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

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:		811-07810

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:		December 31, 2015

Item 1. Schedule of Investments.

Schedule of investments

Delaware Investments^®Colorado Municipal Income Fund, Inc.
December 31, 2015 (Unaudited)

		Principal	Value
		Amount°	(U.S. $)
Municipal Bonds – 138.77%
Corporate-Backed Revenue Bonds – 4.65%
	Public Authority for Colorado
	Energy Revenue
	6.25% 11/15/28	865,000	$	1,109,778
	Public Authority of Colorado
	Energy Natural Gas
	Revenue
	Series 2008
	6.50% 11/15/38	1,750,000		2,375,783
				3,485,561
Education Revenue Bonds – 26.91%
	Colorado Educational &
	Cultural Facilities Authority
	Revenue
	144A 5.00% 7/1/36 #	500,000		514,865
	5.125% 11/1/49	765,000		780,308
	144A 5.25% 7/1/46 #	500,000		515,225
	(Academy Charter School
	Project)
	5.50% 5/1/36 (SGI)	1,720,000		1,726,158
	(Charter School - Atlas
	Preparatory School) 144A
	5.25% 4/1/45 #	700,000		689,647
	(Charter School -
	Community Leadership
	Academy) 7.45% 8/1/48	500,000		596,825
	(Charter School - Peak to
	Peak Charter)
	5.00% 8/15/34	1,000,000		1,122,640
	(Improvement - Charter
	School - University Lab
	School Building) 144A
	5.00% 12/15/45 #	500,000		499,990
	(Johnson & Wales
	University) Series A
	5.25% 4/1/37	900,000		1,020,987
	(Liberty Charter School)
	Series A 5.00% 1/15/44	1,000,000		1,087,490
	(Littleton Charter School
	Project)
	4.375% 1/15/36 (AGC)	1,200,000		1,208,352
	(Skyview Charter School)
	144A 5.50% 7/1/49 #	750,000		793,065
	(Student Housing - Campus
	Village Apartments)
	5.00% 6/1/23	1,065,000		1,142,606
	Colorado School of Mines
	Series B 5.00% 12/1/42	2,500,000		2,816,800
	Colorado State Board of
	Governors
	(University Enterprise
	System) Series A
	5.00% 3/1/39	10,000		11,024
	University of Colorado
	5.00% 6/1/31	3,185,000		3,678,038
	Series A 5.00% 6/1/33	1,000,000		1,161,650
	Western State College
	5.00% 5/15/34	750,000		819,023
				20,184,693
Electric Revenue Bonds – 3.40%
	Colorado Springs Utilities
	System Improvement
	Revenue
	Series A 5.00% 11/15/45	750,000		873,143
	Platte River Power Authority
	Series HH 5.00% 6/1/28	1,500,000		1,678,620
				2,551,763
Healthcare Revenue Bonds – 44.41%
	Aurora Hospital Revenue
	(Children’s Hospital
	Association Project)
	Series A 5.00% 12/1/40	4,000,000		4,359,640
	Colorado Health Facilities
	Authority Revenue
	(Catholic Health Initiatives)
	Series A 5.00% 7/1/39	750,000		806,460
	Series A 5.00% 2/1/41	2,400,000		2,613,456
	Series A 5.25% 2/1/33	1,625,000		1,803,019
	Series A 5.25% 1/1/45	1,000,000		1,118,680
	Series C-1
	5.10% 10/1/41 (AGM)	1,000,000		1,054,450
	Series D 6.125% 10/1/28	750,000		836,123
	(Christian Living
	Community Project)
	6.375% 1/1/41	615,000		667,583
	Series A 5.75% 1/1/37	885,000		898,124
	(Covenant Retirement
	Communities Inc.)
	5.00% 12/1/35	1,000,000		1,088,020
	Series A 5.75% 12/1/36	1,000,000		1,123,840

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Schedule of investments

Delaware Investments^®Colorado Municipal Income Fund, Inc. (Unaudited)

		Principal	Value
		Amount°	(U.S. $)
Municipal Bonds (continued)
Healthcare Revenue Bonds (continued)
	Colorado Health Facilities
	Authority Revenue
	(Evangelical Lutheran Good
	Samaritan Society)
	5.00% 6/1/28	1,250,000	$	1,407,213
	5.50% 6/1/33	2,000,000		2,305,080
	5.625% 6/1/43	1,000,000		1,158,590
	(Healthcare Facilities -
	American Baptist)
	8.00% 8/1/43	500,000		599,445
	(Mental Health Center of
	Denver Project) Series A
	5.75% 2/1/44	1,500,000		1,708,035
	(National Jewish Health
	Project) 5.00% 1/1/27	500,000		523,585
	(Sisters of Charity of
	Leavenworth Health
	System) Series A
	5.00% 1/1/40	4,750,000		5,246,993
	(Total Long-Term Care)
	Series A 6.00% 11/15/30	400,000		454,100
	Sunny Vista Living Center
	Series A 6.25% 12/1/50	505,000		514,302
	Vail Valley Medical Center
	Project 5.00% 1/15/35	1,250,000		1,448,275
	Denver Health & Hospital
	Authority Health Care
	Revenue
	(Recovery Zone Facilities)
	5.625% 12/1/40	750,000		827,625
	University of Colorado
	Hospital Authority Revenue
	Series A 6.00% 11/15/29	650,000		748,755
				33,311,393
Lease Revenue Bonds – 5.86%
	Aurora Certificates of
	Participation
	Series A 5.00% 12/1/30	630,000		707,742
	Colorado Building Excellent
	Schools Today
	Certificates of Participation
	Series G 5.00% 3/15/32	2,000,000		2,292,400
	Pueblo County Certificates of
	Participation
	(County Judicial Complex
	Project)
	5.00% 9/15/42 (AGM)	1,250,000		1,396,750
				4,396,892
Local General Obligation Bonds – 13.41%
	Adams & Weld Counties
	School District No 27J
	Brighton
	4.00% 12/1/30	700,000		778,106
	Adams 12 Five Star Schools
	5.00% 12/15/25	250,000		315,405
	Arapahoe County School
	District No. 1 Englewood
	5.00% 12/1/31	2,935,000		3,449,476
	Beacon Point Metropolitan
	District
	5.00% 12/1/30 (AGM)	600,000		698,436
	Boulder Larimer & Weld
	Counties St. Vrain Valley
	School District No. Re-1J
	5.00% 12/15/33	750,000		833,535
	Denver City & County
	(Better Denver & Zoo)
	Series A 5.00% 8/1/25	650,000		727,207
	Denver International Business
	Center
	Metropolitan District No. 1
	5.00% 12/1/30	650,000		688,851
	Eaton Area Park & Recreation
	District
	5.25% 12/1/34	190,000		198,373
	5.50% 12/1/38	245,000		260,001
	Jefferson County School
	District No. R-1
	5.25% 12/15/24	750,000		949,927
	Pueblo County School District
	No. 70
	5.00% 12/1/31	250,000		283,857
	Rangely Hospital District
	6.00% 11/1/26	750,000		872,085
				10,055,259
Pre-Refunded/Escrowed to Maturity Bonds – 4.47%
	Adams & Arapahoe Counties
	Joint School District No.
	28J (Aurora)
	6.00% 12/1/28-18§	600,000		685,920
	Colorado State Board of
	Governors
	Series A 5.00% 3/1/39-19§	690,000		772,414
	Glendale Certificates of
	Participation
	5.00% 12/1/25-16 (SGI)§	1,000,000		1,041,030

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(Unaudited)

		Principal	Value
		Amount°	(U.S. $)
Municipal Bonds (continued)
Pre-Refunded/Escrowed to Maturity Bonds (continued)
	University of Colorado
	Series A
	5.375% 6/1/38-19§	750,000	$	856,717
				3,356,081
Special Tax Revenue Bonds – 25.04%
	Central Platte Valley
	Metropolitan District
	5.00% 12/1/43	375,000		390,049
	Commerce City
	5.00% 8/1/44 (AGM)	1,000,000		1,134,140
	Denver Convention Center
	Hotel Authority Revenue
	5.00% 12/1/35 (SGI)	2,875,000		2,923,530
	Fountain Urban Renewal
	Authority Tax Increment
	Revenue
	(Academy Highlands
	Project) Series A
	5.50% 11/1/44	1,405,000		1,457,898
	Guam Government Business
	Privilege Tax Revenue
	Series A 5.125% 1/1/42	435,000		478,143
	Series A 5.25% 1/1/36	565,000		628,754
	Regional Transportation
	District Revenue
	Series A 5.375% 6/1/31	460,000		525,518
	(Denver Transit Partners)
	6.00% 1/15/41	2,175,000		2,452,095
	(FasTracks Project)
	Series A
	4.50% 11/1/36 (AGM)	1,500,000		1,574,955
	Series A 5.00% 11/1/38	4,085,000		4,663,272
	Sterling Ranch Community
	Authority Board
	Series A 5.75% 12/1/45	525,000		525,761
	Tallyns Reach Metropolitan
	District No. 3
	(Limited Tax Convertible)
	5.125% 11/1/38	295,000		313,538
	Thornton Development
	Authority
	East 144th Avenue & I-25
	Project
	Series B 4.00% 12/1/37	350,000		357,423
	Series B 5.00% 12/1/35	265,000		297,370
	Series B 5.00% 12/1/36	440,000		491,951
	Virgin Islands Public Finance
	Authority
	(Matching Fund Senior
	Lien)
	5.00% 10/1/29 (AGM)	500,000		565,450
				18,779,847
Transportation Revenue Bonds – 7.80%
	Colorado High Performance
	Transportation Enterprise
	Revenue
	(Senior U.S. 36 & I-25
	Managed Lanes)
	5.75% 1/1/44 (AMT)	1,110,000		1,197,368
	Denver City & County Airport
	System Revenue
	Series A 5.25% 11/15/36	750,000		851,437
	Series B 5.00% 11/15/28	1,000,000		1,182,740
	Series B 5.00% 11/15/37	2,000,000		2,273,260
	E-470 Public Highway
	Authority
	Series C 5.25% 9/1/25	310,000		348,338
				5,853,143
Water & Sewer Revenue Bonds – 2.82%
	City of Aurora Water Revenue
	First Lien Series A
	5.00% 8/1/36 (AMBAC)	2,000,000		2,113,120
				2,113,120

Total Municipal Bonds
	(cost $95,725,440)			104,087,752

Total Value of
	Securities – 138.77%
	(cost $95,725,440)			104,087,752
Liquidation Value of
	Preferred
	Stock – (40.00%)			(30,000,000	)
Receivables and Other
	Assets Net of
	Liabilities – 1.23%			919,811
Net Assets Applicable to
	4,837,100 Shares
	Outstanding – 100.00%		$	75,007,563

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Schedule of investments

Delaware Investments^®Colorado Municipal Income Fund, Inc. (Unaudited)

____________________

#	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 $3,012,792, which represents 4.02% 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.
§	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:
AGC – Insured by Assured Guaranty Corporation
AGM – Insured by Assured Guaranty Municipal Corporation
AMBAC – Insured by AMBAC Assurance Corporation
AMT – Subject to Alternative Minimum Tax
SGI – Insured by Syncora Guarantee Inc.

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Notes

Delaware Investments^® Colorado Municipal Income Fund, 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 Colorado Municipal Income Fund, 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		$	104,087,752

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.

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Notes

December 31, 2015 (Unaudited)

3. Subsequent Events

On January 22, 2016, Delaware Investments Colorado Municipal Income Fund, Inc. (the “Fund”) successfully issued $30,000,000 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 the 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 its VMTP shares on February 1, 2021, unless earlier redeemed or repurchased by the Fund. VMTP shares are subject to optional and mandatory redemption in certain circumstances. The Fund may be obligated to redeem certain of the VMTP shares if the Fund fails to maintain certain asset coverage and leverage ratio requirements and such failures are not cured by the applicable cure date. The redemption price per share is equal to the sum of the liquidation value per share plus any accumulated but unpaid dividends. Dividends on the VMTP shares are set weekly, subject to adjustments in certain circumstances.

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

Leverage may also cause the Fund to incur certain costs. In the event that the Fund is unable to meet certain criteria (including, but not limited to, maintaining certain ratings with Fitch Ratings and Moody’s Investors Service, funding dividend payments, or funding redemptions), the 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.”

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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: