Edgar Filing: Delaware Investments Colorado Municipal Income Fund, Inc.

delcolorado_ncsr.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number: 811-07810

Exact name of registrant as specified in charter:
Delaware Investments® Colorado Municipal Income Fund, 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: March 31, 2010

Item 1. Reports to Stockholders



Annual Report

Delaware Investments Closed-End Municipal Bond Funds	March 31, 2010






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





	Closed-end funds

Table of contents

	> Portfolio management review		1

	> Fund basics		4

	> Sector/State allocations		5

	> Statements of net assets		8

	> Statements of operations		21

	> Statements of changes in net assets		22

	> Financial highlights		23

	> Notes to financial statements		27

	> Report of independent registered public accounting firm		34

	> Other Fund information		35

	> Board of trustees/directors and officers addendum		43

	> About the organization		46

On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. For more information, including press releases, please visit www.delawareinvestments.com.

Unless otherwise noted, views expressed herein are current as of March 31, 2010 and are subject to change. Holdings are as of the date indicated and subject to change.

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

Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.

Investments in Delaware Investments Closed-End Municipal Bond Funds are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Funds, the repayment of capital from the Funds, or any particular rate of return.

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

Portfolio management review

Delaware Investments Closed-End Municipal Bond Funds
April 6, 2010

Delaware Investments Closed-End Municipal Bond Funds

The 12-month fiscal period ended March 31, 2010, was a favorable one for the Funds and for investors in tax-exempt debt in general. The strong conditions came after two very challenging years for the municipal bond market.

National economic environment

On the heels of a historically difficult prior fiscal period, the stage was set for a strong “snapback” recovery. Such a recovery came to fruition for the municipal market (as well as the broader fixed income and equity markets) early during the fiscal period. In our view, this recovery was the defining element of the period. For example, investors’ extreme risk aversion eased within weeks of the start of the period — slowly at first, and more quickly as the year progressed. The series of aggressive actions taken by the federal government as well as the Federal Reserve helped to usher in the improved conditions. In December 2008, for example, the Fed cut its target federal funds rate to a range of 0–0.25%, an all-time low. The Fed kept that policy in place throughout the Funds’ fiscal year. For its part, the federal government passed the Troubled Asset Relief Program (TARP) — a $700 billion package designed to shore up financial institutions — in October 2008. The passage and implementation of the American Recovery and Reinvestment Act of 2009, a $787 billion economic stimulus package, in February 2009 also helped to ease economic distress during the Funds’ fiscal year.

By the second quarter of 2009, the worst economic and market conditions appeared to have passed, with the U.S. economy declining by an annual rate of just 0.7%. In the third quarter, gross domestic product turned to growth and expanded at an annualized 2.2% pace, while fourth-quarter growth was estimated at an annual rate of 5.9% — the best result in six years. Despite these favorable signs, joblessness remained historically high. In January 2010, the national unemployment rate stood at 9.7%; this figure was below the October 2009 peak of 10.1%, but well above the 8.2% at the start of the fiscal period. (Data for economic growth: Bureau of Economic Analysis; Employment data: Bloomberg.)

Municipal market trends

Early in the reporting period, municipal bond investors remained highly cautious. They tended to favor higher-rated securities, as these securities face limited credit risk, and shorter-maturity securities, as these bonds are typically subject to diminished interest rate risk. But as the evidence of an improving economy mounted early during the fiscal period, investors began to turn toward bonds offering the prospect of higher returns, albeit with greater risk. The rally gathered momentum in subsequent months thanks in part to a favorable technical environment that generally grew stronger throughout the annual period. The technical developments can be summarized in a few main points:

Demand for municipal bonds was robust. The $80 billion in net inflows into tax-exempt bond mutual funds in calendar year 2009 more than doubled the previous record. (Source: Barclays Capital.)
Although bond issuance approached a new record as well, supply of tax-exempt debt was limited by the introduction of Build America Bonds, or BABs. These bonds represent a relatively new category of taxable debt, with federally subsidized income payments. While they provided municipal issuers with an attractive alternative to traditional tax-exempt bonds, the surge in issuance of BABs continued diverting supply away from the tax-exempt market.
Within this environment, the 2-to-30-year yield curve flattened during the year. Yields at the short end remained anchored by the fed funds rate. Yet, driven by this combination of strong demand and constrained municipal supply, yields on longer-maturity bonds declined during the period. (It is important to remember that bond yields move in the opposite direction of bond prices.)

Medium- and lower-rated municipal bonds significantly outperformed their higher-rated counterparts during the Funds’ fiscal year. Credit spreads, often viewed as a way to determine a security or asset class’s perceived level of risk, narrowed from historically high levels at the start of the fiscal period. For example, municipal bond spreads (on Baa-rated bonds) declined from 2.39 percentage points above “prime-rated” Aaa securities at the start of the period to

(continues) 1

Portfolio management review

Delaware Investments Closed-End Municipal Bond Funds

1.43 percentage points at the end of the fiscal period. Such a decline represented investors’ increased willingness to accept “risky” securities during the fiscal period. (Source: Bloomberg.)

Similar trends occurred when viewing the municipal market on a sector-by-sector basis. Namely, credits within traditionally higher-risk sectors, such as industrial development revenue (IDR), hospital, and housing bonds significantly outperformed lower-risk areas like pre-refunded bonds. (Source: Barclays Capital.) Pre-refunded bonds are found on the short end of the yield curve and have historically faced little, if any, credit risk because they are backed by the invested debt proceeds of a second bond issue, typically U.S. Treasury securities.

Fund positioning

At the beginning of the fiscal year, the Funds were allocated relatively defensively, with an emphasis on higher-rated, shorter-maturity bonds. A significant portion of the Funds’ holdings (approximately 30% across each Fund) was invested in pre-refunded securities, which, as noted above, tend to be among the least risky bonds in the municipal marketplace.

As risk tolerance re-emerged during the course of the year, we saw what we felt was an unusually attractive opportunity to gradually and methodically tilt the Funds’ portfolios toward a slightly more aggressive stance. Especially during the second and third calendar quarters of 2009, a number of new, lower-rated investment grade issues came to market that offered much-higher-than-usual levels of income at what we believed were still very attractive prices. This provided us with a dual opportunity to trade out of some of the Funds’ more defensive holdings (many of which were scheduled to mature in the coming years) for more-aggressively positioned bonds that we felt offered attractive yields and good long-term value potential for our shareholders.

More specifically, many of our new purchases across each of the Funds involved medium- and lower-medium-grade A-rated and BBB-rated issues in the healthcare, education, and transportation sectors. Additionally, we sold some of the Funds’ shorter-maturity bonds — especially those with maturities of five years or less — and replaced them with 30-year and longer bonds.

By the final quarter of 2009 and in early 2010, we had essentially completed our repositioning and began to note relatively fewer value opportunities available in the marketplace. We had sold a significant portion of our exposure to high-quality, short-maturity debt — the pre-refunded bond allocation across our closed-end funds, for example, fell to roughly 10% from 30% at the start of the fiscal year — and remained more aggressively positioned at period end.

Performance effects

Our decision to move the Funds toward a more aggressive stance proved a fruitful one when comparing each Fund’s Performance to that of its benchmark index. The types of holdings we emphasized during much of the year experienced strong returns relative to the broader municipal market.

Our best individual performers during the fiscal period largely fit the profile of the types of securities that tended to outperform during the period. Namely, they were mid- to low-investment-grade securities with long (20-plus years) maturities.

For example, a Pima County, Ariz., industrial development revenue (IDR) bond issued for the Tucson Country Day School was a top performer within Delaware Investments Arizona Municipal Income Fund, Inc. This bond was unrated by Moody’s and rated BBB- (lower medium grade) by Standard & Poor’s, and is due to mature in 2037. IDR bonds were among the top performers within Delaware Investments Colorado Municipal Income Fund, Inc. and Delaware Investments Minnesota Municipal Income Fund II, Inc. Within the Colorado Fund IDR bonds issued for the Colorado Convention Center in Denver rated Baa3/ BBB- by Moody’s and S&P, respectively, which mature in 2035, added to returns. Within the Minnesota Fund, IDR bonds issued for International Paper boosted the Fund’s return. These bonds are rated Baa3/BBB and mature in 2027.

The strongest performer within Delaware Investments National Municipal Income Fund came from a different sector — student housing — though it shared similar rating and maturity profiles with those of the aforementioned bonds. These bonds were issued by the Maryland State Economic Development Corporation for the University of Maryland College Park. The bonds are due to mature in 2033 and are rated Baa2 by Moody’s (unrated by S&P).

The Funds’ weakest individual performers relative to the index tended to be higher-rated, shorter-maturity bonds. For example, three of the Funds’ worst-performing bonds during the year were pre-refunded bonds. Within Delaware Investments Arizona Municipal Income Fund, Inc., pre-refunded bonds issued by the Commonwealth of Puerto Rico (which are exempt from federal, state, and local income taxes in all 50 states) detracted from returns, whereas pre-refunded bonds issued by the Colorado Educational and Cultural Facilities Authority to benefit student housing at the University of Colorado detracted from returns within Delaware Investments Colorado Municipal Income Fund, Inc.

Within Delaware Investments Minnesota Municipal Income Fund II, Inc, pre-refunded bonds issued by the Minneapolis Community Development Agency weakened the Fund’s return. Within Delaware Investments National Municipal Income Fund, a Virginia state general obligation bond notably hurt the Fund’s return. Unlike the weaker performers mentioned above, this bond was not pre-refunded; instead, it was largely punished by investors for its high credit quality (rated Aaa/AAA by Moody’s and S&P, respectively) during a period when lower-rated, higher-risk securities were most in demand.

Economic environments by state

Arizona

The Arizona economy has slowed significantly due to the housing crisis, with employment figures down significantly from their peak in 2007.

Arizona ended fiscal 2009 with a general fund balance of negative $455.9 million, down from a positive $237.3 million in fiscal 2008. Its budget stabilization fund is fully depleted. Additionally, the state is dealing with limited financial flexibility as a result of voter mandates and constitutional constraints. For example, 73% of the state’s General Fund Budget is protected from reductions due to either the federal stimulus or voter constraints. (Sources: Bureau of Labor Statistics, azcentral.com, Arizona 2008 and 2009 Comprehensive Annual Financial Report, and Moody’s.)

Colorado

As of February 2010 (latest data available), unemployment in Colorado was 7.7%, well below the national rate of 9.7%. The state’s economy is diverse, with below-average employment concentration in manufacturing and a variety of service-sector strengths. Its economic outlook is favorable, reflecting a growing population and work force, relatively low costs of living and doing business, and a mix of technology and service industries. Additionally, Colorado is a wealthy state, with per capita income that’s above the U.S. average.

Fiscal 2009, state-generated general fund revenues totaled $11.2 billion, a 0.3% increase over 2008. Colorado ended fiscal 2009 with a general fund balance of $335 million, up from $207 million in fiscal 2008. Colorado’s Required Statutory Reserve declined $3.5 million to total $148.2 million. (Sources: Bureau of Labor Statistics, The Denver Post, Colorado 2008 and 2009 Comprehensive Annual Financial Report, and Moody’s.)

Minnesota

Unemployment in Minnesota in February 2010 was 7.3%, well below the national rate of 9.7%. Two-thirds of the jobs lost in the state over the past two years have been in the manufacturing, construction, and retail trade sectors. These three industries are projected to regain only about one-quarter of their losses over the next two years.

Minnesota currently faces a budget deficit of $994 million for the 2010-2011 biennium, or 3.2% of projected biennial expenditures. The State House and Senate recently fixed about one-third of the budget problem by passing a bill that cut spending by $312 million. The budget bill cut funding for local governments, colleges and universities, environmental and natural resource programs, economic development, bus operations, courts, prisons, and state agencies. (Sources: Bureau of Labor Statistics, Minnesota Management & Budget, twincities.com, Minnesota 2008 and 2009 Comprehensive Annual Financial Report, and Moody’s.)

Fund basics

Delaware Investments

Arizona Municipal Income Fund, Inc.

As of March 31, 2010

Fund objective

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

Total Fund net assets

$41 million

Number of holdings

Fund start date

Feb. 26, 1993

Cusip number

246100101

Delaware Investments

Colorado Municipal Income Fund, Inc.

As of March 31, 2010

Fund objective

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

Total Fund net assets

$68 million

Number of holdings

Fund start date

July 29, 1993

Cusip number

246101109

Delaware Investments

Minnesota Municipal Income Fund II, Inc.

As of March 31, 2010

Fund objective

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

Total Fund net assets

$162 million

Number of holdings

Fund start date

Feb. 26, 1993

Cusip number

24610V103

Delaware Investments

National Municipal Income Fund

As of March 31, 2010

Fund objective

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

Total Fund net assets

$32 million

Number of holdings

Fund start date

Feb. 26, 1993

Cusip number

24610T108

Sector/State allocations

As of March 31, 2010

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

Delaware Investments
Arizona Municipal Income Fund, Inc.

	Percentage
Sector	of Net Assets
Municipal Bonds		98.26	%
Corporate-Backed Revenue Bonds		3.94	%
Education Revenue Bonds		12.74	%
Electric Revenue Bonds		10.93	%
Health Care Revenue Bonds		22.44	%
Housing Revenue Bonds		1.36	%
Lease Revenue Bonds		6.45	%
Local General Obligation Bonds		4.66	%
Pre-Refunded/Escrowed to Maturity Bonds		6.91	%
Special Tax Revenue Bonds		14.36	%
State General Obligation Bond		0.85	%
Transportation Revenue Bond		4.88	%
Water & Sewer Revenue Bonds		8.74	%
Total Value of Securities		98.26	%
Receivables and Other Assets Net of Liabilities		1.74	%
Total Net Assets		100.00	%

Delaware Investments
Colorado Municipal Income Fund, Inc.

	Percentage
Sector	of Net Assets
Municipal Bonds		99.48	%
Corporate-Backed Revenue Bond		1.23	%
Education Revenue Bonds		20.07	%
Electric Revenue Bonds		5.76	%
Health Care Revenue Bonds		11.55	%
Housing Revenue Bonds		2.73	%
Lease Revenue Bonds		6.71	%
Local General Obligation Bonds		8.40	%
Pre-Refunded/Escrowed to Maturity Bonds		18.75	%
Special Tax Revenue Bonds		10.19	%
State General Obligation Bonds		5.46	%
Transportation Revenue Bond		1.14	%
Water & Sewer Revenue Bonds		7.49	%
Short-Term Investment		0.15	%
Total Value of Securities		99.63	%
Receivables and Other Assets Net of Liabilities		0.37	%
Total Net Assets		100.00	%

(continues) 5

Sector/State allocations

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

Delaware Investments
Minnesota Municipal Income Fund II, Inc.

	Percentage
Sector	of Net Assets
Municipal Bonds		98.98	%
Corporate-Backed Revenue Bonds		5.70	%
Education Revenue Bonds		7.65	%
Electric Revenue Bonds		10.78	%
Health Care Revenue Bonds		15.64	%
Housing Revenue Bonds		8.28	%
Lease Revenue Bonds		6.29	%
Local General Obligation Bonds		9.47	%
Pre-Refunded/Escrowed to Maturity Bonds		22.82	%
Special Tax Revenue Bonds		2.95	%
State General Obligation Bond		0.65	%
Transportation Revenue Bonds		7.84	%
Water & Sewer Revenue Bond		0.91	%
Total Value of Securities		98.98	%
Receivables and Other Assets Net of Liabilities		1.02	%
Total Net Assets		100.00	%

Delaware Investments
National Municipal Income Fund

	Percentage
Sector	of Net Assets
Municipal Bonds		99.94	%
Corporate-Backed Revenue Bonds		13.04	%
Education Revenue Bonds		5.60	%
Electric Revenue Bond		3.34	%
Health Care Revenue Bonds		17.16	%
Housing Revenue Bonds		6.51	%
Local General Obligation Bonds		2.58	%
Special Tax Revenue Bonds		23.11	%
State General Obligation Bonds		7.91	%
Transportation Revenue Bonds		12.18	%
Water & Sewer Revenue Bonds		8.51	%
Short-Term Investment		0.95	%
Total Value of Securities		100.89	%
Liabilities Net of Receivables and Other Assets		(0.89	%)
Total Net Assets		100.00	%

State
(as a % of fixed income investments)
Arizona	3.70	%
California	8.04	%
Colorado	0.94	%
Florida	34.90	%
Georgia	2.90	%
Hawaii	0.98	%
Idaho	0.85	%
Illinois	0.98	%
Iowa	1.66	%
Maryland	1.99	%
Massachusetts	1.93	%
Missouri	1.59	%
New Hampshire	0.99	%
New Mexico	1.56	%
New York	9.71	%
Ohio	2.86	%
Pennsylvania	6.39	%
Puerto Rico	12.85	%
Texas	1.88	%
Virginia	2.51	%
Washington D.C.	0.79	%
Total	100.00	%

Statements of net assets

Delaware Investments Arizona Municipal Income Fund, Inc.

March 31, 2010

			Principal Amount	Value
Municipal Bonds – 98.26%
Corporate-Backed Revenue Bonds – 3.94%
•	Navajo County Pollution Control
	Revenue (Arizona Public Services)
	Series D 5.75% 6/1/34	$	500,000	$	521,210
	Pima County Industrial Development
	Authority Pollution Control Revenue
	(Tucson Electric Power San Juan)
	5.75% 9/1/29		250,000		253,200
	Series A 4.95% 10/1/20		500,000		496,770
	Salt Verde Financial Gas Revenue Senior
	5.00% 12/1/37		400,000		349,692
					1,620,872
Education Revenue Bonds – 12.74%
	Arizona Board of Regents System
	Revenue (University of Arizona)
	Series A 5.00% 6/1/39		500,000		514,790
	Series 8-A
	5.00% 6/1/18		200,000		225,500
	5.00% 6/1/19		375,000		417,596
	Arizona Health Facilities Authority
	Health Care Education Facilities
	Revenue (Kirksville College)
	5.125% 1/1/30		500,000		494,755
	Glendale Industrial Development
	Authority Revenue Refunding
	(Midwestern University)
	5.00% 5/15/31		350,000		332,042
	Northern Arizona University Certificates
	of Participation (Northern Arizona
	University Research Project)
	5.00% 9/1/30 (AMBAC)		1,000,000		965,220
	Pima County Industrial Development
	Authority Educational Revenue
	Refunding (Tucson Country Day
	School Project) 5.00% 6/1/37		500,000		381,590
	South Campus Group Student Housing
	Revenue (Arizona State University
	South Campus Project)
	5.625% 9/1/35 (NATL-RE)		1,000,000		1,003,180
	University of Puerto Rico System
	Revenue Series Q 5.00% 6/1/36		1,000,000		899,080
					5,233,753
Electric Revenue Bonds – 10.93%
	Puerto Rico Electric Power
	Authority Power Revenue
	Series TT 5.00% 7/1/37		100,000		96,110
	Series WW 5.50% 7/1/38		200,000		203,028
	Series XX 5.25% 7/1/40		805,000		798,898
	Salt River Project Agricultural
	Improvement & Power District
	Electric System Revenue
	Series A
	5.00% 1/1/31		1,000,000		1,021,940
	5.00% 1/1/39		1,000,000		1,046,450
	Salt River Project Agricultural
	Improvement & Power District
	Electric System Revenue
	Series B 5.00% 1/1/25		1,250,000		1,326,100
					4,492,526
Health Care Revenue Bonds – 22.44%
	Arizona Health Facilities Authority Revenue
	(Banner Health) Series D 5.50% 1/1/21		500,000		530,360
	(Catholic Healthcare West) Series D
	5.00% 7/1/28		500,000		488,840
	Glendale Industrial Development
	Authority Hospital Revenue
	Refunding (John C. Lincoln Health)
	5.00% 12/1/42		1,500,000		1,305,300
	Maricopa County Industrial
	Development Authority Health
	Facilities Revenue (Catholic
	Healthcare West) Series A
	5.25% 7/1/32		400,000		397,372
	6.00% 7/1/39		500,000		521,940
	Scottsdale Industrial Development
	Authority Hospital Revenue
	Refunding (Scottsdale Healthcare)
	Series A 5.25% 9/1/30		500,000		491,375
	Show Low Industrial Development
	Authority Hospital Revenue
	Refunding (Navapache Regional
	Medical Center)
	Series A 5.50% 12/1/17 (ACA)		1,600,000		1,600,544
	University Medical Center Hospital
	Revenue
	5.00% 7/1/33		1,000,000		931,040
	5.00% 7/1/35		500,000		464,765
	6.50% 7/1/39		500,000		532,090
	Yavapai County Industrial Development
	Authority Revenue (Yavapai
	Regional Medical Center)
	Series A 5.25% 8/1/21 (RADIAN)		2,000,000		1,956,439
					9,220,065
Housing Revenue Bonds – 1.36%
	Phoenix Industrial Development
	Authority Single Family Mortgage
	Statewide Revenue
	Series A 5.35% 6/1/20 (GNMA)
	(FNMA) (FHLMC) (AMT)		340,000		340,211
	Pima County Industrial Development
	Authority Single Family Mortgage
	Housing Revenue Series A-1
	6.125% 11/1/33 (GNMA) (FNMA)
	(FHLMC) (AMT)		30,000		30,045
	Puerto Rico Housing Finance Authority
	Subordinate-Capital Foundation
	Modernization 5.50% 12/1/18		175,000		190,010
					560,266

			Principal Amount	Value
Municipal Bonds (continued)
Lease Revenue Bonds – 6.45%
	Arizona Certificates of Participation
	Department Administration Series A
	5.25% 10/1/25 (AGM)	$	500,000	$	526,360
	Arizona Game & Fishing Department
	& Commission Beneficial Interest
	Certificates (AGF Administration
	Building Project) 5.00% 7/1/26		640,000		648,864
	Nogales Development Authority
	Municipal Facilities Revenue
	5.00% 6/1/30 (AMBAC)		500,000		451,665
	Pima County Industrial Development
	Authority Lease Revenue Metro
	Police Facility (Nevada Project)
	Series A
	5.25% 7/1/31		500,000		513,975
	5.375% 7/1/39		500,000		508,520
					2,649,384
Local General Obligation Bonds – 4.66%
	Gila County Unified School District #10
	(Payson School Improvement
	Project of 2006) Series A
	5.25% 7/1/27 (AMBAC)		500,000		512,985
	Maricopa County School
	District #6 (Washington
	Elementary) Refunding
	Series A 5.375% 7/1/13 (AGM)		1,250,000		1,403,475
					1,916,460
§Pre-Refunded/Escrowed to Maturity Bonds – 6.91%
	Puerto Rico Commonwealth Public
	Improvement Revenue Series A
	5.125% 7/1/31-11		250,000		264,470
	Southern Arizona Capital Facilities
	Finance (University of Arizona
	Project) 5.00% 9/1/23-12 (NATL-RE)		1,000,000		1,096,300
	University of Arizona Certificates
	of Participation (University
	of Arizona Project) Series B
	5.125% 6/1/22-12 (AMBAC)		500,000		543,695
	Virgin Islands Public Finance
	Authority Revenue (Gross Receipts
	Tax Loan Note) Series A
	6.125% 10/1/29-10 (ACA)		900,000		934,812
					2,839,277
Special Tax Revenue Bonds – 14.36%
	Flagstaff Aspen Place Sawmill
	Improvement District Revenue
	5.00% 1/1/32		385,000		385,054
	Gilbert Public Facilities Municipal
	Property Revenue 5.00% 7/1/25		500,000		526,055
	Glendale Municipal Property Series A
	5.00% 7/1/33 (AMBAC)		2,000,000		2,027,979
	Marana Tangerine Farm Road
	Improvement District Revenue
	4.60% 1/1/26		924,000		829,854
	Peoria Municipal Development
	Authority Sales Tax & Excise
	Shared Revenue (Senior Lien &
	Subordinate Lien) 5.00% 1/1/18		1,085,000		1,222,817
	Queen Creek Improvement District #1
	5.00% 1/1/32		1,000,000		907,490
					5,899,249
State General Obligation Bond – 0.85%
	Puerto Rico Commonwealth Refunding
	(Public Improvement) Series C
	6.00% 7/1/39		335,000		350,196
					350,196
Transportation Revenue Bond – 4.88%
	Phoenix Civic Improvement Airport
	Revenue (Senior Lien)
	Series B 5.25% 7/1/27 (NATL-RE)
	(FGIC) (AMT)		2,000,000		2,006,560
					2,006,560
Water & Sewer Revenue Bonds – 8.74%
	Phoenix Civic Improvement
	Wastewater Systems Revenue
	Junior Lien 5.00% 7/1/19
	(NATLE-RE)		850,000		940,143
	Refunding 5.00% 7/1/24
	(NATL-RE) (FGIC)		1,000,000		1,022,840
	Phoenix Civic Improvement Water
	Systems Revenue Junior Lien
	Series A 5.00% 7/1/39		900,000		932,643
	Scottsdale Water & Sewer Revenue
	Refunding 5.00% 7/1/19		600,000		697,590
					3,593,216
Total Municipal Bonds
	(cost $40,336,034)				40,381,824

Total Value of Securities – 98.26%
	(cost $40,336,034)				40,381,824
Receivables and Other Assets
	Net of Liabilities – 1.74%				713,536
Net Assets Applicable to 2,982,200
	Shares Outstanding; Equivalent to
	$13.78 Per Share – 100.00%			$	41,095,360

Components of Net Assets March 31, 2010:
Common stock, $0.01 par value, 200 million shares
	authorized to the Fund			$	40,651,205
Undistributed net investment income					268,364
Accumulated net realized gain on investments					130,001
Net unrealized appreciation of investments					45,790
Total net assets				$	41,095,360

(continues) 9

Statements of net assets

Delaware Investments Arizona Municipal Income Fund, Inc.

§	Pre-Refunded bonds. Municipal bonds that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 9 in “Notes to financial statements.”

•	Variable rate security. The rate shown is the rate as of March 31, 2010.

Summary of Abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHLMC — Federal Home Loan Mortgage Corporation Collateral
FNMA — Federal National Mortgage Association Collateral
GNMA — Government National Mortgage Association Collateral
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance

See accompanying notes

Delaware Investments Colorado Municipal Income Fund, Inc.

March 31, 2010

			Principal Amount	Value
Municipal Bonds – 99.48%
Corporate-Backed Revenue Bond – 1.23%
	Public Authority for Colorado Energy
	National Gas Purpose Revenue
	Series 2008 6.50% 11/15/38	$	750,000	$	832,988
					832,988
Education Revenue Bonds – 20.07%
	Boulder County Development Revenue
	Refunding (University Corporation
	for Atmospheric Research)
	5.00% 9/1/26 (NATL-RE)		3,000,000		3,020,249
	Colorado Board of Governors
	Revenue (University Enterprise
	System) Series A 5.00% 3/1/39		700,000		725,445
	Colorado Educational & Cultural
	Facilities Authority Revenue
	(Bromley Charter School Project)
	Refunding 5.25% 9/15/32 (XLCA)		1,000,000		992,160
	(Johnson & Wales University Project)
	Series A 5.00% 4/1/28 (XLCA)		3,000,000		2,823,449
	(Littleton Charter School Project)
	Refunding 4.375% 1/15/36 (CIFG)		1,200,000		999,156
	Student Housing (Campus
	Village Apartments) Refunding
	5.00% 6/1/23		1,065,000		1,085,725
	Student Housing (University of
	Northern Colorado) Series A
	5.00% 7/1/31 (NATL-RE)		2,500,000		2,365,225
	University of Colorado Enterprise
	Systems Revenue Series A
	5.375% 6/1/38		750,000		796,485
	Western State College 5.00% 5/15/34		750,000		769,298
					13,577,192
Electric Revenue Bonds – 5.76%
	Platte River Power Authority Power
	Revenue Series HH 5.00% 6/1/28		1,500,000		1,612,289
	Puerto Rico Electric Power
	Authority Power Revenue
	Series TT 5.00% 7/1/37		685,000		658,354
	Series WW 5.50% 7/1/38		300,000		304,542
	Series XX 5.25% 7/1/40		1,335,000		1,324,881
					3,900,066
Health Care Revenue Bonds – 11.55%
	Colorado Health Facilities
	Authority Revenue
	(Catholic Health Initiatives)
	Series A 5.00% 7/1/39		750,000		753,803
	Series D 6.125% 10/1/28		750,000		833,618
	(Evangelical Lutheran)
	5.25% 6/1/23		1,000,000		969,429
	Series A 6.125% 6/1/38		750,000		754,433
	(Porter Place) Series A
	6.00% 1/20/36 (GNMA)		2,515,000		2,546,763
	Colorado Springs Hospital Revenue
	Refunding 6.25% 12/15/33		750,000		795,270
	University of Colorado Hospital
	Authority Revenue Series A
	5.00% 11/15/37		500,000		480,440
	6.00% 11/15/29		650,000		681,909
					7,815,665
Housing Revenue Bonds – 2.73%
	Colorado Housing & Finance
	Authority (Single Family
	Mortgage - Class I) Series A
	5.50% 11/1/29 (FHA) (VA) (HUD)		500,000		525,500
	Puerto Rico Housing Finance Authority
	Subordinate-Capital Foundation
	Modernization
	5.125% 12/1/27		1,000,000		993,610
	5.50% 12/1/18		300,000		325,731
					1,844,841
Lease Revenue Bonds – 6.71%
	Aurora Certificates of Participation
	Refunding Series A 5.00% 12/1/30		630,000		656,945
	Glendale Certificates of Participation
	5.00% 12/1/25 (XLCA)		1,500,000		1,532,295
•	Puerto Rico Public Buildings Authority
	Revenue Refunding Guaranteed
	(Government Facilities)
	Series M-2 5.50% 7/1/35 (AMBAC)		700,000		715,029
	Westminster Building Authority
	Certificates of Participation
	5.25% 12/1/22 (NATL-RE)		1,555,000		1,636,731
					4,541,000
Local General Obligation Bonds – 8.40%
	Adams & Arapahoe Counties Joint
	School District #28J (Aurora)
	6.00% 12/1/28		600,000		687,594
	Arapahoe County Water &
	Wastewater Public Improvement
	District Refunding Series A
	5.125% 12/1/32 (NATL-RE)		635,000		636,441
	Boulder Larimer & Weld Counties
	Vrain Valley School District Re-1J
	5.00% 12/15/33		750,000		779,730
	Bowles Metropolitan District Refunding
	5.00% 12/1/33 (AGM)		2,000,000		2,012,500
	Denver City & County School District
	#1 Series A 5.00% 12/1/29		240,000		258,158
	Jefferson County School District
	#R-1 (Supplemental Interest
	Regional Coupons) Refunding
	5.25% 12/15/24		750,000		885,203
	Sand Creek Metropolitan District
	Refunding & Improvement
	5.00% 12/1/31 (XLCA)		500,000		421,090
					5,680,716

(continues) 11

Statements of net assets

Delaware Investments Colorado Municipal Income Fund, Inc.

			Principal Amount	Value
Municipal Bonds (continued)
§Pre-Refunded/Escrowed to Maturity Bonds – 18.75%
	Colorado Educational & Cultural
	Facilities Authority
	(University of Colorado Foundation
	Project) 5.00% 7/1/27-12 (AMBAC)	$	4,000,000	$	4,350,840
	(University of Denver Project)
	Refunding & Improvement Series B
	5.25% 3/1/35-16 (FGIC)		1,000,000		1,168,870
	Denver Convention Center Hotel
	Authority Revenue Senior Series A
	5.00% 12/1/33-13 (XLCA)		3,000,000		3,349,050
	Northwest Parkway Public Highway
	Authority Senior Series A
	5.25% 6/15/41-11 (AGM)		1,500,000		1,612,305
	Ute Water Conservancy District Revenue
	5.75% 6/15/20-10 (NATL-RE)		2,155,000		2,200,902
					12,681,967
Special Tax Revenue Bonds – 10.19%
	Denver Convention Center Hotel
	Authority Revenue Senior
	Refunding 5.00% 12/1/35 (XLCA)		1,575,000		1,324,780
	Puerto Rico Commonwealth Highway
	& Transportation Authority Revenue
	Series K 5.00% 7/1/30		750,000		718,613
	Puerto Rico Sales Tax Financing Sales
	Tax Revenue First Subordinate
	Series B 5.75% 8/1/37		590,000		628,981
	Regional Transportation District
	Colorado Sales Tax Revenue
	(Fastracks Project) Series A
	4.375% 11/1/31 (AMBAC)		1,250,000		1,231,925
	4.50% 11/1/36 (AGM)		3,000,000		2,986,080
					6,890,379
State General Obligation Bonds – 5.46%
	Guam Government Series A
	7.00% 11/15/39		750,000		805,118
	Puerto Rico Commonwealth Refunding
	(Public Improvement)
	Series A 5.50% 7/1/19 (NATL-RE)		2,250,000		2,361,217
	Series C 6.00% 7/1/39		505,000		527,907
					3,694,242
Transportation Revenue Bond – 1.14%
	Denver City & County Airport Revenue
	System Series A 5.25% 11/15/36		750,000		772,808
					772,808
Water & Sewer Revenue Bonds – 7.49%
	Colorado Springs Utilities Revenue
	Systems Improvement Series C
	5.50% 11/15/48		750,000		789,540
	Colorado Water Resources & Power
	Development Authority Small
	Water Revenue Un-Refunded
	Balance Series A 5.80% 11/1/20
	(FGIC) (NATL-RE)		780,000		784,329
	Colorado Water Resources & Power
	Development Authority Water
	Resources Revenue (Parker Water
	& Sanitation District) Series D
	5.125% 9/1/34 (NATL-RE)		1,500,000		1,498,890
	5.25% 9/1/43 (NATL-RE)		2,000,000		1,993,640
					5,066,399
Total Municipal Bonds
	(cost $66,072,009)				67,298,263

Short-Term Investment – 0.15%
•Variable Rate Demand Note – 0.15%
	Colorado Educational & Cultural
	Facilities Authority Revenue
	(National Jewish Federation Bond
	Program) 0.30% 2/1/35
	(LOC – Bank of America N. A.)		100,000		100,000
Total Short-Term Investment
	(cost $100,000)				100,000

Total Value of Securities – 99.63%
	(cost $66,172,009)				67,398,263
Receivables and Other Assets
	Net of Liabilities – 0.37%				252,539
Net Assets Applicable to 4,837,100
	Shares Outstanding; Equivalent to
	$13.99 Per Share – 100.00%			$	67,650,802

Components of Net Assets March 31, 2010:
Common stock, $0.01 par value, 200 million shares
	authorized to the Fund			$	66,918,121
Undistributed net investment income					176,704
Accumulated net realized loss on investments					(670,277	)
Net unrealized appreciation of investments					1,226,254
Total net assets				$	67,650,802

§	Pre-Refunded bonds. Municipal bonds that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 9 in “Notes to financial statements.”

•	Variable rate security. The rate shown is the rate as of March 31, 2010.

Summary of Abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
CIFG — CDC IXIS Financial Guaranty
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
GNMA — Government National Mortgage Association Collateral
HUD — Housing and Urban Development Section 8
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
XLCA — Insured by XL Capital Assurance
VA — Veterans Administration Collateral

See accompanying notes

(continues) 13

Statements of net assets

Delaware Investments Minnesota Municipal Income Fund II, Inc.

March 31, 2010

			Principal Amount	Value
Municipal Bonds – 98.98%
Corporate-Backed Revenue Bonds – 5.70%
	Cloquet Pollution Control Revenue
	Refunding (Potlatch Project)
	5.90% 10/1/26	$	5,500,000	$	5,080,625
	Laurentian Energy Authority I
	Cogeneration Revenue Series A
	5.00% 12/1/21		3,325,000		3,210,720
	Sartell Environmental Improvement
	Revenue Refunding (International
	Paper) Series A 5.20% 6/1/27		1,000,000		929,080
					9,220,425
Education Revenue Bonds – 7.65%
	Minnesota Higher Education
	Facilities Authority Revenue
	(Augsburg College) Series 6-J1
	5.00% 5/1/28		1,500,000		1,502,610
	(Carleton College) Series 6-T
	5.00% 1/1/28		1,000,000		1,055,780
	(College of St. Benedict)
	Series 5-W 5.00% 3/1/20		2,000,000		2,034,620
	(St. Mary’s University) Series 5-U
	4.80% 10/1/23		1,400,000		1,408,512
	(University St. Thomas)
	Series 6-X 5.00% 4/1/29		2,250,000		2,306,047
	Series 7-A 5.00% 10/1/39		1,000,000		1,010,550
	University of Minnesota
	Series A 5.25% 4/1/29		1,000,000		1,098,850
	Series C 5.00% 12/1/19		1,290,000		1,469,865
	University of the Virgin Islands
	Improvement Series A
	5.375% 6/1/34		500,000		481,315
					12,368,149
Electric Revenue Bonds – 10.78%
	Chaska Electric Revenue Refunding
	(Generating Facilities) Series A
	5.25% 10/1/25		250,000		259,540
	Minnesota Municipal Power Agency
	Electric Revenue Series A
	5.00% 10/1/34		1,900,000		1,924,415
	5.25% 10/1/19		1,610,000		1,705,054
	Puerto Rico Electric Power Authority
	Power Revenue Series XX
	5.25% 7/1/40		2,665,000		2,644,799
	Southern Minnesota Municipal
	Power Agency Supply
	System Revenue Series A
	5.25% 1/1/14 (AMBAC)		5,250,000		5,843,198
	Western Minnesota Municipal
	Power Agency Supply Revenue
	Series A 5.00% 1/1/30 (NATL-RE)		5,000,000		5,053,350
					17,430,356
Health Care Revenue Bonds – 15.64%
	Bemidji Health Care Facilities First
	Mortgage Revenue (North
	Country Health Services)
	5.00% 9/1/24 (RADIAN)		1,500,000		1,457,910
	Glencoe Health Care Facilities
	Revenue (Glencoe Regional
	Health Services Project)
	5.00% 4/1/25		2,000,000		1,903,660
	Maple Grove Health Care System
	Revenue (Maple Grove Hospital)
	5.25% 5/1/37		1,000,000		952,790
	Minneapolis Health Care System
	Revenue (Fairview Health Services)
	Series A 6.625% 11/15/28		600,000		669,354
	Series B 6.50% 11/15/38
	(ASSURED GTY)		295,000		330,049
	Series D 5.00% 11/15/34
	(AMBAC)		2,000,000		1,936,599
	Minneapolis – St. Paul Housing
	& Redevelopment Authority
	Revenue (Children’s Hospital)
	Series A-1 5.00% 8/15/34 (AGM)		500,000		502,785
	Minnesota Agricultural & Economic
	Development Board Revenue
	(Fairview Health Care)
	Un-Refunded Balance Series A
	5.75% 11/15/26 (NATL-RE)		100,000		100,028
	6.375% 11/15/29		195,000		197,629
	Rochester Health Care &
	Housing Revenue Refunding
	(Samaritan Bethany) Series A
	7.375% 12/1/41		1,220,000		1,259,357
	Shakopee Health Care Facilities
	Revenue (St. Francis Regional
	Medical Center) 5.25% 9/1/34		1,560,000		1,458,257
	St. Cloud Health Care Revenue
	(Centracare Health System Project)
	Series A 5.125% 5/1/30		1,125,000		1,115,899
	Series D 5.50% 5/1/39
	(ASSURED GTY)		1,500,000		1,546,080
	St. Louis Park Health Care Facilities
	Revenue Refunding (Park Nicollet
	Health Services)
	5.75% 7/1/39		1,500,000		1,500,915
	Series C 5.50% 7/1/23		1,000,000		1,040,230
	St. Paul Housing & Redevelopment
	Authority Health Care
	Facilities Revenue
	(Allina Health System)
	Series A 5.00% 11/15/18 (NATL-RE)		1,380,000		1,443,066
	Series A-1 5.25% 11/15/29		1,395,000		1,404,347
	(Health Partners Obligation
	Group Project) 5.25% 5/15/36		2,000,000		1,847,760
	(Regions Hospital Project)
	5.30% 5/15/28		1,000,000		960,550

			Principal Amount	Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
	St. Paul Housing & Redevelopment
	Authority Revenue (Franciscan
	Health Elderly Project)
	5.40% 11/20/42 (GNMA) (FHA)	$	2,700,000	$	2,713,607
	Winona Health Care Facilities
	Revenue Refunding (Winona
	Health Obligation Group)
	5.00% 7/1/23		1,010,000		949,249
					25,290,121
Housing Revenue Bonds – 8.28%
	Chanhassen Multifamily Housing
	Revenue Refunding (Heritage
	Park Apartments Project)
	6.20% 7/1/30 (FHA) (HUD) (AMT)		1,105,000		1,105,939
	Dakota County Community
	Development Agency Mortgage
	Revenue 5.85% 10/1/30
	(GNMA) (FNMA) (AMT)		10,000		10,006
	Minneapolis Multifamily
	Housing Revenue
	•(Gaar Scott Loft Project)
	5.95% 5/1/30 (AMT)
	(LOC – U.S. Bank N.A.)		900,000		907,839
	(Olson Townhomes Project)
	6.00% 12/1/19 (AMT)		755,000		755,113
	(Seward Towers Project)
	5.00% 5/20/36 (GNMA)		2,000,000		2,018,800
	(Sumner Housing Project)
	Series A 5.15% 2/20/45
	(GNMA) (AMT)		2,000,000		2,001,420
	Minnesota Housing Finance Agency
	(Rental Housing)
	Series A 5.00% 2/1/35 (AMT)		1,000,000		980,420
	Series D 5.95% 2/1/18 (NATL-RE)		120,000		120,502
	(Residential Housing)
	Series B-1 5.35% 1/1/33 (AMT)		1,555,000		1,559,525
	•Series D 4.75% 7/1/32 (AMT)		1,000,000		956,240
	Series I 5.15% 7/1/38 (AMT)		745,000		746,222
	Series L 5.10% 7/1/38 (AMT)		1,495,000		1,483,817
	Washington County Housing &
	Redevelopment Authority
	Revenue Refunding (Woodland
	Park Apartments Project)
	4.70% 10/1/32		750,000		752,100
					13,397,943
Lease Revenue Bonds – 6.29%
	Andover Economic Development
	Authority Public Facilities Lease
	Revenue Refunding (Andover
	Community Center)
	5.125% 2/1/24		205,000		226,492
	5.20% 2/1/29		410,000		454,108
	Puerto Rico Public Buildings
	Authority Revenue Un-Refunded
	Balance (Government Facilities
	Bond) Series D 5.25% 7/1/27		530,000		530,064
	St. Paul Port Authority Lease Revenue
	(Cedar Street Office Building Project)
	5.00% 12/1/22		2,385,000		2,461,821
	5.25% 12/1/27		2,800,000		2,883,243
	(Robert Street Office
	Building Project) Series 3-11
	5.00% 12/1/27		2,000,000		2,061,960
	Virginia Housing & Redevelopment
	Authority Health Care Facility
	Lease Revenue
	5.25% 10/1/25		680,000		642,430
	5.375% 10/1/30		965,000		910,671
					10,170,789
Local General Obligation Bonds – 9.47%
	Dakota County Community
	Development Agency
	Governmental Housing
	Refunding (Senior Housing
	Facilities) Series A 5.00% 1/1/23		1,100,000		1,157,299
	Minneapolis Special School District #1
	5.00% 2/1/19 (AGM)		1,175,000		1,275,427
	Morris Independent School District
	#769 5.00% 2/1/28 (NATL-RE)		3,750,000		4,090,689
	Rocori Independent School District
	#750 (School Building) Series B
	5.00% 2/1/22		1,010,000		1,130,160
	5.00% 2/1/24		1,075,000		1,191,648
	5.00% 2/1/25		1,115,000		1,230,748
	5.00% 2/1/26		1,155,000		1,266,746
	Washington County Housing &
	Redevelopment Authority
	Refunding Series B
	5.50% 2/1/22 (NATL-RE)		1,705,000		1,791,699
	5.50% 2/1/32 (NATL-RE)		2,140,000		2,173,341
					15,307,757
§Pre-Refunded/Escrowed to Maturity Bonds – 22.82%
	Andover Economic Development
	Authority Public Facilities
	Lease Revenue (Andover
	Community Center)
	5.125% 2/1/24-14		295,000		325,928
	5.20% 2/1/29-14		590,000		653,472
	Dakota-Washington Counties
	Housing & Redevelopment
	Authority Revenue (Bloomington
	Single Family Residential
	Mortgage) 8.375% 9/1/21
	(GNMA) (FHA) (VA) (AMT)		7,055,000		10,164,069

(continues) 15

Statements of net assets

Delaware Investments Minnesota Municipal Income Fund II, Inc.

			Principal Amount	Value
Municipal Bonds (continued)
§Pre-Refunded/Escrowed to Maturity Bonds (continued)
	Hennepin County Series B
	5.00% 12/1/18-10	$	2,300,000	$	2,371,691
	Minneapolis Community Planning
	& Economic Development
	Department Supported (Limited
	Tax Common Bond Fund)
	Series G-1 5.70% 12/1/19-11		1,100,000		1,162,656
	Southern Minnesota Municipal
	Power Agency Power Supply
	Revenue Refunding
	Series A 5.75% 1/1/18-13		3,715,000		4,001,092
	Series B 5.50% 1/1/15 (AMBAC)		390,000		410,701
	St. Louis Park Health Care Facilities
	Revenue (Park Nicollet Health
	Services) Series B 5.25% 7/1/30-14		1,250,000		1,424,825
	St. Paul Housing & Redevelopment
	Authority Sales Tax
	(Civic Center Project)
	5.55% 11/1/23		2,300,000		2,407,617
	5.55% 11/1/23 (NATL-RE) (IBC)		4,200,000		4,396,518
	University of Minnesota Hospital &
	Clinics 6.75% 12/1/16		2,580,000		3,164,731
	University of Minnesota Series A
	5.50% 7/1/21		4,000,000		4,633,440
	Western Minnesota Municipal
	Power Agency Power Supply
	Revenue Series A 6.625% 1/1/16		1,535,000		1,785,727
					36,902,467
Special Tax Revenue Bonds – 2.95%
	Minneapolis Community Planning
	& Economic Development
	Department Supported
	(Common Bond Fund)
	Series 5 5.70% 12/1/27		375,000		375,589
	(Limited Tax Common
	Bond Fund) Series A
	6.75% 12/1/25 (AMT)		865,000		866,540
	Minneapolis Development Revenue
	(Limited Tax Supported
	Common Bond Fund) Series 1
	5.50% 12/1/24 (AMT)		1,000,000		1,015,890
	Puerto Rico Commonwealth
	Infrastructure Financing
	Authority Special Tax Revenue
	Series B 5.00% 7/1/46		800,000		729,240
	Puerto Rico Sales Tax Financing Sales
	Tax Revenue First Subordinate
	Series B 5.75% 8/1/37		1,200,000		1,279,283
	Virgin Islands Public Finance
	Authority Revenue (Senior Lien
	Matching Fund Loan Note)
	Series A 5.25% 10/1/23		500,000		502,980
					4,769,522
State General Obligation Bond – 0.65%
	Puerto Rico Commonwealth Public
	Improvement Refunding Series C
	6.00% 7/1/39		1,010,000		1,055,814
					1,055,814
Transportation Revenue Bonds – 7.84%
	Minneapolis - St. Paul Metropolitan
	Airports Commission Revenue
	Series A
	5.00% 1/1/22 (NATL-RE)		3,000,000		3,063,090
	5.00% 1/1/28 (NATL-RE)		2,120,000		2,137,702
	5.25% 1/1/16 (NATL-RE)		1,000,000		1,075,370
	Series B
	5.00% 1/1/35 (AMBAC)		2,000,000		2,004,880
	5.25% 1/1/24 (NATL-RE)
	(FGIC) (AMT)		1,000,000		1,003,200
	St. Paul Housing & Redevelopment
	Authority Parking Revenue
	(Block 19 Ramp Project) Series A
	5.35% 8/1/29 (AGM)		3,350,000		3,395,225
					12,679,467
Water & Sewer Revenue Bond – 0.91%
	St. Paul Sewer Revenue Series D
	5.00% 12/1/21		1,325,000		1,479,720
					1,479,720
Total Municipal Bonds
	(cost $154,415,880)				160,072,530

Total Value of Securities – 98.98%
	(cost $154,415,880)				160,072,530
Receivables and Other Assets
	Net of Liabilities – 1.02%				1,650,001
Net Assets Applicable to 11,504,975
	Shares Outstanding; Equivalent to
	$14.06 Per Share – 100.00%			$	161,722,531

Components of Net Assets at March 31, 2010:
Common stock, $0.01 par value, 200 million shares
	authorized to the Fund			$	157,931,075
Undistributed net investment income					362,513
Accumulated net realized loss on investments					(2,227,707	)
Net unrealized appreciation of investments					5,656,650
Total net assets				$	161,722,531



§	Pre-Refunded bonds. Municipal bonds that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 9 in “Notes to financial statements.”

•	Variable rate security. The rate shown is the rate as of March 31, 2010.

Summary of Abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by Federal Housing Administration
FNMA — Federal National Mortgage Association Collateral
GNMA — Government National Mortgage Association Collateral
HUD — Housing and Urban Development Section 8
IBC — Insured by Integrity Building Corporation
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
VA — Veterans Administration Collateral

See accompanying notes

(continues) 17

Statements of net assets

Delaware Investments National Municipal Income Fund

March 31, 2010

		Principal
		Amount		Value
Municipal Bonds – 99.94%
Corporate-Backed Revenue Bonds – 13.04%
•	Brazos, Texas Harbor Industrial
	Development Environmental
	Facilities Revenue (Dow Chemical
	Project) 5.90% 5/1/38 (AMT)	$	125,000	$	122,679
	Buckeye, Ohio Tobacco Settlement
	Financing Authority Asset-Backed
	Senior Turbo Series A-2
	5.875% 6/1/47		320,000		228,016
	6.50% 6/1/47		130,000		101,838
•	Chesapeake, Virginia Economic
	Development Authority Pollution
	Control Revenue (Virginia
	Electric & Power Project) Series A
	3.60% 2/1/32		500,000		517,665
	Clayton County, Georgia Development
	Authority Special Facilities
	Revenue (Delta Airlines) Series B
	9.00% 6/1/35 (AMT)		200,000		205,350
	Golden State, California Tobacco
	Securitization Corporation
	Settlement Revenue (Asset-
	Backed Senior Notes) Series A-1
	5.125% 6/1/47		370,000		237,041
	Harris County, Texas Industrial
	Development Solid Waste Disposal
	Revenue (Deer Park Refining Project
	Remarketing) 5.00% 2/1/23		150,000		150,779
	Hawaii State Department Budget &
	Finance Special Purpose Revenue
	(Hawaiian Electric Subsidiary)
	6.50% 7/1/39		290,000		311,863
	Iowa Finance Authority Pollution
	Control Facilities Revenue Refunding
	(Interstate Power) 5.00% 7/1/14
	(FGIC)		500,000		530,774
	M-S-R Energy Authority, California Gas
	Revenue Series A
	6.125% 11/1/29		115,000		119,333
	6.50% 11/1/39		210,000		225,053
	New York City, New York Industrial
	Development Agency Special
	Facilities Revenue (American
	Airlines-JFK International Airport)
	7.625% 8/1/25 (AMT)		450,000		455,868
	Ohio State Air Quality Development
	Authority Revenue (First Energy
	Generation) Series A 5.70% 8/1/20		260,000		273,029
	Pennsylvania Economic Development
	Financing Authority Exempt Facilities
	Revenue (Allegheny Energy Supply)
	7.00% 7/15/39		345,000		384,868
	Salt Verde Financial Gas Revenue,
	Arizona Senior Note 5.00% 12/1/37		300,000		262,269
					4,126,425
Education Revenue Bonds – 5.60%
	California Statewide Communities
	Development Authority School
	Facilities Revenue (Aspire Public
	Schools) 6.125% 7/1/46		265,000		259,122
	California Statewide Communities
	Development Authority Student
	Housing Revenue (Irvine, LLC - UCI
	East Campus) 6.00% 5/15/23		470,000		493,349
	Marietta, Georgia Development
	Authority Revenue Refunding
	(Life University Income Project)
	7.00% 6/15/39		430,000		403,164
	Maryland State Economic Development
	Student Housing Revenue
	(University of Maryland College Park
	Projects) 5.75% 6/1/33		370,000		374,773
	Massachusetts State Health &
	Educational Facilities Authority
	Revenue (Nichols College Project)
	Series C 6.125% 10/1/29		250,000		242,403
					1,772,811
Electric Revenue Bond – 3.34%
	Puerto Rico Electric Power Authority
	Power Revenue Series XX
	5.25% 7/1/40		1,065,000		1,056,927
					1,056,927
Health Care Revenue Bonds – 17.16%
	Arizona Health Facilities Authority
	Revenue (Banner Health) Series A
	5.00% 1/1/17		310,000		333,092
	Brevard County, Florida Health Care
	Facilities Authority Revenue (Health
	First Income Project) Series B
	7.00% 4/1/39		90,000		98,813
	Butler County, Pennsylvania Hospital
	Authority Revenue (Butler Health
	System Project) 7.125% 7/1/29		150,000		168,861
	Illinois Finance Authority Revenue
	(Silver Cross & Medical Centers)
	7.00% 8/15/44		300,000		312,210
	Lycoming County, Pennsylvania
	Authority Health System Revenue
	(Susquehanna Health System
	Project) Series A 5.50% 7/1/28		500,000		493,720
	Maricopa County Industrial
	Development Authority Health
	Facilities Revenue (Catholic
	Healthcare West) Series A
	6.00% 7/1/39		225,000		234,873
	Massachusetts State Health &
	Education Facilities Authority
	Revenue (Caregroup) Refunding
	Series E-2 5.375% 7/1/19		360,000		373,316

		Principal
		Amount		Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
	New Hampshire Health & Education
	Facilities Authority Revenue
	(Dartmouth-Hitchcock Medical
	Center) 6.00% 8/1/38	$	300,000	$	317,544
	New Mexico State Hospital Equipment
	Loan Council Revenue (Presbyterian
	Healthcare) 5.00% 8/1/39		500,000		497,680
	Ohio State Hospital Facilities Revenue
	Refunding (Cleveland Clinic Health)
	Series A 5.50% 1/1/39		300,000		310,932
	Orange County, Florida Health Facilities
	Authority Revenue (Orlando
	Regional Healthcare) Series A
	6.25% 10/1/18 (NATL-RE)		1,470,000		1,646,738
	Scottsdale, Arizona Industrial
	Development Authority Hospital
	Revenue Refunding (Scottsdale
	Healthcare) Series A 5.00% 9/1/23		360,000		350,719
	St. Mary Hospital Authority
	Pennsylvania Health System Revenue
	(Catholic Health East) Series A
	5.00% 11/15/40		300,000		291,288
					5,429,786
Housing Revenue Bonds – 6.51%
	California Housing Finance Agency
	Revenue (Home Mortgage) Series M
	5.95% 8/1/25 (AMT)		250,000		261,263
	Florida Housing Finance Agency
	(Homeowner Mortgage) Series 2
	5.90% 7/1/29 (NATL-RE) (AMT)		285,000		288,195
	Volusia County, Florida Multifamily
	Housing Finance Authority (San
	Marco Apartments) Series A
	5.60% 1/1/44 (AGM) (AMT)		1,500,000		1,511,819
					2,061,277
Local General Obligation Bonds – 2.58%
	Idaho Board Bank Authority Revenue
	Series A 5.00% 9/15/28		250,000		271,500
	New York City, New York
	Fiscal 2003 Series I-1
	5.375% 4/1/36		250,000		268,915
	Fiscal 2009 Subordinate Series A-1
	5.25% 8/15/21		250,000		276,115
					816,530
Special Tax Revenue Bonds – 23.11%
	Brooklyn Arena Local Development,
	New York Pilot Revenue (Barclays
	Center Project) 5.875% 7/15/30		300,000		322,209
	California State Economic Recovery
	Refunding Series A 5.25% 7/1/21		260,000		284,591
	Jacksonville, Florida Sales Tax Revenue
	(Better Jacksonville)
	5.00% 10/1/30 (NATL-RE)		1,200,000		1,218,840
	Jacksonville, Florida Transportation
	Revenue Refunding
	5.25% 10/1/29 (NATL-RE)		1,000,000		1,022,580
	Manchester, Missouri Tax Increment &
	Transportation Revenue Refunding
	(Highway 141/Manchester Road
	Project) 6.875% 11/1/39		165,000		163,238
	Miami-Dade County, Florida Special
	Obligation (Capital Appreciation &
	Income) Series B
	5.00% 10/1/35 (NATL-RE)		2,000,000		1,982,921
	New York State Dormitory Authority
	(State Personal Income Tax Revenue-
	Education) Series A 5.00% 3/15/38		570,000		599,817
	New York State Thruway Authority
	(State Personal Income Tax
	Revenue-Transportation) Series A
	5.00% 3/15/22		425,000		467,258
	Puerto Rico Sales Tax Financing Sales
	Tax Revenue First Subordinate
	Series A
	•5.00% 8/1/39		500,000		523,345
	5.75% 8/1/37		245,000		261,187
	Ω(Capital Appreciation) 6.75% 8/1/32		610,000		467,400
					7,313,386
State General Obligation Bonds – 7.91%
	California State Various Purposes
	6.00% 4/1/38		105,000		110,591
	New York State Refunding Series A
	5.00% 2/15/39		300,000		314,661
	Puerto Rico Commonwealth (Public
	Improvement) Refunding
	Series A 5.00% 7/1/16 (ASSURED GTY)		250,000		273,740
	Series A 5.50% 7/1/19 (NATL-RE)		1,250,000		1,311,787
	Series C 6.00% 7/1/39		200,000		209,072
	Virginia State Commonwealth
	Refunding Series B 5.00% 6/1/20		250,000		284,378
					2,504,229
Transportation Revenue Bonds – 12.18%
	Bay Area Toll Authority, California Toll
	Bridge Revenue (San Francisco Bay
	Area) Series F-1 5.625% 4/1/44		235,000		254,571
	Florida Ports Financing Commission
	Revenue (State Transportation Trust
	Fund) 5.375% 6/1/27 (NATL-RE) (AMT)		1,000,000		999,959
	Maryland State Economic Development
	Revenue (Transportation Facilities
	Project) Series A 5.75% 6/1/35		255,000		260,092
	Metropolitan Washington D.C.
	Airports Authority Dulles Toll Road
	Revenue (First Senior Lien) Series A
	5.25% 10/1/44		245,000		252,201

(continues) 19

Statements of net assets

Delaware Investments National Municipal Income Fund

		Principal
		Amount		Value
Municipal Bonds (continued)
Transportation Revenue Bonds (continued)
	Pennsylvania State Turnpike
	Commission Revenue
	Subordinate Series B 5.25% 6/1/39	$	300,000	$	306,546
	Subordinate Series D 5.125% 12/1/40		390,000		395,168
	Sacramento County, California Airport
	Services Revenue (PFC/Grant)
	Subordinate Series C 6.00% 7/1/41		300,000		322,359
	St. Louis, Missouri Airport Revenue
	(Lambert-St. Louis International)
	Series A-1 6.625% 7/1/34		325,000		344,188
	Texas Private Activity Bond Surface
	Transportation Senior Lien Note
	Mobility Partners 7.50% 12/31/31		300,000		326,160
•	Triborough, New York Bridge & Tunnel
	Authority Revenue Subordinate
	Series B-3 5.00% 11/15/38		350,000		395,129
					3,856,373
Water & Sewer Revenue Bonds – 8.51%
	Atlanta, Georgia Water & Wastewater
	Revenue Series A 6.25% 11/1/39		300,000		318,867
	Florida Water Pollution Control
	Financing Revenue Series A
	5.00% 1/15/25		235,000		250,820
	Riviera Beach, Florida Utility Special
	District Water & Sewer Revenue
	5.00% 10/1/34 (NATL-RE) (FGIC)		1,200,000		1,110,672
	Winter Haven, Florida Utilities Systems
	Revenue 5.00% 10/1/30 (NATL-RE)		1,000,000		1,011,980
					2,692,339
Total Municipal Bonds
	(cost $30,682,889)				31,630,083

Short-Term Investment – 0.95%
Variable Rate Demand Note – 0.95%
•	Colorado Educational & Cultural
	Facilities Authority Revenue
	(National Jewish Federation Bond
	Program) Series A-8 0.30% 9/1/35
	(LOC - Bank of America N.A.)		300,000		300,000
Total Short-Term Investment
	(cost $300,000)				300,000

Total Value of Securities – 100.89%
	(cost $30,982,889)				31,930,083
Liabilities Net of Receivables and
	Other Assets – (0.89%)				(279,955	)
Net Assets Applicable to 2,422,200
	Shares Outstanding, Equivalent to
	$13.07 Per Share – 100.00%			$	31,650,128

Components of Net Assets at March 31, 2010:
Common stock, $0.01 par value, unlimited shares
authorized to the Fund	$	33,208,317
Undistributed net investment income		145,793
Accumulated net realized loss on investments		(2,651,176	)
Net unrealized appreciation of investments		947,194
Total net assets	$	31,650,128

Ω	Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.

•	Variable rate security. The rate shown is the rate as of March 31, 2010.

Summary of Abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation

See accompanying notes

Statements of operations

Delaware Investments Closed-End Municipal Bond Funds

Year Ended March 31, 2010

	Delaware		Delaware		Delaware		Delaware
	Investments		Investments		Investments		Investments
	Arizona		Colorado		Minnesota		National
	Municipal		Municipal		Municipal		Municipal
	Income		Income		Income		Income
	Fund, Inc.		Fund, Inc.		Fund II, Inc.		Fund
Investment Income:
Interest	$	1,954,031	$	3,307,301	$	7,806,021	$	1,579,265

Expenses:
Management fees		160,532		265,120		632,888		123,057
Accounting and administration expenses		16,085		26,563		63,411		12,330
Dividend disbursing and transfer agent fees and expenses		13,163		16,828		55,998		18,878
Audit and tax		13,038		14,635		20,921		12,286
Reports and statements to shareholders		10,989		17,116		31,407		10,476
Legal fees		7,525		11,141		25,765		5,607
Pricing fees		4,330		4,291		7,575		5,191
Stock exchange fees		2,625		4,715		10,843		1,816
Directors’/Trustees’ fees		2,512		4,152		9,910		1,925
Insurance fees		1,669		2,621		5,603		1,325
Registration fees		863		863		863		863
Dues and services		773		1,295		3,145		734
Custodian fees		718		1,059		3,212		741
Consulting fees		541		926		2,202		406
Directors’/Trustees’ expenses		183		316		753		139
Taxes (Pennsylvania franchise tax)		—		—		7,274		—
Total operating expenses		235,546		371,641		881,770		195,774
Net Investment Income		1,718,485		2,935,660		6,924,251		1,383,491

Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments		397,279		1,000,097		457,242		(344,009	)
Net change in unrealized appreciation/depreciation of investments		2,548,883		2,519,706		9,715,309		2,879,326
Net Realized and Unrealized Gain on Investments		2,946,162		3,519,803		10,172,551		2,535,317

Net Increase in Net Assets Resulting from Operations	$	4,664,647	$	6,455,463	$	17,096,802	$	3,918,808

See accompanying notes

Statements of changes in net assets

Delaware Investments Closed-End Municipal Bond Funds

	Delaware Investments						Delaware Investments
	Arizona Municipal						Colorado Municipal
	Income Fund, Inc.						Income Fund, Inc.
	Year Ended						Year Ended
	3/31/10			3/31/09			3/31/10			3/31/09
Increase (Decrease) in Net Assets from Operations:
Net investment income	$	1,718,485		$	2,107,397		$	2,935,660		$	3,653,366
Net realized gain (loss) on investments		397,279			(198,104	)		1,000,097			(1,425,714	)
Net change in unrealized appreciation/depreciation of investments		2,548,883			(3,039,177	)		2,519,706			(3,237,138	)
Dividends on preferred stock		—			(520,055	)		—			(835,572	)
Net increase (decrease) in net assets resulting from operations		4,664,647			(1,649,939	)		6,455,463			(1,845,058	)

Dividends and Distributions to Common Shareholders from:
Net investment income		(1,438,912	)		(1,699,854	)		(2,757,147	)		(3,175,556	)
Net realized gain on investments		(74,555	)		—			—			—
		(1,513,467	)		(1,699,854	)		(2,757,147	)		(3,175,556	)

Net Increase (Decrease) in Net Assets		3,151,180			(3,349,793	)		3,698,316			(5,020,614	)

Net Assets:
Beginning of year		37,944,180			41,293,973			63,952,486			68,973,100
End of year	$	41,095,360		$	37,944,180		$	67,650,802		$	63,952,486

Undistributed net investment income	$	268,364		$	—		$	176,704		$	—

	Delaware Investments						Delaware Investments
	Minnesota Municipal						National Municipal
	Income Fund II, Inc.						Income Fund
	Year Ended						Year Ended
	3/31/10			3/31/09			3/31/10			3/31/09
Increase (Decrease) in Net Assets from Operations:
Net investment income	$	6,924,251		$	8,930,566		$	1,383,491		$	1,704,667
Net realized gain (loss) on investments		457,242			(3,108,067	)		(344,009	)		(2,108,853	)
Net change in unrealized appreciation/depreciation of investments		9,715,309			(8,600,912	)		2,879,326			(1,210,078	)
Dividends on preferred stock		—			(2,008,388	)		—			(416,044	)
Net increase (decrease) in net assets resulting from operations		17,096,802			(4,786,801	)		3,918,808			(2,030,308	)

Dividends and Distributions to Common Shareholders from:
Net investment income		(6,557,836	)		(7,334,488	)		(1,235,322	)		(1,368,543	)
		(6,557,836	)		(7,334,488	)		(1,235,322	)		(1,368,543	)

Net Increase (Decrease) in Net Assets		10,538,966			(12,121,289	)		2,683,486			(3,398,851	)

Net Assets:
Beginning of year		151,183,565			163,304,854			28,966,642			32,365,493
End of year	$	161,722,531		$	151,183,565		$	31,650,128		$	28,966,642

Undistributed net investment income	$	362,513		$	—		$	145,793		$	—

See accompanying notes

Financial highlights

Delaware Investments Arizona Municipal Income Fund, Inc.

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

	Year Ended
	3/31/10		3/31/09		3/31/08		3/31/07		3/31/06
Net asset value, beginning of period	$12.720		$13.850		$14.730		$14.730		$15.070

Income (loss) from investment operations:
Net investment income	0.576		0.707		0.906		0.932		0.951
Net realized and unrealized gain (loss) on investments	0.992		(1.093	)	(0.783	)	0.160		(0.177	)
Dividends on preferred stock from:
Net investment income	—		(0.174	)	(0.312	)	(0.297	)	(0.232	)
Net realized gain on investments	—		—		(0.023	)	(0.013	)	(0.002	)
Total dividends on preferred stock	—		(0.174	)	(0.335	)	(0.310	)	(0.234	)
Total from investment operations	1.568		(0.560	)	(0.212	)	0.782		0.540

Less dividends and distributions to common shareholders from:
Net investment income	(0.483	)	(0.570	)	(0.610	)	(0.750	)	(0.860	)
Net realized gain on investments	(0.025	)	—		(0.058	)	(0.032	)	(0.020	)
Total dividends and distributions