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 | |
| Registrant’s telephone number, including area code: | (800) 523-1918 |
| Date of fiscal year end: | March 31 |
| Date of reporting period: | December 31, 2015 |
Item 1. Schedule of Investments.
Schedule of investments
Delaware Investments® Minnesota
Municipal Income Fund II, Inc.
December
31, 2015 (Unaudited)
| Principal | Value | ||||
| Amount° | (U.S. $) | ||||
| Municipal Bonds – 142.16% | |||||
| Corporate-Backed Revenue Bonds – 6.54% | |||||
| Cloquet Pollution Control | |||||
| Revenue | |||||
| (Potlatch Project) 5.90% | |||||
| 10/1/26 | 5,500,000 | $ | 5,506,160 | ||
| Laurentian Energy Authority I | |||||
| Cogeneration Revenue | |||||
| Series A 5.00% 12/1/21 | 3,325,000 | 3,324,867 | |||
| St. Paul Port Authority | |||||
| Revenue | |||||
| (Gerdau St. Paul Steel Mill | |||||
| Project) Series 7 4.50% | |||||
| 10/1/37 (AMT) | 2,605,000 | 2,382,898 | |||
| 11,213,925 | |||||
| Education Revenue Bonds – 20.12% | |||||
| Baytown Township Lease | |||||
| Revenue | |||||
| (St. Croix Preparatory | |||||
| Academy) 5.75% 8/1/42 | 300,000 | 307,059 | |||
| Brooklyn Park Charter School | |||||
| Lease | |||||
| (Prairie Seeds Academy | |||||
| Project) | |||||
| Series A 5.00% 3/1/34 | 990,000 | 1,008,156 | |||
| Series A 5.00% 3/1/39 | 170,000 | 170,859 | |||
| Cologne Charter School Lease | |||||
| Revenue | |||||
| (Cologne Academy Project) | |||||
| Series A 5.00% 7/1/29 | 270,000 | 285,989 | |||
| Series A 5.00% 7/1/45 | 445,000 | 456,414 | |||
| Deephaven Charter School | |||||
| (Eagle Ridge Academy | |||||
| Project) | |||||
| Series A 5.25% 7/1/37 | 740,000 | 766,884 | |||
| Series A 5.25% 7/1/40 | 500,000 | 515,465 | |||
| Forest Lake Minnesota | |||||
| Charter School Revenue | |||||
| (Lake International | |||||
| Language Academy) | |||||
| 5.75% 8/1/44 | 705,000 | 761,033 | |||
| Hugo Charter School Lease | |||||
| Revenue | |||||
| (Noble Academy Project) | |||||
| Series A 5.00% 7/1/34 | 255,000 | 260,212 | |||
| Series A 5.00% 7/1/44 | 775,000 | 772,667 | |||
| Minneapolis Student Housing | |||||
| Revenue | |||||
| (Riverton Community | |||||
| Housing Project) | |||||
| 5.25% 8/1/39 | 205,000 | 210,404 | |||
| Minneapolis Student Housing | |||||
| Revenue | |||||
| 5.50% 8/1/49 | 990,000 | 1,022,432 | |||
| Minnesota Higher Education | |||||
| Facilities Authority Revenue | |||||
| (Carleton College) | |||||
| Series 6-T 5.00% 1/1/28 | 1,000,000 | 1,068,910 | |||
| Series D 5.00% 3/1/30 | 1,120,000 | 1,236,928 | |||
| (College of St. Benedict) | |||||
| Series 7-M 5.00% 3/1/31 | 300,000 | 325,530 | |||
| Series 7-M 5.125% | |||||
| 3/1/36 | 275,000 | 296,934 | |||
| (St. Catherine University) | |||||
| Series 7-Q 5.00% | |||||
| 10/1/32 | 700,000 | 765,681 | |||
| (St. Johns University) | |||||
| Series 8-I 5.00% 10/1/31 | 235,000 | 277,735 | |||
| Series 8-I 5.00% 10/1/34 | 35,000 | 40,910 | |||
| (St. Scholastic College) | |||||
| Series H 5.25% 12/1/35 | 1,000,000 | 1,081,770 | |||
| (University of St. Thomas) | |||||
| Series 6-X 5.00% 4/1/29 | 2,250,000 | 2,354,445 | |||
| Series 7-A 5.00% | |||||
| 10/1/39 | 1,000,000 | 1,111,570 | |||
| Series 7-U 5.00% 4/1/22 | 750,000 | 885,683 | |||
| Otsego Charter School | |||||
| (Kaleidoscope Charter | |||||
| School) | |||||
| Series A 5.00% 9/1/34 | 335,000 | 349,335 | |||
| Series A 5.00% 9/1/44 | 700,000 | 717,773 | |||
| Rice County Educational | |||||
| Facilities Revenue | |||||
| (Shattuck-St. Mary’s | |||||
| School) Series A 144A | |||||
| 5.00% 8/1/22 # | 1,250,000 | 1,301,113 | |||
| St. Paul Housing & | |||||
| Redevelopment Authority | |||||
| Charter School Lease | |||||
| Revenue | |||||
| (Academia Cesar Chavez | |||||
| School Project) Series A | |||||
| 5.25% 7/1/50 | 880,000 | 846,155 | |||
| (Nova Classical Academy) | |||||
| Series A 6.375% 9/1/31 | 750,000 | 852,697 | |||
| (Twin Cities Academy | |||||
| Project) Series A 5.30% | |||||
| 7/1/45 | 630,000 | 639,960 | |||
| University of Minnesota | |||||
| Series A 5.25% 12/1/28 | 500,000 | 589,300 | |||
(continues) NQ- OVJ [12/15] 2/16 (16087) 1
Schedule of investments
Delaware Investments® Minnesota Municipal Income Fund II, Inc. (Unaudited)
| Principal | Value | |||||
| Amount° | (U.S. $) | |||||
| Municipal Bonds (continued) | ||||||
| Education Revenue Bonds (continued) | ||||||
| University of Minnesota | ||||||
| Series A 5.25% 4/1/29 | 1,000,000 | $ | 1,115,490 | |||
| Series C 5.00% 12/1/19 | 1,290,000 | 1,459,699 | ||||
| Series D 5.00% 12/1/27 | 1,110,000 | 1,295,259 | ||||
| Series D 5.00% 12/1/28 | 1,880,000 | 2,185,782 | ||||
| Series D 5.00% 12/1/29 | 2,265,000 | 2,627,604 | ||||
| Series D 5.00% 12/1/31 | 1,000,000 | 1,153,920 | ||||
| Series D 5.00% 12/1/36 | 3,000,000 | 3,415,350 | ||||
| 34,533,107 | ||||||
| Electric Revenue Bonds – 10.09% | ||||||
| Central Minnesota Municipal | ||||||
| Power Agency Revenue | ||||||
| (Brookings Southeast Twin | ||||||
| Cities Transportation) | ||||||
| 5.00% 1/1/32 | 1,130,000 | 1,266,425 | ||||
| (Brookings Twin Cities | ||||||
| Transmission Project) | ||||||
| 5.00% 1/1/42 | 1,000,000 | 1,103,880 | ||||
| Chaska Electric Revenue | ||||||
| Series A 5.00% 10/1/28 | 445,000 | 535,695 | ||||
| Minnesota Municipal Power | ||||||
| Agency Electric Revenue | ||||||
| 5.00% 10/1/25 | 500,000 | 607,200 | ||||
| 5.00% 10/1/26 | 500,000 | 601,375 | ||||
| 5.00% 10/1/27 | 320,000 | 382,304 | ||||
| Northern Municipal Power | ||||||
| Agency | ||||||
| Series A 5.00% 1/1/26 | 100,000 | 117,083 | ||||
| Series A 5.00% 1/1/30 | 340,000 | 389,807 | ||||
| Rochester Electric Utility | ||||||
| Revenue | ||||||
| Series B 5.00% 12/1/30 | 1,300,000 | 1,534,221 | ||||
| Series B 5.00% 12/1/43 | 1,000,000 | 1,144,530 | ||||
| Western Minnesota Municipal | ||||||
| Power Agency Supply | ||||||
| Revenue | ||||||
| Series A 5.00% 1/1/25 | 3,000,000 | 3,574,380 | ||||
| Series A 5.00% 1/1/26 | 1,000,000 | 1,184,300 | ||||
| Series A 5.00% 1/1/33 | 1,000,000 | 1,167,620 | ||||
| Series A 5.00% 1/1/40 | 750,000 | 858,277 | ||||
| Series A 5.00% 1/1/46 | 2,500,000 | 2,847,550 | ||||
| 17,314,647 | ||||||
| Healthcare Revenue Bonds – 33.32% | ||||||
| Anoka Health Care Facilities | ||||||
| Revenue | ||||||
| 5.375% 11/1/34 | 610,000 | 643,166 | ||||
| Anoka Health Care Facilities | ||||||
| Revenue | ||||||
| (Homestead Anoka Project) | ||||||
| Series A 7.00% 11/1/46 | 1,200,000 | 1,287,180 | ||||
| Center City Health Care | ||||||
| Facilities Revenue | ||||||
| (Hazelden Betty Ford | ||||||
| Foundation Project) | ||||||
| 5.00% 11/1/27 | 500,000 | 589,535 | ||||
| 5.00% 11/1/29 | 300,000 | 349,917 | ||||
| (Hazelden Foundation | ||||||
| Project) | ||||||
| 4.75% 11/1/31 | 850,000 | 893,537 | ||||
| 5.00% 11/1/41 | 1,600,000 | 1,701,568 | ||||
| Cloquet Housing Facilities | ||||||
| Revenue | ||||||
| (HADC Cloquet Project) | ||||||
| Series A 5.00% 8/1/48 | 500,000 | 503,870 | ||||
| Deephaven Housing & | ||||||
| Healthcare Revenue | ||||||
| (St. Therese Senior Living | ||||||
| Project) | ||||||
| Series A 5.00% 4/1/38 | 280,000 | 286,300 | ||||
| Series A 5.00% 4/1/40 | 270,000 | 275,740 | ||||
| Duluth Economic | ||||||
| Development Authority | ||||||
| (St. Luke’s Hospital | ||||||
| Authority Obligation | ||||||
| Group) | ||||||
| 5.75% 6/15/32 | 1,400,000 | 1,552,852 | ||||
| 6.00% 6/15/39 | 1,000,000 | 1,113,980 | ||||
| Fergus Falls Health Care | ||||||
| Facilities Revenue | ||||||
| (Lake Region Healthcare) | ||||||
| 5.00% 8/1/30 | 1,000,000 | 1,022,100 | ||||
| Hayward | ||||||
| (American Baptist Homes | ||||||
| Midwest) 5.75% 2/1/44 | 500,000 | 522,870 | ||||
| Hayward Health Care | ||||||
| Facilities Revenue | ||||||
| (St. John’s Lutheran Home | ||||||
| of Albert Lea) | ||||||
| 5.375% 10/1/44 | 680,000 | 692,172 | ||||
| Maple Grove Health Care | ||||||
| Facilities Revenue | ||||||
| (North Memorial Health | ||||||
| Care) 5.00% 9/1/30 | 865,000 | 989,292 | ||||
2 NQ- OVJ [12/15] 2/16 (16087)
(Unaudited)
| Principal | Value | |||||
| Amount° | (U.S. $) | |||||
| Healthcare Revenue Bonds (continued) | ||||||
| Maple Grove Health Care | ||||||
| System Revenue | ||||||
| (Maple Grove Hospital) | ||||||
| 5.25% 5/1/37 | 1,100,000 | $ | 1,142,042 | |||
| Minneapolis Health Care | ||||||
| System Revenue | ||||||
| (Fairview Health Services) | ||||||
| Series A 5.00% 11/15/33 | 500,000 | 575,880 | ||||
| Series A 5.00% 11/15/34 | 500,000 | 572,235 | ||||
| Series B 6.50% 11/15/38 | ||||||
| (AGC) | 1,940,000 | 2,197,147 | ||||
| Minneapolis Senior Housing & | ||||||
| Healthcare Revenue | ||||||
| (Ecumen Mill City Quarter) | ||||||
| 5.00% 11/1/35 | 220,000 | 222,950 | ||||
| 5.25% 11/1/45 | 850,000 | 866,252 | ||||
| 5.375% 11/1/50 | 200,000 | 202,522 | ||||
| Minneapolis – St. Paul | ||||||
| Housing & Redevelopment | ||||||
| Authority Health Care | ||||||
| Revenue | ||||||
| (Children’s Health Care | ||||||
| Facilities) Series A1 5.00% | ||||||
| 8/15/34 (AGM) | 500,000 | 554,925 | ||||
| Rochester Health Care & | ||||||
| Housing Revenue | ||||||
| (Samaritan Bethany) | ||||||
| Series A 7.375% 12/1/41 | 1,220,000 | 1,357,799 | ||||
| (The Homestead at | ||||||
| Rochester Project) Series A | ||||||
| 6.875% 12/1/48 | 1,220,000 | 1,381,626 | ||||
| Rochester Health Care | ||||||
| Facilities Revenue | ||||||
| (Mayo Clinic) | ||||||
| 4.00% 11/15/41 | 4,860,000 | 5,068,105 | ||||
| Series C 4.50% | ||||||
| 11/15/38 ● | 1,750,000 | 2,024,330 | ||||
| Sartell Health Care Facilities | ||||||
| Revenue | ||||||
| (Country Manor Campus | ||||||
| Project) | ||||||
| 5.25% 9/1/30 | 1,000,000 | 1,059,550 | ||||
| Series A 5.30% 9/1/37 | 600,000 | 632,706 | ||||
| Shakopee Health Care | ||||||
| Facilities Revenue | ||||||
| (St. Francis Regional | ||||||
| Medical Center) | ||||||
| 4.00% 9/1/31 | 205,000 | 215,812 | ||||
| 5.00% 9/1/34 | 165,000 | 186,849 | ||||
| St. Cloud Health Care | ||||||
| Revenue | ||||||
| (Centracare Health System | ||||||
| Project) | ||||||
| 5.50% 5/1/39 (AGC) | 1,500,000 | 1,635,975 | ||||
| Series A 5.125% 5/1/30 | 5,175,000 | 5,854,426 | ||||
| Series B 5.00% 5/1/24 | 1,400,000 | 1,687,294 | ||||
| St. Paul Housing & | ||||||
| Redevelopment Authority | ||||||
| Health Care Facilities | ||||||
| Revenue | ||||||
| (Allina Health System) | ||||||
| Series A-1 5.25% | ||||||
| 11/15/29 | 1,395,000 | 1,568,845 | ||||
| (Health Partners Obligation | ||||||
| Group Project) | ||||||
| 5.00% 7/1/29 | 2,000,000 | 2,347,480 | ||||
| 5.00% 7/1/32 | 600,000 | 693,456 | ||||
| St. Paul Housing & | ||||||
| Redevelopment Authority | ||||||
| Hospital Facility | ||||||
| (Healtheast Care System | ||||||
| Project) | ||||||
| Series A 5.00% 11/15/29 | 395,000 | 454,945 | ||||
| Series A 5.00% 11/15/30 | 290,000 | 332,952 | ||||
| St. Paul Housing & | ||||||
| Redevelopment Authority | ||||||
| Housing & Health Care | ||||||
| Facilities Revenue | ||||||
| (Senior Carondelet Village | ||||||
| Project) Series A 6.00% | ||||||
| 8/1/42 | 770,000 | 799,375 | ||||
| (Senior Episcopal Homes | ||||||
| Project) | ||||||
| 5.125% 5/1/48 | 1,200,000 | 1,246,464 | ||||
| Series A 4.75% 11/1/31 | 740,000 | 756,295 | ||||
| Washington County Housing | ||||||
| & Redevelopment Authority | ||||||
| Revenue | ||||||
| (Birchwood & Woodbury | ||||||
| Projects) Series A 5.625% | ||||||
| 6/1/37 | 1,500,000 | 1,564,815 | ||||
| Wayzata Senior Housing | ||||||
| Revenue | ||||||
| (Folkestone Senior Living | ||||||
| Community) | ||||||
| Series A 5.50% 11/1/32 | 420,000 | 455,339 | ||||
| Series A 5.75% 11/1/39 | 945,000 | 1,019,570 | ||||
| Series A 6.00% 5/1/47 | 1,475,000 | 1,600,493 | ||||
(continues) NQ- OVJ [12/15] 2/16 (16087) 3
Schedule of investments
Delaware Investments® Minnesota Municipal Income Fund II, Inc. (Unaudited)
| Principal | Value | |||||
| Amount° | (U.S. $) | |||||
| Municipal Bonds (continued) | ||||||
| Healthcare Revenue Bonds (continued) | ||||||
| Winona Health Care Facilities | ||||||
| Revenue | ||||||
| (Winona Health Obligation) | ||||||
| 4.65% 7/1/26 | 465,000 | $ | 496,346 | |||
| 4.75% 7/1/27 | 785,000 | 837,760 | ||||
| 5.00% 7/1/23 | 1,010,000 | 1,047,562 | ||||
| 5.00% 7/1/34 | 750,000 | 805,650 | ||||
| Woodbury Housing & | ||||||
| Redevelopment Authority | ||||||
| Revenue | ||||||
| (St. Therese of Woodbury) | ||||||
| 5.125% 12/1/44 | 1,250,000 | 1,289,887 | ||||
| 57,179,738 | ||||||
| Housing Revenue Bonds – 4.68% | ||||||
| Minneapolis Multifamily | ||||||
| Housing Revenue | ||||||
| (Olson Townhomes Project) | ||||||
| 6.00% 12/1/19 (AMT) | 410,000 | 410,262 | ||||
| (Seward Towers Project) | ||||||
| 5.00% 5/20/36 (GNMA) | 1,885,000 | 1,891,315 | ||||
| Minnesota Housing Finance | ||||||
| Agency | ||||||
| (Non Ace - State | ||||||
| Appropriated Housing) | ||||||
| 5.00% 8/1/33 | 1,390,000 | 1,611,510 | ||||
| Minnesota State Housing | ||||||
| Finance Agency | ||||||
| (Residential Housing) | ||||||
| Series D 4.75% 7/1/32 | ||||||
| (AMT) ● | 695,000 | 698,871 | ||||
| Series I 5.15% 7/1/38 | ||||||
| (AMT) | 500,000 | 500,405 | ||||
| Series L 5.10% 7/1/38 | ||||||
| (AMT) | 1,060,000 | 1,080,193 | ||||
| Minnesota State Housing | ||||||
| Finance Agency | ||||||
| Homeownership | ||||||
| (Mortgage-Backed | ||||||
| Securities Program) 4.40% | ||||||
| 7/1/32 (GNMA) (FNMA) | 1,180,000 | 1,265,279 | ||||
| Northwest Multi-County | ||||||
| Housing & Redevelopment | ||||||
| Authority | ||||||
| (Pooled Housing Program) | ||||||
| 5.50% 7/1/45 | 560,000 | 563,758 | ||||
| 8,021,593 | ||||||
| Lease Revenue Bonds – 15.05% | ||||||
| Minnesota State General | ||||||
| Fund Revenue | ||||||
| Appropriations | ||||||
| Series A 5.00% 6/1/32 | 780,000 | 906,664 | ||||
| Series A 5.00% 6/1/38 | 5,500,000 | 6,301,185 | ||||
| Series A 5.00% 6/1/43 | 1,750,000 | 1,979,897 | ||||
| Series B 4.00% 3/1/26 | 3,000,000 | 3,296,490 | ||||
| Series B 5.00% 3/1/21 | 1,500,000 | 1,767,600 | ||||
| Series B 5.00% 3/1/29 | 3,525,000 | 4,108,141 | ||||
| University of Minnesota | ||||||
| Special Purpose Revenue | ||||||
| (State Supported Biomed | ||||||
| Science Research) | ||||||
| 5.00% 8/1/35 | 1,040,000 | 1,175,450 | ||||
| 5.00% 8/1/36 | 4,000,000 | 4,641,800 | ||||
| Virginia Housing & | ||||||
| Redevelopment Authority | ||||||
| Health Care Facility Lease | ||||||
| Revenue | ||||||
| 5.25% 10/1/25 | 680,000 | 681,340 | ||||
| 5.375% 10/1/30 | 965,000 | 966,727 | ||||
| 25,825,294 | ||||||
| Local General Obligation Bonds – 6.95% | ||||||
| Hopkins Independent School | ||||||
| District No. 270 | ||||||
| Series A 5.00% 2/1/28 | 1,000,000 | 1,152,220 | ||||
| Mahtomedi Independent | ||||||
| School District No 832 | ||||||
| (School Building) Series A | ||||||
| 5.00% 2/1/28 | 515,000 | 630,035 | ||||
4 NQ- OVJ [12/15] 2/16 (16087)
(Unaudited)
| Principal | Value | |||||
| Amount° | (U.S. $) | |||||
| Municipal Bonds (continued) | ||||||
| Local General Obligation Bonds (continued) | ||||||
| Rocori Independent School | ||||||
| District No. 750 | ||||||
| (School Building) | ||||||
| Series B 5.00% 2/1/22 | 1,010,000 | $ | 1,115,202 | |||
| Series B 5.00% 2/1/24 | 1,075,000 | 1,185,327 | ||||
| Series B 5.00% 2/1/25 | 1,115,000 | 1,227,559 | ||||
| Series B 5.00% 2/1/26 | 1,155,000 | 1,271,597 | ||||
| St. Paul Independent School | ||||||
| District No. 625 | ||||||
| (School Building) | ||||||
| Series B 5.00% 2/1/22 | 1,300,000 | 1,563,770 | ||||
| Series B 5.00% 2/1/26 | 1,000,000 | 1,187,990 | ||||
| Willmar | ||||||
| (Rice Memorial Hospital | ||||||
| Project) Series A 4.00% | ||||||
| 2/1/32 | 2,440,000 | 2,589,670 | ||||
| 11,923,370 | ||||||
| Pre-Refunded/Escrowed to Maturity Bonds – 18.97% | ||||||
| Dakota-Washington Counties | ||||||
| Housing & Redevelopment | ||||||
| Authority Single Family | ||||||
| Residential Mortgage | ||||||
| Revenue | ||||||
| (City of Bloomington) | ||||||
| Series B 8.375% 9/1/21 | ||||||
| (GNMA) (AMT) | 7,055,000 | 9,498,358 | ||||
| Deephaven Charter School | ||||||
| (Eagle Ridge Academy | ||||||
| Project) Series A 5.50% | ||||||
| 7/1/43-23 § | 500,000 | 616,235 | ||||
| Minneapolis Health Care | ||||||
| System Revenue | ||||||
| (Fairview Health Services) | ||||||
| Series A 6.375% | ||||||
| 11/15/23-18 § | 1,105,000 | 1,270,021 | ||||
| Series A 6.625% | ||||||
| 11/15/28-18 § | 1,150,000 | 1,329,849 | ||||
| Series B 6.50% | ||||||
| 11/15/38-18 (AGC) § | 355,000 | 409,265 | ||||
| Minneapolis Revenue | ||||||
| (National Marrow Donor | ||||||
| Program Project) | ||||||
| Series NMDP 4.875% | ||||||
| 8/1/25-18 § | 1,000,000 | 1,098,430 | ||||
| Southern Minnesota | ||||||
| Municipal Power Agency | ||||||
| Revenue | ||||||
| Series A 5.75% 1/1/18 | 2,120,000 | 2,155,828 | ||||
| Southern Minnesota | ||||||
| Municipal Power Agency | ||||||
| Supply Revenue | ||||||
| Series A 5.25% | ||||||
| 1/1/30-19 § | 1,030,000 | 1,156,937 | ||||
| St. Louis Park Health Care | ||||||
| Facilities Revenue | ||||||
| (Park Nicollet Health | ||||||
| Services) | ||||||
| 5.75% 7/1/39-19 § | 3,565,000 | 4,129,304 | ||||
| Series C 5.50% | ||||||
| 7/1/23-18 § | 1,000,000 | 1,111,750 | ||||
| St. Paul Housing & | ||||||
| Redevelopment Authority | ||||||
| Health Care Facilities | ||||||
| Revenue | ||||||
| (Health Partners Obligation | ||||||
| Group Project) 5.25% | ||||||
| 5/15/36-16 § | 2,000,000 | 2,083,600 | ||||
| University of Minnesota | ||||||
| Series A 5.50% 7/1/21 | 4,000,000 | 4,717,680 | ||||
| Series A 5.75% 7/1/18 | 1,750,000 | 1,957,270 | ||||
| University of Minnesota | ||||||
| Hospital & Clinics | ||||||
| 6.75% 12/1/16 | 970,000 | 1,025,309 | ||||
| 32,559,836 | ||||||
| Special Tax Revenue Bonds – 5.57% | ||||||
| Guam Government Business | ||||||
| Privilege Tax Revenue | ||||||
| Series A 5.25% 1/1/36 | 150,000 | 166,926 | ||||
| Hennepin County Sales Tax | ||||||
| Revenue | ||||||
| (Second Lien-Ballpark | ||||||
| Project) Series B 4.75% | ||||||
| 12/15/27 | 1,905,000 | 2,029,568 | ||||
| Minneapolis Community | ||||||
| Planning & Economic | ||||||
| Development Department | ||||||
| (Limited Tax Supported | ||||||
| Common Bond Fund) | ||||||
| 6.25% 12/1/30 | 1,000,000 | 1,193,900 | ||||
| Series 1 5.50% 12/1/24 | ||||||
| (AMT) | 920,000 | 937,416 | ||||
| Minnesota Public Safety Radio | ||||||
| 5.00% 6/1/23 | 2,845,000 | 3,210,184 | ||||
| St. Paul Port Authority | ||||||
| (Brownfields | ||||||
| Redevelopment Tax) | ||||||
| Series 2 5.00% 3/1/37 | 895,000 | 932,662 | ||||
(continues) NQ- OVJ [12/15] 2/16 (16087) 5
Schedule of investments
Delaware Investments® Minnesota Municipal Income Fund II, Inc. (Unaudited)
| Principal | Value | ||||||
| Amount° | (U.S. $) | ||||||
| Municipal Bonds (continued) | |||||||
| Special Tax Revenue Bonds (continued) | |||||||
| St. Paul Sales Tax Revenue | |||||||
| Series G 5.00% 11/1/30 | 935,000 | $ | 1,095,212 | ||||
| 9,565,868 | |||||||
| State General Obligation Bonds – 14.82% | |||||||
| Minnesota State | |||||||
| (State Trunk Highway) | |||||||
| Series B 5.00% 10/1/22 | 5,500,000 | 6,645,045 | |||||
| Series B 5.00% 10/1/29 | 3,315,000 | 3,913,258 | |||||
| (State Various Purpose) | |||||||
| Series D 5.00% 8/1/24 | 2,700,000 | 3,131,109 | |||||
| (Various Purposes) Series F | |||||||
| 5.00% 10/1/22 | 5,000,000 | 6,105,850 | |||||
| State of Minnesota | |||||||
| SER A 5.00% 8/1/24 | 4,500,000 | 5,638,725 | |||||
| 25,433,987 | |||||||
| Transportation Revenue Bonds – 4.47% | |||||||
| Minneapolis – St. Paul | |||||||
| Metropolitan Airports | |||||||
| Commission Revenue | |||||||
| 5.00% 1/1/21 | 2,600,000 | 3,043,612 | |||||
| 5.00% 1/1/22 | 670,000 | 778,694 | |||||
| Subordinate | |||||||
| Series B 5.00% 1/1/26 | 540,000 | 627,518 | |||||
| Series B 5.00% 1/1/26 | |||||||
| (AMT) | 500,000 | 581,855 | |||||
| Series B 5.00% 1/1/27 | 1,190,000 | 1,372,713 | |||||
| Series B 5.00% 1/1/30 | 500,000 | 569,545 | |||||
| Series B 5.00% 1/1/31 | 250,000 | 284,325 | |||||
| St. Paul Port Authority | |||||||
| Revenue | |||||||
| (Amherst H. Wilder | |||||||
| Foundation) Series 3 | |||||||
| 5.00% 12/1/36 | 380,000 | 410,161 | |||||
| 7,668,423 | |||||||
| Water & Sewer Revenue Bonds – 1.58% | |||||||
| Metropolitan Council Waste | |||||||
| Water Revenue | |||||||
| Series B 4.00% 9/1/27 | 1,145,000 | 1,272,118 | |||||
| St. Paul Sewer Revenue | |||||||
| Series D 5.00% 12/1/21 | 1,325,000 | 1,445,549 | |||||
| 2,717,667 | |||||||
| Total Municipal Bonds | |||||||
| (cost $230,269,618) | 243,957,455 | ||||||
| Total Value of | |||||||
| Securities – 142.16% | |||||||
| (cost $230,269,618) | 243,957,455 | ||||||
| Liquidation Value of | |||||||
| Preferred | |||||||
| Stock – (43.70%) | (75,000,000 | ) | |||||
| Receivables and Other | |||||||
| Assets Net of | |||||||
| Liabilities – 1.54% | 2,651,289 | ||||||
| Net Assets Applicable to | |||||||
| 11,504,975 Shares | |||||||
| Outstanding – 100.00% | $ | 171,608,744 | |||||
| # |
Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Dec. 31, 2015, the aggregate value of Rule 144A securities was $1,301,113, which represents 0.76% of the Fund’s net assets. |
| ° |
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, 2015. 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. |
Summary of
abbreviations:
AGM - Insured by Assured
Guaranty Municipal Corporation
AMT - Subject to Alternative Minimum
Tax
AGC - Insured by Assured Guaranty Corporation
FNMA - Federal National Mortgage Association Collateral
GNMA -
Government National Mortgage Association Collateral
6 NQ- OVJ [12/15] 2/16 (16087)
Notes
Delaware Investments®
Minnesota Municipal Income Fund II,
Inc.
December 31, 2015 (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 Fund’s 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 Fund’s Board of Directors/Trustees (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.
2. Investments
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 entity’s 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 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.
| Level 1 – |
Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, exchange-traded options contracts) |
| Level 2 – |
Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) |
| Level 3 – |
Significant unobservable inputs, including the Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities, fair valued securities) |
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of Dec. 31, 2015:
| Securities | Level 2 | ||
| Municipal Bonds | $ | 243,957,455 | |
During the period ended Dec. 31, 2015, there were no transfers between Level 1 investments, Level 2 investments, or Level 3 investments that had a material impact to the Fund. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
(continues) NQ- OVJ [12/15] 2/16 (16087) 7
Notes
December 31, 2015 (Unaudited)
3. Subsequent Events
On January 22, 2016, Delaware Investments Minnesota Municipal Income Fund II, (the “Fund”) successfully issued $75,000,000 of Variable Rate MuniFund Term Preferred (“VMTP”) shares with a $100,000 liquidation value per share in a privately negotiated offering. The net proceeds from each offering were used to redeem the Series 2016 VMTP shares previously outstanding. 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 their VMTP shares on February 1, 2021, unless earlier redeemed or repurchased by a Fund. VMTP shares are subject to optional and mandatory redemption in certain circumstances. A Fund may be obligated to redeem certain of the VMTP shares if the Fund fails to maintain certain asset coverage and leverage ratio requirements and such failures are not cured by the applicable cure date. The redemption price per share is equal to the sum of the liquidation value per share plus any accumulated but unpaid dividends. Dividends on the VMTP shares are set weekly, subject to adjustments in certain circumstances.
The Fund uses leverage because tits manager believes 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 Fund to incur certain costs. In the event that a Fund is unable to meet certain criteria (including, but not limited to, maintaining certain ratings with Fitch Ratings and Moody’s Investors Service, funding dividend payments, or funding redemptions), that Fund will pay additional fees with respect to the leverage.
For financial reporting purposes, the VMTP shares are considered debt of the issuer; therefore, the liquidation value which approximates fair value of the VMTP share is recorded as a liability in the statements of assets and liabilities. Dividends accrued and paid on the VMTP shares are included as a component of interest expense in the statements of operations. The VMTP shares are treated as equity for legal and tax purposes. Dividends paid to holders of the VMTP shares are generally classified as tax-exempt income for tax-reporting purposes.
Management has determined that no additional material events or transactions occurred subsequent to Dec. 31, 2015 that would require recognition or disclosure in the Fund’s “Schedule of investments.”
8 NQ- OVJ [12/15] 2/16 (16087)
Item 2. Controls and Procedures.
The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s 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: