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: 811-2806
Exact name of registrant as specified in charter: Delaware Group Cash Reserve
Address of principal executive offices:
2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service:
Richelle S. Maestro, 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, 2004
Item 1. Reports to Stockholders
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
FIXED INCOME
ANNUAL REPORT MARCH 31, 2004
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DELAWARE CASH RESERVE FUND
[LOGO]
POWERED BY RESEARCH.(SM)
TABLE
OF CONTENTS
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PORTFOLIO MANAGEMENT REVIEW 1
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PERFORMANCE SUMMARY 2
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FINANCIAL STATEMENTS:
Statement of Net Assets 4
Statement of Operations 6
Statements of Changes in Net Assets 7
Financial Highlights 8
Notes to Financial Statements 12
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REPORT OF INDEPENDENT AUDITORS 14
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BOARD OF TRUSTEES/OFFICERS 15
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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.
(C)2004 Delaware Distributors, L.P.
PORTFOLIO DELAWARE CASH RESERVE FUND
MANAGEMENT REVIEW April 9, 2004
FUND MANAGER
Cynthia Isom
Portfolio Manager
Q: CAN YOU DESCRIBE THE INTEREST RATE ENVIRONMENT DURING THE PAST 12-MONTH
PERIOD?
A: In continuing with its downward trend, the Federal Reserve cut the fed funds
rate only once during the past 12-month period at its June 25, 2003 meeting. The
Federal Reserve has remained firm on its stance of monetary policy, keeping
interest rates at historical lows while monitoring the economy for any threat of
inflation. Since the Fund's performance depends largely on the direction of
interest rates, the current low interest rate environment resulted in an adverse
effect on both total return performance and yield.
Although the fed funds rate moved only once during the fiscal year, the Fed
offered plenty of activity for both the interest rate-sensitive fixed income and
equity markets. Starting in mid 2003, Fed Chairman Alan Greenspan stated to bond
investors that buying long-term Treasuries was unlikely to thwart deflation. As
a result of this news, bond prices began to decline while mortgage rates
escalated from their 46-year low.
The Fed made more headlines in January 2004 when it shied away from using the
phrase "for a considerable period" in describing its stance on adjusting the
rates. The removal of this phrase sent a wave of concern through the markets, as
some investors interpreted it to mean that the Fed would no longer stress
patience with regard to its interest rate policy.
Q: HOW DID THE FUND PERFORM DURING THE PERIOD?
A: Delaware Cash Reserve Fund returned +0.67% (Class A shares at net asset value
with dividends reinvested) for the fiscal year ended March 31, 2004. As of
period end, the 7-day SEC yield for Class A shares was 0.61%, slightly down from
its 0.84% yield one year ago.
Equity markets have changed vastly over the past 12 months as economic vitality
has flourished, bringing a much desired rebound from the low levels witnessed in
the recent years. As consumers continued to spend and fuel the economy, gross
domestic product (GDP) retained its positive stature. During the past fiscal
year, third quarter 2003 GDP rose at an annualized rate of +8.2%, the highest
level in almost 20 years. Such economic strength continued in the following two
quarters, albeit at a more subtle pace.
Our shareholders can take comfort knowing that Delaware Cash Reserve Fund is an
investment vehicle that attempts to preserve its net asset value at $1 per share
and maintain liquidity -- which can be an attractive option during times of
market volatility and uncertainty.
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POTENTIAL BENEFITS OF DELAWARE CASH RESERVE FUND
Delaware Cash Reserve Fund is a money market mutual fund that invests in
short-term obligations from credit-worthy corporations and/or from state
governments or the federal government. The Fund offers several potentially
compelling advantages:
o RELATIVE SAFETY -- Your investment is managed to preserve principal, which
can be beneficial during volatile markets (although it is always possible to
lose principal, even in a money market fund);
o CHECK WRITING PRIVILEGES -- You have the ability to write checks against your
account;*
o CURRENT INCOME -- The Fund seeks stability of your principal and also a yield
above the inflation rate;
o CONVENIENT ACCESS to other funds in the Delaware Investments Family of Funds
- Investing in other Delaware Investments mutual funds can be as easy as
making a toll-free call.**
Whether you wish to preserve capital for a specific financial goal or balance
the risks of stock funds and bond funds in a long-term portfolio, you may be
well-served by Delaware Cash Reserve Fund. Investors should be aware that money
market funds are not FDIC insured or bank guaranteed. Although the Fund seeks to
preserve the value of your investment at $1 per share, it is possible to lose
money by investing in the Fund.
We encourage you to consider your Delaware Cash Reserve Fund investment in the
context of your entire portfolio. Talk to your financial advisor about how
Delaware Investments' wide spectrum of equity and fixed-income mutual funds may
complement your investment in Delaware Cash Reserve Fund. Find out how we can
help shape your future today.
*For investors of Class A shares.
**When exchanging money from Delaware Cash Reserve Fund to another fund, you may
incur a sales charge. For a prospectus for any Delaware Investments mutual
fund, contact your financial advisor or call Delaware Investments at 800
523-1918. The prospectus contains complete information about the Fund,
including fees and expenses. Please read it carefully before you invest. The
Fund's exchange offer is subject to termination and its terms are subject to
change.
1
DELAWARE
CASH RESERVE FUND
FUND BASICS
As of March 31, 2004
- ---------------------------------------------
Fund Objective:
The Fund seeks to provide maximum current
income, while preserving principal and
maintaining liquidity.
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Total Fund Net Assets:
$550.06 million
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Number of Holdings:
71
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Fund Start Date:
June 30, 1978
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Your Fund Manager:
Cynthia Isom holds a bachelor's degree from
Vassar College. After eight years in the
securities business, she joined Delaware
Investments in 1985 as a trader of money
market, high-grade, and Treasury securities.
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Nasdaq Symbols:
Class A DCRXX
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CUSIP Numbers:
Consultant Class 245910-20-3
Class B 245910-30-2
Class C 245910-40-1
The performance data quoted represent past performance; past performance does
not guarantee future results. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance
data quoted. Please obtain the performance data for the most recent month end by
calling 800 523-1918 or visiting our web site at www.delawareinvestments.com/
performance. You should consider the investment objectives, risks, charges and
expenses of the investment carefully before investing. The Delaware Cash Reserve
Fund prospectus contains this and other important information about the
investment company. Please request a prospectus by calling 800 523-1918. Read it
carefully before you invest or send money. Performance includes reinvestment of
all distributions.
FUND PERFORMANCE
Average Annual Total Returns/Yields
Through March 31, 2004
7-Day Yield
Lifetime 10 Years Five Years One Year 3/31/04
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Class A (Est. 6/30/78) +6.60% +3.76% +2.90% +0.67% 0.61%
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Consultant Class (Est. 3/10/88) +6.43% +3.50% +2.65% +0.42% 0.36%
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Class B (Est. 5/2/94)
Excluding Sales Charge +2.81% +2.02% +0.11% 0.11%
Including Sales Charge +2.81% +1.60% -3.89%
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Class C (Est. 11/29/95)
Excluding Sales Charge +2.68% +2.02% +0.11% 0.11%
Including Sales Charge +2.68% +2.02% -0.89%
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An investment in Delaware Cash Reserve Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment of
$1.00 per share, it is possible to lose money by investing in Delaware Cash
Reserve Fund. Returns and yields will fluctuate. Past performance is not a
guarantee of future results.
Class A shares are available without sales charges or any 12b-1 fees.
Consultant Class shares were first made available on March 10, 1988 and are
available without a sales charge. Consultant Class performance prior to March
10, 1988 for Delaware Cash Reserve Fund is based on Class A performance.
Performance after March 10, 1988 reflects the impact of an annual service and
distribution fee of up to 0.30%.
Class B shares are sold with a contingent deferred sales charge that declines
from 4% to zero depending upon the period of time the shares are held. Class B
shares will automatically convert to Consultant Class shares on a quarterly
basis approximately eight years after purchase. They are also subject to an
annual distribution and service fee of up to 1%.
Class C shares are sold with a contingent deferred sales charge of 1%, if
redeemed during the first 12 months. They are also subject to an annual
distribution and service fee of up to 1%.
An expense limitation was in effect for all classes of Delaware Cash Reserve
Fund during all periods shown. Performance would have been lower had the expense
limitation not been in effect.
The performance table and graph on the following page do not reflect the
deduction of taxes the shareholder would pay on Fund dividends or redemptions of
Fund shares.
Delaware Cash Reserve Fund Class B and C shares are available only as part of an
overall investment program using Class B or C shares of other funds. Direct
investment into Delaware Cash Reserve Fund Class B or C shares may be made only
when establishing a Wealth Builder plan. Performance, excluding sales charges,
for Class B and C shares assumes either that contingent deferred sales charges
did not apply or the investment was not redeemed.
2
PERFORMANCE OF A $10,000 INVESTMENT
March 31, 1994 through March 31, 2004
DELAWARE CASH RESERVE PERFORMANCE OF $10,000 INVESTMENT CHART
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DELAWARE CASH LIPPER MONEY
RESERVE FUND - MARKET FUNDS
CLASS A SHARES AVERAGE
3/31/94 $10,000 $10,000
3/31/95 $10,401 $10,375
3/31/96 $10,922 $10,857
3/31/97 $11,426 $11,313
3/31/98 $11,972 $11,812
3/31/99 $12,520 $12,300
3/31/00 $13,103 $12,813
3/31/01 $13,858 $13,468
3/31/02 $14,230 $13,710
3/31/03 $14,361 $13,756
3/31/04 $14,466 $13,718
Chart assumes $10,000 invested on March 31, 1994 and includes the reinvestment
of all dividends. Performance for other Fund classes will vary due to differing
charges and expenses. Returns plotted on the chart were as of the last day of
each month shown. The Lipper Money Market Funds Average represents the average
return of money market funds with similar investment objectives tracked by
Lipper (Source: Lipper Inc.). Past performance is not a guarantee of future
results.
3
STATEMENT DELAWARE CASH RESERVE FUND
OF NET ASSETS March 31, 2004
Principal Market
Amount Value
COMMERCIAL PAPER - 87.20%
Financial Services - 64.49%
Allianz Finance Corporation
1.04% 4/14/04 $10,000,000 $ 9,996,244
Amstel Funding Corporation
1.05% 4/15/04 8,494,000 8,490,565
1.055% 5/5/04 10,000,000 9,990,036
1.12% 7/23/04 2,146,000 2,138,456
Aquinas Funding LLC
1.05% 6/22/04 10,600,000 10,574,648
1.06% 4/1/04 13,170,000 13,170,000
Barton Capital Corporation
1.03% 4/5/04 8,000,000 7,999,084
1.05% 4/6/04 12,000,000 11,998,250
Beta Finance Inc.
1.04% 4/1/04 7,710,000 7,710,000
1.04% 4/15/04 3,000,000 2,998,787
1.07% 4/7/04 11,000,000 10,998,038
CAFCO LLC
1.04% 4/13/04 10,000,000 9,996,533
1.04% 6/17/04 10,000,000 9,977,756
Danske Corporation 1.03% 4/6/04 11,425,000 11,423,366
Eiffel Funding LLC
1.03% 4/13/04 8,000,000 7,997,253
1.04% 4/15/04 4,850,000 4,848,038
1.05% 5/13/04 10,750,000 10,736,831
Fleet Funding Corporation 1.02% 4/8/04 10,000,000 9,998,017
Fortis Funding LLC
1.02% 4/5/04 10,000,000 9,998,867
1.03% 5/25/04 5,000,000 4,992,275
Fountain Square Commercial
Funding Corporation
1.03% 4/2/04 4,500,000 4,499,871
1.03% 5/6/04 7,426,000 7,418,564
1.045% 6/15/04 2,557,000 2,551,433
General Electric Capital Corporation
1.073% 4/8/04 7,676,000 7,674,478
Massmutual Funding LLC 1.02% 4/5/04 5,380,000 5,379,390
Metlife Funding Inc. 1.02% 4/13/04 10,000,000 9,996,600
Moat Funding LLC
1.03% 4/2/04 8,000,000 7,999,771
1.03% 5/20/04 10,500,000 10,485,280
1.134% 4/5/04 6,500,000 6,499,227
Nationwide Life Insurance Co.
1.05% 5/3/04 7,000,000 6,993,467
Starbird Funding Corporation
1.05% 6/2/04 5,000,000 4,990,958
1.06% 4/7/04 10,000,000 9,998,233
1.07% 4/12/04 10,000,000 9,996,731
Steamboat Funding Corporation
1.03% 4/19/04 10,000,000 9,994,850
1.031% 4/7/04 10,000,000 9,998,233
Surrey Funding Corporation
1.05% 4/6/04 10,000,000 9,998,542
1.05% 4/12/04 10,000,000 9,996,792
Swiss RE Financial Products
1.05% 5/6/04 7,000,000 6,992,854
1.054% 5/20/04 7,225,000 7,214,576
1.06% 5/27/04 10,000,000 9,983,511
Principal Market
Amount Value
COMMERCIAL PAPER (continued)
Financial Services (continued)
Three Pillars Funding
1.04% 4/5/04 $ 5,024,000 $ 5,023,419
1.05% 4/6/04 5,000,000 4,999,271
Wal-Mart Funding 1.03% 4/23/04 10,000,000 9,993,706
-----------
354,712,801
-----------
Mortgage Bankers & Brokers - 16.62%
Credit Suisse First Boston 1.03% 4/12/04 4,750,000 4,748,505
HBOS Treasury Services
1.03% 4/16/04 7,500,000 7,496,781
1.045% 4/28/04 4,775,000 4,771,258
1.05% 4/8/04 7,000,000 6,998,571
ING Funding LLC 1.05% 4/6/04 21,500,000 21,496,892
Morgan Stanley 1.04% 4/6/04 10,000,000 9,998,556
NBNZ International Ltd.
1.03% 4/6/04 9,000,000 8,998,712
1.05% 5/18/04 7,000,000 6,990,404
1.09% 8/3/04 1,500,000 1,494,368
1.13% 7/21/04 3,000,000 2,989,548
Westpac Capital Corporation
1.03% 4/5/04 5,250,000 5,249,399
Westpac Trust Securities Ltd.
1.05% 4/7/04 10,200,000 10,198,215
-----------
91,431,209
-----------
Other - 6.09%
Swedish National Housing Finance
1.03% 4/2/04 10,500,000 10,499,700
University of California
1.02% 4/5/04 4,500,000 4,499,490
1.04% 4/6/04 9,500,000 9,498,628
Yale University 1.04% 5/4/04 9,000,000 8,991,420
-----------
33,489,238
-----------
TOTAL COMMERCIAL PAPER
(cost $479,633,248) 479,633,248
-----------
CERTIFICATES OF DEPOSIT - 5.45%
First Tennessee Bank 1.02% 4/20/04 10,000,000 10,000,000
Mercantile Safe Deposit & Trust Co.
1.04% 6/29/04 10,000,000 10,000,000
Wilmington Trust Co. 1.13% 7/7/04 10,000,000 10,000,536
-----------
TOTAL CERTIFICATES OF DEPOSIT
(cost $30,000,536) 30,000,536
-----------
*FLOATING RATE NOTES - 1.27%
General Electric Capital Corporation
1.21% 5/20/04 2,000,000 2,000,385
Morgan Stanley 1.08% 8/27/04 5,000,000 5,000,000
-----------
TOTAL FLOATING RATE NOTES
(cost $7,000,385) 7,000,385
-----------
4
STATEMENT DELAWARE CASH RESERVE FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
+VARIABLE RATE DEMAND NOTES - 2.14%
Chesterfield County, Virginia Industrial
Development Authority Revenue
(Virginia State University Real Estate)
Class A 1.06% 7/1/29
(LOC Bank of America) $ 3,560,000 $ 3,560,000
Crestmont Nursing Home 1.07% 3/1/24 3,350,000 3,350,000
Greensboro, North Carolina
Certificates of Participation
(Equipment Acquisition Project)
1.05% 6/1/07 2,850,000 2,850,000
PCP Investors LLC 1.15% 12/1/24 2,000,000 2,000,000
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TOTAL VARIABLE RATE DEMAND NOTES
(cost $11,760,000) 11,760,000
------------
YANKEE CDS - 4.55%
Barclays Bank 1.055% 4/5/04 5,000,000 5,000,013
Credit Suisse First Boston 1.05% 5/4/04 10,000,000 10,000,000
Toronto Dominion Bank 1.05% 5/4/04 10,000,000 9,999,998
------------
TOTAL YANKEE CDS (cost $25,000,011) 25,000,011
------------
TOTAL MARKET VALUE OF SECURITIES - 100.61%
(cost $553,394,180)** 553,394,180
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (0.61%) (3,333,308)
------------
NET ASSETS APPLICABLE TO 550,413,200 SHARES
OUTSTANDING - 100.00% $550,060,872
============
Net Asset Value - Delaware Cash Reserve Fund
Class A ($485,657,319 / 485,957,897 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund
Class B ($21,782,734 / 21,805,932 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund
Class C ($10,292,793 / 10,298,993 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund
Consultant Class ($32,328,026 / 32,350,378 Shares) $1.00
-----
COMPONENTS OF NET ASSETS AT MARCH 31, 2004:
Shares of beneficial interest
(unlimited authorization - no par) $550,413,221
Accumulated net realized loss on investments (352,349)
------------
Total net assets $550,060,872
============
*The interest rate shown is the rate as of March 31, 2004.
**Also the cost for federal income tax purposes.
+The interest rate shown is the rate as of March 31, 2004 and the maturity date
shown is the longer of the next interest readjustment or the date the principal
amount shown can be recovered through demand.
SUMMARY OF ABBREVIATIONS:
LOC - Letter of Credit
See accompanying notes
5
STATEMENT DELAWARE CASH RESERVE FUND
OF OPERATIONS Year Ended March 31, 2004
INVESTMENT INCOME:
Interest $ 6,624,374
-----------
EXPENSES:
Management fees $2,621,202
Dividend disbursing and transfer agent fees and expenses 2,284,227
Distribution expense -- Class B 290,846
Distribution expense -- Class C 111,728
Distribution expense -- Consultant Class 102,763
Accounting and administration expenses 238,386
Reports and statements to shareholders 111,259
Legal and professional fees 110,943
Registration fees 76,782
Trustees' fees 29,700
Custodian fees 19,000
Other 58,069 6,054,905
----------
Less expenses absorbed or waived (2,864,741)
Less waived distribution expense -- Class B (124,726)
Less waived distribution expense -- Class C (49,518)
Less waived distribution expense -- Consultant Class (13,301)
Less expenses paid indirectly (14,194)
-----------
Total expenses 2,988,425
-----------
NET INVESTMENT INCOME 3,635,949
-----------
NET REALIZED GAIN ON INVESTMENTS:
Net Realized Gain on Investments 14,961
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,650,910
===========
See accompanying notes
6
STATEMENTS DELAWARE CASH RESERVE FUND
OF CHANGES IN NET ASSETS
Year Ended
3/31/04 3/31/03
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 3,635,949 $ 5,223,790
Net realized gain (loss) on investments 14,961 (367,310)
------------ -------------
Net increase in net assets resulting from operations 3,650,910 4,856,480
------------ -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A (3,444,494) (4,883,075)
Class B (30,462) (53,729)
Class C (12,009) (14,854)
Consultant Class (148,984) (272,132)
------------ -------------
(3,635,949) (5,223,790)
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 560,956,289 604,018,602
Class B 12,821,846 44,635,175
Class C 11,309,957 13,331,678
Consultant Class 20,432,041 42,344,790
Net asset value of shares issued upon reinvestment of dividends:
Class A 3,386,159 4,765,752
Class B 27,003 46,346
Class C 11,346 13,766
Consultant Class 149,824 270,255
------------ -------------
609,094,465 709,426,364
------------ -------------
Cost of shares repurchased:
Class A (617,167,881) (595,032,593)
Class B (28,092,066) (33,375,974)
Class C (11,452,709) (9,999,346)
Consultant Class (25,284,311) (40,176,626)
------------ -------------
(681,996,967) (678,584,539)
------------ -------------
Increase (decrease) in net assets derived from capital share transactions (72,902,502) 30,841,825
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS (72,887,541) 30,474,515
NET ASSETS:
Beginning of year 622,948,413 592,473,898
------------ -------------
End of year $550,060,872 $622,948,413
============ ============
See accompanying notes
7
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE CASH RESERVE FUND CLASS A
- -----------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.007 0.009 0.026 0.056 0.046
------ ------ ------ ------ ------
Total from investment operations 0.007 0.009 0.026 0.056 0.046
------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.007) (0.009) (0.026) (0.056) (0.046)
------ ------ ------ ------ ------
Total dividends (0.007) (0.009) (0.026) (0.056) (0.046)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN(1) 0.67% 0.92% 2.59% 5.75% 4.69%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $485,657 $538,469 $525,032 $548,006 $566,193
Ratio of expenses to average net assets 0.45% 0.76% 0.92% 0.84% 0.91%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 0.93% 0.99% 0.92% 0.84% 0.91%
Ratio of net investment income to average net assets 0.67% 0.91% 2.56% 5.60% 4.59%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 0.19% 0.68% 2.56% 5.60% 4.59%
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends at net asset value.
Total investment return reflects waivers and payment of fees by the manager,
as applicable. Performance would have been lower had the expense limitation
not been in effect.
See accompanying notes
8
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE CASH RESERVE FUND CLASS B
- -----------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.001 0.002 0.016 0.046 0.036
------ ------ ------ ------ ------
Total from investment operations 0.001 0.002 0.016 0.046 0.036
------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.001) (0.002) (0.016) (0.046) (0.036)
------ ------ ------ ------ ------
Total dividends (0.001) (0.002) (0.016) (0.046) (0.036)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN(1) 0.11% 0.16% 1.57% 4.71% 3.65%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $21,783 $37,025 $25,744 $32,267 $23,349
Ratio of expenses to average net assets 1.02% 1.51% 1.92% 1.84% 1.91%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 1.93% 1.99% 1.92% 1.84% 1.91%
Ratio of net investment income to average net assets 0.10% 0.16% 1.56% 4.60% 3.59%
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expenses paid indirectly (0.81%) (0.32%) 1.56% 4.60% 3.59%
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends at net asset value
and does not reflect the impact of a sales charge. Total investment return
reflects waivers and payment of fees by the manager and distributor, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
9
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE CASH RESERVE FUND CLASS C
- -----------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.001 0.002 0.016 0.046 0.036
------ ------ ------ ------ ------
Total from investment operations 0.001 0.002 0.016 0.046 0.036
------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.001) (0.002) (0.016) (0.046) (0.036)
------ ------ ------ ------ ------
Total dividends (0.001) (0.002) (0.016) (0.046) (0.036)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN(1) 0.11% 0.16% 1.57% 4.71% 3.65%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $10,293 $10,424 $7,084 $6,893 $7,760
Ratio of expenses to average net assets 1.02% 1.51% 1.92% 1.84% 1.91%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 1.93% 1.99% 1.92% 1.84% 1.91%
Ratio of net investment income to average net assets 0.10% 0.16% 1.56% 4.60% 3.59%
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expenses paid indirectly (0.81%) (0.32%) 1.56% 4.60% 3.59%
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends at net asset value
and does not reflect the impact of a sales charge. Total investment return
reflects waivers and payment of fees by the manager and distributor, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
10
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE CASH RESERVE FUND CONSULTANT CLASS
- -----------------------------------------------------------------------------------------------------------------------
Year Ended
3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.004 0.007 0.023 0.054 0.043
------ ------ ------ ------ ------
Total from investment operations 0.004 0.007 0.023 0.054 0.043
------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.004) (0.007) (0.023) (0.054) (0.043)
------ ------ ------ ------ ------
Total dividends (0.004) (0.007) (0.023) (0.054) (0.043)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN(1) 0.42% 0.67% 2.34% 5.49% 4.43%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $32,328 $37,030 $34,614 $36,783 $32,648
Ratio of expenses to average net assets 0.70% 1.01% 1.17% 1.09% 1.16%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 1.23% 1.24% 1.17% 1.09% 1.16%
Ratio of net investment income to average net assets 0.42% 0.66% 2.31% 5.35% 4.34%
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expenses paid indirectly (0.11%) 0.43% 2.31% 5.35% 4.34%
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends at net asset value.
Total investment return reflects waivers and payment of fees by the manager
and distributor, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
11
NOTES DELAWARE CASH RESERVE FUND
TO FINANCIAL STATEMENTS March 31, 2004
Delaware Group Cash Reserve (the "Trust") is organized as a Delaware statutory
trust and offers one series, the Delaware Cash Reserve Fund (the "Fund"). The
Trust is an open-end investment company. The Fund is considered diversified
under the Investment Company Act of 1940, as amended, and offers Class A, Class
B, Class C and Consultant Class shares. Class A and Consultant Class shares are
not subject to a sales charge. Class B shares are sold with a contingent
deferred sales charge that declines from 4% to zero depending upon the period of
time the shares are held. Prior to May 30, 2003, Class B contingent deferred
sales charge declined from 5% to zero depending upon the period of time the
shares were held. Class B shares will automatically convert to Consultant Class
shares on a quarterly basis approximately eight years after purchase. Class C
shares are sold with a contingent deferred sales charge of 1%, if redeemed
during the first 12 months.
The investment objective of the Fund is to seek to provide maximum current
income, while preserving principal and maintaining liquidity.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Fund.
Security Valuation -- Securities are valued at amortized cost, which
approximates market value.
Federal Income Taxes -- The Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting -- Investment income and common expenses are allocated to the
classes of the Fund on the basis of "settled shares" of each class in relation
to the net assets of the Fund. Realized and unrealized gain (loss) on
investments are allocated to the various classes of the Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Other -- Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and other expenses are paid monthly. Security transactions are
recorded on the date the securities are purchased or sold (trade date). Costs
used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to interest
income over the lives of the respective securities. The Fund declares dividends
from net investment income daily and pays such dividends monthly.
Certain expenses of the Fund are paid through commission arrangements with
brokers. The amount of these expenses was approximately $14,194 for the year
ended March 31, 2004. In addition, the Fund receives earnings credits from its
custodian when positive cash balances are maintained, which are used to offset
custody fees. There were no earnings credits for the year ended March 31, 2004.
The expenses paid under the above arrangements are included in their respective
expense captions on the Statement of Operations with the corresponding expense
offset shown as "expenses paid indirectly".
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its investment management agreement, the Fund
pays Delaware Management Company (DMC), a series of Delaware Management Business
Trust and the investment manager, an annual fee which is calculated daily at the
rate of 0.45% on the first $500 million of average daily net assets of the Fund,
0.40% on the next $500 million, 0.35% on the next $1.5 billion and 0.30% on the
average daily net assets in excess of $2.5 billion.
DMC has elected to waive that portion, if any, of its management fee and
reimburse the Fund to the extent necessary to ensure that annual operating
expenses, exclusive of taxes, interest, brokerage commissions, distribution
fees, certain insurance costs and extraordinary expenses, do not exceed 0.45% of
average daily net assets of the Fund, which can be revoked at any time.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. The Fund pays
DSC a monthly fee based on average net assets subject to certain minimums for
accounting and administration services. The Fund pays DSC a monthly fee based on
the number of shareholder accounts for dividend and disbursing and transfer
agent services. Prior to June 1, 2003, the monthly fee for dividend disbursing
and transfer agent services was based on the number of shareholder accounts and
shareholder transactions.
Pursuant to a distribution agreement and distribution plan, the Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.30% of the average daily net
assets of the Consultant Class shares and 1.00% of the average daily net assets
of the Class B and C shares. No distribution expenses are paid by Class A
shares. Effective June 25, 2003 DDLP has contracted to waive distribution and
service fees through May 31, 2005 in order to prevent distribution and service
fees of Consultant Class shares from exceeding 0.25% of average daily net
assets. Effective June 25, 2003, DDLP has elected to waive its distribution and
service fees in order to prevent distribution fees of Class B and C shares from
exceeding 0.50% of the average daily net assets, which can be revoked at any
time.
At March 31, 2004, the Fund had receivables from or liabilities payable to
affiliates as follows:
Investment management fee payable to DMC $ 1,596
Dividend disbursing, transfer agent fees,
accounting and other expenses payable to DSC 72,428
Other expenses payable to DMC and affiliates* 57,343
*DMC, as part of its administrative services, pays operating expenses on behalf
of the Fund and is reimbursed on a periodic basis. Such expenses include items
such as printing of shareholder reports, professional fees, registration fees
and trustees' fees.
Certain internal legal expenses are allocated to the Fund. For the year ended
March 31, 2004, the Fund was allocated costs of $72,382.
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust.
These officers and trustees are paid no compensation by the Fund.
12
NOTES DELAWARE CASH RESERVE FUND
TO FINANCIAL STATEMENTS (CONTINUED)
3. DIVIDEND AND DISTRIBUTION INFORMATION
Income distributions are determined in accordance with federal income tax
regulations, which may differ from accounting principles generally accepted in
the United States. The tax character of dividends paid during the years ended
March 31, 2004 and 2003 was as follows:
Year Ended
3/31/04 3/31/03
---------- ----------
Ordinary income $3,635,949 $5,223,790
As of March 31, 2004, the components of net assets on a tax basis were as
follows:
Shares of beneficial interest $550,413,221
Capital loss carryforwards (351,845)
Post-October losses (504)
------------
Net assets $550,060,872
------------
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. Such capital loss
carryforwards expire as follows: $351,845 expires in 2011.
Post-October losses represent losses realized on investment transactions from
November 1, 2003 through March 31, 2004 that, in accordance with federal income
tax regulations, the Fund has elected to defer and treat as having arisen in the
following fiscal year.
4. CAPITAL SHARES
Transactions in capital shares were as follows:
Year Ended
3/31/04 3/31/03
Shares sold:
Class A 560,956,289 604,018,602
Class B 12,821,846 44,635,175
Class C 11,309,957 13,331,678
Consultant Class 20,432,041 42,344,790
Shares issued upon reinvestment of dividends:
Class A 3,386,139 4,765,752
Class B 27,002 46,346
Class C 11,346 13,766
Consultant Class 149,824 270,255
------------ ------------
609,094,444 709,426,364
------------ ------------
Shares repurchased:
Class A (617,167,881) (595,032,593)
Class B (28,092,066) (33,375,974)
Class C (11,452,709) (9,999,346)
Consultant Class (25,284,311) (40,176,626)
------------ ------------
(681,996,967) (678,584,539)
------------ ------------
Net increase (decrease) (72,902,523) 30,841,825
============ ============
For the years ended March 31, 2004 and 2003, 751,053 Class B shares were
converted to 751,053 Consultant Class shares valued at $751,053 and 142,819
Class B shares were converted to 142,819 Consultant Class shares valued at
$142,819, respectively. The respective amounts are included in Class B
redemptions and Consultant Class subscriptions in the table above and the
Statements of Changes in Net Assets.
5. CONTRACTUAL OBLIGATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
6. TAX INFORMATION (UNAUDITED)
The information set forth below is for the Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of a fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in January of each
year. Please consult your tax advisor for proper treatment of this information.
For the fiscal year ended March 31, 2004, the Fund designates distributions paid
during the year as follows:
(A)
Ordinary Income
Distributions
(Tax Basis)
--------------
100%
(A) is based on a percentage of the Fund's total distribution.
13
REPORT
OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees
Delaware Group Cash Reserve -- Delaware Cash Reserve Fund
We have audited the accompanying statement of net assets of Delaware Cash
Reserve Fund (the "Fund") as of March 31, 2004, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of March 31, 2004, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Cash Reserve Fund at March 31, 2004, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and its financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 7, 2004
14
DELAWARE INVESTMENTS FAMILY OF FUNDS
BOARD OF TRUSTEES AND OFFICERS ADDENDUM
A mutual fund is governed by a Board of Trustees which has oversight
responsibility for the management of a fund's business affairs. Trustees
establish procedures and oversee and review the performance of the investment
manager, the distributor and others that perform services for the fund. The
independent fund trustees, in particular, are advocates for shareholder
interests. The following is a list of the Trustees and Officers with certain
background and related information.
Other
Principal Number of Directorships
Name, Position(s) Occupation(s) Portfolios in Fund Held by
Address Held with Length of Time During Complex Overseen Trustee or
and Birthdate Fund(s) Served Past 5 Years by Trustee or Officer Officer
- -----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
JUDE T. DRISCOLL(2) Chairman and 4 Years - Since August 2000, 80 None
2005 Market Street Trustee(4) Executive Officer Mr. Driscoll has served in
Philadelphia, PA various executive capacities
19103 at different times at
Delaware Investments(1)
March 10, 1963
Senior Vice President and
Director of Fixed-Income Process -
Conseco Capital Management
(June 1998 - August 2000)
Managing Director -
NationsBanc Capital Markets
(February 1996 - June 1998)
- -----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
WALTER P. BABICH Trustee 16 Years Board Chairman - 98 None
2005 Market Street Citadel Construction Corporation
Philadelphia, PA (1989 - Present)
19103
October 1, 1927
JOHN H. DURHAM Trustee 25 Years(3) Private Investor 98 Trustee - Abington
2005 Market Street Memorial Hospital
Philadelphia, PA
19103
August 7, 1937 President/Director -
22 WR Corporation
JOHN A. FRY Trustee(4) 3 Years President - 80 None
2005 Market Street Franklin & Marshall College
Philadelphia, PA (June 2002 - Present)
19103
Executive Vice President -
University of Pennsylvania
May 28, 1960 (April 1995 - June 2002)
ANTHONY D. KNERR Trustee 11 Years Founder/Managing Director - 98 None
2005 Market Street Anthony Knerr & Associates
Philadelphia, PA (Strategic Consulting)
19103 (1990 - Present)
December 7, 1938
15
DELAWARE INVESTMENTS FAMILY OF FUNDS
BOARD OF TRUSTEES AND OFFICERS ADDENDUM
Other
Principal Number of Directorships
Name, Position(s) Occupation(s) Portfolios in Fund Held by
Address Held with Length of Time During Complex Overseen Trustee or
and Birthdate Fund(s) Served Past 5 Years by Trustee or Officer Officer
- -----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES (CONTINUED)
ANN R. LEVEN Trustee 15 Years Treasurer/Chief Fiscal Officer - 98 Director - Andy
2005 Market Street National Gallery of Art Warhol Foundation
Philadelphia, PA (1994 - 1999)
19103 Director -
Systemax Inc.
November 1, 1940
THOMAS F. MADISON Trustee 10 Years President/Chief 98 Director -
2005 Market Street Executive Officer - Banner Health
Philadelphia, PA MLM Partners, Inc.
19103 (Small Business Investing Director -
and Consulting) CenterPoint Energy
February 25, 1936 (January 1993 - Present)
Director -
Digital River Inc.
Director - Rimage
Corporation
JANET L. YEOMANS Trustee 5 Years Vice President/Mergers & 98 None
2005 Market Street Acquisitions - 3M Corporation
Philadelphia, PA (January 2003 - Present)
19103
Ms. Yeomans has held
July 31, 1948 various management
positions at 3M Corporation
since 1983.
- -----------------------------------------------------------------------------------------------------------------------------------
OFFICERS
JOSEPH H. HASTINGS Executive Executive Mr. Hastings has served in 98 None
2005 Market Street Vice President Vice President various executive capacities
Philadelphia, PA and and at different times at
19103 Chief Financial Chief Financial Delaware Investments.
Officer Officer since
December 19, 1949 August 21, 2003
RICHELLE S. MAESTRO Executive Vice President, Chief Legal Ms. Maestro has served in 98 None
2005 Market Street Chief Legal Officer Officer since various executive capacities
Philadelphia, PA and Secretary March 17, 2003 at different times at
19103 Delaware Investments.
November 26, 1957
MICHAEL P. BISHOF Senior Vice President 8 Years Mr. Bishof has served in 98 None
2005 Market Street and Treasurer various executive capacities
Philadelphia, PA at different times at
19103 Delaware Investments.
August 18, 1962
(1) Delaware Investments is the marketing name for Delaware Management Holdings,
Inc. and its subsidiaries, including the Registrant's investment advisor,
principal underwriter and its transfer agent.
(2) Mr. Driscoll is considered to be an "Interested Trustee" because he is an
executive officer of the Fund's manager and distributor.
(3) Mr. Durham served as a Director Emeritus from 1995 through 1998.
(4) Mr. Driscoll and Mr. Fry are not Trustees of the portfolios of Voyageur
Insured Funds, Voyageur Intermediate Tax Free Funds, Voyageur Investment
Trust, Voyageur Mutual Funds, Voyageur Mutual Funds II, Voyageur Mutual
Funds III and Voyageur Tax Free Funds.
The Statement of Additional Information for the Fund(s) includes additional
information about the Trustees and Officers and is available, without charge,
upon request by calling 800 523-1918.
16
Delaware
Investments(SM)
- --------------------------------------
A member of Lincoln Financial Group(R)
This annual report is for the information of Delaware Cash Reserve Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current prospectus for Delaware Cash Reserve Fund and the
Delaware Investments Performance Update for the most recently completed calendar
quarter. The prospectus sets forth details about charges, expenses, investment
objectives, and operating policies of the Fund. You should read the prospectus
carefully before you invest. The figures in this report represent past results
which are not a guarantee of future results. The return and principal value of
an investment in the Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
Board of Trustees Affiliated Officers Contact Information
JUDE T. DRISCOLL JOSEPH H. HASTINGS INVESTMENT MANAGER
Chairman Executive Vice President and Delaware Management Company
Delaware Investments Family of Funds Chief Financial Officer Philadelphia, PA
Philadelphia, PA Delaware Investments Family of Funds
Philadelphia, PA INTERNATIONAL AFFILIATE
WALTER P. BABICH Delaware International Advisers Ltd.
Board Chairman RICHELLE S. MAESTRO London, England
Citadel Construction Corporation Executive Vice President,
King of Prussia, PA Chief Legal Officer and Secretary NATIONAL DISTRIBUTOR
Delaware Investments Family of Funds Delaware Distributors, L.P.
JOHN H. DURHAM Philadelphia, PA Philadelphia, PA
Private Investor
Gwynedd Valley, PA MICHAEL P. BISHOF SHAREHOLDER SERVICING, DIVIDEND
Senior Vice President and Treasurer DISBURSING AND TRANSFER AGENT
JOHN A. FRY Delaware Investments Family of Funds Delaware Service Company, Inc.
President Philadelphia, PA 2005 Market Street
Franklin & Marshall College Philadelphia, PA 19103-7094
Lancaster, PA
FOR SHAREHOLDERS
ANTHONY D. KNERR 800 523-1918
Managing Director
Anthony Knerr & Associates FOR SECURITIES DEALERS AND FINANCIAL
New York, NY INSTITUTIONS REPRESENTATIVES ONLY
800 362-7500
ANN R. LEVEN
Former Treasurer/Chief Fiscal Officer WEB SITE
National Gallery of Art www.delawareinvestments.com
Washington, DC
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
JANET L. YEOMANS
Vice President/Mergers & Acquisitions
3M Corporation
St. Paul, MN
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies (if any) relating to portfolio securities is available without
charge (i) upon request, by calling 800 523-1918; (ii) on the Fund's website at
http://www.delawareinvestments.com; and (iii) on the Commission's website at
http://www.sec.gov.; and beginning no later than August 31, 2004, information
(if any) regarding how the Fund voted proxies relating to portfolio securities
during the most recent 12-month period ended June 30 is available without charge
(i) through the Fund's website at http://www.delawareinvestments.com; and (ii)
on the Commission's website at http://www.sec.gov.
- --------------------------------------------------------------------------------
(8682) Printed in the USA
AR-008 [3/04] IVES 5/04 J9654
Item 2. Code of Ethics
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or a
third party. A copy of the registrant's Code of Business Ethics has been posted
on Delaware Investments' internet website at www.delawareinvestments.com. Any
amendments to the Code of Business Ethics, and information on any waiver from
its provisions granted by the registrant, will also be posted on this website
within five business days of such amendment or waiver and will remain on the
website for at least 12 months.
Item 3. Audit Committee Financial Expert
The registrant's Board of Trustees/Directors has determined that each
member of the registrant's Audit Committee is an audit committee financial
expert, as defined below. For purposes of this item, an "audit committee
financial expert" is a person who has the following attributes:
a. An understanding of generally accepted accounting principles and
financial statements;
b. The ability to assess the general application of such principles in
connection with the accounting for estimates, accruals, and reserves;
c. Experience preparing, auditing, analyzing, or evaluating financial
statements that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the registrant's financial statements, or
experience actively supervising one or more persons engaged in such activities;
d. An understanding of internal controls and procedures for financial
reporting; and
e. An understanding of audit committee functions.
An "audit committee financial expert" shall have acquired such attributes
through:
a. Education and experience as a principal financial officer, principal
accounting officer, controller, public accountant, or auditor or experience in
one or more positions that involve the performance of similar functions;
b. Experience actively supervising a principal financial officer,
principal accounting officer, controller, public accountant, auditor, or person
performing similar functions;
c. Experience overseeing or assessing the performance of companies or
public accountants with respect to the preparation, auditing, or evaluation of
financial statements; or
d. Other relevant experience.
The registrant's Board of Trustees/Directors has also determined that
each member of the registrant's Audit Committee is independent. In order to be
"independent" for purposes of this item, the Audit Committee member may not: (i)
other than in his or her capacity as a member of the Board of Trustees/Directors
or any committee thereof, accept directly or indirectly any consulting, advisory
or other compensatory fee from the issuer; or (ii) be an "interested person" of
the registrant as defined in Section 2(a)(19) of the Investment Company Act of
1940.
The names of the audit committee financial experts on the registrant's
Audit Committee are set forth below:
Ann R. Leven
Thomas F. Madison
Janet L. Yeomans(1)
Item 4. Principal Accountant Fees and Services
(a) Audit fees.
-----------
The aggregate fees billed for services provided to the Registrant by
its independent auditors for the audit of the Registrant's annual financial
statements and for services normally provided by the independent auditors in
connection with statutory and regulatory filings or engagements were $23,150 for
the fiscal year ended March 31, 2004.
The aggregate fees billed for services provided to the Registrant by
its independent auditors for the audit of the Registrant's annual financial
statements and for services normally provided by the independent auditors in
connection with statutory and regulatory filings or engagements were $21,350 for
the fiscal year ended March 31, 2003.
- --------------------
(1) The instructions to Form N-CSR require disclosure on the relevant experience
of persons who qualify as audit committee financial experts based on "other
relevant experience." The Board of Trustees/Directors has determined that Ms.
Yeomans qualifies as an audit committee financial expert by virtue of her
education and experience as the Treasurer of a large global corporation.
(b) Audit-related fees.
-------------------
The aggregate fees billed by the Registrant's independent auditors for
services relating to the performance of the audit of the Registrant's financial
statements and not reported under paragraph (a) of this Item were $0 for the
fiscal year ended March 31, 2004.
The aggregate fees billed by the Registrant's independent auditors for
services relating to the performance of the audit of the financial statements of
the Registrant's investment adviser(s) and other service providers under common
control with the adviser(s) and that relate directly to the operations or
financial reporting of the Registrant were $162,700 for the Registrant's fiscal
year ended March 31, 2004. The percentage of these fees relating to services
approved by the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of
Regulation S-X was 0%. These audit-related services were as follows: issuance of
reports concerning transfer agents' system of internal accounting control
pursuant to Rule 17Ad-13 of the Securities Exchange Act; issuance of agreed-upon
procedures reports to the Funds' Board in connection with the annual transfer
agent contract renewals and the pass-through of internal legal costs relating to
the operations of the Funds; and preparation of Report on Controls Placed in
Operation and Tests of Operating Effectiveness Relating to the Retirement Plan
Services Division ("SAS 70 report").
The aggregate fees billed by the Registrant's independent auditors for
services relating to the performance of the audit of the Registrant's financial
statements and not reported under paragraph (a) of this Item were $0 for the
fiscal year ended March 31, 2003.
The aggregate fees billed by the Registrant's independent auditors for
services relating to the performance of the audit of the financial statements of
the Registrant's investment adviser(s) and other service providers under common
control with the adviser(s) and that relate directly to the operations or
financial reporting of the Registrant were $166,400 for the Registrant's fiscal
year ended March 31, 2003. The percentage of these fees relating to services
approved by the Registrant's Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of
Regulation S-X was 0%. These audit-related services were as follows: issuance of
reports concerning transfer agents' system of internal accounting control
pursuant to Rule 17Ad-13 of the Securities Exchange Act; issuance of agreed-upon
procedures reports to the Funds' Board in connection with the annual transfer
agent contract renewals and the pass-through of internal legal costs relating to
the operations of the Funds; and preparation of Report on Controls Placed in
Operation and Tests of Operating Effectiveness Relating to the Retirement Plan
Services Division ("SAS 70 report").
(c) Tax fees.
---------
The aggregate fees billed by the Registrant's independent auditors for
tax-related services provided to the Registrant were $1,250 for the fiscal year
ended March 31, 2004. The percentage of these fees relating to services approved
by the Registrant's Audit Committee pursuant to the de minimis exception from
the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These tax-related services were as follows: review of income tax return and
excise tax return.
The aggregate fees billed by the Registrant's independent auditors for
tax-related services provided to the Registrant's investment adviser(s) and
other service providers under common control with the adviser(s) and that relate
directly to the operations or financial reporting of the Registrant were $0 for
the Registrant's fiscal year ended March 31, 2004.
The aggregate fees billed by the Registrant's independent auditors for
tax-related services provided to the Registrant were $1,150 for the fiscal year
ended March 31, 2003. The percentage of these fees relating to services approved
by the Registrant's Audit Committee pursuant to the de minimis exception from
the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These tax-related services were as follows: review of income tax return and
excise tax return.
The aggregate fees billed by the Registrant's independent auditors for
tax-related services provided to the Registrant's adviser(s) and other service
providers under common control with the adviser(s) and that relate directly to
the operations or financial reporting of the Registrant were $0 for the
Registrant's fiscal year ended March 31, 2003.
(d) All other fees.
---------------
The aggregate fees billed for all services provided by the independent
auditors to the Registrant other than those set forth in paragraphs (a), (b) and
(c) of this Item were $0 for the fiscal year ended March 31, 2003.
The aggregate fees billed for all services other than those set forth
in paragraphs (b) and (c) of this Item provided by the Registrant's independent
auditors to the Registrant's adviser(s) and other service providers under common
control with the adviser(s) and that relate directly to the operations or
financial reporting of the Registrant were $0 for the Registrant's fiscal year
ended March 31, 2004.
The aggregate fees billed for all services provided by the independent
auditors to the Registrant other than those set forth in paragraphs (a), (b) and
(c) of this Item were $0 for the fiscal year ended March 31, 2003.
The aggregate fees billed for all services other than those set forth
in paragraphs (b) and (c) of this Item provided by the Registrant's independent
auditors to the Registrant's adviser(s) and other service providers under common
control with the adviser(s) and that relate directly to the operations or
financial reporting of the Registrant were $0 for the Registrant's fiscal year
ended March 31, 2003.
(e) The Registrant's Audit Committee has not established pre-approval
policies and procedures as permitted by Rule 2-01(c)(7)(i)(B) of Regulation S-X.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the Registrant's independent
auditors for services rendered to the Registrant and to its investment
adviser(s) and other service providers under common control with the adviser(s)
were $286,850 and $303,900 for the Registrant's fiscal years ended March 31,
2004 and March 31, 2003, respectively.
(h) In connection with its selection of the independent auditors, the
Registrant's Audit Committee has considered the independent auditors' provision
of non-audit services to the Registrant's investment adviser(s) and other
service providers under common control with the adviser(s) that were not
required to be pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X.
The Audit Committee has determined that the independent auditors' provision of
these services is compatible with maintaining the auditors' independence.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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
half-year (the registrant's second fiscal half-year in the case of an annual
report) that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 11. Exhibits
(a)(1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are
attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1
under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are
furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf, by the undersigned, thereunto duly authorized.
NAME OF REGISTRANT:
JUDE T. DRISCOLL
- -------------------------
By: Jude T. Driscoll
Title: Chairman
Date: May 28, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
JUDE T. DRISCOLL
- -------------------------
By: Jude T. Driscoll
Title: Chairman
Date: May 28, 2004
JOSEPH H. HASTINGS
- -------------------------
By: Joseph H. Hastings
Title: Chief Financial Officer
Date: May 28, 2004