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: 881-21335
Exact name of registrant as specified in charter: Optimum Fund Trust
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)
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A member of Lincoln Financial Group
ANNUAL REPORT MARCH 31, 2005
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OPTIMUM FIXED INCOME FUND
OPTIMUM INTERNATIONAL FUND
OPTIMUM LARGE CAP GROWTH FUND
OPTIMUM LARGE CAP VALUE FUND
OPTIMUM SMALL CAP GROWTH FUND
OPTIMUM SMALL CAP VALUE FUND
[LOGO] POWERED BY RESEARCH.(SM)
TABLE
OF CONTENTS
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PORTFOLIO MANAGEMENT REVIEW:
Optimum Fixed Income Fund 1
Optimum International Fund 6
Optimum Large Cap Growth Fund 10
Optimum Large Cap Value Fund 14
Optimum Small Cap Growth Fund 18
Optimum Small Cap Value Fund 22
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DISCLOSURE OF FUND EXPENSES 26
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SECTOR ALLOCATION 28
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FINANCIAL STATEMENTS:
Statements of Net Assets 32
Statements of Assets and Liabilities 57
Statements of Operations 58
Statements of Changes in Net Assets 59
Financial Highlights 62
Notes to Financial Statements 68
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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM 76
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BOARD OF TRUSTEES/OFFICERS 77
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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 OPTIMUM FIXED INCOME FUND
MANAGEMENT REVIEW April 5, 2005
ADVISOR
Delaware Management Company (DMC)
SUB-ADVISOR
Deutsche Investment Management Americas Inc. (DIMA Inc.)
The Federal Reserve Open Market Committee began a "measured pace" of monetary
tightening during the 12-month period ended March 31, 2005 in which the federal
funds target rate was raised a total of 1.75% since June 2004. During the
period, two-year Treasuries picked up 2.20% in yield while 10-year Treasuries
remained mostly range-bound and picked up only 0.65%.
For the 12 months ended March 31, 2005, the Fund returned 2.59% (Class A shares
at net asset value with distributions reinvested), bettering its benchmark, the
Lehman Brothers U.S. Aggregate Bond Index, which returned 1.15% for the period.
The Fund seeks a high level of income and may also seek growth of capital. The
Fund's advisor, DMC, manages one portion of the Fund. It also selected a
sub-advisor to manage another portion of the Fund's assets. The sub-advisor
selects investments for its portion of the Fund based on its own investment
style and strategy, which is generally intended to complement DMC's style.
Within its portion of the Fund, DMC allocates investments principally among the
following three sectors of the fixed-income market:
1) U.S. investment grade
2) U.S. high yield
3) International
Sub-advisor DIMA Inc. uses a "bottom-up" security selection approach and focuses
on the securities and sectors it believes are undervalued relative to the
market, rather than relying on interest rate forecasts. For more information on
DMC's and DIMA, Inc.'s investment approach, please see the Fund's prospectus.
DIMA INC.
Q: CAN YOU PROVIDE SOME BACKGROUND ON THE FIXED-INCOME MARKETS DURING
THE PERIOD?
A: The bond market returned 1.15% for the 12-month period ended March 31, 2005,
as measured by the Lehman Brothers U.S. Aggregate Bond Index. Mortgages, both
single-family and commercial, benefited from muted volatility and outperformed
versus Treasuries. Corporate bonds also provided strong returns for the period
despite underperforming Treasuries in the most recent calendar quarter ended
March 31, 2005.
Q: CAN YOU ELABORATE ON YOUR STRATEGIES FOR THE FUND?
A: Our strategy is predicated on the investment philosophy that the only way to
consistently add value is through strict bottom-up approach, capitalizing on the
inefficiencies inherent in the bond market. Therefore, we focus our efforts on a
disciplined process of individual security selection and avoid such techniques
as interest rate forecasting or sector rotation that cannot be relied upon to
consistently add value.
For the reporting period, we outperformed the Fund's benchmark index on the
strength of this process. While, generally, our investments in all non-Treasury
sectors contributed to performance, our security selection within each sector
further aided returns.
In corporate bonds, our outweighted position to media cable, utility and
insurance versus our benchmark added to performance, as these were among the
better-performing sub-sectors for the period. In the important auto segment, we
maintained a market weighting, but at the shorter end of the yield curve and,
thus, reduced the impact of the negative headline events in this sector during
the period.
Our approach typically favors more structured mortgages (CMOs) not found in the
benchmark index, which perform better during periods of volatility. We added to
our overweighted position in this segment during the period as volatility
remained low and relative valuations were compelling. Although the pass-through
component of our mortgage portfolio kept pace with the performance of the Lehman
Brothers Mortgage Index on an absolute basis, our underweight to generic
mortgages detracted from returns relative to the benchmark during the period.
However, our investments in structured mortgages offset this underperformance
and, therefore, investments in a combination of pass-throughs and CMOs resulted
in returns comparable to that of the index.
Asset-backed securities also helped performance, especially our holdings in the
home equity sub-sector. Our underweighted position in manufactured housing,
though, diminished returns as real-estate-related sub-sectors were the
best-performing for the period.
1
DMC
Q: WHAT FACTORS INFLUENCED PERFORMANCE IN YOUR PART
OF THE FUND?
A: Interest rate volatility resurfaced this year for the first time since
April/May 2004. During the 12-month period ended March 31, 2005, the Federal
Reserve raised the fed funds rate by 25 basis points seven times. Commodity
prices, higher growth prospects and dollar strength all weighed on the bond
market.
In high yield securities' portion of the Fund, security selection and quality
decision (BB vs. CCC) helped us generate breakeven relative return during the
challenging first quarter of 2005.
In emerging markets, asset prices remained relatively strong in spite of a sell
off in the U.S. Treasury market during the first quarter of 2005. Core emerging
market positions benefited the portfolio and contributed modestly to return,
although we remained at the low end of our emerging market exposure range at the
end of the fiscal year.
Our portion of the Fund continued to include a strategic mix of
investment-grade, high-yield, and international fixed income bonds. In the
investment-grade section of our portfolio, research and trading efforts have
remained focused on corporate bonds that display potential given our outlook for
future ratings upgrades or downgrades.
Higher-quality, short-dated high-yield situations were an overriding theme in
the high-yield portion of our portfolio. In the international markets, our focus
during the second part of the fiscal year was to reduce risk and take profits
opportunistically. We shifted our views away from commodity-driven economies
such as Australia and New Zealand and have been cautious with our positioning,
in order to be prepared to take advantage of any future revaluation of the
renmimbi by China.
2
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3
PERFORMANCE SUMMARY
OPTIMUM FIXED INCOME FUND
The performance data quoted represent past performance; past performance does
not guarantee future results. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance
data quoted. Please obtain the performance data for the most recent month end by
calling 800 914-0278 or visiting our Web site at www.optimummutualfunds.com. You
should consider the investment objectives, risks, charges and expenses of the
investment carefully before investing. The Optimum Fixed Income Fund prospectus
contains this and other important information about the investment company.
Please request a prospectus by calling 800 914-0278. 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
Through March 31, 2005 One Year Lifetime
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Class A (Est 8/1/03)
Excluding Sales Charge +2.59 +5.64%
Including Sales Charge -2.00 +2.77%
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Class B (Est 8/1/03)
Excluding Sales Charge +1.88 +5.03%
Including Sales Charge -2.08 +3.27%
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Class C (Est 8/1/03)
Excluding Sales Charge +1.88 +5.03%
Including Sales Charge +0.89 +5.03%
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Returns reflect the reinvestment of all distributions and are shown both
including and excluding the effect of front-end or contingent deferred sales
charges. Returns and share values will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Performance for Class B and
C shares, excluding sales charges, assumes either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
The Fund offers Class A, B, C, and Institutional Class shares. Class A shares
are sold with a front-end sales charge of up to 4.50% and have an annual
distribution and service fee of up to 0.35%.
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 Class A shares on a quarterly basis
approximately eight years after purchase. They are also subject to an annual
distribution and service fee of 1%.
Class C shares are sold with a contingent deferred sales charge of 1% if
redeemed during the first 12 months after purchase. They are also subject to an
annual distribution and service fee of 1%.
The average annual total return for the lifetime and one-year periods ended
March 31, 2005 for Optimum Fixed Income Fund's Institutional Class were 6.02%
and 2.96%, respectively. The Institutional Class shares were first made
available on August 1, 2003 and are available without sales or asset-based
distribution charges only to certain eligible investors.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Fixed Income Fund
during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
4
PERFORMANCE SUMMARY
OPTIMUM FIXED INCOME FUND
FUND BASICS
As of March 31, 2005
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FUND OBJECTIVES:
The Fund seeks a high level of income and may
also seek growth of capital.
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TOTAL FUND NET ASSETS:
$320.0 million
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NUMBER OF HOLDINGS:
804
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FUND START DATE:
August 1, 2003
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ADVISOR:
Delaware Management Company
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SUB-ADVISOR:
DIMA Inc.
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CUSIP NUMBERS:
Class A 246118-68-1
Class B 246118-67-3
Class C 246118-66-5
Institutional 246118-65-7
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PERFORMANCE OF A $10,000 INVESTMENT
August 1, 2003 (Fund's inception) through March 31, 2005
OPTIMUM FIXED LEHMAN BROTHERS
INCOME FUND - AGGREGATE BOND
CLASS A SHARES INDEX
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8/1/2003 $9,550
8/31/2003 $9,595 $10,000
9/30/2003 $9,853 $10,265
10/31/2003 $9,786 $10,170
11/30/2003 $9,831 $10,194
12/31/2003 $9,964 $10,298
1/31/2004 $10,043 $10,380
2/29/2004 $10,123 $10,493
3/31/2004 $10,202 $10,571
4/30/2004 $9,963 $10,324
5/31/2004 $9,917 $10,276
6/30/2004 $9,974 $10,335
7/31/2004 $10,065 $10,430
8/31/2004 $10,261 $10,632
9/30/2004 $10,318 $10,692
10/31/2004 $10,445 $10,823
11/30/2004 $10,434 $10,812
12/31/2004 $10,548 $10,930
1/31/2005 $10,583 $10,967
2/28/2005 $10,560 $10,942
3/31/2005 $10,466 $10,845
Chart assumes $10,000 invested on August 1, 2003 and includes the effect of a
4.50% front-end sales charge and the reinvestment of all distributions.
Performance of other Fund classes will vary due to different charges and
expenses. Effective September 1, 2004, DMC assumed responsibility for day-to-day
management of international sector within the portion of the Fund managed by DMC
in connection with the termination of a previous sub-advisory agreement. Returns
plotted on the chart were as of the last day of each month shown. The Lehman
Brothers Aggregate Bond Index is an unmanaged composite that tracks the broad
U.S. bond markets. An index is unmanaged and does not reflect the costs of
operating a mutual fund, such as the costs of buying, selling, and holding
securities. You cannot invest directly in an index. Past performance is not a
guarantee of future results.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Fixed Income Fund
during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
5
PORTFOLIO OPTIMUM INTERNATIONAL FUND
MANAGEMENT REVIEW April 5, 2005
SUB-ADVISORS
Mondrian Investment Partners Limited (Mondrian)
Marsico Capital Management, LLC (Marsico Capital)
The Optimum International Fund underperformed the MSCI EAFE Index for the
twelve-month period ending March 31, 2005. The Fund had a total return of
+10.62% (Class A shares at net asset value with distributions reinvested), while
the MSCI EAFE Index had a total return of +15.06% for the period.(1) Gains were
widespread; nine of the ten economic sectors in the index had returns in excess
of 10%, with energy, utilities and materials as the best overall sector
performers. Currency was a major story in international equity markets during
the last year, as the U.S. dollar was under sustained downward pressure
throughout much of the period.
The Fund seeks long-term growth of capital and may also seek income. The Fund's
advisor, Delaware Management Company, selected two sub-advisors to manage the
Fund's assets, each of which is responsible for day-to-day investment management
of a portion of the Fund's assets. Each selects investments for its portion of
the Fund based on its own investment style and strategy, which are generally
intended to complement one another. Sub-advisor Mondrian uses a value-oriented
stock selection approach. Sub-advisor Marsico Capital uses a more
growth-oriented approach, which combines "top-down" economic analysis with
"bottom-up" stock selection. For more information on each sub-advisor's
investment approach, please see the Fund's prospectus.
MARSICO CAPITAL
Q: CAN YOU DESCRIBE WHICH AREAS BENEFITED THE FUND?
A: The Marsico Capital Management portion of the Fund was significantly
overweighted in the hotels, restaurants and leisure industry versus the
benchmark index. This posture benefited the portfolio. Companies in this
industry, such as Wynn Resorts and Shangri-La Asia, posted strong returns and
were among the portfolio's top contributors.
Select holdings also performed well for the period. A position in Japanese
retailer Yamada Denki emerged as a top contributor to performance. Energy
companies Total and Talisman Energy as well as financial sector companies UBS AG
and HSBC Holdings also were strong performers. (HSBC Holdings was sold prior to
March 31, 2005.)
Q: WHICH AREAS DETRACTED FROM THE FUND'S PERFORMANCE?
A: Stock selection in two different industry groups within the consumer
discretionary sector had a material negative impact on performance for the
period. In the media industry, positions in EMI Group, Sony, and News Corp.
(prior to being sold) were among the largest detractors from performance on an
individual stock level. An overweighted posture in media relative to the
benchmark index further hurt performance. In the consumer durables and apparel
industry, positions in Yamaha and Philips Electronics were laggards. Yamaha and
Philips were sold from the Marsico sleeve of the portfolio prior to the end of
the reporting period.
The portfolio maintained an overweighted posture in the information technology
sector for much of the period. This positioning detracted from performance, as
information technology was the weakest-performing sector of the benchmark index.
Select holdings in the information technology sector also detracted from
performance. Samsung Electronics, Ericsson LM and Trend Micro struggled during
the period.
Stock selection in the financials sector was another area of weakness in the
fund. Specifically, holdings Kookmin Bank, Mitsubishi Tokyo Financial, and Man
Group performed poorly during the period they were held in the portfolio.
(Kookmin Bank and Man Group were not held in the portfolio as of March 31,
2005.)
The portfolio's performance shortfall compared to its benchmark was also
attributable to currency-related factors. Although the U.S. dollar stabilized
somewhat late in the period compared to major world currencies, it was
relatively weak for much of the reporting period. The portfolio did not receive
the same overall "lift" in performance as the benchmark index because not all of
its assets were denominated in foreign currencies.
As of March 31, 2005, the portfolio's largest economic sector-related
allocations were financials, consumer discretionary, and energy. The portfolio's
largest country allocations included Japan, France, United Kingdom, and
Switzerland.
(1) Source: Lipper LANA Fund Analyzer
6
MONDRIAN
Q: WHAT FACTORS HAVE BEEN INFLUENCING THE PORTFOLIO AND
GLOBAL EQUITY MARKETS IN GENERAL?
A: After international equity markets generally ended 2004 on
a high note in the fourth quarter, international equity prices struggled to make
progress in the period ending March 31, 2005. This came against the backdrop of
rising oil prices, heightened concerns about U.S. interest rates, and a subdued
outlook for growth in the euro zone and Japanese economies. These markets could
not sustain the momentum of a strong fourth quarter of 2004 that had positive
returns recorded in all markets in local currency terms, along with exchange
rate movements, which boosted investors' returns in U.S. dollars.
Demand for oil grew by 3.5% in 2004, the biggest increase since 1980. This was
driven mainly by a remarkable 16% growth in Chinese demand, but also by strong
gasoline consumption in the U.S. With inventories low and supply disrupted in
certain areas, OPEC's spare capacity has fallen. This, combined with the
continued security worries in Saudi Arabia and Iraq, has contributed to oil
prices reaching 15-year highs in real (inflation-adjusted) terms.
Following a period of strength, international currencies weakened against the
U.S. dollar in the period ended March 31, 2005.
Also of note, leaders of the European Union (EU) agreed to reform the Stability
and Growth Pact (SPG), which has placed contextual limits as to the manner
member states may run budget deficits. While deficits are still intended not to
breach three percent of a member nation's GDP, situations are to be added in
which violations may be tolerated, as with a nation introducing strategic
economic reforms. Also, countries having breached the three percent cap are to
be allowed added time with which to achieve compliance.
Q: WHAT STRATEGIES DID YOU PURSUE DURING THE FISCAL YEAR?
A: As always, Mondrian remains focused on selecting securities with strong value
orientations and strong cash flows, using a dividend discount methodology.
Throughout the year, we maintained an underweight position to what we believe to
be overvalued Japanese and U.S markets and an overweight exposure to the
attractively valued Australasian markets. At fiscal year end, we held an
underweight position overall in continental Europe, with selected markets
overweight. Additionally, we continued to reduce our effective exposure to UK
sterling by partially hedging our currency exposure.
7
PERFORMANCE SUMMARY
OPTIMUM INTERNATIONAL FUND
The performance data quoted represent past performance; past performance does
not guarantee future results. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance
data quoted. Please obtain the performance data for the most recent month end by
calling 800 914-0278 or visiting our Web site at www.optimummutualfunds.com. You
should consider the investment objectives, risks, charges and expenses of the
investment carefully before investing. The Optimum International Fund prospectus
contains this and other important information about the investment company.
Please request a prospectus by calling 800 914-0278. Read it carefully before
you invest or send money. Performance includes reinvestment of all distributions
and is subject to change. Instances of high double-digit returns are highly
unusual and cannot be sustained and were achieved primarily during favorable
market conditions.
FUND PERFORMANCE
Average Annual Total Returns
Through March 31, 2005 One Year Lifetime
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Class A (Est 8/1/03)
Excluding Sales Charge +10.62 +21.80%
Including Sales Charge +4.27 +17.54%
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Class B (Est 8/1/03)
Excluding Sales Charge +9.91 +20.99%
Including Sales Charge +5.91 +19.27%
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Class C (Est 8/1/03)
Excluding Sales Charge +10.01 +21.05%
Including Sales Charge +9.01 +21.05%
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Returns reflect the reinvestment of all distributions and are shown both
including and excluding the effect of front-end or contingent deferred sales
charges. Returns and share values will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Performance for Class B and
C shares, excluding sales charges, assumes either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
The Fund offers Class A, B, C, and Institutional Class shares. Class A shares
are sold with a front-end sales charge of up to 5.75% and have an annual
distribution and service fee of up to 0.35%.
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 Class A shares on a quarterly basis
approximately eight years after purchase. They are also subject to an annual
distribution and service fee of 1%.
Class C shares are sold with a contingent deferred sales charge of 1% if
redeemed during the first 12 months after purchase. They are also subject to an
annual distribution and service fee of 1%.
The average annual total return for the lifetime and one-year periods ended
March 31, 2005 for Optimum International Fund's Institutional Class were 22.24%
and 11.08%, respectively. The Institutional Class shares were first made
available on August 1, 2003 and are available without sales or asset-based
distribution charges only to certain eligible investors.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum International
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
8
PERFORMANCE SUMMARY
OPTIMUM INTERNATIONAL FUND
FUND BASICS
As of March 31, 2005
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FUND OBJECTIVES: FUND START DATE:
The Fund seeks long-term growth of capital and may also seek income. August 1, 2003
- ----------------------------------------------------------------------- -------------------------------------------------------
TOTAL FUND NET ASSETS: SUB-ADVISORS:
$97.4 million Mondrian
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NUMBER OF HOLDINGS: Marsico Capital
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104 CUSIP NUMBERS:
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Class A 246118-73-1
Class B 246118-72-3
Class C 246118-71-5
Institutional 246118-69-9
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PERFORMANCE OF A $10,000 INVESTMENT
August 1, 2003 (Fund's inception) through March 31, 2005
OPTIMUM INTERNATIONAL FUND PERFORMANCE OF $10,000 INVESTMENT CHART
------------------------------------------------------------------
OPTIMUM
INTERNATIONAL CLASS
A SHARES MSCI EAFE INDEX
8/1/2003 $9,425
8/31/2003 $9,602 $10,000
9/30/2003 $9,768 $10,310
10/31/2003 $10,423 $10,954
11/30/2003 $10,633 $11,199
12/31/2003 $11,305 $12,075
1/31/2004 $11,516 $12,245
2/29/2004 $11,760 $12,531
3/31/2004 $11,836 $12,606
4/30/2004 $11,537 $12,331
5/31/2004 $11,525 $12,369
6/30/2004 $11,721 $12,661
7/31/2004 $11,396 $12,252
8/31/2004 $11,373 $12,308
9/30/2004 $11,732 $12,632
10/31/2004 $12,091 $13,064
11/30/2004 $12,786 $13,960
12/31/2004 $13,250 $14,573
1/31/2005 $12,902 $14,307
2/28/2005 $13,429 $14,927
3/31/2005 $13,092 $14,559
Chart assumes $10,000 invested on August 1, 2003 and includes the effect of a
5.75% front-end sales charge and the reinvestment of all distributions.
Performance of other Fund classes will vary due to different charges and
expenses. Returns plotted on the chart were as of the last day of each month
shown. The MSCI EAFE Index is an unmanaged composite of international stocks in
Europe, Australasia, and the Far East. An index is unmanaged and does not
reflect the costs of operating a mutual fund, such as the costs of buying,
selling, and holding securities. You cannot invest directly in an index. Past
performance is not a guarantee of future results.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum International
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
9
PORTFOLIO OPTIMUM LARGE CAP GROWTH FUND
MANAGEMENT REVIEW April 5, 2005
SUB-ADVISORS
T. Rowe Price Associates, Inc. (T. Rowe Price)
Marsico Capital Management, LLC (Marsico Capital)
The Optimum Large Cap Growth Fund outperformed its primary benchmark index, the
Russell 1000 Growth Index, for the year ending March 31, 2005. The Fund had a
total return of +4.70% (Class A shares at net asset value with distributions
reinvested), while the benchmark index had a total return of +1.16% for the
period.
The Optimum Large Cap Growth Fund seeks long-term growth of capital. The Fund's
advisor, Delaware Management Company, selected two sub-advisors to manage the
Fund's assets, each of which is responsible for day-to-day investment management
of a portion of the Fund's assets. Each selects investments for its portion of
the Fund based on its own investment style and strategy, which are generally
intended to complement one another. Sub-advisor T. Rowe Price mostly seeks
investments in companies with the ability to pay increasing dividends through
strong cash flow. Sub-advisor Marsico Capital uses a more growth-oriented
approach, which combines "top-down" economic analysis with "bottom-up" stock
selection. For more on each sub-advisor's investment approach, please see the
Fund's prospectus.
T. ROWE PRICE
Q: WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE FISCAL YEAR?
A: U.S. stocks posted a solid but unspectacular gain for the
12-month period ended March 31, 2005. Rising oil prices-which briefly reached a
22-year high-and a gradual increase in short-term interest rates challenged
stocks and prompted periods of weakness. However, the market ultimately gained
ground thanks to economic and corporate profit growth, brisk merger activity,
and a late-2004 rally that was inspired by a short-lived drop in oil prices and
an uncontested presidential election result.
Investors continued to retrench to value and defensive sectors. Growth stocks
lagged value across all market capitalizations, particularly among large-caps.
In the large-cap universe, energy stocks strongly outpaced other sectors, but
utilities, materials, and industrials also performed very well. In contrast,
stocks in the information technology and financials sectors fell.
Q: CAN YOU PLEASE PROVIDE SOME HIGHLIGHTS FROM THE PORTFOLIO?
A: Strong stock selection in multiple sectors was the primary driver of our
relative outperformance. Within the information technology sector, our positions
held up far better than the benchmark. Research in Motion, maker of the popular
Blackberry wireless device, was a significant contributor to relative results,
as was Adobe Systems, which has been on an exceptional run for the past two
years.
The Fund also benefited from strong holdings in the materials sector, which has
been riding a China-driven commodities boom. In particular, metals and mining
stocks Nucor and BHP Billiton have advanced on strong demand and thin supply,
providing a boost to our relative results.
Of course, not all our stock choices were standouts. Although we overweighted
the surging energy sector, some of the benefits of that position were offset by
lagging holdings. Schlumberger, for example, was among the portfolio's largest
detractors within the energy sector, despite posting a solid double-digit gain.
Individual holdings in the consumer discretionary and industrials and business
services sectors were also relatively weak.
Our current view is that the U.S. economy and developed markets worldwide will
continue to expand for the remainder of the year, although at a slower pace than
in 2004. This growth should be accompanied by slightly higher inflation and
interest rates, resulting in positive but not spectacular equity market returns.
In this environment, large-capitalization growth stocks, especially companies
with sustainable double-digit earnings and cash-flow growth, offer solid
risk/reward comparisons at current prices and have the potential to outperform
most other asset classes as economic growth moderates.
10
MARSICO CAPITAL
Q: WHAT INFLUENCED PERFORMANCE IN YOUR PART OF THE FUND?
A: The largest performance contributor for the Marsico portion of the Fund
during the year was stock selection and posture in the healthcare equipment and
services industry. UnitedHealth Group, a long-time major holding in the
portfolio, was one of the portfolio's largest contributors for the year, and an
overweight posture versus the benchmark index also benefited performance. The
company provides a wide variety of healthcare services, has a dominant (and
growing) market share position in a steadily growing industry, and, in our
opinion, makes tremendous use of "outcome-based" technology and databases in
identifying appropriate healthcare solutions for its clients. Biotechnology
company Genentech also was a strong performer.
Stock selection in the consumer discretionary sector, an area overweighted in
the Marsico portion of the portfolio, was also a positive contributor. Stocks in
the hotels, restaurants and leisure industry, such as Wynn Resorts and Mandalay
Resort Group, were significant contributors. (Mandalay Resort Group was not held
in the portfolio as of March 31, 2005.) In addition, consumer-related companies
such as Starbucks, Nike, and homebuilder KB Home also enhanced the portfolio's
performance.
Industrial companies Caterpillar, FedEx, and General Electric also posted solid
gains. We believe these companies may benefit from growth in "emerging market"
countries such as China and India.
One of the portfolio's largest individual stock contributors was in the tech
hardware and equipment industry, namely communications equipment producer
Qualcomm.
Q: WHICH HOLDINGS DETRACTED FROM PERFORMANCE?
A: For much of the year, the Marsico portion of the Fund had little exposure to
the energy sector, an area of strong performance for the benchmark index. By not
fully participating in this sector, the portfolio missed an opportunity for
additional positive returns.
Stock selection in retailing and information technology also detracted from
performance. Samsung Electronics (prior to being sold), Electronic Arts and
Texas Instruments (prior to being sold) were specific holdings in the
information technology sector that were performance laggards.
In the retailing industry, Tiffany & Co. declined sharply prior to being sold.
As of March 31, 2005, the portfolio's economic sector allocations emphasized
healthcare, consumer discretionary, financials and industrials. As of year-end,
the portfolio had little or no exposure in areas such as telecommunication
services and materials.
11
PERFORMANCE SUMMARY
OPTIMUM LARGE CAP GROWTH FUND
The performance data quoted represent past performance; past performance does
not guarantee future results. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance
data quoted. Please obtain the performance data for the most recent month end by
calling 800 914-0278 or visiting our Web site at www.optimummutualfunds.com. You
should consider the investment objectives, risks, charges and expenses of the
investment carefully before investing. The Optimum Large Cap Growth Fund
prospectus contains this and other important information about the investment
company. Please request a prospectus by calling 800 914-0278. 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
Through March 31, 2005 One Year Lifetime
- --------------------------------------------------------------------------------
Class A (Est 8/1/03)
Excluding Sales Charge +4.70 +10.37%
Including Sales Charge -1.28 +6.51%
- --------------------------------------------------------------------------------
Class B (Est 8/1/03)
Excluding Sales Charge +3.99 +9.64%
Including Sales Charge -0.01 +7.80%
- --------------------------------------------------------------------------------
Class C (Est 8/1/03)
Excluding Sales Charge +3.99 +9.64%
Including Sales Charge +2.99 +9.64%
- --------------------------------------------------------------------------------
Returns reflect the reinvestment of all distributions and are shown both
including and excluding the effect of front-end or contingent deferred sales
charges. Returns and share values will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Performance for Class B and
C shares, excluding sales charges, assumes either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
The Fund offers Class A, B, C, and Institutional Class shares. Class A shares
are sold with a front-end sales charge of up to 5.75% and have an annual
distribution and service fee of up to 0.35%.
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 Class A shares on a quarterly basis
approximately eight years after purchase. They are also subject to an annual
distribution and service fee of 1%.
Class C shares are sold with a contingent deferred sales charge of 1% if
redeemed during the first 12 months after purchase. They are also subject to an
annual distribution and service fee of 1%.
The average annual total return for the lifetime and one-year periods ended
March 31, 2005 for Optimum Large Cap Growth Fund's Institutional Class were
10.76% and 5.11%, respectively. The Institutional Class shares were first made
available on August 1, 2003 and are available without sales or asset-based
distribution charges only to certain eligible investors.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Large Cap Growth
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
12
PERFORMANCE SUMMARY
OPTIMUM LARGE CAP GROWTH FUND
FUND BASICS
As of March 31, 2005
- ----------------------------------------------
FUND OBJECTIVE:
The Fund seeks long-term growth of capital.
- ----------------------------------------------
TOTAL FUND NET ASSETS:
$283.5 million
- ----------------------------------------------
NUMBER OF HOLDINGS:
151
- ----------------------------------------------
FUND START DATE:
August 1, 2003
- ----------------------------------------------
SUB-ADVISORS:
T. Rowe Price
Marsico Capital
- ----------------------------------------------
CUSIP NUMBERS:
Class A 246118-70-7
Class B 246118-80-6
Class C 246118-88-9
Institutional 246118-87-1
- ----------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT
August 1, 2003 (Fund's inception) through March 31, 2005
DELAWARE OPTIMUM
LARGE CAP GROWTH RUSSELL 1000
CLASS A SHARES GROWTH INDEX
---------------- ------------
8/1/2003 $9,425
8/31/2003 $9,690 $10,000
9/30/2003 $9,579 $9,893
10/31/2003 $10,089 $10,449
11/30/2003 $10,111 $10,559
12/31/2003 $10,432 $10,924
1/31/2004 $10,532 $11,146
2/29/2004 $10,654 $11,219
3/31/2004 $10,610 $11,010
4/30/2004 $10,366 $10,882
5/31/2004 $10,488 $11,085
6/30/2004 $10,643 $11,223
7/31/2004 $10,133 $10,589
8/31/2004 $10,200 $10,537
9/30/2004 $10,510 $10,637
10/31/2004 $10,621 $10,803
11/30/2004 $11,153 $11,175
12/31/2004 $11,663 $11,613
1/31/2005 $11,286 $11,226
2/28/2005 $11,353 $11,345
3/31/2005 $11,109 $11,139
Chart assumes $10,000 invested on August 1, 2003 and includes the effect of a
5.75% front-end sales charge and the reinvestment of all distributions.
Performance of other Fund classes will vary due to different charges and
expenses. Returns plotted on the chart were as of the last day of each month
shown. The Russell 1000 Growth Index is an unmanaged composite that includes
performance of those Russell 1000 companies with higher price-to-book ratios and
higher forecasted growth values. An index is unmanaged and does not reflect the
costs of operating a mutual fund, such as the costs of buying, selling, and
holding securities. You cannot invest directly in an index. Past performance is
not a guarantee of future results.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Large Cap Growth
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
13
PORTFOLIO OPTIMUM LARGE CAP VALUE FUND
MANAGEMENT REVIEW April 5, 2005
SUB-ADVISORS:
Massachusetts Financial Services Company (MFS)
Van Kampen Asset Management, Inc. (Van Kampen)
For stock investors, the 12 months ended March 31, 2005, were a bumpy ride.
Investors endured skyrocketing oil prices, slowing earnings growth, a volatile
and retreating U.S. dollar, record U.S. budget and trade deficits, and war in
Iraq. During the first half of the period, it seemed these factors would lead to
flat or negative performance for many investments. But by the final quarter of
2004, stock markets appeared to recognize that -- although the rate of growth
had slowed -- both corporate profits and gross domestic product (GDP) were still
growing solidly in a majority of global economies. For the 12 months as a whole,
improving fundamental factors such as corporate spending and earnings triumphed,
and equity markets delivered positive results.
For the 12 months ending March 31, 2005, the Fund's return was 12.04 percent
(Class A shares at net asset value with distributions reinvested), slightly
underperforming the Russell 1000 Value Index, which gained 13.10 percent.
The Fund seeks long-term growth of capital and may also seek income. The Fund's
advisor, Delaware Management Company, selected two sub-advisors to manage the
Fund's assets, each of which is responsible for day-to-day investment management
of a portion of the Fund's assets. Each selects investments for its portion of
the Fund based on its own investment style and strategy, which are generally
intended to complement one another. MFS employs a high-quality, lower-risk
equity style, which has historically resulted in a gross yield on the portfolio,
which exceeds that of the S&P 500 Index. This strategy uses a "bottom-up"
approach to portfolio construction and selects securities based upon fundamental
analysis of factors such as cash flows, balance sheet, franchise durability, and
management's abilities. Van Kampen uses a stock selection approach that focuses
primarily on a security's potential for capital growth and income. For more
information on each sub-advisor's investment approach, please see the Fund's
prospectus.
MFS
Q: WHAT AREAS OF THE FUND CONTRIBUTED MOST SIGNIFICANTLY TO RELATIVE
PERFORMANCE?
A: On a sector basis, utilities and communications, technology, and basic
materials were the strongest contributors to performance over the period,
relative to our benchmark, the Russell 1000 Value Index. The Russell 1000 Value
Index is constructed to provide a comprehensive barometer for the value
securities in the large-cap segment of the U.S. equity universe. The Russell
1000 Value Index measures the performance of large companies in the Russell 3000
Index with lower price-to-book ratios and lower forecasted growth values.
In the utilities and communications sector, stock selection was the major
contributor to relative results. Our stock in Texas-based electric power
generator TXU rose sharply, as new management significantly increased its
earnings projections for 2004, 2005, and 2006 and raised its dividend from $0.50
per share to $2.25 per share.
In the technology area, a relative underweighting aided results as the sector
underperformed the market, as measured by our benchmark. Stock selection within
technology boosted relative performance as well.
An overweighted position and, to a lesser extent, stock selection, contributed
to relative outperformance in the basic materials sector. Agricultural products
firm Monsanto was a key contributor in the sector as the firm's stock
appreciated significantly over the period. Wider acceptance of the company's
genetically modified seeds led to higher-than-expected earnings throughout the
period.
Stocks in other sectors that added to relative results included oil companies
Unocal and ConocoPhillips, whose stocks were helped by rising energy prices and,
in Unocal's case, takeover speculation. Our stock in healthcare products firm
Johnson & Johnson entered the period at what we felt was an attractive valuation
and then rose as the firm experienced stronger business fundamentals than
investors had anticipated. Food processing giant Archer-Daniels-Midland
benefited from strong demand for its products. Underweighting financial services
conglomerate JPMorgan Chase & Co. and missing some of the stock's decline early
in the period helped relative performance as well. Not owning insurance firm AIG
also helped relative performance as the firm's stock sank under the weight of
accounting and management issues.
Q: CAN YOU DISCUSS SOME OF THE FACTORS THAT DETRACTED FROM PERFORMANCE?
A: Relative to the Fund's benchmark, the retailing, leisure, and energy sectors
modestly detracted from performance over the period.
In the retailing and leisure sectors, stock selection was the key detractor from
results. Within the leisure area, our positions in newspaper publisher Tribune
Co. and media conglomerate Viacom hurt performance as their stock prices
declined, in part because the weak recovery in advertising spending led to
lower-than-expected earnings at both companies.
14
While some energy stocks were among the strongest performers over the period,
the sector as a whole detracted from results. Our relative underperformance in
the sector was caused by a modest underweighting. While we started the period
with an overweight position in the sector, we reduced our weight throughout the
period, as this sector's stocks and their valuations increased, resulting in an
average underweight position for the timeframe. Underweighting both ExxonMobil
and ChevronTexaco, and selling our ChevronTexaco position during the period,
held back relative performance.
Holdings in other sectors that hurt relative results included home mortgage firm
Fannie Mae, whose shares suffered as the company worked to resolve several
accounting issues; forest products company International Paper, which negatively
surprised investors by announcing its supply-chain management initiatives would
cost much more than anticipated; and pharmaceutical firm Pfizer, which was
weighed down by questions regarding the safety of its blockbuster arthritis
drugs Celebrex and Bextra.
The cash position we maintained in our portfolio also detracted from relative
performance. As with nearly all mutual funds, we need some cash in our portfolio
to buy new holdings and to provide liquidity. In a period when equity markets
rose sharply, holding any cash hurt performance against our benchmark, which has
no cash position.
VAN KAMPEN
Q: WHAT IS YOUR VIEW OF THE MARKET CONDITIONS THAT YOU FACED DURING THE FISCAL
YEAR?
A: The equity market performed solidly overall for the 12-month period, although
not with consistent strength. The market was supported for much of the year by
robust manufacturing activity and impressive corporate earnings, while consumer
spending also remained solid and job growth boosted consumer confidence.
Although the Federal Open Market Committee raised the federal funds target rate
several times during the period, these rate changes were implemented at a
measured pace and were widely anticipated by investors. While the market made
significant gains in the first half of the period, a number of geopolitical
concerns weighed on stocks in the third quarter and contributed to declining
market strength. Concerns over potential terrorist attacks and anxiety related
to events in Iraq played a role in slowing the market. In addition, investors
also worried about the possibility of another protracted outcome to the U.S.
presidential election. Shifting energy prices contributed further to market
volatility during the 12 months.
Several of these concerns were alleviated as oil prices fell from their highs at
the end of October and as the presidential election came to a quick and decisive
conclusion, setting the stage for an equities rally in November and December. A
pickup in initial public offerings and a number of high-profile mergers and
acquisitions also helped boost stocks during this time. Although the successful
election in Iraq and the upward revision of fourth-quarter gross domestic
product numbers further supported the market in early 2005, the period ended on
a less-positive note, as oil prices continued to rise in the final month and
rising interest rates finally began to weigh on market performance.
With the exception of the technology sector, all sectors posted gains for the 12
months. During the period, the leading sectors within the benchmark Russell 1000
Value Index were energy, industrials, materials, and utilities. Information
technology, financials, and telecommunications services stocks lagged other
sectors for the year.
Q: WHAT FACTORS SLOWED PERFORMANCE?
A: Stock selection within the energy sector significantly dampened the
performance relative to the benchmark for the period, as our portfolio's
exposure in energy was tilted towards large integrated energy companies. This
conservative position limited the portfolio's exposure to small refining
companies that performed particularly well within the sector. In the consumer
staples sector, the portfolio's relative performance suffered from a lack of
exposure to both grocery companies and tobacco companies that made gains during
the period. The portfolio was impeded within the technology sector by the
decision to favor software services companies over technology hardware. While
software services companies have been relatively cheap in terms of valuation,
technology hardware companies benefited from a cyclical upturn in the economy
during the period. Overweighted positions in the technology and consumer
discretionary sectors further hampered our returns.
Q: THE FUND PERFORMED NEARLY IN LINE WITH THE BENCHMARK FOR THE PERIOD. WHAT
FACTORS CONTRIBUTED POSITIVELY TO PERFORMANCE?
A: A number of positions were beneficial and supported positive returns for the
period. An underweighted position in financials particularly helped performance,
as the portfolio greatly limited its exposure to interest rate-sensitive banks
during a period of rising interest rates. Stock selection within the
telecommunications services sector also served the portfolio well. During the
period, mergers and acquisitions activity supported gains for many companies
within the sector and boosted the performance of a number of larger service
providers held by the portfolio. Also, an overweighted position in healthcare
and stock selection within that sector further helped the portfolio's relative
performance for the 12 months. The portfolio made gains late in the period when
the performance of many pharmaceutical stocks strongly improved.
15
PERFORMANCE SUMMARY
OPTIMUM LARGE CAP VALUE FUND
The performance data quoted represent past performance; past performance does
not guarantee future results. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance
data quoted. Please obtain the performance data for the most recent month end by
calling 800 914-0278 or visiting our Web site at www.optimummutualfunds.com. You
should consider the investment objectives, risks, charges and expenses of the
investment carefully before investing. The Optimum Large Cap Value Fund
prospectus contains this and other important information about the investment
company. Please request a prospectus by calling 800 914-0278. Read it carefully
before you invest or send money. Performance includes reinvestment of all
distributions and is subject to change. Instances of high double-digit returns
are highly unusual and cannot be sustained and were achieved primarily during
favorable market conditions.
FUND PERFORMANCE
Average Annual Total Returns
Through March 31, 2005 One Year Lifetime
- --------------------------------------------------------------------------------
Class A (Est 8/1/03)
Excluding Sales Charge +12.04 +17.09%
Including Sales Charge +5.59 +12.99%
- --------------------------------------------------------------------------------
Class B (Est 8/1/03)
Excluding Sales Charge +11.36 +16.35%
Including Sales Charge +7.36 +14.58%
- --------------------------------------------------------------------------------
Class C (Est 8/1/03)
Excluding Sales Charge +11.36 +16.35%
Including Sales Charge +10.36 +16.35%
- --------------------------------------------------------------------------------
Returns reflect the reinvestment of all distributions and are shown both
including and excluding the effect of front-end or contingent deferred sales
charges. Returns and share values will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Performance for Class B and
C shares, excluding sales charges, assumes either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
The Fund offers Class A, B, C, and Institutional Class shares. Class A shares
are sold with a front-end sales charge of up to 5.75% and have an annual
distribution and service fee of up to 0.35%.
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 Class A shares on a quarterly basis
approximately eight years after purchase. They are also subject to an annual
distribution and service fee of 1%.
Class C shares are sold with a contingent deferred sales charge of 1% if
redeemed during the first 12 months after purchase. They are also subject to an
annual distribution and service fee of 1%.
The average annual total return for the lifetime and one-year periods ended
March 31, 2005 for Optimum Large Cap Value Fund's Institutional Class were
17.47% and 12.41%, respectively. The Institutional Class shares were first made
available on August 1, 2003 and are available without sales or asset-based
distribution charges only to certain eligible investor.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Large Cap Value
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
16
PERFORMANCE SUMMARY
OPTIMUM LARGE CAP VALUE FUND
FUND BASICS
As of March 31, 2005
- ---------------------------------------------------------------------
FUND OBJECTIVE:
The Fund seeks long-term growth of capital and may also seek income.
- ---------------------------------------------------------------------
TOTAL FUND NET ASSETS:
$273.8 million
- ---------------------------------------------------------------------
NUMBER OF HOLDINGS:
143
- ---------------------------------------------------------------------
FUND START DATE:
August 1, 2003
- ---------------------------------------------------------------------
SUB-ADVISORS:
MFS
Van Kampen
- ---------------------------------------------------------------------
CUSIP NUMBERS:
Class A 246118-86-3
Class B 246118-85-5
Class C 246118-84-8
Institutional 246118-83-0
- ---------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT
August 1, 2003 (Fund's inception) through March 31, 2005
DELAWARE OPTIMUM
LARGE CAP VALUE RUSSELL 1000
CLASS A SHARES VALUE INDEX
---------------- ------------
8/1/2003 $9,425
8/31/2003 $9,611 $10,000
9/30/2003 $9,545 $9,902
10/31/2003 $9,977 $10,508
11/30/2003 $10,110 $10,651
12/31/2003 $10,764 $11,307
1/31/2004 $10,898 $11,506
2/29/2004 $11,132 $11,753
3/31/2004 $10,942 $11,649
4/30/2004 $10,831 $11,365
5/31/2004 $10,865 $11,481
6/30/2004 $11,098 $11,752
7/31/2004 $10,885 $11,586
8/31/2004 $10,963 $11,751
9/30/2004 $11,154 $11,933
10/31/2004 $11,344 $12,131
11/30/2004 $11,826 $12,745
12/31/2004 $12,248 $13,172
1/31/2005 $12,033 $12,937
2/28/2005 $12,395 $13,365
3/31/2005 $12,260 $13,182
Chart assumes $10,000 invested on August 1, 2003 and includes the effect of a
5.75% front-end sales charge and the reinvestment of all distributions.
Performance of other Fund classes will vary due to different charges and
expenses. Returns plotted on the chart were as of the last day of each month
shown. The Russell 1000 Value Index measures the performance of those Russell
1000 companies with lower price-to-book ratios and lower forecasted growth
values. An index is unmanaged and does not reflect the costs of operating a
mutual fund, such as the costs of buying, selling, and holding securities. You
cannot invest directly in an index. Past performance is not a guarantee of
future results.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Large Cap Value
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
17
PORTFOLIO OPTIMUM SMALL CAP GROWTH FUND
MANAGEMENT REVIEW April 5, 2005
SUB-ADVISORS
Columbia Wanger Asset Management, L.P. (Columbia WAM)
Oberweis Asset Management, Inc. (OAM)
During the 12-month period ended March 31, 2005, the Fund gained 4.37% (Class A
shares at net asset value with distributions reinvested). By comparison, the
Russell 2000 and Russell 2000 Growth Indexes gained 5.41%, and 0.87%,
respectively. Small-caps, aided by a healthy fourth-quarter rally, outpaced
their large-cap counterparts in 2004 for the sixth year in a row. Particularly
helpful to the indexes were returns from the smallest caps and speculative
companies.
The Optimum Small Cap Growth Fund seeks long-term growth of capital. The Fund's
advisor, Delaware Management Company, selected two sub-advisors to manage the
Fund's assets, each of which is responsible for day-to-day investment management
of a portion of the Fund's assets. Each sub-advisor selects investments for its
portion of the Fund based on its investment style and strategy. Sub-advisor
Columbia WAM typically looks for companies with:
[ ] A strong business franchise that offers growth potential,
[ ] Products and services that give the company a competitive advantage,
and/or,
[ ] A stock price that they believe is reasonable relative to the assets and
earnings power of the company.
Oberweis Asset Management is a bottom-up active manager who maximizes exposure
to new information by systematically searching for superior fundamentals,
growth, and valuation characteristics in micro-, small-, and mid-capitalization
equities.
For more information on each sub-advisor's investment approach, please see the
Fund's prospectus.
COLUMBIA WAM
Q: WHAT WERE SOME CONTRIBUTING FACTORS TO PERFORMANCE?
A: Industrials, consumer discretionary, and energy stocks were the
best-performing sectors in the portion of the Fund managed by Columbia WAM.
Within industrials, stock selection and the decision to overweight the benchmark
drove performance. The greater-than-benchmark weight was a result of being able
to find many compelling, attractively priced businesses.
One of the best-performing names within industrials was Chicago Bridge & Iron.
The company, contrary to its name, is not based in Chicago and does not make
bridges. The company is a leading designer and manufacturer of tanks used to
convert liquefied natural gas (LNG) into the pipeline gas used to heat homes and
generate electricity.
Energy was also a large contributor to performance. We maintained an overweight
position based on our analyst's assumption early last year that predictions for
oil prices were low, based on his proprietary estimates. This was a good call as
the portfolio energy stocks returned roughly 63% during the year, with
Quicksilver Resources leading the way. Quicksilver Resources is widely
recognized as a leader in the development and production of unconventional
natural gas reserves, including coal bed methane, shale gas, and tight sand gas.
Q: WHAT FACTORS DETRACTED FROM PERFORMANCE?
A: Technology was the largest detractor from performance during the year. Tech
was the worst-performing segment of the benchmark during the year and our stocks
were no exception. Our tech weighting was skewed towards hardware stocks, and
holdings 3Com and Pericom Semiconductor hurt returns.
We continue to invest the Fund's money in companies we believe have solid growth
prospects for the next three to five years that are trading in the market at
what we deem to be reasonable prices. Our outperformance over the last 12 months
and since inception was due to the superior selection of stocks by our team of
12 analysts. With value stocks outperforming growth stocks of late, our team's
solid valuation discipline also served to boost performance relative to the
Fund's benchmark.
OAM
The year ending March 31, 2005 proved challenging for managers such as Oberweis
who specialize in high growth, small-cap equities. For the year ending March 31,
2005, our portion of the Fund returned -2.49% versus +0.87% for the Russell 2000
Growth Index. Small-cap value clearly outperformed small-cap growth, as
evidenced by a 0.87% return in the Russell 2000 Growth Index versus a 9.79%
return in the Russell 2000 Value Index. Even within the Russell 2000 Growth
Index, stocks of companies with higher rates of growth (which are targeted by
this strategy) lagged those of companies with lower rates of growth. Our
Oberweis Octagon methodology seeks to invest in companies with exceptionally
high rates of growth. A minimum growth rate of 30% is required for inclusion in
the portfolio. Our results were adversely affected because the market favored
companies with lower rates of growth.
18
Additionally, portfolio average market capitalization was also an important
factor over the last year in understanding performance. Small-cap lagged
large-cap, with the Russell 2000 Index trailing the Russell 1000 Index by 183
basis points. Larger companies outperformed small companies, even within the
Russell 2000 Growth Index. As our process seeks to invest in smaller,
undiscovered issues, we tend to invest in a higher percentage of companies with
below-average market capitalizations. Our strategy's weighted average market
capitalization as of quarter end was $787 million versus $1.0 billion for the
Russell 2000 Growth Index. It should be noted that we expect to see periodic
style cycles favoring growth vs. value or large-cap vs. small-cap. Because of
the unpredictability of the style cycles, we focus our efforts on finding
undervalued individual companies. Our process has clearly worked well over long
periods of time, despite these shorter-term style cycles that can work against
us. Historically, these cycles have tended to average out, leaving stock
selection skill, our forte, as the residual driver of excess return over long
periods of time.
The portfolio weight in technology was 30.9% versus 19.6% for the Russell 2000
Growth Index. Healthcare was also over weighted at 27.6% versus 21.1% for the
benchmark. Consumer discretionary continues to be somewhat underweighted at
18.3% versus 22.3% for the benchmark.
Top contributors since inception (March 30, 2004 to March 31, 2005) were Tessera
Technologies (which contributed 259 bps to portfolio return) and Hansen Natural
(which rose 366.4% and contributed 209 bps to portfolio return). Hansen Natural
markets natural sodas, fruit drinks, and energy drinks. Greatest detractors from
performance include OmniVision Technologies (which declined 45.9% and detracted
137 bps from portfolio return) and Sierra Wireless (which declined 77.1% and
detracted 134 bps from portfolio return).
19
PERFORMANCE SUMMARY
OPTIMUM SMALL CAP GROWTH FUND
The performance data quoted represent past performance; past performance does
not guarantee future results. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance
data quoted. Please obtain the performance data for the most recent month end by
calling 800 914-0278 or visiting our Web site at www.optimummutualfunds.com. You
should consider the investment objectives, risks, charges and expenses of the
investment carefully before investing. The Optimum Small Cap Growth Fund
prospectus contains this and other important information about the investment
company. Please request a prospectus by calling 800 914-0278. Read it carefully
before you invest or send money. Performance includes reinvestment of all
distributions and is subject to change. Instances of high double-digit returns
are highly unusual and cannot be sustained and were achieved primarily during
favorable market conditions.
FUND PERFORMANCE
Average Annual Total Returns
Through March 31, 2005 One Year Lifetime
- --------------------------------------------------------------------------------
Class A (Est 8/1/03)
Excluding Sales Charge +4.37 +21.44%
Including Sales Charge -1.66 +17.19%
- --------------------------------------------------------------------------------
Class B (Est 8/1/03)
Excluding Sales Charge +3.67 +20.76%
Including Sales Charge -0.33 +19.03%
- --------------------------------------------------------------------------------
Class C (Est 8/1/03)
Excluding Sales Charge +3.67 +20.76%
Including Sales Charge +2.67 +20.76%
- --------------------------------------------------------------------------------
Returns reflect the reinvestment of all distributions and are shown both
including and excluding the effect of front-end or contingent deferred sales
charges. Returns and share values will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Performance for Class B and
C shares, excluding sales charges, assumes either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
The Fund offers Class A, B, C, and Institutional Class shares. Class A shares
are sold with a front-end sales charge of up to 5.75% and have an annual
distribution and service fee of up to 0.35%.
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 Class A shares on a quarterly basis
approximately eight years after purchase. They are also subject to an annual
distribution and service fee of 1%.
Class C shares are sold with a contingent deferred sales charge of 1% if
redeemed during the first 12 months after purchase. They are also subject to an
annual distribution and service fee of 1%.
The average annual total return for the lifetime and one-year periods ended
March 31, 2005 for Optimum Small Cap Growth Fund's Institutional Class were
21.87% and 4.81%, respectively. The Institutional Class shares were first made
available on August 1, 2003 and are available without sales or asset-based
distribution charges only to certain eligible investors.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Small Cap Growth
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
20
PERFORMANCE SUMMARY
OPTIMUM SMALL CAP GROWTH FUND
FUND BASICS
As of March 31, 2005
- -----------------------------------------------
FUND OBJECTIVE:
The Fund seeks long-term growth of capital.
- -----------------------------------------------
TOTAL FUND NET ASSETS:
$59.5 million
- -----------------------------------------------
NUMBER OF HOLDINGS:
145
- -----------------------------------------------
- -----------------------------------------------
FUND START DATE:
August 1, 2003
- -----------------------------------------------
SUB-ADVISORS:
Columbia Wanger Asset Management, L.P.
Oberweis Asset Management, Inc.
- -----------------------------------------------
CUSIP NUMBERS:
Class A 246118-82-2
Class B 246118-81-4
Class C 246118-79-8
Institutional 246118-78-0
- -----------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT
August 1, 2003 (Fund's inception) through March 31, 2005
OPTIMUM SMALL CAP GROWTH FUND PERFORMANCE OF $10,000 INVESTMENT CHART
---------------------------------------------------------------------
OPTIMUM SMALL CAP
GROWTH CLASS A RUSSELL 2000
SHARES GROWTH INDEX
8/1/2003 $9,425
8/31/2003 $10,144 $10,000
9/30/2003 $9,966 $9,747
10/31/2003 $11,241 $10,589
11/30/2003 $11,607 $10,935
12/31/2003 $11,796 $10,983
1/31/2004 $12,505 $11,560
2/29/2004 $12,605 $11,543
3/31/2004 $12,483 $11,597
4/30/2004 $11,862 $11,013
5/31/2004 $12,239 $11,227
6/30/2004 $12,751 $11,596
7/31/2004 $11,598 $10,553
8/31/2004 $11,354 $10,322
9/30/2004 $11,842 $10,888
10/31/2004 $12,108 $11,150
11/30/2004 $13,173 $12,089
12/31/2004 $13,738 $12,518
1/31/2005 $13,372 $11,951
2/28/2005 $13,350 $12,111
3/31/2005 $13,028 $11,651
Chart assumes $10,000 invested in Class A shares of the Fund on August 1, 2003
and includes the effect of a 5.75% front-end sales charge and the reinvestment
of all distributions. Performance of other Fund classes will vary due to
different charges and expenses. Returns plotted on the chart were as of the last
day of each month shown. The Russell 2000 Growth Index is an unmanaged index
that generally tracks the performance of those stocks in the Russell 2000 Index
that have higher price-to-book ratios and higher forecasted growth values. An
index is unmanaged and does not reflect the costs of operating a mutual fund,
such as the costs of buying, selling, and holding securities. You cannot invest
directly in an index. Past performance is not a guarantee of future results.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Small Cap Growth
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
21
OPTIMUM SMALL CAP VALUE FUND
PORTFOLIO April 5, 2005
MANAGEMENT REVIEW
SUB-ADVISORS
Delafield Asset Management (Delafield)
Hotchkis and Wiley Capital Management LLC (H&W)
Through twelve months ended March 31, 2005, the Optimum Small Cap Value Fund had
a return of 16.12% (Class A shares at net asset value with distributions
reinvested), versus an increase of 9.79% in the benchmark Russell 2000 Value
Index.
The Optimum Small-Cap Value Fund seeks long-term growth of capital. The Fund's
advisor, Delaware Management Company, selected two sub-advisors to manage the
Fund's assets, each of which is responsible for day-to-day investment management
of a portion of the Fund's assets. Each selects investments for its portion of
the Fund based on its own investment style and strategy, which are generally
intended to complement one another. Sub-advisor H&W employs a disciplined
bottom-up, value-oriented investment style with an emphasis on internally
generated fundamental research. Sub-advisor Delafield considers factors,
including the values of individual securities relative to other investment
alternatives, trends in the determinants of corporate profits, corporate cash
flow, balance sheet changes, management capability and practices, and the
economic and political outlook.
DELAFIELD
Q: WHAT WERE THE GENERAL MARKET CONDITIONS DURING THIS PERIOD?
A: While general market returns over the 12-month period were healthy at roughly
10%, strength was weighted to the fourth quarter of calendar 2004, with the
Russell 2000 Value Index up 13.20% for the three months ended December 31, 2004.
Fourth-quarter strength reflected better-than-expected corporate earnings,
particularly from companies operating in cyclical industries. Unfortunately,
positive stock momentum did not continue into the first quarter of calendar
2005, with the index down 3.98% in the three months ended March 31, 2005.
Q: WHAT WERE POSITIVE ASPECTS OF THE FUND'S PERFORMANCE?
A: The stocks selected by the managers performed well, as the equity only return
over the 12-month period ended March 31, 2005 was a positive 25.55%. Our cash
position (15% at March 31, 2005) continues to dilute overall performance.
However, as is Delafield's discipline, we invest at measured prices in
companies, which, hopefully, do not possess much market risk. Our cash position
will allow us to take advantage of potential volatility in the marketplace.
Given current political and economic crosscurrents, we are not uncomfortable
with this position.
Positive performance during the trailing 12 months was broad-based, with the top
five investments generating only 6.4 percentage points of the gains for our
portion of the portfolio. Walter Industries, Inc. stock was the top performer,
advancing 150% as the market focused on the value of its coal reserves within an
increasingly tight energy environment. Yellow Roadway Corporation shares were up
60% due to higher-than-expected earnings leverage realized from a major
acquisition. In both cases we sold our shares when their increased prices more
fully reflected the anticipated positive outlook.
Q: WHAT WERE THE NEGATIVE CONTRIBUTORS TO PERFORMANCE?
A: On the negative side, Maytag Corp. (MYG) impacted the portfolio by 1.1
percentage points. Market share loss and increased material costs led to
weaker-than-expected results, and we sold our position. Also, Unisys Corporation
(UIS) and GrafTech International Ltd. (GTI) both missed earnings expectations in
the fourth quarter. Together, they hurt our portion of the portfolio by 2.2
percentage points.
Q: WHAT IS YOUR APPROACH AS YOU BEGIN THE NEW FISCAL YEAR?
A: Year-to-date, the markets have not been kind to companies that have
experienced slippage versus previous expectations. The economy appears to be
sustaining a modest growth trend but looks somewhat fragile. Economic indicators
are mixed. It seems that for every piece of positive news there is an offset;
whether it be inflation, interest rates, consumer confidence, unemployment
claims or factory orders. In this environment, the market could remain uneven.
22
At Delafield, we anticipate that our focus will remain on identifying special
situations. Such investments tend to have performance that more closely
parallels the underlying events of the individual company rather than the broad
markets. This can cause performance on a quarterly basis to be out of sync with
the overall market. We anticipate this will continue to be the case.
HOTCHKIS AND WILEY
Q: WHAT FACTORS INFLUENCED PERFORMANCE IN YOUR PART OF THE FUND DURING THIS
PERIOD?
A: During the fiscal year ended March 31, 2005, optimism over the economic
recovery was tempered by fears of a rise in inflation and higher interest rates.
Record-high crude oil prices, growing trade imbalances, and politics also played
a role in dampening equity returns. Despite these factors, the U.S. equity
markets managed to close out the year in positive territory. Large-cap stocks
had a slight advantage over small-cap stocks while value outperformed growth. In
general, stocks that were exposed to oil performed well while industrial
companies and companies with interest-rate sensitivity were the worst performers
during the year.
Q: WHAT HOLDINGS CONTRIBUTED POSITIVELY TO PERFORMANCE?
A: Relative to the Russell 2000 Value Index, the portfolio's outperformance was
primarily from stock selection within the consumer discretionary and energy
sectors of the market. In consumer discretionary, homebuilders Beazer Homes USA,
Inc. and WCI Communities led the sector as the housing market remained robust.
In the energy sector, oil transportation stocks Overseas Shipholding Group and
Stelmar Shipping posted strong gains due to higher profit margins resulting from
record high crude oil prices.
Q: WHAT WERE THE NEGATIVE ASPECTS TO PERFORMANCE?
A: Conversely, stock selection within the industrials sector hurt performance.
In the industrials sector, FLYi, Spherion, Central Freight Lines and USF led the
decline as all four posted double digit-losses.
Q: WHAT IS YOUR APPROACH AS YOU BEGIN THE NEW FISCAL YEAR?
A: Currently we are finding value in stocks outside of the energy sector.
Although oil may continue to skew equity index returns (higher prices lead to
higher weights) and lead to near-term underperformance, we continue to focus on
companies with strong fundamentals, sustainable cash flows, and low prices
relative to normal earnings. We have found this strategy to offer the potential
for superior long-term risk adjusted returns.
23
PERFORMANCE SUMMARY
OPTIMUM SMALL CAP VALUE FUND
The performance data quoted represent past performance; past performance does
not guarantee future results. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance
data quoted. Please obtain the performance data for the most recent month end by
calling 800 914-0278 or visiting our Web site at www.optimummutualfunds.com. You
should consider the investment objectives, risks, charges and expenses of the
investment carefully before investing. The Optimum Small Cap Value Fund
prospectus contains this and other important information about the investment
company. Please request a prospectus by calling 800 914-0278. Read it carefully
before you invest or send money. Performance includes reinvestment of all
distributions and is subject to change. Instances of high double-digit returns
are highly unusual and cannot be sustained and were achieved primarily during
favorable market conditions.
FUND PERFORMANCE
Average Annual Total Returns
Through March 31, 2005 One Year Lifetime
- --------------------------------------------------------------------------------
Class A (Est 8/1/03)
Excluding Sales Charge +16.12 +28.19%
Including Sales Charge +9.46 +23.70%
- --------------------------------------------------------------------------------
Class B (Est 8/1/03)
Excluding Sales Charge +15.35 +27.40%
Including Sales Charge +11.35 +25.73%
- --------------------------------------------------------------------------------
Class C (Est 8/1/03)
Excluding Sales Charge +15.35 +27.40%
Including Sales Charge +14.35 +27.40%
- --------------------------------------------------------------------------------
Returns reflect the reinvestment of all distributions and are shown both
including and excluding the effect of front-end or contingent deferred sales
charges. Returns and share values will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Performance for Class B and
C shares, excluding sales charges, assumes either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
The Fund offers Class A, B, C, and Institutional Class shares. Class A shares
are sold with a front-end sales charge of up to 5.75% and have an annual
distribution and service fee of up to 0.35%.
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 Class A shares on a quarterly basis
approximately eight years after purchase. They are also subject to an annual
distribution and service fee of 1%.
Class C shares are sold with a contingent deferred sales charge of 1% if
redeemed during the first 12 months after purchase. They are also subject to an
annual distribution and service fee of 1%.
The average annual total return for the lifetime and one-year periods ended
March 31, 2005 for Optimum Small Cap Value Fund's Institutional Class were
28.55% and 16.35%, respectively. The Institutional Class shares were first made
available on August 1, 2003 and are available without sales or asset-based
distribution charges only to certain eligible investors.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Small Cap Value
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
24
PERFORMANCE SUMMARY
OPTIMUM SMALL CAP VALUE FUND
FUND BASICS
As of March 31, 2005
- ---------------------------------------------------
FUND OBJECTIVE:
The Fund seeks long-term growth of capital.
- ---------------------------------------------------
TOTAL FUND NET ASSETS:
$59.9 million
- ---------------------------------------------------
NUMBER OF HOLDINGS:
107
- ---------------------------------------------------
- ---------------------------------------------------
FUND START DATE:
August 1, 2003
- ---------------------------------------------------
SUB-ADVISORS:
Delafield Asset Management (Division of Reich and Tang Asset Management)
Hotchkis and Wiley Capital Management LLC
- ---------------------------------------------------
CUSIP NUMBERS:
Class A 246118-77-2
Class B 246118-76-4
Class C 246118-75-6
Institutional 246118-74-9
- ---------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT
August 1, 2003 (Fund's inception) through March 31, 2005
SMALL CAP VALUE FUND PERFORMANCE OF $10,000 INVESTMENT CHART
------------------------------------------------------------
OPTIMUM
SMALL
CAP RUSSELL
VALUE 2000
CLASS A VALUE
SHARES INDEX
8/1/2003 $9,425
8/31/2003 $9,902 $10,000
9/30/2003 $9,813 $9,885
10/31/2003 $10,545 $10,691
11/30/2003 $10,899 $11,101
12/31/2003 $11,366 $11,503
1/31/2004 $11,690 $11,901
2/29/2004 $12,036 $12,132
3/31/2004 $12,281 $12,300
4/30/2004 $11,980 $11,664
5/31/2004 $12,092 $11,805
6/30/2004 $12,654 $12,405
7/31/2004 $12,144 $11,834
8/31/2004 $12,291 $11,950
9/30/2004 $12,688 $12,423
10/31/2004 $12,745 $12,616
11/30/2004 $13,832 $13,735
12/31/2004 $14,352 $14,063
1/31/2005 $14,008 $13,519
2/28/2005 $14,490 $13,788
3/31/2005 $14,259 $13,503
Chart assumes $10,000 invested on August 1, 2003 and includes the effect of a
5.75% front-end sales charge and the reinvestment of all distributions.
Performance of other Fund classes will vary due to different charges and
expenses. Returns plotted on the chart were as of the last day of each month
shown. The Russell 2000 Value Index is an unmanaged index that generally tracks
the performance of those stocks in the Russell 2000 Index that have lower
price-to-book ratios and lower forecasted growth values. An index is unmanaged
and does not reflect the costs of operating a mutual fund, such as the costs of
buying, selling, and holding securities. You cannot invest directly in an index.
Past performance is not a guarantee of future results.
The performance graph does not reflect the deduction of taxes the shareholder
would pay on Fund distributions or redemptions of Fund shares.
An expense limitation was in effect for all classes of Optimum Small Cap Value
Fund during the periods shown. Performance would have been lower had the expense
limitation not been in effect.
25
DISCLOSURE For the Period October 1, 2004 to March 31, 2005
OF FUND EXPENSES
As a shareholder of a 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. The following examples are
intended to help you understand your ongoing costs (in dollars) of investing in
a Fund and to compare these costs with the ongoing costs of investing in other
mutual funds.
The Examples are 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 tables 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 tables 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 a fund and other mutual funds. To do
so, compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other mutual 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.
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 182/365 (to reflect the one-half year period).
OPTIMUM FIXED INCOME 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
- ----------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000 $1,014.30 1.24% $6.23
Class B 1,000 1,011.00 1.89% 9.48
Class C 1,000 1,011.00 1.89% 9.48
Institutional Class 1,000 1,016.20 0.89% 4.47
- ----------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000 $1,018.75 1.24% $6.24
Class B 1,000 1,015.51 1.89% 9.50
Class C 1,000 1,015.51 1.89% 9.50
Institutional Class 1,000 1,020.49 0.89% 4.48
- ----------------------------------------------------------------------------------------------------------
OPTIMUM INTERNATIONAL 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
- ----------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000 $1,116.00 1.98% $10.45
Class B 1,000 1,112.00 2.63% 13.85
Class C 1,000 1,113.00 2.63% 13.85
Institutional Class 1,000 1,118.50 1.63% 8.61
- ----------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000 $1,015.06 1.98% $ 9.95
Class B 1,000 1,011.82 2.63% 13.19
Class C 1,000 1,011.82 2.63% 13.19
Institutional Class 1,000 1,016.80 1.63% 8.20
- ----------------------------------------------------------------------------------------------------------
26
DISCLOSURE For the Period October 1, 2004 to March 31, 2005
OF FUND EXPENSES (CONTINUED)
OPTIMUM LARGE CAP GROWTH 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
- ----------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000 $1,057.00 1.67% $ 8.56
Class B 1,000 1,053.10 2.32% 11.88
Class C 1,000 1,053.10 2.32% 11.88
Institutional Class 1,000 1,058.80 1.32% 6.78
- ----------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000 $1,016.60 1.67% $8.40
Class B 1,000 1,013.36 2.32% 11.65
Class C 1,000 1,013.36 2.32% 11.65
Institutional Class 1,000 1,018.35 1.32% 6.64
- ----------------------------------------------------------------------------------------------------------
OPTIMUM LARGE CAP VALUE 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
- ----------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000 $1,099.10 1.53% $ 8.01
Class B 1,000 1,095.70 2.18% 11.39
Class C 1,000 1,095.80 2.18% 11.39
Institutional Class 1,000 1,100.70 1.18% 6.18
- ----------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000 $1,017.30 1.53% $ 7.70
Class B 1,000 1,014.06 2.18% 10.95
Class C 1,000 1,014.06 2.18% 10.95
Institutional Class 1,000 1,019.05 1.18% 5.94
- ----------------------------------------------------------------------------------------------------------
OPTIMUM SMALL CAP GROWTH 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
- ----------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000 $1,100.20 1.80% $ 9.43
Class B 1,000 1,097.10 2.45% 12.81
Class C 1,000 1,097.10 2.45% 12.81
Institutional Class 1,000 1,102.60 1.45% 7.60
- ----------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000 $1,015.96 1.80% $ 9.05
Class B 1,000 1,012.72 2.45% 12.29
Class C 1,000 1,012.72 2.45% 12.29
Institutional Class 1,000 1,017.70 1.45% 7.29
- ----------------------------------------------------------------------------------------------------------
OPTIMUM SMALL CAP VALUE 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
- ----------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000 $1,124.00 1.76% $ 9.32
Class B 1,000 1,120.30 2.41% 12.74
Class C 1,000 1,120.30 2.41% 12.74
Institutional Class 1,000 1,125.30 1.41% 7.47
- ----------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000 $1,016.16 1.76% $ 8.85
Class B 1,000 1,012.91 2.41% 12.09
Class C 1,000 1,012.91 2.41% 12.09
Institutional Class 1,000 1,017.90 1.41% 7.09
- ----------------------------------------------------------------------------------------------------------
27
SECTOR ALLOCATION As of March 31, 2005
OPTIMUM FIXED INCOME 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
- ------------------------------------------------------------------------
AGENCY ASSET-BACKED SECURITIES 0.77%
- ------------------------------------------------------------------------
AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS 12.80%
- ------------------------------------------------------------------------
AGENCY MORTGAGE-BACKED SECURITIES 12.29%
- ------------------------------------------------------------------------
AGENCY OBLIGATIONS 1.88%
- ------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED SECURITIES 2.60%
- ------------------------------------------------------------------------
CORPORATE BONDS 30.66%
- ------------------------------------------------------------------------
Basic Materials 2.06%
Capital Goods - Manufacturing 1.21%
Consumer Cyclical 2.83%
Consumer Non-Cyclical 2.15%
Energy 1.63%
Finance 10.82%
Media 1.92%
Technology 0.06%
Telecommunications 3.49%
Transportation 0.73%
Utilities 3.76%
- ------------------------------------------------------------------------
MUNICIPAL BONDS 3.26%
- ------------------------------------------------------------------------
NON-AGENCY ASSET-BACKED SECURITIES 3.96%
- ------------------------------------------------------------------------
NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS 5.49%
- ------------------------------------------------------------------------
REGIONAL AGENCY 0.16%
- ------------------------------------------------------------------------
Australia 0.16%
- ------------------------------------------------------------------------
REGIONAL AUTHORITY 0.29%
- ------------------------------------------------------------------------
Canada 0.29%
- ------------------------------------------------------------------------
SOVEREIGN AGENCIES 1.08%
- ------------------------------------------------------------------------
Canada 0.17%
Japan 0.91%
- ------------------------------------------------------------------------
SOVEREIGN DEBT 5.86%
- ------------------------------------------------------------------------
Argentina 0.23%
Austria 0.25%
Belgium 0.28%
El Salvador 0.19%
France 0.79%
Germany 1.04%
PERCENTAGE
SECTOR OF NET ASSETS
- ------------------------------------------------------------------------
SOVEREIGN DEBT (CONTINUED)
- ------------------------------------------------------------------------
Italy 0.53%
Mexico 0.17%
Netherlands 0.31%
Norway 0.08%
Peru 0.19%
Poland 0.67%
Russia 0.09%
Sweden 0.30%
United Kingdom 0.50%
Venezuela 0.24%
- ------------------------------------------------------------------------
SUPRANATIONAL BANKS 0.25%
- ------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS 15.98%
- ------------------------------------------------------------------------
COMMON STOCK 0.00%
- ------------------------------------------------------------------------
PREFERRED STOCK 0.04%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENTS 10.14%
- ------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 107.51%
- ------------------------------------------------------------------------
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS (7.51)%
- ------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
- ------------------------------------------------------------------------
28
SECTOR ALLOCATION As of March 31, 2005
(CONTINUED)
The following chart lists the Fund's categories of portfolio holdings as a
percentage of total net assets.
OPTIMUM INTERNATIONAL FUND
PERCENTAGE
SECTOR OF NET ASSETS
- ------------------------------------------------------------------------
COMMON STOCK 95.90%
- ------------------------------------------------------------------------
Australia 5.29%
Austria 1.09%
Bahamas 0.60%
Belgium 1.63%
Brazil 0.89%
Canada 3.42%
Czech Republic 0.31%
Finland 0.75%
France 10.25%
Germany 5.26%
Hong Kong 3.53%
India 1.43%
Ireland 1.03%
Italy 3.18%
Japan 16.54%
Mexico 1.80%
Netherlands 3.87%
New Zealand 0.89%
Republic of Korea 1.12%
Singapore 1.97%
South Africa 1.69%
Spain 3.89%
Sweden 1.20%
Switzerland 4.14%
United Kingdom 18.91%
United States 1.22%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENTS 3.45%
- ------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 99.35%
- ------------------------------------------------------------------------
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 0.65%
- ------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
- ------------------------------------------------------------------------
OPTIMUM LARGE CAP GROWTH FUND
PERCENTAGE
SECTOR OF NET ASSETS
- ------------------------------------------------------------------------
COMMON STOCK 95.77%
- ------------------------------------------------------------------------
Basic Industry/Capital Goods 8.72%
Business Services 4.33%
Consumer Cyclical 0.57%
Consumer Durables 2.88%
Consumer Non-Durables 13.23%
Consumer Services 8.42%
Energy 4.21%
Finance 16.94%
Healthcare 17.83%
Technology 16.31%
Transportation & Shipping 1.56%
Utilities 0.77%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENTS 4.10%
- ------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 99.87%
- ------------------------------------------------------------------------
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 0.13%
- ------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
- ------------------------------------------------------------------------
29
SECTOR ALLOCATION As of March 31, 2005
(CONTINUED)
The following chart lists the Fund's categories of portfolio holdings as a
percentage of total net assets.
OPTIMUM LARGE CAP VALUE FUND
PERCENTAGE
SECTOR OF NET ASSETS
- ------------------------------------------------------------------------
COMMON STOCK 95.15%
- ------------------------------------------------------------------------
Basic Materials 7.69%
Capital Goods 6.82%
Communication Services 4.26%
Consumer Discretionary 3.57%
Consumer Services 0.84%
Consumer Staples 8.65%
Credit Cyclicals 1.03%
Energy 11.32%
Finance 24.60%
Healthcare 10.03%
Industrial 0.71%
Media 5.13%
Technology 4.81%
Transportation 1.26%
Utilities 4.43%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENTS 6.56%
- ------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 101.71%
- ------------------------------------------------------------------------
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS (1.71)%
- ------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
- ------------------------------------------------------------------------
OPTIMUM SMALL CAP GROWTH FUND
PERCENTAGE
SECTOR OF NET ASSETS
- ------------------------------------------------------------------------
COMMON STOCK 94.37%
- ------------------------------------------------------------------------
Basic Industry/Capital Goods 11.49%
Business Services 8.77%
Consumer Durables 0.16%
Consumer Non-Durables 8.55%
Consumer Services 5.35%
Energy 6.13%
Financial 4.66%
Healthcare 20.14%
Technology/Communications 7.48%
Technology/Hardware 13.31%
Technology/Software 6.37%
Utilities 1.96%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENTS 6.10%
- ------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 100.47%
- ------------------------------------------------------------------------
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS (0.47)%
- ------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
- ------------------------------------------------------------------------
30
SECTOR ALLOCATION As of March 31, 2005
(CONTINUED)
The following chart lists the Fund's categories of portfolio holdings as a
percentage of total net assets.
OPTIMUM SMALL CAP VALUE FUND
PERCENTAGE
SECTOR OF NET ASSETS
- ------------------------------------------------------------------------
COMMON STOCK 89.10%
- ------------------------------------------------------------------------
Basic Industries 15.24%
Business Services 11.07%
Capital Spending 7.92%
Conglomerates 2.41%
Consumer Cyclical 9.08%
Consumer Services 11.12%
Consumer Staples 0.96%
Energy 4.16%
Financial Services 3.34%
Healthcare 1.21%
Real Estate 6.44%
Technology 12.25%
Transportation 3.12%
Utilities 0.78%
- ------------------------------------------------------------------------
REPURCHASE AGREEMENTS 11.11%
- ------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 100.21%
- ------------------------------------------------------------------------
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS (0.21%)
- ------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
- ------------------------------------------------------------------------
31
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS March 31, 2005
Principal Market
Amount(degree) Value (U.S.$)
AGENCY ASSET-BACKED SECURITIES - 0.77%
oFannie Mae Grantor Trust
Series 2004-T4 A2 3.93% 2/25/20 USD 180,000 $ 178,910
Series 2004-T4 A3 4.42% 8/25/24 215,000 213,959
oSLMA Student Loan Trust
Series 2004-1 A1 2.74% 1/26/15 36,326 36,348
Series 2004-3 A3 2.79% 4/25/16 400,000 400,878
Series 2004-6 A2 2.74% 1/25/13 900,000 900,932
Series 2004-8 A3 2.79% 7/27/15 725,000 726,519
----------
TOTAL AGENCY ASSET-BACKED SECURITIES
(cost $2,459,959) 2,457,546
----------
AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS - 12.80%
Fannie Mae
Series 1996-46 ZA 7.50% 11/25/26 75,618 80,010
Series 2001-14 Z 6.00% 5/25/31 126,417 130,008
Series 2002-2 MG 6.00% 2/25/17 1,052,918 1,086,676
Series 2002-56 MC 5.50% 9/25/17 79,093 80,133
Series 2002-90 A1 6.50% 6/25/42 51,844 53,740
Series 2002-93 A1 6.50% 3/25/32 72,050 74,050
Series 2003-34 DV 4.00% 2/25/22 690,000 687,097
Series 2003-92 KH 5.00% 3/25/32 70,000 68,478
Series 2003-106 WB 4.50% 10/25/15 405,000 405,113
Series 2003-122 TU 4.00% 5/25/16 570,000 567,978
Series 2004-8 GD 4.50% 10/25/32 1,350,000 1,274,461
Series 2004-29 QG 4.50% 12/25/32 335,000 318,816
Series 2004-52 NE 4.50% 7/25/33 272,000 257,875
Series 2004-90 PC 5.00% 3/25/27 120,000 120,049
Series 2005-1 KZ 5.00% 2/25/35 181,503 156,058
Series 2005-14 ME 5.00% 10/25/33 1,395,000 1,357,929
Series 2005-22 HE 5.00% 10/25/33 740,000 719,997
Fannie Mae Grantor Trust
Series 1999-T2 A1 7.50% 1/19/39 73,176 77,059
Series 2001-T7 A1 7.50% 2/25/41 368,885 388,311
Series 2001-T8 A2 9.50% 7/25/41 40,592 44,482
Series 2002-T4 A3 7.50% 12/25/41 287,316 303,091
Series 2002-T16 A2 7.00% 7/25/42 37,279 38,954
Series 2002-T19 A2 7.00% 7/25/42 503,706 526,556
Series 2002-T19 A3 7.50% 7/25/42 474,944 501,795
Series 2004-T1 1A2 6.50% 1/25/44 105,486 108,980
Series 2004-T2 1A3 7.00% 11/25/43 95,272 99,691
Series 2004-T3 1A3 7.00% 2/25/44 47,049 48,978
Fannie Mae Whole Loan
Series 2002-W1 2A 7.50% 2/25/42 271,548 285,597
Series 2003-W3 1A2 7.00% 8/25/42 156,387 163,451
Series 2003-W8 2A 7.00% 10/25/42 542,146 566,826
Series 2003-W15 2A3 4.71% 8/25/43 16,815 16,827
Series 2003-W18 1A3 4.732% 8/25/43 67,351 67,442
Series 2003-W19 1A3 4.783% 11/25/33 85,000 84,957
Series 2004-W1 1A3 4.49% 11/25/43 130,000 130,129
Series 2004-W2 2A2 7.00% 2/25/44 243,426 254,694
Series 2004-W2 5A 7.50% 3/25/44 729,919 772,288
Series 2004-W3 A2 3.75% 5/25/34 405,000 400,000
Series 2004-W9 2A1 6.50% 2/25/44 134,928 138,864
Series 2004-W15 6.00% 8/25/44 684,022 703,316
Freddie Mac
Series 2113 QE 6.00% 11/15/27 53,981 55,034
Series 2141 N 5.55% 11/15/27 552,770 560,203
Series 2173 Z 6.50% 7/15/29 447,605 466,732
Series 2480 EH 6.00% 11/15/31 1,680 1,698
Series 2497 BM 5.00% 2/15/22 10,500 10,512
Series 2526 CA 5.00% 6/15/16 88,170 88,941
Principal Market
Amount(degree) Value (U.S.$)
AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
Freddie Mac (continued)
Series 2552 KB 4.25% 6/15/27 USD 996,031 $ 993,088
Series 2612 LJ 4.00% 7/15/22 331,513 330,334
Series 2658 PA 3.75% 11/15/07 14,767 14,783
Series 2662 DG 5.00% 10/15/22 25,000 24,565
Series 2672 TN 4.00% 3/15/23 190,000 188,975
Series 2682 LC 4.50% 7/15/32 110,000 104,881
Series 2691 MB 4.00% 4/15/22 531,000 524,364
Series 2691 ME 4.50% 4/15/32 274,000 261,346
Series 2694 QH 4.50% 3/15/32 76,000 72,486
Series 2721 PE 5.00% 1/15/23 100,000 98,475
Series 2726 PY 3.50% 4/15/26 640,000 635,022
Series 2727 PB 4.25% 4/15/23 215,000 213,139
Series 2727 PE 4.50% 7/15/32 295,000 280,973
Series 2727 PM 4.50% 1/15/34 165,000 149,362
Series 2728 TC 4.00% 2/15/23 235,000 231,472
Series 2737 XG 4.00% 11/15/22 120,000 118,229
Series 2737 YD 5.00% 8/15/32 140,000 137,304
Series 2750 NB 4.00% 12/15/22 388,000 381,949
Series 2755 LB 4.00% 9/15/23 517,868 514,024
Series 2755 LE 4.00% 9/15/30 508,000 467,121
Series 2759 AU 3.50% 5/15/19 226,000 224,218
Series 2764 TE 5.00% 10/15/32 35,000 34,157
Series 2773 EK 3.50% 5/15/10 599,000 597,539
Series 2776 ON 4.50% 11/15/32 305,000 289,507
Series 2777 PE 5.00% 4/15/33 585,000 573,196
Series 2778 JD 5.00% 12/15/32 570,000 557,046
Series 2780 TE 5.00% 1/15/33 785,000 765,292
Series 2783 PD 5.00% 1/15/33 276,000 269,639
Series 2802 NE 5.00% 2/15/33 600,000 584,722
Series 2836 EG 5.00% 12/15/32 755,000 736,592
Series 2836 QC 5.00% 9/15/22 700,000 706,708
Series 2840 OE 5.00% 2/15/33 1,800,000 1,759,759
Series 2840 OL 5.00% 11/15/22 630,000 635,970
Series 2844 PD 5.00% 12/15/32 745,000 726,848
Series 2844 PQ 5.00% 5/15/23 700,000 708,876
Series 2849 AJ 5.00% 5/15/18 380,000 384,873
Series 2852 YN 3.75% 6/15/24 1,510,000 1,470,254
Series 2864 PE 5.00% 6/15/33 1,095,000 1,071,438
Series 2881 TE 5.00% 7/15/33 1,080,000 1,054,346
Series 2889 OE 5.00% 1/15/30 195,000 193,009
Series 2890 PC 5.00% 7/15/30 265,000 262,295
Series 2902 LC 5.50% 12/15/17 220,000 223,981
Series 2911 BU 5.00% 9/15/23 975,000 983,141
Series 2921 NE 5.00% 9/15/33 1,095,000 1,063,105
Series 2937 JG 5.00% 8/15/33 1,410,000 1,375,619
Series 2938 ND 5.00% 10/15/33 1,050,000 1,024,673
Freddie Mac Structured Pass Through Securities
Series T-41 3A 7.50% 7/25/32 459,352 483,666
Series T-54 2A 6.50% 2/25/43 95,314 98,736
Series T-56 A2A 2.842% 7/25/36 164,414 163,118
Series T-58 1A2 3.108% 5/25/35 159,751 158,867
Series T-58 2A 6.50% 9/25/43 48,376 50,163
Series T-58 3A 7.00% 9/25/43 624,548 652,135
Series T-59 1A2 7.00% 10/25/43 100,362 105,016
GNMA
Series 2003-116 ND 3.75% 6/20/26 235,000 232,230
Series 2004-11 QE 5.00% 12/16/32 405,000 395,050
Series 2004-30 PD 5.00% 2/20/33 276,000 272,370
----------
TOTAL AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS
(cost $41,445,069) 40,973,922
----------
32
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
AGENCY MORTGAGE-BACKED SECURITIES - 12.29%
Fannie Mae
4.92% 5/1/13 USD 25,000 $ 25,195
5.73% 12/1/08 100,800 104,643
5.732% 9/1/14 1,518,624 1,598,827
6.50% 8/1/17 263,625 275,159
6.765% 1/1/07 130,769 134,855
7.13% 1/1/12 294,884 306,219
oFannie Mae ARM 5.119% 1/1/35 559,766 556,653
Fannie Mae Relocation 30 yr
5.00% 11/1/33 72,065 71,299
5.00% 1/1/34 56,460 55,736
5.00% 1/1/34 134,551 133,121
5.00% 2/1/34 74,096 73,309
5.00% 8/1/34 153,658 151,690
5.00% 11/1/34 203,665 201,056
5.00% 11/1/34 134,296 132,575
Fannie Mae S.F. 15 yr TBA
4.50% 4/15/35 660,000 645,356
5.00% 3/1/35 1,510,000 1,509,056
5.50% 4/1/20 1,295,000 1,319,686
Fannie Mae S.F. 20 yr 5.50% 12/1/24 676,918 683,476
Fannie Mae S.F. 30 yr
4.50% 8/1/33 692,114 657,941
4.50% 10/1/33 1,503,553 1,429,315
5.00% 3/1/34 797,463 782,261
5.00% 3/1/34 139,505 136,845
5.00% 3/1/34 778,260 763,425
5.00% 3/1/35 459,499 449,735
5.00% 3/1/35 145,000 141,919
5.50% 3/1/29 290,572 292,388
5.50% 4/1/29 147,285 148,205
5.50% 12/1/33 344,266 345,557
5.50% 12/1/33 151,515 152,083
5.50% 5/1/34 243,280 243,889
5.50% 11/1/34 251,055 251,683
6.00% 9/1/34 763,574 780,993
6.50% 11/1/33 86,665 89,996
6.50% 11/1/33 125,286 130,101
6.50% 9/1/34 440,087 457,003
7.50% 3/1/32 6,787 7,256
7.50% 4/1/32 29,055 31,061
7.50% 6/1/32 45,228 48,351
7.50% 6/1/34 162,352 173,564
Fannie Mae S.F. 30 yr TBA
5.00% 4/1/35 1,145,000 1,119,595
5.00% 5/1/35 3,330,000 3,246,751
5.50% 4/1/35 8,410,000 8,423,142
6.00% 4/1/35 1,230,000 1,257,291
6.50% 4/1/35 2,205,000 2,288,377
7.00% 4/1/35 835,000 879,881
7.50% 4/1/35 160,000 171,000
oFreddie Mac ARM 3.732% 4/1/34 119,266 120,944
Freddie Mac Relocation 30 yr 5.00% 9/1/33 8,959 8,872
Freddie Mac S.F. 15 yr 4.00% 5/1/19 844,213 808,597
Freddie Mac S.F. 20 yr
5.50% 8/1/24 957,666 967,841
5.50% 9/1/24 1,141,354 1,153,481
Principal Market
Amount(degree) Value (U.S.$)
AGENCY MORTGAGE-BACKED SECURITIES (continued)
Freddie Mac S.F. 30 yr
6.00% 10/1/33 USD 74,455 $ 76,246
6.50% 9/1/33 17,238 17,896
6.50% 10/1/33 23,295 24,183
6.50% 11/1/33 181,253 188,163
7.00% 11/1/33 25,392 26,764
GNMA
6.00% 3/20/34 220,243 226,437
6.00% 4/20/34 198,516 204,099
7.00% 8/20/34 290,202 306,707
GNMA S.F. 30 yr
5.50% 10/15/33 120,372 121,651
6.00% 7/15/34 724,395 744,995
6.00% 8/20/34 755,804 776,116
GNMA S.F. 30 yr 5.00% 4/1/35 TBA 685,000 675,581
----------
TOTAL AGENCY MORTGAGE-BACKED SECURITIES
(cost $39,497,195) 39,326,092
----------
AGENCY OBLIGATIONS - 1.88%
Fannie Mae
3.00% 8/15/07 455,000 444,111
3.25% 8/15/08 180,000 174,243
5.00% 4/15/15 165,000 166,605
6.625% 11/15/30 315,000 378,891
^Fannie Mae 5.485% 10/9/19 2,260,000 1,042,945
^Financing Corporation Fico Strip
PRN-2 5.031% 11/30/17 620,000 327,424
^Financing Corporation Fico Strip
PRN-15 5.240% 3/7/19 390,000 190,963
Freddie Mac 4.875% 3/15/07 300,000 305,195
^Residual Funding Strip Principal Only
5.047% 10/15/19 3,290,000 1,588,811
^Resolution Funding Strip Interest Only
5.209% 1/15/25 2,268,000 828,151
5.24% 10/15/25 1,650,000 579,757
----------
TOTAL AGENCY OBLIGATIONS (cost $5,996,109) 6,027,096
----------
COMMERCIAL MORTGAGE-BACKED SECURITIES - 2.60%
Banc of America Commercial Mortgage Securities
Series 2004-5 A3 4.561% 11/10/41 125,000 122,661
Series 2005-1 A3 4.877% 11/10/42 755,000 758,797
oSeries 2005-1 AJ 4.999% 11/10/42 1,160,000 1,162,002
Bank of America - First Union Commercial
Mortgage Series 2001-3 A1 4.89% 4/11/37 280,849 282,234
DLJ Commercial Mortgage Securities
Series 1998-CF1 A1A 6.14% 2/18/31 342,613 342,187
#DLJ Mortgage Acceptance Series 1997-CF2
A1B 144A 6.82% 10/15/30 204,965 214,382
First Union-Lehman Brothers-Bank of America
Series 1998-C2 A2 6.56% 11/18/35 360,000 379,265
GMAC Commercial Mortgage Securities
Series 1997-C1 A3 6.869% 7/15/29 330,527 345,898
Series 1998-C2 A2 6.42% 5/15/35 390,000 410,984
oGreenwich Capital Commercial Funding
Series 2005 GG3 AJ 4.859% 8/10/42 330,000 322,241
Series 2005 GG3 B 4.894% 8/10/42 555,000 541,545
#Hilton Hotel Pool Trust Series 2000-HLTA A1
144A 7.055% 10/3/15 63,933 68,543
33
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
COMMERCIAL MORTGAGE-BACKED SECURITIES (continued)
J.P. Morgan Chase Commercial
Mortgage Securities
Series 2002-C1 A3 5.376% 7/12/37 USD 720,000 $ 739,454
oSeries 2002-C2 A2 5.05% 12/12/34 665,000 668,879
Series 2003-C1 A2 4.985% 1/12/37 90,000 90,067
LB-UBS Commercial Mortgage Trust
Series 2002-C1 A4 6.462% 3/15/31 245,000 267,702
#Meristar Commercial Mortgage Trust
Series 1999-C1 C 144A 8.29% 3/3/16 140,000 151,841
Merrill Lynch Mortgage Trust
oSeries 2004-BPC1 A3 4.467% 10/12/41 85,000 82,984
Series 2005-GGP1 F 4.351% 11/15/10 105,000 104,998
oSeries 2005-MKB2 A4 5.204% 9/12/42 350,000 351,921
Nomura Asset Securities
Series 1998-D6 A1B 6.59% 3/15/30 330,000 349,562
#NYC Mortgage Loan Trust
Series 1996 A3 144A 6.75% 9/25/19 270,000 297,000
o#STRIPs III Series
2003-1A 144A 3.308% 3/24/18 69,443 67,186
#Tower Series 2004-2A A
144A 4.232% 12/15/14 195,000 190,131
----------
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES
(cost $8,443,545) 8,312,464
----------
CORPORATE BONDS - 30.66%
Basic Materials - 2.06%
Abitibi-Consolidated 6.95% 12/15/06 290,000 292,900
Barrick Gold Finance 7.50% 5/1/07 10,000 10,611
#BCP Caylux Holdings 144A 9.625% 6/15/14 52,000 59,540
#Boise Cascade 144A 7.125% 10/15/14 285,000 289,988
Bowater 9.50% 10/15/12 200,000 224,500
Buckeye Technologies 8.00% 10/15/10 110,000 109,450
Celulosa Arauco 5.125% 7/9/13 325,000 311,431
Fort James 7.75% 11/15/23 445,000 500,624
#Huntsman International 144A 7.375% 1/1/15 200,000 200,000
Lubrizol 4.625% 10/1/09 70,000 69,025
Lyondell Chemical 9.875% 5/1/07 72,000 74,160
MDP Acquisitions 9.625% 10/1/12 300,000 324,000
Nalco 8.875% 11/15/13 95,000 102,125
Newmont Mining 5.875% 4/1/35 380,000 373,666
Norske Skog 8.625% 6/15/11 275,000 286,000
#Novelis 144A 7.25% 2/15/15 115,000 113,275
#Port Townsend Paper 144A 12.00% 4/15/11 220,000 221,100
Potlatch 12.50% 12/1/09 175,000 216,848
#PQ 144A 7.50% 2/15/13 65,000 64,350
Rhodia
8.875% 6/1/11 130,000 127,075
10.25% 6/1/10 120,000 131,400
#Sappi Papier Holding 144A 6.75% 6/15/12 650,000 706,068
Seminis Vegetable Seeds 10.25% 10/1/13 185,000 219,225
Smurfit Capital Funding 7.50% 11/20/25 75,000 72,375
++Solutia 6.72% 10/15/37 330,000 275,550
Stora Enso 7.375% 5/15/11 440,000 496,361
Tembec Industries 8.50% 2/1/11 350,000 333,375
Temple-Inland 5.003% 5/17/07 195,000 196,455
Weyerhaeuser
7.125% 7/15/23 30,000 34,081
7.375% 3/15/32 45,000 52,777
Principal Market
Amount(degree) Value (U.S.$)
CORPORATE BONDS (continued)
Basic Materials (continued)
Witco
6.875% 2/1/26 USD 80,000 $ 80,400
7.75% 4/1/23 25,000 25,875
----------
6,594,610
----------
Capital Goods - Manufacturing - 1.21%
Anchor Glass 11.00% 2/15/13 220,000 199,650
Armor Holdings 8.25% 8/15/13 300,000 324,750
#Bae Systems Series 2001 AT
144A 7.156% 12/15/11 779,963 833,819
Casella Waste Systems 9.75% 2/1/13 30,000 33,150
General Electric 5.00% 2/1/13 235,000 235,035
Geo Subordinate 11.00% 5/15/12 165,000 169,950
#Graham Packaging 144A 9.875% 10/15/14 195,000 195,975
Interface 10.375% 2/1/10 135,000 151,875
Interline Brands 11.50% 5/15/11 298,000 341,210
#Lone Star Industries 144A 8.85% 6/15/05 60,000 60,425
*Mueller Holdings 14.75% 4/15/14 195,000 135,525
#Park-Ohio Industries
144A 8.375% 11/15/14 75,000 72,750
Radnor Holdings
o9.41% 4/15/09 105,000 105,525
11.00% 3/15/10 65,000 48,425
Trimas 9.875% 6/15/12 175,000 179,375
Tyco International Group
6.875% 1/15/29 531,000 597,033
7.00% 6/15/28 159,000 181,039
----------
3,865,511
----------
Consumer Cyclical - 2.83%
#Accuride 144A 8.50% 2/1/15 220,000 216,700
Adesa 7.625% 6/15/12 210,000 211,050
*Advanced Accessory Holdings
13.25% 12/15/11 95,000 28,975
Advanced Accessory Systems
10.75% 6/15/11 185,000 155,400
Ameristar Casinos 10.75% 2/15/09 445,000 488,387
Argosy Gaming 9.00% 9/1/11 110,000 120,863
Auburn Hills Trust 12.375% 5/1/20 87,000 130,560
Boyd Gaming 9.25% 8/1/09 275,000 292,531
#Buhrmann US 144A 7.875% 3/1/15 60,000 60,300
Caesars Entertainment 9.375% 2/15/07 70,000 74,638
#Carrols 144A 9.00% 1/15/13 205,000 212,175
oCentex 2.993% 8/1/07 175,000 175,266
Corrections Corporation of America
7.50% 5/1/11 238,000 242,165
CVS
3.875% 11/1/07 240,000 236,683
4.00% 9/15/09 120,000 117,203
DaimlerChrysler Holdings
o3.45% 9/10/07 220,000 220,416
4.75% 1/15/08 416,000 414,297
#Denny's 144A 10.00% 10/1/12 155,000 163,525
Ford Motor 7.45% 7/16/31 310,000 281,179
Gaylord Entertainment 8.00% 11/15/13 185,000 192,400
General Motors 8.375% 7/15/33 75,000 64,335
*#H-Lines Finance Holding
144A 11.00% 4/1/13 155,000 121,675
#Horizon Lines 144A 9.00% 11/1/12 100,000 107,000
Johnson Controls 5.00% 11/15/06 25,000 25,321
#Jones Apparel 144A 4.25% 11/15/09 105,000 100,641
34
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
CORPORATE BONDS (continued)
Consumer Cyclical (continued)
Kansas City Southern Railway
9.50% 10/1/08 USD 220,000 $ 240,900
#Knowledge Learning 144A 7.75% 2/1/15 155,000 150,350
#Landry's Restaurant 144A 7.50% 12/15/14 270,000 263,250
Limited 6.95% 3/1/33 235,000 242,505
#Loehmanns Capital 144A 13.00% 10/1/11 40,000 39,000
Lowe's 7.50% 12/15/05 50,000 51,306
Mandalay Resort Group 10.25% 8/1/07 265,000 289,513
MGM Mirage 9.75% 6/1/07 375,000 405,000
O'Charleys 9.00% 11/1/13 130,000 141,700
OMI 7.625% 12/1/13 190,000 198,313
Penn National Gaming 8.875% 3/15/10 475,000 505,874
Pulte Homes 5.20% 2/15/15 270,000 255,419
Royal Caribbean Cruises 7.25% 3/15/18 60,000 63,900
Seabulk International 9.50% 8/15/13 90,000 103,950
Six Flags 9.625% 6/1/14 25,000 23,188
Stena AB 9.625% 12/1/12 165,000 183,563
Target 5.95% 5/15/06 75,000 76,571
*Town Sports International 11.00% 2/1/14 125,000 74,063
True Temper Sports 8.375% 9/15/11 155,000 144,925
#Ultrapetrol 144A 9.00% 11/24/14 130,000 121,550
#Uno Restaurant 144A 10.00% 2/15/11 155,000 155,775
Warnaco 8.875% 6/15/13 200,000 215,500
Warner Music Group 7.375% 4/15/14 175,000 181,125
Wendy's International 6.35% 12/15/05 25,000 25,385
Wheeling Island Gaming 10.125% 12/15/09 195,000 210,600
#Wynn Las Vegas 144A 6.625% 12/1/14 250,000 238,750
----------
9,055,660
----------
Consumer Non-Cyclical - 2.15%
Allied Waste North America 9.25% 9/1/12 375,000 403,125
Ameripath 10.50% 4/1/13 95,000 95,000
#Amgen 144A 4.00% 11/18/09 80,000 78,003
Archer-Daniels-Midland 8.125% 6/1/12 55,000 65,945
#Autopista Del Maipo 144A 7.373% 6/15/22 350,000 395,901
Caremark Rx 7.375% 10/1/06 295,000 307,169
#Commonwealth Brands 144A
9.75% 4/15/08 10,000 10,750
10.625% 9/1/08 220,000 236,500
Cott Beverages 8.00% 12/15/11 300,000 318,750
#Erac USA Finance 144A 7.35% 6/15/08 75,000 81,026
Great Atlantic & Pacific Tea 7.75% 4/15/07 160,000 161,600
#Highmark 144A 6.80% 8/15/13 260,000 280,199
#IMCO Recycling 144A 9.00% 11/15/14 250,000 263,750
Kraft Foods
4.125% 11/12/09 230,000 224,156
5.25% 10/1/13 365,000 368,607
5.625% 11/1/11 5,000 5,195
#Le-Natures 144A 10.00% 6/15/13 275,000 301,125
Medco Health Solutions 7.25% 8/15/13 305,000 337,669
#Miller Brewing 144A 4.25% 8/15/08 280,000 277,458
Nabisco 6.85% 6/15/05 105,000 105,679
National Beef Packing 10.50% 8/1/11 110,000 112,750
Pilgrims Pride 9.625% 9/15/11 215,000 234,350
Province Healthcare 7.50% 6/1/13 440,000 491,149
#Rite Aid 144A 7.50% 1/15/15 125,000 120,625
Safeway
3.80% 8/15/05 70,000 69,976
6.15% 3/1/06 15,000 15,271
UnitedHealth Group 3.375% 8/15/07 375,000 367,423
Universal 6.50% 2/15/06 100,000 101,953
Principal Market
Amount(degree) Value (U.S.$)
CORPORATE BONDS (continued)
Consumer Non-Cyclical (continued)
Universal Hospital Services
10.125% 11/1/11 USD 240,000 $ 247,200
#US Oncology 144A 10.75% 8/15/14 210,000 232,050
UST 6.625% 7/15/12 90,000 99,027
*Vanguard Health 11.25% 10/1/15 220,000 147,950
#Warner Chilcott 144A 8.75% 2/1/15 150,000 151,500
#WellPoint 144A
3.75% 12/14/07 105,000 103,115
4.25% 12/15/09 85,000 83,068
----------
6,895,014
----------
Energy - 1.63%
Bluewater Finance 10.25% 2/15/12 260,000 283,400
CenterPoint Energy Resources
7.875% 4/1/13 280,000 325,058
Duke Capital 5.668% 8/15/14 135,000 136,006
El Paso Natural Gas 7.625% 8/1/10 55,000 57,949
El Paso Production Holding 7.75% 6/1/13 190,000 193,325
Enterprise Products Operating
4.00% 10/15/07 125,000 122,451
4.625% 10/15/09 100,000 97,685
7.50% 2/1/11 317,000 350,613
#Enterprise Products Operating 144A
5.00% 3/1/15 327,000 307,128
#Gazprom OAO 144A 9.625% 3/1/13 260,000 298,350
Halliburton 8.75% 2/15/21 260,000 341,961
#Hilcorp Energy 144A 10.50% 9/1/10 255,000 284,325
#Inergy Finance 144A 6.875% 12/15/14 90,000 86,850
Naftogaz Ukrainy 8.125% 9/30/09 200,000 205,660
Nexen 5.875% 3/10/35 570,000 547,062
OAO Siberian Oil 10.75% 1/15/09 515,000 574,224
o#Pemex Project Funding Master Trust
144A 3.79% 6/15/10 20,000 20,450
Petroleum Geo-Services
8.00% 11/5/06 98,000 100,328
10.00% 11/5/10 197,000 222,118
o#Secunda International 144A 10.66% 9/1/12 165,000 166,238
Stone Energy 6.75% 12/15/14 55,000 53,625
Tennessee Gas Pipeline 8.375% 6/15/32 55,000 61,396
#Titan Petrochemical Group
144A 8.50% 3/18/12 125,000 117,500
USX 9.125% 1/15/13 15,000 18,741
Valero Energy 6.125% 4/15/07 40,000 41,364
Valero Logistics Operations 6.05% 3/15/13 190,000 198,290
Weatherford International 4.95% 10/15/13 20,000 19,774
----------
5,231,871
----------
Finance - 10.82%
21st Century Insurance 5.90% 12/15/13 275,000 277,943
#America Real Estate Partners
144A 7.125% 2/15/13 200,000 197,000
American General Finance 4.00% 3/15/11 864,000 821,802
Amvescap 4.50% 12/15/09 350,000 343,632
o#Banco Santander 144A 3.31% 12/9/09 150,000 150,544
Bear Stearns 4.65% 7/2/18 180,000 166,278
#Berkshire Hathaway Finance 144A
o2.66% 1/11/08 195,000 195,224
4.125% 1/15/10 717,000 700,269
BF Saul REIT 7.50% 3/1/14 115,000 119,888
o#Bombardier Capital 144A 4.92% 5/30/05 120,000 119,910
#Canadian Oil Sands 144A 4.80% 8/10/09 75,000 74,557
35
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
CORPORATE BONDS (continued)
Finance (continued)
Citigroup 5.875% 2/22/33 USD 235,000 $ 238,547
Credit Suisse First Boston USA
6.125% 11/15/11 140,000 148,735
o#DBS Capital Funding 144A 7.657% 3/31/49 260,000 294,881
Developers Diversified Realty
4.625% 8/1/10 95,000 92,773
5.25% 4/15/11 100,000 100,624
Downey Financial 6.50% 7/1/14 290,000 298,683
E Trade Financial 8.00% 6/15/11 290,000 300,150
#Farmers Exchange Capital 144A
7.05% 7/15/28 345,000 361,299
7.20% 7/15/48 80,000 84,266
#Farmers Insurance Exchange 144A
6.00% 8/1/14 140,000 142,197
8.625% 5/1/24 5,000 6,064
Finova Group 7.50% 11/15/09 386,754 169,205
Ford Motor Credit
5.625% 10/1/08 55,000 52,748
5.70% 1/15/10 45,000 42,431
5.80% 1/12/09 310,000 296,319
6.875% 2/1/06 2,679,000 2,715,969
7.00% 10/1/13 145,000 140,684
Franklin Resources 3.70% 4/15/08 45,000 44,241
General Electric Capital
2.80% 1/15/07 150,000 146,696
4.875% 3/4/15 345,000 337,881
GMAC
o3.61% 7/16/07 310,000 292,244
6.75% 1/15/06 1,869,000 1,882,366
6.875% 9/15/11 247,000 223,777
7.75% 1/19/10 130,000 124,987
Goldman Sachs
4.75% 7/15/13 360,000 346,854
5.125% 1/15/15 320,000 313,013
6.345% 2/15/34 230,000 236,513
#Health Care Services 144A 7.75% 6/15/11 250,000 284,761
Household Finance 4.125% 11/16/09 530,000 515,863
HSBC Bank USA
3.875% 9/15/09 520,000 503,909
5.875% 11/1/34 250,000 252,529
HSBC Finance 4.125% 3/11/08 1,460,000 1,449,887
J.P. Morgan Chase 5.875% 3/15/35 1,475,000 1,429,332
#Kazkommerts International 144A
7.00% 11/3/09 85,000 84,363
8.50% 4/16/13 375,000 380,625
KFW International Finance
1.75% 3/23/10 JPY 132,000,000 1,307,397
LaBranche & Company
11.00% 5/15/12 USD 190,000 202,350
#Liberty Mutual 144A
5.75% 3/15/14 90,000 88,609
7.00% 3/15/34 210,000 216,763
#Mantis Reef 144A 4.692% 11/14/08 740,000 732,019
Marsh & McLennan
o2.77% 7/13/07 400,000 398,368
5.375% 3/15/07 210,000 213,401
Merrill Lynch
o4.056% 3/12/07 215,000 213,205
5.00% 1/15/15 664,000 644,709
Mizuho Financial Group 8.375% 12/29/49 1,240,000 1,340,416
Principal Market
Amount(degree) Value (U.S.$)
CORPORATE BONDS (continued)
Finance (continued)
#Mizuho Financial Group
144A 5.79% 4/15/14 USD 175,000 $ 177,637
o#Mizuho Preferred Capital
144A 8.79% 12/29/49 245,000 272,350
Morgan Stanley
o3.02% 11/24/06 105,000 105,175
4.00% 1/15/10 336,000 323,813
4.75% 4/1/14 160,000 152,613
5.30% 3/1/13 25,000 25,182
o#National Capital Trust 1 144A
5.486% 12/29/49 665,000 668,263
#Nationwide Mutual Insurance 144A
o5.81% 12/15/24 750,000 744,626
7.875% 4/1/33 95,000 114,636
#NLV Financial 144A 6.50% 3/15/35 720,000 711,035
Oesterreichesche Kontrollbank
1.80% 3/22/10 JPY 148,000,000 1,468,533
o#Oil Insurance 144A 5.15% 8/15/33 USD 390,000 391,693
#OMX Timber Finance
144A 5.42% 1/29/20 505,000 495,279
#Pennsylvania Mutual Life Insurance
144A 6.65% 6/15/34 369,000 399,444
#PF Export Receivables Master Trust
144A 6.60% 12/1/11 147,663 156,926
Popular North America 4.25% 4/1/08 100,000 99,398
Popular North America Capital Trust
6.564% 9/15/34 115,000 121,581
o#Premium Asset Trust Series 2005-2
144A 2.95% 2/2/07 195,000 195,000
o#Rabobank Capital Funding II
144A 5.26% 12/29/49 35,000 35,217
oRBS Capital Trust I 4.709% 12/29/49 120,000 116,076
Regions Financial 6.375% 5/15/12 60,000 64,818
Rentenbank 1.375% 4/25/13 JPY 165,000,000 1,579,881
Royal Bank of Scotland
7.816% 11/29/49 USD 265,000 271,540
Tanger Properties 9.125% 2/15/08 200,000 221,000
o#Twin Reefs 144A 3.77% 12/31/49 300,000 301,742
Wells Fargo
o3.15% 9/28/07 310,000 310,547
4.20% 1/15/10 677,000 662,660
#Westfield Capital 144A 4.375% 11/15/10 1,620,000 1,580,654
-----------
34,627,019
-----------
Media - 1.92%
JAdelphia Communications 8.125% 7/15/06 155,000 130,200
American Media Operations 10.25% 5/1/09 410,000 424,349
Cenveo 7.875% 12/1/13 200,000 179,500
#Charter Communications
144A 5.875% 11/16/09 65,000 56,306
Charter Communications Holdings
10.75% 10/1/09 575,000 474,374
*12.125% 1/15/12 310,000 195,300
Comcast Cable Communications
8.375% 3/15/13 210,000 249,903
Comcast Cablevision 9.00% 9/1/08 339,000 382,072
#Cox Communications 144A 4.625% 1/15/10 175,000 170,228
CSC Holdings
8.125% 8/15/09 170,000 180,200
10.50% 5/15/16 340,000 375,700
Dex Media West 9.875% 8/15/13 210,000 235,200
36
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
CORPORATE BONDS (continued)
Media (continued)
InterActiveCorp 6.75% 11/15/05 USD 270,000 $ 274,027
oLiberty Media 4.51% 9/17/06 310,000 314,194
Lodgenet Entertainment 9.50% 6/15/13 190,000 208,050
Mediacom Broadband 11.00% 7/15/13 75,000 80,625
Mediacom Capital
8.50% 4/15/08 225,000 228,938
9.50% 1/15/13 225,000 225,563
Nextmedia Operating 10.75% 7/1/11 290,000 317,913
Rogers Cablesystems 11.00% 12/1/15 75,000 82,125
Sheridan Acquisition 10.25% 8/15/11 155,000 165,463
TCI Communications
9.875% 6/15/22 290,000 409,271
10.125% 4/15/22 144,000 205,735
Thomson 5.75% 2/1/08 85,000 87,676
Time Warner 8.18% 8/15/07 240,000 258,627
Time Warner Entertainment 8.375% 3/15/23 25,000 30,709
XM Satellite Radio 12.00% 6/15/10 180,000 210,600
----------
6,152,848
----------
Technology - 0.06%
Dell 6.55% 4/15/08 15,000 15,928
#Magnachip Semiconductor
144A 8.00% 12/15/14 110,000 113,025
Stratus Technologies 10.375% 12/1/08 70,000 69,650
----------
198,603
----------
Telecommunications - 3.49%
Alaska Communications Systems Holdings
9.875% 8/15/11 268,000 284,080
Alltel 4.656% 5/17/07 185,000 186,218
America Movil 5.75% 1/15/15 370,000 359,475
BellSouth 4.75% 11/15/12 170,000 166,266
British Telecommunications
8.875% 12/15/30 695,000 928,845
Centennial Cellular Operating
10.125% 6/15/13 125,000 138,750
Cincinnati Bell 8.375% 1/15/14 350,000 346,500
Deutsche Telekom International Finance
8.75% 6/15/30 147,000 192,823
GTE 7.90% 2/1/27 670,000 721,495
#Hanarotelecom 144A 7.00% 2/1/12 200,000 193,920
*Inmarsat Finance 10.375% 11/15/12 255,000 181,050
#Intelsat Bermuda 144A 8.625% 1/15/15 200,000 205,000
Insight Midwest 10.50% 11/1/10 440,000 473,000
iPCS 11.50% 5/1/12 45,000 50,850
#Iwo Escrow 144A
o6.32% 1/15/12 30,000 30,750
*10.75% 1/15/15 25,000 16,125
MCI
6.908% 5/1/07 226,000 230,520
7.688% 5/1/09 250,000 260,625
MetroPCS 10.75% 10/1/11 20,000 20,500
Motorola 4.608% 11/16/07 195,000 195,628
#New Skies Satellite 144A 9.125% 11/1/12 110,000 112,750
Nextel Communications 5.95% 3/15/14 400,000 400,000
#Qwest 144A 7.875% 9/1/11 60,000 62,100
#Qwest Services 144A 14.00% 12/15/10 255,000 296,438
Rural Cellular
9.625% 5/15/08 125,000 120,000
9.875% 2/1/10 35,000 35,350
Principal Market
Amount(degree) Value (U.S.$)
CORPORATE BONDS (continued)
Telecommunications (continued)
SBC Communications
4.125% 9/15/09 USD 795,000 $ 774,010
5.625% 6/15/16 210,000 211,264
6.15% 9/15/34 285,000 286,497
Sprint Capital
4.78% 8/17/06 70,000 70,454
6.375% 5/1/09 10,000 10,572
8.75% 3/15/32 300,000 390,385
#Telcordia Technologies
144A 10.00% 3/15/13 270,000 269,325
Telecom Italia Capital 5.25% 11/15/13 115,000 113,810
#Telecom Italia Capital 144A
4.00% 1/15/10 85,000 81,349
4.95% 9/30/14 455,000 436,658
Telefonica Europe 7.35% 9/15/05 15,000 15,258
Telefonos de Mexico 4.50% 11/19/08 435,000 428,756
#Telefonos de Mexico 144A 4.75% 1/27/10 1,135,000 1,108,760
oUS Lec 10.67% 10/1/09 95,000 99,275
US Unwired 10.00% 6/15/12 110,000 122,375
#Valor Telecom Enterprises
144A 7.75% 2/15/15 130,000 130,000
Verizon New Jersey 5.875% 1/17/12 60,000 62,316
Verizon Wireless 5.375% 12/15/06 200,000 203,831
Vodafone Group 5.375% 1/30/15 135,000 136,881
-----------
11,160,834
-----------
Transportation - 0.73%
American Airlines 6.817% 5/23/11 65,000 60,420
Continental Airlines 6.503% 6/15/11 140,000 134,461
oCSX 3.05% 8/3/06 95,000 95,202
Delta Air Lines 6.417% 7/2/12 435,000 452,479
Deutsche Bahn Finance
1.65% 12/1/14 JPY 166,000,000 1,577,641
-----------
2,320,203
-----------
Utilities - 3.76%
#Allegheny Energy Supply Statutory
Trust 2001 Series B 144A
13.00% 11/15/07 USD 15,000 16,875
American Electric Power
6.125% 5/15/06 60,000 61,351
oAtmos Energy 3.035% 10/15/07 130,000 130,235
Avista
7.75% 1/1/07 85,000 89,810
9.75% 6/1/08 45,000 51,490
Calpine 10.50% 5/15/06 75,000 74,250
o#Calpine 144A 8.41% 7/15/07 88,650 76,239
CC Fund Trust I 6.90% 2/16/07 660,000 689,742
CMS Energy 9.875% 10/15/07 130,000 141,700
Consolidated Edison 3.625% 8/1/08 30,000 29,282
Consumers Energy
5.00% 2/15/12 320,000 316,489
6.25% 9/15/06 340,000 349,669
#Dayton Power & Light 144A 5.125% 10/1/13 56,000 56,206
Detroit Edison
5.05% 10/1/05 60,000 60,431
6.35% 10/15/32 5,000 5,455
Dominion Resources 7.195% 9/15/14 95,000 107,927
DTE Energy 6.65% 4/15/09 475,000 507,348
#Dynegy Holdings 144A 10.125% 7/15/13 215,000 235,425
Elwood Energy 8.159% 7/5/26 83,297 92,876
37
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
CORPORATE BONDS (continued)
Utilities (continued)
#FPL Energy National
144A 5.608% 3/10/24 USD 480,000 $ 475,855
FPL Group Capital 4.086% 2/16/07 760,000 758,471
#Holly Energy Partners 144A 6.25% 3/1/15 250,000 241,250
Hydro Quebec
8.40% 1/15/22 120,000 164,927
9.40% 2/1/21 35,000 51,100
Midland Funding II 11.75% 7/23/05 17,208 17,637
Midwest Generation
8.30% 7/2/09 190,000 203,775
8.75% 5/1/34 285,000 319,200
++Mirant Americas Generation 7.625% 5/1/06 130,000 147,550
Nisource Finance 3.20% 11/1/06 55,000 53,925
#NRG Energy 144A 8.00% 12/15/13 236,000 250,750
Orion Power Holdings 12.00% 5/1/10 60,000 73,200
Pacific Gas & Electric 6.05% 3/1/34 317,000 326,624
Pacificorp 6.375% 5/15/08 290,000 306,945
#Pedernales Electric 144A 6.202% 11/15/32 620,000 672,516
#Power Contract Financing 144A 5.20% 2/1/06 58,109 58,585
PP&L Capital Funding 7.75% 4/15/05 180,000 180,203
Progress Energy 6.75% 3/1/06 495,000 507,418
PSEG Energy Holdings 7.75% 4/16/07 135,000 139,388
Puget Energy 7.69% 2/1/11 250,000 287,432
Reliant Energy 9.50% 7/15/13 130,000 142,025
oScana 3.109% 3/1/08 185,000 185,198
Sempra Energy
o3.317% 5/21/08 240,000 240,793
4.621% 5/17/07 510,000 512,279
Southern California Edison
o3.075% 12/13/07 190,000 189,912
6.00% 1/15/34 155,000 161,501
Southern Capital Funding 5.30% 2/1/07 40,000 41,157
#Texas Genco 144A 6.875% 12/15/14 175,000 176,313
#TXU 144A
4.80% 11/15/09 340,000 329,717
5.55% 11/15/14 550,000 522,798
#TXU Australia 144A 6.15% 11/15/13 560,000 596,475
TXU Electric Delivery 7.00% 5/1/32 35,000 40,481
TXU Energy 7.00% 3/15/13 20,000 21,921
Westar Energy 5.95% 1/1/35 435,000 437,316
Xcel Energy 7.00% 12/1/10 80,000 88,200
-----------
12,015,637
-----------
TOTAL CORPORATE BONDS (cost $98,841,881) 98,117,810
-----------
MUNICIPAL BONDS - 3.26%
Allentown, Pennsylvania
3.98% 10/1/11 (AMBAC) 320,000 305,635
oArizona Educational Loan Marketing
Corporation 2004-A A1 3.01% 12/1/13 998,667 999,602
Aruba Airport Authority 7.70% 1/1/13 (MBIA) 184,000 201,439
Augusta, Georgia Water & Sewer Revenue
5.25% 10/1/39 (FSA) 260,000 274,303
California State
5.00% 2/1/33 60,000 61,090
5.00% 2/1/33 5,000 5,087
California State Economic Recovery
5.25% 7/1/13 105,000 115,416
California State University Revenue System
5.00% 11/1/30 (AMBAC) 195,000 202,586
Principal Market
Amount(degree) Value (U.S.$)
MUNICIPAL BONDS (continued)
Colorado Department of
Transportation Revenue
5.00% 12/15/12 (FGIC) USD 85,000 $ 92,221
5.00% 12/15/13 (FGIC) 255,000 276,856
Escondido, California Revenue
5.75% 9/1/25 (MBIA) 565,000 580,888
Fairfield, California Pension Obligation
5.42% 6/1/34 (AMBAC) 765,000 764,495
Forsyth, Montana Pollution Control Revenue
(Portland General Project) Series A
5.20% 5/1/33 20,000 20,902
Golden State, California Tobacco
Securitization Corporation Settlement
Revenue Series B 5.50% 6/1/43 55,000 58,123
Hoboken, New Jersey General Obligation
Taxable Series B
4.26% 2/1/10 (MBIA) 60,000 58,872
5.33% 2/1/18 (MBIA) 65,000 65,573
Hoboken, New Jersey Refunding Taxable
Pension 6.50% 4/1/26 (MBIA) 25,000 28,354
Illinois State Taxable Pension 5.10% 6/1/33 120,000 115,516
Industry Urban Development Agency
4.50% 5/1/10 (MBIA) 195,000 192,338
La Quinta Redevelopment Agency
Tax Allocation
5.45% 9/1/13 (AMBAC) 15,000 15,067
6.24% 9/1/23 (AMBAC) 10,000 10,683
Los Angeles, California Community
Redevelopment
5.60% 7/1/18 (MBIA) 80,000 80,307
5.83% 12/1/17 (FSA) 525,000 531,720
Manchester, New Hampshire Taxable
Series C 5.375% 12/1/11 (FGIC) 110,000 113,559
Metropolitan Washington, District of
Columbia Airport Authority
4.62% 10/1/10 (FGIC) 15,000 14,930
New Jersey Economic Development
Authority Revenue Cigarette Tax
5.75% 6/15/29 100,000 105,132
New York State Sales Tax Asset
Receivables 5.25% 10/15/27 (AMBAC) 155,000 167,237
New York State Urban Development
Corporate 5.25% 3/15/34 (FGIC) 125,000 132,431
Oregon Local Governments
3.145% 6/1/06 (AMBAC) 325,000 322,108
Oregon State Taxable Pension
5.892% 6/1/27 65,000 69,854
Philadelphia, Pennsylvania Authority For
Industrial Development Retirement
System Series A 5.64% 4/15/06 (MBIA) 1,103,000 1,121,971
Puerto Rico Public Buildings Authority
Revenue (Government Facilities)
Series I 5.25% 7/1/33 120,000 125,906
Sacramento, California Public Finance
Authority Series B
3.82% 12/1/08 (FGIC) 85,000 83,884
5.18% 12/1/13 (FGIC) 105,000 105,334
San Diego Redevelopment Tax Allocation
Series C 5.81% 9/1/19 (XLCA) 645,000 659,274
South Texas Detention Complex
4.92% 2/1/14 (MBIA) 1,150,000 1,135,509
38
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
MUNICIPAL BONDS (continued)
Waterbury, Connecticut Taxable
Series B 5.43% 4/1/09 (FSA) USD 564,000 $ 574,411
West Virginia Economic
Development Authority
5.37% 7/1/20 (MBIA) 590,000 595,770
6.07% 7/1/26 45,000 46,975
-----------
TOTAL MUNICIPAL BONDS (cost $10,402,342) 10,431,358
-----------
NON-AGENCY ASSET-BACKED SECURITIES - 3.96%
#ABSC NIM Trust Series 2004-HE1 A
144A 7.00% 1/17/34 14,075 14,038
AmeriCredit Automobile Receivables Trust
Series 2001-D A4 4.41% 11/12/08 358,691 360,497
Series 2002-1 A3 4.23% 10/6/06 5,139 5,140
Series 2002-A A4 4.61% 1/12/09 541,116 544,763
Capital One Auto Finance Trust
Series 2003-A A4A 2.47% 1/15/10 20,000 19,595
Centex Home Equity
Series 2002-A AF6 5.54% 1/25/32 65,000 65,804
#Chase Funding NIM
Series 2003-6A 144A 5.00% 12/27/35 2,226 2,226
Citibank Credit Card Issuance Trust
Series 2002-A1 A1 4.95% 2/9/09 305,000 309,413
Series 2003-A7 A7 4.15% 7/7/17 65,000 60,970
Series 2004-A4 3.20% 8/24/09 75,000 73,222
Capital One Multi-Asset Execution Trust
oSeries 2004-B3 B3 3.54% 1/18/22 1,390,000 1,425,936
Series 2005-B1 B1 4.90% 12/15/17 715,000 695,981
Countrywide Asset-Backed Certificates
oSeries 2004-9 AF2 3.337% 9/25/23 115,000 113,441
oSeries 2004-13 AV2 2.91% 5/25/34 220,000 220,587
Series 2004-S1 A2 3.872% 3/25/20 230,000 227,035
#Countrywide Asset-Backed Certificates 144A
Series 2004-1NIM Note 6.00% 5/25/34 18,092 18,214
Series 2004-2N N1 NIM 5.00% 2/25/35 124,753 123,927
Series 2004-BC1N Note 5.50% 4/25/35 21,421 21,468
#Drive Auto Receivables Trust
Series 2004-1 A3 144A 3.50% 8/15/08 325,000 321,827
#First Franklin NIM Trust 144A
Series 2004-FF6A 5.75% 7/25/34 212,202 212,998
Series 2004-FFH4 N1 4.212% 1/21/35 919,931 919,930
#GSAA Trust Series 2004-4N
Note 144A 6.25% 5/25/34 132,775 132,650
Honda Automobile Receivables Owners
Trust Series 2004-2 A4 3.81% 10/15/09 70,000 69,134
@=#Magnetite Asset Investor
Series 2003 C1 144A 8.786% 1/31/08 250,000 257,917
MBNA Credit Card Master Note Trust
Series 2004-A4 A4 2.70% 9/15/09 270,000 262,377
#MBNA Master Credit Card Trust USA
Series 2000-D C 144A 8.40% 9/15/09 110,000 118,414
oMerrill Lynch Mortgage Investors
Series 2004-WMC5 A2B2 3.20% 7/25/35 225,000 225,825
Series 2005-NC1 A2B 3.07% 10/25/35 80,000 80,073
Series 2005-WMC1 A2B 3.07% 9/25/35 375,000 375,586
Mid-State Trust
Series 2004-1 A 6.005% 8/15/37 66,869 66,613
MMCA Automobile Trust
Series 2002-2 A4 4.30% 3/15/10 231,056 230,875
Series 2002-2 B 4.67% 3/15/10 169,768 167,110
Principal Market
Amount(degree) Value (U.S.$)
NON-AGENCY ASSET-BACKED SECURITIES (continued)
Navistar Financial Corporate Owner Trust
Series 2001-B A4 4.37% 11/17/08 USD 217,058 $ 217,334
oNovastar Home Equity Loan
Series 2004-4 A2B 2.99% 3/25/35 230,000 230,870
#Park Place Securities NIM Trust 144A
Series 2004-MCW1 A 4.458% 9/25/34 286,905 286,905
Series 2004-MHQ1 A 2.487% 12/25/34 130,754 130,754
Series 2004-WHQ1 B 3.483% 9/25/34 640,000 638,656
Series 2004-WHQ1 D 7.384% 9/25/34 385,000 389,813
Renaissance Home Equity Loan Trust
Series 2004-4 AF2 3.856% 2/25/35 225,000 222,631
oResidential Asset Mortgage Products
Series 2004-RS12 AII2 3.08% 12/25/34 110,000 110,177
Series 2004-RZ2 AI3 4.30% 1/25/31 125,000 124,515
Residential Asset Securities
Series 2000-KS5 AI6 7.175% 12/25/31 74,954 76,356
@=#RHYNO CBO Delaware
Series 1997-1 A2 144A 6.33% 9/15/09 60,461 61,110
#Sail NIM Notes Series 2004-4A A
144A 5.00% 4/27/34 520,556 521,182
oSaxon Asset Securities Trust
Series 2005-1 A2B 3.07% 5/25/35 280,000 280,271
Structured Asset Securities
Series 2001-SB1 A2 3.375% 8/25/31 179,386 170,988
oSeries 2005-NC1 A7 2.88% 2/25/35 270,000 270,440
Vanderbilt Mortgage Finance
Series 2001-A A4 7.235% 6/7/28 110,000 115,968
WFS Financial Owner Trust
Series 2002-2 A4 4.50% 2/20/10 115,000 115,695
Series 2005-1 D 4.09% 8/17/12 925,000 916,280
Whole Auto Loan Trust
Series 2003-1 B 2.24% 3/15/10 29,316 28,905
----------
TOTAL NON-AGENCY ASSET-BACKED SECURITIES
(cost $12,714,172) 12,652,436
----------
NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS - 5.49%
Bank of America Alternative Loan Trust
Series 2003-10 2A1 6.00% 12/25/33 30,364 30,896
Series 2004-2 1A1 6.00% 3/25/34 92,384 94,000
Series 2004-10 1CB1 6.00% 11/25/34 329,693 335,751
Series 2005-3 2A1 5.50% 3/25/20 215,000 218,124
Bank of America Funding
Series 2004-3 2A2 5.00% 9/25/19 150,909 149,777
Bank of America Mortgage Securities
oSeries 2003-I 2A4 3.828% 10/25/33 5,000 4,969
Series 2004-3 1A2O 4.25% 4/25/34 622,644 622,417
oSeries 2004-A 1A1 3.491% 2/25/34 29,763 29,544
oSeries 2004-E 1A1 3.532% 6/25/34 81,212 80,350
oSeries 2004-G 2A6 4.657% 8/25/34 125,000 124,752
oSeries 2005-A 2A1 4.494% 2/25/35 520,854 516,131
oSeries 2005-B 2A1 4.428% 3/25/35 489,718 484,477
Cendant Mortgage
Series 2003-1 A6 5.50% 2/25/33 113,277 113,617
Citigroup Mortgage Loan Trust
Series 2003-3 A4 5.50% 3/25/33 400,000 405,132
Series 2004-NCM1 1A2 6.50% 6/25/34 312,909 323,860
Series 2004-NCM2 1CB2 6.75% 8/25/34 416,321 432,063
Countrywide Alternative Loan Trust
Series 2004-J1 1A1 6.00% 2/25/34 64,449 65,334
Series 2004-J2 7A1 6.00% 12/25/33 104,283 105,521
oSeries 2004-J7 1A2 4.673% 8/25/34 175,000 174,842
39
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
Countrywide Home Loan Mortgage
Pass Through Trust
oSeries 2001-HYB2 3A1 5.412% 9/19/31 USD 19,412 19,443
Series 2003-1 1A7 4.50% 3/25/33 3,491 3,492
oSeries 2003-21 A1 4.131% 5/25/33 31,447 31,071
oSeries 2003-56 3A7B 4.71% 12/25/33 245,000 241,027
Credit Suisse First Boston
Mortgage Securities
Series 2003-29 5A1 7.00% 12/25/33 55,846 57,704
Series 2004-1 3A1 7.00% 2/25/34 21,241 21,943
oDeutsche Mortgage Securities
Series 2004-4 1A2 4.01% 4/25/34 40,000 39,952
First Horizon Alternative Mortgage Securities
Series 2004-FA1 1A1 6.25% 10/25/34 361,625 370,816
oFirst Horizon Asset Securities
Series 2004-AR5 4A1 5.664% 10/25/34 129,583 131,591
#GSMPS Mortgage Loan Trust 144A
Series 1998-3 A 7.75% 9/19/27 52,016 55,311
Series 1999-3 A 8.00% 8/19/29 87,691 93,889
Series 2005-RP1 1A3 8.00% 1/25/35 213,418 229,443
Series 2005-RP1 1A4 8.50% 1/25/35 98,323 107,053
oMaster Adjustable Rate Mortgages Trust
Series 2003-6 1A2 2.981% 12/25/33 10,000 9,835
MASTR Alternative Loans Trust
Series 2003-6 3A1 8.00% 9/25/33 45,077 46,918
Series 2003-9 1A1 5.50% 12/25/18 26,539 26,970
Series 2004-3 2A1 6.25% 4/25/34 780,852 799,886
Series 2004-3 8A1 7.00% 4/25/34 166,330 170,269
Series 2004-5 3A1 6.50% 6/25/34 66,951 68,959
Series 2004-5 6A1 7.00% 6/25/34 745,290 755,551
Series 2005-3 7A1 6.00% 3/31/35 310,000 315,425
MASTR Asset Securitization Trust
Series 2003-6 8A1 5.50% 7/25/33 177,398 176,455
Series 2003-9 2A7 5.50% 10/25/33 710,491 708,191
Series 2003-11 6A12 4.75% 12/25/33 370,000 370,797
#MASTR Reperforming Loan Trust
Series 2005-1 1A5 144A 8.00% 8/25/34 310,000 323,924
Merrill Lynch Mortgage Trust
Series 2005-GGP1 E 4.33% 11/15/10 110,000 109,997
oNomura Asset Acceptance
Series 2004-AP2 A2 4.099% 7/25/34 80,000 79,782
Prime Mortgage Trust
Series 2004-CL1 1A1 6.00% 2/25/34 94,872 95,761
Residential Asset Mortgage Products
Series 2004-SL1 A3 7.00% 11/25/34 45,581 46,790
Series 2004-SL4 A3 6.50% 7/25/32 193,820 199,449
Residential Asset Securitization Trust
Series 2002-A13 A3 5.00% 12/25/17 77,046 77,206
Series 2003-A11 A1 4.25% 11/25/33 507,505 507,503
Structured Adjusted Rate Mortgage Loan
Trust Series 2004-18 5A 5.50% 12/25/34 143,343 144,374
Structured Asset Securities
oSeries 2002-22H 1A 6.998% 11/25/32 34,392 35,330
Series 2004-12H 1A 6.00% 5/25/34 286,830 290,236
Washington Mutual Alternative Mortgage
Pass-Through Certificates
Series 2005-1 5A2 6.00% 3/25/20 173,161 174,785
Series 2005-1 6A2 6.50% 3/25/35 52,483 53,746
Washington Mutual MSC Mortgage
Pass-Through Certificates
Series 2001-MS15 SA1 6.00% 1/25/17 5,575 5,659
Principal Market
Amount(degree) Value (U.S.$)
NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
Washington Mutual
Series 2002-S7 4A1 4.50% 11/25/32 USD 20,330 $ 20,329
Series 2002-S8 2A1 4.50% 1/25/18 237,119 237,317
oSeries 2003-AR9 1A7 4.058% 9/25/33 192,977 191,089
oSeries 2003-AR10 A6 4.076% 10/25/33 955,000 939,471
oSeries 2003-AR11 A6 3.985% 10/25/33 1,245,000 1,215,424
oSeries 2004-AR4 A6 3.808% 6/25/34 580,000 560,847
oSeries 2004-AR5 A6 3.858% 6/25/34 555,000 536,758
oSeries 2004-AR9 A7 4.225% 8/25/34 456,000 447,806
Series 2004-CB2 4A 6.50% 8/25/34 230,126 238,180
Series 2004-CB3 1A 6.00% 10/25/34 312,051 318,690
Series 2004-CB3 4A 6.00% 10/25/19 170,398 175,190
oSeries 2005-AR3 A1 4.661% 3/25/35 410,262 407,287
oWells Fargo Mortgage Backed
Securities Trust
Series 2004-DD 2A3 4.545% 1/25/35 245,000 244,033
Series 2004-DD 2A6 4.545% 1/25/35 125,000 121,841
Series 2004-I 1A1 3.391% 7/25/34 361,761 364,220
Series 2004-T A1 3.455% 9/25/34 247,132 245,585
-----------
TOTAL NON-AGENCY COLLATERALIZED
MORTGAGE OBLIGATIONS (cost $17,737,970) 17,572,157
-----------
REGIONAL AGENCY - 0.16%
Australia - 0.16%
Queensland Treasury 6.00% 6/14/11 AUD 663,000 515,872
-----------
TOTAL REGIONAL AGENCY (cost $502,414) 515,872
-----------
REGIONAL AUTHORITY - 0.29%
Canada - 0.29%
Province of Ontario 1.875% 1/25/10 JPY 94,000,000 934,725
-----------
TOTAL REGIONAL AUTHORITY (cost $938,509) 934,725
-----------
SOVEREIGN AGENCIES - 1.08%
Canada - 0.17%
Canada Housing Trust 3.75% 3/15/10 CAD 664,000 544,283
-----------
544,283
-----------
Japan - 0.91%
Development Bank of Japan
1.75% 6/21/10 JPY 132,000,000 1,307,568
Japan Finance Corporation for
Municipal Enterprises
1.35% 11/26/13 JPY 170,000,000 1,614,803
-----------
2,922,371
-----------
TOTAL SOVEREIGN AGENCIES (cost $3,530,742) 3,466,654
-----------
SOVEREIGN DEBT - 5.86%
Argentina - 0.23%
oArgentina Government Bonds
3.01% 8/3/12 USD 855,000 723,655
-----------
723,655
-----------
Austria - 0.25%
Austria Government Bond
5.25% 1/4/11 EUR 565,000 810,864
-----------
810,864
-----------
40
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount(degree) Value (U.S.$)
SOVEREIGN DEBT (continued)
Belgium - 0.28%
Belgium Government Bond
5.75% 3/28/08 EUR 642,000 $ 904,081
----------
904,081
----------
El Salvador - 0.19%
El Salvador Government International
Bond 8.25% 4/10/32 USD 610,000 622,830
----------
622,830
----------
France - 0.79%
France Government Bond
4.00% 4/25/13 EUR 1,184,000 1,592,045
French Treasury Note 5.00% 1/12/06 EUR 702,000 928,743
----------
2,520,788
----------
Germany - 1.04%
Deutschland Republic
4.50% 1/4/13 EUR 1,173,000 1,632,746
4.75% 7/4/08 EUR 671,000 922,436
5.00% 7/4/11 EUR 557,000 794,424
----------
3,349,606
----------
Italy - 0.53%
Italy Bouni Poliennali Del Tesoro
5.00% 8/1/34 EUR 98,000 142,037
Italy Government International Bond
0.65% 3/20/09 JPY 64,100,000 606,296
5.75% 7/25/16 EUR 616,000 939,628
----------
1,687,961
----------
Mexico - 0.17%
Mexico Government International
Bond 6.75% 9/27/34 USD 540,000 528,390
----------
528,390
----------
Netherlands - 0.31%
Netherlands Government Bond
5.75% 2/15/07 EUR 733,000 1,006,835
----------
1,006,835
----------
Norway - 0.08%
Norway Government Bond
6.00% 5/16/11 NOK 1,423,000 252,593
----------
252,593
----------
Peru - 0.19%
Peru Government Bond 8.75% 11/21/33 USD 585,000 611,325
----------
611,325
----------
Poland - 0.67%
Poland Government Bond
6.00% 5/24/09 PLZ 3,339,000 1,076,107
6.25% 10/24/15 PLZ 3,186,000 1,070,041
----------
2,146,148
----------
Russia - 0.09%
Russian Ministry of Finance
3.00% 5/14/11 USD 320,000 268,608
@#Russian Paris Club Participation
Note 144A 1.925% 8/20/20 JPY 1,529,420 12,576
----------
281,184
----------
Principal Market
Amount(degree) Value (U.S.$)
SOVEREIGN DEBT (continued)
Sweden - 0.30%
Sweden Government Bond
6.50% 5/5/08 SEK 3,040,000 $ 476,967
6.75% 5/5/14 SEK 2,750,000 482,084
----------
959,051
----------
United Kingdom - 0.50%
U.K. Treasury
4.00% 3/7/09 GBP 580,450 1,070,676
4.25% 6/7/32 GBP 296,000 532,373
----------
1,603,049
----------
Venezuela - 0.24%
Venezuela Government
International Bond
6.75% 3/31/20 USD 500,000 498,471
9.375% 1/13/34 USD 260,000 258,050
----------
756,521
----------
TOTAL SOVEREIGN DEBT (cost $18,322,659) 18,764,881
----------
SUPRANATIONAL BANKS - 0.25%
Inter-American Development Bank
1.90% 7/8/09 JPY 80,000,000 795,698
----------
TOTAL SUPRANATIONAL BANKS (cost $781,517) 795,698
----------
U.S. TREASURY OBLIGATIONS - 15.98%
U.S. Treasury Bonds
5.375% 2/15/31 USD 220,000 239,843
6.00% 2/15/26 3,332,000 3,812,668
U.S. Treasury Inflation Index Notes
(infinity)1.625% 1/15/15 1,562,887 1,540,299
2.00% 7/15/14 794,122 811,384
2.375% 1/15/25 551,333 593,204
3.00% 7/15/12 164,385 180,972
3.375% 1/15/07 168,498 176,943
3.375% 4/15/32 182,629 242,423
U.S. Treasury Notes
2.00% 8/31/05 785,000 781,934
2.75% 6/30/06 8,989,000 8,901,221
3.00% 2/15/09 8,251,000 7,937,404
3.25% 1/15/09 4,190,000 4,072,814
3.375% 2/28/07 3,895,000 3,867,766
3.375% 2/15/08 510,000 502,510
3.50% 2/15/10 3,000,000 2,912,697
3.625% 7/15/09 3,224,000 3,162,670
3.875% 2/15/13 300,000 289,676
4.00% 3/15/10 3,515,000 3,488,641
4.00% 2/15/15 3,335,000 3,205,248
5.00% 8/15/11 4,249,000 4,415,642
----------
TOTAL U.S. TREASURY OBLIGATIONS
(cost $51,318,634) 51,135,959
----------
Number of
Shares
COMMON STOCK - 0.00%
MCI 77 1,919
----------
TOTAL COMMON STOCK (cost $1,348) 1,919
----------
41
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
Number of Market
Shares Value (U.S.$)
PREFERRED STOCK - 0.04%
Alamosa Delaware 7.50% 50 $ 43,413
Host Marriott Preferred Class B 10.00% 225 5,652
Nexen 7.35% 3,225 83,721
------------
TOTAL PREFERRED STOCK (cost $135,287) 132,786
------------
Principal
Amount(degree)
REPURCHASE AGREEMENTS - 10.14%
With BNP Paribas 2.60% 4/1/05
(dated 3/31/05, to be repurchased at
$17,117,236, collateralized by $650,000
U.S. Treasury Bills due 7/28/05,
market value $644,381, and $17,011,000
U.S. Treasury Bills due 8/18/05,
market value $16,817,486) USD 17,116,000 17,116,000
With UBS Warburg 2.50% 4/1/05
(dated 3/31/05, to be repurchased
at $15,340,065, collateralized by
$1,921,000 U.S. Treasury Notes 6.75%
due 5/15/05, market value $1,978,593,
$9,158,000 U.S. Treasury Notes 2.50%
due 5/31/06, market value $9,158,705,
and $4,579,000 U.S. Treasury Notes
2.375% due 8/15/06,
market value $4,513,723) 15,339,000 15,339,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $32,455,000) 32,455,000
------------
TOTAL MARKET VALUE OF SECURITIES - 107.51%
(cost $345,524,352) 344,074,375
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (7.51%) (24,032,514)x
------------
NET ASSETS APPLICABLE TO 35,983,717
SHARES OUTSTANDING - 100.00% $320,041,861
============
Net Asset Value - Optimum Fixed Income Fund
Class A ($33,251,027 / 3,739,356 Shares) $8.89
-----
Net Asset Value - Optimum Fixed Income Fund
Class B ($8,405,319 / 944,568 Shares) $8.90
-----
Net Asset Value - Optimum Fixed Income Fund
Class C ($125,301,177 / 14,076,355 Shares) $8.90
-----
Net Asset Value - Optimum Fixed Income Fund
Institutional Class ($153,084,338 / 17,223,438 Shares) $8.89
-----
COMPONENTS OF NET ASSETS AT MARCH 31, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $320,056,015
Undistributed net investment income 1,244,598
Accumulated net realized gain on investments 173,573
Net unrealized depreciation of investments
and foreign currencies (1,432,325)
------------
Total net assets $320,041,861
============
(degree)Principal amount shown is stated in the currency in which each foreign
bond is denominated.
AUD - Australian Dollar
CAD - Canadian Dollar
EUR - European Monetary Units
GBP - British Pound Sterling
JPY - Japanese Yen
NOK - Norwegian Kroner
PLZ - Polish Zloty
SEK - Swedish Krona
USD - U.S. Dollar
#Security exempt from registration under Rule 144A of the Securities Act of
1933. See Note 9 in "Notes to Financial Statements."
(infinity)Fully or partially pledged as collateral for financial futures
contracts.
^Zero coupon bond. The interest rate shown is the yield at the time of
purchase.
++Non-income producing security. Security is currently in default.
oVariable rate notes. The interest rate shown is the rate as of March 31, 2005.
*Step coupon bond. Indicates security that has a zero coupon that remains in
effect until a predetermined date at which time the stated interest rate
becomes effective.
@Illiquid Security. See Note 9 in "Notes to Financial Statements." At
March 31, 2005, 3 securities were deemed illiquid which represented 0.10% of
the Fund's net assets.
JSecurity is currently in default. The issue has missed the maturity date.
Bankruptcy proceedings are in the process to determine distribution of assets.
The date listed is the estimate of when the proceedings will be finalized.
zOf this amount, $(39,225,017) represents payable for securities purchased as
of March 31, 2005.
=Security is being fair valued in accordance with the Fund's fair valuation
policy.
See Note 1 in "Notes to Financial Statements." At March 31, 2005, 2 securities
were fair valued which represented 0.10% of the Fund's net assets.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
ARM - Adjustable Rate Mortgage
CBO - Collateralized Bond Obligation
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by the Financial Security Assurance
GNMA - Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
NIM - Net Interest Margin
PRN - Principal Only
REIT - Real Estate Investment Trust
S.F. - Single Family
SLMA - Student Loan Marketing Association
TBA - To be announced
XLCA - Insured by XL Capital Assurance
yr - Year
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
OPTIMUM FIXED INCOME FUND
Net asset value Class A (A) $8.89
Sales charge (4.50% of offering price) (B) 0.42
-----
Offering price $9.31
=====
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
42
STATEMENT OPTIMUM FIXED INCOME FUND
OF NET ASSETS (CONTINUED)
The following foreign exchange contracts and futures contracts were outstanding
at March 31, 2005:
FOREIGN EXCHANGE CONTRACTS(1)
Unrealized
In Exchange Settlement Appreciation
Contracts to Deliver For Date (Depreciation)
- -------------------- ------------ ---------- --------------
(3,561,777) European Monetary Units US$4,600,000 6/28/05 $(28,059)
(297,256,400) Japanese Yen US$2,800,000 6/28/05 6,450
--------
$(21,609)
========
FUTURES CONTRACTS(2)
Notional Unrealized
Contracts to Cost Notional Expiration Appreciation
to Buy (Sell) (Proceeds) Value Date (Depreciation)
- ------------- ---------- -------- ---------- --------------
18 U.S. Treasury
10 year Notes $ 1,948,644 $ 1,966,781 6/05 $18,137
(49) U.S. Treasury
5 year Notes (5,238,858) 5,247,594 6/05 (8,736)
(130) U.S. Treasury
2 year Notes (26,989,444) 26,895,781 6/05 93,663
50 U.S. Treasury
Long Bond 5,626,490 5,568,750 6/05 (57,740)
-------
$45,324
=======
The use of futures contracts involves elements of market risk and risks in
excess of the amount recognized in the financial statements. The notional amount
presented above represents the Fund's total exposure in such contracts, whereas
only the net unrealized appreciation (depreciation) is reflected in the Fund's
net assets.
(1) See Note 6 in "Notes to Financial Statements."
(2) See Note 7 in "Notes to Financial Statements."
See accompanying notes
43
STATEMENT OPTIMUM INTERNATIONAL FUND
OF NET ASSETS March 31, 2005
Number of Market
Shares Value (U.S.$)
COMMON STOCK - 95.90%(DELTA)
Australia - 5.29%
Amcor 121,385 $ 671,175
Coles Myer 94,736 688,434
Foster's Group 333,470 1,321,089
Macquarie Bank Limited 6,329 234,750
National Australia Bank 63,626 1,392,983
Telstra 200,638 788,658
Wesfarmers 1,693 51,957
----------
5,149,046
----------
Austria - 1.09%
Erste Bank der Oestereichischen
Sparkassen 20,326 1,063,166
----------
1,063,166
----------
Bahamas - 0.60%
+Kerzner International 9,583 586,767
----------
586,767
----------
Belgium - 1.63%
Electrabel 1,151 516,395
Fortis Group 37,636 1,073,814
----------
1,590,209
----------
Brazil - 0.89%
Natura Cosmeticos 10,308 280,285
Petroleo Brasiliero ADR 13,289 587,108
----------
867,393
----------
Canada - 3.42%
Canadian National Railway 18,722 1,185,291
+Research In Motion 9,163 700,236
Shoppers Drug Mart 14,101 470,577
Talisman Energy 28,528 976,330
----------
3,332,434
----------
Czech Republic - 0.31%
Cesky Telecom GDR 15,926 298,613
----------
298,613
----------
Finland - 0.75%
UPM-Kymmene 32,900 729,285
----------
729,285
----------
France - 10.25%
Compagnie de Saint-Gobain 15,299 932,108
+JC Decaux 26,391 720,476
Renault 7,656 683,796
Sanofi-Aventis ADR 16,517 1,392,785
Societe Generale 11,116 1,154,935
Thomson 34,018 917,229
Total 10,961 2,564,679
Vinci 11,197 1,614,031
----------
9,980,039
----------
Germany - 5.26%
Bayer 29,584 977,918
Bayerische Hypo-und Vereinsbank 54,829 1,339,761
Fresenius 7,022 814,502
+Lanxess 2,624 53,778
RWE 24,197 1,463,250
Schering 7,113 473,016
----------
5,122,225
----------
Number of Market
Shares Value (U.S.$)
COMMON STOCK (continued)
Hong Kong - 3.53%
CNOOC ADR 10,287 $ 562,802
Hang Lung Properties 309,745 448,765
Hong Kong Electric 168,000 747,437
Shangri-La Asia 670,246 979,660
Wharf Holdings 220,000 695,305
----------
3,433,969
----------
India - 1.43%
ICICI Bank ADR 26,500 549,080
#Reliance Industries 144A GDR 33,193 846,422
----------
1,395,502
----------
Ireland - 1.03%
Anglo Irish Bank 39,923 999,852
----------
999,852
----------
Italy - 3.18%
Banca Intesa 425,104 2,160,164
Raiunione Adriatica di Sicurta 39,896 938,667
----------
3,098,831
----------
Japan - 16.54%
Astellas Pharma 27,000 914,059
Canon 32,600 1,748,193
Eisai 13,200 448,104
Fanuc 9,099 569,403
Hitachi 101,000 627,335
KDDI 177 876,540
Keyence 3,000 694,987
Matsushita Electric Industrial 57,000 839,916
Millea Holdings 69 1,003,870
Mitsubishi Tokyo Financial 105 910,701
Promise 16,700 1,141,627
Sony 5,100 203,096
Sumitomo Realty & Development 72,000 868,902
Takeda Pharmaceutical 30,000 1,429,703
Takefuji 6,710 451,818
Toyota Motor 34,700 1,291,238
Trend Micro 10,500 451,434
West Japan Railway 132 537,971
Yamada Denki 20,900 1,095,434
----------
16,104,331
----------
Mexico - 1.80%
America Movil ADR 16,377 845,053
Grupo Televisa GDR 15,380 904,344
----------
1,749,397
----------
Netherlands - 3.87%
ING Groep 46,197 1,395,324
Reed Elsevier 63,064 950,751
Royal Dutch Petroleum 23,742 1,419,424
----------
3,765,499
----------
New Zealand - 0.89%
Telecom Corporation of New Zealand 201,120 867,228
----------
867,228
----------
Republic of Korea - 1.12%
POSCO ADR 12,800 631,808
Samsung Electronics 920 453,896
----------
1,085,704
----------
44
STATEMENT OPTIMUM INTERNATIONAL FUND
OF NET ASSETS (CONTINUED)
Number of Market
Shares Value (U.S.$)
COMMON STOCK (continued)
Singapore - 1.97%
CapitaLand 666,000 $ 947,971
Jardine Matheson 4,400 76,560
Oversea-Chinese Banking 107,000 894,367
-----------
1,918,898
-----------
South Africa - 1.69%
Sasol 70,926 1,649,104
-----------
1,649,104
-----------
Spain - 3.89%
Banco Santander Central Hispano 81,603 993,293
Iberdrola 44,151 1,154,961
Telefonica 93,889 1,635,759
-----------
3,784,013
-----------
Sweden - 1.20%
Ericsson Telefonaktiebolget ADR 16,662 469,868
ForeningsSparbanken 29,345 693,000
-----------
1,162,868
-----------
Switzerland - 4.14%
Lonza Group 11,270 689,539
+Swiss Life Holding 7,142 1,073,330
UBS 26,905 2,271,317
-----------
4,034,186
-----------
United Kingdom - 18.91%
ARM Holdings 355,893 711,220
Aviva 40,035 480,416
BG Group 151,129 1,176,656
BHP Billiton 34,731 466,978
BOC Group 29,238 563,023
Boots Group 102,761 1,210,791
BP 158,708 1,646,553
Brambles Industries 138,769 793,272
+British Energy Group 93,052 488,410
EMI Group 106,525 476,591
Enterprise Inns 117,109 1,699,637
GKN 108,893 522,168
GlaxoSmithKline 71,107 1,631,307
HBOS 82,529 1,287,443
Intercontinental Hotels Group 133,575 1,561,238
Lloyds TSB Group 131,589 1,187,401
Mitchells & Butlers 42,730 277,978
Reckitt Benckiser 17,881 568,358
Rio Tinto 32,531 1,051,230
Unilever 61,279 606,223
-----------
18,406,893
-----------
United States - 1.22%
+NTL 7,181 457,214
+Wynn Resorts 10,811 732,338
-----------
1,189,552
-----------
TOTAL COMMON STOCK (cost $85,757,630) 93,365,004
-----------
Principal Market
Amount Value (U.S.$)
REPURCHASE AGREEMENTS - 3.45%
With BNP Paribas 2.60% 4/1/05
(dated 3/31/05, to be repurchased
at $1,768,128, collateralized by
$67,000 U.S. Treasury Bills due
7/28/05, market value $66,572, and
$1,757,000 U.S. Treasury Bills due
8/18/05, market value $1,737,453) $1,768,000 $ 1,768,000
With UBS Warburg 2.50% 4/1/05
(dated 3/31/05, to be repurchased at
$1,585,110, collateralized by $198,000
U.S. Treasury Notes 6.75% due 5/15/05,
market value $204,413, $946,000
U.S. Treasury Notes 2.50% due 5/31/06,
market value $946,207, and $473,000
U.S. Treasury Notes 2.375%
due 8/15/06, market value $466,323) 1,585,000 1,585,000
-----------
TOTAL REPURCHASE AGREEMENTS
(cost $3,353,000) 3,353,000
-----------
TOTAL MARKET VALUE OF SECURITIES - 99.35%
(cost $89,110,630) 96,718,004
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.65% 634,016
-----------
NET ASSETS APPLICABLE TO 8,368,645
SHARES OUTSTANDING - 100.00% $97,352,020
===========
Net Asset Value - Optimum International Fund
Class A ($11,299,827 / 968,914 Shares) $11.66
------
Net Asset Value - Optimum International Fund
Class B ($3,386,569 / 293,631 Shares) $11.53
------
Net Asset Value - Optimum International Fund
Class C ($38,516,727/ 3,338,069 Shares) $11.54
------
Net Asset Value - Optimum International Fund
Institutional Class ($44,148,897/ 3,768,031 Shares) $11.72
------
COMPONENTS OF NET ASSETS AT MARCH 31, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $88,112,579
Accumulated net investment loss (105,091)
Accumulated net realized gain on investments 1,765,008
Net unrealized appreciation of investments
and foreign currencies 7,579,524
-----------
Total net assets $97,352,020
===========
+Non-income producing security for the year ended March 31, 2005.
(DELTA)Securities have been classified by country origin. Classification by type
of business has been presented in Note 11 in "Notes to Financial Statements."
#Securities exempt from registration under Rule 144A of the Securities Act of
1933.
See Note 9 in "Notes to Financial Statements."
SUMMARY OF ABBREVIATIONS:
ADR - American Depositary Receipts
GDR - Global Depositary Receipts
45
STATEMENT OPTIMUM INTERNATIONAL FUND
OF NET ASSETS (CONTINUED)
The following foreign currency exchange contracts were outstanding at March 31,
2005:
FOREIGN CURRENCY EXCHANGE CONTRACTS(1)
Unrealized
Contracts to In Exchange Settlement Appreciation
Receive (Deliver) For Date (Depreciation)
- ---------------------- ------------- ---------- ----------------
21,056 Australian Dollars US$ (16,250) 4/1/05 $ 10
(2,310,000) British Pounds US$ 4,333,730 4/29/05 (24,854)
98,171 British Pounds US$ (183,983) 4/1/05 1,535
52,270 British Pounds US$ (98,383) 4/4/05 384
121,240 European Monetary Units US$ (156,728) 4/1/05 436
16,430 European Monetary Units US$ (21,309) 4/4/05 (9)
3,860,680 Japanese Yen US$ (35,985) 4/4/05 27
(9,585) South African Rand US$ 1,538 4/1/05 4
(115,924) New Zealand Dollars US$ 82,364 4/1/05 (122)
--------
$(22,589)
========
(1) See Note 6 in "Notes to Financial Statements."
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
OPTIMUM INTERNATIONAL FUND
Net asset value Class A (A) $11.66
Sales charge (5.75% of offering price) (B) 0.71
------
Offering price $12.37
======
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $75,000 or more.
See accompanying notes
46
STATEMENT OPTIMUM LARGE CAP GROWTH FUND
OF NET ASSETS March 31, 2005
Number of Market
Shares Value (U.S.$)
COMMON STOCK - 95.77%
Basic Industry/Capital Goods - 8.72%
BHP Billiton (Australia) 95,400 $ 1,316,530
Caterpillar 31,933 2,919,954
Danaher 41,500 2,216,515
Deere & Co. 17,200 1,154,636
General Electric 298,410 10,760,664
Nucor 5,500 316,580
Rio Tinto (United Kingdom) 32,600 1,053,460
Tyco International 70,750 2,391,350
United Technologies 25,351 2,577,183
-----------
24,706,872
-----------
Business Services - 4.33%
+Accenture Limited Class A 81,200 1,960,979
+Affiliated Computer Services Class A 34,800 1,852,752
Automatic Data Processing 20,600 925,970
First Data 27,900 1,096,749
+Fiserv 27,100 1,078,580
News Corporation Limited Preferred ADR 104,300 1,764,756
+Research In Motion 9,100 695,422
Sysco 28,900 1,034,620
United Parcel Service Class B 10,390 755,769
Vodafone Group (United Kingdom) 301,800 802,735
Vodafone Group ADR 11,750 312,080
-----------
12,280,412
-----------
Consumer Cyclical - 0.57%
Compass Group (United Kingdom) 92,800 423,516
Inditex (Spain) 27,100 810,442
Kingfisher (United Kingdom) 70,200 383,389
-----------
1,617,347
-----------
Consumer Durables - 2.88%
Harley-Davidson 28,785 1,662,622
Harman International 16,047 1,419,518
KB HOME 14,175 1,664,995
Lennar 23,306 1,320,984
MDC Holdings 14,398 1,002,821
+Toll Brothers 13,697 1,080,008
-----------
8,150,948
-----------
Consumer Non-Durables - 13.23%
Best Buy 24,900 1,344,849
Coca-Cola 16,550 689,639
CVS 30,499 1,604,857
Family Dollar Stores 15,900 482,724
Gillette 18,600 938,928
Hermes International (France) 2,084 419,541
Home Depot 34,350 1,313,544
+Kohl's 27,900 1,440,477
Lowe's 70,747 4,038,946
NIKE 41,832 3,485,024
PepsiCo 22,627 1,199,910
PETsMART 24,100 692,875
Procter & Gamble 105,995 5,617,735
+Starbucks 34,605 1,787,694
Target 64,488 3,225,690
Wal-Mart de Mexico ADR 11,300 396,154
Wal-Mart de Mexico Series V (Mexico) 34,000 119,304
Wal-Mart Stores 63,900 3,202,029
Walgreen 60,895 2,704,956
Yum Brands 53,875 2,791,264
-----------
37,496,140
-----------
Number of Market
Shares Value (U.S.$)
COMMON STOCK (continued)
Consumer Services - 8.42%
+Apollo Group Class A 20,380 $ 1,509,343
Carnival 34,450 1,784,855
Cendant 73,000 1,499,420
+Comcast Special Class A 54,150 1,808,610
+eBay 16,140 601,376
EchoStar Communications Class A 25,800 754,650
Four Seasons Hotels 5,574 394,082
International Game Technology 47,750 1,273,015
+Liberty Media Class A 215,100 2,230,587
+MGM MIRAGE 33,767 2,391,379
+Pixar 6,742 657,682
Royal Caribbean Cruises 42,791 1,912,330
Scripps (E.W.) 13,520 659,100
+Time Warner 83,100 1,458,405
+Univision Communications Class A 33,450 926,231
Viacom Class B 26,300 916,029
+Wynn Resorts 45,462 3,079,595
-----------
23,856,689
-----------
Energy - 4.21%
Baker Hughes 35,200 1,566,048
ChevronTexaco 23,500 1,370,285
Exxon Mobil 95,748 5,706,581
Schlumberger 46,700 3,291,416
-----------
11,934,330
-----------
Finance - 16.94%
ACE Limited 14,500 598,415
American Express 29,700 1,525,689
American International Group 59,100 3,274,731
+AmeriTrade Holding 69,100 705,511
Anglo Irish Bank (Ireland) 31,100 778,182
Chicago Mercantile Exchange 9,536 1,850,270
Citigroup 149,937 6,738,168
Countrywide Financial 132,691 4,307,150
+Credit Suisse Group (Switzerland) 15,840 679,860
Genworth Financial 13,900 382,528
Goldman Sachs Group 33,601 3,695,774
Hartford Financial Services 20,950 1,436,332
Marsh & McLennan 15,400 468,468
Mellon Financial 26,500 756,310
Merrill Lynch 23,050 1,304,630
Northern Trust 18,500 803,640
Schwab (Charles) 69,200 727,292
SLM 110,943 5,529,399
St. Joe 19,690 1,325,137
State Street 50,660 2,214,855
UBS (Switzerland) 23,500 1,983,868
UBS 50,188 4,235,867
UCBH Holdings 39,435 1,573,457
US Bancorp 39,500 1,138,390
-----------
48,033,923
-----------
Healthcare - 17.83%
Aetna 5,430 406,979
+Amgen 30,980 1,803,346
+Biogen Idec 8,600 296,786
Biomet 18,550 673,365
+Elan ADR 23,500 76,140
+Forest Laboratories 6,490 239,806
+Genentech 133,063 7,532,696
+Gilead Sciences 32,960 1,179,968
47
STATEMENT OPTIMUM LARGE CAP GROWTH FUND
OF NET ASSETS (CONTINUED)
Number of Market
Shares Value (U.S.$)
COMMON STOCK (continued)
Healthcare (continued)
Johnson & Johnson 82,319 $ 5,528,544
Medtronic 49,383 2,516,064
+PacifiCare Health Systems 20,040 1,140,677
Pfizer 98,996 2,600,625
Quest Diagnostics 9,484 997,053
+St. Jude Medical 44,274 1,593,864
Stryker 16,300 727,143
Synthes (Switzerland) 10,760 1,196,155
Teva Pharmaceutical Industries ADR 24,200 750,200
UnitedHealth Group 136,565 13,025,569
+WellPoint 24,761 3,103,791
Wyeth 19,300 814,074
+Zimmer Holdings 55,988 4,356,426
------------
50,559,271
------------
Technology - 16.31%
Adobe Systems 9,550 641,474
America Movil ADR 13,600 701,760
Analog Devices 38,500 1,391,390
+ASML Holding (Netherlands) 48,900 825,960
+Cisco Systems 47,600 851,564
+Corning 139,100 1,548,183
+Crown Castle International 45,100 724,306
+Dell 169,883 6,526,904
+Electronic Arts 62,075 3,214,244
+EMC 55,300 681,296
General Dynamics 19,007 2,034,699
+Google Class A 2,300 415,173
Intel 96,300 2,237,049
+InterActiveCorp 29,700 661,419
+Intuit 15,850 693,755
+Juniper Networks 25,800 569,148
Lockheed Martin 35,045 2,139,848
Maxim Integrated Products 17,650 721,356
+Mercury Interactive 11,100 525,918
Microsoft 168,800 4,079,896
+Nextel Communications Class A 36,650 1,041,593
+Nokia Oyj (Finland) 51,300 795,342
+Oracle 95,900 1,196,832
QUALCOMM 144,488 5,295,484
+Red Hat 25,200 274,932
Samsung Electronics (Republic of Korea) 1,900 937,395
Sony ADR 11,117 444,902
Sprint 41,300 939,575
+Symantec 28,500 607,905
TELUS (Canada) 7,200 231,526
TELUS 13,100 403,611
Texas Instruments 18,100 461,369
Xilinx 32,400 947,052
+Yahoo 43,700 1,481,430
------------
46,244,290
------------
Transportation & Shipping - 1.56%
FedEx 47,043 4,419,690
------------
4,419,690
------------
Utilities - 0.77%
TXU 27,531 2,192,294
------------
2,192,294
------------
TOTAL COMMON STOCK (cost $258,945,104) 271,492,206
------------
Principal Market
Amount Value (U.S.$)
REPURCHASE AGREEMENTS - 4.10%
With BNP Paribas 2.60% 4/1/05
(dated 3/31/05, to be repurchased at
$6,131,443, collateralized by $233,000
U.S. Treasury Bills due 7/28/05,
market value $230,830 and $6,094,000
U.S. Treasury Bills due 8/18/05,
market value $6,024,344) $6,131,000 $ 6,131,000
With UBS Warburg 2.50% 4/1/05
(dated 3/31/05, to be repurchased at
$5,495,382, collateralized by $688,000
U.S. Treasury Notes 6.75% due 5/15/05,
market value $708,770, $3,281,000
U.S. Treasury Notes 2.50% due
5/31/06, market value $3,280,823, and
$1,640,000 U.S. Treasury Notes 2.375%
due 8/15/06, market value $1,616,902) 5,495,000 5,495,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $11,626,000) 11,626,000
------------
TOTAL MARKET VALUE OF SECURITIES - 99.87%
(cost $270,571,104) 283,118,206
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.13% 370,454
------------
NET ASSETS APPLICABLE TO 28,316,610
SHARES OUTSTANDING - 100.00% $283,488,660
============
Net Asset Value - Optimum Large Cap Growth Fund
Class A ($26,252,359 / 2,620,786 Shares) $10.02
------
Net Asset Value - Optimum Large Cap Growth Fund
Class B ($7,603,269 / 767,093 Shares) $ 9.91
------
Net Asset Value - Optimum Large Cap Growth Fund
Class C ($91,433,404 / 9,226,889 Shares) $ 9.91
------
Net Asset Value - Optimum Large Cap Growth Fund
Institutional Class ($158,199,628 / 15,701,842 Shares) $10.08
------
COMPONENTS OF NET ASSETS AT MARCH 31, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $271,887,157
Accumulated net investment loss (19,460)
Accumulated net realized loss on investments (926,858)
Net unrealized appreciation of investments
and foreign currencies 12,547,821
------------
Total net assets $283,488,660
============
+Non-income producing security for the year ended March 31, 2005.
SUMMARY OF ABBREVIATIONS:
ADR - American Depositary Receipts
48
STATEMENT OPTIMUM LARGE CAP GROWTH FUND
OF NET ASSETS (CONTINUED)
The following foreign currency exchange contracts were outstanding at March 31,
2005:
FOREIGN CURRENCY EXCHANGE CONTRACTS(1)
Unrealized
In Exchange Settlement Appreciation
Contracts to Receive (Deliver) For Date (Depreciation)
- ------------------------------------ ----------- ---------------- -------------
145,037 Australian Dollars US$(112,273) 4/1/05 $(268)
(33,867) British Pounds US$63,556 4/5/05 445
131,665 Swiss Francs US$(110,652) 4/5/05 (601)
-----
$(424)
=====
(1) See Note 6 in "Notes to Financial Statements."
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
OPTIMUM LARGE CAP GROWTH FUND
Net asset value Class A (A) $10.02
Sales charge (5.75% of offering price) (B) 0.61
------
Offering price $10.63
======
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $75,000 or more.
See accompanying notes
49
STATEMENT OPTIMUM LARGE CAP VALUE FUND
OF NET ASSETS March 31, 2005
Number of Market
Shares Value (U.S.$)
COMMON STOCK - 95.15%
Basic Materials - 7.69%
Air Products & Chemicals 28,020 $ 1,773,386
Bayer ADR 102,870 3,403,968
Bowater 8,530 321,325
Dow Chemical 66,820 3,330,977
duPont (E.I.) deNemours 36,760 1,883,582
International Paper 47,530 1,748,629
+Lanxess (Germany) 9,375 192,136
Masco 42,250 1,464,808
Monsanto 8,460 545,670
Newmont Mining 44,750 1,890,688
PPG Industries 33,170 2,372,318
Praxair 9,230 441,748
+Smurfit-Stone Container 30,220 467,503
+Syngenta (Switzerland) 11,540 1,204,736
-----------
21,041,474
-----------
Capital Goods - 6.82%
Cooper Industries 13,320 952,646
Deere & Co. 24,705 1,658,447
Emerson Electric 22,350 1,451,186
General Electric 84,680 3,053,561
Illinois Tool Works 14,870 1,331,311
Lockheed Martin 41,320 2,522,999
Northrop Grumman 64,560 3,484,949
Parker Hannifin 14,620 890,650
Raytheon 35,500 1,373,850
Tyco International 9,820 331,916
United Technologies 15,890 1,615,377
-----------
18,666,892
-----------
Communication Services - 4.26%
France Telecom ADR 40,190 1,200,475
Sprint 175,600 3,994,900
Vodafone Group (United Kingdom) 703,170 1,870,308
Verizon Communications 129,270 4,589,085
-----------
11,654,768
-----------
Consumer Discretionary - 3.57%
Gap 75,070 1,639,529
Hasbro 27,630 565,034
+Kohl's 36,990 1,909,793
Lowe's 12,240 698,782
Target 20,530 1,026,911
TJX 47,910 1,180,023
Wal-Mart Stores 55,150 2,763,566
-----------
9,783,638
-----------
Consumer Services - 0.84%
Marriott International Class A 10,720 716,739
McDonald's 50,430 1,570,390
-----------
2,287,129
-----------
Consumer Staples - 8.65%
Altria Group 87,430 5,717,047
Archer-Daniels-Midland 66,840 1,642,927
Cadbury Schweppes ADR 35,970 1,463,979
Coca-Cola 45,980 1,915,987
Diageo (United Kingdom) 46,390 653,985
Heinz (H.J.) 29,630 1,091,569
Kellogg 47,180 2,041,479
Kimberly-Clark 54,140 3,558,621
Kraft Foods Class A 30,670 1,013,644
Number of Market
Shares Value (U.S.$)
COMMON STOCK (continued)
Consumer Staples (continued)
Nestle (Switzerland) 2,718 $ 743,452
PepsiCo 16,030 850,071
Sara Lee 44,480 985,677
Unilever 29,090 1,990,338
-----------
23,668,776
-----------
Credit Cyclicals - 1.03%
Honda Motor ADR 112,930 2,827,767
-----------
2,827,767
-----------
Energy - 11.32%
BP ADR 73,940 4,613,856
ConocoPhillips 55,450 5,979,728
Devon Energy 16,220 774,505
EOG Resources 20,310 989,909
Exxon Mobil 86,870 5,177,452
GlobalSantaFe 10,230 378,919
Noble 22,970 1,291,144
Royal Dutch Petroleum 43,740 2,626,150
Schlumberger 33,960 2,393,501
Total ADR 22,840 2,677,533
Unocal 38,770 2,391,721
Valero Energy 23,230 1,702,062
-----------
30,996,480
-----------
Finance - 24.60%
Aegon 35,310 475,273
AFLAC 20,270 755,260
Allstate 55,060 2,976,544
American Express 27,370 1,405,997
Bank of America 158,606 6,994,524
Chubb 39,850 3,158,910
CIGNA 23,320 2,082,476
Citigroup 171,860 7,723,388
Fannie Mae 39,180 2,133,351
Franklin Resources 7,540 517,621
Freddie Mac 49,000 3,096,800
Goldman Sachs Group 38,870 4,275,311
Hartford Financial Services 44,590 3,057,090
J.P. Morgan Chase 138,901 4,805,982
Lehman Brothers Holdings 41,840 3,939,654
MBNA 27,670 679,299
Mellon Financial 31,760 906,430
Merrill Lynch 67,670 3,830,122
MetLife 76,940 3,008,354
PNC Financial Services Group 45,560 2,345,429
Prudential Financial 25,730 1,476,902
Schwab (Charles) 102,710 1,079,482
St. Paul Travelers 50,413 1,851,670
State Street 13,400 585,848
SunTrust Banks 41,310 2,977,212
Wells Fargo 20,400 1,219,920
-----------
67,358,849
-----------
Healthcare - 10.03%
Abbott Laboratories 34,620 1,613,984
Applera - Applied Biosystems 13,740 271,228
Bausch & Lomb 20,760 1,521,708
Baxter International 20,430 694,211
Bristol-Myers Squibb 145,620 3,707,484
+Chiron 30,170 1,057,760
GlaxoSmithKline ADR 24,700 1,134,224
50
STATEMENT OPTIMUM LARGE CAP VALUE FUND
OF NET ASSETS (CONTINUED) March 31, 2005
Number of Market
Shares Value (U.S.$)
COMMON STOCK (continued)
Healthcare (continued)
Johnson & Johnson 35,870 $ 2,409,029
Lilly (Eli) 34,840 1,815,164
Merck 51,610 1,670,616
Novartis (Switzerland) 9,740 454,273
Pfizer 11,480 301,580
Roche Holding (Switzerland) 8,260 885,099
Roche Holding ADR 49,620 2,668,549
Sanofi-Aventis ADR 37,450 1,585,633
Schering-Plough 138,890 2,520,854
Wyeth 74,350 3,136,083
-----------
27,447,479
-----------
Industrial - 0.71%
Finning International (Canada) 5,050 137,295
Ingersoll-Rand Class A 14,210 1,131,826
+Nalco Holding 13,030 245,355
Sandvik (Sweden) 10,340 429,883
-----------
1,944,359
-----------
Media - 5.13%
Clear Channel Communications 72,570 2,501,488
+Comcast Special Class A 8,180 273,212
Disney (Walt) 107,690 3,093,934
Reed Elsevier (United Kingdom) 124,610 1,291,617
+Time Warner 206,190 3,618,634
Tribune 23,600 940,932
Viacom Class B 66,920 2,330,824
-----------
14,050,641
-----------
Technology - 4.81%
+Accenture 93,370 2,254,886
Analog Devices 15,740 568,844
Equifax 33,370 1,024,125
+Fiserv 17,890 712,022
Hewlett-Packard 76,480 1,677,971
Intel 45,660 1,060,682
International Business Machines 13,380 1,222,664
+Micron Technology 75,690 782,635
Motorola 73,050 1,093,559
+NEXTEL Communications Class A 29,220 830,432
+Symantec 91,210 1,945,509
-----------
13,173,329
-----------
Transportation - 1.26%
Burlington Northern Santa Fe 25,960 1,400,023
CNF 5,140 240,501
Norfolk Southern 49,010 1,815,820
-----------
3,456,344
-----------
Utilities - 4.43%
American Electric Power 32,460 1,105,588
Cinergy 10,010 405,605
Consolidated Edison 17,250 727,605
Dominion Resources 36,790 2,738,279
Entergy 28,990 2,048,433
Exelon 33,440 1,534,562
FirstEnergy 22,370 938,422
FPL Group 6,610 265,392
PPL 12,940 698,631
Public Service Enterprise Group 10,460 568,919
Number of Market
Shares Value (U.S.$)
COMMON STOCK (continued)
Utilities (continued)
TXU 13,810 $ 1,099,690
------------
12,131,126
------------
TOTAL COMMON STOCK (cost $244,334,662) 260,489,051
------------
Principal
Amount
REPURCHASE AGREEMENTS - 6.56%
With BNP Paribas 2.60% 4/1/05
(dated 3/31/05, to be repurchased
at $9,470,684, collateralized by
$360,000 U.S. Treasury Bills due
7/28/05, market value $356,549, and
$9,412,000 U.S. Treasury Bills due
8/18/05, market value $9,305,451) $9,470,000 9,470,000
With UBS Warburg 2.50% 4/1/05
(dated 3/31/05, to be repurchased
at $8,488,589, collateralized by
$1,063,000 U.S. Treasury Notes
6.75% due 5/15/05, market value
$1,094,795, $5,067,000 U.S. Treasury
Notes 2.50% due 5/31/06, market
value $5,067,695, and $2,534,000
U.S. Treasury Notes 2.375% due
8/15/06, market value $2,497,533) 8,488,000 8,488,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $17,958,000) 17,958,000
------------
TOTAL MARKET VALUE OF SECURITIES - 101.71%
(cost $262,292,662) 278,447,051
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (1.71%) (4,687,457)
------------
NET ASSETS APPLICABLE TO 25,290,409
SHARES OUTSTANDING - 100.00% $273,759,594
============
Net Asset Value - Optimum Large Cap Value Fund
Class A ($27,523,571 / 2,538,343 Shares) $10.84
------
Net Asset Value - Optimum Large Cap Value Fund
Class B ($8,072,389 / 748,654 Shares) $10.78
------
Net Asset Value - Optimum Large Cap Value Fund
Class C ($97,822,564 / 9,075,154 Shares) $10.78
------
Net Asset Value - Optimum Large Cap Value Fund
Institutional Class ($140,341,070 / 12,928,258 Shares) $10.86
------
Components of Net Assets at March 31, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $253,439,236
Undistributed investment income 349,690
Accumulated net realized gain on investments 3,816,518
Net unrealized appreciation of investments
and foreign currencies 16,154,150
------------
Total net assets $273,759,594
============
+Non-income producing security for the year ended March 31, 2005.
51
STATEMENT OPTIMUM LARGE CAP VALUE FUND
OF NET ASSETS (CONTINUED)
SUMMARY OF ABBREVIATIONS:
ADR - American Depositary Receipts
The following foreign currency exchange contracts were outstanding at March 31,
2005:
FOREIGN CURRENCY EXCHANGE CONTRACTS(1)
Unrealized
In Exchange Settlement Appreciation
Contracts to Receive For Date (Depreciation)
- -------------------- ----------- ---------- ----------------
29,945 British Pounds US$(56,275) 4/4/05 $306
3,293 Canadian Dollars US$(2,722) 4/4/05 1
61,264 Swedish Krona US$(8,681) 4/4/05 (17)
77,270 Swiss Francs US$(64,499) 4/4/05 94
----
$384
====
(1) See Note 6 in "Notes to Financial Statements."
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
OPTIMUM LARGE CAP VALUE FUND
Net asset value Class A (A) $10.84
Sales charge (5.75% of offering price) (B) 0.66
------
Offering price $11.50
======
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $75,000 or more.
See accompanying notes
52
STATEMENT OPTIMUM SMALL CAP GROWTH FUND
OF NET ASSETS March 31, 2005
Number of Market
Shares Value
Common Stock - 94.37%
Basic Industry/Capital Goods - 11.49%
+A.S.V. 8,355 $ 331,234
+Ceradyne 26,024 582,157
+CUNO 3,400 174,726
Florida Rock Industries 5,000 294,100
+Genlyte Group 7,000 629,790
Kaydon 10,000 314,000
Mine Safety Appliances 8,000 309,920
+Newpark Resources 37,000 217,930
Nordson 10,000 368,200
+Nuco2 5,700 149,910
Pentair 10,000 390,000
+Petroleum Development 5,325 200,699
+Pride International 27,000 670,680
+Rogers 4,700 188,000
+Scotts 6,400 449,472
Spartech 15,000 297,750
+Trex 6,649 295,282
+TurboChef Technologies 27,443 408,626
+Waste Connections 16,300 566,425
-----------
6,838,901
-----------
Business Services - 8.77%
+AnswerThink 42,800 176,764
+aQuantive 76,899 851,271
CDW 5,500 311,740
+Ceridian 15,000 255,750
Chicago Bridge & Iron 9,500 418,285
+Desarrolladora Homex ADR 19,975 490,986
+Greenfield Online 26,046 511,804
MAXIMUS 12,000 401,880
+Pegasus Solutions 47,000 555,540
+Portfolio Recovery Associates 12,892 438,715
+SkillSoft ADR 75,000 276,000
+ValueClick 50,098 531,540
-----------
5,220,275
-----------
Consumer Durables - 0.16%
+DHB Industries 10,500 92,400
-----------
92,400
-----------
Consumer Non-Durables - 8.55%
+Aeropostale 15,450 505,988
+Brookstone 5,100 82,722
+Build-A-Bear Workshop 11,741 359,862
+Central European District 27,534 916,606
+Chico's FAS 14,352 405,588
Christopher & Banks 7,950 139,920
+Deckers Outdoor 11,396 407,293
+Hansen Natural 11,594 696,452
+PETCO Animal Supplies 21,300 784,052
+Sports Authority 12,000 330,000
+USANA Health Sciences 9,701 458,857
-----------
5,087,340
-----------
Consumer Services - 5.35%
+ASK Jeeves 6,359 178,561
Central Parking 45,000 773,100
+Coinstar 14,000 296,800
+Ctrip.com International ADR 11,517 435,918
+Entravision Communications 31,300 277,631
+HealthExtras 10,260 170,829
International Speedway Class A 12,500 678,125
Number of Market
Shares Value
COMMON STOCK (continued)
Consumer Services (continued)
+Spanish Broadcasting Systems Class A 36,400 $ 373,464
-----------
3,184,428
-----------
Energy - 6.13%
+Carrizo Oil & Gas 48,178 818,544
+FMC Technologies 11,000 364,980
+Pioneer Drilling 8,500 117,045
+Quicksilver Resources 10,600 516,538
+Veritas DGC 23,523 704,749
Western Gas Resources 17,800 613,210
+Whiting Petroleum 12,631 515,092
-----------
3,650,158
-----------
Financial - 4.66%
+AmeriCredit 22,500 527,400
+Euronet Worldwide 25,475 727,311
HCC Insurance Holdings 18,700 676,192
+Markel 500 172,605
Mercantile Bank 2,200 89,936
TCF Financial 8,400 228,060
+United America Indemnity Class A 7,000 131,880
+World Acceptance 8,500 216,920
-----------
2,770,304
-----------
Healthcare - 20.14%
+Able Laboratories 13,073 306,693
+American Healthways 12,764 421,467
+American Science & Engineering 3,636 162,566
+Anika Therapeutics 17,710 226,688
Arrow International 11,000 377,850
+Arthrocare 9,950 283,575
+Bone Care International 17,416 451,771
+Centene 11,782 353,342
+Connetics 13,138 332,260
+Coventry Health Care 4,495 306,289
+CTI Molecular Imaging 21,600 437,832
Diagnostic Products 14,000 676,200
+Edwards Lifesciences 6,000 259,320
+Hologic 9,136 291,210
+Inkine Pharmaceutical 26,075 80,833
+Kensey Nash 9,456 256,068
+Kos Pharmaceuticals 12,988 541,340
+Kyphon 14,978 376,996
+La Jolla Pharmaceutical 125,000 87,500
+Laserscope 11,148 353,838
LCA-Vision 41,698 1,388,544
+Lifecell 16,575 147,518
+Lincare Holdings 3,500 154,805
+Merge Technologies 20,535 360,389
NDCHealth 6,300 100,674
+Neurocrine Biosciences 12,600 479,556
+Par Pharmaceuticals 18,500 618,640
+Salix Pharmaceuticals 8,504 140,231
+SFBC International 20,932 737,626
+United Therapeutics 9,099 415,779
+Ventiv Health 25,870 595,010
+VNUS Medical Technologies 23,071 267,162
-----------
11,989,572
-----------
Technology/Communications - 7.48%
+3Com 70,000 249,200
+Alvarion 25,566 245,178
53
STATEMENT OPTIMUM SMALL CAP GROWTH FUND
OF NET ASSETS (CONTINUED)
Number of Market
Shares Value
COMMON STOCK (continued)
Technology/Communications (continued)
+American Tower Class A 13,400 $ 244,282
+Andrew 18,200 213,122
+AudioCodes 40,253 453,249
+Catapult Communications 5,560 118,706
+Crown Castle International 18,400 295,504
+Ixia 34,305 610,286
+RADVision 25,037 316,968
+RightNow Technologies 28,923 354,596
+SafeNet 16,010 469,253
+Symmetricom 25,000 277,250
+Tellabs 40,000 292,000
+Western Wireless Class A 8,200 311,272
-----------
4,450,866
-----------
Technology/Hardware - 13.31%
+Aviall 17,000 476,000
BEI Technologies 4,656 111,604
CTS 37,000 481,000
+Entegris 70,000 692,300
+ESCO Technologies 9,000 723,150
+IXYS 20,000 228,800
+M-Systems Flash Disk Pioneers 20,048 441,858
+PDF Solutions 11,263 157,682
+Pericom Semiconductor 42,300 362,511
+PowerDsine 41,995 429,609
+Rudolph Technologies 16,429 247,421
+SeaChange International 9,300 120,435
+Sigmatel 17,958 672,168
+Silicon Image 32,189 323,821
Symbol Technologies 40,000 579,600
+Synaptics 11,501 266,823
+Tessera Technologies 30,392 1,313,847
+UNOVA 14,000 289,100
-----------
7,917,729
-----------
Technology/Software - 6.37%
+Altiris 22,528 537,293
+Aspect Communications 50,000 520,500
+Audible 25,529 345,152
+Digital River 16,271 507,004
+E.Piphany 21,900 77,745
+eCollege.com 1,500 19,410
+Indus International 80,000 195,200
+Integrated Circuit Systems 9,800 187,376
+JDA Software Group 8,600 120,744
+MAPICS 29,400 374,262
+MTC Technologies 10,659 346,418
+Novell 50,400 300,384
+Ulticom 23,093 257,025
-----------
3,788,513
-----------
Utilities - 1.96%
Northeast Utilities 27,000 520,290
Oneok 21,000 647,220
-----------
1,167,510
-----------
TOTAL COMMON STOCK (cost $49,994,470) 56,157,996
-----------
Principal Market
Amount Value
REPURCHASE AGREEMENTS - 6.10%
With BNP Paribas 2.60% 4/1/05 (dated
3/31/05, to be repurchased at $1,913,138,
collateralized by $73,000 U.S. Treasury
Bills due 7/28/05, market value $72,033,
and $1,902,000 U.S. Treasury Bills due
8/18/05, market value $1,879,952) $1,913,000 $ 1,913,000
With UBS Warburg 2.50% 4/1/05
(dated 3/31/05, to be repurchased at
$1,715,119, collateralized by $215,000
U.S. Treasury Notes 6.75% due 5/15/05,
market value $221,178, $1,024,000
U.S. Treasury Notes 2.50% due 5/31/06,
market value $1,023,811, and $512,000
U.S. Treasury Notes 2.375%
due 8/15/06, market value $504,569) 1,715,000 1,715,000
-----------
TOTAL REPURCHASE AGREEMENTS
(cost $3,628,000) 3,628,000
-----------
TOTAL MARKET VALUE OF SECURITIES - 100.47%
(cost $53,622,470) 59,785,996
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (0.47%) (277,636)
-----------
NET ASSETS APPLICABLE TO 5,066,910
SHARES OUTSTANDING - 100.00% $59,508,360
===========
Net Asset Value - Optimum Small Cap Growth Fund
Class A ($6,132,889 / 521,851 Shares) $11.75
-----------
Net Asset Value - Optimum Small Cap Growth Fund
Class B ($1,665,497 / 143,117 Shares) $11.64
-----------
Net Asset Value - Optimum Small Cap Growth Fund
Class C ($19,882,914 / 1,708,460 Shares) $11.64
-----------
Net Asset Value - Optimum Small Cap Growth Fund
Institutional Class ($31,827,060 / 2,693,482 Shares) $11.82
-----------
COMPONENTS OF NET ASSETS AT MARCH 31, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $54,688,002
Accumulated net realized loss on investments (1,343,168)
Net unrealized appreciation of investments 6,163,526
-----------
Total net assets $59,508,360
===========
+Non-income producing security for the year
ended March 31, 2005.
ADR - American Depositary Receipt
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
OPTIMUM SMALL CAP GROWTH FUND
Net asset value Class A (A) $11.75
Sales charge (5.75% of offering price) (B) 0.72
-----------
Offering price $12.47
===========
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $75,000 or more.
See accompanying notes
54
STATEMENT OPTIMUM SMALL CAP VALUE FUND
OF NET ASSETS March 31, 2005
Number of Market
Shares Value
COMMON STOCK - 89.10%
Basic Industries - 15.24%
Agrium 38,500 $ 702,625
+Aleris International 27,000 673,650
+Algoma Steel 7,400 200,318
Commercial Metals 3,000 101,670
Cytec Industries 13,500 732,375
Engelhard 19,000 570,570
+FMC 7,500 400,875
Fuller (H.B.) 14,000 406,000
+GrafTech International 80,000 455,200
+Hercules 41,000 593,680
Longview Fibre 61,400 1,151,864
Lubrizol 20,100 816,864
+Material Sciences 27,000 363,150
+Pioneer Companies 6,100 138,470
Pope & Talbot 26,000 457,080
Smith (A.O.) 15,000 433,050
Sonoco Products 22,000 634,700
St. Joe 4,500 302,850
-----------
9,134,991
-----------
Business Services - 11.07%
Bowne & Company 51,200 770,048
Donnelley (R.R.) & Sons 20,000 632,400
Harland (John H.) 8,000 274,880
IKON Office Solutions 22,300 220,547
Kelly Services 35,100 1,010,529
+PHH 57,900 1,266,273
+ProQuest 10,000 361,500
+R.H. Donnelley 5,100 296,259
+Spherion 89,600 671,104
+Valassis Communications 32,300 1,129,208
-----------
6,632,748
-----------
Capital Spending - 7.92%
Acuity Brands 22,000 594,000
+Allied Waste Industries 45,000 328,950
Ametek 10,000 402,500
Crane 15,500 446,245
Federal Signal 32,000 485,440
+Flowserve 18,000 465,660
Harsco 4,000 238,440
Kennametal 19,000 902,310
+Navistar International 16,000 582,400
+Team 15,000 300,000
-----------
4,745,945
-----------
Conglomerates - 2.41%
Honeywell International 19,000 706,990
SPX 17,000 735,760
-----------
1,442,750
-----------
Consumer Cyclical - 9.08%
Beazer Homes USA 11,500 573,390
ElkCorp 8,600 330,756
Furniture Brands International 56,100 1,223,541
+Hayes Lemmerz International 32,000 166,400
M/I Homes 8,300 406,119
Newell Rubbermaid 35,000 767,900
Stanley Works 7,000 316,890
+WCI Communities 41,100 1,236,288
Number of Market
Shares Value
Common Stock (continued)
Consumer Cyclical (continued)
+William Lyon Homes 5,500 $ 421,850
-----------
5,443,134
-----------
Consumer Services - 11.12%
+BJ's Wholesale Club 10,200 316,812
Callaway Golf 23,800 304,640
Delta Apparel 15,000 444,000
Foot Locker 39,000 1,142,700
+Group 1 Automotive 15,400 405,020
Jones Apparel Group 28,000 937,720
+Lodgian 41,800 428,450
+Magna Entertainment Class A 58,300 357,962
+Papa John's International 600 20,832
+Pathmark Stores 55,000 347,050
Reader's Digest Association Class A 10,000 173,100
Reebok International 3,100 137,330
+Sunterra 1,300 19,604
+Tommy Hilfiger 20,900 244,530
+Warnaco Group Class A 57,600 1,384,704
-----------
6,664,454
-----------
Consumer Staples - 0.96%
+Del Monte Foods 53,100 576,135
-----------
576,135
-----------
Energy - 4.16%
Ashland 5,800 391,326
+Forest Oil 9,000 364,500
Foundation Coal Holdings 24,700 580,697
+Giant Industries 13,100 336,670
+Southern Union 32,685 820,720
-----------
2,493,913
-----------
Financial Services - 3.34%
+Allmerica Financial 20,100 722,595
+Americredit 8,300 194,552
+Conseco 13,400 273,628
+KMG America 31,000 302,250
+United America Indemnity 26,864 506,118
-----------
1,999,143
-----------
Healthcare - 1.21%
+Health Net Class A 2,900 94,859
+STERIS 25,000 631,250
-----------
726,109
-----------
Real Estate - 6.44%
Aames Investment 50,500 414,100
American Financial Realty Trust 32,000 468,160
Brookfield Homes 6,300 265,923
Capital Lease Funding 12,000 132,600
Fieldstone Investment 38,900 564,828
Government Properties Trust 2,700 26,892
+Jameson Inns 115,800 170,226
+La Quinta 29,300 249,050
MI Developments Class A 44,300 1,406,525
MortgageIT Holdings 10,200 162,690
-----------
3,860,994
-----------
55
STATEMENT OPTIMUM SMALL CAP VALUE FUND
OF NET ASSETS (CONTINUED)
Number of Market
Shares Value
COMMON STOCK (continued)
Technology - 12.25%
+BearingPoint 184,100 $ 1,614,557
+CommScope 28,000 418,880
+Concord Communications 28,300 286,396
Imation 20,000 695,000
+International Rectifier 16,000 728,000
+Lawson Software 44,900 264,910
+Mettler-Toledo International 3,400 161,500
+Micromuse 13,100 59,343
Reynolds & Reynolds Class A 19,000 514,140
Symbol Technologies 23,000 333,270
+Thermo Electron 41,000 1,036,890
+Unisys 45,000 317,700
+UNOVA 20,000 413,000
+Vishay Intertechnology 40,000 497,200
-----------
7,340,786
-----------
Transportation - 3.12%
+AirTran Holdings 37,300 337,565
Alexander & Baldwin 14,200 585,040
+Central Freight Lines 28,000 99,680
Overnite 8,500 271,915
Overseas Shipholding Group 9,100 572,481
-----------
1,866,681
-----------
Utilities - 0.78%
Alliant Energy 17,400 465,972
-----------
465,972
-----------
TOTAL COMMON STOCK (cost $48,419,901) 53,393,755
-----------
Principal
Amount
Repurchase Agreements - 11.11%
With BNP Paribas 2.60% 4/1/05
(dated 3/31/05, to be repurchased
at $3,511,254, collateralized by
$133,000 U.S. Treasury Bills due
7/28/05, market value $132,172, and
$3,489,000 U.S. Treasury Bills due
8/18/05, market value $3,449,515) $3,511,000 3,511,000
With UBS Warburg 2.50% 4/1/05
(dated 3/31/05, to be repurchased
at $3,146,218, collateralized by
$394,000 U.S. Treasury Notes 6.75%
due 5/15/05, market value $405,839,
$1,878,000 U.S. Treasury Notes 2.50%
due 5/31/06, market value $1,878,586,
and $939,000 U.S. Treasury Notes 2.375%
due 8/15/06, market value $925,831) 3,146,000 3,146,000
-----------
TOTAL REPURCHASE AGREEMENTS
(cost $6,657,000) 6,657,000
-----------
TOTAL MARKET VALUE OF SECURITIES - 100.21%
(cost $55,076,901) 60,050,755
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (0.21%) (125,343)
-----------
NET ASSETS APPLICABLE TO 4,840,558
SHARES OUTSTANDING - 100.00% $59,925,412
===========
Net Asset Value - Optimum Small Cap Value Fund
Class A ($7,297,489 / 588,235 Shares) $12.41
-----------
Net Asset Value - Optimum Small Cap Value Fund
Class B ($1,858,527 / 151,374 Shares) $12.28
-----------
Net Asset Value - Optimum Small Cap Value Fund
Class C ($23,869,388 / 1,944,490 Shares) $12.28
-----------
Net Asset Value - Optimum Small Cap Value Fund
Institutional Class ($26,900,008 / 2,156,459 Shares) $12.47
-----------
COMPONENTS OF NET ASSETS AT MARCH 31, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $52,748,507
Accumulated net realized gain on investments 2,203,051
Net unrealized appreciation of investments 4,973,854
-----------
Total net assets $59,925,412
===========
+Non-income producing security for the year ended March 31, 2005.
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
OPTIMUM SMALL CAP VALUE FUND
Net asset value Class A (A) $12.41
Sales charge (5.75% of offering price) (B) 0.76
-----------
Offering price $13.17
===========
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $75,000 or more.
See accompanying notes
56
STATEMENTS OPTIMUM FUND TRUST
OF ASSETS AND LIABILITIES March 31, 2005
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
ASSETS:
Investments at market $344,074,375 $96,718,004 $283,118,206 $278,447,051 $59,785,996 $60,050,755
Cash -- 15,144 469,869 66,637 7,964 6,326
Foreign currencies 13,550 340,219 15,061 -- -- --
Subscriptions receivable 2,208,287 668,489 2,210,869 2,100,731 439,979 469,396
Receivables for securities sold 11,375,086 316,948 613,719 833,355 75,109 148,594
Dividends receivable 141 326,667 206,432 441,666 9,040 27,057
Interest receivable 2,782,530 238 824 1,273 257 472
------------ ----------- ----------- ------------ ----------- -----------
Total assets 360,453,969 98,385,709 286,634,980 281,890,713 60,318,345 60,702,600
------------ ----------- ----------- ------------ ----------- -----------
LIABILITIES:
Payables for securities purchased 39,225,017 600,955 2,375,927 7,409,513 584,358 535,859
Management fees payable 98,643 90,482 121,114 86,016 38,347 56,077
Other accrued expenses 653,608 254,404 515,663 508,802 157,136 158,228
Other liabilities 434,840 87,848 133,616 126,788 30,144 27,024
------------ ----------- ----------- ------------ ----------- -----------
Total liabilities 40,412,108 1,033,689 3,146,320 8,131,119 809,985 777,188
------------ ----------- ----------- ------------ ----------- -----------
TOTAL NET ASSETS $320,041,861 $97,352,020 $283,488,660 $273,759,594 $59,508,360 $59,925,412
============ =========== ============ ============ =========== ===========
Investments at cost $345,524,352 $89,110,630 $270,571,104 $262,292,662 $53,622,470 $55,076,901
Foreign currencies at cost $13,782 $340,917 $13,581 $-- $-- $--
See accompanying notes
57
STATEMENTS OPTIMUM FUND TRUST
OF OPERATIONS Year Ended March 31, 2005
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
INVESTMENT INCOME:
Dividends $ 17,837 $ 1,480,171 $ 1,921,905 $ 3,349,556 $ 96,119 $ 376,751
Interest 8,196,177 59,968 220,534 155,157 45,523 76,855
Foreign tax withheld -- (137,222) (12,848) (34,732) (305) (1,939)
------------ ----------- ----------- ----------- ----------- -----------
8,214,014 1,402,917 2,129,591 3,469,981 141,337 451,667
------------ ----------- ----------- ----------- ----------- -----------
EXPENSES:
Management fees 1,191,874 493,006 1,308,224 1,196,220 401,720 374,922
Distribution expenses--Class A 73,011 25,168 58,456 59,392 13,259 14,825
Distribution expenses--Class B 70,098 26,565 60,643 62,236 13,170 14,150
Distribution expenses--Class C 852,837 247,489 604,619 627,522 127,769 152,405
Accounting and administration expenses 738,365 287,111 648,002 607,086 178,818 175,965
Dividend disbursing and transfer agent
fees and expenses 334,765 164,448 298,061 291,235 161,315 156,488
Professional fees 43,305 24,392 38,595 37,487 21,639 21,807
Trustees' fees 47,207 16,957 44,022 42,303 11,733 11,653
Reports and statements to shareholders 37,447 15,275 33,473 28,355 20,473 5,863
Custodian fees 44,816 52,232 20,470 22,504 4,129 3,814
Registration fees 71,506 50,780 83,777 66,153 48,203 47,737
Pricing fees 34,020 12,054 3,103 2,236 1,077 955
Other 5,451 9,385 10,214 11,223 8,662 8,985
------------ ----------- ----------- ----------- ----------- -----------
3,544,702 1,424,862 3,211,659 3,053,952 1,011,967 989,569
Less expenses absorbed or waived (878,428) (185,188) (328,875) (476,448) (325,879) (312,932)
Less expenses paid indirectly -- -- -- -- (185) (334)
------------ ----------- ----------- ----------- ----------- -----------
Total expenses 2,666,274 1,239,674 2,882,784 2,577,504 685,903 676,303
------------ ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) 5,547,740 163,243 (753,193) 892,477 (544,566) (224,636)
------------ ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investments 1,073,318 1,929,662 (554,906) 5,108,525 (1,343,168) 3,066,721
Futures contracts 252,875 -- -- -- -- --
Options written 11,400 -- -- -- -- --
Swap agreements 7,777 -- -- -- -- --
Foreign currencies 472,197 (226,024) (40,925) (2,651) -- --
------------ ----------- ----------- ------------ ----------- -----------
Net realized gain (loss) 1,817,567 1,703,638 (595,831) 5,105,874 (1,343,168) 3,066,721
Net change in unrealized
appreciation/depreciation of
investments and foreign currencies (2,333,989) 5,225,103 9,674,113 13,825,365 3,980,308 2,823,528
------------ ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (516,422) 6,928,741 9,078,282 18,931,239 2,637,140 5,890,249
------------ ----------- ----------- ------------ ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $5,031,318 $7,091,984 $8,325,089 $19,823,716 $2,092,574 $5,665,613
============ =========== =========== =========== ========== ===========
See accompanying notes
58
STATEMENTS OPTIMUM FUND TRUST
OF CHANGES IN NET ASSETS
Optimum Fixed Income Fund Optimum International Fund
Year Ended 8/1/03* Year Ended 8/1/03*
3/31/05 to 3/31/04 3/31/05 to 3/31/04
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 5,547,740 $ 658,759 $ 163,243 $ 16,167
Net realized gain on investments and foreign currencies 1,817,567 730,669 1,703,638 326,303
Net change in unrealized appreciation/depreciation of
investments and foreign currencies (2,333,989) 901,664 5,225,103 2,354,421
------------ ----------- ----------- -----------
Net increase in net assets from operations 5,031,318 2,291,092 7,091,984 2,696,891
------------ ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (607,462) (92,235) -- --
Class B (149,152) (17,545) -- --
Class C (1,862,660) (213,683) -- --
Institutional Class (2,689,405) (161,149) (10,068) --
Net realized gain on investments:
Class A (169,911) (7,152) (70,371) (1,261)
Class B (60,676) (2,626) (28,750) (447)
Class C (711,907) (31,584) (247,759) (4,492)
Institutional Class (552,891) (6,526) (182,693) (3,593)
------------ ----------- ----------- -----------
(6,804,064) (532,500) (539,641) (9,793)
------------ ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 23,242,345 11,904,499 7,124,904 3,816,194
Class B 4,359,127 4,259,160 1,644,652 1,535,336
Class C 78,034,924 51,716,890 23,236,383 13,438,723
Institutional Class 138,332,965 26,419,491 37,265,900 10,175,742
Net asset value of shares issued upon reinvestment
of dividends and distributions:
Class A 752,910 93,236 69,669 1,226
Class B 198,379 18,533 28,262 437
Class C 2,511,297 237,463 242,906 4,422
Institutional Class 3,143,227 164,341 189,814 3,584
------------ ----------- ----------- -----------
250,575,174 94,813,613 69,802,490 28,975,664
------------ ----------- ----------- -----------
Cost of shares repurchased:
Class A (2,602,853) (167,871) (777,862) (59,769)
Class B (437,867) (69,467) (192,042) (15,905)
Class C (7,226,122) (376,974) (1,907,718) (131,871)
Institutional Class (9,763,291) (4,688,327) (5,473,673) (2,106,735)
------------ ----------- ----------- -----------
(20,030,133) (5,302,639) (8,351,295) (2,314,280)
------------ ----------- ----------- -----------
Increase in net assets derived from capital
share transactions 230,545,041 89,510,974 61,451,195 26,661,384
------------ ----------- ----------- -----------
NET INCREASE IN NET ASSETS 228,772,295 91,269,566 68,003,538 29,348,482
NET ASSETS:
Beginning of period 91,269,566 -- 29,348,482 --
------------ ----------- ----------- -----------
End of period $320,041,861 $91,269,566 $97,352,020 $29,348,482
============ =========== =========== ===========
Undistributed net investment income (loss) $ 1,244,598 $ 206,252 $ (105,091) $ (32,242)
============ =========== =========== ===========
*Commencement of operations
See accompanying notes
59
STATEMENTS OPTIMUM FUND TRUST
OF CHANGES IN NET ASSETS (CONTINUED)
Optimum Large Cap Growth Fund Optimum Large Cap Value Fund
Year Ended 8/1/03* Year Ended 8/1/03*
3/31/05 to 3/31/04 3/31/05 to 3/31/04
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $ (753,193) $ (164,714) $ 892,477 $ 59,410
Net realized gain (loss) on investments and
foreign currencies (595,831) (371,406) 5,105,874 692,496
Net change in unrealized appreciation/depreciation of
investments and foreign currencies 9,674,113 2,873,708 13,825,365 2,328,785
------------ ------------ ------------ ------------
Net increase in net assets from operations 8,325,089 2,337,588 19,823,716 3,080,691
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A -- -- (56,275) (11,327)
Class B -- -- -- --
Class C -- -- -- --
Institutional Class -- -- (511,745) (22,188)
Net realized gain on investments:
Class A -- -- (217,926) (7,880)
Class B -- -- (82,157) (2,817)
Class C -- -- (809,638) (31,589)
Institutional Class -- -- (820,065) (10,442)
------------ ------------ ------------ ------------
-- -- (2,497,806) (86,243)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 17,733,530 9,152,213 17,926,107 8,815,092
Class B 4,016,377 3,510,552 4,013,859 3,497,348
Class C 57,805,803 34,317,631 58,790,101 34,313,218
Institutional Class 140,103,883 25,753,313 119,998,337 22,144,571
Net asset value of shares issued upon
reinvestment of dividends and distributions:
Class A -- -- 270,439 18,557
Class B -- -- 80,872 2,710
Class C -- -- 796,609 31,097
Institutional Class -- -- 1,311,059 32,267
------------ ------------ ------------ ------------
219,659,593 72,733,709 203,187,383 68,854,860
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A (1,646,757) (156,597) (1,659,252) (169,358)
Class B (288,388) (43,727) (306,639) (36,814)
Class C (4,197,896) (331,681) (4,231,491) (240,089)
Institutional Class (7,968,074) (4,934,199) (6,974,417) (4,984,947)
------------ ------------ ------------ ------------
(14,101,115) (5,466,204) (13,171,799) (5,431,208)
------------ ------------ ------------ ------------
Increase in net assets derived from capital
share transactions 205,558,478 67,267,505 190,015,584 63,423,652
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS 213,883,567 69,605,093 207,341,494 66,418,100
NET ASSETS:
Beginning of period 69,605,093 -- 66,418,100 --
------------ ------------ ------------ ------------
End of period $283,488,660 $ 69,605,093 $273,759,594 $66,418,100
============ ============ ============ ============
Undistributed net investment income (loss) $ (19,460) $ (10,943) $ 349,690 $ 27,884
============ ============ ============ ============
*Commencement of operations
See accompanying notes
60
STATEMENTS OPTIMUM FUND TRUST
OF CHANGES IN NET ASSETS (CONTINUED)
Optimum Small Cap Growth Fund Optimum Small Cap Value Fund
Year Ended 8/1/03* Year Ended 8/1/03*
3/31/05 to 3/31/04 3/31/05 to 3/31/04
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss $ (544,566) $ (100,258) $ (224,636) $ (51,336)
Net realized gain (loss) on investments (1,343,168) 103,701 3,066,721 506,512
Net change in unrealized appreciation/depreciation
of investments 3,980,308 2,183,218 2,823,528 2,150,326
------------ ----------- ----------- ----------
Net increase in net assets from operations 2,092,574 2,186,661 5,665,613 2,605,502
------------ ----------- ----------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments:
Class A (479) -- (122,848) (6,141)
Class B (198) -- (42,176) (2,109)
Class C (1,742) -- (445,185) (26,029)
Institutional Class (2,549) -- (415,985) (33,737)
------------ ----------- ----------- ----------
(4,968) -- (1,026,194) (68,016)
------------ ----------- ----------- ----------
Capital Share Transactions:
Proceeds from shares sold:
Class A 4,186,170 1,994,189 5,061,730 1,945,722
Class B 858,140 757,253 881,752 755,420
Class C 12,540,122 7,071,156 13,687,307 8,246,621
Institutional Class 29,515,787 8,802,193 22,067,117 7,830,304
Net asset value of shares issued upon reinvestment
of dividends and distributions:
Class A 472 -- 120,917 5,887
Class B 195 -- 41,348 2,014
Class C 1,708 -- 437,878 25,639
Institutional Class 2,524 -- 409,196 33,657
------------ ----------- ----------- ----------
47,105,118 18,624,791 42,707,245 18,845,264
------------ ----------- ----------- ----------
Cost of shares repurchased:
Class A (404,618) (37,916) (578,700) (36,465)
Class B (61,613) (11,723) (72,026) (7,267)
Class C (886,607) (52,150) (1,223,649) (59,197)
Institutional Class (8,971,226) (69,963) (6,771,964) (54,734)
------------ ----------- ----------- ----------
(10,324,064) (171,752) (8,646,339) (157,663)
------------ ----------- ----------- ----------
Increase in net assets derived from capital
share transactions 36,781,054 18,453,039 34,060,906 18,687,601
------------ ----------- ----------- ----------
NET INCREASE IN NET ASSETS 38,868,660 20,639,700 38,700,325 21,225,087
NET ASSETS:
Beginning of period 20,639,700 -- 21,225,087 --
------------ ----------- ----------- ----------
End of period $ 59,508,360 $20,639,700 $59,925,412 $21,225,087
============ =========== =========== ===========
Undistributed net investment income (loss) $ -- $ -- $ -- $ --
============ =========== =========== ===========
*Commencement of operations
See accompanying notes
61
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
OPTIMUM FIXED INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Institutional Class
Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1)
Ended to Ended to Ended to Ended to
3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04
NET ASSET VALUE, BEGINNING OF PERIOD $8.980 $8.500 $8.990 $8.500 $8.990 $8.500 $8.970 $8.500
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(2) 0.279 0.171 0.221 0.133 0.221 0.133 0.310 0.192
Net realized and unrealized gain (loss) on
investments and foreign currencies (0.061) 0.417 (0.055) 0.420 (0.055) 0.420 (0.050) 0.407
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.218 0.588 0.166 0.553 0.166 0.553 0.260 0.599
------ ------ ------ ------ ------ ------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.228) (0.098) (0.176) (0.053) (0.176) (0.053) (0.260) (0.119)
Net realized gain on investments (0.080) (0.010) (0.080) (0.010) (0.080) (0.010) (0.080) (0.010)
------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions (0.308) (0.108) (0.256) (0.063) (0.256) (0.063) (0.340) (0.129)
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $8.890 $8.980 $8.900 $8.990 $8.900 $8.990 $8.890 $8.970
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN(3) 2.59% 6.82% 1.88% 6.52% 1.88% 6.52% 2.96% 7.07%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $33,251 $12,049 $8,405 $4,296 $125,301 $52,648 $153,085 $22,276
Ratio of expenses to average net assets 1.24% 1.20% 1.89% 1.85% 1.89% 1.85% 0.89% 0.85%
Ratio of expenses to average net assets
prior to expense limitation 1.70% 2.25% 2.35% 2.90% 2.35% 2.90% 1.35% 1.90%
Ratio of net investment income to average
net assets 3.12% 2.88% 2.47% 2.23% 2.47% 2.23% 3.47% 3.23%
Ratio of net investment income to average
net assets prior to expense limitation 2.66% 1.83% 2.01% 1.18% 2.01% 1.18% 3.01% 2.18%
Portfolio turnover 352% 383% 352% 383% 352% 383% 352% 383%
(1) Date of commencement of operations; ratios and portfolio turnover have been
annualized and total return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
62
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
OPTIMUM INTERNATIONAL FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Institutional Class
Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1)
Ended to Ended to Ended to Ended to
3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04
NET ASSET VALUE, BEGINNING OF PERIOD $10.670 $ 8.500 $10.620 $ 8.500 $10.620 $ 8.500 $10.690 $ 8.500
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)(2) 0.050 0.021 (0.020) (0.023) (0.020) (0.023) 0.089 0.045
Net realized and unrealized gain on
investments and foreign currencies 1.069 2.155 1.059 2.149 1.069 2.149 1.079 2.151
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 1.119 2.176 1.039 2.126 1.049 2.126 1.168 2.196
------- ------- ------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income -- -- -- -- -- -- (0.009) --
Net realized gain on investments (0.129) (0.006) (0.129) (0.006) (0.129) (0.006) (0.129) (0.006)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distributions (0.129) (0.006) (0.129) (0.006) (0.129) (0.006) (0.138) (0.006)
------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.660 $10.670 $11.530 $10.620 $11.540 $10.620 $11.720 $10.690
======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 10.62% 25.61% 9.91% 25.02% 10.01% 25.02% 11.08% 25.84%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $11,300 $4,083 $3,386 $1,624 $38,517 $14,339 $44,149 $9,302
Ratio of expenses to average net assets 1.98% 1.92% 2.63% 2.57% 2.63% 2.57% 1.63% 1.57%
Ratio of expenses to average net assets
prior to expense limitation 2.30% 3.82% 2.95% 4.47% 2.95% 4.47% 1.95% 3.47%
Ratio of net investment income (loss)
to average net assets 0.45% 0.30% (0.20%) (0.35%) (0.20%) (0.35%) 0.80% 0.65%
Ratio of net investment income (loss) to
average net assets prior to expense
limitation 0.13% (1.60%) (0.52%) (2.25%) (0.52%) (2.25%) 0.48% (1.25%)
Portfolio turnover 82% 49% 82% 49% 82% 49% 82% 49%
(1) Date of commencement of operations; ratios and portfolio turnover have been
annualized and total return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
63
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
OPTIMUM LARGE CAP GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Institutional Class
Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1)
Ended to Ended to Ended to Ended to
3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.570 $8.500 $9.530 $8.500 $9.530 $8.500 $ 9.590 $8.500
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(2) (0.036) (0.037) (0.099) (0.077) (0.099) (0.077) (0.002) (0.015)
Net realized and unrealized gain on
investments and foreign currencies 0.486 1.107 0.479 1.107 0.479 1.107 0.492 1.105
------- ------ ------ ------ ------ ------ ------- ------
Total from investment operations 0.450 1.070 0.380 1.030 0.380 1.030 0.490 1.090
------- ------ ------ ------ ------ ------ ------- ------
NET ASSET VALUE, END OF PERIOD $10.020 $9.570 $9.910 $9.530 $9.910 $9.530 $10.080 $9.590
======= ====== ====== ====== ====== ====== ======= ======
TOTAL RETURN(3) 4.70% 12.59% 3.99% 12.12% 3.99% 12.12% 5.11% 12.82%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $26,252 $9,337 $7,603 $3,569 $91,434 $35,143 $158,200 $21,557
Ratio of expenses to average net assets 1.67% 1.61% 2.32% 2.26% 2.32% 2.26% 1.32% 1.26%
Ratio of expenses to average net assets
prior to expense limitation 1.87% 2.51% 2.52% 3.16% 2.52% 3.16% 1.52% 2.16%
Ratio of net investment loss to average
net assets (0.37%) (0.61%) (1.02%) (1.26%) (1.02%) (1.26%) (0.02%) (0.26%)
Ratio of net investment loss to average
net assets prior to expense limitation (0.57%) (1.51%) (1.22%) (2.16%) (1.22%) (2.16%) (0.22%) (1.16%)
Portfolio turnover 37% 51% 37% 51% 37% 51% 37% 51%
(1) Date of commencement of operations; ratios and portfolio turnover have been
annualized and total return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
64
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
OPTIMUM LARGE CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Institutional Class
Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1)
Ended to Ended to Ended to Ended to
3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.830 $8.500 $ 9.810 $8.500 $ 9.810 $8.500 $ 9.840 $8.500
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)(2) 0.074 0.038 0.008 (0.003) 0.008 (0.003) 0.110 0.060
Net realized and unrealized gain on
investments and foreign currencies 1.100 1.331 1.098 1.329 1.098 1.329 1.110 1.330
------- ------ ------- ------ ------- ------ ------- ------
Total from investment operations 1.174 1.369 1.106 1.326 1.106 1.326 1.220 1.390
------- ------ ------- ------ ------- ------ ------- ------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.028) (0.023) -- -- -- -- (0.064) (0.034)
Net realized gain on investments (0.136) (0.016) (0.136) (0.016) (0.136) (0.016) (0.136) (0.016)
------- ------ ------- ------ ------- ------ ------- ------
Total dividends and distributions (0.164) (0.039) (0.136) (0.016) (0.136) (0.016) (0.200) (0.050)
------- ------ ------- ------ ------- ------ ------- ------
NET ASSET VALUE, END OF PERIOD $10.840 $9.830 $10.780 $9.810 $10.780 $9.810 $10.860 $9.840
======= ====== ======= ====== ======= ====== ======= ======
TOTAL RETURN(3) 12.04% 16.12% 11.36% 15.61% 11.36% 15.61% 12.41% 16.38%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $27,524 $9,115 $8,072 $3,609 $97,823 $35,732 $140,341 $17,962
Ratio of expenses to average net assets 1.53% 1.50% 2.18% 2.15% 2.18% 2.15% 1.18% 1.15%
Ratio of expenses to average net assets
prior to expense limitation 1.84% 2.52% 2.49% 3.17% 2.49% 3.17% 1.49% 2.17%
Ratio of net investment income (loss)
to average net assets 0.72% 0.59% 0.07% (0.06%) 0.07% (0.06%) 1.07% 0.94%
Ratio of net investment income (loss) to
average net assets prior to expense
limitation 0.41% (0.43%) (0.24%) (1.08%) (0.24%) (1.08%) 0.76% (0.08%)
Portfolio turnover 38% 38% 38% 38% 38% 38% 38% 38%
(1) Date of commencement of operations; ratios and portfolio turnover have been
annualized and total return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
65
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
OPTIMUM SMALL CAP GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Institutional Class
Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1)
Ended to Ended to Ended to Ended to
3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04
NET ASSET VALUE, BEGINNING OF PERIOD $11.260 $ 8.500 $11.230 $ 8.500 $11.230 $ 8.500 $11.280 $8.500
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(2) (0.161) (0.100) (0.233) (0.146) (0.233) (0.146) (0.121) (0.075)
Net realized and unrealized gain on
investments 0.653 2.860 0.645 2.876 0.645 2.876 0.663 2.855
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 0.492 2.760 0.412 2.730 0.412 2.730 0.542 2.780
------- ------- ------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net realized gain on investments (0.002) -- (0.002) -- (0.002) -- (0.002) --
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distributions (0.002) -- (0.002) -- (0.002) -- (0.002) --
------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.750 $11.260 $11.640 $11.230 $11.640 $11.230 $11.820 $11.280
======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 4.37% 32.47% 3.67% 32.12% 3.67% 32.12% 4.81% 32.71%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $6,133 $2,115 $1,665 $792 $19,883 $7,521 $31,827 $10,212
Ratio of expenses to average net assets 1.80% 1.81% 2.45% 2.46% 2.45% 2.46% 1.45% 1.46%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly 2.69% 4.11% 3.34% 4.76% 3.34% 4.76% 2.34% 3.76%
Ratio of net investment loss to average
net assets (1.42%) (1.41%) (2.07%) (2.06%) (2.07%) (2.06%) (1.07%) (1.06%)
Ratio of net investment loss to average
net assets prior to expense limitation
and expenses paid indirectly (2.31%) (3.71%) (2.96%) (4.36%) (2.96%) (4.36%) (1.96%) (3.36%)
Portfolio turnover 44% 16% 44% 16% 44% 16% 44% 16%
(1) Date of commencement of operations; ratios and portfolio turnover have been
annualized and total return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
66
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
OPTIMUM SMALL CAP VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Institutional Class
Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1) Year 8/1/03(1)
Ended to Ended to Ended to Ended to
3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04
NET ASSET VALUE, BEGINNING OF PERIOD $11.010 $ 8.500 $10.970 $ 8.500 $10.970 $ 8.500 $11.040 $8.500
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(2) (0.055) (0.046) (0.129) (0.090) (0.129) (0.090) (0.014) (0.022)
Net realized and unrealized gain on
investments 1.801 2.616 1.785 2.620 1.785 2.620 1.790 2.622
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 1.746 2.570 1.656 2.530 1.656 2.530 1.776 2.600
------- ------- ------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net realized gain on investments (0.346) (0.060) (0.346) (0.060) (0.346) (0.060) (0.346) (0.060)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distributions (0.346) (0.060) (0.346) (0.060) (0.346) (0.060) (0.346) (0.060)
------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $12.410 $11.010 $12.280 $10.970 $12.280 $10.970 $12.470 $11.040
======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 16.12% 30.30% 15.35% 29.83% 15.35% 29.83% 16.35% 30.66%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $7,297 $2,126 $1,859 $819 $23,869 $9,018 $26,900 $9,262
Ratio of expenses to average net assets 1.73% 1.67% 2.38% 2.32% 2.38% 2.32% 1.38% 1.32%
Ratio of expenses to average net assets
prior to expense limitation
and expenses paid indirectly 2.61% 4.08% 3.26% 4.73% 3.26% 4.73% 2.26% 3.73%
Ratio of net investment loss to average
net assets (0.47%) (0.69%) (1.12%) (1.34%) (1.12%) (1.34%) (0.12%) (0.34%)
Ratio of net investment loss to average
net assets prior to expense limitation
and expenses paid indirectly (1.35%) (3.10%) (2.00%) (3.75%) (2.00%) (3.75%) (1.00%) (2.75%)
Portfolio turnover 46% 40% 46% 40% 46% 40% 46% 40%
(1) Date of commencement of operations; ratios and portfolio turnover have been
annualized and total return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
67
NOTES OPTIMUM FUND TRUST
TO FINANCIAL STATEMENTS March 31, 2005
Optimum Fund Trust (the "Trust") is organized as a Delaware statutory trust and
offers six series: Optimum Fixed Income Fund, Optimum International Fund,
Optimum Large Cap Growth Fund, Optimum Large Cap Value Fund, Optimum Small Cap
Growth Fund, and Optimum Small Cap Value Fund (each a "Fund" and collectively,
the "Funds"). The Trust is an open-end investment company. The Funds are
considered diversified under the Investment Company Act of 1940, as amended, and
offer Class A, Class B, Class C and Institutional Class shares. Class A Shares
are sold with a front-end sales charge of up to 5.75% for Optimum Large Cap
Growth Fund, Optimum Large Cap Value Fund, Optimum Small Cap Growth Fund,
Optimum Small Cap Value Fund and Optimum International Fund and 4.50% for
Optimum Fixed Income Fund. 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 Class A 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. Institutional Class shares are not subject to a sales charge and are
offered for sale exclusively to a limited group of investors.
The investment objective of Optimum Fixed Income Fund is to seek a high level of
income. The Fund may also seek growth of capital.
The investment objective of Optimum International Fund is to seek long-term
growth of capital. The Fund may also seek income.
The investment objective of Optimum Large Cap Growth Fund is to seek long-term
growth of capital.
The investment objective of Optimum Large Cap Value Fund is to seek long-term
growth of capital. The Fund may also seek income.
The investment objective of Optimum Small Cap Growth Fund is to seek long-term
growth of capital.
The investment objective of Optimum Small Cap Value Fund is to seek long-term
growth of capital.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Trust.
Security Valuation - Equity securities, except those traded on the Nasdaq Stock
Market, Inc. (NASDAQ), are valued at the last quoted sales price as of the time
of the regular close of the New York Stock Exchange (NYSE) on the valuation
date. Securities traded on the NASDAQ are valued in accordance with the NASDAQ
Official Closing Price, which may not be the last sales price. If on a
particular day an equity security does not trade, then the mean between the bid
and asked prices will be used. Securities listed on a foreign exchange are
valued at the last quoted sales price before each Fund is valued. U.S.
government and agency securities are valued at the mean between the bid and
asked prices. Other long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Forward foreign
currency exchange contracts are valued at the mean between the bid and asked
prices of the contracts and are marked-to-market daily. Interpolated values are
derived when the settlement date of the contract is an interim date for which
quotations are not available. Futures contracts are valued at the daily quoted
settlement prices. Swap agreements and other securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith under the direction of the Trust's Board of Trustees.
In determining whether market quotations are readily available or fair valuation
will be used, various factors will be taken into consideration, such as market
closures, or with respect to foreign securities, aftermarket trading or
significant events after local market trading (e.g., government actions or
pronouncements, trading volume or volatility on markets, exchanges among
dealers, or news events).
Federal Income Taxes - Each 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, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
each Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
Repurchase Agreements - Each Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds pursuant to an
exemptive order issued by the Securities and Exchange Commission. The aggregate
daily balance of the pooled cash account is invested in repurchase agreements
secured by obligations of the U.S. government. The respective collateral is held
by each Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is 102% collateralized. However, in the
event of default or bankruptcy by the counterparty to the agreement, realization
of the collateral may be subject to legal proceedings.
Foreign Currency Transactions - Transactions denominated in foreign currencies
are recorded at the prevailing exchange rates on the valuation date. The value
of all assets and liabilities denominated in foreign currencies is translated
into U.S. dollars at the exchange rate of such currencies against the U.S.
dollar daily. Transaction gains or losses resulting from changes in exchange
rates during the reporting period or upon settlement of the foreign currency
transaction are reported in operations for the current period. The Funds isolate
that portion of realized gains and losses on investments in debt securities,
which are due to changes in foreign exchange rates, from that which are due to
changes in market prices of debt securities. For foreign equity securities,
these changes are included in realized gains (losses) on investments. The Funds
report certain foreign currency related transactions as components of realized
gains (losses) for financial reporting purposes, where such components are
treated as ordinary income (loss) for federal income tax purposes.
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 Trust 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. Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Discounts and premiums are
amortized to interest income over the lives of the respective securities.
Realized gains (losses) on paydowns of mortgage- and asset-backed securities are
classified as interest income. Distributions received from investments in Real
Estate Investment Trusts are recorded as dividend income on ex-dividend date,
subject to reclassification upon notice of the character of such distribution by
the issuer. Foreign dividends are also recorded on the ex-dividend date or as
soon after the ex-dividend date that the Funds are aware of such dividends, net
of all
68
NOTES OPTIMUM FUND TRUST
TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
non-rebatable tax withholdings. Withholding taxes on foreign dividends have been
recorded in accordance with each Fund's understanding of the applicable
country's tax rules and rates.
Optimum International Fund, Optimum Large Cap Growth Fund, Optimum Large Cap
Value Fund, Optimum Small Cap Growth Fund and Optimum Small Cap Value Fund
declare and pay dividends from net investment income, if any, annually. Optimum
Fixed Income Fund declares and pays dividends from net investment income
quarterly. Each Fund will declare and pay distributions from net realized gain
on investments, if any, annually. In addition, in order to satisfy certain
distribution requirements of the Tax Reform Act of 1986, each Fund may declare
special year-end dividend and capital gains distributions during November or
December to shareholders of record on a date in such month. Such distributions,
if received by shareholders by January 31, are deemed to have been paid by a
Fund and received by shareholders on the earlier of the date paid or December 31
of the prior year.
The Funds may receive earnings credits from their custodian when positive cash
balances are maintained, which are used to offset custody fees. The expense paid
under the above arrangement is included in custodian fees on the Statements of
Operations with the corresponding expense offset shown as "expense paid
indirectly". The amount of this expense for the year ended March 31, 2005 was as
follows:
Optimum Optimum
Small Cap Small Cap
Growth Fund Value Fund
----------- ----------
Earnings credits $185 $334
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
Delaware Management Company (DMC), a series of Delaware Management Business
Trust, furnishes investment management services to each Fund and has full
discretion and responsibility, subject to the overall supervision of the Trust's
Board of Trustees, to select and contract with one or more investment
sub-advisers to manage the investment operations and composition of each Fund,
and to render investment advice for each Fund, including the purchase,
retention, and dispositions of investments, securities and cash contained in
each Fund. The investment management agreement obligates DMC to implement
decisions with respect to the allocation or reallocation of each Fund's assets
among one or more current or additional sub-advisers, and to monitor the
sub-advisers' compliance with the relevant Fund's investment objective, policies
and restrictions. DMC paid the sub-advisers out of its fees.
In accordance with the terms of the investment management agreement, DMC is
entitled to receive an annual fee equal to the following percentage rates of the
average daily net assets of a Fund:
Optimum Fixed Income Fund 0.7000% of assets up to $25 million
0.6500% of assets from $25 million to $100 million
0.6000% of assets over $100 million
Optimum International Fund 0.8750% of assets up to $50 million
0.8000% of assets from $50 to 100 million
0.7800% of assets from $100 to 300 million
0.7650% of assets from $300 to 400 million
0.7300% of assets over $400 million
Optimum Large Cap Growth Fund 0.8000% of assets up to $250 million
0.7875% of assets from $250 million to $300 million
0.7625% of assets from $300 million to $400 million
0.7375% of assets from $400 million to $500 million
0.7250% of assets over $500 million
Optimum Large Cap Value Fund 0.8000% of assets up to $100 million
0.7375% of assets from $100 million to $250 million
0.7125% of assets from $250 million to $500 million
0.6875% of assets over $500 million
Optimum Small Cap Growth Fund 1.1000% of assets
Optimum Small Cap Value Fund 1.0500% of assets up to $75 million
1.0250% of assets from $75 million to $150 million
1.0000% of assets over $150 million
DMC has entered into sub-advisory agreements for the Trust as follows: Optimum
Fixed Income Fund -- Deutsche Investment Management Americas Inc.; Optimum
International Fund -- Mondrian Investment Partners Limited (formerly known as
Delaware International Advisers Ltd.) and Marsico Capital Management, LLC;
Optimum Large Cap Growth Fund -- Marsico Capital Management, LLC and T. Rowe
Price Associates, Inc.; Optimum Large Cap Value Fund -- Massachusetts Financial
Services Company and Morgan Stanley Investment Management doing business as Van
Kampen Asset Management, Inc.; Optimum Small Cap Growth Fund -- Columbia Wanger
Asset Management, L.P. and Oberweis Asset Management, Inc.; and Optimum Small
Cap Value Fund -- Hotchkis and Wiley Capital Management, LLC and Delafield Asset
Management (a division of Reich & Tang Asset Management, LLC).
For the year ended March 31, 2005, DMC paid the following subadvisory fees:
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
------------ ------------- ----------- ---------- ----------- ----------
$584,149 $272,871 $736,728 $687,528 $265,741 $250,059
69
NOTES OPTIMUM FUND TRUST
TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES (CONTINUED)
DMC has contractually agreed to waive that portion, if any, of its management
fee and/or reimburse each Fund to the extent necessary to ensure that total
annual operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, certain insurance costs and extraordinary expenses, do not
exceed specified percentages of average daily net assets through August 1, 2005
as shown below:
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
------------ ------------- ----------- ---------- ----------- ----------
0.90% 1.66% 1.34% 1.20% 1.60% 1.41%
Prior to August 1, 2004, the waivers were as follows:
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
------------ ------------- ----------- ---------- ----------- ----------
0.85% 1.57% 1.26% 1.15% 1.46% 1.32%
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides the Trust
with fund accounting, administrative, and transfer agency services pursuant to a
Mutual Fund Services Agreement. For fund accounting services, the Trust pays DSC
a fee at an annual rate of 0.04% of the Trust's total average daily net assets,
plus out-of-pocket expenses, subject to certain minimums. DSC also provides the
Trust with administrative services including financial and tax reporting,
corporate governance, and preparation of materials and reports for the Board of
Trustees. For administrative services, the Trust pays DSC a fee at an annual
rate of 0.35% of the Trust's total average daily net assets, plus out-of-pocket
expenses. DSC also serves as the shareholder servicing, dividend disbursing, and
transfer agent for each Fund. For transfer agency services, the Trust pays DSC a
fee at an annual rate of 0.15% of the Trust's total average daily net assets,
subject to certain minimums.
Delaware Distributors, L.P. (DDLP), an affiliate of DMC, serves as the national
distributor of each Fund's shares pursuant to a Distribution Agreement. Pursuant
to the Distribution Agreement and Rule 12b-1 plans, the Funds pay DDLP an annual
fee of 0.35% of the average daily net assets of the Class A shares and 1.00% of
the average daily net assets of the Class B and C shares. Institutional Class
shares pay no distribution expenses.
At March 31, 2005, each Fund had liabilities payable to affiliates as follows:
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
------------ ------------- ----------- ---------- ----------- ----------
Investment management fee payable to DMC $ 98,643 $90,482 $121,114 $ 86,016 $38,347 $56,077
Dividend disbursing, transfer agent fees,
accounting and other expenses payable to DSC 266,417 97,716 241,368 230,685 65,725 66,088
Other expenses payable to DMC and affiliates* 246,803 81,667 190,041 190,686 43,758 50,759
*DMC, as part of its administrative services, pays operating expenses on behalf
of the Funds and is reimbursed on a periodic basis. Such expenses included items
such as printing of shareholder reports, professional fees, registration fees
and trustees' fees.
DMC, DSC and DDLP are indirect, wholly owned subsidiaries of Delaware Management
Holdings, Inc., which is an indirect wholly owned subsidiary of Lincoln National
Corporation.
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 Funds.
3. INVESTMENTS
For the year ended March 31, 2005, the Funds made purchases and sales of
investment securities other than short-term investments as follows:
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
------------ ------------- ----------- ---------- ----------- ----------
Purchases other than U.S. government securities $550,627,616 $103,891,663 $252,247,593 $235,171,131 $50,723,442 $43,539,892
Purchases of U.S. government securities 311,107,753 -- -- -- -- --
Sales other than U.S. government securities 375,924,037 45,196,330 56,776,432 57,008,244 15,340,727 14,764,139
Sales of U.S. government securities 266,370,717 -- -- -- -- --
At March 31, 2005, the cost of investments and unrealized appreciation
(depreciation) for federal income tax purposes for each Fund were as follows:
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
------------ ------------- ----------- ---------- ----------- ----------
Cost of investments $345,930,378 $89,361,316 $271,257,799 $262,785,365 $53,706,192 $55,109,242
============ =========== ============ ============ =========== ===========
Aggregate unrealized appreciation $ 1,691,032 $ 8,403,442 $ 18,837,193$ 19,588,206 $ 8,779,566 $ 6,187,954
Aggregate unrealized depreciation (3,547,035) (1,046,754) (6,976,786) (3,926,520) (2,699,762) (1,246,441)
------------ ----------- ------------ ------------ ----------- -----------
Net unrealized appreciation (depreciation) $ (1,856,003) $ 7,356,688 $ 11,860,407$ 15,661,686 $ 6,079,804 $ 4,941,513
============ =========== ============ ============ =========== ===========
70
NOTES OPTIMUM FUND TRUST
TO FINANCIAL STATEMENTS (CONTINUED)
4. DIVIDEND AND DISTRIBUTION INFORMATION
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. Additionally, gains (losses) on foreign currency
transactions and net short-term gains on sales of investment securities are
treated as ordinary income for federal income tax purposes. The tax character of
dividends and distributions paid during the year ended March 31, 2005 and the
period ended March 31, 2004 was as follows:
Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Small Cap Small Cap
Fund Fund Value Fund Growth Fund Value Fund
------------ ------------- ---------- ----------- ----------
YEAR ENDED MARCH 31, 2005:
Ordinary Income $6,647,568 $494,462 $2,367,284 $4,968 $ 869,720
Long-Term Capital Gain 156,496 45,179 130,522 -- 156,474
---------- -------- ---------- ------ ----------
Total $6,804,064 $539,641 $2,497,806 $4,968 $1,026,194
========== ======== ========== ====== ==========
PERIOD ENDED MARCH 31, 2004:
Ordinary Income $ 532,500 $ 9,793 $ 86,243 $ -- $ 68,016
Optimum Large Cap Growth Fund did not make any distributions in either year.
As of March 31, 2005, the components of net assets on a tax basis were as
follows:
Optimum Fixed Income Fund Optimum International Fund Optimum Large Cap Growth Fund
------------------------- -------------------------- -----------------------------
Shares of beneficial interest $320,056,015 $88,112,579 $271,887,157
Undistributed ordinary income 1,764,370 1,348,921 --
Undistributed long-term capital gain 83,542 666,773 --
Post-October losses -- -- --
Post-October currency losses -- (127,680) (19,884)
Capital loss carryforward -- -- (240,163)
Unrealized appreciation (depreciation)
of investments and foreign currencies (1,862,066) 7,351,427 11,861,550
------------ ----------- ------------
Net assets $320,041,861 $97,352,020 $283,488,660
============ =========== ============
Optimum Large Cap Value Fund Optimum Small Cap Growth Fund Optimum Small Cap Value Fund
---------------------------- ----------------------------- ----------------------------
Shares of beneficial interest $253,439,236 $54,688,002 $52,748,507
Undistributed ordinary income 2,728,111 -- 612,198
Undistributed long-term capital gain 1,932,084 -- 1,623,194
Post-October losses -- (620,700) --
Post-October currency losses (900) -- --
Capital loss carryforward -- (638,746) --
Unrealized appreciation (depreciation)
of investments and foreign currencies 15,661,063 6,079,804 4,941,513
------------ ----------- -----------
Net assets $273,759,594 $59,508,360 $59,925,412
============ =========== ===========
The differences between book basis and tax basis components of net assets are
primarily attributable to tax deferral of losses on wash sales, mark-to-market
on futures contracts, mark-to-market of forward foreign currency contracts and
tax treatment of market discount and premium on debt instruments.
Post-October losses represent losses realized on investment and foreign currency
transactions from November 1, 2004 through March 31, 2005 that, in accordance
with federal income tax regulations, the Funds have elected to defer and treat
as having arisen in the following fiscal year.
For financial reporting purposes, capital accounts are adjusted to reflect the
tax character of permanent book/tax differences. For the year ended March 31,
2005, each Fund recorded the following reclassifications. Reclassifications are
primarily due to tax treatment of net operating losses and gain (loss) on
foreign currency transactions and paydowns of mortgage- and asset-backed
securities. Results of operations and net assets were not affected by these
reclassifications.
Optimum Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Large Cap Small Cap Small Cap
Fund Fund Growth Fund Value Fund Growth Fund Value Fund
------------ ------------- ----------- ---------- ----------- ----------
Undistributed (Accumulated) net
investment income (loss) $ 799,285 $(226,024) $ 744,676 $(2,651) $ 544,566 $ 224,636
Accumulated realized gain (loss) (799,285) 226,024 40,925 2,651 1,525 (224,636)
Paid-in capital -- -- (785,601) -- (546,091) --
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. Capital loss carryforwards
outstanding at March 31, 2005 will expire as follows:
Optimum Large Cap Growth Fund Optimum Small Cap Growth Fund
----------------------------- -----------------------------
Year of Expiration 2013 $240,163 $638,746
71
NOTES OPTIMUM FUND TRUST
TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL SHARES
Transactions in capital shares were as follows:
Optimum Optimum Optimum Large Cap
Fixed Income Fund International Fund Growth Fund
---------------------- --------------------- ----------------------
Year 8/1/03* Year 8/1/03* Year 8/1/03*
Ended to Ended to Ended to
3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04
Shares sold:
Class A 2,604,696 1,350,930 649,124 388,631 1,811,897 992,873
Class B 493,163 483,742 155,552 154,454 422,024 379,178
Class C 8,745,628 5,871,982 2,136,364 1,362,378 5,966,892 3,724,731
Institutional Class 15,486,338 2,994,706 3,390,313 1,072,081 14,258,695 2,775,139
---------- ---------- --------- --------- ---------- ---------
27,329,825 10,701,360 6,331,353 2,977,544 22,459,508 7,871,921
---------- ---------- --------- --------- ---------- ---------
Shares issued upon reinvestment
of dividends and distributions:
Class A 84,653 10,485 6,568 124 -- --
Class B 22,307 2,086 2,694 44 -- --
Class C 282,189 26,727 23,074 448 -- --
Institutional Class 352,862 18,433 17,714 362 -- --
---------- ---------- --------- --------- ---------- ---------
742,011 57,731 50,050 978 -- --
---------- ---------- --------- --------- ---------- ---------
Shares repurchased:
Class A (292,493) (18,915) (69,596) (5,937) (167,095) (16,889)
Class B (48,904) (7,826) (17,567) (1,546) (29,466) (4,643)
Class C (807,764) (42,407) (171,311) (12,884) (428,897) (35,837)
Institutional Class (1,098,366) (530,535) (510,431) (202,008) (804,930) (527,062)
---------- ---------- --------- --------- ---------- ---------
(2,247,527) (599,683) (768,905) (222,375) (1,430,388) (584,431)
---------- ---------- --------- --------- ---------- ---------
Net increase 25,824,309 10,159,408 5,612,498 2,756,147 21,029,120 7,287,490
========== ========== ========= ========= ========== =========
Optimum Large Cap Optimum Small Cap Optimum Small Cap
Value Fund Growth Fund Value Fund
---------------------- --------------------- ----------------------
Year 8/1/03* Year 8/1/03* Year 8/1/03*
Ended to Ended to Ended to
3/31/05 3/31/04 3/31/05 3/31/04 3/31/05 3/31/04
Shares sold:
Class A 1,745,346 943,488 369,365 191,434 435,139 196,000
Class B 402,786 371,334 77,974 71,658 79,351 75,160
Class C 5,763,734 3,664,980 1,116,607 674,849 1,191,177 825,171
Institutional Class 11,651,128 2,342,801 2,602,503 911,226 1,898,666 841,044
---------- --------- --------- --------- --------- ---------
19,562,994 7,322,603 4,166,449 1,849,167 3,604,333 1,937,375
---------- --------- --------- --------- --------- ---------
Shares issued upon reinvestment
of dividends and distributions:
Class A 25,981 1,959 42 -- 10,324 586
Class B 7,883 286 18 -- 3,579 201
Class C 77,527 3,284 154 -- 37,840 2,556
Institutional Class 124,785 3,404 226 -- 34,839 3,345
---------- --------- --------- --------- --------- ---------
236,176 8,933 440 -- 86,582 6,688
---------- --------- --------- --------- --------- ---------
Shares repurchased:
Class A (160,453) (17,978) (35,344) (3,646) (50,198) (3,616)
Class B (29,848) (3,787) (5,450) (1,083) (6,218) (699)
Class C (409,019) (25,352) (78,255) (4,895) (106,442) (5,812)
Institutional Class (673,193) (520,667) (814,146) (6,327) (616,300) (5,135)
---------- --------- --------- --------- --------- ---------
(1,272,513) (567,784) (933,195) (15,951) (779,158) (15,262)
---------- --------- --------- --------- --------- ---------
Net increase 18,526,657 6,763,752 3,233,694 1,833,216 2,911,757 1,928,801
========== ========= ========= ========= ========= =========
*Date of commencement of operations.
72
NOTES OPTIMUM FUND TRUST
TO FINANCIAL STATEMENTS (CONTINUED)
6. FOREIGN EXCHANGE CONTRACTS
The Optimum Fixed Income Fund, Optimum International Fund, Optimum Large Cap
Growth Fund and Optimum Large Cap Value Fund may enter into forward foreign
currency exchange contracts as a way of managing foreign exchange rate risk. The
Funds may enter into these contracts to fix the U.S. dollar value of a security
that it has agreed to buy or sell for the period between the date the trade was
entered into and the date the security is delivered and paid for. The Funds may
also use these contracts to hedge the U.S. dollar value of securities they
already own that are denominated in foreign currencies. The change in market
value is recorded as an unrealized gain or loss. When the contract is closed, a
realized gain or loss is recorded equal to the difference between the value of
the contract at the time it was opened and the value at the time it was closed.
The use of forward foreign currency exchange contracts does not eliminate
fluctuations in the underlying prices of the securities, but does establish a
rate of exchange that can be achieved in the future. Although forward foreign
currency exchange contracts limit the risk of loss due to a decline in the value
of the hedged currency, they also limit any potential gain that might result
should the value of the currency increase. In addition, the Funds could be
exposed to risks if the counterparties to the contracts are unable to meet the
terms of their contracts.
7. FUTURES CONTRACTS
The Optimum Fixed Income Fund may invest in financial futures contracts to hedge
its existing portfolio securities against fluctuations in fair value caused by
changes in prevailing market interest rates. Upon entering into a futures
contract, the Fund deposits cash or pledges U.S. government securities to a
broker, equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. In some cases, due to the form of the futures
agreement, initial margin is held in a segregated account with the Fund's
custodian, rather than directly with the broker. Subsequent payments are
received from the broker or paid to the broker (or added to the segregated
account) each day, based on the daily fluctuation in the market value of the
contract. These receipts or payments are known as "variation margin" and are
recorded daily by the Fund as unrealized gains or losses until the contracts are
closed. When the contracts are closed, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. Risks of entering into futures
contracts include potential imperfect correlation between the futures contracts
and the underlying securities and the possibility of an illiquid secondary
market for these instruments.
8. OPTIONS WRITTEN
During the year ended March 31, 2005, The Optimum Fixed Income Fund entered into
options contracts in accordance with its investment objectives. When the Fund
writes an option, a premium is received and a liability is recorded and adjusted
on a daily basis to reflect the current market value of the options written.
Premiums received from writing options that expire unexercised are treated by
the Fund on the expiration date as realized gains. The difference between the
premium received and the amount paid on effecting a closing purchase
transaction, including brokerage commissions, is treated as realized gain or
loss. If a call option is exercised, the premium is added to the proceeds from
the sale of the underlying security in determining whether the Fund has a
realized gain or loss. If a put option is exercised, the premium reduces the
cost basis of the securities purchased by the Fund. The Fund, as writer of an
option, bears the market risk of an unfavorable change in the price of the
security underlying the written option.
Transactions in options written during the year ended March 31, 2005 for The
Optimum Fixed Income Fund, were as follows:
Number
of Contracts Premiums
------------ --------
Options outstanding at March 31, 2004 -- $ --
Options written 9,400 40,468
Options terminated in closing purchase transaction (9,400) (40,468)
------ --------
Options outstanding at March 31, 2005 -- $ --
====== ========
9. SWAP AGREEMENTS
During the year ended March 31, 2005, the Optimum Fixed Income Fund entered into
total return swap agreements in accordance with its investment objectives. A
swap is an agreement to exchange the return generated by one instrument for the
return generated by another instrument. Total return swaps involve commitments
to pay interest in exchange for a market-linked return based on a notional
amount. To the extent the total return of the security, instrument or basket of
instruments underlying the transaction exceeds the offsetting interest
obligation, the Fund will receive a payment from the counterparty. To the extent
the total return of the security, instrument or basket of instruments underlying
the transaction falls short of the offsetting interest obligation, the Fund will
make a payment to the counterparty. The change in value of swap agreements
outstanding, if any, is recorded as unrealized appreciation or depreciation
daily. A realized gain or loss is recorded on maturity or termination of the
swap agreement.
No total return swap agreements were outstanding at March 31, 2005.
10. CREDIT AND MARKET RISKS
Some countries in which the Optimum Fixed Income Fund, Optimum International
Fund, Optimum Large Cap Growth Fund and Optimum Large Cap Value Fund may invest
require governmental approval for the repatriation of investment income, capital
or the proceeds of sales of securities by foreign investors. In addition, if
there is deterioration in a country's balance of payments or for other reasons,
a country may impose temporary restrictions on foreign capital remittances
abroad.
The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by such Funds
may be inhibited. In addition, a significant portion of the aggregate market
value of equity securities listed on the major securities exchanges in emerging
markets are held by a smaller number of investors. This may limit the number of
shares available for acquisition or disposition by the Funds.
The Optimum Fixed Income Fund invests a portion of its assets in high-yield,
fixed-income securities, which carry ratings of BB or lower by Standard & Poor's
Ratings Group and/or Ba or lower by Moody's Investors Service, Inc. Investments
in these higher yielding securities are generally accompanied by a greater
degree of credit risk than higher rated securities. Additionally, lower rated
securities may be more susceptible to adverse economic and competitive industry
conditions than investment grade securities.
73
NOTES OPTIMUM FUND TRUST
TO FINANCIAL STATEMENTS (CONTINUED)
10. CREDIT AND MARKET RISKS (CONTINUED)
The Optimum Fixed Income Fund invests in fixed-income securities whose value is
derived from an underlying pool of mortgages or consumer loans. Investors
receive principal and interest payments as the underlying mortgages and consumer
loans are paid back. Some of these securities are collateralized mortgage
obligations (CMOs). CMOs are debt securities issued by U.S. government agencies
or by financial institutions and other mortgage lenders, which are
collateralized by a pool of mortgages held under an indenture. Prepayment of
mortgages may shorten the stated maturity of the obligations and can result in a
loss of premium, if any has been paid. Certain of these securities may be
stripped (securities which provide only the principal or interest feature of the
underlying security). The yield to maturity on an interest-only CMO is extremely
sensitive not only to changes in prevailing interest rates, but also to the rate
of principal payments (including prepayments) on the related underlying mortgage
assets. A rapid rate of principal payments may have a material adverse effect on
the Fund's yield to maturity. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities even if the securities are
rated in the highest rating categories. The Optimum Fixed Income Fund also
invests in taxable municipal bonds.
Each Fund may invest up to 15% of their total assets in illiquid securities,
which may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of these securities may impair each Fund from disposing of them in a
timely manner and at a fair price when it is necessary or desirable to do so. At
March 31, 2005 Rule 144A securities represented approximately 9.85% and 0.87% of
total net assets for Optimum Fixed Income Fund and Optimum International Fund,
respectively. Rule 144A securities comprising 0.10% of total net assets for
Optimum Fixed Income Fund have been determined to be illiquid under the Fund's
Liquidity Procedures. While maintaining oversight, the Board of Trustees has
delegated to the investment adviser the day-to-day functions of determining
whether individual Rule 144A securities are liquid for purposes of a Fund's
limitation on investments in illiquid assets. Illiquid securities, if any, have
been denoted in the Statement of Net Assets.
The Optimum Small Cap Growth Fund and Optimum Small Cap Value Fund invest a
significant portion of their assets in small companies and may be subject to
certain risks associated with ownership of securities of small companies.
Investments in small-sized companies may be more volatile than investments in
larger companies for a number of reasons, which include limited financial
resources or a dependence on narrow product lines.
11. CONTRACTUAL OBLIGATIONS
The Funds enter into contracts in the normal course of business that contain a
variety of indemnifications. The Funds' maximum exposure under these
arrangements is unknown. However, the Funds have not had prior claims or losses
pursuant to these contracts. Management has reviewed the Funds' existing
contracts and expects the risk of loss to be remote.
12. INDUSTRY ALLOCATION
As of March 31, 2005, the Optimum International Fund's investment in equity
securities classified by type of business were as follows:
Percentage
Industry of net assets
- -------- -------------
Automobiles & Components 1.54%
Banking & Finance 16.82%
Buildings & Materials 1.67%
Cable, Media & Publishing 3.66%
Commercial Services & Supplies 4.27%
Computers & Technology 0.71%
Consumer Products 1.19%
Electronics & Electrical Equipment 2.59%
Energy 3.03%
Food, Drug & Staples Retailing 9.08%
Food, Beverage & Tobacco 3.87%
Healthcare & Pharmaceuticals 5.44%
Holding Companies 1.22%
Industrial Machinery 1.00%
Insurance 4.31%
Leisure, Lodging & Entertainment 5.13%
Metals & Mining 3.96%
Packaging & Containers 0.87%
Paper & Forest Products 0.64%
Real Estate 3.54%
Retail 4.61%
Semiconductors 0.81%
Technology Hardware & Equipment 1.65%
Telecommunications 9.36%
Transportation & Shipping 1.88%
Utilities 3.05%
------
Total 95.90%
======
74
NOTES OPTIMUM FUND TRUST
TO FINANCIAL STATEMENTS (CONTINUED)
13. TAX INFORMATION (UNAUDITED)
The information set forth below is for each 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, each Fund designates distributions
paid during the year as follows:
(A) (B)
Long-Term Capital Ordinary Income Total (C)
Gains Distributions Distributions* Distributions Qualifying
(Tax Basis) (Tax Basis) (Tax Basis) Dividends(1)
------------------- --------------- ------------- ------------
Optimum Fixed Income Fund 2% 98% 100% --
Optimum International Fund 8% 92% 100% --
Optimum Large Cap Value Fund 5% 95% 100% 82%
Optimum Small Cap Growth Fund -- 100% 100% --
Optimum Small Cap Value Fund 15% 85% 100% --
(A) and (B) are based on a percentage of each Fund's total distributions.
(C) is based on a percentage of each Fund's ordinary income distributions.
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
*For the fiscal year ended March 31, 2005 certain dividends paid by the Funds
may be subject to a maximum tax rate of 15%, as provided for by the Jobs and
Growth Tax Relief Reconciliation Act of 2003. The Optimum Fixed Income Fund,
Optimum International Fund and Optimum Large Cap Value Fund intend to designate
up to a maximum amount of $5,308,679, $10,068 and $568,020, respectively to be
taxed at a maximum rate of 15%. Complete information will be computed and
reported in conjunction with your 2005 Form 1099-DIV.
75
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees
Optimum Fund Trust
We have audited the accompanying statements of net assets and statements of
assets and liabilities of Optimum Fund Trust (comprising, respectively, the
Optimum Fixed Income Fund, Optimum International Fund, Optimum Large Cap Growth
Fund, Optimum Large Cap Value Fund, Optimum Small Cap Growth Fund, and Optimum
Small Cap Value Fund (the "Funds")) as of March 31, 2005, and the related
statements of operations for the year then ended, and the statements of changes
in net assets and the financial highlights for the year then ended and the
period August 1, 2003 (commencement of operations) through March 31, 2004. These
financial statements and financial highlights are the responsibility of the
Funds' 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 Funds' 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 Funds' 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 or by other appropriate auditing procedures where replies from brokers
were not received. 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 each
of the respective Funds constituting Optimum Fund Trust at March 31, 2005, the
results of their operations for the year then ended, and the changes in their
net assets and their financial highlights for the year then ended and the period
August 1, 2003 (commencement of operations) through March 31, 2004, in
conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 12, 2005
76
OPTIMUM FUND TRUST
BOARD OF TRUSTEES AND OFFICERS ADDENDUM
A mutual fund is governed by a Board of Trustees which has oversight
responsibility for the management of a fund's business affairs. Trustees
establish procedures and oversee and review the performance of the investment
manager, the distributor and others that perform services for the fund. The
independent fund trustees, in particular, are advocates for shareholder
interests. The following is a list of the Trustees and Officers of the Trust
with certain background and related information.
PRINCIPAL NUMBER OF OTHER
NAME, POSITION(S) OCCUPATION(S) PORTFOLIOS IN FUND DIRECTORSHIPS
ADDRESS HELD WITH LENGTH OF TIME DURING COMPLEX OVERSEEN HELD BY
AND AGE THE TRUST SERVED PAST 5 YEARS BY TRUSTEE(1) TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
MARK S. CASADY(2) Trustee April 21, President and Chief Executive 6 None
2005 Market Street 2003 to Officer - LPL Financial Services
Philadelphia, PA present (2004 - Present)
19103
Age 44 President and Chief Operating
Officer - LPL Financial Services
(2002 - 2004)
Managing Director
Scudder Investments
(1994-2002)
JOHN C. E. CAMPBELL(2) Trustee, President June 17, 2004 President, Global 6 None
2005 Market Street and Chief to present Institutional Services,
Philadelphia, PA Executive Officer Delaware Investment Advisers
19103 (2003 - Present)
Age 59 Executive Vice President(1)
Global Marketing & Client Serivces
Delaware Management Company
(1992 - Present)
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
NICHOLAS D. CONSTAN Trustee July 17, 2003 Adjunct Professor - 6 None
2005 Market Street to present University of Pennsylvania
Philadelphia, PA (1972 - Present)
19103
Age 66
WILLIAM W. HENNIG Trustee July 17, 2003 Private Investor 6 None
2005 Market Street to present
Philadelphia, PA
19103
Age 74
DURANT ADAMS HUNTER Trustee July 17, 2003 Principal-Ridgeway Partners 6 None
2005 Market Street to present (Executive Recruiting)
Philadelphia, PA (2004 - Present)
19103
Chief Executive Officer and
Age 56 Executive Recruiter -
Whitehead MANN Inc.
(Executive Recruiting)
(1992 - 2003)
77
PRINCIPAL NUMBER OF OTHER
NAME, POSITION(S) OCCUPATION(S) PORTFOLIOS IN FUND DIRECTORSHIPS
ADDRESS HELD WITH LENGTH OF TIME DURING COMPLEX OVERSEEN HELD BY
AND AGE THE TRUST SERVED PAST 5 YEARS BY TRUSTEE(1) TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES (continued)
KENNETH R. LEIBLER Trustee July 17, 2003 Chairman - 6 None
2005 Market Street to present Boston Options Exchange
Philadelphia, PA (2005 - Present)
19103
Chairman and Chief Executive
Age 56 Officer - Boston Stock Exchange
(2001 - 2004)
President and Chief Executive
Officer - Liberty Financial Companies
(Financial Services)
(1995 - 2000)
STEPHEN PAUL MULLIN Trustee July 17, 2003 President - Econsult Corporation 6 None
2005 Market Street to present (Economic Consulting)
Philadelphia, PA (2000 - Present)
19103
Age 49
ROBERT A. RUDELL Trustee July 17, 2003 Private Investor 6 Director -
2005 Market Street to present (2002 - Present) Medtox Scientific,
Philadelphia, PA Inc. (Clinical Lab)
19103 (2002 - Present)
Chief Operating Officer - ZSI
Age 56 (Asset Management) Director -
(1998 - 2002) Heartland Group, Inc.
Famliy of Funds
(3 mutual funds)
(2005 - Present)
JON EDWARD SOCOLOFSKY Trustee July 17, 2003 Private Investor 6 None
2005 Market Street (2002 - Present)
Philadelphia, PA
19103 Senior Vice President -
The Northern Trust
Age 59 (Trust Bank)
(1970 - 2001)
78
PRINCIPAL NUMBER OF OTHER
NAME, POSITION(S) OCCUPATION(S) PORTFOLIOS IN FUND DIRECTORSHIPS
ADDRESS HELD WITH LENGTH OF TIME DURING COMPLEX OVERSEEN HELD BY
AND AGE THE TRUST SERVED PAST 5 YEARS BY OFFICER(1) OFFICER
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
JOSEPH H. HASTINGS Senior July 17, 2003 Mr. Hastings has served in 6 None
2005 Market Street Vice President to Present various executive capacities
Philadelphia, PA and at different times at
19103 Chief Financial Delaware Investments.
Officer
Age 55
RICHELLE S. MAESTRO Senior Vice July 17, 2003 Ms. Maestro has served in 6 None
2005 Market Street President, Chief to Present various executive capacities
Philadelphia, PA Legal Officer at different times at
19103 and Secretary Delaware Investments.
Age 47
MICHAEL P. BISHOF Senior Vice July 17, 2003 Mr. Bishof has served in 6 None
2005 Market Street President and to Present various executive capacities
Philadelphia, PA Treasurer at different times at
19103 Delaware Investments.
Age 42
(1) The term "Fund Complex" refers to the Funds in the Optimum Fund Trust. Mr.
Bishof and Ms. Maestro also serve in similar capacities for the Delaware
Investments Family of Funds, a fund complex also managed and distributed by
Delaware Investments with 98 funds.
(2) "Interested persons" of the Funds by virtue of their executive and
management positions or relationships with the Fund's service providers or
sub-service providers. Delaware Investments is the marketing name for
Delaware Management Holdings, Inc. and its subsidiaries, including the
Trust's manager, principal underwriter and service agent.
The Statement of Additional Information for the Fund(s) includes additional
information about the Trustees and Officers and is available, without charge,
upon request by calling your financial advisor or 800 914-0278.
79
This annual report is for the information of Optimum Fund Trust shareholders,
but it may be used with prospective investors when preceded or accompanied by a
current prospectus for Optimum Fund Trust and the 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 will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
BOARD OF TRUSTEES AFFILIATED OFFICERS CONTACT INFORMATION
MARK S. CASADY JOSEPH H. HASTINGS INVESTMENT MANAGER
President and Chief Executive Officer Senior Vice President and Delaware Management Company
LPL Financial Services Chief Financial Officer Philadelphia, PA
Optimum Fund Trust
JOHN C. E. CAMPBELL Philadelphia, PA NATIONAL DISTRIBUTOR
Executive Vice President Delaware Distributors, L.P.
Delaware Investments RICHELLE S. MAESTRO Philadelphia, PA
Senior Vice President,
NICHOLAS D. CONSTAN Chief Legal Officer and Secretary SHAREHOLDER SERVICING, DIVIDEND
Adjunct Professor - University of Pennsylvania Optimum Fund Trust DISBURSING AND TRANSFER AGENT
Philadelphia, PA Delaware Service Company, Inc.
WILLIAM W. HENNIG 2005 Market Street
Private Investor MICHAEL P. BISHOF Philadelphia, PA 19103-7094
Senior Vice President and Treasurer
DURANT ADAMS HUNTER Optimum Fund Trust FOR SHAREHOLDERS
Principal - Ridgeway Partners Philadelphia, PA 800 914-0278
KENNETH R. LEIBLER FOR SECURITIES DEALERS AND FINANCIAL
Chairman INSTITUTIONS REPRESENTATIVES ONLY
Boston Options Exchange 800 362-7500
STEPHEN PAUL MULLIN WEB SITE
President - Econsult Corporation www.optimummutualfunds.com
ROBERT A. RUDELL
Private Investor
JON EDWARD SOCOLOFSKY
Private Investor
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Each 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. Each Fund's Forms N-Q, as well as a description of the policies and
procedures that each Fund uses to determine how to vote proxies (if any)
relating to portfolio securities is available without charge (i) upon request,
by calling 800 914-0278; (ii) on the Fund's Web site at http://
www.optimummutualfunds.com; and (iii) on the Commission's Web site at
http://www.sec.gov. Each 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 each Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through each Fund's Web site at
http://www.optimummutualfunds.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
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(9358) Printed in the USA
AR-901 [3/05] IVES 5/05 J10143
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 its internet website at www.optimummutualfunds.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 has determined that two 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 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 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:
Jon E. Socolofsky
Robert A. Rudell
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 $102,100
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 $93,500 for
the fiscal year ended March 31, 2004.
(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 $12,600 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: preparation
of report concerning transfer agents' system of internal accounting control
pursuant to Rule 17Ad-13 of the Securities Exchange Act.
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 $12,100 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: preparation
of report concerning transfer agents' system of internal accounting control
pursuant to Rule 17Ad-13 of the Securities Exchange Act.
(c) Tax fees.
The aggregate fees billed by the registrant's independent auditors for
tax-related services provided to the registrant were $12,500 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 $12,000 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 investment adviser(s) and
other service providers under common control with the adviser(s) and that relate
directly to the operations or financial reporting of the registrant were $0 for
the registrant's fiscal year ended March 31, 2004.
(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 $239,134 and $229,555 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 and other service
providers under common control with the adviser 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 registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an annual
report) that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 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: OPTIMUM FUND TRUST
JOHN C.E. CAMPBELL
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By: John C.E. Campbell
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Title: Chief Executive Officer
Date: June 8, 2005
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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.
JOHN C.E. CAMPBELL
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By: John C.E. Campbell
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Title: Chief Executive Officer
Date: June 8, 2005
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JOSEPH H. HASTINGS
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By: Joseph H. Hastings
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Title: Chief Financial Officer
Date: June 8, 2005
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