UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO
HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act
file number:
|
811-07420
|
|
|
Exact name of
registrant as specified in charter:
|
Delaware Investments
®
Minnesota
|
|
Municipal Income Fund II, Inc.
|
|
|
Address of principal
executive offices:
|
2005 Market
Street
|
|
Philadelphia, PA
19103
|
|
|
Name and address of
agent for service:
|
David F. Connor,
Esq.
|
|
2005 Market
Street
|
|
Philadelphia, PA
19103
|
|
|
Registrants telephone
number, including area code:
|
(800)
523-1918
|
|
|
Date of fiscal year
end:
|
March 31
|
|
|
Date of reporting
period:
|
December 31,
2013
|
Item 1. Schedule of Investments.
Schedule of investments
Delaware
Investments
®
Minnesota Municipal Income Fund II,
Inc.
December 31, 2013
(Unaudited)
|
|
Principal
|
|
Value
|
|
|
Amount°
|
|
(U.S. $)
|
Municipal
Bonds 144.29%
|
|
|
|
|
Corporate Revenue Bonds 6.89%
|
|
|
|
|
|
Cloquet
Pollution Control Revenue
|
|
|
|
|
|
(Potlatch Project) 5.90% 10/1/26
|
5,500,000
|
|
$
|
5,498,460
|
|
Laurentian Energy
Authority I
|
|
|
|
|
|
Cogeneration Revenue
|
|
|
|
|
|
Series A 5.00% 12/1/21
|
3,325,000
|
|
|
3,038,219
|
|
St. Paul Port
Authority Revenue
|
|
|
|
|
|
(Gerdau St. Paul Steel Mill Project)
|
|
|
|
|
|
Series 7 4.50% 10/1/37 (AMT)
|
3,145,000
|
|
|
2,407,560
|
|
|
|
|
|
10,944,239
|
Education Revenue Bonds 17.71%
|
|
|
|
|
|
Baytown Township Lease
Revenue
|
|
|
|
|
|
(St. Croix Preparatory Academy)
|
|
|
|
|
|
5.75% 8/1/42
|
300,000
|
|
|
269,502
|
|
Deephaven
Charter School
|
|
|
|
|
|
(Eagle Ridge Academy Project)
|
|
|
|
|
|
Series A 5.50% 7/1/43
|
500,000
|
|
|
467,580
|
|
Minnesota Higher
Education Facilities
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
(Augsburg College) Series 6-J1
|
|
|
|
|
|
5.00% 5/1/28
|
1,500,000
|
|
|
1,503,255
|
|
(Carleton College)
|
|
|
|
|
|
Series 6-T 5.00% 1/1/28
|
1,000,000
|
|
|
1,070,960
|
|
Series D 5.00% 3/1/30
|
1,120,000
|
|
|
1,189,474
|
|
(College of St. Benedict)
|
|
|
|
|
|
Series 7-M 5.00% 3/1/31
|
300,000
|
|
|
299,637
|
|
Series 7-M 5.125% 3/1/36
|
275,000
|
|
|
271,571
|
|
(Macalester College) Series 7-S
|
|
|
|
|
|
4.00% 5/1/43
|
1,250,000
|
|
|
1,139,213
|
|
(St. Catherine University) Series 7-Q
|
|
|
|
|
|
5.00% 10/1/32
|
700,000
|
|
|
698,257
|
|
(St. Marys University) Series 5U
|
|
|
|
|
|
4.80% 10/1/23
|
1,400,000
|
|
|
1,401,050
|
|
(St. Scholastic College) Series H
|
|
|
|
|
|
5.25% 12/1/35
|
1,000,000
|
|
|
1,011,600
|
|
(University of St. Thomas) Series
|
|
|
|
|
|
7-U 5.00% 4/1/21
|
450,000
|
|
|
517,577
|
|
(University of St. Thomas)
|
|
|
|
|
|
Series 6-X 5.00% 4/1/29
|
2,250,000
|
|
|
2,357,370
|
|
Series 7-A 5.00% 10/1/39
|
1,000,000
|
|
|
1,026,030
|
|
Series 7-U 5.00% 4/1/20
|
495,000
|
|
|
572,304
|
|
Series 7-U 5.00% 4/1/22
|
750,000
|
|
|
860,520
|
|
St. Paul Housing
& Redevelopment
|
|
|
|
|
|
Authority Charter School Lease
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Nova Classical Academy) Series A
|
|
|
|
|
|
6.375% 9/1/31
|
750,000
|
|
|
769,088
|
|
University of
Minnesota
|
|
|
|
|
|
Series A 5.25% 4/1/29
|
1,000,000
|
|
|
1,106,910
|
|
Series D 5.00% 12/1/27
|
1,110,000
|
|
|
1,235,042
|
|
Series D 5.00% 12/1/28
|
1,880,000
|
|
|
2,077,682
|
|
Series D 5.00% 12/1/29
|
2,265,000
|
|
|
2,488,238
|
|
Series D 5.00% 12/1/31
|
1,000,000
|
|
|
1,085,620
|
|
Series D 5.00% 12/1/36
|
3,000,000
|
|
|
3,189,210
|
|
SER C Series C 5.00% 12/1/19
|
1,290,000
|
|
|
1,514,950
|
|
|
|
|
|
28,122,640
|
Electric Revenue Bonds 10.16%
|
|
|
|
|
|
Central
Minnesota Municipal Power
|
|
|
|
|
|
Agency Revenue
|
|
|
|
|
|
(Brookings Southeast Twin Cities
|
|
|
|
|
|
Transportation) 5.00% 1/1/32
|
1,130,000
|
|
|
1,176,850
|
|
(Brookings Twin Cities Transmission
|
|
|
|
|
|
Project) 5.00% 1/1/42
|
1,000,000
|
|
|
1,012,490
|
|
Chaska Electric Revenue
Refunding
|
|
|
|
|
|
(Generating Facilities) Series A
|
|
|
|
|
|
5.25% 10/1/25
|
250,000
|
|
|
268,123
|
|
Minnesota
Municipal Power Agency
|
|
|
|
|
|
Electric Revenue
|
|
|
|
|
|
Series A 5.00% 10/1/34
|
3,400,000
|
|
|
3,474,732
|
|
Series A 5.25% 10/1/19
|
1,610,000
|
|
|
1,665,304
|
|
Northern Municipal
Power Agency
|
|
|
|
|
|
Series A 5.00% 1/1/26
|
100,000
|
|
|
108,678
|
|
Series A 5.00% 1/1/30
|
340,000
|
|
|
358,387
|
|
Rochester
Electric Utility Revenue
|
|
|
|
|
|
Series B 5.00% 12/1/30
|
1,300,000
|
|
|
1,425,606
|
|
Series B 5.00% 12/1/43
|
1,000,000
|
|
|
1,049,400
|
|
Southern Minnesota
Municipal Power
|
|
|
|
|
|
Agency Supply Revenue
|
|
|
|
|
|
Series A 5.25% 1/1/30
|
1,030,000
|
|
|
1,083,066
|
|
Western
Minnesota Municipal Power
|
|
|
|
|
|
Agency Supply Revenue
|
|
|
|
|
|
Series A 5.00% 1/1/25
|
3,000,000
|
|
|
3,391,830
|
|
Series A 5.00% 1/1/26
|
1,000,000
|
|
|
1,119,870
|
|
|
|
|
|
16,134,336
|
Healthcare Revenue Bonds 41.90%
|
|
|
|
|
|
Anoka Health Care
Facilities Revenue
|
|
|
|
|
|
(Homestead Anoka project) Series A
|
|
|
|
|
|
7.00% 11/1/46
|
1,200,000
|
|
|
1,131,120
|
|
Center City
Health Care Facilities
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Hazelden Foundation Project)
|
|
|
|
|
|
4.75% 11/1/31
|
850,000
|
|
|
841,381
|
|
5.00% 11/1/41
|
1,600,000
|
|
|
1,607,520
|
|
Cloquet Housing
Facilities Revenue
|
|
|
|
|
|
(HADC Cloquet project) Refunding
|
|
|
|
|
|
Series A 5.00% 8/1/48
|
500,000
|
|
|
424,510
|
|
Deephaven
Housing & Healthcare
|
|
|
|
|
|
(St. Therese Senior Living project)
|
|
|
|
|
|
Series A 5.00% 4/1/38
|
280,000
|
|
|
239,355
|
|
Series A 5.00% 4/1/40
|
270,000
|
|
|
228,855
|
|
Duluth Economic
Development
|
|
|
|
|
|
Authority Revenue
|
|
|
|
|
|
(St. Lukes Hospital Authority
|
|
|
|
|
|
Obligation Group) 6.00% 6/15/39
|
1,000,000
|
|
|
983,320
|
(continues)
NQ-OVJ [12/13] 2/14 (12139) 1
Schedule of investments
Delaware
Investments
®
Minnesota Municipal Income Fund
II, Inc.
|
|
Principal
|
|
Value
|
|
|
Amount°
|
|
(U.S. $)
|
Municipal
Bonds
(continued)
|
|
|
|
|
Healthcare Revenue Bonds (continued)
|
|
|
|
|
|
Duluth Economic
Development
|
|
|
|
|
|
Authority
Revenue
|
|
|
|
|
|
(St. Lukes Hospital
Authority
|
|
|
|
|
|
Obligation Group) 5.75%
6/15/32
|
500,000
|
|
$
|
487,780
|
|
Fergus Falls Health
Care Facilities
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Lake Region
Healthcare)
|
|
|
|
|
|
5.00% 8/1/30
|
1,000,000
|
|
|
997,720
|
|
Maple Grove
Health Care System
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Maple Grove
Hospital)
|
|
|
|
|
|
5.25% 5/1/37
|
1,100,000
|
|
|
1,078,891
|
|
Minneapolis Health Care
System
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Fairview Health
Services)
|
|
|
|
|
|
Series A 6.375%
11/15/23
|
1,105,000
|
|
|
1,286,342
|
|
Series A 6.625%
11/15/28
|
1,150,000
|
|
|
1,331,677
|
|
Series B
|
|
|
|
|
|
6.50% 11/15/38 (ASSURED
GTY)
|
2,295,000
|
|
|
2,612,559
|
|
Series D 5.00% 11/15/34
(AMBAC)
|
2,000,000
|
|
|
1,993,460
|
|
Minneapolis
Revenue
|
|
|
|
|
|
(National Marrow Donor
Program
|
|
|
|
|
|
project) 4.875%
8/1/25
|
1,000,000
|
|
|
997,190
|
|
Minneapolis St. Paul
Housing &
|
|
|
|
|
|
Redevelopment Authority
Health
|
|
|
|
|
|
Care Revenue
|
|
|
|
|
|
(Childrens Health Care
Facilities)
|
|
|
|
|
|
Series A1 5.00% 8/15/34
(AGM)
|
500,000
|
|
|
504,600
|
|
Minnesota
Agricultural & Economic
|
|
|
|
|
|
Development Board
Revenue
|
|
|
|
|
|
Un-Refunded
Balance
|
|
|
|
|
|
5.75% 11/15/26
(NATL-RE)
|
100,000
|
|
|
100,099
|
|
6.375%
11/15/29
|
195,000
|
|
|
195,671
|
|
Rochester Health Care
& Housing
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Samaritan Bethany)
Series A
|
|
|
|
|
|
7.375% 12/1/41
|
1,220,000
|
|
|
1,261,236
|
|
(The Homestead) Series
A
|
|
|
|
|
|
6.875% 12/1/48
|
1,220,000
|
|
|
1,197,393
|
|
Rochester Health
Care Facilities
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Mayo Clinic)
|
|
|
|
|
|
4.00% 11/15/41
|
7,745,000
|
|
|
6,852,234
|
|
Series A 4.00%
11/15/30
|
2,240,000
|
|
|
2,486,848
|
|
Series C 4.50%
11/15/38
|
2,000,000
|
|
|
2,217,040
|
|
Sartell Health Care
Facilities Revenue
|
|
|
|
|
|
(Country Manor Campus
Project)
|
|
|
|
|
|
Series A 5.30%
9/1/37
|
600,000
|
|
|
519,252
|
|
Sartell Health
Care Facility Revenue
|
|
|
|
|
|
(Country Manor Campus
Project)
|
|
|
|
|
|
5.25% 9/1/30
|
1,000,000
|
|
|
899,670
|
|
Shakopee Health Care
Facilities
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(St. Francis Regional
Medical
|
|
|
|
|
|
Center) 5.25%
9/1/34
|
1,560,000
|
|
|
1,561,248
|
|
St Paul Housing
& Redevelopment
|
|
|
|
|
|
Authority Health Care
Facilities
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Regions Hospital
Project)
|
|
|
|
|
|
5.30% 5/15/28
|
1,000,000
|
|
|
1,000,620
|
|
St Paul Housing &
Redevelopment
|
|
|
|
|
|
Authority Hospital
Revenue
|
|
|
|
|
|
(Health East
Project)
|
|
|
|
|
|
6.00% 11/15/30
|
2,775,000
|
|
|
2,823,063
|
|
St Paul Housing
& Redevelopment
|
|
|
|
|
|
Authority Housing &
Health Care
|
|
|
|
|
|
Facilities
|
|
|
|
|
|
(Senior Episcopal Homes
Project)
|
|
|
|
|
|
Series A 4.75%
11/1/31
|
740,000
|
|
|
632,974
|
|
St. Cloud Health Care
Revenue
|
|
|
|
|
|
(Centracare Health
System project)
|
|
|
|
|
|
5.50% 5/1/39 (ASSURED
GTY)
|
1,500,000
|
|
|
1,560,225
|
|
Series A 5.125%
5/1/30
|
5,175,000
|
|
|
5,444,359
|
|
St. Louis Park
Health Care Facilities
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Park Nicollet Health
Services)
|
|
|
|
|
|
5.75% 7/1/39
|
3,315,000
|
|
|
3,437,290
|
|
Series C 5.50%
7/1/23
|
1,000,000
|
|
|
1,071,210
|
|
St. Paul Housing &
Redevelopment
|
|
|
|
|
|
Authority Health Care
Facilities
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Allina Health
System)
|
|
|
|
|
|
Series A
|
|
|
|
|
|
5.00% 11/15/18
(NATL-RE)
|
1,380,000
|
|
|
1,558,531
|
|
Series A-1 5.25%
11/15/29
|
1,395,000
|
|
|
1,456,799
|
|
(Health Partners
Obligation Group
|
|
|
|
|
|
project) 5.25%
5/15/36
|
2,000,000
|
|
|
2,018,700
|
|
St. Paul Housing
& Redevelopment
|
|
|
|
|
|
Authority Hospital
Revenue
|
|
|
|
|
|
(Health East
project)
|
|
|
|
|
|
6.00% 11/15/35
|
2,500,000
|
|
|
2,534,400
|
|
St. Paul Housing &
Redevelopment
|
|
|
|
|
|
Authority Housing &
Health Care
|
|
|
|
|
|
Facilities
|
|
|
|
|
|
(Senior Carondelet
Village Project)
|
|
|
|
|
|
Series A 6.00%
8/1/42
|
770,000
|
|
|
774,628
|
|
(Senior-Episcopal Homes
Project)
|
|
|
|
|
|
5.125% 5/1/48
|
1,200,000
|
|
|
998,592
|
|
Washington
County Housing &
|
|
|
|
|
|
Redevelopment Authority
Revenue
|
|
|
|
|
|
(Birchwood &
Woodbury Projects)
|
|
|
|
|
|
Series A 5.625%
6/1/37
|
1,500,000
|
|
|
1,352,265
|
|
Wayzata Senior Housing
Revenue
|
|
|
|
|
2 NQ-OVJ [12/13] 2/14
(12139)
|
|
Principal
|
|
Value
|
|
|
Amount°
|
|
(U.S. $)
|
Municipal Bonds
(continued)
|
|
|
|
|
Healthcare Revenue
Bonds (continued)
|
|
|
|
|
|
(Folkestone
Senior Living Community)
|
|
|
|
|
|
Series A 5.50%
11/1/32
|
420,000
|
|
$
|
413,675
|
|
Series A 5.75%
11/1/39
|
945,000
|
|
|
939,878
|
|
Series A 6.00%
5/1/47
|
1,475,000
|
|
|
1,489,352
|
|
Winona Health Care Facilities Revenue
|
|
|
|
|
|
(Winona Health
Obligated Group)
|
|
|
|
|
|
4.75%
7/1/27
|
785,000
|
|
|
763,279
|
|
5.00%
7/1/23
|
1,010,000
|
|
|
1,050,552
|
|
5.00%
7/1/34
|
750,000
|
|
|
711,743
|
|
(Winona Health
Obligation)
|
|
|
|
|
|
4.65%
7/1/26
|
465,000
|
|
|
456,788
|
|
|
|
|
|
66,525,894
|
Housing Revenue Bonds
5.99%
|
|
|
|
|
|
Minneapolis Multifamily
Housing
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Gaar Scott
Loft Project) 5.95%
|
|
|
|
|
|
5/1/30 (AMT)
(LOC-U.S. Bank
|
|
|
|
|
|
N.A.)
|
815,000
|
|
|
817,649
|
|
(Olson
Townhomes Project)
|
|
|
|
|
|
6.00% 12/1/19
(AMT)
|
540,000
|
|
|
540,124
|
|
(Seward Towers
Project)
|
|
|
|
|
|
5.00% 5/20/36
(GNMA)
|
1,980,000
|
|
|
1,988,969
|
|
(Summer Housing
Project) Series A
|
|
|
|
|
|
5.15% 2/20/45
(GNMA) (AMT)
|
2,000,000
|
|
|
1,999,940
|
|
Minnesota State Housing Finance
|
|
|
|
|
|
Agency
|
|
|
|
|
|
(Residential
Housing)
|
|
|
|
|
|
Series D 4.75%
7/1/32 (AMT)
|
800,000
|
|
|
790,304
|
|
Series I 5.15%
7/1/38 (AMT)
|
585,000
|
|
|
585,661
|
|
Series L 5.10%
7/1/38 (AMT)
|
1,250,000
|
|
|
1,312,063
|
|
Minnesota State Housing
Finance
|
|
|
|
|
|
Agency
Homeownership
|
|
|
|
|
|
(Mortgage-Backed Securities
|
|
|
|
|
|
Program)
|
|
|
|
|
|
4.40% 7/1/32
(GNMA) (FNMA) (FHLMC)
|
1,385,000
|
|
|
1,477,075
|
|
|
|
|
|
9,511,785
|
Lease Revenue
Bonds 10.21%
|
|
|
|
|
|
Andover Economic Development
|
|
|
|
|
|
Authority
Public Facilities Lease
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Andover
Community Center)
|
|
|
|
|
|
5.125%
2/1/24
|
205,000
|
|
|
205,853
|
|
5.20%
2/1/29
|
410,000
|
|
|
411,730
|
|
Minnesota State General
Fund
|
|
|
|
|
|
Revenue
Appropriations
|
|
|
|
|
|
Series B 4.00%
3/1/26
|
3,375,000
|
|
|
3,502,440
|
|
Series B 5.00%
3/1/27
|
1,160,000
|
|
|
1,284,654
|
|
Series B 5.00%
3/1/29
|
3,525,000
|
|
|
3,850,463
|
|
University of Minnesota Special
|
|
|
|
|
|
Purpose
Revenue
|
|
|
|
|
|
(State
Supported Biomed Science Research)
|
|
|
|
|
|
5.00%
8/1/35
|
1,040,000
|
|
|
1,080,893
|
|
5.00%
8/1/36
|
4,000,000
|
|
|
4,213,800
|
|
Virginia Housing &
Redevelopment
|
|
|
|
|
|
Authority
Health Care Facility Lease
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
5.25%
10/1/25
|
680,000
|
|
|
685,250
|
|
5.375%
10/1/30
|
965,000
|
|
|
974,052
|
|
|
|
|
|
16,209,135
|
Local General
Obligation Bonds 9.47%
|
|
|
|
|
|
City of Willmar
|
|
|
|
|
|
(Rice Memorial
Hospital Project)
|
|
|
|
|
|
Series A 4.00%
2/1/32
|
2,940,000
|
|
|
2,932,415
|
|
Dakota County
Community
|
|
|
|
|
|
Development
Agency
|
|
|
|
|
|
(Senior Housing
Facilities) Series A
|
|
|
|
|
|
5.00%
1/1/23
|
1,100,000
|
|
|
1,149,258
|
|
Hopkins Independent School District
|
|
|
|
|
|
No.
270
|
|
|
|
|
|
Series
A
|
|
|
|
|
|
5.00% 2/1/28 SD
CRED PROG
|
1,000,000
|
|
|
1,095,930
|
|
Rocori Independent
School District No. 750
|
|
|
|
|
|
(School
Building)
|
|
|
|
|
|
Series B 5.00%
2/1/22
|
1,010,000
|
|
|
1,138,159
|
|
Series B 5.00%
2/1/24
|
1,075,000
|
|
|
1,203,893
|
|
Series B 5.00%
2/1/25
|
1,115,000
|
|
|
1,235,130
|
|
Series B 5.00%
2/1/26
|
1,155,000
|
|
|
1,275,513
|
|
St. Paul Independent School District
|
|
|
|
|
|
No.
625
|
|
|
|
|
|
(School
Building)
|
|
|
|
|
|
Series B 5.00%
2/1/22
|
1,300,000
|
|
|
1,523,405
|
|
Series B 5.00%
2/1/26
|
1,000,000
|
|
|
1,131,820
|
|
Thief River Falls
Independent School
|
|
|
|
|
|
District No.
564
|
|
|
|
|
|
(School
Building) Series A
|
|
|
|
|
|
4.00%
2/1/32
|
1,160,000
|
|
|
1,165,545
|
|
Washington County Housing &
|
|
|
|
|
|
Redevelopment
Authority
|
|
|
|
|
|
Series B 5.50%
2/1/22 (NATL-RE)
|
525,000
|
|
|
526,927
|
|
Series B 5.50%
2/1/32 (NATL-RE)
|
655,000
|
|
|
656,801
|
|
|
|
|
|
15,034,796
|
Pre-Refunded/Escrowed
to Maturity Bonds 18.66%§
|
|
|
|
|
|
Dakota-Washington
Counties Housing
|
|
|
|
|
|
&
Redevelopment Authority
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
(Bloomington
Single Family
|
|
|
|
|
|
Residential
Mortgage) Series B
|
|
|
|
|
|
8.375% 9/1/21
(GNMA) (FHA) (VA) (AMT)
|
7,055,000
|
|
|
9,584,984
|
(continues)
NQ-OVJ [12/13] 2/14 (12139) 3
Schedule of investments
Delaware
Investments
®
Minnesota Municipal Income Fund
II, Inc.
|
|
Principal
|
|
Value
|
|
|
|
Amount°
|
|
(U.S. $)
|
|
Municipal
Bonds
(continued)
|
|
|
|
|
|
Pre-Refunded/Escrowed to Maturity Bonds§
(continued)
|
|
|
|
|
|
Southern
Minnesota Municipal Power
|
|
|
|
|
|
|
Agency Supply
Revenue Refunding
|
|
|
|
|
|
|
Series A 5.75%
1/1/18
|
2,750,000
|
|
$
|
2,886,923
|
|
|
St. Paul Housing &
Redevelopment
|
|
|
|
|
|
|
Authority Sales
Tax
|
|
|
|
|
|
|
(Civic Cener
Project)
|
|
|
|
|
|
|
5.55% 11/1/23
(NATL-RE) (IBC)
|
4,200,000
|
|
|
4,539,906
|
|
|
(Civic Center
Project)
|
|
|
|
|
|
|
5.55%
11/1/23
|
2,300,000
|
|
|
2,486,139
|
|
|
University of
Minnesota
|
|
|
|
|
|
|
Series A 5.50%
7/1/21
|
4,000,000
|
|
|
4,788,520
|
|
|
Series A 5.75%
7/1/18
|
2,000,000
|
|
|
2,402,840
|
|
|
University of Minnesota
Hospital &
|
|
|
|
|
|
|
Clinics
|
|
|
|
|
|
|
6.75%
12/1/16
|
2,580,000
|
|
|
2,937,459
|
|
|
|
|
|
|
29,626,771
|
|
Special Tax Revenue Bonds 6.31%
|
|
|
|
|
|
|
Guam Government
Business Privilege
|
|
|
|
|
|
|
Tax
Revenue
|
|
|
|
|
|
|
Series A 5.25%
1/1/36
|
150,000
|
|
|
150,681
|
|
|
Hennepin County Sales
Tax Revenue
|
|
|
|
|
|
|
(Second
Lien-Ballpark Project)
|
|
|
|
|
|
|
Series B 4.75%
12/15/27
|
1,905,000
|
|
|
1,994,306
|
|
|
Minneapolis
Community Planning &
|
|
|
|
|
|
|
Economic
Development
|
|
|
|
|
|
|
Department
|
|
|
|
|
|
|
(Limited Tax
Supported Common Bond Fund)
|
|
|
|
|
|
|
6.25%
12/1/30
|
1,000,000
|
|
|
1,126,380
|
|
|
Series 1 5.50%
12/1/24 (AMT)
|
1,000,000
|
|
|
1,036,620
|
|
|
Series 5 5.70%
12/1/27
|
375,000
|
|
|
378,761
|
|
|
Minnesota Public Safety
Radio
|
|
|
|
|
|
|
5.00%
6/1/23
|
2,845,000
|
|
|
3,198,207
|
|
|
Puerto Rico
Sales Tax Financing
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Series C 5.25%
8/1/40
|
485,000
|
|
|
380,769
|
|
|
First
Subordinate Series A
|
|
|
|
|
|
|
6.00%
8/1/42
|
1,140,000
|
|
|
851,968
|
|
|
St. Paul Port
Authority
|
|
|
|
|
|
|
(Brownsfields
Redevelopment Tax)
|
|
|
|
|
|
|
Series 2 5.00%
3/1/37
|
895,000
|
|
|
900,612
|
|
|
|
|
|
|
10,018,304
|
|
State General Obligation Bonds 8.35%
|
|
|
|
|
|
|
Minnesota
State
|
|
|
|
|
|
|
(State Trunk
Highway)
|
|
|
|
|
|
|
Series B 5.00%
10/1/22
|
5,500,000
|
|
|
6,444,075
|
|
|
Series B 5.00%
10/1/29
|
3,315,000
|
|
|
3,671,164
|
|
|
Minnesota State
Refunding
|
|
|
|
|
|
|
(State Various
Purpose) Series D
|
|
|
|
|
|
|
5.00%
8/1/24
|
2,700,000
|
|
|
3,134,349
|
|
|
|
|
|
|
13,249,588
|
|
Transportation Revenue Bonds 5.39%
|
|
|
|
|
|
|
Minneapolis
St. Paul Metropolitan
|
|
|
|
|
|
|
Airports
Commission Revenue
|
|
|
|
|
|
|
5.00%
1/1/21
|
2,600,000
|
|
|
2,989,818
|
|
|
5.00%
1/1/22
|
670,000
|
|
|
757,656
|
|
|
Series A 5.00%
1/1/35 (AMBAC)
|
2,000,000
|
|
|
2,010,860
|
|
|
Series B 5.00%
1/1/26
|
540,000
|
|
|
590,965
|
|
|
Series B 5.00%
1/1/27
|
1,190,000
|
|
|
1,284,308
|
|
|
Series B 5.00%
1/1/30
|
500,000
|
|
|
529,030
|
|
|
St. Paul Port Authority
Revenue
|
|
|
|
|
|
|
Refunding
|
|
|
|
|
|
|
(Amherst H
Wilder Foundation)
|
|
|
|
|
|
|
Series 3 5.00%
12/1/36
|
380,000
|
|
|
388,903
|
|
|
|
|
|
|
8,551,540
|
|
Water & Sewer Revenue Bonds 3.25%
|
|
|
|
|
|
|
Metropolitan
Council Waste Water
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Series B 4.00%
9/1/27
|
1,145,000
|
|
|
1,174,781
|
|
|
Series E 5.00%
9/1/21
|
2,100,000
|
|
|
2,488,248
|
|
|
St. Paul Sewer
Revenue
|
|
|
|
|
|
|
Series D 5.00%
12/1/21
|
1,325,000
|
|
|
1,502,603
|
|
|
|
|
|
|
5,165,632
|
|
Total Municipal Bonds
|
|
|
|
|
|
|
(cost
$228,559,399)
|
|
|
|
229,094,660
|
|
|
|
Total Value of Securities 144.29%
|
|
|
|
|
|
|
(cost
$228,559,399)
|
|
|
|
229,094,660
|
|
Liquidation Value of Preferred
|
|
|
|
|
|
|
Stock
(47.24%)
|
|
|
|
(75,000,000
|
)
|
Receivables and Other Assets Net
|
|
|
|
|
|
|
of Liabilities 2.95%
|
|
|
|
4,678,125
|
|
Net Assets 100.00%
|
|
|
$
|
158,772,785
|
|
____________________
°
|
Principal amount shown
is stated in U.S. Dollars unless noted that the security is denominated in
another currency.
|
|
Variable rate
security. The rate shown is the rate as of Dec. 31, 2013. Interest rates
reset periodically.
|
§
|
Pre-refunded
bonds. Municipal bonds that are generally backed or secured by U.S.
Treasury bonds. For pre-refunded bonds, the stated maturity is followed by
the year in which the bond is pre-refunded. See Note 4 in
Notes.
|
4 NQ-OVJ [12/13] 2/14
(12139)
Summary of
abbreviations:
AGM Insured by
Assured Guaranty Municipal Corporation
AMBAC Insured by AMBAC Assurance
Corporation
ASSURED GTY Insured by Assured Guaranty Corporation
FHA
Federal Housing Administration
FHLMC Federal Home Loan Mortgage
Corporation Collateral
GNMA Government National Mortgage Association
Collateral
IBC Insured Bond
Certificate
NATL-RE Insured by National
Public Finance Guarantee Corporation
VA Veterans Administration
Collateral
(continues)
NQ-OVJ [12/13] 2/14 (12139) 5
Notes
Delaware
Investments
®
Minnesota Municipal Income Fund
II, Inc.
December 31, 2013
(Unaudited)
1. Significant Accounting
Policies
The following accounting policies are
in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and
are consistently followed by Delaware Investments Minnesota Municipal Income
Fund II, Inc. (Fund). This report covers the period of time since the Funds
last fiscal year end.
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 the Funds Board of Directors (Board). In
determining whether market quotations are readily available or fair valuation
will be used, various factors will be taken into consideration, such as market
closures or suspension of trading in a security.
Federal Income Taxes
No provision for federal income taxes
has been made as the 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 Fund evaluates tax positions taken or expected to be taken in
the course of preparing the Funds tax returns to determine whether the tax
positions are more-likely-than-not of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
are recorded as a tax benefit or expense in the current year. Management has
analyzed the Funds tax positions taken for all open federal income tax years
(March 31, 2010March 31, 2013), and has concluded that no provision for federal
income tax is required in the Funds financial statements.
Use of Estimates
The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect
the fair value of investments, the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and the
differences could be material.
Other
Expenses directly attributable to the Fund are charged
directly to the Fund. Other expenses common to various funds within the Delaware
Investments
®
Family of Funds are generally allocated among such funds
on the basis of average net assets. Management fees and some other expenses are
paid monthly. Security transactions are recorded on the date the securities are
purchased or sold (trade date) for financial reporting purposes. Costs used in
calculating realized gains and losses on the sale of investment securities are
those of the specific securities sold. Interest income is recorded on the
accrual basis. Discounts and premiums on debt securities are amortized to
interest income over the lives of the respective securities using the effective
interest method. The Fund declares and pays dividends from net investment income
monthly and distributions from net realized gain on investments, if any,
annually. The Fund may distribute more frequently, if necessary for tax
purposes. Dividends and distributions, if any, are recorded on the ex-dividend
date.
2. Investments
At Dec. 31, 2013, the cost of
investments federal income tax purposes has been estimated since final tax
characteristics cannot be determined until fiscal year end. At Dec. 31, 2013,
the cost of investments and unrealized appreciation (depreciation) for the Fund
were as follows:
Cost of
Investments
|
$
|
228,567,539
|
|
Aggregate unrealized
appreciation
|
$
|
6,812,359
|
|
Aggregate
unrealized depreciation
|
|
(81,285,238
|
)
|
Net unrealized
depreciation
|
$
|
(74,472,879
|
)
|
U.S. GAAP defines fair value as the
price that the 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 entitys own assumptions about the assumptions that
market participants would use in pricing the asset or liability developed based
on the best information available under the circumstances. The Funds investment
in its entirety is assigned a level based upon the observability of the inputs
which are significant to the overall valuation. The three level hierarchy of
inputs is summarized below.
Level 1
|
inputs are quoted
prices in active markets for identical investments (e.g., equity
securities, open-end investment companies, futures contracts,
exchange-traded options contracts)
|
|
Level 2
|
other observable inputs
(including, but not limited to: quoted prices for similar assets or
liabilities in markets that are active, quoted prices for identical or
similar assets or liabilities in markets that are not active, inputs other
than quoted prices that are observable for the assets or liabilities (such
as interest rates, yield curves, volatilities, prepayment speeds, loss
severities, credit risks and default rates) or other market-corroborated
inputs) (e.g., debt securities, government securities, swap contracts,
foreign currency exchange contracts, foreign securities utilizing
international fair value pricing, broker-quoted securities, fair valued
securities)
|
|
Level 3
|
inputs are significant
unobservable inputs (including the Funds own assumptions used to
determine the fair value of investments) (e.g., broker-quoted securities,
fair valued securities)
|
Level 3 investments are valued using
significant unobservable inputs. The Fund may also use an income-based valuation
approach in which the anticipated future cash flows of the investment are
discounted to calculate fair value. Discounts may also be applied due to the
nature or duration of any restrictions on the disposition of the investments.
Valuations may also be based upon current market prices of securities that are
comparable in coupon, rating, maturity and industry. The derived value of a
Level 3 investment may not represent the value which is received upon
disposition and this could impact the results of operations.
6 NQ-OVJ [12/13] 2/14
(12139)
Notes
Delaware
Investments
®
Minnesota Municipal Income Fund
II, Inc.
2. Investments
(continued)
The following table summarizes the
valuation of the Funds investments by fair value hierarchy levels as of Dec.
31, 2013:
|
Level 2
|
Municipal
Bonds
|
229,094,660
|
During the period ended Dec. 31,
2013, there were no transfers between Level1 investments, Level 2 investments or
Level 3 investments that had a significant impact to the Fund. The Funds policy
is to recognize transfers between levels at the beginning of the reporting
period.
3. Preferred Stock
On November 15, 2011, the Fund issued
$75,000,000 Series 2016 Variable Rate MuniFund Term Preferred (VMTP) Shares,
with $100,000 liquidation value per share in a privately negotiated offering.
Proceeds from the issuance of VMTP Shares, net of offering expenses, were
invested in accordance with the Funds investment objective. The VMTP Shares
were offered to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933.
The Fund is obligated to redeem its
VMTP Shares on December 1, 2016, unless earlier redeemed or repurchased by the
Fund. VMTP Shares are subject to optional and mandatory redemption in certain
circumstances. The VMTP Shares may be redeemed at the option of the Fund,
subject to payment of a premium until December 1, 2013, and at par thereafter.
The Fund may be obligated to redeem certain of the VMTP Shares if the Fund fails
to maintain certain asset coverage and leverage ratio requirements and such
failures are not cured by the applicable cure date. The redemption price per
share is equal to the sum of the liquidation value per share plus any
accumulated but unpaid dividends. Dividends on the VMTP Shares (which are
treated as interest payments for financial reporting purposes) are set
weekly.
The Fund uses leverage because its
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 the Funds overall performance.
Leverage may also cause the Fund to
incur certain costs. In the event that the Fund is unable to meet certain
criteria (including, but not limited to, maintaining certain ratings with Fitch
Ratings and Moodys Investors Service (Moodys), funding dividend payments or
funding redemptions), the Fund will pay additional fees with respect to the
leverage.
4. Credit and Market
Risk
The Fund concentrates its investments
in securities issued by municipalities, mainly in Minnesota, and may be subject
to geographic concentration risk. In addition, the Fund has the flexibility to
invest in issues in Puerto Rico, the Virgin Islands, and Guam whose bonds are
also free of individual state income taxes. The value of these investments may
be adversely affected by new legislation within the state, regional or local
economic conditions, and differing levels of supply and demand for municipal
bonds. Many municipalities insure repayment for their obligations. Although bond
insurance reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that 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 the Fund. At Dec. 31, 2013, 10.12%
of the Funds net assets were insured by bond insurers. These securities have
been identified in the schedule of investments.
The Fund invests a portion of its
assets in high yield fixed income securities, which are securities rated BB or
lower by Standard & Poors (S&P) and/or Ba or lower by Moodys, 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 Fund may invest in advanced
refunded bonds, escrow secured bonds or defeased bonds. Under current federal
tax laws and regulations, state and local government borrowers are permitted to
refinance outstanding bonds by issuing new bonds. The issuer refinances the
outstanding debt to either reduce interest costs or to remove or alter
restrictive covenants imposed by the bonds being refinanced. A refunding
transaction where the municipal securities are being refunded within 90 days
from the issuance of the refunding issue is known as a current refunding.
Advance refunded bonds are bonds in which the refunded bond issue remains
outstanding for more than 90 days following the issuance of the refunding issue.
In an advance refunding, the issuer will use the proceeds of a new bond issue to
purchase high grade interest bearing debt securities which are then deposited in
an irrevocable escrow account held by an escrow agent to secure all future
payments of principal and interest and bond premium of the advance refunded
bond. Bonds are escrowed to maturity when the proceeds of the refunding issue
are deposited in an escrow account for investment sufficient to pay all of the
principal and interest on the original interest payment and maturity
dates.
Bonds are considered pre-refunded
when the refunding issues proceeds are escrowed only until a permitted call
date or dates on the refunded issue with the refunded issue being redeemed at
the time, including any required premium. Bonds become defeased when the
rights and interests of the bondholders and of their lien on the pledged
revenues or other security under the terms of the bond contract and are
substituted with an alternative source of revenues (the escrow securities)
sufficient to meet payments of principal and interest to maturity or to the
first call dates. Escrowed secured bonds will often receive a rating of AAA from
Moodys, S&P, and/or Fitch Ratings due to the strong credit quality of the
escrow securities and the irrevocable nature of the escrow deposit
agreement.
Certain obligations held by the Fund
may have liquidity protection 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 through third parties, through various means of structuring the
transaction or through a combination of such approaches. The Fund will not pay
any additional fees for such credit support, although the existence of credit
support may increase the price of a security.
The Fund may invest up to 15% of its
net assets in illiquid securities, which may include securities with contractual
restrictions on resale, securities exempt from registration under Rule 144A of
the Securities Act of 1933, as amended, and other securities which may not be
readily marketable. The relative illiquidity of these securities may impair the
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 Funds Board
has delegated to Delaware Management Company, a series of Delaware Management
Business Trust, the day-to-day functions of determining whether individual
securities are liquid for purposes of the Funds limitation on investments in
illiquid securities. Securities eligible for resale pursuant to Rule 144A, which
are determined to be liquid, are not subject to the Funds 15% limit on
investments in illiquid securities. As of Dec. 31, 2013, there were no Rule 144A
securities and no securities have been determined to be illiquid under the
Funds Liquidity Procedures.
NQ-OVJ [12/13] 2/14 (12139) 7
5. Subsequent
Events
Management has determined that no
material events or transactions occurred subsequent to Dec. 31, 2013 that would
require recognition or disclosure in the Funds schedule of
investments.
8 NQ-OVJ [12/13] 2/14
(12139)
Item 2. Controls and Procedures.
The
registrants principal executive officer and principal financial officer have
evaluated the registrants disclosure controls and procedures within 90 days of
the filing of this report and have concluded that they are effective in
providing reasonable assurance that the information required to be disclosed by
the registrant in its reports or statements filed under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission.
There were no significant
changes in the registrants internal control over financial reporting that
occurred during the registrants last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the registrants
internal control over financial reporting.
Item 3. Exhibits.
File as exhibits as part
of this Form a separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2(a)), exactly as set forth below:
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