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: September 30, 2004
Item 1. Reports to Stockholders
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
FIXED INCOME
SEMIANNUAL REPORT SEPTEMBER 30, 2004
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DELAWARE CASH RESERVE FUND
[LOGO] POWERED BY RESEARCH.(SM)
TABLE
OF CONTENTS
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DISCLOSURE OF FUND EXPENSES 1
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SECTOR ALLOCATION 2
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FINANCIAL STATEMENTS:
Statement of Net Assets 3
Statement of Operations 5
Statements of Changes in Net Assets 6
Financial Highlights 7
Notes to Financial Statements 11
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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.
DISCLOSURE For the Period April 1, 2004 to September 30, 2004
OF FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including sales charges (loads) on purchase payments,
reinvested dividends, or other distributions; redemption fees; and exchange
fees; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other Fund expenses. This Example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period April 1, 2004 to September 30, 2004.
ACTUAL EXPENSES
The first section of the table shown, "Actual Fund Return,"
provides information about actual account values and actual expenses. You may
use the information in this section of the table, together with the amount you
invested, to estimate the expenses that you paid over the period. Simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), then multiply the result by the number in the first section under
the heading entitled "Expenses Paid During Period" to estimate the expenses you
paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table shown, "Hypothetical 5% Return," provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. The Fund's actual expenses shown in the table reflect fee waivers in
effect. The expenses shown in the table below assume reinvestment of all
dividends and distributions.
In each case, "Expenses Paid During Period" are equal to the Fund's annualized
expense ratio, multiplied by the average account value over the period,
multiplied by 183/366 (to reflect the one-half year period).
DELAWARE CASH RESERVE FUND(1)
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
Beginning Ending Annualized Expenses
Account Account Expense Paid During
Value Value Ratio Period
4/1/04 9/30/04 4/1/04 to
9/30/04
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ACTUAL FUND RETURN
Class A $1,000.00 $1,004.10 0.45% $2.25
Class B 1,000.00 1,001.60 0.95% 4.75
Class C 1,000.00 1,001.60 0.95% 4.75
Consultant Class 1,000.00 1,002.90 0.70% 3.51
- -----------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,022.72 0.45% $2.28
Class B 1,000.00 1,020.19 0.95% 4.81
Class C 1,000.00 1,020.19 0.95% 4.81
Consultant Class 1,000.00 1,021.46 0.70% 3.54
- -----------------------------------------------------------------------------------------------------------
(1) Effective October 1, 2004, the Fund's manager decreased contractual expense
waivers in effect for the Fund, causing the expenses paid by the Fund to
increase. Had the new expense waivers been in effect during the period, the
Fund's expense analysis would be as follows:
DELAWARE CASH RESERVE FUND
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
Beginning Ending Annualized Expenses
Account Account Expense Paid During
Value Value Ratio Period
4/1/04 9/30/04 4/1/04 to
9/30/04
- -----------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000.00 $1,003.09 0.65% $3.26
Class B 1,000.00 1,000.59 1.15% 5.75
Class C 1,000.00 1,000.59 1.15% 5.75
Consultant Class 1,000.00 1,001.89 0.90% 4.51
- -----------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,021.71 0.65% $3.29
Class B 1,000.00 1,019.18 1.15% 5.82
Class C 1,000.00 1,019.18 1.15% 5.82
Consultant Class 1,000.00 1,020.44 0.90% 4.56
- -----------------------------------------------------------------------------------------------------------
1
SECTOR ALLOCATION As of September 30, 2004
DELAWARE CASH RESERVE
The SEC adopted a requirement that all funds present their categories of
portfolio holdings in a table, chart, or graph format in their annual and
semiannual shareholder reports, whether or not a schedule of investments is
utilized. The following chart lists the Fund's categories of portfolio holdings
as a percent of total net assets and is provided in compliance with such
requirement.
PERCENTAGE
SECTOR OF NET ASSETS
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COMMERCIAL PAPER 89.49%
- -------------------------------------------------------------------------
Financial Services 59.23 %
Industrial 12.90%
Mortgage Bankers & Brokers 13.15%
Other 4.21%
- -------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT 7.94%
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FLOATING RATE NOTES 2.98%
- -------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES 0.40%
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TOTAL MARKET VALUE OF SECURITIES 100.81%
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LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS (0.81%)
- -------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
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2
STATEMENT DELAWARE CASH RESERVE FUND
OF NET ASSETS September 30, 2004 (Unaudited)
Principal Market
Amount Value
COMMERCIAL PAPER - 89.49%
Financial Services - 59.23%
Allianz Finance Corporation
1.51% 10/6/04 $10,000,000 $ 9,997,903
1.55% 10/7/04 10,000,000 9,997,417
Amstel Funding Corporation
1.60% 10/15/04 9,902,000 9,895,839
1.91% 12/31/04 3,250,000 3,234,309
Barton Capital Corporation
1.58% 10/7/04 10,000,000 9,997,367
1.77% 10/5/04 7,667,000 7,665,492
CRC Funding LLC
1.58% 10/13/04 10,000,000 9,994,733
1.81% 11/19/04 10,000,000 9,975,364
Eiffel Funding LLC
1.55% 10/4/04 5,000,000 4,999,354
1.65% 11/8/04 10,000,000 9,982,583
Fountain Square Commercial
Funding Corporation
1.55% 10/19/04 7,000,000 6,994,575
1.63% 11/1/04 10,000,000 9,985,964
General Electric Capital Corporation
1.62% 11/1/04 2,751,000 2,747,162
1.62% 11/5/04 3,400,000 3,394,645
1.64% 11/10/04 3,355,000 3,348,886
Massmutual Funding LLC 1.88% 10/1/04 5,170,000 5,170,000
MetLife Funding Inc. 1.57% 10/12/04 14,000,000 13,993,285
Nationwide Life Insurance Co.
1.58% 10/12/04 10,000,000 9,995,172
1.62% 10/19/04 10,000,000 9,991,900
Prudential PLC 1.79% 11/16/04 5,310,000 5,297,855
Rabobank Finance Corporation
1.87% 10/1/04 25,000,000 25,000,000
Sheffield Receivables 1.88% 10/1/04 15,000,000 15,000,000
Sigma Finance Inc. 1.53% 10/13/04 10,000,000 9,994,900
Starbird Funding Corporation
1.53% 10/4/04 10,000,000 9,998,725
1.60% 11/4/04 10,000,000 9,984,889
1.85% 12/6/04 5,000,000 4,983,042
Steamboat Funding Corporation
1.775% 10/22/04 11,591,000 11,578,998
Surrey Funding Corporation
1.77% 10/20/04 10,000,000 9,990,658
Three Pillars Funding
1.78% 10/5/04 10,000,000 9,998,022
1.78% 10/15/04 10,035,000 10,028,054
UBS Finance LLC 1.88% 10/1/04 25,000,000 25,000,000
-----------
298,217,093
-----------
Industrial - 12.90%
Koch Industries LLC 1.87% 10/1/04 25,000,000 25,000,000
Total Capital 1.87% 10/1/04 25,000,000 25,000,000
Wal-Mart Funding Corporation
1.85% 11/17/04 15,000,000 14,963,771
-----------
64,963,771
-----------
Principal Market
Amount Value
COMMERCIAL PAPER (continued)
Mortgage Bankers & Brokers - 13.15%
Credit Suisse First Boston
1.64% 11/12/04 $10,000,000 $ 9,980,867
1.77% 10/22/04 10,000,000 9,989,675
Goldman Sachs Group 1.65% 11/23/04 10,000,000 9,975,708
HBOS Treasury Services PLC
1.63% 11/2/04 10,000,000 9,985,511
ING Funding LLC 1.62% 10/8/04 5,903,000 5,901,141
Nordea North America Inc.
1.56% 10/4/04 5,458,000 5,457,290
1.865% 12/22/04 10,000,000 9,957,519
Svenska Handelsbank Inc. 1.86% 12/8/04 5,000,000 4,982,433
-----------
66,230,144
-----------
Other - 4.21%
Swedish National Housing Finance
1.68% 10/20/04 3,600,000 3,596,808
1.80% 11/10/04 2,600,000 2,594,800
University of California
1.77% 10/4/04 5,000,000 4,999,263
1.77% 10/21/04 10,000,000 9,990,166
------------
21,181,037
------------
TOTAL COMMERCIAL PAPER
(cost $450,592,045) 450,592,045
------------
CERTIFICATES OF DEPOSIT - 7.94%
First Tennessee Bank
1.60% 11/8/04 10,000,000 10,000,000
1.65% 11/16/04 10,000,000 10,000,000
Mercantile Safe Deposit & Trust Co.
1.55% 10/4/04 10,000,000 10,000,000
Wilmington Trust Co. 1.78% 11/10/04 10,000,000 9,999,887
------------
TOTAL CERTIFICATES OF DEPOSIT
(cost $39,999,887) 39,999,887
------------
*FLOATING RATE NOTES - 2.98%
Morgan Stanley
1.86% 1/5/05 10,000,000 10,000,000
1.86% 2/18/05 5,000,000 5,000,000
------------
Total Floating Rate Notes
(cost $15,000,000) 15,000,000
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+Variable Rate Demand Notes- 0.40%
PCP Investors LLC 1.85% 12/1/24 2,000,000 2,000,000
------------
Total Variable Rate Demand Notes
(cost $2,000,000) 2,000,000
------------
TOTAL MARKET VALUE OF SECURITIES - 100.81%
(cost $507,591,932)** 507,591,932
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (0.81%) (4,055,184)
------------
NET ASSETS APPLICABLE TO 503,885,503 SHARES
OUTSTANDING - 100.00% $503,536,748
============
3
STATEMENT DELAWARE CASH RESERVE FUND
OF NET ASSETS (CONTINUED)
Net Asset Value - Delaware Cash Reserve Fund Class A
($449,158,963 / 449,456,223 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund Class B
($21,175,957 / 21,199,047 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund Class C
($10,808,317 / 10,814,535 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund
Consultant Class ($22,393,511 / 22,415,698 Shares) $1.00
-----
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 2004:
Shares of beneficial interest
(unlimited authorization - no par) $503,885,524
Accumulated net realized loss on investments (348,776)
------------
Total net assets $503,536,748
============
*Floating Rate Notes -- the interest rate shown is the rate as of September 30,
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.
**Also the cost for federal income tax purposes.
+The interest rate shown is the rate as of September 30, 2004.
See accompanying notes
4
STATEMENT DELAWARE CASH RESERVE FUND
OF OPERATIONS Six Months Ended September 30, 2004 (Unaudited)
INVESTMENT INCOME:
Interest $3,555,815
----------
EXPENSES:
Management fees 1,239,960
Dividend disbursing and transfer agent fees and expenses 895,067
Distribution expenses -- Class B 120,294
Distribution expenses -- Class C 56,812
Distribution expenses -- Consultant Class 46,400
Accounting and administration expenses 99,800
Reports and statements to shareholders 54,357
Registration fees 43,069
Trustees' fees 11,080
Legal and professional fees 10,185
Custodian fees 6,943
Other 6,246 2,590,213
---------
Less expenses absorbed or waived (1,108,084)
Less waived distribution expenses -- Class B (60,147)
Less waived distribution expenses -- Class C (28,406)
Less waived distribution expenses -- Consultant Class (7,733)
Less expenses paid indirectly (1,393)
----------
Total expenses 1,384,450
----------
NET INVESTMENT INCOME 2,171,365
----------
NET REALIZED GAIN ON INVESTMENTS:
Net Realized Gain on Investments 3,573
----------
Net Increase in Net Assets Resulting from Operations $2,174,938
==========
See accompanying notes
5
STATEMENTS DELAWARE CASH RESERVE FUND
OF CHANGES IN NET ASSETS
Six Months Year
Ended Ended
9/30/04 3/31/04
(Unaudited)
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,171,365 $ 3,635,949
Net realized gain on investments 3,573 14,961
------------ ------------
Net increase in net assets resulting from operations 2,174,938 3,650,910
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A (2,029,540) (3,444,494)
Class B (37,878) (30,462)
Class C (18,512) (12,009)
Consultant Class (85,435) (148,984)
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(2,171,365) (3,635,949)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 347,270,151 560,956,289
Class B 11,315,575 12,821,846
Class C 6,508,204 11,309,957
Consultant Class 14,249,525 20,432,041
Net asset value of shares issued upon reinvestment of dividends:
Class A 1,912,004 3,386,159
Class B 29,093 27,003
Class C 16,251 11,346
Consultant Class 79,717 149,824
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381,380,520 609,094,465
------------ ------------
Cost of shares repurchased:
Class A (385,683,829) (617,167,881)
Class B (11,951,553) (28,092,066)
Class C (6,008,913) (11,452,709)
Consultant Class (24,263,922) (25,284,311)
------------ -----------
(427,908,217) (681,996,967)
------------ ------------
Decrease in net assets derived from capital share transactions (46,527,697) (72,902,502)
------------ ------------
NET DECREASE IN NET ASSETS (46,524,124) (72,887,541)
NET ASSETS:
Beginning of period 550,060,872 622,948,413
------------ ------------
End of period $503,536,748 $550,060,872
============ ============
See accompanying notes
6
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Cash Reserve Fund Class A
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
9/30/04(1) 3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.004 0.007 0.009 0.026 0.056 0.046
------ ------ ------ ------ ------ ------
Total from investment operations 0.004 0.007 0.009 0.026 0.056 0.046
------ ------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.004) (0.007) (0.009) (0.026) (0.056) (0.046)
------ ------ ------ ------ ------ ------
Total dividends (0.004) (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 $1.000
====== ====== ====== ====== ====== ======
TOTAL RETURN(2) 0.41% 0.67% 0.92% 2.59% 5.75% 4.69%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $449,159 $485,657 $538,469 $525,032 $548,006 $566,193
Ratio of expenses to average net assets 0.45% 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 0.85% 0.93% 0.99% 0.92% 0.84% 0.91%
Ratio of net investment income to average net assets 0.83% 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 0.43% 0.19% 0.68% 2.56% 5.60% 4.59%
(1) Ratios have been annualized and total return has not been annualized.
(2) 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
7
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Cash Reserve Fund Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
9/30/04(1) 3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.002 0.001 0.002 0.016 0.046 0.036
------ ------ ------ ------ ------ ------
Total from investment operations 0.002 0.001 0.002 0.016 0.046 0.036
------ ------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.002) (0.001) (0.002) (0.016) (0.046) (0.036)
------ ------ ------ ------ ------ ------
Total dividends (0.002) (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 $1.000
====== ====== ====== ====== ====== ======
TOTAL RETURN(2) 0.16% 0.11% 0.16% 1.57% 4.71% 3.65%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $21,176 $21,783 $37,025 $25,744 $32,267 $23,349
Ratio of expenses to average net assets 0.95% 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 1.85% 1.93% 1.99% 1.92% 1.84% 1.91%
Ratio of net investment income to average net assets 0.33% 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 (0.57%) (0.81%) (0.32%) 1.56% 4.60% 3.59%
(1) Ratios have been annualized and total return has not been annualized.
(2) 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
8
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Cash Reserve Fund Class C
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
9/30/04(1) 3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.002 0.001 0.002 0.016 0.046 0.036
------ ------ ------ ------ ------ ------
Total from investment operations 0.002 0.001 0.002 0.016 0.046 0.036
------ ------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.002) (0.001) (0.002) (0.016) (0.046) (0.036)
------ ------ ------ ------ ------ ------
Total dividends (0.002) (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 $1.000
====== ====== ====== ====== ====== ======
TOTAL RETURN(2) 0.16% 0.11% 0.16% 1.57% 4.71% 3.65%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $10,808 $10,293 $10,424 $7,084 $6,893 $7,760
Ratio of expenses to average net assets 0.95% 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 1.85% 1.93% 1.99% 1.92% 1.84% 1.91%
Ratio of net investment income to average net assets 0.33% 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 (0.57%) (0.81%) (0.32%) 1.56% 4.60% 3.59%
(1) Ratios have been annualized and total return has not been annualized.
(2) 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 Consultant Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
9/30/04(1) 3/31/04 3/31/03 3/31/02 3/31/01 3/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.003 0.004 0.007 0.023 0.054 0.043
------ ------ ------ ------ ------ ------
Total from investment operations 0.003 0.004 0.007 0.023 0.054 0.043
------ ------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.003) (0.004) (0.007) (0.023) (0.054) (0.043)
------ ------ ------ ------ ------ ------
Total dividends (0.003) (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 $1.000
====== ====== ====== ====== ====== ======
TOTAL RETURN(2) 0.29% 0.42% 0.67% 2.34% 5.49% 4.43%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $22,394 $32,328 $37,030 $34,614 $36,783 $32,648
Ratio of expenses to average net assets 0.70% 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 1.15% 1.23% 1.24% 1.17% 1.09% 1.16%
Ratio of net investment income to average net assets 0.58% 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 0.13% (0.11%) 0.43% 2.31% 5.35% 4.34%
(1) Ratios have been annualized and total return has not been annualized.
(2) 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
10
NOTES DELAWARE CASH RESERVE FUND
TO FINANCIAL STATEMENTS September 30, 2004 (Unaudited)
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. 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 U.S. generally accepted
accounting principles 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
U.S. generally accepted accounting principles 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 some 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.
The Fund receives earnings credits from its custodian when positive cash
balances are maintained, which are used to offset custody fees. The earnings
credits for the period ended September 30, 2004 were approximately $1,393. 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.
Effective October 1, 2004, DMC has elected to waive its fees in order to prevent
annual operating expenses from exceeding 0.65% of the average daily net asset of
the Fund.
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 disbursing and transfer agent
services.
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. Class A shares pay no distribution and service
expenses. DDLP has contracted to waive distribution and service fees through May
31, 2005 in order to prevent distribution and service fees of the Consultant
Class shares from exceeding 0.25% of average daily net assets. 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 September 30, 2004, the Fund had receivables from or liabilities payable to
affiliates as follows:
Investment management fee payable to DMC $(57,556)
Dividend disbursing, transfer agent,
accounting and administration fees
and other expenses payable to DSC 10,511
Other expenses payable to DMC and affiliates* (26,777)
*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, fees for audit, legal and tax
services, registration fees and trustees' fees.
As provided in the investment management agreement, the Fund bears the cost of
certain legal services expenses, including in-house legal services provided to
the Fund by DMC employees. For the period ended September 30, 2004, the Fund had
costs of $0.
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.
11
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 U.S. generally accepted accounting
principles. The tax character of dividends paid during the six months ended
September 30, 2004 and the year ended March 31, 2004 was as follows:
Six Months Year
Ended Ended
9/30/04* 3/31/04
---------- ----------
Ordinary income $2,171,365 $3,635,949
*Tax information for the period ended September 30, 2004 is an estimate and the
tax character of dividends may be redesignated at fiscal year end.
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of September 30, 2004, the
estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest $503,885,524
Capital loss carryforwards (348,776)
------------
Net assets $503,536,748
============
At March 31, 2004, for federal income tax purposes, the Fund had capital loss
carryforwards of $351,845, which may be carried forward and applied against
future capital gains. Such capital loss carryforwards expire as follows:
$351,845 in 2011. For the period ended September 30, 2004, the Fund had capital
gains of $3,069, which may be offset by the capital loss carryforwards.
4. CAPITAL SHARES
Transactions in capital shares were as follows:
Six Months Year
Ended Ended
9/30/04 3/31/04
Shares sold:
Class A 347,270,151 560,956,289
Class B 11,315,575 12,821,846
Class C 6,508,204 11,309,957
Consultant Class 14,249,525 20,432,041
Shares issued upon reinvestment of dividends:
Class A 1,912,004 3,386,139
Class B 29,093 27,002
Class C 16,251 11,346
Consultant Class 79,717 149,824
------------ ------------
381,380,520 609,094,444
------------ ------------
Shares repurchased:
Class A (385,683,829) (617,167,881)
Class B (11,951,553) (28,092,066)
Class C (6,008,913) (11,452,709)
Consultant Class (24,263,922) (25,284,311)
------------ ------------
(427,908,217) (681,996,967)
------------ ------------
Net decrease (46,527,697) (72,902,523)
============ ============
For the period ended September 30, 2004 and the year ended March 31, 2004,
831,081 Class B shares were converted to 831,081 Consultant Class shares valued
at $831,081 and 751,053 Class B shares were converted to 751,053 Consultant
Class shares valued at $751,053, 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 in the normal course of business 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. Management has reviewed the Fund's existing
contracts and expects the risk of loss to be remote.
12
Delaware
Investments(SM)
- --------------------------------------
A member of Lincoln Financial Group(R)
This semiannual 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 NATIONAL DISTRIBUTOR
WALTER P. BABICH Delaware Distributors, L.P.
Board Chairman RICHELLE S. MAESTRO Philadelphia, PA
Citadel Construction Corporation Executive Vice President,
King of Prussia, PA Chief Legal Officer and Secretary SHAREHOLDER SERVICING, DIVIDEND
Delaware Investments Family of Funds DISBURSING AND TRANSFER AGENT
JOHN H. DURHAM Philadelphia, PA Delaware Service Company, Inc.
Private Investor 2005 Market Street
Gwynedd Valley, PA MICHAEL P. BISHOF Philadelphia, PA 19103-7094
Senior Vice President and Treasurer
JOHN A. FRY Delaware Investments Family of Funds FOR SHAREHOLDERS
President Philadelphia, PA 800 523-1918
Franklin & Marshall College
Lancaster, PA FOR SECURITIES DEALERS AND FINANCIAL
INSTITUTIONS REPRESENTATIVES ONLY
ANTHONY D. KNERR 800 362-7500
Managing Director
Anthony Knerr & Associates WEB SITE
New York, NY www.delawareinvestments.com
ANN R. LEVEN
Former Treasurer/Chief Fiscal Officer
National Gallery of Art
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
- --------------------------------------------------------------------------------
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. The Fund's Forms N-Q, as well as 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 Web site at http://www.delawareinvestments.com;
and (iii) on the Commission's Web site at http://www.sec.gov. The Fund's Forms
N-Q may be reviewed and copied at the Commission's Public Reference Room in
Washington, DC; information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Information (if any) regarding how the Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through the Fund's Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
- --------------------------------------------------------------------------------
(8996) Printed in the USA
SA-008 [9/04] IVES 11/04 J9846
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Included as part of report to shareholders filed under Item 1 of this
Form N-CSR.
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
Companies 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 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: November 29, 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: November 29, 2004
JOSEPH H. HASTINGS
- ---------------------------
By: Joseph H. Hastings
Title: Chief Financial Officer
Date: November 29, 2004