Delaware Investments Provides Update on Auction Rate Preferred Securities Issued...

Delaware Investments Provides Update on Auction Rate Preferred Securities
Issued by Municipal Closed-End Funds

PHILADELPHIA, July 31 /PRNewswire-FirstCall/ -- Delaware Investments today
provided an update on its efforts to find a solution to the lack of liquidity
for holders of preferred shares issued by four of its closed-end funds:
Delaware Investments Arizona Municipal Income Fund, Inc. (ASE: VAZ), Delaware
Investments Colorado Municipal Income Fund, Inc. (ASE: VCF), Delaware
Investments Minnesota Municipal Income Fund II, Inc. (ASE: VMM), and Delaware
Investments National Municipal Income Fund (ASE: VFL). The unprecedented,
industry-wide lack of liquidity in these securities is due to continuing
failed auctions and remarketings of the preferred shares. Delaware Investments
is acutely aware of the concerns of the preferred shareholders impacted by the
failed remarketings and remains committed to act in the best interest of all
of our fund shareholders.
Delaware Investments continues to communicate with other market
participants to develop workable long-term solutions to these issues. Along
with other issuers of closed-end funds, the firm is exploring a number of
possible alternatives, including potentially issuing "liquidity enhanced"
preferred shares eligible for purchase by a broader institutional market, in
particular money market funds. These "liquidity enhanced" preferred shares
would have a put feature that would require repurchase on demand by a
liquidity provider in the event of a failed auction or remarketing.
A number of challenges remain in implementing this solution, including
potentially obtaining exemptive relief from the Securities and Exchange
Commission and locating liquidity partners and remarketing agents. Currently,
no institutional market for "liquidity enhanced" preferred shares exists, and
there is no guarantee that a market will develop. In addition, this approach
may significantly increase the funds' leveraging costs. The timing of some or
all of these factors may be beyond the firm's control.
Another option is the use of tender option bonds within some portfolios as
an alternate form of leverage, which may allow for partial redemptions of some
preferred shares. However, tender option bonds may not be practical for all
municipal closed-end funds because they may have a relatively high cost of
implementation. In addition, this form of leverage may impact portfolio
management flexibility. Moreover, the financing for these bonds may increase
the leverage costs for these funds.
Delaware Investments cannot guarantee that it will seek either of these
alternatives, or be able to implement either of these alternatives, or that
they will occur in a timely manner or be well received by the marketplace. The
firm, however, remains committed to exploring options to address the current
situation and to act in the best interests of the closed-end funds and all of
their shareholders. Remarketing results will continue to be made available at
http://www.delawareinvestments.com.
About Delaware Investments:
Delaware Investments, an affiliate of Lincoln Financial Group, is a
Philadelphia-based diversified asset management firm with more than $135
billion in assets under management as of June 30, 2008. Through a broad range
of managed accounts and portfolios, mutual funds, retirement accounts, sub-
advised funds, and other investment products, Delaware Investments provides
investment services to individual investors and to institutional investors
such as private and public pension funds, foundations, and endowment funds.
Delaware Investments is the marketing name for Delaware Management Holdings,
Inc. and its subsidiaries. For more information on Delaware Investments, visit
the company at http://www.delawareinvestments.com. Lincoln Financial Group is
the marketing name for Lincoln National Corporation (NYSE: LNC) and its
affiliates. For more information on Lincoln Financial Group, visit
http://www.lincolnfinancial.com.
SOURCE Delaware Investments

Ayele Ajavon, +1-215-255-1632, aajavon@delinvest.com, or Laurel O'Brien,
+1-215-255-1520, lobrien@delinvest.com, both Corporate Communications of
Delaware Investments