UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-2806
Exact name of registrant as specified in charter: Delaware Group Cash Reserve
Address of principal executive offices:
2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service:
David F. Connor, 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, 2006
Item 1. Reports to Stockholders
Delaware Cash
Reserve Fund
Annual Report
March 31, 2006
Delaware
Investments(R)
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A member of Lincoln Financial Group Fixed Income Mutual Funds
Table of contents
> Portfolio management review 1
> Performance summary 2
> Disclosure of Fund expenses 4
> Sector allocation 5
> Financial statements:
Statement of net assets 6
Statement of operations 8
Statements of changes in net assets 9
Financial highlights 10
Notes to financial statements 14
> Report of independent registered
public accounting firm 17
> Board of trustees/directors and officers addendum 18
> About the organization 20
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) 2006 Delaware Distributors L.P.
Portfolio management review
> Delaware Cash Reserve Fund
April 10, 2006
Fund manager
Cynthia Isom
Portfolio Manager
The fiscal year ended March 31, 2006, with the Federal Reserve Board raising
short-term interest rates to 4.75% and reiterating its long-standing commitment
to fighting inflation. Benjamin Bernanke stuck to the Federal Reserve's playbook
in his first meeting as chairman, as the fed's Open Market Committee boosted
borrowing costs to a five-year high and hinted that an additional interest rate
increase or increases could be in store. This marked the fifteenth straight
interest rate increase by the fed since June 2004.
As a whole, money market funds have had a successful year, posting their first
annual gains in assets since 2001. Currently, money market funds are widening
their rate advantage over options such as bank saving accounts. At this time,
some money market funds, which invest in short-term instruments, have attractive
yields and the advantage of keeping cash in relatively safe securities, such as
certificates of deposit and commercial paper.
Delaware Cash Reserve Fund returned 3.11% (Class A shares at net asset value
with dividends reinvested) for the fiscal year ended March 31, 2006.* The
average taxable money market fund, as measured by the 393 funds that compose the
Lipper Money Market Funds Average, returned 2.86% for the same period.
Typical of a money market fund, more than half of the Delaware Cash Reserve
Fund's assets remain invested in commercial paper, which represents obligations
issued by corporations or banks to finance short-term credit needs, such as
accounts receivable and inventory.
Delaware Investments believes that the US economy will continue to be strong in
the second quarter and grow at a moderate pace later in 2006. We remain mindful
of global inflationary pressures, which we believe will continue to be an
overriding concern for the U.S. economy in the near and intermediate future.
High energy and commodity prices give further evidence that investors should be
mindful of potential inflationary pressures. Amid this economic backdrop and
fairly rich spread valuations, we expect to remain more cautious in non-Treasury
sectors. Our view is that the dollar will weaken versus most trading partners'
currencies in 2006 because of the growing US trade imbalance.
Regardless of the near-term outlook, it remains important for investors to
periodically reexamine the asset allocation within their investment portfolios.
For individuals seeking stability of principal or needing to keep
cash-equivalent assets handy while making decisions about stock and bond
investments, we believe Delaware Cash Reserve Fund can continue to be a valuable
short-term investment vehicle.
* For complete annualized performance for Delaware Cash Reserve Fund, please
see the table on page 2.
1
Performance summary
> Delaware Cash Reserve Fund
The performance data quoted represent past performance; past performance does
not guarantee future results. Investment return and principal value may
fluctuate so your shares, when redeemed, may be worth more or less than their
original cost. Current performance may be lower or higher than the performance
data quoted. Please obtain the performance data for the most recent month end by
calling 800 523-1918 or visiting our Web site at
www.delawareinvestments.com/performance. You should consider the investment
objectives, risks, charges and expenses of the investment carefully before
investing. The Delaware Cash Reserve Fund prospectus contains this and other
important information about the Fund. Please request a prospectus by calling 800
523-1918. Read it carefully before you invest or send money. Performance
includes reinvestment of all distributions and is subject to change.
Fund Performance
Average Annual Total Returns/Yields 7-Day Yield
Through March 31, 2006 Lifetime 10 Years 5 Years 1 Year 3/31/06
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Class A (Est. 6/30/78) +6.27% +3.29% +1.69% +3.11% +4.06%
Consultant Class (Est. 6/30/78) +6.09% +3.03% +1.44% +2.85% +3.81%
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Class B (Est. 5/2/94)
Excluding Sales Charge +2.80% +2.53% +0.95% +2.21% +3.06%
Including Sales Charge +2.80% +2.53% +0.51% -1.79%
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Class C (Est. 11/29/95)
Excluding Sales Charge +2.44% +2.40% +0.95% +2.21% +3.06%
Including Sales Charge +2.44% +2.40% +0.95% +1.21%
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All performance reflects reinvestment of all dividends. An investment in
Delaware Cash Reserve Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment of $1.00 per share, it is possible to lose
money by investing in Delaware Cash Reserve Fund. Returns and yields will
fluctuate. Past performance is not a guarantee of future results.
Class A shares are available without sales charges or any 12b-1 fees.
Consultant Class shares were first made available on March 10, 1988 and are
available without a sales charge. Consultant Class performance prior to March
10, 1988 for Delaware Cash Reserve Fund is based on Class A performance.
Performance after March 10, 1988 reflects the impact of an annual service and
distribution fee of up to 0.30%.
Class B shares are sold with a contingent deferred sales charge that declines
from 4% to zero depending upon the period of time the shares are held. Class B
shares will automatically convert to Consultant Class shares on a quarterly
basis approximately eight years after purchase. They are also subject to an
annual distribution and service fee of up to 1%. Lifetime and 10-year
performance figures for Class B shares reflect conversion to Consultant Class
after eight years.
Class C shares are sold with a contingent deferred sales charge of 1% if
redeemed during the first 12 months. They are also subject to an annual
distribution and service fee of up to 1%.
An expense limitation was in effect for all classes of Delaware Cash Reserve
Fund during all periods shown. Performance would have been lower had the expense
limitation not been in effect.
The performance table does not reflect the deduction of taxes the shareholder
would pay on Fund dividends or redemptions of Fund shares.
Delaware Cash Reserve Fund Class B and C shares are available only as part of an
overall investment program using Class B or C shares of other funds. Direct
investment into Delaware Cash Reserve Fund Class B or C shares may be made only
when establishing a Wealth Builder plan. Performance, excluding sales charges,
for Class B and C shares assumes either that contingent deferred sales charges
did not apply or the investment was not redeemed.
2
Fund Basics
As of March 31, 2006
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Fund objective
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The Fund seeks to provide maximum current income, while preserving principal and
maintaining liquidity.
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Total fund net assets
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$425.09 million
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Number of holdings
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47
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Fund start date
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June 30, 1978
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Your fund manager
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Cynthia Isom joined Delaware Investments in 1985 as a trader of money market,
high-grade, and Treasury securities. Prior to coming to Delaware, she worked as
an institutional salesperson with Merrill Lynch. Ms. Isom holds a bachelor's
degree from Vassar College.
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Nasdaq symbols
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Class A DCRXX
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CUSIP Numbers:
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Class A 245910-10-4
Class B 245910-30-2
Class C 245910-40-1
Consultant Class 245910-20-3
3
Disclosure of Fund expenses
For the Period October 1, 2005 to March 31, 2006
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, reinvested
dividends, or other distributions; redemption fees; and exchange fees; and (2)
ongoing costs, including management fees; distribution and/or service (12b-1)
fees; and other Fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period October 1, 2005 to March 31, 2006.
Actual Expenses
The first section of the table shown, "Actual Fund Return," provides information
about actual account values and actual expenses. You may use the information in
this section of the table, together with the amount you invested, to estimate
the expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first section under the heading
entitled "Expenses Paid During Period" to estimate the expenses you paid on your
account during this period.
Hypothetical Example for Comparison Purposes
The second section of the table shown, "Hypothetical 5% Return," provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. The Fund's actual expenses, shown in the table reflect fee waivers in
effect. The expenses shown in the table assume reinvestment of all dividends and
distributions.
"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).
Delaware Cash Reserve Fund
Expense Analysis of an Investment of $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 10/1/05 to
10/1/05 3/31/06 Ratio 3/31/06
- -----------------------------------------------------------------------------------------------------
Actual Fund Return
Class A $1,000.00 $1,017.90 0.70% $3.52
Class B 1,000.00 1,012.80 1.70% 8.53
Class C 1,000.00 1,012.80 1.70% 8.53
Consultant Class 1,000.00 1,016.60 0.95% 4.78
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Hypothetical 5% Return (5% return before expenses)
Class A $1,000.00 $1,021.44 0.70% $3.53
Class B 1,000.00 1,016.45 1.70% 8.55
Class C 1,000.00 1,016.45 1.70% 8.55
Consultant Class 1,000.00 1,020.19 0.95% 4.78
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4
Sector allocation
> Delaware Cash Reserve Fund
As of March 31, 2006
Sector designations may be different than the sector designations presented in
other Fund materials.
Percentage
Sector of Net Assets
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Certificates of Deposit 15.94%
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Corporate Bonds 1.16%
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Discount Commercial Paper 66.99%
Colleges & Universities 4.48%
Energy 4.03%
Financial Services 44.08%
Industrial 1.74%
Mortgage Bankers & Brokers 9.00%
Sovereign Agency 3.66%
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Floating Rate Notes 6.91%
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Interest Bearing Commercial Paper 2.30%
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Other Medium Term Notes 2.30%
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Variable Rate Demand Notes 2.30%
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Total Market Value of Securities 97.90%
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Receivables and Other Assets Net of Liabilities 2.10%
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Total Net Assets 100.00%
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5
Statement of net assets
> Delaware Cash Reserve Fund
March 31, 2006
Principal
Amount Value
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Certificates of Deposit - 15.94%
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American Express Centurion Bank
4.75% 5/26/06 $10,000,000 $ 10,000,000
Credit Suisse 4.75% 4/20/06 10,000,000 10,000,000
First Tennessee Bank
4.53% 4/17/06 10,000,000 10,000,000
4.54% 4/20/06 10,000,000 10,000,000
Wells Fargo Bank 4.77% 4/24/06 10,000,000 10,000,000
Wilmington Trust
4.56% 4/20/06 10,000,000 10,000,000
4.71% 5/8/06 9,250,000 9,250,000
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Total Certificates of Deposit
(cost $69,250,000) 69,250,000
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Corporate Bonds - 1.16%
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Bank of America 7.125% 9/15/06 5,000,000 5,053,920
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Total Corporate Bonds (cost $5,053,920) 5,053,920
------------
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[not equal]Discount Commercial Paper - 66.99%
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Colleges & Universities - 4.48%
Leland Stanford Junior University
4.528% 5/2/06 9,500,000 9,461,061
Yale University 4.829% 4/4/06 10,000,000 9,996,175
------------
19,457,236
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Energy - 4.03%
Koch Resources 4.716% 4/3/06 17,500,000 17,495,294
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17,495,294
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Financial Services - 44.08%
(CS)Aquinas Funding 4.556% 4/3/06 17,500,000 17,495,294
(CS)Barton Capital 4.825% 4/3/06 17,500,000 17,495,304
Cargill Asia Pacific Treasury
4.847% 4/3/06 14,350,000 14,346,149
(CS)Eiffel Funding
4.843% 4/17/06 5,000,000 4,990,000
4.888% 5/12/06 5,000,000 4,973,008
4.890% 5/2/06 10,000,000 9,958,925
(CS)Eureka Securitization
4.581% 5/17/06 6,500,000 6,460,216
4.916% 5/18/06 10,000,000 9,937,203
(CS)Fountain Square
4.625% 5/22/06 9,500,000 9,435,535
4.781% 5/5/06 10,000,000 9,955,800
ING America Insurance Holdings
4.774% 7/6/06 10,000,000 9,870,667
4.792% 4/12/06 6,000,000 5,991,787
(CS)Starbird Funding
4.794% 5/15/06 8,000,000 7,952,969
4.840% 6/9/06 10,000,000 9,907,617
(CS)Surrey Funding
4.774% 4/20/06 10,000,000 9,976,224
4.790% 5/1/06 5,000,000 4,980,125
Swiss RE Financial Products
4.842% 6/12/06 4,025,000 3,986,038
4.875% 4/24/06 10,000,000 9,971,058
(CS)Three Pillars Funding 4.832% 4/5/06 6,307,000 6,303,643
UBS Finance Delaware
4.832% 4/3/06 17,500,000 17,495,304
------------
191,482,866
------------
Industrial - 1.74%
Cargill 4.535% 4/3/06 3,150,000 3,149,155
Total Capital 4.832% 4/3/06 4,410,000 4,408,819
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7,557,974
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Mortgage Bankers & Brokers - 9.00%
Goldman Sachs 4.832% 7/20/06 8,000,000 7,883,156
Morgan Stanley 4.842% 4/4/06 20,000,000 19,992,050
National Australia Funding
4.822% 4/4/06 6,700,000 6,697,337
Westpac Banking 4.551% 6/9/06 4,567,000 4,524,633
------------
39,097,176
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Sovereign Agency - 3.66%
Swedish National Finance
4.778% 4/10/06 7,000,000 6,992,143
4.863% 5/24/06 9,000,000 8,936,267
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15,928,410
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Total Discount Commercial Paper
(cost $291,018,956) 291,018,956
------------
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oFloating Rate Notes - 6.91%
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ANZ National International Loan
4.65% 6/7/07 5,000,000 5,000,000
Bank of America 4.81% 6/7/06 10,000,000 10,000,000
Washington Mutual Bank
4.651% 5/31/06 10,000,000 10,000,000
4.729% 12/15/06 5,000,000 5,000,000
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Total Floating Rate Notes
(cost $30,000,000) 30,000,000
------------
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Interest Bearing Commercial Paper - 2.30%
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oGoldman Sachs 4.661% 8/7/06 10,000,000 10,000,000
------------
Total Interest Bearing Commercial
Paper (cost $10,000,000) 10,000,000
------------
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Other Medium Term Notes - 2.30%
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Sigma Finance 4.83% 1/30/07 10,000,000 10,000,000
------------
Total Other Medium Term Notes
(cost $10,000,000) 10,000,000
------------
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oVariable Rate Demand Notes - 2.30%
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North Texas Higher Education Authority
4.85% 12/1/44 (AMBAC) 8,000,000 8,000,000
PCP Investors 4.87% 12/1/24 2,000,000 2,000,000
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Total Variable Rate Demand Notes
(cost $10,000,000) 10,000,000
------------
(continued)
6
Statement of net assets
Delaware Cash Reserve Fund
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Total Market Value of Securities - 97.90%
(cost $425,322,876)(tri) $425,322,876
Receivables and Other Assets
Net of Liabilities - 2.10% 9,100,552
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Net Assets Applicable to 434,771,285 Shares
Outstanding - 100.00% $434,423,428
============
Net Asset Value - Delaware Cash Reserve Fund
Class A ($400,446,986 / 400,741,547 Shares) $1.00
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Net Asset Value - Delaware Cash Reserve Fund
Class B ($9,807,597 / 9,831,006 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund
Class C ($5,352,796 / 5,359,939 Shares) $1.00
-----
Net Asset Value - Delaware Cash Reserve Fund
Consultant Class ($18,816,049 / 18,838,793 Shares) $1.00
-----
Components of Net Assets at March 31, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $434,771,454
Accumulated net realized loss on investments (348,026)
------------
Total net assets $434,423,428
============
[not equal] The interest rate shown is the effective yield as of the time of
purchase.
(CS) Asset-backed commercial paper.
o Variable rate security. The interest rate shown is the rate as of March 31,
2006.
(tri) Also the cost for federal income tax purposes.
AMBAC - Insured by the AMBAC Assurance Corporation
See accompanying notes
7
Statement of operations
> Delaware Cash Reserve Fund
Year Ended March 31, 2006
Investment Income:
Interest $17,565,306
-----------
Expenses:
Management fees $2,101,527
Dividend disbursing and transfer agent fees and expenses 855,508
Distribution expenses - Class B 146,877
Distribution expenses - Class C 74,746
Distribution expenses - Consultant Class 56,820
Accounting and administration expenses 180,946
Reports and statements to shareholders 130,215
Registration fees 77,826
Legal and professional fees 70,020
Insurance fees 39,933
Trustees' fees 25,451
Custodian fees 9,284
Pricing fees 1,468
Taxes (other than taxes on income) 178
Other 19,137 3,789,936
----------
Less expenses absorbed or waived (239,577)
Less waived distribution expenses - Class B (22,099)
Less waived distribution expenses - Class C (10,968)
Less waived distribution expenses - Consultant Class (9,470)
Less expense paid indirectly (4,882)
-----------
Total expenses 3,502,940
-----------
Net Investment Income 14,062,366
-----------
Net Realized Gain on Investments:
Net Realized Gain on Investments 750
-----------
Net Increase in Net Assets Resulting from Operations $14,063,116
===========
See accompanying notes
8
Statements of changes in net assets
> Delaware Cash Reserve Fund
Year Ended
3/31/06 3/31/05
Increase in Net Assets from Operations:
Net investment income $ 14,062,366 $ 5,931,994
Net realized gain on investments 750 3,573
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Net increase in net assets resulting from operations 14,063,116 5,935,567
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Dividends to Shareholders from:
Net investment income:
Class A (13,061,424) (5,504,334)
Class B (311,897) (135,870)
Class C (159,022) (64,220)
Consultant Class (530,023) (227,570)
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(14,062,366) (5,931,994)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold:
Class A 526,009,821 669,359,865
Class B 6,963,595 15,751,441
Class C 8,962,766 11,940,121
Consultant Class 9,334,530 20,542,359
Net asset value of shares issued upon reinvestment of dividends:
Class A 12,494,548 5,221,123
Class B 270,548 112,292
Class C 146,630 56,890
Consultant Class 512,295 215,023
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564,694,733 723,199,114
------------ ------------
Cost of shares repurchased:
Class A (574,611,940) (723,689,725)
Class B (15,180,969) (19,891,833)
Class C (13,490,077) (12,555,278)
Consultant Class (10,862,243) (33,253,549)
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(614,145,229) (789,390,385)
------------ ------------
Decrease in net assets derived from capital share transactions (49,450,496) (66,191,271)
------------ ------------
Net Decrease in Net Assets (49,449,746) (66,187,698)
Net Assets:
Beginning of period 483,873,174 550,060,872
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End of period (there was no undistributed net investment
income at either period end) $434,423,428 $483,873,174
============ ============
See accompanying notes
9
Financial highlights
> Delaware Cash Reserve Fund Class A
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Year Ended
------------------------------------------------------------------------------
3/31/06 3/31/05 3/31/04 3/31/03 3/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income 0.031 0.012 0.007 0.009 0.026
------ ------ ------ ------ ------
Total from investment operations 0.031 0.012 0.007 0.009 0.026
------ ------ ------ ------ ------
Less dividends from:
Net investment income (0.031) (0.012) (0.007) (0.009) (0.026)
------ ------ ------ ------ ------
Total dividends (0.031) (0.012) (0.007) (0.009) (0.026)
------ ------ ------ ------ ------
Net asset value, end of period $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
Total return(1) 3.11% 1.21% 0.67% 0.92% 2.59%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $400,447 $436,552 $485,657 $538,469 $525,032
Ratio of expenses to average net assets 0.70% 0.56% 0.45% 0.76% 0.92%
Ratio of expenses to average net assets
prior to expense limitation and expense
paid indirectly 0.75% 0.78% 0.93% 0.99% 0.92%
Ratio of net investment income to average net assets 3.06% 1.17% 0.67% 0.91% 2.56%
Ratio of net investment income to average net assets
prior to expense limitation and expense paid indirectly 3.01% 0.95% 0.19% 0.68% 2.56%
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends at net asset value.
Total investment return reflects waivers and payment of fees by the manager,
as applicable. Performance would have been lower had the expense limitation
not been in effect.
See accompanying notes
10 (continued)
Financial highlights
> Delaware Cash Reserve Fund Class B
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Year Ended
-------------------------------------------------------------------------------
3/31/06 3/31/05 3/31/04 3/31/03 3/31/02
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income 0.022 0.007 0.001 0.002 0.016
------ ------ ------ ------ ------
Total from investment operations 0.022 0.007 0.001 0.002 0.016
------ ------ ------ ------ ------
Less dividends from:
Net investment income (0.022) (0.007) (0.001) (0.002) (0.016)
------ ------ ------ ------ ------
Total dividends (0.022) (0.007) (0.001) (0.002) (0.016)
------ ------ ------ ------ ------
Net asset value, end of period $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
Total return(1) 2.21% 0.70% 0.11% 0.16% 1.57%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $9,807 $17,755 $21,783 $37,025 $25,744
Ratio of expenses to average net assets 1.55% 1.06% 1.02% 1.51% 1.92%
Ratio of expenses to average net assets prior to
expense limitation and expense paid indirectly 1.75% 1.78% 1.93% 1.99% 1.92%
Ratio of net investment income to average net assets 2.21% 0.67% 0.10% 0.16% 1.56%
Ratio of net investment income (loss) to average net
assets prior to expense limitation and expense
paid indirectly 2.01% (0.05%) (0.81%) (0.32%) 1.56%
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(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends at net asset value
and does not reflect the impact of a sales charge. Total investment return
reflects waivers and payment of fees by the manager and distributor, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
(continued) 11
Financial highlights
> Delaware Cash Reserve Fund Class C
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Year Ended
------------------------------------------------------------------------------
3/31/06 3/31/05 3/31/04 3/31/03 3/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income 0.022 0.007 0.001 0.002 0.016
------ ------ ------ ------ ------
Total from investment operations 0.022 0.007 0.001 0.002 0.016
------ ------ ------ ------ ------
Less dividends from:
Net investment income (0.022) (0.007) (0.001) (0.002) (0.016)
------ ------ ------ ------ ------
Total dividends (0.022) (0.007) (0.001) (0.002) (0.016)
------ ------ ------ ------ ------
Net asset value, end of period $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
Total return(1) 2.21% 0.70% 0.11% 0.16% 1.57%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $5,353 $9,734 $10,293 $10,424 $7,084
Ratio of expenses to average net assets 1.55% 1.06% 1.02% 1.51% 1.92%
Ratio of expenses to average net assets prior
to expense limitation and expense paid indirectly 1.75% 1.78% 1.93% 1.99% 1.92%
Ratio of net investment income to average net assets 2.21% 0.67% 0.10% 0.16% 1.56%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expense paid indirectly 2.01% (0.05%) (0.81%) (0.32%) 1.56%
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends at net asset value
and does not reflect the impact of a sales charge. Total investment return
reflects waivers and payment of fees by the manager and distributor, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
12 (continued)
Financial highlights
> Delaware Cash Reserve Fund Consultant Class
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Year Ended
------------------------------------------------------------------------------
3/31/06 3/31/05 3/31/04 3/31/03 3/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income 0.028 0.010 0.004 0.007 0.023
------ ------ ------ ------ ------
Total from investment operations 0.028 0.010 0.004 0.007 0.023
------ ------ ------ ------ ------
Less dividends from:
Net investment income (0.028) (0.010) (0.004) (0.007) (0.023)
------ ------ ------ ------ ------
Total dividends (0.028) (0.010) (0.004) (0.007) (0.023)
------ ------ ------ ------ ------
Net asset value, end of period $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
Total return(1) 2.85% 0.95% 0.42% 0.67% 2.34%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $18,816 $19,832 $32,328 $37,030 $34,614
Ratio of expenses to average net assets 0.95% 0.81% 0.70% 1.01% 1.17%
Ratio of expenses to average net assets
prior to expense limitation and expense
paid indirectly 1.05% 1.08% 1.23% 1.24% 1.17%
Ratio of net investment income to average net assets 2.81% 0.92% 0.42% 0.66% 2.31%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expense paid indirectly 2.71% 0.65% (0.11%) 0.43% 2.31%
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends at net asset value.
Total investment return reflects waivers and payment of fees by the manager
and distributor, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
13
Notes to financial statements
> Delaware Cash Reserve Fund
March 31, 2006
Delaware Group Cash Reserve (the "Trust") is organized as a Delaware statutory
trust and offers one series, the Delaware Cash Reserve Fund (the "Fund"). The
Trust is an open-end investment company. The Fund is considered diversified
under the Investment Company Act of 1940, as amended, and offers Class A, Class
B, Class C and Consultant Class shares. Class A and Consultant Class shares are
not subject to a sales charge. Class B shares are sold with a contingent
deferred sales charge that declines from 4% to zero depending upon the period of
time the shares are held. Class B shares will automatically convert to
Consultant Class shares on a quarterly basis approximately eight years after
purchase. Class C shares are sold with a contingent deferred sales charge of 1%,
if redeemed during the first 12 months.
The investment objective of the Fund is to seek to provide maximum current
income, while preserving principal and maintaining liquidity.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation -- Securities are valued at amortized cost, which
approximates market value.
Federal Income Taxes -- The Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting -- Investment income and common expenses are allocated to the
classes of the Fund on the basis of "settled shares" of each class in relation
to the net assets of the Fund. Realized and unrealized gain (loss) on
investments are allocated to the various classes of the Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates -- The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other -- Expenses common to all funds within the Delaware Investments(R) Family
of Funds are allocated amongst the funds on the basis of average net assets.
Management fees and some other expenses are paid monthly. Security transactions
are recorded on the date the securities are purchased or sold (trade date) for
financial reporting purposes. Costs used in calculating realized gains and
losses on the sale of investment securities are those of the specific securities
sold. Interest income is recorded on the accrual basis. Discounts and premiums
are amortized to interest income over the lives of the respective securities.
The Fund declares dividends daily from net investment income and pays such
dividends monthly.
The Fund receives earnings credits from its 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 Statement of
Operations with the corresponding expense offset shown as "expense paid
indirectly."
2. Investment Management, Administration Agreements and Other Transactions
with Affiliates
In accordance with the terms of its investment management agreement, the Fund
pays Delaware Management Company (DMC), a series of Delaware Management Business
Trust and the investment manager, an annual fee which is calculated daily at the
rate of 0.45% on the first $500 million of average daily net assets of the Fund,
0.40% on the next $500 million, 0.35% on the next $1.5 billion and 0.30% on the
average daily net assets in excess of $2.5 billion.
Effective July 1, 2005, DMC has elected to waive that portion, if any, of its
management fee and reimburse the Fund to the extent necessary to ensure that
annual operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, certain insurance costs and extraordinary expenses, do not
exceed 0.70% of average daily net assets of the Fund, which can be revoked at
any time. Prior to July 1, 2005, DMC had elected to waive its fees in order to
prevent such expenses from exceeding 0.65% of the average daily net assets of
the Fund.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. Effective May
19, 2005, the Fund pays DSC a monthly fee computed at the annual rate of 0.04%
of the Fund's average daily net assets for accounting and administration
services. Prior to May 19, 2005, the Fund paid DSC a monthly fee based on
average net assets subject to certain minimums for accounting and administration
services. The Fund pays DSC a monthly fee based on the number of shareholder
accounts for dividend disbursing and transfer agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.30% of the average daily net
assets of the Consultant Class shares and 1.00% of the average daily net assets
of the Class B and C shares. Class A shares pay no distribution and service
expenses. DDLP has elected to waive distribution and service fees in order to
prevent these fees from exceeding 0.25% of average daily net assets for
Consultant Class shares. These waivers may be revoked at any time. Prior to July
1, 2005, DDLP had elected to waive distribution and service fees in order to
prevent these fees from exceeding 0.50% of average daily net assets for Class B
and C shares.
At March 31, 2006, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC $143,928
Dividend disbursing, transfer agent, accounting
and administration fees and other expenses
payable to DSC 92,946
Distribution fee payable to DDLP 17,541
Other expenses payable to DMC and affiliates* 11,406
* DMC, as part of its administrative services, pays operating expenses on
behalf of the Fund and is reimbursed on a periodic basis. Such expenses
include items such as printing of shareholder reports, fees for audit, legal
and tax services, registration fees and trustees' fees.
14 (continued)
Notes to financial statements
> Delaware Cash Reserve Fund
2. Investment Management, Administration Agreements and Other Transactions with
Affiliates (continued)
As provided in the investment management agreement, the Fund bears the cost of
certain legal services expenses, including internal legal services provided to
the Fund by DMC employees. For the year ended March 31, 2006, the Delaware Cash
Reserve Fund was charged $28,775 for internal legal services provided by DMC.
For the year ended March 31, 2006, DDLP received gross contingent deferred sales
charge commissions of $79,299 and $3,213 on redemption of the Fund's Class B and
Class C shares, respectively. These commissions were entirely used to offset
up-front commissions previously paid by DDLP to broker dealers on sales of those
shares.
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust.
These officers and trustees are paid no compensation by the Fund.
3. Dividend and Distribution Information
Income distributions are determined in accordance with federal income tax
regulations, which may differ from U.S. generally accepted accounting
principles. Additionally, net short-term gains on sales of investment securities
are treated as ordinary income for federal income tax purposes. The tax
character of dividends paid during the years ended March 31, 2006 and 2005 was
as follows:
Year Ended
3/31/06 3/31/05
------- -------
Ordinary income $14,062,366 $5,931,994
As of March 31, 2006, the components of net assets on a tax basis were as
follows:
Shares of beneficial interest $434,771,454
Capital loss carryforwards (348,026)
------------
Net assets $434,423,428
============
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. $750 was utilized in 2006.
Capital loss carryforwards remaining at March 31, 2006 will expire as follows:
$348,026 expires in 2011.
4. Capital Shares
Transactions in capital shares were as follows:
Year Ended
3/31/06 3/31/05
Shares sold:
Class A 526,009,821 669,359,865
Class B 6,963,595 15,751,441
Class C 8,962,766 11,940,121
Consultant Class 9,334,530 20,542,359
Shares issued upon reinvestment of dividends:
Class A 12,494,548 5,221,081
Class B 270,548 112,291
Class C 146,630 56,890
Consultant Class 512,295 215,023
------------ ------------
564,694,733 723,199,071
------------ ------------
Shares repurchased:
Class A (574,611,940) (723,689,725)
Class B (15,180,969) (19,891,832)
Class C (13,490,183) (12,555,278)
Consultant Class (10,862,243) (33,253,549)
------------ ------------
(614,145,335) (789,390,384)
------------ ------------
Net decrease (49,450,602) (66,191,313)
============ ============
For the years ended March 31, 2006 and 2005, 1,931,445 Class B shares were
converted to 1,931,445 Consultant Class shares valued at $1,931,445 and 580,569
Class B shares were converted to 580,569 Consultant Class shares valued at
$580,569, respectively. The respective amounts are included in Class B
redemptions and Consultant Class subscriptions in the table above and the
Statements of Changes in Net Assets.
5. Credit and Market Risks
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investments at $1.00 per share, it is possible to
lose money by investing in the Fund.
(continued) 15
Notes to financial statements
> Delaware Cash Reserve Fund
6. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a
variety of indemnifications. The Fund's maximum exposure under these
arrangements is unknown. However, the Fund has not had prior claims or losses
pursuant to these contracts. Management has reviewed the Fund's existing
contracts and expects the risk of loss to be remote.
7. Tax Information (Unaudited)
The information set forth below is for the Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of a fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in January of each
year. Please consult your tax advisor for proper treatment of this information.
For the fiscal year ended March 31, 2006, the Fund designates distributions paid
during the year as follows:
(A)
Ordinary
Income
Distributions
(Tax Basis)
---------------
100%
(A) is based on a percentage of the Fund's total distribution.
16
Report of independent
registered public accounting firm
To the Shareholders and Board of Trustees
Delaware Group Cash Reserve --
Delaware Cash Reserve Fund
We have audited the accompanying statement of net assets of Delaware Cash
Reserve Fund (the sole series of Delaware Group Cash Reserve) ("the Fund") as of
March 31, 2006, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of March 31, 2006, by correspondence with the custodian and
brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Delaware Cash Reserve Fund series of Delaware Group Cash Reserve at March 31,
2006, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and its financial
highlights for each of the five years in the period then ended, in conformity
with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 12, 2006
17
Delaware Investments(R) Family of Funds
Board of trustees/directors and officers addendum
A mutual fund is governed by a Board of Trustees/Directors ("Trustees"), which
has oversight responsibility for the management of a fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others who perform services for the
fund. The independent fund trustees, in particular, are advocates for
shareholder interests. Each trustee has served in that capacity since he or she
was elected to or appointed to the Board of Trustees, and will continue to serve
until his or her retirement or the election of a new trustee in his or her
place. The following is a list of the Trustees and Officers with certain
background and related information.
Number of
Portfolios in Fund Other
Name, Complex Overseen Directorships
Address Position(s) Length of Principal Occupation(s) by Trustee Held by
and Birthdate Held with Fund(s) Time Served During Past 5 Years or Officer Trustee or Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Jude T. Driscoll(2) Chairman, 5 Years - Since August 2000, 87 None
2005 Market Street President, Executive Officer Mr. Driscoll has served in
Philadelphia, PA Chief Executive various executive capacities
19103 Officer and 2 Years - at different times at
Trustee Trustee Delaware Investments(1)
March 10, 1963
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas L. Bennett Trustee Since Private Investor - 87 None
2005 Market Street March 23, 2005 (March 2004 - Present)
Philadelphia, PA
19103 Investment Manager -
Morgan Stanley & Co.
October 4, 1947 (January 1984 - March 2004)
- ------------------------------------------------------------------------------------------------------------------------------------
John A. Fry Trustee 4 Years President - 87 Director -
2005 Market Street Franklin & Marshall College Community Health
Philadelphia, PA (June 2002 - Present) Systems
19103
Executive Vice President - Director -
May 28, 1960 University of Pennsylvania Allied Barton
(April 1995 - June 2002) Security Holdings
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony D. Knerr Trustee 12 Years Founder/Managing Director - 87 None
2005 Market Street Anthony Knerr & Associates
Philadelphia, PA (Strategic Consulting)
19103 (1990 - Present)
December 7, 1938
- ------------------------------------------------------------------------------------------------------------------------------------
Lucinda S. Landreth Trustee Since Chief Investment Officer - 87 None
2005 Market Street March 23, 2005 Assurant, Inc.
Philadelphia, PA (Insurance)
19103 (2002 - 2004)
June 24, 1947
- ------------------------------------------------------------------------------------------------------------------------------------
Ann R. Leven Trustee 16 Years Treasurer/Chief Fiscal Officer - 87 Director and
2005 Market Street National Gallery of Art Audit Committee
Philadelphia, PA (1994 - 1999) Chairperson - Andy
19103 Warhol Foundation
November 1, 1940 Director and Audit
Committee Member -
Systemax Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
18
Number of
Portfolios in Fund Other
Name, Complex Overseen Directorships
Address Position(s) Length of Principal Occupation(s) by Trustee Held by
and Birthdate Held with Fund(s) Time Served During Past 5 Years or Officer Trustee or Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas F. Madison Trustee 11 Years President/Chief 87 Director -
2005 Market Street Executive Officer - Banner Health
Philadelphia, PA MLM Partners, Inc.
19103 (Small Business Investing Director -
and Consulting) CenterPoint Energy
February 25, 1936 (January 1993 - Present)
Director and Audit
Committee Member -
Digital River Inc.
Director and Audit
Committee Member -
Rimage
Corporation
Director - Valmont
Industries, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Janet L. Yeomans Trustee 6 Years Vice President 87 None
2005 Market Street (January 2003 - Present)
Philadelphia, PA and Treasurer
19103 (January 2006 - Present)
3M Corporation
July 31, 1948
Ms. Yeomans has held
various management positions
at 3M Corporation since 1983.
- ------------------------------------------------------------------------------------------------------------------------------------
J. Richard Zecher Trustee Since Founder - 87 Director and Audit
2005 Market Street March 23, 2005 Investor Analytics Committee Member -
Philadelphia, PA (Risk Management) Investor Analytics
19103 (May 1999 - Present)
Director and Audit
July 3, 1940 Committee Member -
Oxigene, Inc.
Director - Sutton
Asset Management
- ------------------------------------------------------------------------------------------------------------------------------------
Officers
- ------------------------------------------------------------------------------------------------------------------------------------
Michael P. Bishof Senior Chief Financial Mr. Bishof has served in 87 None(3)
2005 Market Street Vice President Officer since various executive capacities
Philadelphia, PA and February 17, 2005 at different times at
19103 Chief Financial Delaware Investments.
Officer
August 18, 1962
- ------------------------------------------------------------------------------------------------------------------------------------
David F. Connor Vice President, Vice President since Mr. Connor has served as 87 None(3)
2005 Market Street Deputy General September 21, 2000 Vice President and Deputy
Philadelphia, PA Counsel and Secretary and Secretary General Counsel of
19103 since Delaware Investments
October 25, 2005 since 2000.
December 2, 1963
- ------------------------------------------------------------------------------------------------------------------------------------
David P. O'Connor Senior Vice Senior Vice President, Mr. O'Connor has served in 87 None(3)
2005 Market Street President, General Counsel and various executive and legal
Philadelphia, PA General Counsel Chief Legal Officer capacities at different times
19103 and Chief since at Delaware Investments.
Legal Officer October 25, 2005
February 21, 1966
- ------------------------------------------------------------------------------------------------------------------------------------
John J. O'Connor Senior Vice President Treasurer Mr. O'Connor has served in 87 None
2005 Market Street and Treasurer since various executive capacities
Philadelphia, PA February 17, 2005 at different times at
19103 Delaware Investments.
June 16, 1957
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Delaware Investments is the marketing name for Delaware Management
Holdings, Inc. and its subsidiaries, including the Fund's(s') investment
advisor, principal underwriter and its transfer agent.
(2) Mr. Driscoll is considered to be an "Interested Trustee" because he is an
executive officer of the Fund's(s') manager and distributor.
(3) Messrs. Bishof, Connor, and David P. O'Connor serve in similar capacities
for the six portfolios of the Optimum Fund Trust, which have the same
investment advisor, principal underwriter, and transfer agent as the
registrant. Mr. John J. O'Connor also serves in a similar capacity for
Lincoln Variable Insurance Products Trust, which has the same investment
advisor as the registrant.
The Statement of Additional Information for the Fund(s) includes additional
information about the Trustees and Officers and is available, without charge,
upon request by calling 800 523-1918.
19
About the organization
This annual report is for the information of Delaware Cash Reserve Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current prospectus for Delaware Cash Reserve Fund and the
Delaware Investments(R) Performance Update for the most recently completed
calendar quarter. The prospectus sets forth details about charges, expenses,
investment objectives, and operating policies of the Fund. You should read the
prospectus carefully before you invest. The figures in this report represent
past results that are not a guarantee of future results. The return and
principal value of an investment in the Fund may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Board of Trustees Affiliated Officers Contact Information
Jude T. Driscoll Michael P. Bishof Investment Manager
Chairman Senior Vice President and Delaware Management Company, a Series
Delaware Investments Family of Funds Chief Financial Officer of Delaware Management Business Trust
Philadelphia, PA Delaware Investments Family of Funds Philadelphia, PA
Philadelphia, PA
Thomas L. Bennett National Distributor
Private Investor David F. Connor Delaware Distributors L.P.
Rosemont, PA Vice President, Deputy General Counsel, Philadelphia, PA
and Secretary
John A. Fry Delaware Investments Family of Funds Shareholder Servicing, Dividend
President Philadelphia, PA Disbursing and Transfer Agent
Franklin & Marshall College Delaware Service Company Inc.
Lancaster, PA David P. O'Connor 2005 Market Street
Senior Vice President, General Counsel, Philadelphia, PA 19103-7094
Anthony D. Knerr and Chief Legal Officer
Founder/Managing Director Delaware Investments Family of Funds For Shareholders
Anthony Knerr & Associates Philadelphia, PA 800 523-1918
New York, NY
John J. O'Connor For Securities Dealers
Lucinda S. Landreth Senior Vice President and Treasurer and Financial Institutions
Former Chief Investment Officer Delaware Investments Family of Funds Representatives Only
Assurant Inc. Philadelphia, PA 800 362-7500
Philadelphia, PA
Web Site
Ann R. Leven www.delawareinvestments.com
Former Treasurer/Chief Fiscal Officer
National Gallery of Art Delaware Investments is the marketing
Washington, DC name of Delaware Management Holdings,
Inc. and its subsidiaries.
Thomas F. Madison
President and Chief Executive Officer The Fund files its complete schedule of portfolio holdings with the Securities
MLM Partners Inc. and Exchange Commission for the first and third quarters of each fiscal year on
Minneapolis, MN Form N-Q. The Fund's Forms N-Q, as well as a description of the policies and
procedures that the Fund uses to determine how to vote proxies (if any) relating
Janet L. Yeomans to portfolio securities are available without charge (i) upon request, by
Vice President and Treasurer calling 800 523-1918; (ii) on the Fund's Web site at
3M Corporation http://www.delawareinvestments.com; and (iii) on the Commission's Web site at
St. Paul, MN http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC; information on the
J. Richard Zecher operation of the Public Reference Room may be obtained by calling 800 SEC-0330.
Founder
Investor Analytics Information (if any) regarding how the Fund voted proxies relating to portfolio
Scottsdale, AZ securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through the Fund's Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
20
Simplify your life.
Manage your investments online!
Get Account Access, the Delaware Investments(R) secure Web site that allows you
to conduct your business online. Gain 24-hour access to your account and one of
the highest levels of Web security available. You also get:
o Hassle-Free Investing - Make online purchases and redemptions at any time.
o Simplified Tax Processing - Automatically retrieve your Delaware Investments
accounts' 1099 information and import it directly into your 1040 tax return.
Available only with Turbo Tax(R) Online(SM) and Desktop software -
www.turbotax.com.
o Less Mail Clutter - Get instant access to your fund materials online with
Delaware eDelivery.
Register for Account Access today! Visit www.delawareinvestments.com,
select Individual Investors, and click Account Access.
Please call our Shareholder Service Center at 800 523-1918 Monday through Friday
from 8:00 a.m. to 7:00 p.m., Eastern Time, to assist with any questions.
Delaware
Investments(R)
- --------------
A member of Lincoln Financial Group
(438) Printed in the USA
AR-008 [3/06] CGI 5/06 ANN 0603 CASH PO10969
Item 2. Code of Ethics
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or a
third party. A copy of the registrant's Code of Business Ethics has been posted
on Delaware Investments' internet website at www.delawareinvestments.com. Any
amendments to the Code of Business Ethics, and information on any waiver from
its provisions granted by the registrant, will also be posted on this website
within five business days of such amendment or waiver and will remain on the
website for at least 12 months.
Item 3. Audit Committee Financial Expert
The registrant's Board of Trustees/Directors has determined that each
member of the registrant's Audit Committee is an audit committee financial
expert, as defined below. For purposes of this item, an "audit committee
financial expert" is a person who has the following attributes:
a. An understanding of generally accepted accounting principles and
financial statements;
b. The ability to assess the general application of such principles in
connection with the accounting for estimates, accruals, and reserves;
c. Experience preparing, auditing, analyzing, or evaluating financial
statements that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the registrant's financial statements, or
experience actively supervising one or more persons engaged in such activities;
d. An understanding of internal controls and procedures for financial
reporting; and
e. An understanding of audit committee functions.
An "audit committee financial expert" shall have acquired such attributes
through:
a. Education and experience as a principal financial officer, principal
accounting officer, controller, public accountant, or auditor or experience in
one or more positions that involve the performance of similar functions;
b. Experience actively supervising a principal financial officer,
principal accounting officer, controller, public accountant, auditor, or person
performing similar functions;
c. Experience overseeing or assessing the performance of companies or
public accountants with respect to the preparation, auditing, or evaluation of
financial statements; or
d. Other relevant experience.
The registrant's Board of Trustees/Directors has also determined that
each member of the registrant's Audit Committee is independent. In order to be
"independent" for purposes of this item, the Audit Committee member may not: (i)
other than in his or her capacity as a member of the Board of Trustees/Directors
or any committee thereof, accept directly or indirectly any consulting, advisory
or other compensatory fee from the issuer; or (ii) be an "interested person" of
the registrant as defined in Section 2(a)(19) of the Investment Company Act of
1940.
The names of the audit committee financial experts on the registrant's
Audit Committee are set forth below:
Thomas L. Bennett (1)
Thomas F. Madison
Janet L. Yeomans (1)
J. Richard Zecher
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 $26,400 for
the fiscal year ended March 31, 2006.
- -----------------------
(1) The instructions to Form N-CSR require disclosure on the relevant experience
of persons who qualify as audit committee financial experts based on "other
relevant experience." The Board of Trustees/Directors has determined that Mr.
Bennett qualifies as an audit committee financial expert by virtue of his
education, Chartered Financial Analyst designation, and his experience as a
credit analyst, portfolio manager and the manager of other credit analysts and
portfolio managers. The Board of Trustees/Directors has determined that Ms.
Yeomans qualifies as an audit committee financial expert by virtue of her
education and experience as the Treasurer of a large global corporation.
The aggregate fees billed for services provided to the registrant by
its independent auditors for the audit of the registrant's annual financial
statements and for services normally provided by the independent auditors in
connection with statutory and regulatory filings or engagements were $25,350 for
the fiscal year ended March 31, 2005.
(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, 2006.
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 and other service providers under common
control with the adviser and that relate directly to the operations or financial
reporting of the registrant were $33,700 for the registrant's fiscal year ended
March 31, 2006. The percentage of these fees relating to services approved by
the registrant's Audit Committee pursuant to the de minimis exception from the
pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These audit-related services were as follows: issuance of reports concerning
transfer agent's system of internal accounting control pursuant to Rule 17Ad-13
of the Securities Exchange Act; and issuance of agreed upon procedures reports
to the registrant's Board in connection with the pass-through of internal legal
cost relating to the operations of the registrant.
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 and other service providers under common
control with the adviser and that relate directly to the operations or financial
reporting of the registrant were $164,700 for the registrant's fiscal year ended
March 31, 2005. The percentage of these fees relating to services approved by
the registrant's Audit Committee pursuant to the de minimis exception from the
pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These audit-related services were as follows: issuance of reports concerning
transfer agent's system of internal accounting control pursuant to Rule 17Ad-13
of the Securities Exchange Act; issuance of agreed upon procedures reports to
the registrant's Board in connection with the annual transfer agent and fund
accounting service agent contract renewals and the pass-through of internal
legal cost relating to the operations of the registrant; and preparation of
Report on Controls Placed in Operation and Tests of Operating Effectiveness
Relating to the Retirement Plan Services Division ("SAS 70 report").
(c) Tax fees.
--------
The aggregate fees billed by the registrant's independent auditors for
tax-related services provided to the registrant were $5,200 for the fiscal year
ended March 31, 2006. 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 and other
service providers under common control with the adviser and that relate directly
to the operations or financial reporting of the registrant were $0 for the
registrant's fiscal year ended March 31, 2006.
The aggregate fees billed by the registrant's independent auditors for
tax-related services provided to the registrant were $1,750 for the fiscal year
ended March 31, 2005. The percentage of these fees relating to services approved
by the registrant's Audit Committee pursuant to the de minimis exception from
the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
These tax-related services were as follows: review of income tax return and
review of annual excise distribution calculation.
The aggregate fees billed by the registrant's independent auditors for
tax-related services provided to the registrant's adviser and other service
providers under common control with the adviser 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.
(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, 2006.
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 and other service providers under common
control with the adviser and that relate directly to the operations or financial
reporting of the registrant were $0 for the registrant's fiscal year ended March
31, 2006.
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 and other service providers under common
control with the adviser
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.
(e) The registrant's Audit Committee has established pre-approval
policies and procedures as permitted by Rule 2-01(c)(7)(i)(B) of Regulation S-X
(the "Pre-Approval Policy") with respect to services provided by the
registrant's independent auditors. Pursuant to the Pre-Approval Policy, the
Audit Committee has pre-approved the services set forth in the table below with
respect to the registrant up to the specified fee limits. Certain fee limits are
based on aggregate fees to the registrant and other registrants within the
Delaware Investments Family of Funds.
- ---------------------------------------------------------------------------------- -----------------------------------
Service Range of Fees
- ---------------------------------------------------------------------------------- -----------------------------------
Audit Services
- ---------------------------------------------------------------------------------- -----------------------------------
Statutory audits or financial audits for new Funds up to $25,000 per Fund
- ---------------------------------------------------------------------------------- -----------------------------------
Services associated with SEC registration statements (e.g., Form N-1A, Form
N-14, etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings (e.g., comfort letters up to $10,000 per Fund
for closed-end Fund offerings, consents), and assistance in responding to SEC
comment letters
- ---------------------------------------------------------------------------------- -----------------------------------
Consultations by Fund management as to the accounting or disclosure treatment of
transactions or events and/or the actual or potential impact of final or
proposed rules, standards or interpretations by the SEC, FASB, or other up to $25,000 in the aggregate
regulatory or standard-setting bodies (Note: Under SEC rules, some consultations
may be considered "audit-related services" rather than "audit services")
- ---------------------------------------------------------------------------------- -----------------------------------
Audit-Related Services
- ---------------------------------------------------------------------------------- -----------------------------------
Consultations by Fund management as to the accounting or disclosure treatment of
transactions or events and /or the actual or potential impact of final or
proposed rules, standards or interpretations by the SEC, FASB, or other up to $25,000 in the aggregate
regulatory or standard-setting bodies (Note: Under SEC rules, some consultations
may be considered "audit services" rather than "audit-related services")
- ---------------------------------------------------------------------------------- -----------------------------------
Tax Services
- ---------------------------------------------------------------------------------- -----------------------------------
U.S. federal, state and local and international tax planning and advice (e.g.,
consulting on statutory, regulatory or administrative developments, evaluation up to $25,000 in the aggregate
of Funds' tax compliance function, etc.)
- ---------------------------------------------------------------------------------- -----------------------------------
U.S. federal, state and local tax compliance (e.g., excise distribution reviews,
etc.) up to $5,000 per Fund
- ---------------------------------------------------------------------------------- -----------------------------------
Review of federal, state, local and international income, franchise and other up to $5,000 per Fund
tax returns
- ---------------------------------------------------------------------------------- -----------------------------------
Under the Pre-Approval Policy, the Audit Committee has also
pre-approved the services set forth in the table below with respect to the
registrant's investment adviser and other entities controlling, controlled by or
under common control with the investment adviser that provide ongoing services
to the registrant (the "Control Affiliates") up to the specified fee limit. This
fee limit is based on aggregate fees to the investment adviser and its Control
Affiliates.
- ---------------------------------------------------------------------------------- -----------------------------------
Service Range of Fees
- ---------------------------------------------------------------------------------- -----------------------------------
Non-Audit Services
- ---------------------------------------------------------------------------------- -----------------------------------
Services associated with periodic reports and other documents filed with the SEC up to $10,000 in the aggregate
and assistance in responding to SEC comment letters
- ---------------------------------------------------------------------------------- -----------------------------------
The Pre-Approval Policy requires the registrant's independent auditors
to report to the Audit Committee at each of its regular meetings regarding all
services initiated since the last such report was rendered, including those
services authorized by the Pre-Approval Policy.
(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
and other service providers under common control with the adviser were $201,160
and $354,209 for the registrant's fiscal years ended March 31, 2006 and March
31, 2005, 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 second fiscal quarter of the
period covered by the report to stockholders included herein (i.e., the
registrant's fourth fiscal quarter) that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
Item 12. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are
attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1
under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are
furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf, by the undersigned, thereunto duly authorized.
Name of Registrant: Delaware Group Cash Reserve
JUDE T. DRISCOLL
- ---------------------------------
By: Jude T. Driscoll
Title: Chief Executive Officer
Date: June 2, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
JUDE T. DRISCOLL
- ---------------------------------
By: Jude T. Driscoll
Title: Chief Executive Officer
Date: June 2, 2006
MICHAEL P. BISHOF
- ---------------------------------
By: Michael P. Bishof
Title: Chief Financial Officer
Date: June 2, 2006