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, 2005
Item 1. Reports to Stockholders
Delaware
Investments(R)
-----------------------------------
A member of Lincoln Financial Group
FIXED INCOME
ANNUAL REPORT MARCH 31, 2005
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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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DISCLOSURE OF FUND EXPENSES 3
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SECTOR ALLOCATION 4
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FINANCIAL STATEMENTS:
Statement of Net Assets 5
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 REGISTERED
PUBLIC ACCOUNTING FIRM 14
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OTHER FUND INFORMATION 15
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BOARD OF TRUSTEES/OFFICERS 16
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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) 2005 Delaware Distributors, L.P.
PORTFOLIO DELAWARE CASH RESERVE FUND
MANAGEMENT REVIEW April 7, 2005
FUND MANAGER
Cynthia Isom
Portfolio Manager
As with most fixed-income investments, money market yields climbed during the
year ended March 31, 2005. Beginning last summer, the Federal Reserve Board
embarked on a steady campaign of monetary tightening in which the U.S. central
bank incrementally raised its target for the overnight fed funds rate to 2.75%
by March of this year.
According to iMoneyNet, the average yield on money market funds broke 2.00% in
March 2005 -- the first time average yields had reached that level since
November 2001. With fed funds futures predicting a short-term benchmark rate of
4.00% by year-end, there are clearly some expectations in the market that rates
will continue to trend upward.
Delaware Cash Reserve Fund returned +1.21% (Class A shares at net asset value
with dividends reinvested) for the fiscal year ended March 31, 2005. The average
taxable money market fund, as measured by the 393 funds that compose the Lipper
Money Market Funds Average, returned +0.91% for the same period. As of period
end, the 7-day SEC yield for Delaware Cash Reserve Class A shares was 2.12%, a
figure that was increased from 0.61% for the period ended March 31, 2004.
Typical of a money market fund, more than half of the Delaware Cash Reserve Fund
portfolio remains invested in commercial paper, which represents obligations
issued by corporations or banks to finance short-term credit needs such as
accounts receivable and inventory.
At Delaware Investments, we continue to anticipate positive growth during the
remainder of 2005 as the U.S. economic recovery matures. We believe that the
corporate earnings picture should trend upward over the next six to nine months,
albeit at a declining rate, and that short-term interest rates could trend
higher.
Regardless of near-term outlook, it is important for investors to periodically
reexamine the asset allocation within their investment portfolios. For
individuals seeking stability of principal, or keeping cash-equivalent assets
handy while making decisions about potential stock and bond investments,
Delaware Cash Reserve Fund will continue to be an important short-term
investment vehicle.
1
PERFORMANCE SUMMARY
DELAWARE CASH RESERVE FUND
The performance data quoted represent past performance; past performance
does not guarantee future results. Investment return and principal value
may 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 and is
subject to change.
FUND PERFORMANCE
Average Annual Total Returns/Yields
7-Day Yield
Through March 31, 2005 Lifetime 10 Years Five Years One Year 3/31/05
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Class A (Est. 6/30/78) +6.39% +3.48% +2.21% +1.21% +2.12%
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Consultant Class (Est. 3/10/88) +6.22% +3.22% +1.96% +0.95% +1.87%
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Class B (Est. 5/2/94)
Excluding Sales Charge +2.77% +2.68% +1.44% +0.70% +1.62%
Including Sales Charge +2.77% +2.68% +1.01% -3.30%
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Class C (Est. 11/29/95)
Excluding Sales Charge +2.47% +1.44% +0.70% +1.62%
Including Sales Charge +2.47% +1.44% -0.30%
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All performance reflects reinvestment of all dividends. 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 which
was established 6/30/78. 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 does 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.
FUND BASICS
As of March 31, 2005
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FUND OBJECTIVE:
The Fund seeks to provide maximum current income, while preserving
principal and maintaining liquidity.
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TOTAL FUND NET ASSETS:
$483.87 million
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NUMBER OF HOLDINGS:
47
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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 SYMBOL:
Class A DCRXX
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CUSIP NUMBERS:
Consultant Class 245910-20-3
Class A 245910-10-4
Class B 245910-30-2
Class C 245910-40-1
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2
DISCLOSURE For the Period October 1, 2004 to March 31, 2005
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 October 1, 2004 to March 31, 2005.
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 assume reinvestment of all dividends and
distributions.
DELAWARE CASH RESERVE FUND
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 10/1/04 to
10/1/04 3/31/05 Ratio 3/31/05*
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ACTUAL FUND RETURN
Class A $1,000.00 $1,007.90 0.65% $3.25
Class B 1,000.00 1,005.40 1.15% 5.75
Class C 1,000.00 1,005.40 1.15% 5.75
Consultant Class 1,000.00 1,006.70 0.90% 4.50
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HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,021.69 0.65% $3.28
Class B 1,000.00 1,019.20 1.15% 5.79
Class C 1,000.00 1,019.20 1.15% 5.79
Consultant Class 1,000.00 1,020.44 0.90% 4.53
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*Expenses are equal to the Fund's annualized expense ratio, multiplied by the
average account value over the period, multiplied by the 182/365 (to reflect
the one-half year period).
3
SECTOR ALLOCATION As of March 31, 2005
DELAWARE CASH RESERVE FUND
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 percentage of total net assets and is provided in compliance with such
requirement.
PERCENTAGE
SECTOR OF NET ASSETS
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COMMERCIAL PAPER 83.63%
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Financial Services 61.82%
Industrial 8.83%
Mortgage Bankers & Brokers 12.98%
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CERTIFICATES OF DEPOSIT 10.54%
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Domestic Certificates of Deposit 8.47%
Foreign Certificates of Deposit 2.07%
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VARIABLE RATE DEMAND NOTES 2.68%
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TOTAL MARKET VALUE OF SECURITIES 96.85%
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RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 3.15%
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TOTAL NET ASSETS 100.00%
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4
STATEMENT DELAWARE CASH RESERVE FUND
OF NET ASSETS March 31, 2005
Principal Market
Amount Value
COMMERCIAL PAPER - 83.63%
Financial Services - 61.82%
Amstel Funding
2.786% 4/15/05 $ 7,747,000 $ 7,738,625
2.901% 6/7/05 10,000,000 9,946,400
Aquinas Funding
2.566% 4/7/05 10,000,000 9,995,750
2.844% 4/1/05 12,000,000 12,000,000
Barton Capital
2.757% 4/20/05 10,000,000 9,985,486
2.783% 4/11/05 10,772,000 10,763,682
CBA Finance 2.808% 4/1/05 22,000,000 21,999,999
Corporate Receivables Funding
2.777% 4/20/05 10,000,000 9,985,381
Eiffel Funding
2.687% 4/11/05 10,000,000 9,992,556
2.785% 4/13/05 5,000,000 4,995,367
2.805% 4/12/05 4,020,000 4,016,561
Fortis Funding 2.787% 4/22/05 10,000,000 9,983,783
Fountain Square
2.617% 4/20/05 10,000,000 9,986,278
2.757% 4/18/05 10,000,000 9,987,014
Moat Funding
2.766% 4/15/05 10,000,000 9,989,267
2.795% 4/18/05 10,000,000 9,986,825
Sheffield Receivables 2.697% 4/11/05 5,000,000 4,996,264
Starbird Funding
2.726% 4/8/05 15,000,000 14,992,066
2.757% 4/13/05 6,250,000 6,244,271
Steamboat Funding
2.756% 4/15/05 14,565,000 14,549,424
2.844% 4/1/05 7,435,000 7,435,000
Surrey Funding
2.666% 4/5/05 7,000,000 6,997,931
2.785% 4/7/05 6,500,000 6,496,988
Swedish National Finance 2.686% 4/7/05 17,000,000 16,992,406
Swiss RE Financial Products
2.799% 7/13/05 5,000,000 4,960,517
Three Pillars Funding
2.655% 4/1/05 10,000,000 10,000,000
2.666% 4/4/05 8,000,000 7,998,227
2.696% 4/7/05 4,130,000 4,128,148
UBS Finance 2.844% 4/1/05 22,000,000 21,999,999
Wal-Mart Funding 2.627% 4/20/05 10,000,000 9,986,225
------------
299,130,440
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Industrial - 8.83%
BMW U.S. Capital 2.808% 4/1/05 15,720,000 15,720,000
Cargill 2.808% 4/1/05 5,000,000 5,000,000
Total Capital 2.808% 4/1/05 22,000,000 22,000,000
------------
42,720,000
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Mortgage Bankers & Brokers - 12.98%
Citigroup Global Markets 2.774% 4/6/05 10,000,000 9,996,153
Credit Suisse First Boston 2.922% 6/10/05 10,000,000 9,943,611
ING Funding
2.762% 6/21/05 10,000,000 9,938,575
2.786% 4/15/05 8,015,000 8,006,335
KFW International Finance 2.809% 7/21/05 10,000,000 9,914,592
Morgan Stanley 2.783% 4/5/05 15,000,000 14,995,366
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62,794,632
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TOTAL COMMERCIAL PAPER (cost $404,645,072) 404,645,072
------------
Principal Market
Amount Value
CERTIFICATES OF DEPOSIT - 10.54%
Domestic Certificates of Deposit - 8.47%
First Tennessee Bank
2.15% 4/6/05 $11,000,000 $ 10,999,308
2.69% 4/8/05 10,000,000 10,000,000
Washington Mutual Bank 2.47% 4/18/05 10,000,000 9,998,337
Wilmington Trust 2.55% 4/1/05 10,000,000 10,000,000
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40,997,645
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Foreign Certificates of Deposit - 2.07%
HBOS Treasury Services 2.81% 7/14/05 10,000,000 10,000,266
------------
10,000,266
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TOTAL CERTIFICATES OF DEPOSIT (cost $50,997,911) 50,997,911
------------
oVARIABLE RATE DEMAND NOTES - 2.68%
North Texas Higher Education Authority
2.85% 12/1/44 (AMBAC) 8,000,000 8,000,000
PCP Investors 2.90% 12/1/24 2,000,000 2,000,000
Stephens & Stephens 2.94% 11/1/34 3,000,000 3,000,000
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TOTAL VARIABLE RATE DEMAND NOTES
(cost $13,000,000) 13,000,000
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TOTAL MARKET VALUE OF SECURITIES - 96.85%
(cost $468,642,983)** 468,642,983
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 3.15% 15,230,191
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NET ASSETS APPLICABLE TO 484,221,887
SHARES OUTSTANDING - 100.00% $483,873,174
============
Net Asset Value - Delaware Cash Reserve Fund
Class A ($436,552,397 / 436,849,118 Shares) $1.00
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Net Asset Value - Delaware Cash Reserve Fund
Class B ($17,754,693 / 17,777,832 Shares) $1.00
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Net Asset Value - Delaware Cash Reserve Fund
Class C ($9,734,243 / 9,740,726 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund
Consultant Class ($19,831,841 / 19,854,211 Shares) $1.00
-----
COMPONENTS OF NET ASSETS AT MARCH 31, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $484,221,950
Accumulated net realized loss on investments (348,776)
------------
Total net assets $483,873,174
============
o Variable Rate Notes. The interest rate shown is the rate as of March 31, 2005
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.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
See accompanying notes
5
STATEMENT DELAWARE CASH RESERVE FUND
OF OPERATIONS Year Ended March 31, 2005
INVESTMENT INCOME:
Interest $9,069,811
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EXPENSES:
Management fees $2,339,368
Dividend disbursing and transfer agent fees and expenses 1,295,807
Distribution expenses -- Class B 212,756
Distribution expenses -- Class C 100,028
Distribution expenses -- Consultant Class 78,628
Accounting and administration expenses 178,863
Reports and statements to shareholders 115,339
Registration fees 71,893
Legal and professional fees 45,346
Trustees' fees 24,991
Custodian fees 11,864
Pricing fees 2,885
Other 9,025 4,486,793
----------
Less expenses absorbed or waived (1,179,479)
Less waived distribution expenses -- Class B (106,378)
Less waived distribution expenses -- Class C (50,014)
Less waived distribution expenses -- Consultant Class (13,105)
----------
Total expenses 3,137,817
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NET INVESTMENT INCOME 5,931,994
----------
NET REALIZED GAIN ON INVESTMENTS:
Net Realized Gain on Investments 3,573
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,935,567
==========
See accompanying notes
6
STATEMENTS DELAWARE CASH RESERVE FUND
OF CHANGES IN NET ASSETS
Year Ended
3/31/05 3/31/04
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 5,931,994 $ 3,635,949
Net realized gain on investments 3,573 14,961
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Net increase in net assets resulting from operations 5,935,567 3,650,910
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DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A (5,504,334)
Class B (135,870) (30,462)
Class C (64,220) (12,009)
Consultant Class (227,570) (148,984)
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(5,931,994) (3,635,949)
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CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 669,359,865 560,956,289
Class B 15,751,441 12,821,846
Class C 11,940,121 11,309,957
Consultant Class 20,542,359 20,432,041
Net asset value of shares issued upon reinvestment of dividends:
Class A 5,221,123 3,386,159
Class B 112,292 27,003
Class C 56,890 11,346
Consultant Class 215,023 149,824
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723,199,114 609,094,465
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Cost of shares repurchased:
Class A (723,689,725) (617,167,881)
Class B (19,891,833) (28,092,066)
Class C (12,555,278) (11,452,709)
Consultant Class (33,253,549) (25,284,311)
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(789,390,385) (681,996,967)
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Decrease in net assets derived from capital share transactions (66,191,271) (72,902,502)
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NET DECREASE IN NET ASSETS (66,187,698) (72,887,541)
NET ASSETS:
Beginning of year 550,060,872 622,948,413
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End of year (there was no undistributed net
investment income at either year end) $ 483,873,174 $ 550,060,872
============= =============
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
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Year Ended
3/31/05 3/31/04 3/31/03 3/31/02 3/31/01
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.012 0.007 0.009 0.026 0.056
------ ------ ------ ------ ------
Total from investment operations 0.012 0.007 0.009 0.026 0.056
------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.012) (0.007) (0.009) (0.026) (0.056)
------ ------ ------ ------ ------
Total dividends (0.012) (0.007) (0.009) (0.026) (0.056)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN(1) 1.21% 0.67% 0.92% 2.59% 5.75%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $436,552 $485,657 $538,469 $525,032 $548,006
Ratio of expenses to average net assets 0.56% 0.45% 0.76% 0.92% 0.84%
Ratio of expenses to average net assets
prior to expense limitation and expense paid indirectly 0.78% 0.93% 0.99% 0.92% 0.84%
Ratio of net investment income to average net assets 1.17% 0.67% 0.91% 2.56% 5.60%
Ratio of net investment income to average net assets
prior to expense limitation and expense paid indirectly 0.95% 0.19% 0.68% 2.56% 5.60%
(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
3/31/05 3/31/04 3/31/03 3/31/02 3/31/01
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 0.001 0.002 0.016 0.046
------ ------ ------ ------ ------
Total from investment operations 0.007 0.001 0.002 0.016 0.046
------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.007) (0.001) (0.002) (0.016) (0.046)
------ ------ ------ ------ ------
Total dividends (0.007) (0.001) (0.002) (0.016) (0.046)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN(1) 0.70% 0.11% 0.16% 1.57% 4.71%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $17,755 $21,783 $37,025 $25,744 $32,267
Ratio of expenses to average net assets 1.06% 1.02% 1.51% 1.92% 1.84%
Ratio of expenses to average net assets
prior to expense limitation and expense paid indirectly 1.78% 1.93% 1.99% 1.92% 1.84%
Ratio of net investment income to average net assets 0.67% 0.10% 0.16% 1.56% 4.60%
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expense paid indirectly (0.05%) (0.81%) (0.32%) 1.56% 4.60%
(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
3/31/05 3/31/04 3/31/03 3/31/02 3/31/01
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 0.001 0.002 0.016 0.046
------ ------ ------ ------ ------
Total from investment operations 0.007 0.001 0.002 0.016 0.046
------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.007) (0.001) (0.002) (0.016) (0.046)
------ ------ ------ ------ ------
Total dividends (0.007) (0.001) (0.002) (0.016) (0.046)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN(1) 0.70% 0.11% 0.16% 1.57% 4.71%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $9,734 $10,293 $10,424 $7,084 $6,893
Ratio of expenses to average net assets 1.06% 1.02% 1.51% 1.92% 1.84%
Ratio of expenses to average net assets
prior to expense limitation and expense paid indirectly 1.78% 1.93% 1.99% 1.92% 1.84%
Ratio of net investment income to average net assets 0.67% 0.10% 0.16% 1.56% 4.60%
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expense paid indirectly (0.05%) (0.81%) (0.32%) 1.56% 4.60%
(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
3/31/05 3/31/04 3/31/03 3/31/02 3/31/01
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.010 0.004 0.007 0.023 0.054
------ ------ ------ ------ ------
Total from investment operations 0.010 0.004 0.007 0.023 0.054
------ ------ ------ ------ ------
LESS DIVIDENDS FROM:
Net investment income (0.010) (0.004) (0.007) (0.023) (0.054)
------ ------ ------ ------ ------
Total dividends (0.010) (0.004) (0.007) (0.023) (0.054)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN(1) 0.95% 0.42% 0.67% 2.34% 5.49%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $19,832 $32,328 $37,030 $34,614 $36,783
Ratio of expenses to average net assets 0.81% 0.70% 1.01% 1.17% 1.09%
Ratio of expenses to average net assets
prior to expense limitation and expense paid indirectly 1.08% 1.23% 1.24% 1.17% 1.09%
Ratio of net investment income to average net assets 0.92% 0.42% 0.66% 2.31% 5.35%
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expense paid indirectly 0.65% (0.11%) 0.43% 2.31% 5.35%
(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, 2005
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
daily from net investment income and pays such dividends monthly.
The Fund may receive 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, 2005.
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.
Effective October 1, 2004, 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 0.65% of average daily net assets of the Fund, which can be revoked at
any time. Prior to October 1, 2004, DMC had elected to waive its fees in order
to prevent such expenses from exceeding 0.45% of the average daily net assets 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 and 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 elected to waive distribution and service fees in order to
prevent these fees from exceeding 0.25% of average daily net assets for
Consultant Class shares and 0.50% of average daily net assets for Class B and C
shares. These waivers may be revoked at any time.
At March 31, 2005, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC $216,262
Dividend disbursing, transfer agent,
accounting and administration fees
and other expenses payable to DSC 158,328
Other expenses payable to DMC and
affiliates* 52,325
*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 internal legal services provided to
the Fund by DMC employees. For the year ended March 31, 2005, the Delaware Cash
Reserve Fund was charged $10,801 for internal legal services provide by DMC.
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 U.S. generally accepted accounting
principles. Additionally, net short-term gains on sales of investment securities
are treated as ordinary income for federal income tax purposes. The tax
character of dividends paid during the years ended March 31, 2005 and 2004 was
as follows:
Year Ended
3/31/05 3/31/04
---------- ----------
Ordinary income $5,931,994 $3,635,949
As of March 31, 2005, the components of net assets on a tax basis were as
follows:
Shares of beneficial interest $484,221,950
Capital loss carryforwards (348,776)
------------
Net assets $483,873,174
============
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. $3,069 was utilized in 2005.
Capital loss carryforwards remaining at March 31, 2005 will expire as follows:
$348,776 expires in 2011.
4. CAPITAL SHARES
Transactions in capital shares were as follows:
Year Ended
3/31/05 3/31/04
Shares sold:
Class A 669,359,865 560,956,289
Class B 15,751,441 12,821,846
Class C 11,940,121 11,309,957
Consultant Class 20,542,359 20,432,041
Shares issued upon reinvestment of dividends:
Class A 5,221,081 3,386,139
Class B 112,291 27,002
Class C 56,890 11,346
Consultant Class 215,023 149,824
------------ ------------
723,199,071 609,094,444
------------ ------------
Shares repurchased:
Class A (723,689,725) (617,167,881)
Class B (19,891,832) (28,092,066)
Class C (12,555,278) (11,452,709)
Consultant Class (33,253,549) (25,284,311)
------------ ------------
(789,390,384) (681,996,967)
------------ ------------
Net decrease (66,191,313) (72,902,523)
============ ============
For the years ended March 31, 2005 and 2004, 580,569 Class B shares were
converted to 580,569 Consultant Class shares valued at $580,569 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.
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, 2005, 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 REGISTERED PUBLIC ACCOUNTING FIRM
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 sole series of Delaware Group Cash Reserve) ("the Fund") as of
March 31, 2005, 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 the standards of the Public Company
Accounting Oversight Board (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. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of March 31, 2005, by correspondence with the custodian and
brokers. 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 the
Delaware Cash Reserve Fund series of Delaware Group Cash Reserve at March 31,
2005, 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 the financial
highlights for each of the five years in the period then ended, in conformity
with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 12, 2005
14
OTHER DELAWARE CASH RESERVE FUND
FUND INFORMATION
The shareholders of Delaware Group Cash Reserve (the "Trust") voted on the
following proposals at the special meeting of shareholders on March 23, 2005 or
as adjourned. The description of each proposal and number of shares voted are as
follows:
1. To elect a Board of Trustees for the Trust.
Shares Voted
Shares Voted For Withheld Authority
---------------- ------------------
Thomas L. Bennett 325,591,349 14,048,885
Jude T. Driscoll 325,432,757 14,207,477
John A. Fry 325,701,190 13,939,044
Anthony D. Knerr 325,584,746 14,055,488
Lucinda S. Landreth 325,256,589 14,383,645
Ann R. Leven 325,324,161 14,316,073
Thomas F. Madison 325,427,778 14,212,456
Janet L. Yeomans 325,499,102 14,141,132
J. Richard Zecher 325,496,283 14,143,951
2. To approve the use of a "manager of managers" structure whereby the
investment manager of the fund of the Trust will be able to hire and
replace subadvisers without shareholder approval.
Broker
For Against Abstain Non-Votes
--- ------- ------- ----------
Delaware Group Cash Reserve 291,965,247 17,362,008 16,637,905 13,675,074
15
DELAWARE INVESTMENTS FAMILY OF FUNDS
BOARD OF TRUSTEES/DIRECTORS AND OFFICERS ADDENDUM
A mutual fund is governed by a Board of Trustees/Directors ("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.
NUMBER OF OTHER
PORTFOLIOS IN FUND DIRECTORSHIPS
POSITION(S) COMPLEX OVERSEEN HELD BY
NAME, ADDRESS AND HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S) BY TRUSTEE TRUSTEE
BIRTHDATE FUND(S) SERVED DURING PAST 5 YEARS OR OFFICER OR OFFICER
- ---------------------- ------------------- -------------------- --------------------------- ------------------- --------------------
INTERESTED TRUSTEES
JUDE T. DRISCOLL(2) Chairman, 5 Years - Executive Since August 2000, Mr. 92 None
2005 Market Street President, Chief Officer Driscoll has served in
Philadelphia, PA Executive Officer various executive
19103 and Trustee 1 Year - Trustee capacities at different
times at Delaware
March 10, 1963 Investments(1)
Senior Vice President and
Director of Fixed-Income
Process - Conseco Capital
Management
(June 1998 - August 2000)
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
THOMAS L. BENNETT Trustee Since Private Investor - 92 None
2005 Market Street March 23, 2005 (March 2004 - Present)
Philadelphia, PA
19103 Investment Manager -
Morgan Stanley & Co.
October 4, 1947 (January 1984 - March 2004)
JOHN A. FRY Trustee 4 Years President - Franklin & 92 Director - Community
2005 Market Street Marshall College Health Systems
Philadelphia, PA (June 2002 - Present)
19103
Executive Vice President
May 28, 1960 - University of
Pennsylvania
(April 1995 - June 2002)
ANTHONY D. KNERR Trustee 12 Years Founder/Managing Director 92 None
2005 Market Street - Anthony Knerr &
Philadelphia, PA Associates (Strategic
19103 Consulting)
(1990 - Present)
December 7, 1938
LICINDA S. LANDRETH Trustee Since Chief Investment Officer - 92 None
2005 Market Street March 23, 2005 Assurant, Inc.
Philadelphia, PA (Insurance)
19103 (2002 - 2004)
June 24, 1947
ANN R. LEVEN Trustee 16 Years Treasurer/Chief Fiscal 92 Director and Audit
2005 Market Street Officer - National Committee
Philadelphia, PA Gallery of Art Chairperson -
19103 (1994 - 1999) Andy Warhol
Foundation
November 1, 1940
Director and Audit
Committee Member -
Systemax Inc.
16
NUMBER OF OTHER
PORTFOLIOS IN FUND DIRECTORSHIPS
POSITION(S) COMPLEX OVERSEEN HELD BY
NAME, ADDRESS AND HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S) BY TRUSTEE TRUSTEE
BIRTHDATE FUND(S) SERVED DURING PAST 5 YEARS OR OFFICER OR OFFICER
- ---------------------- ------------------- -------------------- --------------------------- ------------------- --------------------
INDEPENDENT TRUSTEES (CONTINUED)
THOMAS F. MADISON Trustee 11 Years President/Chief Executive 92 Director -
2005 Market Street Officer - MLM Partners, Banner Health
Philadelphia, PA Inc. (Small Business
19103 Investing and Consulting) Director and Audit
(January 1993 - Present) Committee Member -
February 25, 1936 CenterPoint Energy
Director and Audit
Committee Member -
Digital River Inc.
Director and Audit
Committee Member -
Rimage Corporation
Director - Valmont
Industries Inc.
JANET L. YEOMANS Trustee 6 Years Vice President/Mergers & 92 None
2005 Market Street Acquisitions -
Philadelphia, PA 3M Corporation
19103 (January 2003 - Present)
July 31, 1948 Ms. Yeomans has held
various management
positions at 3M Corporation
since 1983.
J. RICHARD ZECHER Trustee Since Founder - 92 Director and Audit
2005 Market Street March 23, 2005 Investor Analytics Committee Member -
Philadelphia, PA (Risk Management) Investor Analytics
10103 (May 1999 - Present)
Director and Audit
July 3, 1940 Committee Member -
Oxigene, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
MICHAEL P. BISHOF Senior Vice Chief Financial Mr. Bishof has served in 92 None(3)
2005 Market Street President and Officer since various executive capacities
Philadelphia, PA Chief Financial February 17, 2005 at different times at
19103 Officer Delaware Investments
August 18, 1962
RICHELLE S. MAESTRO Executive Vice 2 Years Ms. Maestro has served in 92 None(3)
2005 Market Street President, Chief various executive capacities
Philadelphia, PA Legal Officer and at different times at
19103 Secretary Delaware Investments
November 26, 1957
JOHN J. O'CONNOR Senior Vice Treasurer since Mr. O'Connor has served in 92 None(3)
2005 Market Street President and February 17, 2005 various executive capacities
Philadelphia, PA Treasurer at different times at
19103 Delaware Investments
June 16, 1957
(1) Delaware Investments is the marketing name for Management Holdings, Inc.
and its subsidiaries, including the Fund's(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(s') manager and distributor.
(3) Mr. Bishof, Ms. Maestro and Mr. O'Connor also serve in similar capacities
for the six portfolios of the Optimum Fund Trust, which have the same
investment advisor, principal underwriter, and transfer agent as the
registrant.
The Statement of Additional Information for the Fund(s) includes additional
information about the Trustees/Directors and Officers and is available, without
charge, upon request by calling 800 523-1918.
17
Delaware
Investments(R)
- -----------------------------------
A member of Lincoln Financial Group
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
that are not a guarantee of future results. The return and principal value of an
investment in the Fund may 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 MICHAEL P. BISHOF INVESTMENT MANAGER
Chairman Senior 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
THOMAS L. BENNETT Delaware Distributors, L.P.
Private Investor RICHELLE S. MAESTRO Philadelphia, PA
Rosemont, PA Executive Vice President,
Chief Legal Officer and Secretary SHAREHOLDER SERVICING, DIVIDEND
JOHN A. FRY Delaware Investments Family of Funds DISBURSING AND TRANSFER AGENT
President Philadelphia, PA Delaware Service Company, Inc.
Franklin & Marshall College 2005 Market Street
Lancaster, PA JOHN J. O'CONNOR Philadelphia, PA 19103-7094
Senior Vice President and Treasurer
ANTHONY D. KNERR Delaware Investments Family of Funds FOR SHAREHOLDERS
Managing Director Philadelphia, PA 800 523-1918
Anthony Knerr & Associates
New York, NY FOR SECURITIES DEALERS AND FINANCIAL
INSTITUTIONS REPRESENTATIVES ONLY
LUCINDA S. LANDRETH 800 362-7500
Former Chief Investment Officer
Assurant, Inc. WEB SITE
Philadelphia, PA 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
J. RICHARD ZECHER
Founder
Investor Analytics
Scottsdale, AZ
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
(9349) Printed in the USA
AR-008 [3/05] IVES 5/05 J10146
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 $25,350 for
the fiscal year ended March 31, 2005.
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.
- ---------------------
(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, 2005.
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 $164,700 for the Registrant's fiscal
year ended March 31, 2005. 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 agent's system of internal accounting control
pursuant to Rule 17Ad-13 of the Securities Exchange Act; issuance of agreed upon
procedures reports to the Registrant's Board in connection with the annual
transfer agent and fund accounting service agent contract renewals and the
pass-through of internal legal cost relating to the operations of the
Registrant; 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, 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 Registrant's Board in connection with the annual
transfer agent and fund accounting service agent contract renewals and the
pass-through of internal legal costs relating to the operations of the
Registrant; 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 $1,750 for the fiscal year
ended March 31, 2005. 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
review of annual excise distribution calculation.
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, 2005.
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
review of annual excise distribution calculation.
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, 2004.
(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, 2005.
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, 2005.
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, 2004.
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.
(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 $354,209 and $286,850 for the Registrant's fiscal years ended March 31,
2005 and March 31, 2004, 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. 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. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. 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 second fiscal quarter of the
period covered by the report to stockholders included herein (i.e., the
registrant's fourth fiscal quarter) that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
Item 12. 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: June 3, 2005
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: June 3, 2005
MICHAEL P. BISHOF
- --------------------------------
By: Michael P. Bishof
Title: Chief Financial Officer
Date: June 3, 2005