|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware
|
|
|
Delaware
|
|
|
Delaware
|
|
|
|
|
Investments®
|
|
|
Investments
|
|
|
Investments
|
|
|
|
|
Colorado
|
|
|
Minnesota
|
|
|
National
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
Income
|
|
|
Income
|
|
|
Income
|
|
|
|
|
Fund, Inc.
|
|
|
Fund II, Inc.
|
|
|
Fund
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments, at value1
|
|
$
|
106,889,078
|
|
|
$
|
246,232,960
|
|
|
$
|
96,164,388
|
|
|
Cash
|
|
|
72,036
|
|
|
|
—
|
|
|
|
101,873
|
|
|
Interest income receivable
|
|
|
1,336,116
|
|
|
|
3,140,981
|
|
|
|
1,283,891
|
|
|
Offering cost for preferred shareholders
|
|
|
197,208
|
|
|
|
197,208
|
|
|
|
197,208
|
|
|
Prepaid rating agency fee
|
|
|
30,870
|
|
|
|
29,870
|
|
|
|
19,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
108,525,308
|
|
|
|
249,601,019
|
|
|
|
97,767,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash due to custodian
|
|
|
—
|
|
|
|
86,726
|
|
|
|
—
|
|
|
Liquidation value of preferred stock
|
|
|
30,000,000
|
|
|
|
75,000,000
|
|
|
|
30,000,000
|
|
|
Payable for securities purchased
|
|
|
4,629,978
|
|
|
|
2,490,695
|
|
|
|
—
|
|
|
Other accrued expenses
|
|
|
62,602
|
|
|
|
58,896
|
|
|
|
47,946
|
|
|
Investment management fees payable
|
|
|
34,081
|
|
|
|
81,033
|
|
|
|
32,067
|
|
|
Audit and tax fees payable
|
|
|
21,350
|
|
|
|
21,350
|
|
|
|
21,350
|
|
|
Legal fees payable to affiliates
|
|
|
2,001
|
|
|
|
4,650
|
|
|
|
1,835
|
|
|
Accounting and administration expenses payable to affiliates
|
|
|
649
|
|
|
|
1,090
|
|
|
|
630
|
|
|
Directors’/Trustees’ fees and expenses payable
|
|
|
283
|
|
|
|
659
|
|
|
|
260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
34,750,944
|
|
|
|
77,745,099
|
|
|
|
30,104,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Assets Applicable to Common Shareholders
|
|
$
|
73,774,364
|
|
|
$
|
171,855,920
|
|
|
$
|
67,663,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
Total distributable earnings (loss)
|
|
|
6,856,243
|
|
|
|
13,924,845
|
|
|
|
7,453,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Assets Applicable to Common Shareholders
|
|
$
|
73,774,364
|
|
|
$
|
171,855,920
|
|
|
$
|
67,663,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value per Common Share
|
|
$
|
15.25
|
|
|
$
|
14.94
|
|
|
$
|
14.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Investments, at cost
|
|
|
100,576,283
|
|
|
|
233,396,413
|
|
|
|
89,524,272
|
|
|
2 Common shares outstanding
|
|
|
4,837,100
|
|
|
|
11,504,975
|
|
|
|
4,528,443
|
|
|
3 Common shares authorized
|
|
|
200 million
|
|
|
|
200 million
|
|
|
|
unlimited
|
|
See accompanying notes, which are an integral part of the financial statements.
24
Statements of
operations
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
Six months ended September 30, 2019 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware
|
|
Delaware
|
|
Delaware
|
|
|
|
Investments®
|
|
Investments
|
|
Investments
|
|
|
|
Colorado
|
|
Minnesota
|
|
National
|
|
|
|
Municipal
|
|
Municipal
|
|
Municipal
|
|
|
|
Income
|
|
Income
|
|
Income
|
|
|
|
Fund, Inc.
|
|
Fund II, Inc.
|
|
Fund
|
|
Investment Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
$
|
2,151,026
|
|
|
|
$
|
4,411,503
|
|
|
|
$
|
2,026,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees
|
|
|
|
206,427
|
|
|
|
|
489,825
|
|
|
|
|
193,538
|
|
|
Interest expense
|
|
|
|
384,263
|
|
|
|
|
960,658
|
|
|
|
|
384,263
|
|
|
Rating agency fees
|
|
|
|
54,664
|
|
|
|
|
51,668
|
|
|
|
|
48,533
|
|
|
Offering costs
|
|
|
|
34,640
|
|
|
|
|
46,025
|
|
|
|
|
39,976
|
|
|
Dividend disbursing and transfer agent fees and expenses
|
|
|
|
29,514
|
|
|
|
|
49,245
|
|
|
|
|
31,115
|
|
|
Accounting and administration expenses
|
|
|
|
29,513
|
|
|
|
|
42,060
|
|
|
|
|
28,942
|
|
|
Legal fees
|
|
|
|
27,224
|
|
|
|
|
51,295
|
|
|
|
|
26,080
|
|
|
Audit and tax fees
|
|
|
|
20,127
|
|
|
|
|
20,256
|
|
|
|
|
20,127
|
|
|
Reports and statements to shareholders
|
|
|
|
11,041
|
|
|
|
|
17,401
|
|
|
|
|
9,529
|
|
|
Stock exchange fees
|
|
|
|
2,381
|
|
|
|
|
5,473
|
|
|
|
|
2,146
|
|
|
Directors’/Trustees’ fees and expenses
|
|
|
|
2,198
|
|
|
|
|
5,099
|
|
|
|
|
2,003
|
|
|
Custodian fees
|
|
|
|
2,061
|
|
|
|
|
2,650
|
|
|
|
|
1,191
|
|
|
Registration fees
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
90
|
|
|
Other
|
|
|
|
11,319
|
|
|
|
|
18,250
|
|
|
|
|
15,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
815,372
|
|
|
|
|
1,759,905
|
|
|
|
|
803,261
|
|
|
Less expense paid indirectly
|
|
|
|
(434
|
)
|
|
|
|
(1,656
|
)
|
|
|
|
(1,124
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
814,938
|
|
|
|
|
1,758,249
|
|
|
|
|
802,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income
|
|
|
|
1,336,088
|
|
|
|
|
2,653,254
|
|
|
|
|
1,224,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Gain:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gain on investments
|
|
|
|
739,722
|
|
|
|
|
354,842
|
|
|
|
|
604,692
|
|
|
Net change in unrealized appreciation (depreciation) of investments
|
|
|
|
1,074,246
|
|
|
|
|
4,896,521
|
|
|
|
|
1,759,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Gain
|
|
|
|
1,813,968
|
|
|
|
|
5,251,363
|
|
|
|
|
2,364,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Resulting from Operations
|
|
|
$
|
3,150,056
|
|
|
|
$
|
7,904,617
|
|
|
|
$
|
3,588,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
25
Statements of changes in net assets
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware Investments®
|
|
|
|
|
Colorado Municipal
|
|
|
|
|
Income Fund, Inc.
|
|
|
|
|
Six months
|
|
|
|
|
|
|
|
ended
|
|
|
|
|
|
|
|
9/30/19
|
|
|
Year ended
|
|
|
|
|
(Unaudited)
|
|
|
3/31/19
|
|
|
Increase in Net Assets from Operations:
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
1,336,088
|
|
|
$
|
2,823,671
|
|
|
Net realized gain
|
|
|
739,722
|
|
|
|
50,415
|
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
1,074,246
|
|
|
|
150,252
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
3,150,056
|
|
|
|
3,024,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and Distributions to Common Shareholders from:
|
|
|
|
|
|
|
|
|
|
Distributable earnings
|
|
|
(1,426,945
|
)
|
|
|
(3,023,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,426,945
|
)
|
|
|
(3,023,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Applicable to Common Shareholders
|
|
|
1,723,111
|
|
|
|
1,150
|
|
|
|
|
|
|
Net Assets Applicable to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
72,051,253
|
|
|
|
72,050,103
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
73,774,364
|
|
|
$
|
72,051,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware Investments
|
|
|
|
|
Minnesota Municipal
|
|
|
|
|
Income Fund II, Inc.
|
|
|
|
|
Six months
|
|
|
|
|
|
|
|
ended
|
|
|
|
|
|
|
|
9/30/19
|
|
|
Year ended
|
|
|
|
|
(Unaudited)
|
|
|
3/31/19
|
|
|
Increase in Net Assets from Operations:
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
2,653,254
|
|
|
$
|
5,535,037
|
|
|
Net realized gain
|
|
|
354,842
|
|
|
|
61,162
|
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
4,896,521
|
|
|
|
1,928,102
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
7,904,617
|
|
|
|
7,524,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and Distributions to Common Shareholders from:
|
|
|
|
|
|
|
|
|
|
Distributable earnings
|
|
|
(2,588,619
|
)
|
|
|
(5,177,239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,588,619
|
)
|
|
|
(5,177,239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Applicable to Common Shareholders
|
|
|
5,315,998
|
|
|
|
2,347,062
|
|
|
|
|
|
|
Net Assets Applicable to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
166,539,922
|
|
|
|
164,192,860
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
171,855,920
|
|
|
$
|
166,539,922
|
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware Investments®
|
|
|
|
|
National Municipal
|
|
|
|
|
Income Fund
|
|
|
|
|
Six months
|
|
|
|
|
|
|
|
ended
|
|
|
|
|
|
|
|
9/30/19
|
|
|
Year ended
|
|
|
|
|
(Unaudited)
|
|
|
3/31/19
|
|
|
Increase in Net Assets from Operations:
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
1,224,679
|
|
|
$
|
2,687,792
|
|
|
Net realized gain
|
|
|
604,692
|
|
|
|
274,447
|
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
1,759,511
|
|
|
|
230,113
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
3,588,882
|
|
|
|
3,192,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and Distributions to Common Shareholders from:
|
|
|
|
|
|
|
|
|
|
Distributable earnings
|
|
|
(1,324,570
|
)
|
|
|
(2,717,066
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,324,570
|
)
|
|
|
(2,717,066
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Applicable to Common Shareholders
|
|
|
2,264,312
|
|
|
|
475,286
|
|
|
|
|
|
|
Net Assets Applicable to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
65,398,830
|
|
|
|
64,923,544
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
67,663,142
|
|
|
$
|
65,398,830
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
27
Statements of cash flows
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
Six months ended September 30, 2019 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware
|
|
|
Delaware
|
|
|
Delaware
|
|
|
|
|
Investments®
|
|
|
Investments
|
|
|
Investments
|
|
|
|
|
Colorado
|
|
|
Minnesota
|
|
|
National
|
|
|
|
|
Municipal
|
|
|
Municipal
|
|
|
Municipal
|
|
|
|
|
Income
|
|
|
Income
|
|
|
Income
|
|
|
|
|
Fund, Inc.
|
|
|
Fund II, Inc.
|
|
|
Fund
|
|
|
Net Cash Provided by (Used for) Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
3,150,056
|
|
|
$
|
7,904,617
|
|
|
$
|
3,588,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
241,459
|
|
|
|
1,093,937
|
|
|
|
235,986
|
|
|
Purchase of investment securities
|
|
|
(18,987,101
|
)
|
|
|
(15,134,681
|
)
|
|
|
(16,757,785
|
)
|
|
Proceeds from disposition of investment securities
|
|
|
13,894,430
|
|
|
|
13,226,886
|
|
|
|
18,955,638
|
|
|
(Purchase) proceeds from disposition of short-term investment securities, net
|
|
|
700,000
|
|
|
|
(500,000
|
)
|
|
|
200,000
|
|
|
Net realized gain on investments
|
|
|
(739,722
|
)
|
|
|
(354,842
|
)
|
|
|
(604,692
|
)
|
|
Net change in net unrealized appreciation (depreciation)
|
|
|
(1,074,246
|
)
|
|
|
(4,896,521
|
)
|
|
|
(1,759,511
|
)
|
|
Increase in receivable for securities sold
|
|
|
—
|
|
|
|
—
|
|
|
|
531,511
|
|
|
Decrease in interest receivable
|
|
|
88,896
|
|
|
|
6,353
|
|
|
|
21,149
|
|
|
Increase in other accrued expenses receivable
|
|
|
(2,620
|
)
|
|
|
(8,620
|
)
|
|
|
(8,620
|
)
|
|
Increase in offering costs for preferred shareholders
|
|
|
(136,696
|
)
|
|
|
(122,307
|
)
|
|
|
(131,491
|
)
|
|
Increase in payable for securities purchased
|
|
|
4,629,978
|
|
|
|
822,047
|
|
|
|
(2,756,076
|
)
|
|
Decrease in interest payable
|
|
|
(2,211
|
)
|
|
|
(5,527
|
)
|
|
|
(2,211
|
)
|
|
Decrease in investment management fees payable
|
|
|
(412
|
)
|
|
|
(486
|
)
|
|
|
(21,201
|
)
|
|
Decrease in Trustees’ fees and expenses payable
|
|
|
(279
|
)
|
|
|
(635
|
)
|
|
|
(507
|
)
|
|
Increase (decrease) in audit fees payable
|
|
|
16,627
|
|
|
|
16,627
|
|
|
|
(4,723
|
)
|
|
Decrease in other affiliates payable
|
|
|
(3,385
|
)
|
|
|
(2,473
|
)
|
|
|
(5,886
|
)
|
|
Increase in other accrued expenses
|
|
|
38,748
|
|
|
|
21,543
|
|
|
|
47,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjustments
|
|
|
(1,336,534
|
)
|
|
|
(5,838,699
|
)
|
|
|
(2,060,566
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
1,813,522
|
|
|
|
2,065,918
|
|
|
|
1,528,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows Used for Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends and distributions paid to common shareholders
|
|
|
(1,426,945
|
)
|
|
|
(2,588,619
|
)
|
|
|
(1,324,570
|
)
|
|
Increase (decrease) in bank overdraft
|
|
|
(314,541
|
)
|
|
|
86,726
|
|
|
|
(101,873
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(1,741,486
|
)
|
|
|
(2,501,893
|
)
|
|
|
(1,426,443
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
72,036
|
|
|
|
(435,975
|
)
|
|
|
101,873
|
|
|
Cash at beginning of year
|
|
|
—
|
|
|
|
435,975
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of year
|
|
$
|
72,036
|
|
|
$
|
—
|
|
|
$
|
101,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest expense for leverage
|
|
$
|
382,052
|
|
|
$
|
966,185
|
|
|
$
|
386,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
28
Financial highlights
Delaware Investments® Colorado Municipal Income Fund, Inc.
Selected data for each share of the Fund outstanding throughout each period were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/191
|
|
|
Year ended
|
|
|
|
|
(Unaudited)
|
|
|
3/31/19
|
|
|
3/31/18
|
|
|
3/31/17
|
|
|
3/31/16
|
|
|
3/31/15
|
|
|
Net asset value, beginning of period
|
|
$
|
14.90
|
|
|
$
|
14.90
|
|
|
$
|
14.93
|
|
|
$
|
15.66
|
|
|
$
|
15.55
|
|
|
$
|
14.43
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income2
|
|
|
0.28
|
|
|
|
0.58
|
|
|
|
0.63
|
|
|
|
0.67
|
|
|
|
0.71
|
|
|
|
0.71
|
|
|
Net realized and unrealized gain (loss)
|
|
|
0.37
|
|
|
|
0.04
|
|
|
|
0.03
|
|
|
|
(0.68
|
)
|
|
|
0.12
|
|
|
|
1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
0.65
|
|
|
|
0.62
|
|
|
|
0.66
|
|
|
|
(0.01
|
)
|
|
|
0.83
|
|
|
|
1.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less dividends and distributions to common shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.30
|
)
|
|
|
(0.62
|
)
|
|
|
(0.69
|
)
|
|
|
(0.72
|
)
|
|
|
(0.72
|
)
|
|
|
(0.69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.30
|
)
|
|
|
(0.62
|
)
|
|
|
(0.69
|
)
|
|
|
(0.72
|
)
|
|
|
(0.72
|
)
|
|
|
(0.69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
15.25
|
|
|
$
|
14.90
|
|
|
$
|
14.90
|
|
|
$
|
14.93
|
|
|
$
|
15.66
|
|
|
$
|
15.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value, end of period
|
|
$
|
14.79
|
|
|
$
|
14.17
|
|
|
$
|
14.39
|
|
|
$
|
14.70
|
|
|
$
|
15.07
|
|
|
$
|
14.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment return based on:3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value
|
|
|
6.47%
|
|
|
|
2.90%
|
|
|
|
2.44%
|
|
|
|
2.24%
|
|
|
|
10.38%
|
|
|
|
13.01%
|
|
|
Net asset value
|
|
|
4.41%
|
|
|
|
4.50%
|
|
|
|
4.44%
|
|
|
|
(0.07%
|
)
|
|
|
5.85%
|
|
|
|
13.12%
|
|
|
|
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to common shares, end of period (000 omitted)
|
|
$
|
73,774
|
|
|
$
|
72,051
|
|
|
$
|
72,050
|
|
|
$
|
72,240
|
|
|
$
|
75,771
|
|
|
$
|
75,226
|
|
|
Ratio of expenses to average net assets applicable to common shareholders4
|
|
|
2.23%
|
|
|
|
2.14%
|
|
|
|
1.82%
|
|
|
|
1.60%
|
|
|
|
1.52%
|
|
|
|
1.43%
|
|
|
Ratio of net investment income to average net assets applicable to common shareholders5
|
|
|
3.65%
|
|
|
|
3.98%
|
|
|
|
4.14%
|
|
|
|
4.32%
|
|
|
|
4.59%
|
|
|
|
4.65%
|
|
|
Portfolio turnover
|
|
|
13%
|
|
|
|
7%
|
|
|
|
11%
|
|
|
|
12%
|
|
|
|
13%
|
|
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred shares outstanding (000
omitted)6
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
Net asset coverage per share of preferred shares, end of
period6
|
|
$
|
345,915
|
|
|
$
|
340,171
|
|
|
$
|
340,167
|
|
|
$
|
340,799
|
|
|
$
|
352,571
|
|
|
$
|
350,753
|
|
|
Liquidation value per share of preferred shares6
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
1
|
Ratios have been annualized and total return and portfolio turnover have not been annualized.
|
|
2
|
Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.079,
$0.168, $0.135, $0.110, $0.079, and $0.077 per share for the six months ended Sept. 30, 2019 and the years ended March 31, 2019, 2018, 2017, 2016, and 2015, respectively.
|
|
3
|
Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on
the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Generally, total
investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of
the market value to the net asset value from the beginning to the end of such periods.
|
|
4
|
The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the six
months ended Sept. 30, 2019 and the years ended March 31, 2019, 2018, 2017, 2016, and 2015 were 1.18%, 1.00%, 0.93%, 0.90%, 1.01%, and 0.92%, respectively.
|
|
5
|
The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30,
2019 and the years ended March 31, 2019, 2018, 2017, 2016, and 2015 were 4.70%, 5.12%, 5.03%, 5.03%, 5.11%, and 5.16% respectively.
|
|
6
|
In November 2011, the Fund issued a series of 300 variable rate preferred shares, with a liquidation preference of
$100,000 per share (Series 2016 Shares).The Series 2016 Shares were redeemed on Feb. 2, 2016 and replaced with Series 2021 Shares, which were the same amount and value as the Fund’s Series 2016 Shares. On April 25, 2019, the Fund redeemed
the Series 2021 Shares, and replaced them with Series 2049 Muni-MultiMode Preferred Shares (Series 2049), which have the same amount and value as the Series 2021 Shares.
|
See accompanying notes, which are an integral part of the financial statements.
(continues)
29
Financial highlights
Delaware Investments® Minnesota Municipal Income Fund II, Inc.
Selected data for each share of the Fund outstanding throughout each period were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/191
|
|
|
Year ended
|
|
|
|
|
(Unaudited)
|
|
|
3/31/19
|
|
|
3/31/18
|
|
|
3/31/17
|
|
|
3/31/16
|
|
|
3/31/15
|
|
|
Net asset value, beginning of period
|
|
$
|
14.48
|
|
|
$
|
14.27
|
|
|
$
|
14.41
|
|
|
$
|
15.05
|
|
|
$
|
14.97
|
|
|
$
|
14.31
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income2
|
|
|
0.23
|
|
|
|
0.48
|
|
|
|
0.51
|
|
|
|
0.55
|
|
|
|
0.63
|
|
|
|
0.64
|
|
|
Net realized and unrealized gain (loss)
|
|
|
0.46
|
|
|
|
0.18
|
|
|
|
(0.12
|
)
|
|
|
(0.59
|
)
|
|
|
0.08
|
|
|
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
0.69
|
|
|
|
0.66
|
|
|
|
0.39
|
|
|
|
(0.04
|
)
|
|
|
0.71
|
|
|
|
1.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less dividends and distributions to common shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.23
|
)
|
|
|
(0.45
|
)
|
|
|
(0.53
|
)
|
|
|
(0.60
|
)
|
|
|
(0.63
|
)
|
|
|
(0.67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.23
|
)
|
|
|
(0.45
|
)
|
|
|
(0.53
|
)
|
|
|
(0.60
|
)
|
|
|
(0.63
|
)
|
|
|
(0.67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
14.94
|
|
|
$
|
14.48
|
|
|
$
|
14.27
|
|
|
$
|
14.41
|
|
|
$
|
15.05
|
|
|
$
|
14.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value, end of period
|
|
$
|
13.11
|
|
|
$
|
12.63
|
|
|
$
|
12.63
|
|
|
$
|
14.56
|
|
|
$
|
14.70
|
|
|
$
|
13.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment return based on:3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value
|
|
|
5.61%
|
|
|
|
3.73%
|
|
|
|
(9.94%
|
)
|
|
|
3.16%
|
|
|
|
11.17%
|
|
|
|
8.97%
|
|
|
Net asset value
|
|
|
4.97%
|
|
|
|
5.26%
|
|
|
|
2.82%
|
|
|
|
(0.27%
|
)
|
|
|
5.30%
|
|
|
|
9.80%
|
|
|
|
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to common shares, end of period (000 omitted)
|
|
$
|
171,856
|
|
|
$
|
166,540
|
|
|
$
|
164,193
|
|
|
$
|
165,754
|
|
|
$
|
173,119
|
|
|
$
|
172,280
|
|
|
Ratio of expenses to average net assets applicable to common shareholders4
|
|
|
2.07%
|
|
|
|
2.10%
|
|
|
|
1.78%
|
|
|
|
1.59%
|
|
|
|
1.46%
|
|
|
|
1.40%
|
|
|
Ratio of net investment income to average net assets applicable to common shareholders5
|
|
|
3.12%
|
|
|
|
3.40%
|
|
|
|
3.48%
|
|
|
|
3.69%
|
|
|
|
4.24%
|
|
|
|
4.33%
|
|
|
Portfolio turnover
|
|
|
5%
|
|
|
|
13%
|
|
|
|
22%
|
|
|
|
9%
|
|
|
|
16%
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred shares outstanding
(000
omitted)6
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
Net asset coverage per share of preferred shares, end of
period6
|
|
$
|
329,141
|
|
|
$
|
322,053
|
|
|
$
|
318,924
|
|
|
$
|
321,006
|
|
|
$
|
330,825
|
|
|
$
|
329,707
|
|
|
Liquidation value per share of preferred shares6
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
1
|
Ratios have been annualized and total return and portfolio turnover have not been annualized.
|
|
2
|
Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.084,
$0.176, $0.142, $0.115, $0.083, and $0.081 per share for the six months ended Sept. 30, 2019 and the years ended March 31, 2019, 2018, 2017, 2016, and 2015, respectively.
|
|
3
|
Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on
the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Generally, total
investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of
the market value to the net asset value from the beginning to the end of such periods.
|
|
4
|
The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the six
months ended Sept. 30, 2019 and years ended March 31, 2019, 2018, 2017, 2016, and 2015 were 0.94%, 0.85%, 0.81%, 0.82%, 0.90% and 0.85%, respectively.
|
|
5
|
The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30,
2019 and years ended March 31, 2019, 2018, 2017, 2016, and 2015 were 4.25%, 4.65%, 4.45%, 4.46%, 4.80%, and 4.88%, respectively.
|
|
6
|
In November 2011, the Fund issued a series of 750 variable rate preferred shares, with a liquidation preference of
$100,000 per share (Series 2016 Shares).The Series 2016 Shares were redeemed on Feb. 2, 2016 and replaced with Series 2021 Shares, which were the same amount and value as the Fund’s Series 2016 Shares. On April 25, 2019, the Fund redeemed
the Series 2021 Shares, and replaced them with Series 2049 Muni-MultiMode Preferred Shares (Series 2049), which have the same amount and value as the Series 2021 Shares.
|
See accompanying notes, which are an integral part of the financial statements.
30
Financial highlights
Delaware Investments® National Municipal Income Fund
Selected data for each share of the Fund outstanding throughout each period were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/191
|
|
|
Year ended
|
|
|
|
|
(Unaudited)
|
|
|
3/31/19
|
|
|
3/31/18
|
|
|
3/31/17
|
|
|
3/31/16
|
|
|
3/31/15
|
|
|
Net asset value, beginning of period
|
|
$
|
14.44
|
|
|
$
|
14.34
|
|
|
$
|
14.31
|
|
|
$
|
15.02
|
|
|
$
|
14.97
|
|
|
$
|
13.81
|
|
|
Income (loss) from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income2
|
|
|
0.27
|
|
|
|
0.59
|
|
|
|
0.64
|
|
|
|
0.66
|
|
|
|
0.70
|
|
|
|
0.71
|
|
|
Net realized and unrealized gain (loss)
|
|
|
0.52
|
|
|
|
0.11
|
|
|
|
(0.01
|
)
|
|
|
(0.69
|
)
|
|
|
0.11
|
|
|
|
1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
0.79
|
|
|
|
0.70
|
|
|
|
0.63
|
|
|
|
(0.03
|
)
|
|
|
0.81
|
|
|
|
1.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less dividends and distributions to common shareholders from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(0.29
|
)
|
|
|
(0.60
|
)
|
|
|
(0.60
|
)
|
|
|
(0.68
|
)
|
|
|
(0.76
|
)
|
|
|
(0.77
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.29
|
)
|
|
|
(0.60
|
)
|
|
|
(0.60
|
)
|
|
|
(0.68
|
)
|
|
|
(0.76
|
)
|
|
|
(0.77
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
14.94
|
|
|
$
|
14.44
|
|
|
$
|
14.34
|
|
|
$
|
14.31
|
|
|
$
|
15.02
|
|
|
$
|
14.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value, end of period
|
|
$
|
13.45
|
|
|
$
|
12.69
|
|
|
$
|
12.62
|
|
|
$
|
12.94
|
|
|
$
|
13.80
|
|
|
$
|
13.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment return based on:3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value
|
|
|
8.33%
|
|
|
|
5.56%
|
|
|
|
2.04%
|
|
|
|
(1.50%
|
)
|
|
|
11.32%
|
|
|
|
12.87%
|
|
|
Net asset value
|
|
|
5.75%
|
|
|
|
5.71%
|
|
|
|
4.84%
|
|
|
|
0.01%
|
|
|
|
6.35%
|
|
|
|
14.99%
|
|
|
|
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to common shares, end of period (000 omitted)
|
|
$
|
67,663
|
|
|
$
|
65,399
|
|
|
$
|
64,924
|
|
|
$
|
64,792
|
|
|
$
|
68,008
|
|
|
$
|
67,804
|
|
|
Ratio of expenses to average net assets applicable to common shareholders4
|
|
|
2.40%
|
|
|
|
2.31%
|
|
|
|
1.97%
|
|
|
|
1.73%
|
|
|
|
1.70%
|
|
|
|
1.60%
|
|
|
Ratio of net investment income to average net assets applicable to common shareholders5
|
|
|
3.67%
|
|
|
|
4.19%
|
|
|
|
4.36%
|
|
|
|
4.45%
|
|
|
|
4.72%
|
|
|
|
4.86%
|
|
|
Portfolio turnover
|
|
|
17%
|
|
|
|
16%
|
|
|
|
50%
|
|
|
|
13%
|
|
|
|
25%
|
|
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
Leverage analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of preferred shares outstanding
(000
omitted)6
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
Net asset coverage per share of preferred shares, end of
period6
|
|
$
|
325,544
|
|
|
$
|
317,996
|
|
|
$
|
316,412
|
|
|
$
|
315,898
|
|
|
$
|
326,693
|
|
|
$
|
326,013
|
|
|
Liquidation value per share of preferred shares6
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
1
|
Ratios have been annualized and total return and portfolio turnover have not been annualized.
|
|
2
|
Net investment income is reduced by dividends paid to preferred shareholders from net investment income of $0.085,
$0.179, $0.144, $0.117, $0.084, and $0.083 per share for the six months ended Sept. 30, 2019 and the years ended March 31, 2019, 2018, 2017, 2016, and 2015, respectively.
|
|
3
|
Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on
the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Generally, total
investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of
the market value to the net asset value from the beginning to the end of such periods.
|
|
4
|
The ratio of expenses to average net assets applicable to common shareholders excluding interest expense for the six
months ended Sept. 30, 2019 and years ended March 31, 2019, 2018, 2017, 2016, and 2015 were 1.25%, 1.05%, 0.98%, 0.94%, 1.13%, and 1.03%, respectively.
|
|
5
|
The ratio of net investment income excluding interest expense to average net assets for the six months ended Sept. 30,
2019 and years ended March 31, 2019, 2018, 2017, 2016, and 2015 were 4.82%, 5.45%, 5.35%, 5.24%, 5.29%, and 5.44%, respectively.
|
|
6
|
In March 2012, the Fund issued a series of 300 variable rate preferred shares, with a liquidation preference of
$100,000 per share (Series 2017 Shares). The Series 2017 Shares were redeemed on Feb. 2, 2016 and replaced with Series 2021 Shares, which were the same amount and value as the Fund’s Series 2017 Shares. On April 25, 2019, the Fund redeemed
the Series 2021 Shares, and replaced them with Series 2049 Muni-MultiMode Preferred Shares (Series 2049), which have the same amount and value as the Series 2021 Shares.
|
See accompanying notes, which are an integral part of the financial statements.
31
Notes to financial statements
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
September 30, 2019 (Unaudited)
Delaware Investments® Colorado Municipal Income Fund, Inc. (Colorado Municipal Fund) and Delaware Investments Minnesota Municipal Income Fund II, Inc. (Minnesota Municipal Fund II) are organized as Minnesota
corporations and Delaware Investments National Municipal Income Fund (National Municipal Fund) is organized as a Massachusetts business trust (each referred to as a Fund and collectively as the Funds). Colorado Municipal Fund, Minnesota Municipal
Fund II, and National Municipal Fund are considered diversified closed-end management investment companies under the Investment Company Act of 1940, as amended. The Funds’ shares trade on the NYSE American, the successor to the American Stock
Exchange, formerly known as NYSE Market.
The investment objective of each of Colorado Municipal Fund and Minnesota Municipal Fund II is to provide current income
exempt from federal income tax and from state personal income tax, if any, consistent with the preservation of capital. The investment objective of National Municipal Fund is to provide current income exempt from federal income tax, consistent with
the preservation of capital. Each of Colorado Municipal Fund and Minnesota Municipal Fund II seeks to achieve its investment objective by investing substantially all of its net assets in investment grade, tax-exempt municipal obligations of its
respective state at the time of investment. National Municipal Fund seeks to achieve its investment objective by investing at least 80% of its net assets in securities the income from which is exempt from federal income tax.
1. Significant Accounting Policies
Each Fund follows accounting and
reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies. 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 Boards.
Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends to continue to qualify for federal income
tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Funds evaluate tax positions taken or expected to be taken in the course of
preparing each Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold
are recorded as a tax benefit or expense in the current year. Management has analyzed each Fund’s tax positions taken or expected to be taken on each Fund’s federal income tax returns through the six months ended Sept. 30, 2019 and for all
open tax years (years ended March 31, 2016–March 31, 2019), and has concluded that no provision for federal income tax is required in each Fund’s financial statements. If applicable, each Fund recognizes interest accrued on
unrecognized tax benefits in interest expense and penalties in “Other expenses” on the “Statements of operations.” During the six months ended Sept. 30, 2019, the Funds did not incur any interest or tax penalties.
Cash and Cash Equivalents — Cash and cash equivalents include deposits held at financial institutions, which are available for each Fund’s use with no
restrictions, with original maturities of 90 days or less.
Use of Estimates — 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
32
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 expenses paid under this arrangement are included on the “Statements of operations” under “Custodian fees” with the corresponding expenses offset included under “Less
expenses paid indirectly.” For the six months ended Sept. 30, 2019, each Fund earned the following amounts under this arrangement:
|
|
|
|
|
|
|
|
|
|
|
Colorado
Municipal
Fund
|
|
Minnesota
Municipal
Fund II
|
|
National
Municipal
Fund
|
|
|
|
$434
|
|
$1,656
|
|
$1,124
|
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Macquarie Investment
Management Business Trust and the investment manager, an annual fee of 0.40% which is calculated based on each Fund’s adjusted average daily net assets.
Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. For these
services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rates: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and
0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund then pays its portion of the remainder of
the Total Fee on a relative net asset value (NAV) basis. These amounts are included on the “Statements of operations” under “Accounting and administration expenses.” For the six months ended Sept. 30, 2019, the Funds were charged
for these services as follows:
|
|
|
|
|
|
|
|
|
|
|
Colorado
Municipal
Fund
|
|
Minnesota
Municipal
Fund II
|
|
National
Municipal
Fund
|
|
|
|
$3,952
|
|
$6,624
|
|
$3,830
|
As provided in the investment management agreement, each Fund bears a portion of the cost of certain resources shared with DMC, including
the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to each Fund. These amounts are included on the “Statements of operations” under “Legal fees.” For the six
months ended Sept. 30, 2019, 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
|
|
|
|
$17,188
|
|
$27,630
|
|
$16,493
|
Directors’/Trustees’ fees include expenses accrued by each Fund for each Director’s/Trustee’s retainer and meeting
fees. Certain officers of DMC and DIFSC are officers and/or Directors/Trustees of the Funds. These officers and Directors/Trustees are paid no compensation by the Funds.
Cross trades for the six months ended Sept. 30, 2019, 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
Notes to financial statements
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
Pursuant to these procedures, for the six months ended Sept. 30, 2019, the Funds engaged in Rule 17a-7 securities
purchases and securities sales, which did not result in any realized gains or losses as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado
Municipal
Fund
|
|
Minnesota
Municipal
Fund II
|
|
National
Municipal
Fund
|
|
|
Purchases
|
|
$ —
|
|
$1,200,249
|
|
|
$400,069
|
|
|
Sales
|
|
450,020
|
|
3,552,202
|
|
|
400,359
|
|
3. Investments
For the six months ended
Sept. 30, 2019, 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
|
|
|
$18,987,101
|
|
|
|
$15,134,681
|
|
|
|
$16,757,785
|
|
|
Sales
|
|
|
13,894,430
|
|
|
|
13,226,886
|
|
|
|
18,802,663
|
|
|
|
|
At Sept. 30, 2019, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end.
At Sept. 30, 2019, the cost and unrealized appreciation (depreciation) of investments for each Fund were as follows:
|
|
|
|
|
|
|
|
|
|
Colorado
Municipal
Fund
|
|
Minnesota
Municipal
Fund II
|
|
National
Municipal
Fund
|
|
|
Cost of investments
|
|
|
$100,563,724
|
|
|
|
$233,377,037
|
|
|
$
|
89,514,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate unrealized appreciation of investments
|
|
|
$ 6,446,612
|
|
|
|
$ 12,993,779
|
|
|
$
|
6,685,276
|
|
|
Aggregate unrealized depreciation of investments
|
|
|
(121,258
|
)
|
|
|
(137,856
|
)
|
|
|
(35,679
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized appreciation of investments
|
|
|
$ 6,325,354
|
|
|
|
$ 12,855,923
|
|
|
$
|
6,649,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
At March 31, 2019, capital loss
carryforwards available to offset future realized capital gains were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss carryforward character
|
|
|
|
|
|
|
|
|
|
Short-term
|
|
|
Long-term
|
|
|
Total
|
|
|
|
|
Colorado Municipal Fund
|
|
|
$220,671
|
|
|
|
$43,172
|
|
|
|
$263,843
|
|
|
|
|
Minnesota Municipal
Fund II
|
|
|
42,238
|
|
|
|
—
|
|
|
|
42,238
|
|
|
|
|
National Municipal Fund
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
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.
34
|
|
|
|
|
Level 1 –
|
|
Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, and 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, and fair valued securities)
|
|
|
|
|
Level 3 –
|
|
Significant unobservable inputs, including each Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities and fair valued securities)
|
Level 3 investments are valued using significant unobservable inputs. Each Fund may also use an income-based valuation approach in which
the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon
current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of
operations.
The following tables summarize the valuation of each Fund’s investments by fair value hierarchy levels as of Sept. 30, 2019:
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Colorado
Municipal Fund
Level 2
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Municipal Bonds
|
|
|
$106,889,078
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Minnesota
Municipal Fund II
Level 2
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Municipal Bonds
|
|
|
$245,232,960
|
|
|
|
|
Short-Term Investments
|
|
|
1,000,000
|
|
|
|
|
Total Value of Securities
|
|
|
$246,232,960
|
|
|
|
|
|
|
|
|
Securities
|
|
|
National
Municipal Fund
Level 2
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Municipal Bonds
|
|
|
$96,164,388
|
|
|
|
During the six months ended Sept. 30, 2019, 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.
4. Capital Stock
Pursuant to their articles of incorporation, Colorado Municipal Fund and Minnesota Municipal Fund II each have 200 million shares of $0.01 par value common
shares authorized. National Municipal Fund has been authorized to issue an unlimited amount of $0.01 par value common shares. Shares issuable under each Fund’s dividend reinvestment plan are purchased by each Fund’s transfer agent,
Computershare, Inc., in the open market. During the six months ended Sept. 30, 2019 and the year ended March 31, 2019, the Funds did not issue any shares under their dividend reinvestment plan.
On April 25, 2019, Colorado Municipal Fund, Minnesota Municipal Fund II, and National Municipal Fund (each, a “Fund” and collectively, the
“Funds”) priced private offerings to a qualified institutional buyer, as defined pursuant to Rule 144A under the Securities Act of 1933, of approximately $135 million of Muni-MultiMode Preferred Shares, Series 2049 (MMP). Colorado
Municipal Fund, Minnesota Municipal Fund II,
(continues)
35
Notes to financial statements
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
4. Capital Stock (continued)
and National Municipal Fund issued $30,000,000, $75,000,000 and $30,000,000, respectively, of MMP Shares with a $100,000 liquidation value per share. Each Fund used the net proceeds from each
offering to redeem its outstanding Variable Rate MuniFund Term Preferred Shares, Series 2021 (VMTP). The MMP shares were the same amount and value as the respective Fund’s VMTP shares.
The MMP shares are a floating rate form of preferred stock with a mandatory term redemption. The mandatory term redemption date for these three offerings is
April 1, 2049. MMP shares have the option at either the request of the purchaser or issuer to be converted to a variable rate demand preferred (“VRDP”) structure. The converted VRDP shares could then be offered for sale to certain
institutional investors. The VRDP could continue to remain outstanding for the remainder of the MMP shares’ 30-year term. MMP dividends are set weekly at a spread to the Securities Industry and Financial Markets Association Municipal Swap
Index. MMP shares represent the preferred stock of each Fund and are senior, with priority in all respects, to each Fund’s common shares as to payments of dividends. MMP shares are redeemable at par. A Fund may be obligated to redeem certain of
the MMP 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 MMP shares are set weekly, and are based on a short-term index rate plus an additional spread that is subject to adjustment in certain circumstances, including a change in the credit rating
assigned to the MMP shares by Fitch Ratings (“Fitch”).
The weighted average dividend rates for the six months ended Sept. 30, 2019 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado
Municipal
Fund
|
|
Minnesota
Municipal
Fund II
|
|
National
Municipal
Fund
|
|
|
|
|
2.55
|
%
|
|
|
2.55
|
%
|
|
|
2.55
|
%
|
The Funds use leverage because their managers believe that, over time, leveraging may provide opportunities for additional income and
total return for common shareholders. However, the use of leverage also can expose common shareholders to additional volatility. For example, as the prices of securities held by a Fund decline, the negative impact of these valuation changes on
common share net asset value and common shareholder total return is magnified by the use of leverage; accordingly, the use of structural leverage may hurt a Fund’s overall performance.
Leverage may also cause the Funds to incur certain costs. In the event that a Fund is unable to meet certain criteria (including, but not limited to, maintaining certain
ratings with Fitch, funding dividend payments, or funding redemptions), that Fund will pay additional fees with respect to the leverage.
For financial reporting
purposes, the MMP shares are considered debt of the issuer; therefore, the liquidation value which approximates fair value of the MMP shares is recorded as a liability in the statements of assets and liabilities. Dividends accrued and paid on the
MMP shares are included as a component of interest expense in the statements of operations. The MMP shares are treated as equity for legal and tax purposes. Dividends paid to holders of the MMP shares are generally classified as tax-exempt income
for tax-reporting purposes.
Offering costs for MMP shares are recorded as a deferred charge and amortized over the 5-year life of the MMP shares. These are
presented as “Offering cost for preferred shareholders” on the “Statements of assets and liabilities” and “Offering costs” on the “Statements of operations.”
5. Geographic, Credit, and Market Risk
The Funds concentrate their
investments in securities issued by municipalities. Because each of Colorado Municipal Fund and 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 Colorado Municipal Fund and 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. 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, National Municipal Fund may invest a considerable portion of its assets in certain municipalities. As of Sept. 30, 2019, National Municipal Fund has invested 21.31%, 18.46%, 14.52%, and
12.31% (each as a percentage of net assets) in securities issued by the State of
36
California, the Commonwealth of Pennsylvania, the State of New York, and the State of Texas, respectively. These
investments could make National Municipal Fund more sensitive to economic conditions in those states than other more geographically diversified national municipal income funds.
Each Fund may invest a percentage of assets in obligations of governments of US territories, commonwealths, and possessions such as Puerto Rico, the US Virgin Islands,
or Guam. To the extent a Fund invests in such obligations, that Fund may be adversely affected by local political and economic conditions and developments within these US territories, commonwealths, and possessions.
From time to time, a fund may invest in industrial development bonds (IDBs) or pollution control revenue (PCR) bonds that are issued by a conduit authority on behalf of
a corporation that is either foreign owned or has international affiliates or operations. While the bonds may be issued to finance a facility located in the United States, the bonds may be secured by a payment obligation or guaranty of the
corporation. To the extent the Fund invests in such securities, that Fund may be exposed to risks associated with international investments. The risk of international investments not ordinarily associated with US investments includes fluctuation in
currency values, differences in accounting principles, and/or economic or political instability in other nations.
Many municipalities insure repayment for their
obligations. Although bond insurance may reduce the risk of loss due to default by an issuer, such bonds remain subject to the risk that market value may fluctuate for other reasons, and there is no assurance that the insurance company will meet its
obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in each Fund. At Sept. 30, 2019, 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
Fund
|
|
Assured Guaranty Corporation
|
|
|
1.63%
|
|
|
|
—
|
|
|
|
—
|
|
|
Assured Guaranty Municipal Corporation
|
|
|
7.83%
|
|
|
|
0.88
|
%
|
|
|
1.66
|
%
|
|
Build America Mutual Assurance Company
|
|
|
1.64%
|
|
|
|
—
|
|
|
|
—
|
|
|
Syncora Guarantee
|
|
|
2.34%
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
|
13.44%
|
|
|
|
0.88
|
%
|
|
|
1.66
|
%
|
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.
(continues)
37
Notes to financial statements
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
5. Geographic, Credit, and Market Risk (continued)
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 described in Note 1.
6. Contractual Obligations
Each Fund enters into contracts in the normal
course of business that contain a variety of indemnifications. Each Fund’s maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed each
Fund’s existing contracts and expects the risk of loss to be remote.
7. Recent Accounting Pronouncements
In August 2018, the FASB issued an Accounting Standards Update, ASU 2018-13, which changes certain fair value measurement disclosure requirements. The ASU 2018-13, in
addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation
process for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, management is evaluating the implications of these changes on the
financial statements.
8. Subsequent Events
Management has determined
that no material events or transactions occurred subsequent to Sept. 30, 2019, that would require recognition or disclosure in the Funds’ financial statements.
38
Other Fund information
(Unaudited)
Delaware
Funds® by Macquarie Closed-End Municipal Bond Funds
Fund management
Gregory A. Gizzi
Managing Director, Head of Municipal Bonds, Senior
Portfolio Manager
Gregory A. Gizzi is head of municipal bonds in the Americas, a role he assumed in February 2019. In this role, he is responsible for the
overall operation of the strategy and is team lead on several of the tax-exempt strategies. Additionally, Gizzi continues to be responsible for the taxable municipal business and the marketing efforts for the municipal product. Previously, Gizzi was
co-portfolio manager of the firm’s municipal bond funds and several client accounts, a role he held since November 2011. 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.
Stephen J. Czepiel
Managing Director, Head of Municipal Bonds Portfolio Management, Senior Portfolio Manager
Stephen J. Czepiel leads the portfolio management of the firm’s municipal bonds strategies, a role he assumed in February 2019. He is a co-portfolio manager of the
firm’s municipal bond funds and client accounts, a role he has held since August 2007. 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.
Jake van Roden
Senior
Vice President, Head of Municipal Trading, Portfolio Manager
Jake van Roden is head of the firm’s municipal trading. He is also a portfolio manager for the
firm’s nine open-end state-specific municipal bond funds, as well as for several municipal bond client accounts, a role he assumed in December 2017. In February 2019, his portfolio management role expanded to include the closed-end municipal
bond funds and the three national municipal open-end funds. He joined the municipal department in July 2004 as a generalist and became head of municipal trading in December 2012. Before that, van Roden interned at Macquarie Investment Management
(MIM) in the client services department. He received a bachelor’s degree in American studies with a minor in government from Franklin & Marshall College.
Denise A. Franchetti, CFA
Senior Vice President, Co-Head of Municipal
Credit Research, Portfolio Manager
Denise A. Franchetti is co-head of the company’s municipal research operations, a role she assumed in January 2018.
Previously, she was a senior municipal analyst for the municipal bond department, responsible for following the airport, education, hotel, cogeneration, and cargo sectors. In 2003, she was also named as portfolio manager on the tax-exempt closed-end
funds in addition to her research duties. Prior to joining Macquarie Investment Management (MIM) in 1997 as a municipal bond analyst, she was a fixed income trader at Provident Mutual Life Insurance and an investment analyst at General Accident
Insurance. Franchetti received her bachelor’s degree and an MBA from La Salle University. She is a member of the CFA Institute, the Financial Analysts of Philadelphia, and the National Federation of Municipal Analysts.
Board consideration of Investment Advisory Agreements for Delaware Investments® Colorado Municipal Income
Fund, Inc.; Delaware Investments Minnesota Municipal Income Fund II, Inc.; and Delaware Investments National Municipal Income Fund at a meeting held on August 21-22, 2019
At a meeting held on Aug. 21-22, 2019 (the “Annual Meeting”), the Board of Trustees (the “Board”), including a majority of disinterested or
independent Trustees, approved the renewal of the Investment Advisory Agreements for Delaware Investments Colorado Municipal Income Fund, Inc.; Delaware Investments Minnesota Municipal Income Fund II, Inc.; and Delaware Investments National
Municipal Income Fund (each, a “Fund” and together, the “Funds”). In making its decision, the Board considered information furnished at regular quarterly Board meetings,
(continues)
39
Other Fund information
(Unaudited)
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
Board consideration of Investment Advisory Agreements for Delaware Investments® Colorado Municipal Income Fund, Inc.; Delaware Investments Minnesota Municipal Income Fund II, Inc.; and Delaware Investments National Municipal Income Fund at a meeting held on
August 21-22, 2019 (continued)
including reports detailing Fund performance, investment strategies, and expenses, as well as information prepared
specifically in connection with the renewal of the investment advisory contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreements with Delaware Management Company (“DMC”), a series
of Macquarie Investment Management Business Trust (“MIMBT”), included materials provided by DMC and its affiliates (collectively, “Macquarie Investment Management”) concerning, among other things, the nature, extent, and quality
of services provided to the Funds; the costs of such services to the Funds; economies of scale; and the investment manager’s financial condition and profitability. In addition, in connection with the Annual Meeting, materials were provided to
the Trustees in May 2019, including reports provided by Broadridge Financial Solutions (“Broadridge”). The Broadridge reports compared each Fund’s investment performance and expenses with those of other comparable mutual funds. The
Independent Trustees reviewed and discussed the Broadridge reports with independent legal counsel to the Independent Trustees. In addition to the information noted above, the Board also requested and received information regarding DMC’s policy
with respect to advisory fee levels and its breakpoint philosophy; the structure of portfolio manager compensation; comparative client fee information; and any constraints or limitations on the availability of securities for certain investment
styles, which had in the past year inhibited, or which were likely in the future to inhibit, the investment manager’s ability to invest fully in accordance with Fund policies.
In considering information relating to the approval of each Fund’s advisory agreement, the Independent Trustees received assistance and advice from and met
separately with independent legal counsel to the Independent Trustees and also received assistance and advice from an experienced and knowledgeable independent fund consultant, JDL Consultants, LLC (“JDL”). Although the Board gave
attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.
Nature, extent, and quality of services. The Board considered the services provided by DMC to the Funds and their shareholders. In reviewing the nature, extent,
and quality of services, the Board considered reports furnished to it throughout the year, which covered matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and
restrictions for the Funds; compliance by DMC (“Management”) personnel with the Code of Ethics adopted throughout the Delaware Funds® by Macquarie (“Delaware Funds”); and
adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of DMC and the emphasis placed on research in the investment process. The Board recognized DMC’s receipt of certain
favorable industry distinctions during the past several years. The Board gave favorable consideration to DMC’s efforts to control expenses while maintaining service levels committed to Fund matters. The Board was satisfied with the nature,
extent, and quality of the overall services provided by DMC.
Investment performance. The Board placed significant emphasis on the investment performance of
the Funds in view of the importance of investment performance to shareholders. Although the Board considered performance reports and discussions with portfolio managers at Board meetings throughout the year, the Board gave particular weight to the
Broadridge reports furnished for the Annual Meeting. The Broadridge reports prepared for each Fund showed the investment performance of its shares in comparison to a group of similar funds as selected by Broadridge (the “Performance
Universe”). A fund with the highest performance ranked first, and a fund with the lowest ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25%, the second quartile; the next
25%, the third quartile; and the lowest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for each Fund was shown for the past 1-, 3-, 5-, and 10-year periods, to the extent
applicable, ended Jan. 31, 2019. The Board’s objective is that each Fund’s performance for the 1-, 3-, and 5-year periods be at or above the median of its Performance Universe.
Delaware Investments Colorado Municipal Income Fund, Inc. – The Performance Universe for the Fund consisted of the Fund and all leveraged closed-end “other
states” municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1- and 10-year periods was in the fourth quartile of its Performance Universe. The report further showed
that the Fund’s total return for the 3- and 5-year periods was in the second quartile and first quartile, respectively, of its Performance Universe. The Board observed that the Fund’s performance results were mixed, but tended toward
median, which was acceptable. In evaluating the Fund’s performance, the Board considered the numerous investment and performance reports delivered by Management personnel to the Board’s Investments Committee. The Board was satisfied that
Management was taking action to improve comparative Fund performance and to meet the Board’s performance objective.
40
Delaware Investments Minnesota Municipal Income Fund II, Inc. – The Performance Universe for the Fund consisted of
the Fund and all leveraged closed-end “other states” municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, 5-, and 10-year periods was in the fourth
quartile of its Performance Universe. The Fund’s performance results were not in line with the Board’s objective. In evaluating the Fund’s performance, the Board considered the numerous investment and performance reports delivered by
Management personnel to the Board’s Investments Committee. The Board was satisfied that Management was taking action to improve comparative Fund performance and meet the Board’s performance objective.
Delaware Investments® National Municipal Income Fund – The Performance Universe for the Fund consisted of
the Fund and all leveraged closed-end general and insured municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, and 5-year periods was in the third quartile of its
Performance Universe. The report further showed that the Fund’s total return for the 10-year period was in fourth quartile of its Performance Universe. The Fund’s performance results were not in line with the Board’s objective. In
evaluating the Fund’s performance, the Board considered the numerous investment and performance reports delivered by Management personnel to the Board’s Investments Committee. The Board was satisfied that Management was taking action to
improve comparative Fund performance and meet the Board’s performance objective.
Comparative expenses. The Board considered expense data for the
Delaware Funds. Management provided the Board with information on pricing levels and fee structures for the Funds as of its most recently completed fiscal year. The Board also focused on the comparative analysis of effective management fees and
total expense ratios of each Fund versus effective management fees and expense ratios of a group of similar closed-end funds as selected by Broadridge (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual
management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund)
within the Expense Group, taking into account any applicable breakpoints and fee waivers. Each Fund’s total expenses were also compared with those of its Expense Group. The Board’s objective is for each Fund’s total expense ratio to
be competitive with those of the peer funds within its Expense Group.
Delaware Investments Colorado Municipal Income Fund, Inc. – The expense comparisons for
the Fund showed that its actual management fee was the lowest expenses of its Expense Group. Broadridge did not provide the total expenses comparison of its Expense Group. The Board was satisfied with the management fee of the Fund in comparison to
those of its Expense Group.
Delaware Investments Minnesota Municipal Income Fund II, Inc. – The expense comparisons for the Fund showed that its actual
management fee and total expenses were in the quartile with the lowest expenses of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense Group.
Delaware Investments National Municipal Income Fund – The expense comparisons for the Fund showed that its actual management fee was in the quartile with the lowest
expenses of its Expense Group and its total expenses were in the quartile with the second lowest expenses of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense
Group.
Management profitability. The Board considered the level of profits, if any, realized by DMC in connection with the operation of the Funds. In this
respect, the Board reviewed the Investment Management Profitability Analysis that addressed the overall profitability of DMC’s business in providing management and other services to each of the individual funds and the Delaware Funds as a
whole. Specific attention was given to the methodology used by DMC in allocating costs for the purpose of determining profitability. Management stated that the level of profits of DMC, to a certain extent, reflects recent operational cost savings
and efficiencies initiated by DMC. The Board considered DMC’s efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide Securities and Exchange
Commission initiatives. The Board also considered the extent to which DMC might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its
role as service provider to the Delaware Funds and the benefits from allocation of fund brokerage to improve trading efficiencies. As part of its work, the Board also reviewed a report prepared by JDL regarding MIMBT profitability as compared to
certain peer fund complexes and the Independent Directors discussed with JDL personnel regarding DMC’s profitability in such context. The Board found that the management fees were reasonable in light of the services rendered and the
profitability of DMC.
Economies of scale. As closed-end funds, the Funds do not issue shares on a continuous basis. Fund assets, therefore, increase
primarily as a result of the increase in value of the underlying securities in each Fund. Accordingly, the Board determined that the Funds were not likely to experience significant economies of scale due to asset growth and, therefore, a fee
schedule with breakpoints to pass the benefit of economies of scale on to shareholders was not likely to provide the intended effect.
(continues)
41
Other Fund information
(Unaudited)
Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
Proxy results
At the annual
meeting on Aug. 21, 2019, the shareholders of the Funds voted to elect a Board of Directors. A quorum was present and the votes passed with a majority of those shares. All shareholders of each Fund vote together with respect to the election of each
Director with one exception. The holders of preferred shares of the Funds that have issued one or more classes of preferred shares have the exclusive right to separately elect two Directors, Ms. Borowiec and Mr. Chow.
The results of the voting at the meeting were as follows:
Delaware Investments® Colorado Municipal Income Fund, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders
|
|
Preferred shareholders
|
|
|
|
|
|
Shares voted
|
|
|
|
Shares voted
|
|
|
|
Shares
|
|
withheld
|
|
Shares
|
|
withheld
|
|
|
|
voted for
|
|
authority
|
|
voted for
|
|
authority
|
|
Jerome D. Abernathy
|
|
3,913,150
|
|
228,340
|
|
300
|
|
0
|
|
Thomas L. Bennett
|
|
3,908,517
|
|
232,973
|
|
300
|
|
0
|
|
John A. Fry
|
|
3,895,743
|
|
245,747
|
|
300
|
|
0
|
|
Lucinda S. Landreth
|
|
3,840,962
|
|
300,528
|
|
300
|
|
0
|
|
Shawn K. Lytle
|
|
3,913,732
|
|
227,758
|
|
300
|
|
0
|
|
Frances A. Sevilla-Sacasa
|
|
3,855,222
|
|
286,268
|
|
300
|
|
0
|
|
Thomas K. Whitford
|
|
3,941,888
|
|
199,602
|
|
300
|
|
0
|
|
Christianna Wood
|
|
3,856,344
|
|
285,146
|
|
300
|
|
0
|
|
Janet L. Yeomans
|
|
3,840,962
|
|
300,528
|
|
300
|
|
0
|
|
Ann D. Borowiec
|
|
|
|
|
|
300
|
|
0
|
|
Joseph W. Chow
|
|
|
|
|
|
300
|
|
0
|
Delaware Investments® Minnesota Municipal Income Fund II, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders
|
|
Preferred shareholders
|
|
|
|
|
|
Shares voted
|
|
|
|
Shares voted
|
|
|
|
Shares
|
|
withheld
|
|
Shares
|
|
withheld
|
|
|
|
voted for
|
|
authority
|
|
voted for
|
|
authority
|
|
Jerome D. Abernathy
|
|
8,891,543
|
|
928,786
|
|
750
|
|
0
|
|
Thomas L. Bennett
|
|
8,979,496
|
|
930,833
|
|
750
|
|
0
|
|
John A. Fry
|
|
8,989,077
|
|
921,252
|
|
750
|
|
0
|
|
Lucinda S. Landreth
|
|
8,992,229
|
|
918,100
|
|
750
|
|
0
|
|
Shawn K. Lytle
|
|
8,989,134
|
|
921,195
|
|
750
|
|
0
|
|
Frances A. Sevilla-Sacasa
|
|
8,995,379
|
|
914,950
|
|
750
|
|
0
|
|
Thomas K. Whitford
|
|
8,995,104
|
|
915,225
|
|
750
|
|
0
|
|
Christianna Wood
|
|
9,000,904
|
|
909,425
|
|
750
|
|
0
|
|
Janet L. Yeomans
|
|
8,994,035
|
|
916,294
|
|
750
|
|
0
|
|
Ann D. Borowiec
|
|
|
|
|
|
750
|
|
0
|
|
Joseph W. Chow
|
|
|
|
|
|
750
|
|
0
|
42
Delaware Investments® National Municipal Income Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders
|
|
Preferred shareholders
|
|
|
|
|
|
Shares voted
|
|
|
|
Shares voted
|
|
|
|
Shares
|
|
withheld
|
|
Shares
|
|
withheld
|
|
|
|
voted for
|
|
authority
|
|
voted for
|
|
authority
|
|
Jerome D. Abernathy
|
|
3,812,613
|
|
257,735
|
|
300
|
|
0
|
|
Thomas L. Bennett
|
|
3,845,067
|
|
225,281
|
|
300
|
|
0
|
|
John A. Fry
|
|
3,845,896
|
|
224,452
|
|
300
|
|
0
|
|
Lucinda S. Landreth
|
|
3,800,527
|
|
269,821
|
|
300
|
|
0
|
|
Shawn K. Lytle
|
|
3,846,567
|
|
223,781
|
|
300
|
|
0
|
|
Frances A. Sevilla-Sacasa
|
|
3,844,782
|
|
225,566
|
|
300
|
|
0
|
|
Thomas K. Whitford
|
|
3,847,779
|
|
222,569
|
|
300
|
|
0
|
|
Christianna Wood
|
|
3,771,424
|
|
298,924
|
|
300
|
|
0
|
|
Janet L. Yeomans
|
|
3,799,972
|
|
270,376
|
|
300
|
|
0
|
|
Ann D. Borowiec
|
|
|
|
|
|
300
|
|
0
|
|
Joseph W. Chow
|
|
|
|
|
|
300
|
|
0
|
(continues)
43
About the organization
This semiannual report is for the information of Delaware Funds® by Macquarie Closed-End Municipal Bond Funds
shareholders.
Board of directors/trustees
Shawn K. Lytle
President and
Chief Executive Officer
Delaware Funds by Macquarie
Philadelphia, PA
Thomas L. Bennett
Chairman of the Board
Delaware Funds by Macquarie
Private Investor
Rosemont, PA
Jerome D. Abernathy
Managing Member
Stonebrook Capital Management, LLC
New York, NY
Ann D. Borowiec
Former Chief Executive Officer
Private Wealth Management
J.P. Morgan Chase & Co.
New York, NY
Joseph W. Chow
Former Executive Vice President
State Street Corporation
Boston, MA
John A. Fry
President
Drexel University
Philadelphia, PA
Lucinda S. Landreth
Former Chief Investment Officer
Assurant, Inc.
New York, NY
Frances A. Sevilla-Sacasa
Former Chief Executive Officer
Banco Itaú International
Miami, FL
Thomas K. Whitford
Former Vice Chairman
PNC Financial Services Group
Pittsburgh, PA
Christianna Wood
Chief Executive Officer and President
Gore Creek Capital, Ltd.
Golden, CO
Janet L. Yeomans
Former Vice President and Treasurer
3M Company
St. Paul, MN
Affiliated officers
David F. Connor
Senior Vice President, General
Counsel, and Secretary
Delaware Funds by Macquarie
Philadelphia, PA
Daniel V. Geatens
Vice President and Treasurer
Delaware Funds by Macquarie
Philadelphia, PA
Richard Salus
Senior Vice President and
Chief Financial Officer
Delaware Funds by Macquarie
Philadelphia, PA
Investment manager
Delaware Management Company, a series
of Macquarie Investment Management
Business Trust (MIMBT)
Philadelphia, PA
Principal office of the Funds
2005 Market Street
Philadelphia, PA 19103-7057
Independent registered public accounting firm
PricewaterhouseCoopers LLP
2001 Market Street
Philadelphia, PA 19103
Registrar and stock transfer agent
Computershare, Inc.
480 Washington Blvd.
Jersey City, NJ 07310
866 437-0252
For securities dealers and financial institutions
representatives
800 362-7500
Website
delawarefunds.com/closed-end
Number of recordholders as of
Sept. 30, 2019
Colorado Municipal Fund
52 Minnesota Municipal Fund II 292 National Municipal Fund 59
Your reinvestment options
Each of the Funds offers an automatic dividend
reinvestment program. If you would like to reinvest dividends, and shares are registered in your name, contact Computershare, Inc. at 866 437-0252. You will be asked to put your request in writing. If you have shares registered in “street”
name, contact the broker/dealer holding the shares or your financial advisor. If you choose to receive your dividends in cash, you may now elect to receive them by ACH transfer. Contact Computershare at the number above for more information.
Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form
N-Q or Form N-PORT (available for filings after March 31, 2019). Each Fund’s Forms N-Q or Forms N-PORT, as well as a description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio
securities, are available without charge (i) upon request, by calling 866 437-0252; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Funds use to determine how to vote proxies (if any)
relating to portfolio securities and the Schedules of Investments included in the Funds’ most recent Forms N-Q or Forms N-PORT are available without charge on the Funds’ website at delawarefunds.com/closed-end. Each Fund’s Forms N-Q
and Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.
Information (if any) regarding how each Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available
without charge (i) through the Funds’ website at delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.
44
