & Redevelopment Authority Health Care Facility Lease Revenue 5.25% 10/1/25

     680,000        681,530  

5.375% 10/1/30

     965,000        967,248  
     

 

 

 
        17,216,399  
     

 

 

 

Local General Obligation Bonds – 10.81%

 

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

     1,185,000        1,283,509  
 

 

(continues)                                     13


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

    

Principal

Amount°

     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Local General Obligation Bonds (continued)

 

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

     600,000      $ 642,864  

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

     545,000        628,325  

Hennepin County
Series A 5.00% 12/1/36

     1,300,000        1,524,016  

Series A 5.00% 12/1/41

     1,060,000        1,233,776  

Series C 5.00% 12/1/37

     3,000,000        3,509,400  

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

     1,000,000        1,083,490  

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

     515,000        591,503  

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

     2,000,000        2,084,580  

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

     1,300,000        1,523,665  

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

     1,000,000        1,122,680  

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

     2,440,000        2,523,716  
     

 

 

 
        17,751,524  
     

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds – 26.65%

 

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

     1,200,000        1,305,516  

Dakota-Washington Counties Housing & Redevelopment Authority Single Family Residential Mortgage Revenue
(City of Bloomington) Series B 8.375% 9/1/21 (GNMA) (AMT)

     7,055,000        8,404,480  
    

Principal

Amount°

     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

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

     500,000      $ 582,095  

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

     500,000        515,500  

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

     1,000,000        1,010,730  

Minnesota Higher Education Facilities Authority Revenue
(College of St. Benedict) Series 7-M 5.00% 3/1/31-20 §

     300,000        318,126  

Series 7-M 5.125% 3/1/36-20 §

     275,000        292,259  

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

     1,000,000        1,048,790  

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

     1,220,000        1,328,665  

Rocori Independent School District No. 750
(School Building) Series B 5.00% 2/1/24-19 §

     1,075,000        1,105,455  

Series B 5.00% 2/1/25-19 §

     1,115,000        1,146,588  

Series B 5.00% 2/1/26-19 §

     1,155,000        1,187,721  

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

     1,500,000        1,560,930  

Series A 5.125% 5/1/30-20 §

     3,830,000        4,090,938  

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

     2,000,000        2,100,540  
 

 

14


Table of Contents

    

 

    

 

     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

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

     755,000      $ 797,053  

St. Paul Housing & Redevelopment Authority Hospital Facility
(Healtheast Care System Project) Series A 5.00% 11/15/29-25 §

     395,000        466,693  

Series A 5.00% 11/15/30-25 §

     290,000        342,635  

University of Minnesota
Series A
5.25% 12/1/28-20 §

     500,000        544,340  

Series A 5.25% 4/1/29-19 §

     1,000,000        1,035,770  

Series A 5.50% 7/1/21

     4,000,000        4,316,600  

Series D 5.00% 12/1/27-21 §

     1,110,000        1,231,112  

Series D 5.00% 12/1/28-21 §

     1,880,000        2,085,127  

Series D 5.00% 12/1/29-21 §

     2,265,000        2,512,134  

Series D 5.00% 12/1/31-21 §

     1,000,000        1,109,110  

Series D 5.00% 12/1/36-21 §

     3,000,000        3,327,330  
     

 

 

 
        43,766,237  
     

 

 

 

Special Tax Revenue Bonds – 1.53%

 

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

     150,000        156,441  

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

     1,000,000        1,109,300  

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

     165,000        175,753  

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

     935,000        1,064,395  
     

 

 

 
        2,505,889  
     

 

 

 
     Principal
Amount°
     Value
(US $)
 

 

 

Municipal Bonds (continued)

 

 

 

State General Obligation Bonds – 13.40%

 

Minnesota State
Series A
5.00% 8/1/24

     2,500,000      $ 2,911,325  

Series A 5.00% 8/1/29

     700,000        820,064  

(State Trunk Highway) Series B 5.00% 10/1/22

     5,500,000        6,079,700  

Series B 5.00% 10/1/29

     3,315,000        3,643,152  

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

     2,700,000        2,900,529  

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

     5,000,000        5,644,000  
     

 

 

 
        21,998,770  
     

 

 

 

Transportation Revenue Bonds – 7.25%

 

Minneapolis – St. Paul Metropolitan Airports Commission Revenue 5.00% 1/1/21

     600,000        649,326  

5.00% 1/1/22

     670,000        723,767  

Subordinate
Series A
5.00% 1/1/31

     410,000        480,905  

Series A 5.00% 1/1/32

     1,255,000        1,466,719  

Series B 5.00% 1/1/26

     540,000        593,023  

Series B 5.00% 1/1/26 (AMT)

     500,000        561,075  

Series B 5.00% 1/1/27

     1,190,000        1,305,954  

Series B 5.00% 1/1/30

     500,000        543,650  

Series B 5.00% 1/1/31

     250,000        271,545  

Series C 5.00% 1/1/33

     2,000,000        2,328,980  

Series C 5.00% 1/1/36

     1,000,000        1,157,780  

Series C 5.00% 1/1/46

     1,245,000        1,425,936  

St. Paul Port Authority Revenue
(Amherst H. Wilder Foundation) Series 3 5.00% 12/1/36

     380,000        399,980  
     

 

 

 
        11,908,640  
     

 

 

 

Water & Sewer Revenue Bonds – 3.59%

 

Guam Government Waterworks Authority 5.00% 7/1/40

     840,000        904,327  

5.00% 1/1/46

     725,000        772,299  

Metropolitan Council Waste Water Revenue Series B 4.00% 9/1/27

     1,145,000        1,221,726  

Series C 4.00% 3/1/31

     1,355,000        1,471,286  
 

 

(continues)                                     15


Table of Contents

Schedules of investments

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Water & Sewer Revenue Bonds (continued)

 

Metropolitan Council Waste Water Revenue Series C 4.00% 3/1/32

     1,405,000      $ 1,517,541  
     

 

 

 
        5,887,179  
     

 

 

 

Total Municipal Bonds
(cost $226,092,240)

        232,104,164  
     

 

 

 
     

Short-Term Investments – 1.83%

 

        

Variable Rate Demand Notes – 1.83%¤

 

Minneapolis – St. Paul, Minnesota Housing & Redevelopment Authority Health Care Revenue Series A (Children’s Hospitals & Clinics) 1.55% 8/15/37 (AGM)

     1,825,000        1,825,000  

Series B-1 (Allina Health System)
1.45% 11/15/35 (LOC - JPMorgan Chase Bank N.A.)

     150,000        150,000  

Series B-2 (Allina Health System)
1.47% 11/15/35 (LOC-JPMorgan Chase Bank N.A.)

     1,025,000        1,025,000  
     

 

 

 

Total Short-Term Investments
(cost $3,000,000)

        3,000,000  
     

 

 

 

Total Value of Securities – 143.19%
(cost $229,092,240)

      $ 235,104,164  
     

 

 

 

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended.At March 31, 2018, the aggregate value of Rule 144A securities was $4,425,751, which represents 2.70% of the Fund’s net assets. See Note 7 in “Notes to financial statements.”

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of March 31, 2018.

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by USTreasury bonds. For pre-refunded bonds,the stated maturity is followed by the year in which the bond is pre-refunded. See Note 7 in “Notes to financial statements.”

°

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

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

FNMA – Federal National Mortgage Association Collateral

GNMA – Government National Mortgage Association Collateral

LOC – Letter of Credit

N.A. – National Association

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

 

 

16


Table of Contents

    

Delaware Investments® National Municipal Income Fund

March 31, 2018

 

     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds – 144.53%

 

        

Corporate Revenue Bonds – 13.32%

 

Buckeye, Ohio Tobacco Settlement Financing Authority Asset-Backed -2
Series A-2
5.875% 6/1/47

     500,000      $ 494,375  

Series A-2
6.50% 6/1/47

     430,000        432,692  

Central Plains Energy Project Revenue, Nebraska
(Project No. 3)
Series A
5.00% 9/1/42

     260,000        313,542  

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

     1,015,000        1,025,952  

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

     300,000        309,144  

Golden State, California Tobacco Securitization Corporate Settlement Revenue
(Asset-Backed Senior Notes) Series A-1 5.75% 6/1/47

     790,000        794,669  

Louisiana Local Government Environmental Facilities & Community Development Authority
(Westlake Chemical)
Series A
6.50% 8/1/29

     645,000        710,674  

Series A-1 6.50% 11/1/35

     255,000        282,326  

M-S-R Energy Authority, California Gas
Series B 6.50% 11/1/39

     250,000        352,013  

Series C 7.00% 11/1/34

     1,000,000        1,420,090  

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

     500,000        499,950  

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

     310,000        350,483  
     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Corporate Revenue Bonds (continued)

 

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

     750,000      $ 810,683  

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

     460,000        500,314  

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

     60,000        65,040  

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

     240,000        283,764  
     

 

 

 
        8,645,711  
     

 

 

 

Education Revenue Bonds – 22.63%

 

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

     330,000        347,912  

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

     500,000        558,260  

California State University (Systemwide)
Series A 5.00% 11/1/42

     200,000        231,404  

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

     1,000,000        1,059,930  

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

     500,000        547,820  

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

     600,000        660,720  

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

     460,000        489,334  
 

 

(continues)                                     17


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Education Revenue Bonds (continued)

 

Illinois Finance Authority Revenue
(Chicago International Charter School Project)
5.00% 12/1/47

     535,000      $ 555,742  

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

     500,000        542,100  

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

     650,000        710,573  

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

     285,000        310,277  

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

     550,000        573,243  

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

     1,000,000        1,084,410  

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

     500,000        536,240  

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

     600,000        650,064  

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

     1,000,000        1,153,150  

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

     370,000        422,337  
      Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Education Revenue Bonds (continued)

 

Phoenix, Arizona Industrial Development Authority Revenue
(Rowan University Project)
5.00% 6/1/42

     1,000,000      $ 1,080,090  

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

     500,000        448,740  

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

     135,000        142,015  

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

     490,000        559,286  

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

     600,000        630,570  

University of California Series AI
5.00% 5/15/32

     1,000,000        1,131,150  

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

     250,000        266,937  
     

 

 

 
        14,692,304  
     

 

 

 

Electric Revenue Bonds – 2.77%

 

Imperial Irrigation District Electric System Revenue, California Series C 5.00% 11/1/28

     60,000        70,621  

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

     355,000        395,090  

Long Island Power Authority, New York
Series A
5.00% 9/1/44

     250,000        277,420  

Series B
5.00% 9/1/46

     130,000        146,316  

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

     305,000        346,117  
 

 

18


Table of Contents

    

 

    

 

     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Electric Revenue Bonds (continued)

 

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

     500,000      $ 561,765  
     

 

 

 
        1,797,329  
     

 

 

 

Healthcare Revenue Bonds – 24.05%

 

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

     500,000        556,860  

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

     500,000        515,890  

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

     1,000,000        1,098,930  

California Health Facilities Financing Authority Revenue
(Kaiser Permanente)
Series A-2 5.00% 11/1/47

     400,000        519,672  

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

     760,000        815,153  

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

     375,000        367,106  

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

     330,000        380,021  

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

     1,000,000        1,092,260  

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

     700,000        738,871  
      Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Healthcare Revenue Bonds (continued)

 

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

     500,000      $ 522,270  

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

     300,000        326,274  

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

     500,000        523,115  

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

     255,000        255,191  

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

     200,000        222,848  

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

     1,000,000        1,102,560  

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

     750,000        798,337  

New Hope, Texas Cultural Education Facilities
(Cardinal Bay Inc.)
Series A1
4.00% 7/1/36

     55,000        55,692  

Series A1
5.00% 7/1/46

     135,000        148,878  

Series A1
5.00% 7/1/51

     135,000        148,372  

Series B
4.25% 7/1/36

     80,000        81,954  

Series B
4.75% 7/1/51

     160,000        166,862  

Series B
5.00% 7/1/46

     135,000        143,613  
 

 

(continues)                                     19


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

     

Principal

Amount°

    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Healthcare Revenue Bonds (continued)

 

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

     300,000      $ 322,881  

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

     500,000        544,415  

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

     215,000        238,661  

Orange County, Florida Health Facilities Authority Revenue
(Mayflower Retirement Center)
5.00% 6/1/32

     400,000        422,700  

5.00% 6/1/36

     250,000        263,185  

5.125% 6/1/42

     750,000        789,585  

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

     500,000        565,030  

Palm Beach County Health Facilities Authority, Florida (Sinai Residences Boca Raton Project)
7.25% 6/1/34

     20,000        23,158  

7.50% 6/1/49

     105,000        122,231  

Palomar Health, California
5.00% 11/1/39

     130,000        142,121  

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

     250,000        278,407  

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

     500,000        532,830  

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

     720,000        787,046  
     

 

 

 
        15,612,979  
     

 

 

 
      Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

        

Lease Revenue Bonds – 8.59%

 

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

     1,000,000      $ 1,097,670  

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

     135,000        149,033  

(State Police)
Series I
5.00% 9/1/23

     760,000        831,356  

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

     1,000,000        1,103,570  

MTA Hudson Rail Yards Trust Obligations, New York
Series A
5.00% 11/15/56

     735,000        800,525  

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

     1,000,000        1,091,850  

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

     500,000        505,710  
     

 

 

 
        5,579,714  
     

 

 

 

Local General Obligation Bonds – 6.38%

 

  

Chicago Board of Education, Illinois
5.00% 4/1/42

     205,000        220,678  

5.00% 4/1/46

     210,000        225,406  

Chicago, Illinois
Series A
5.50% 1/1/34

     225,000        239,157  

Series C
5.00% 1/1/38

     500,000        515,500  

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

     1,000,000        1,162,610  

New York, New York Series A-1
5.25% 8/15/21

     250,000        253,380  

Series E-1
5.25% 3/1/35

     1,150,000        1,378,022  

Series I-1
5.375% 4/1/36

     10,000        10,357  

School District of Philadelphia, Pennsylvania Series B
4.00% 9/1/43 (AGM)

     135,000        134,781  
     

 

 

 
        4,139,891  
     

 

 

 
 

 

20


Table of Contents

    

 

    

 

     Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

Pre-Refunded/Escrowed to Maturity Bonds – 18.56%

 

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

     300,000      $ 321,204  

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

     260,000        283,210  

Brevard County, Florida
Health Facilities Authority
Revenue
(Health First Project)
7.00% 4/1/39-19§

     350,000        368,179  

Brooklyn Arena Local
Development, New York
Pilot Revenue
(Barclays Center Project)
6.25% 7/15/40-20§

     940,000        1,015,134  

6.50% 7/15/30-20§

     300,000        325,014  

Butler County, Pennsylvania
Hospital Authority Revenue
(Butler Health System
Project) 7.125% 7/1/29-19§

     300,000        319,752  

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

     405,000        444,107  

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

     625,000        646,163  

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

     520,000        576,586  

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

     300,000        324,093  

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

     950,000        1,016,899  
     Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

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

     645,000      $ 738,344  

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

     300,000        325,830  

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

     105,000        119,069  

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

     255,000        276,703  

Metropolitan Transportation
Authority Revenue,
New York
Series A 5.00% 11/15/41-21§

     190,000        211,193  

(Unrefunded)

Series A

5.00% 11/15/41-21§

     310,000        344,577  

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

     495,000        555,152  

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

     500,000        553,650  

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

     300,000        316,815  

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

     450,000        489,487  

New Jersey Turnpike Authority
Series A 5.00% 1/1/27-22§

     25,000        28,037  
 

 

(continues)                                     21


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

     Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

 

New Jersey Turnpike Authority
(Unrefunded) Series A 5.00% 1/1/27-22§

     475,000      $ 533,729  

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

     240,000        248,782  

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

     300,000        308,661  

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

     100,000        108,415  

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

     400,000        434,752  

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

     260,000        288,369  

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

     500,000        528,775  
     

 

 

 
        12,050,681  
     

 

 

 

Special Tax Revenue Bonds – 14.04%

 

Anne Arundel County, Maryland Special Obligation Revenue
(National Business Park - North Project) 6.10% 7/1/40

     200,000        204,692  

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

     750,000        858,083  

Guam Government Business Privilege Tax Revenue Series A 5.00% 1/1/22

     775,000        830,645  

Series B-1 5.00% 1/1/42

     540,000        551,934  
     Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

Special Tax Revenue Bonds (continued)

 

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

     135,000      $ 138,097  

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

     200,000        248,508  

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

     520,000        569,057  

New Jersey Economic Development Authority Revenue
(Cigarette Tax) 5.00% 6/15/28

     200,000        215,174  

5.00% 6/15/29

     800,000        859,392  

(School Facilities

Construction)

Series AA

5.50% 12/15/29

     295,000        306,098  

New York City, New York Transitional Finance Authority Future Tax Secured Revenue (Future Tax
Secured - Subordinated Fiscal) Series E-1 5.00% 2/1/41

     745,000        833,417  

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

     1,000,000        1,111,770  

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

     205,000        235,701  

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

     380,000        440,485  
 

 

22


Table of Contents
     Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

Special Tax Revenue Bonds (continued)

 

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

     500,000      $ 537,775  

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

     850,000        952,221  

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

     220,000        222,842  
     

 

 

 
        9,115,891  
     

 

 

 

State General Obligation Bonds – 7.06%

 

California State 5.25% 11/1/40

     320,000        346,669  

(Various Purposes)

5.00% 10/1/41

     440,000        483,556  

5.00% 11/1/47

     1,000,000        1,158,180  

6.00% 4/1/38

     105,000        109,497  

Illinois State 5.00% 5/1/36

     90,000        91,031  

5.00% 11/1/36

     1,170,000        1,195,331  

5.00% 2/1/39

     160,000        161,034  

Series A 5.00% 4/1/38

     170,000        171,119  

New York State
Series A 5.00% 2/15/39

     300,000        308,106  

Oregon State
Series K 5.00% 5/1/22

     500,000        559,700  
     

 

 

 
        4,584,223  
     

 

 

 

Transportation Revenue Bonds – 23.46%

 

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

     430,000        480,392  

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

     1,000,000        1,134,680  

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

     1,000,000        1,108,100  
     Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

Transportation Revenue Bonds (continued)

 

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

     500,000      $ 514,790  

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

     250,000        285,605  

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

     1,000,000        1,088,740  

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

     500,000        545,190  

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

     700,000        767,319  

Pennsylvania Turnpike Commission Subordinate Series A-1 5.00% 12/1/43

     500,000        539,880  

Series A-1 5.00% 12/1/47

     210,000        235,807  

(Motor License Fund)

Series B 5.00% 12/1/41

     240,000        257,897  

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

     900,000        992,817  

Port Authority of New York & New Jersey Special Project
(JFK International Air Terminal)
6.00% 12/1/42

     230,000        252,963  

6.50% 12/1/28

     500,000        522,700  

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

     625,000        713,844  

South Jersey Port, New Jersey
(Subordinated Marine Terminal Revenue)
Series A 5.00% 1/1/49

     85,000        92,227  

Series B 5.00% 1/1/42 (AMT)

     85,000        91,870  

Series B 5.00% 1/1/48 (AMT)

     195,000        209,781  
 

 

(continues)                                     23


Table of Contents

Schedules of investments

Delaware Investments® National Municipal Income Fund

 

     Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

Transportation Revenue Bonds (continued)

 

St. Louis, Missouri Airport Revenue
(Lambert St. Louis International) 5.00% 7/1/32 (AMT)

     1,000,000      $ 1,073,330  

Series A-1 6.625% 7/1/34

     325,000        343,453  

Texas Private Activity Bond Surface Transportation
(Senior Lien - Blueridge Transportation) 5.00% 12/31/40 (AMT)

     110,000        120,244  

5.00% 12/31/45 (AMT)

     110,000        119,779  

5.00% 12/31/50 (AMT)

     160,000        173,550  

5.00% 12/31/55 (AMT)

     160,000        173,214  

Texas Private Activity Bond Surface Transportation Corporate Senior Lien Revenue
(LBJ Infrastructure) 7.00% 6/30/40

     285,000        314,552  

7.50% 6/30/33

     665,000        742,891  

(Mobility Partners)

7.50% 12/31/31

     500,000        546,980  

(NTE Mobility Partners)

6.75% 6/30/43 (AMT)

     225,000        261,355  

6.875% 12/31/39

     1,000,000        1,080,790  

7.00% 12/31/38 (AMT)

     165,000        194,306  

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

     235,000        254,693  
     

 

 

 
        15,233,739  
     

 

 

 

Water & Sewer Revenue Bonds – 3.67%

 

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

     280,000        314,412  

New York City Water & Sewer System, New York
(2nd Generation Fiscal 2013) Series CC 5.00% 6/15/47

     345,000        380,425  
     Principal
Amount°
    

Value

(US $)

 

Municipal Bonds (continued)

 

Water & Sewer Revenue Bonds (continued)

 

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

     500,000      $ 552,935  

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

     1,000,000        1,133,460  
     

 

 

 
        2,381,232  
     

 

 

 

Total Municipal Bonds
(cost $89,183,202)

        93,833,694  
     

 

 

 
     

Short-Term Investment – 0.46%

 

Variable Rate Demand Note – 0.46%¤

 

  

Minneapolis – St. Paul, Minnesota Housing & Redevelopment Authority Health Care Revenue Series A-II
(Children’s Hospitals & Clinics) 1.55% 8/15/37
(AGM) (SPA - US Bank N.A.)

     300,000        300,000  
     

 

 

 

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

 

     300,000  
     

 

 

 

Total Value of Securities – 144.99%
(cost $89,483,202)

 

   $ 94,133,694  
     

 

 

 

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At March 31, 2018, the aggregate value of Rule 144A securities was $3,209,331, which represents 4.94% of the Fund’s net assets. See Note 7 in “Notes to financial statements.”

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of March 31, 2018.

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by USTreasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 7 in “Notes to financial statements.”

°

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

 

 

24


Table of Contents
·

Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at March 31, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above.

Summary of abbreviations:

AGM – Insured by Assured Guaranty Municipal

Corporation

AMT – Subject to Alternative Minimum Tax

N.A. – National Association

SPA – Stand-by Purchase Agreement

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

 

 

25


Table of Contents

Statements of assets and liabilities

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

March 31, 2018

 

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

Assets:

      

Investments, at value1

   $ 100,828,291     $ 235,104,164     $ 94,133,694  

Interest income receivable

     1,447,739       3,205,533       1,324,293  

Receivable for securities sold

           1,464,263        

Offering cost for preferred shareholders

     93,381       115,704       101,453  

Prepaid rating agency fee

     26,083       19,667       25,333  
  

 

 

   

 

 

   

 

 

 

Total assets

     102,395,494       239,909,331       95,584,773  
  

 

 

   

 

 

   

 

 

 

Liabilities:

      

Cash overdraft

     272,901       571,035       220,496  

Liquidation value of preferred stock

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

Investment management fees payable

     34,644       81,177       32,217  

Other accrued expenses

     30,295       53,993       33,807  

Audit and tax fees payable

     4,723       4,723       4,580  

Legal fees payable to affiliates

     1,680       3,338       1,554  

Accounting and administration expenses payable to affiliates

     667       1,108       644  

Directors’/Trustees’ fees and expenses payable

     425       968       383  

Reports and statements to shareholders expenses payable to affiliates

     56       129       51  

Payable for securities purchased

                 367,497  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     30,345,391       75,716,471       30,661,229  
  

 

 

   

 

 

   

 

 

 

Total Net Assets Applicable to Common Shareholders

   $ 72,050,103     $ 164,192,860     $ 64,923,544  
  

 

 

   

 

 

   

 

 

 

Net Assets Applicable to Common Shareholders Consist of:

      

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

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

Undistributed net investment income

     349,855       381,142       300,532  

Accumulated net realized loss on investments

     (306,170     (131,281     (237,068

Net unrealized appreciation of investments

     5,088,297       6,011,924       4,650,492  
  

 

 

   

 

 

   

 

 

 

Total Net Assets Applicable to Common Shareholders

   $ 72,050,103     $ 164,192,860     $ 64,923,544  
  

 

 

   

 

 

   

 

 

 

Net Asset Value per Common Share

   $ 14.90     $ 14.27     $ 14.34  
  

 

 

   

 

 

   

 

 

 

1Investments, at cost

     95,739,994       229,092,240       89,483,202  

2Common shares outstanding

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

3Common shares authorized

     200 million       200 million       unlimited  

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

 

26


Table of Contents

Statements of operations

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

Year ended March 31, 2018

 

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

Investment Income:

      

Interest

   $ 4,361,620     $ 8,822,575     $ 4,179,263  
  

 

 

   

 

 

   

 

 

 

Expenses:

      

Management fees

     412,674       970,251       383,990  

Interest expense

     651,448       1,628,619       651,448  

Rating agency fees

     60,716       52,048       50,884  

Accounting and administration expenses

     43,094       72,838       41,556  

Audit and tax fees

     42,085       42,087       41,942  

Dividend disbursing and transfer agent fees and expenses

     32,302       70,673       33,312  

Legal fees

     23,933       33,413       23,693  

Reports and statements to shareholders

     21,084       39,176       19,636  

Offering costs

     17,985       24,172       20,853  

Stock exchange fees

     4,775       10,944       4,289  

Directors’/Trustees’ fees and expenses

     3,172       7,612       2,998  

Custodian fees

     2,437       8,939       2,553  

Registration fees

     868       868       778  

Other

     17,084       31,381       25,400  
  

 

 

   

 

 

   

 

 

 
     1,333,657       2,993,021       1,303,332  

Less expense paid indirectly

     (1,364     (3,528     (1,180
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,332,293       2,989,493       1,302,152  
  

 

 

   

 

 

   

 

 

 

Net Investment Income

     3,029,327       5,833,082       2,877,111  
  

 

 

   

 

 

   

 

 

 

Net Realized and Unrealized Gain (Loss):

      

Net realized gain on investments

     226,210       671,697       601,740  

Net change in unrealized appreciation (depreciation) of investments

     (131,684     (1,968,736     (630,594
  

 

 

   

 

 

   

 

 

 

Net Realized and Unrealized Gain (Loss)

     94,526       (1,297,039     (28,854
  

 

 

   

 

 

   

 

 

 

Net Increase in Net Assets Resulting from Operations

   $ 3,123,853     $ 4,536,043     $ 2,848,257  
  

 

 

   

 

 

   

 

 

 

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

 

27


Table of Contents

Statements of changes in net assets

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

     Delaware Investments
Colorado Municipal
Income Fund, Inc.
 
     Year ended  
     3/31/18     3/31/17  

Increase (Decrease) in Net Assets from Operations:

    

Net investment income

   $ 3,029,327     $ 3,240,164  

Net realized gain

     226,210       608,285  

Net change in unrealized appreciation (depreciation)

     (131,684     (3,897,264
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     3,123,853       (48,815
  

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

    

Net investment income

     (3,313,414     (3,482,712
  

 

 

   

 

 

 
     (3,313,414     (3,482,712
  

 

 

   

 

 

 

Net Decrease in Net Assets Applicable to Common Shareholders

     (189,561     (3,531,527

Net Assets Applicable to Common Shareholders:

    

Beginning of year

     72,239,664       75,771,191  
  

 

 

   

 

 

 

End of year

   $ 72,050,103     $ 72,239,664  
  

 

 

   

 

 

 

Undistributed net investment income

   $ 349,855     $ 635,612  
  

 

 

   

 

 

 
     Delaware Investments
Minnesota Municipal
Income Fund II, Inc.
 
     Year ended  
     3/31/18     3/31/17  

Increase (Decrease) in Net Assets from Operations:

    

Net investment income

   $ 5,833,082     $ 6,309,240  

Net realized gain

     671,697       619,214  

Net change in unrealized appreciation (depreciation)

     (1,968,736     (7,447,417
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     4,536,043       (518,963
  

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

    

Net investment income

     (6,097,637     (6,845,460
  

 

 

   

 

 

 
     (6,097,637     (6,845,460
  

 

 

   

 

 

 

Net Decrease in Net Assets Applicable to Common Shareholders

     (1,561,594     (7,364,423

Net Assets Applicable to Common Shareholders:

    

Beginning of year

     165,754,454       173,118,877  
  

 

 

   

 

 

 

End of year

   $ 164,192,860     $ 165,754,454  
  

 

 

   

 

 

 

Undistributed net investment income

   $ 381,142     $ 600,732  
  

 

 

   

 

 

 

 

28


Table of Contents
     Delaware Investments
National Municipal
Income Fund
 
     Year ended  
     3/31/18     3/31/17  

Increase (Decrease) in Net Assets from Operations:

    

Net investment income

   $ 2,877,111     $ 2,995,863  

Net realized gain

     601,740       147,253  

Net change in unrealized appreciation (depreciation)

     (630,594     (3,279,316
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     2,848,257       (136,200
  

 

 

   

 

 

 

Dividends and Distributions to Common Shareholders from:

    

Net investment income

     (2,717,066     (3,079,341
  

 

 

   

 

 

 
     (2,717,066     (3,079,341
  

 

 

   

 

 

 

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

     131,191       (3,215,541

Net Assets Applicable to Common Shareholders:

    

Beginning of year

     64,792,353       68,007,894  
  

 

 

   

 

 

 

End of year

   $ 64,923,544     $ 64,792,353  
  

 

 

   

 

 

 

Undistributed net investment income

   $ 300,532     $ 141,408  
  

 

 

   

 

 

 

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

 

29


Table of Contents

Statements of cash flows

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

Year ended March 31, 2018

 

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

Net Cash Provided by (Used for) Operating Activities:

      

Net increase in net assets resulting from operations

   $ 3,123,853     $ 4,536,043     $ 2,848,257  
  

 

 

   

 

 

   

 

 

 

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

      

Amortization of premium and accretion of discount on investments

     437,826       2,293,416       507,189  

Purchase of investment securities

     (8,454,449     (36,019,001     (33,538,648

Proceeds from disposition of investment securities

     8,190,741       37,534,469       32,508,849  

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

     100,000       (1,400,000     (300,000

Net realized gain on investments

     (226,210     (671,697     (601,740

Net change in net unrealized (appreciation) depreciation

     131,684       1,968,736       630,594  

Increase (decrease) in receivable for securities sold

     4,904       (1,438,988      

Increase (decrease) in interest receivable

     (21,638     29,203       15,829  

Amortization of offering costs for preferred shareholders

     32,868       40,804       35,738  

(Increase) decrease in prepaid rating agency fees

     (2,166     (1,584     (16,000

Increase (decrease) in payable for securities purchased

     (270,181     (690,090     367,497  

Increase (decrease) in investment management fees payable

     48       (269     131  

Increase in Directors’/Trustees’ fees and expenses payable

     235       533       213  

Increase in audit and tax fees payable

     4,723       4,723       4,580  

Increase (decrease) in other affiliates payable

     101       (431     147  

Decrease in other accrued expenses

     (7,084     (37,213     (5,487
  

 

 

   

 

 

   

 

 

 

Total adjustments

     (78,598     1,612,611       (391,108
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     3,045,255       6,148,654       2,457,149  
  

 

 

   

 

 

   

 

 

 

Cash Flows Used for Financing Activities:

      

Cash dividends and distributions paid to common shareholders

     (3,603,640     (6,644,123     (2,943,468

Increase in bank overdraft

     272,901       495,469       220,496  
  

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (3,330,739     (6,148,654     (2,722,972
  

 

 

   

 

 

   

 

 

 

Net decrease in cash

     (285,484           (265,823

Cash at beginning of year

     285,484             265,823  
  

 

 

   

 

 

   

 

 

 

Cash at end of year

   $     $     $  
  

 

 

   

 

 

   

 

 

 

Cash paid for interest expense for leverage

   $ 651,448     $ 1,628,619     $ 651,448  
  

 

 

   

 

 

   

 

 

 

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

 

30


Table of Contents

Financial highlights

Delaware Investments® Colorado Municipal Income Fund, Inc.

 

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

 

     Year ended  
      3/31/18     3/31/17     3/31/16     3/31/15     3/31/14  

Net asset value, beginning of period

   $ 14.93     $ 15.66     $ 15.55     $ 14.43     $ 15.37  

Income (loss) from investment operations:

          

Net investment income1

     0.63       0.67       0.71       0.71       0.70  

Net realized and unrealized gain (loss)

     0.03       (0.68     0.12       1.10       (0.93
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

     0.66       (0.01     0.83       1.81       (0.23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less dividends and distributions to common shareholders from:

          

Net investment income

     (0.69     (0.72     (0.72     (0.69     (0.69

Net realized gain

                             (0.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total dividends and distributions

     (0.69     (0.72     (0.72     (0.69     (0.71
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 14.90     $ 14.93     $ 15.66     $ 15.55     $ 14.43  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market value, end of period

   $ 14.39     $ 14.70     $ 15.07     $ 14.35     $ 13.33  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment return based on:2

          

Market value

     2.44%       2.24%       10.38%       13.01%       (5.25%

Net asset value

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

Ratios and supplemental data:

          

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

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

Ratio of expenses to average net assets applicable to common shareholders3

     1.82%       1.60%       1.52%       1.43%       1.49%  

Ratio of net investment income to average net assets applicable to common shareholders4

     4.14%       4.32%       4.59%       4.65%       4.90%  

Portfolio turnover

     11%       12%       13%       14%       26%  

Leverage analysis:

          

Value of preferred shares outstanding (000 omitted)5

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

Net asset coverage per share of preferred shares, end of period5

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

Liquidation value per share of preferred shares5

   $ 100,000     $ 100,000     $ 100,000     $ 100,000     $ 100,000  

 

 

 

1 

Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.135, $0.110, $0.079, $0.077, and $0.078 per share for the years ended March 31, 2018, 2017, 2016, 2015, and 2014, respectively, and from realized capital gains of $0.002 per share for the year ended March 31, 2014.

2 

Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods.

3 

The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 0.93%, 0.90%, 1.01%, 0.92%, and 0.94%, respectively.

4 

The ratio of net investment income excluding interest expense for the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 5.03% , 5.03%, 5.11%, 5.16%, and 5.45%, respectively.

5 

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

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

 

(continues)                                     31


Table of Contents

Financial highlights

Delaware Investments® Minnesota Municipal Income Fund II, Inc.

 

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

 

     Year ended  
      3/31/18     3/31/17     3/31/16     3/31/15     3/31/14  

Net asset value, beginning of period

   $ 14.41     $ 15.05     $ 14.97     $ 14.31     $ 15.27  

Income (loss) from investment operations:

          

Net investment income1

     0.51       0.55       0.63       0.64       0.65  

Net realized and unrealized gain (loss)

     (0.12     (0.59     0.08       0.69       (0.80
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

     0.39       (0.04     0.71       1.33       (0.15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less dividends and distributions to common shareholders from:

          

Net investment income

     (0.53     (0.60     (0.63     (0.67     (0.69

Net realized gain

                             (0.12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total dividends and distributions

     (0.53     (0.60     (0.63     (0.67     (0.81
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 14.27     $ 14.41     $ 15.05     $ 14.97     $ 14.31  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market value, end of period

   $ 12.63     $ 14.56     $ 14.70     $ 13.85     $ 13.34  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment return based on:2

          

Market value

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

Net asset value

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

Ratios and supplemental data:

          

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

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

Ratio of expenses to average net assets applicable to common shareholders3

     1.78%       1.59%       1.46%       1.40%       1.51%  

Ratio of net investment income to average net assets applicable to common shareholders4

     3.48%       3.69%       4.24%       4.33%       4.54%  

Portfolio turnover

     22%       9%       16%       10%       17%  

Leverage analysis:

          

Value of preferred shares outstanding (000 omitted)5

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

Net asset coverage per share of preferred shares, end of period5

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

Liquidation value per share of preferred shares5

   $ 100,000     $ 100,000     $ 100,000     $ 100,000     $ 100,000  

 

 

 

1 

Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.142, $0.115, $0.083, $0.081 and $0.076 per share for the years ended March 31, 2018, 2017, 2016, 2015, and 2014, respectively, and from realized capital gains of $0.014 per share for the year ended March 31, 2014.

2 

Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods.

3 

The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 0.81%, 0.82%, 0.90%, 0.85%, and 0.88%, respectively.

4 

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

5 

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

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

 

32


Table of Contents

Delaware Investments® National Municipal Income Fund

 

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

 

     Year ended  
      3/31/18     3/31/17     3/31/16     3/31/15     3/31/14  

Net asset value, beginning of period

   $ 14.31     $ 15.02     $ 14.97     $ 13.81     $ 14.99  

Income (loss) from investment operations:

          

Net investment income1

     0.64       0.66       0.70       0.71       0.71  

Net realized and unrealized gain (loss)

     (0.01     (0.69     0.11       1.22       (1.18
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

     0.63       (0.03     0.81       1.93       (0.47
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less dividends and distributions to common shareholders from:

          

Net investment income

     (0.60     (0.68     (0.76     (0.77     (0.71
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total dividends and distributions

     (0.60     (0.68     (0.76     (0.77     (0.71
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 14.34     $ 14.31     $ 15.02     $ 14.97     $ 13.81  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Market value, end of period

   $ 12.62     $ 12.94     $ 13.80     $ 13.14     $ 12.35  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment return based on:2

          

Market value

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

Net asset value

     4.84%       0.01%       6.35%       14.99%       (2.41%

Ratios and supplemental data:

          

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

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

Ratio of expenses to average net assets applicable to common shareholders3

     1.97%       1.73%       1.70%       1.60%       1.58%  

Ratio of net investment income to average net assets applicable to common shareholders4

     4.36%       4.45%       4.72%       4.86%       5.17%  

Portfolio turnover

     50%       13%       25%       38%       40%  

Leverage analysis:

          

Value of preferred shares outstanding (000 omitted)5

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

Net asset coverage per share of preferred shares, end of period5

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

Liquidation value per share of preferred shares5

   $ 100,000     $ 100,000     $ 100,000     $ 100,000     $ 100,000  

 

 

 

1 

Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.144, $0.117, $0.084, $0.083, and $0.085 per share for the years ended March 31, 2018, 2017, 2016, 2015, and 2014, respectively.

2 

Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods.

3 

The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 0.98%, 0.94%, 1.13%, 1.03%, and 0.96%, respectively.

4 

The ratio of net investment income excluding interest expense to average net assets for the years ended March 31, 2018, 2017, 2016, 2015, and 2014 were 5.35%, 5.24%, 5.29%, 5.44%, and 5.79%, respectively.

5 

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

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

 

                                     33


Table of Contents

Notes to financial statements

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

March 31, 2018

 

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

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

1. Significant Accounting Policies

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

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

Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Funds evaluate tax positions taken or expected to be taken in the course of preparing each Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed each Fund’s tax positions taken on the Fund’s federal income tax returns through the year ended March 31, 2018 and for all open tax years (years ended March 31, 2015–March 31, 2018), and has concluded that no provision for federal income tax is required in each Fund’s financial statements. If applicable, each Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in other expenses on the “Statements of operations.” During the year ended March 31, 2018, the Funds did not incur any interest or tax penalties.

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

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

Other — Expenses directly attributable to each Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Each Fund declares and pays

 

34


Table of Contents

    

 

    

 

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

Each Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expense paid under this arrangement is included on the “Statements of operations” under “Custodian fees” with the corresponding expense offset included under “Less expense paid indirectly.” For the year ended March 31, 2018, each Fund earned the following amounts under this agreement:

 

     Colorado
    Municipal    
Fund
   Minnesota
    Municipal    
Fund II
   National
    Municipal    
Fund
   $1,364    $3,528    $1,180

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

In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee of 0.40% which is calculated based on each Fund’s adjusted average daily net assets.

Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. For these services, DIFSC’s fees were calculated daily and paid monthly based on the aggregate daily net assets of the Delaware Funds from April 1, 2017 through Aug. 31, 2017 at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DIFSC under the service agreement described above were allocated among all funds in the Delaware Funds on a relative net asset value (NAV) basis. Effective Sept. 1, 2017, the Funds as well as the other Delaware Funds entered into an amendment to the DIFSC agreement. Under the amendment to the DIFSC agreement, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of the Delaware Funds at the following annual rate: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund in the Delaware Funds then pays its relative portion of the remainder of the Total Fee on a relative NAV basis. These amounts are included on the “Statements of operations” under “Accounting and administration expenses.” For the year ended March 31, 2018, each Fund was charged for these services as follows:

 

     Colorado
    Municipal    
Fund
   Minnesota
    Municipal    
Fund II
   National
    Municipal    
Fund
   $6,594    $12,367    $6,297

As provided in the investment management agreement, each Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to each Fund. These amounts are included on the “Statements of operations” under “Legal fees.” For the year ended March 31, 2018, each Fund was charged for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees as follows:

 

     Colorado
    Municipal    
Fund
   Minnesota
    Municipal    
Fund II
   National
    Municipal    
Fund
   $15,325    $27,678    $15,198

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

Cross trades for the year ended March 31, 2018, were executed by the Funds pursuant to procedures adopted by the Boards designed to ensure compliance with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies, or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common investment advisor (or affiliated investment advisors), common directors/trustees and/or common officers. At their regularly scheduled meetings, the Boards review such transactions for compliance with the procedures adopted by the Boards.

 

(continues)                                     35


Table of Contents

Notes to financial statements

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

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

Pursuant to these procedures, for the year ended March 31, 2018, the Funds engaged in securities purchases and securities sales, which resulted in net realized gains or losses as follows:

 

     Colorado
    Municipal    
Fund
  Minnesota
    Municipal    
Fund II
  National
    Municipal    
Fund

Purchases

     $ 1,900,868     $ 12,738,251     $ 1,700,515

Sales

       2,486,023       13,119,135       3,640,773

Net realized gain (loss)

       (11,533 )       (80,559 )       111,936

3. Investments

For the year ended March 31, 2018, each Fund made purchases and sales of investment securities other than short-term investments as follows:

 

     Colorado
    Municipal    
Fund
   Minnesota
    Municipal    
Fund II
   National
    Municipal    
Fund

Purchases

     $ 8,454,449      $ 36,019,001      $ 33,538,648

Sales

       8,190,741        37,534,469        32,508,849

The tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. At March 31, 2018, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes for each Fund were as follows:

 

     Colorado
    Municipal    
Fund
  Minnesota
    Municipal    
Fund II
  National
    Municipal    
Fund

Cost of investments

     $ 95,731,906     $ 229,118,127     $ 89,486,992
    

 

 

     

 

 

     

 

 

 

Aggregate unrealized appreciation of investments

     $ 5,232,999     $ 7,188,132     $ 4,907,821

Aggregate unrealized depreciation of investments

       (136,614 )       (1,202,095 )       (261,119 )
    

 

 

     

 

 

     

 

 

 

Net unrealized appreciation of investments

     $ 5,096,385     $ 5,986,037     $ 4,646,702
    

 

 

     

 

 

     

 

 

 

US GAAP defines fair value as the price that each Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below and on the next page.

 

Level 1

 

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

Level 2

 

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

 

36


Table of Contents

    

 

    

 

Level 3

 

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

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

The following tables summarize the valuation of each Fund’s investments by fair value hierarchy levels as of March 31, 2018:

 

    

Colorado

Municipal Fund

 

Securities

  

Level 2

 

Assets:

  

Municipal Bonds

   $ 100,328,291  

Short-Term Investments

     500,000  
  

 

 

 

Total Value of Securities

   $ 100,828,291  
  

 

 

 
    

Minnesota

Municipal Fund II

 

Securities

  

Level 2

 

Assets:

  

Municipal Bonds

   $ 232,104,164  

Short-Term Investments

     3,000,000  
  

 

 

 

Total Value of Securities

   $ 235,104,164  
  

 

 

 
    

National

Municipal Fund

 

Securities

  

Level 2

 

Assets:

  

Municipal Bonds

   $ 93,833,694  

Short-Term Investments

     300,000  
  

 

 

 

Total Value of Securities

   $ 94,133,694  
  

 

 

 

During the year ended March 31, 2018, there were no transfers between Level 1 investments, Level 2 investments, or Level 3 investments. The Funds’ policy is to recognize transfers between levels based on fair value at the beginning of the reporting period.

 

(continues)                                     37


Table of Contents

Notes to financial statements

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from US 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, 2018 and 2017 was as follows:

Year ended March 31, 2018

 

     Colorado
Municipal
Fund
     Minnesota
Municipal
Fund II
     National
Municipal
Fund
 

Ordinary income

   $      $ 672      $ 3,219  

Tax-exempt income

     3,964,837        7,725,522        3,365,270  
  

 

 

    

 

 

    

 

 

 

Total*

   $ 3,964,837      $ 7,726,194      $ 3,368,489  
  

 

 

    

 

 

    

 

 

 

Year ended March 31, 2017

        
     Colorado
Municipal
Fund
     Minnesota
Municipal
Fund II
     National
Municipal
Fund
 

Ordinary income

   $      $ 12,365      $ 1,918  

Tax-exempt income

     4,012,640        8,157,914        3,607,318  
  

 

 

    

 

 

    

 

 

 

Total*

   $ 4,012,640      $ 8,170,279      $ 3,609,236  
  

 

 

    

 

 

    

 

 

 

*Distributions to preferred shareholders in this table are part of interest expense and therefore not showed as distributions on the statements of changes in net assets.

5. Components of Net Assets on a Tax Basis

As of March 31, 2018, the components of net assets on a tax basis were as follows:

 

     Colorado
Municipal
Fund
    Minnesota
Municipal
Fund II
    National
Municipal
Fund
 

Shares of beneficial interest

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

Undistributed tax-exempt income

     349,855       381,142       300,532  

Capital loss carryforwards

     (314,258     (105,394     (233,278

Unrealized appreciation on investments

     5,096,385       5,986,037       4,646,702  
  

 

 

   

 

 

   

 

 

 

Net assets

   $ 72,050,103     $ 164,192,860     $ 64,923,544  
  

 

 

   

 

 

   

 

 

 

The differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of market discount on debt instruments and tax deferral of wash sales.

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 and expiring capital loss carryforwards. Results of operations and net assets were not affected by these reclassifications. For the year ended March 31, 2018, the Funds recorded the following reclassifications.

 

     Colorado
Municipal
Fund
    Minnesota
Municipal
Fund II
    National
Municipal
Fund
 

Undistributed net investment income

   $ (1,670   $ 44,965     $ (921

Accumulated net realized loss

     1,670       (44,965     408,809  

Paid in capital

                 (407,888

 

38


Table of Contents

    

 

    

 

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. In 2018, the Funds utilized capital loss carryforwards as follows:

 

       Colorado
Municipal
Fund
       Minnesota
Municipal
Fund II
       National
Municipal
Fund
        
     $ 226,244        $ 672,843        $ 602,118       

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

At March 31, 2018, capital loss carryforwards available to offset future realized capital gains were as follows:

 

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

Colorado Municipal Fund

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

Minnesota Municipal Fund II

   105,394             —    105,394

National Municipal Fund

   233,278             —    233,278

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. Shares issuable under each Fund’s dividend reinvestment plan are purchased by each Fund’s transfer agent, Computershare, Inc., in the open market. During the years ended March 31, 2018 and 2017, the Funds did not issue any shares under each Fund’s dividend reinvestment plan.

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

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

The weighted average dividend rates for the year ended March 31, 2018 were as follows:

 

Colorado
Municipal
Fund
  Minnesota
Municipal
Fund II
  National
Municipal
Fund
2.2%   2.2%   2.2%

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

 

(continues)                                     39


Table of Contents

Notes to financial statements

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

6. Capital Stock (continued)

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

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

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

7. Geographic, Credit, and Market Risk

The Funds concentrate their investments in securities issued by municipalities. Because each of the Colorado Municipal Fund and the Minnesota Municipal Fund II invests substantially all of its net assets in municipal obligations of its respective state at the time of investment, events in that state may have a significant impact on the performance and investments of the Colorado Municipal Fund and the Minnesota Municipal Fund II. These events may include economic or political policy changes, tax base erosion, state constitutional limits on tax increases, budget deficits and other financial difficulties, changes in the credit ratings assigned to the state’s municipal issuers, the effects of natural or human-made disasters, or other economic, legislative, or political or social issues. Any downgrade to the credit rating of the securities issued by the US government may result in a downgrade of securities issued by the states or US territories. The National Municipal Fund will be subject to these risks as well but to a lesser extent because it invests at least 80% of its net assets in securities, the income from which is exempt from federal income tax and is not limited to investing substantially all of its assets in municipal obligations of a single state. From time to time and consistent with its investment policies, the National Municipal Fund may invest a considerable portion of its assets in certain municipalities. As of March 31, 2018, the National Municipal Fund has invested 22.13%, 18.98%, 18.38%, 11.18% and 10.67%, (each as a percentage of net assets) in securities issued by the State of New York, the Commonwealth of Pennsylvania, the State of California, the State of Illinois, and the State of Texas, respectively. These investments could make the National Municipal Fund more sensitive to economic conditions in those states than other more geographically diversified national municipal income funds.

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

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

 

40


Table of Contents

    

 

    

 

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, 2018, the percentages of each Fund’s net assets insured by insurers are listed below and these securities have been identified on the “Schedules of investments.”

 

     Colorado
Municipal
Fund
  Minnesota
Municipal
Fund II
  National
Municipal
Income Fund

Assured Guaranty Corporation

       1.67 %       2.17 %      

Assured Guaranty Municipal Corporation

       6.97 %       1.43 %       2.25 %

Build America Mutual Assurance Company

       1.60 %            

Syncora Guarantee

       2.39 %            
    

 

 

     

 

 

     

 

 

 

Total

       12.63 %       3.60 %       2.25 %
    

 

 

     

 

 

     

 

 

 

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

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

Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s, S&P, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.

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

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

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Boards have delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of each Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. Rule 144A securities held by each Fund have been identified on the “Schedules of investments.” Restricted securities are valued pursuant to the security valuation procedures noted in Note 1.

 

(continues)                                     41


Table of Contents

Notes to financial statements

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

 

8. Contractual Obligations

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

9. Recent Accounting Pronouncements

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

10. Subsequent Events

Management has determined that no material events or transactions occurred subsequent to March 31, 2018 that would require recognition or disclosure in the Funds’ financial statements.

 

42


Table of Contents

Report of independent

registered public accounting firm

 

To the Board of Trustees/Directors and Shareholders of Delaware Investments® Colorado Municipal Income Fund, Inc., Delaware Investments Minnesota Municipal Income Fund II, Inc. and Delaware Investments National Municipal Income Fund

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Delaware Investments Colorado Municipal Income Fund, Inc., Delaware Investments Minnesota Municipal Income Fund II, Inc. and Delaware Investments National Municipal Income Fund (hereafter collectively referred to as the “Funds”) as of March 31, 2018, the related statements of operations and cash flows for the year ended March 31, 2018, the statements of changes in net assets for each of the two years in the period ended March 31, 2018, including the related notes, and the financial highlights for each of the five years in the period ended March 31, 2018 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2018, the results of each of their operations and each of their cash flows for the year then ended, the changes in each of their net assets for each of the two years in the period ended March 31, 2018 and each of the financial highlights for each of the five years in the period ended March 31, 2018 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our procedures included confirmation of securities owned as of March 31, 2018 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

May 18, 2018

We have served as the auditor of one or more investment companies in Delaware Funds® by Macquarie since 2010.

 

43


Table of Contents

Other Fund information

(Unaudited)

Delaware Funds® by Macquarie Closed-End Municipal Bond Funds

Tax Information (Unaudited)

The information set forth below is for each Fund’s 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.

All disclosures are based on financial information available as of the date of this annual report and, accordingly are subject to change. For any and all items requiring reporting, it is the intention of each Fund to report the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.

For the year ended March 31, 2018, each Fund reports distributions paid during the year as follows:

 

     (A)
Ordinary
Income
Distributions
(Tax Basis)
  (B)
Tax-Exempt
Income
Distributions
(Tax Basis)
  Total
Distributions
(Tax Basis)

Colorado Municipal Fund

             100.00 %       100.00 %

Minnesota Municipal Fund II

       0.01 %       99.99 %       100.00 %

National Municipal Fund

       0.10 %       99.90 %       100.00 %

(A) and (B) are based on a percentage of each Fund’s total distributions.

Fund management

Joseph R. Baxter

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

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

Stephen J. Czepiel

Senior Vice President, Senior Portfolio Manager

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

Denise A. Franchetti, CFA

Vice President, Portfolio Manager, Co-Director of Municipal Credit — Macquarie Investment Management, Americas

Denise A. Franchetti is co-director of the company’s municipal research operations, a role she assumed in January 2018. Previously, she was a senior municipal analyst for the municipal bond department, responsible for following the airport, education, hotel, cogeneration, and cargo sectors. In 2003, she was also named as portfolio manager on the tax-exempt closed-end funds in addition to her research duties. Prior to joining Macquarie Investment Management (MIM) in 1997 as a municipal bond analyst, she was a fixed income trader at Provident Mutual Life Insurance and an investment analyst at General Accident Insurance. Franchetti received her bachelor’s degree and an MBA from La Salle University. She is a member of the Financial Analysts of Philadelphia.

 

44


Table of Contents

Gregory A. Gizzi

Senior Vice President, Senior Portfolio Manager

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

 

(continues)                                     45


Table of Contents

Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

A mutual fund is governed by a Board of Trustees / Directors (“Trustees”), which has oversight responsibility for the management of a fund’s business affairs. Trustees establish procedures and oversee and review the performance of the investment manager 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.

 

Name,

Address,

and Birth Date

  

Position(s)

Held with

Fund(s)

  

Length of Time

Served

        

Principal

Occupation(s)

During the

Past Five Years

  

Number of

Portfolios in Fund

Complex Overseen

by Trustee

or Officer

  

Other

Directorships

Held by

Trustee

or Officer

Interested Trustee

                             

Shawn K. Lytle1,2

2005 Market Street

Philadelphia, PA 19103

February 1970

  

President,

Chief Executive Officer,

and Trustee

  

Trustee since

September 2015

 

President and

Chief Executive Officer

since August 2015

 

     

President —

Macquarie Investment Management3

(June 2015–Present)

 

Regional Head of Americas — UBS Global Asset Management

(April 2010–May 2015)

   60   

Trustee — UBS Relationship Funds,

SMA Relationship Trust,

and UBS Funds

(May 2010–April 2015)

Independent Trustees

Thomas L. Bennett

2005 Market Street

Philadelphia, PA 19103

October 1947

   Chairman and Trustee   

Trustee since

March 2005

     

Private Investor

(March 2004–Present)

   60    None
         

Chairman since

March 2015

 

                   

Ann D. Borowiec

2005 Market Street

Philadelphia, PA 19103

November 1958

   Trustee    Since March 2015        

Chief Executive Officer,

Private Wealth Management

(2011–2013) and Market Manager,

New Jersey Private Bank

(2005–2011) —

J.P. Morgan Chase & Co.

   60   

Director —

Banco Santander

International

 

Director —

Santander Bank, N.A.

 

Joseph W. Chow

2005 Market Street

Philadelphia, PA 19103

January 1953

   Trustee    Since January 2013        

Executive Vice President (Emerging Economies Strategies, Risks, and Corporate Administration)

State Street Corporation

(July 2004–March 2011)

   60   

Director and Audit

Committee

Member — Hercules

Technology Growth

Capital, Inc.

(2004–2014)

 

John A. Fry

2005 Market Street

Philadelphia, PA 19103

May 1960

   Trustee    Since January 2001      

President —

Drexel University

(August 2010–Present)

 

President —

Franklin & Marshall College

(July 2002–July 2010)

   60   

Director; Compensation

Committee

and Governance

Committee Member —

Community Health

Systems

                 

Director —

Drexel Morgan & Co.

                 

Director, Audit

Committee Member —

vTv Therapeutics LLC

                             

Director; Audit Committee

Member —

FS Credit Real Estate

Income Trust, Inc.

 

 

46


Table of Contents

Name,

Address,

and Birth Date

  

Position(s)

Held with

Fund(s)

  

Length of Time

Served

        

Principal

Occupation(s)

During the

Past Five Years

  

Number of

Portfolios in Fund

Complex Overseen

by Trustee

or Officer

  

Other

Directorships

Held by

Trustee

or Officer

Independent Trustees (continued)

Lucinda S. Landreth

2005 Market Street

Philadelphia, PA 19103

June 1947

 

   Trustee    Since March 2005        

Private Investor

(2004–Present)

   60    None

Frances A. Sevilla-Sacasa

2005 Market Street

Philadelphia, PA 19103

January 1956

   Trustee    Since September 2011        

Chief Executive Officer —

Banco Itaú

International

(April 2012–December 2016)

 

Executive Advisor to Dean

(August 2011–March 2012)

and Interim Dean

(January 2011–July 2011) —

University of Miami School of

Business Administration

 

President — U.S. Trust,

Bank of America Private

Wealth Management

(Private Banking)

(July 2007-December 2008)

 

   60   

Trust Manager and

Audit Committee

Member — Camden

Property Trust

Thomas K. Whitford

2005 Market Street

Philadelphia, PA 19103

March 1956

   Trustee    Since January 2013        

Vice Chairman

(2010–April 2013) —

PNC Financial

Services Group

   60   

Director — HSBC

Finance Corporation

and HSBC North

America Holdings Inc.

 

Director — HSBC

USA Bank Inc.

 

Janet L. Yeomans

2005 Market Street

Philadelphia, PA 19103

July 1948

   Trustee    Since April 1999        

Vice President and Treasurer

(January 2006–July 2012),

Vice President — Mergers & Acquisitions

(January 2003–January 2006), and

Vice President and Treasurer

(July 1995–January 2003) —

3M Company

   60   

Director (2009-2017);

Personnel and

Compensation Committee

Chair; Member of

Nominating, Investments,

and Audit Committees for

various periods

throughout directorship

— Okabena Company

 

 

(continues)                                     47


Table of Contents

Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

 

Name,

Address,

and Birth Date

  

Position(s)

Held with

Fund(s)

   Length of Time
Served
        

Principal

Occupation(s)

During the

Past Five Years

  

Number of

Portfolios in Fund

Complex Overseen
by Trustee

or Officer

  

Other

Directorships

Held by

Trustee

or Officer

Officers

                             

David F. Connor

2005 Market Street

Philadelphia, PA 19103

December 1963

  

Senior Vice President,

General Counsel,

and Secretary

  

Senior Vice President,

since May 2013;

General Counsel

since May 2015;

Secretary since

October 2005

 

       

David F. Connor has served in

various capacities at different times

at Macquarie Investment Management.

   60    None2

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 Macquarie Investment Management.

   60    None2

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 capacities at different times

at Macquarie Investment Management.

   60    None2

 

1  Shawn K. Lytle is considered to be an “Interested Trustee” because he is an executive officer of the Fund’s(s’) investment advisor.
2