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: 811-21335
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: 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
Optimum Fixed Income Fund Annual Shareholder Report
Optimum International Fund Annual Shareholder Report
Optimum Large Cap Growth Fund Annual Shareholder Report
Optimum Large Cap Value Fund Annual Shareholder Report
Optimum Small Cap Growth Fund Annual Shareholder Report
Optimum Small Cap Value Fund Annual Shareholder Report
Annual Report
March 31, 2006
Table of contents
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
Disclosure of Fund expenses 26
Sector/country allocations and
credit rating breakdown 28
Financial statements
Statements of net assets 32
Statements of assets and liabilities 66
Statements of operations 67
Statements of changes in net assets 68
Financial highlights 71
Notes to financial statements 83
Report of independent registered
public accounting firm 93
Other fund information 94
Board of trustees and officers 96
About the organization 98
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
Optimum Fixed Income Fund
April 11, 2006
Advisor:
Delaware Management Company (DMC)
Subadvisor:
Aberdeen Asset Management Inc. (AAMI)
The Optimum Fixed Income Fund returned +1.31% at net asset value and -3.26%
including the maximum applicable sales charge for the year ended March 31, 2006
(both figures reflect performance for Class A shares with all distributions
reinvested). By comparison, the Funds benchmark -- the Lehman Brothers Aggregate
Bond Index -- gained +2.26% for the period. For complete, annualized returns,
please see the fund performance table on page 4.
The Funds advisor, DMC, manages one portion of the Fund. It also has selected
AAMI as subadvisor to manage another portion of the Fund's assets. 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 fixed income
2) U.S. high yield fixed income
3) International fixed income
The strategy employed by AAMI is predicated on an investment philosophy that the
best way to consistently add value is through a strictly bottom-up approach to
capitalize on the inefficiencies inherent in the bond market. Therefore, AAMI
focuses its efforts on a disciplined process of carefully selecting individual
securities based on specified criteria and avoiding techniques such as interest
rate forecasting.
For more information on the investments styles used by the manager and
subadvisor, please see the Fund's prospectus.
Throughout the fiscal year, the Federal Reserve Board Open Market Committee
continued its "measured pace" of monetary tightening. Yet while short-term
interest rates rose as the fed set its short-term interest rate target
increasingly higher, long-term rates frequently did not follow suit. This
temporarily created a situation that economists refer to as a "flattening yield
curve." That is, the difference between short- and long-term interest rates and
bond yields grows smaller across the spectrum of maturities.
Conditions for the high-yield corporate bond market were largely favorable for
the year ended March 31, 2006. Although the performance did not rival that of
the prior fiscal year, high yield securities were nonetheless one of the better
performing bond markets for the 12-month period. The representative Bear Stearns
High-Yield Index gained 6.15%. Overall, high yield bonds continued to benefit
from a solid earnings environment among issuing companies, with the default rate
coming in at a mere 1%.
AAMI
Q: Can you provide some background on fixed income market performance during
the period?
A: Bond market psychology turned from quite bullish to less so during the
period. Interpretations of the fundamental environment were affected by events,
as bond market participants drove long-term rates lower early in the period and
then somewhat higher later -- all in the context of "measured" monetary
tightening. The following factors pulled and tugged at the market during the
year:
o The downturn in credit within the auto sector and its effects on the credit
markets
o Growing concerns about corporate risk
o Hurricane Katrina, which initially lowered rates and subsequently increased
them as effects of increasing energy prices evolved
o A seemingly more hawkish fed, combined with a changing of the guard at its
helm
o The stabilizing effect of the continued investor demand for the yield and
"carry" of the spread sectors.
The results by the end of the period were generally higher Treasury rates, a
flatter yield curve, slightly wider spreads, and modestly positive bond market
returns.
1
Q: What influenced performance in your portion of the Fund?
A: Our strategy generally results in a lower-than-benchmark weighting in
Treasury securities and an emphasis on investing within the so-called "spread
sectors" or non-Treasury sectors -- of the bond market, where opportunities are
more numerous. During the recent year, this selection process resulted in a
reduction of our portion of the Funds investments in the credit sector because
we reached target valuations for individual holdings, and we viewed reinvestment
opportunities to be limited as the result of valuations at maximum levels.
Nonetheless, holdings within insurance, utilities, international corporations,
and domestic and foreign financial institutions generally added positively to
returns. Investments subject to event risk, such as those within the
media/telecom sector, generally had a negative effect on performance during part
of the year.
On the other hand, our portion of the Funds investments in the high-grade
portions of the market increased during the year. This was generally a positive
factor for the Funds performance. In particular, holdings of single-family
mortgage-backed investments increased during the period in response to
compelling relative valuations. These holdings are concentrated in structured
issues (collateralized mortgage obligations), which are generally less sensitive
to changes in interest rates than are the pass-through issues that make up the
Lehman Mortgage Index.
We intend to continue emphasizing an investment process that seeks to exploit
market opportunities as a primary strategy, which we believe will serve the Fund
well in varying rate and economic environments.
DMC
Q: What influenced performance in your portion of the Fund?
A: Performance for the Fund is measured against the Lehman Brothers Aggregate
Bond Index -- a benchmark that typically serves as a broad representation of the
U.S. investment grade bond market. However, our portion of the Fund also
includes holdings from other fixed income sectors, and relative performance is
often influenced by market performance in those sectors, as well as by our asset
allocation decisions.
For instance, the Fund held securities from issuers in 28 countries at fiscal
year-end. International fixed income as a whole was weak during the year, as the
Merrill Lynch Global Government Bond Index fell by 4.43%. But bonds from
emerging market countries performed well, and the Merrill Lynch Emerging Market
Sovereigns Index gained 16.53% (source: Lipper). Some emerging market nations
now borrow from maturing local markets to decrease their foreign exchange
liabilities. This has in turn increased liquidity and made local investments
more attractive in the eyes of many foreign investors. These fund inflows
continue to underpin external debt prices.
The Fund does have a limited exposure to emerging market debt on the whole.
Within established foreign markets as of March 31, 2006, we continued to favor
hedged currency risk in Sweden, the United Kingdom, Poland, New Zealand, and
Australia, where hedging strategies are attractive in our opinion.
At fiscal year end, the Fund also held noninvestment grade debt totaling less
than 20% of the Funds net assets.
2
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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, 2006 Lifetime One Year
Class A (Est. 8/1/03)
Excluding Sales Charge +4.00% 1.31%
Including Sales Charge +2.22% -3.26%
Class B (Est. 8/1/03)
Excluding Sales Charge +3.32% 0.54%
Including Sales Charge +2.52% -3.39%
Class C (Est. 8/1/03)
Excluding Sales Charge +3.36% 0.65%
Including Sales Charge +3.36% -0.33%
Returns reflect the reinvestment of all distributions and any applicable sales
charges as noted below. Performance for Class B and C shares, excluding sales
charges, assumes either that contingent deferred sales charges did not apply or
that the investment was not redeemed.
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. They are also subject to an annual
distribution and service fee of 1%.
The average annual total returns for the lifetime and one-year periods ended
March 31, 2006 for Optimum Fixed Income Funds Institutional Class were 4.33% and
1.56%, 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 table above 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
Fund Basics
As of March 31, 2006
Fund objectives
The Fund seeks a high level of income and may also seek growth of capital.
Total fund net assets
$551 million
Number of holdings
949
Fund start date
August 1, 2003
Advisor:
Delaware Management Company
Subadvisor:
Aberdeen Asset Management Inc.
CUSIP numbers:
Class A 246118-68-1
Class B 246118-67-3
Class C 246118-66-5
Institutional 246118-65-7
Performance of a $10,000 Investment
August 1, 2003 (Fund's inception) through March 31, 2006
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Optimum Fixed Income Fund Performance of $10,000 investment chart
Optimum Fixed Lehman Brothers
Income Fund - Aggregate
Class A Shares % gain Bond Index % gain
August 1, 2003 $9,550 $10,000
Sep-03 $9,854 3.18% $10,333 3.33%
Dec-03 $9,964 1.12% $10,366 0.32%
Mar-04 $10,202 2.39% $10,642 2.66%
Jun-04 $9,974 -2.24% $10,382 -2.44%
Sep-04 $10,318 3.45% $10,714 3.20%
Dec-04 $10,548 2.23% $10,816 0.95%
Mar-05 $10,466 -0.78% $10,764 -0.48%
Jun-05 $10,706 2.30% $11,088 3.01%
Sep-05 $10,599 -1.00% $11,014 -0.67%
Dec-05 $10,615 0.15% $11,079 0.59%
Mar-06 $10,603 -0.11% $11,007 -0.65%
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. 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 management review
Optimum International Fund
April 11, 2006
Advisor:
Delaware Management Company
Subadvisors:
Alliance Capital Management L.P. (Alliance)
Mondrian Investment Partners Ltd. (Mondrian)
Despite strong double-digit performance, the Optimum International Fund lagged
behind its benchmark -- the Morgan Stanley Capital International Europe,
Australasia, Far East Index (MSCI EAFE Index) -- for the twelvemonth period
ended March 31, 2006. The Fund returned +23.54% at net asset value and +16.45%
including the maximum applicable sales charge (both figures are for Class A
shares with distributions reinvested), while the MSCI EAFE Index rose +24.94%
for the fiscal year. Although all countries in the index showed gains in local
currency terms, adverse currency movements held back returns in U.S. dollars.
For complete, annualized returns, please see the Fund Performance table on page
8.
The Fund seeks long-term growth of capital and may also seek income. The Fund's
advisor, Delaware Management Company, selected two subadvisors to manage the
Fund's assets, each of whom 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. Subadvisor Mondrian
uses a value-oriented stock selection approach. Subadvisor Alliance also employs
a value-oriented approach, with country allocations usually weighted in
proportion to the size of their stock markets. The managers may over- or
underweight a country depending on the relative attractiveness of its available
investments. Alliance replaced Marsico Capital Management, LLC (Marsico Capital)
as one of the Funds subadvisors on September 29, 2005. During its time as one of
the Funds subadvisors, Marsico Capital used an approach that combined "top-down"
macroeconomic analysis with "bottom-up" stock selection on its portion of the
Fund. For more information on each subadvisor's investment approach, please see
the Fund's prospectus.
Alliance
Q: What drove performance in your portion of the Fund?
A: Among the contributors to relative returns were some of our financial
holdings in Asia, where we believe strengthening economic growth is helping
companies escape their previous bad loan problems and is driving a significant
earnings recovery. These included ORIX and Sumitomo Mitsui Financial Group in
Japan, as well as Industrial Bank of Korea. Insurance companies Assurances
Generales de France (AGF) and ING Groep (Netherlands) were also very strong.
In the energy sector, we have held Canadian Natural Resources and Petroleo
Brasiliero. The portfolio's holdings in steel companies, specifically Sumitomo
Metal Industries, Kobe Steel and JFE Holdings in Japan, as well as
European-based Arcelor, were the source of strong returns versus the MSCI EAFE
Index in the industrial commodities sector. These companies have done well on
the back of rapid economic growth and buoyant demand for raw materials.
Partially offsetting these gains was weakness in some of our other industrial
commodities holdings, including Brazilian chemical company Braskem.
Our portion of the portfolio has had an underweight in telecommunications, a
sector that lagged behind the market. However, one of our larger individual
detractors was Singapore Telecommunications, which issued a profit warning due
to tough competition in the Australian mobile phone market, putting pressure on
margins. We still find SingTel attractive, largely because we believe its strong
growth potential in emerging markets seems undervalued. Weak stock selection in
the technology sector also detracted from performance. Investors disappointed
with the sluggish recovery in technology demand put pressure on holdings such as
Flextronics International.
6
Q: What was your approach to the portfolio at fiscal year-end?
A: Although maturity of the economic and profit cycle might be a cause for
concern, we still have not seen the industrial stresses that can generate the
large inter-sector price discrepancies that value investors such as ourselves
typically seek to exploit. Thus, the portfolio remains broadly diversified and
we anticipate using our extensive research capabilities to attempt to uncover
stock-specific opportunities within a range of industries.
Even so, several themes are apparent in the portfolio. We continue to favor many
energy and industrial commodity companies and to maintain broad exposure among
financials. We believe the most notable shift in positioning over recent
quarters has been our increased weighting in utilities stocks, as profits in the
sector have risen in the wake of higher gas and oil prices.
Mondrian
Q: Can you please provide additional perspective on international market
performance?
A: Norways +46.5% return was the strongest country performance in the MSCI
EAFE Index during the period and was driven by higher crude oil prices. Among
larger European markets, Germany gained 28.0% and is benefiting from continued
strength of the global economy. Next came the Swiss market, its 24.9% rise
during the period attributable in part to strength in financial and healthcare
stocks. The U.K. trailed with a 14.7% gain during the period, and Italys 10.2%
rise was the weakest among the larger European markets (all country returns are
based on MSCI country indices).
In the Pacific region, Japan continues to benefit from strong international
trade, particularly with its exports to China, and appreciated 37.3% for the
12-month period. Among other major names, Singapore slightly outperformed the
MSCI EAFE Index, and Australasian markets trailed the index.
Benefiting from a buoyant global economy and substantial merger and acquisition
activity, materials recorded the years strongest sector performance in the MSCI
EAFE Index, with financials and industrials next. Beset by margin pressures,
competition, and rising regulation, telecommunications declined 7.9%, making it
the years weakest performer. Relative to the benchmark index, our portion of the
Fund ended the fiscal year with an underweighting in European telecommunications
stocks but heavier investment in Pacific telecom, where we see excellent value.
Fund return was impeded by our benchmark-relative smaller investment position in
the outperforming Japanese market and larger position in the underper-forming
New Zealand and Australian markets. Partly offsetting these influences was the
benefit of fewer investments in France and more in South Africa, which lies
outside the benchmark. Although our performance in Japan and Australia was weak,
we generated excess return versus the benchmark in Europe, and especially in
Germany.
Some of the worst performers for the year came from the telecommunications
sector, such as Telefonica, Telecom of New Zealand, and Telstra. Conversely,
some of our strong performers were Sasol, a South African energy concern, and
British-Australian mining company Rio Tinto.
Q: How was your portion of the Fund positioned at the end of the fiscal year?
A: As of fiscal year-end, some highlights of our strategy included a
benchmark-relative underweighting in what we believe is an overvalued Japanese
market. We also held comparatively heavier positions in Australasia, which we
view as undervalued, as well as in smaller Asian and select European markets.
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.
Fund Performance
Average Annual Total Returns
Through March 31, 2006 Lifetime One Year
Class A (Est. 8/1/03)
Excluding Sales Charge +22.45% +23.54%
Including Sales Charge +19.76% +16.45%
Class B (Est. 8/1/03)
Excluding Sales Charge +21.67% +22.81%
Including Sales Charge +20.92% +18.81%
Class C (Est. 8/1/03)
Excluding Sales Charge +21.67% +22.69%
Including Sales Charge +21.67% +21.69%
Returns reflect the reinvestment of all distributions and any applicable sales
charges as noted below. 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.
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. They are also subject to an annual
distribution and service fee of 1%.
The average annual total returns for the lifetime and one-year periods ended
March 31, 2006 for the Optimum International Funds Institutional Class were
+22.86% and +23.91%, respectively. 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 table above 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
Fund Basics
As of March 31, 2006
Fund objectives
The Fund seeks long-term growth of capital and may also seek income.
Total fund net assets
$195 million
Number of holdings
167
Fund start date
August 1, 2003
Advisor:
Delaware Management Company
Subadvisors:
Alliance Capital Management L.P.
Mondrian Investment Partners Ltd.
CUSIP numbers:
Class A 246118-73-1
Class B 246118-72-3
Class C 246118-71-5
Institutional 246118-69-9
Performance of a $10,000 Investment
August 1, 2003 (Fund's inception) through March 31, 2006
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Optimum International Fund Performance of $10,000 investment chart
Optimum International
Fund - Class A Shares % gain MSCI EAFE Index % gain
August 1, 2003 $9,425 $10,000
Sep-03 $9,769 3.65% $10,561 5.61%
Dec-03 $11,306 15.73% $12,368 17.11%
Mar-04 $11,838 4.71% $12,912 4.40%
Jun-04 $11,723 -0.97% $12,969 0.44%
Sep-04 $11,735 0.10% $12,939 -0.23%
Dec-04 $13,254 12.94% $14,927 15.36%
Mar-05 $13,096 -1.19% $14,912 -0.10%
Jun-05 $13,017 -0.60% $14,800 -0.75%
Sep-05 $14,342 10.18% $16,345 10.44%
Dec-05 $14,773 3.00% $17,018 4.12%
Mar-06 $16,178 9.51% $18,630 9.47%
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 Morgan Stanley Capital International Europe Australasia Far East
(MSCI EAFE) Index is an unmanaged composite of stocks in established markets
within 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 management review
Optimum Large Cap Growth Fund
April 11, 2006
Advisor:
Delaware Management Company
Subadvisors:
Marsico Capital Management, LLC (Marsico Capital)
T. Rowe Price Associates, Inc. (T. Rowe Price)
The Optimum Large Cap Growth Fund returned +15.17% at net asset value and +8.56%
including the maximum applicable sales charge for the year ended March 31, 2006
(both figures reflect performance for Class A shares with all distributions
reinvested). By comparison, the Fund's benchmark -- the Russell 1000 Growth
Index -- rose +13.14% for the period. For complete, annualized returns, please
see the Fund Performance table on page 12.
The Optimum Large Cap Growth Fund seeks long-term growth of capital. The Funds
advisor, Delaware Management Company, selected two subadvisors to manage the
Funds assets. Each is responsible for day-to-day investment management of a
portion of the Funds assets and selects investments for its portion of the Fund
based on its own investment style and strategy, which are generally intended to
complement those of the other subadvisors for the Fund. Subadvisor T. Rowe Price
mostly seeks investments in companies with the ability to pay increasing
dividends through strong cash flow. Subadvisor Marsico Capital uses a more
growth-oriented approach, which combines "top-down" economic analysis with
"bottom-up" stock selection. For more on each subadvisor's investment approach,
please see the Fund's prospectus.
U.S. stocks rose strongly in the 12-month period ended March 31, 2006 despite
elevated commodity prices and energy costs, plus concerns about inflation and
rising interest rates. Equities gradually worked their way higher, supported by
solid economic and corporate earnings growth, as well as merger activity. Gains
accelerated in recent months amid hopes that the Federal Reserve would soon stop
raising short-term interest rates. The period ended with major blue chip indices
near levels not seen in five years and small-cap benchmarks at all-time highs.
Among better-performing sectors of the market, energy, industrials, business
services, and materials benefited from continued economic expansion and elevated
commodity prices. Traditional growth sectors were solid as well. Technology was
led by telecommunications equipment and Internet software/services stocks before
weakening in the first quarter of 2006.
In similar fashion, the healthcare sector performed well throughout the better
part of the fiscal year, owing to general strength in biotechnology stocks,
before tailing off late in the fiscal year. Lastly, financials were fueled by a
favorable environment for capital market-sensitive stocks.
Weak sectors for the fiscal year were consumer staples and utilities. In the
Optimum Large Cap Growth Fund specifically, consumer discretionary sector
holdings were among the detractors from the Funds performance.
10
Marsico Capital
Q: What influenced performance in your portion of the Fund?
A: We generated our greatest return versus the benchmark through stock
selection in the industrials sector. Diversified financials, in which we were
more heavily invested relative to the benchmark, also performed well, including
positions such as Chicago Mercantile Exchange, UBS, and Lehman Brothers
Holdings.
Healthcare experienced mixed performance. Our largest individual contributor for
the fiscal year was biotech-nology company, Genentech. Certain other
healthcare-related positions struggled, however, including medical device
company Zimmer Holdings.
Q: What were areas of weakness regarding your portfolio holdings?
A: For much of the fiscal year, our underweighting in energy -- an area of
strength for the period -- was a detractor for our portion of the Fund when
compared to the benchmark index. By not fully participating in this strong
sector, we missed an opportunity for additional return. Also, Exxon Mobil
declined sharply prior to being sold from the Marsico Capital portion of the
Fund. Other individual holdings that detracted from performance were
consumer-related positions Yum! Brands and Four Seasons Hotels, as well
liquidated names Harley Davidson and Royal Caribbean Cruise.
T. Rowe Price
Q: What influenced performance in your portion of the Fund?
A: The main drivers of performance compared to the index for the year were
good performance among our holdings in the financial sector, and heavier
weightings than the benchmark in the strong-performing financials and
telecommunication services areas.
Performance drivers there included companies' ability to capitalize on
increasing global prosperity, healthy investment banking activity, and
fee-for-service business strategies that helped these stocks generate strong
free cash flow and earnings growth. In technology, we favored wireless
telecommunication services stocks, given opportunities for growth in
underpenetrated international markets.
Industrial and business service stocks detracted from returns as we were less
invested in these better-performing sectors. Also lowering performance in our
portion of the Fund were weak security selection in diversified consumer
services and a heavier focus on media, though much of this weakness was offset
by our hotel, restaurant, and leisure holdings.
Q: Any concluding thoughts about the past year?
A: In 2005, and in the first quarter of 2006, investors tended to focus on
short-term concerns and generally did not reward core growth companies with
favorable operational performances.
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, 2006 Lifetime One Year
Class A (Est. 8/1/03)
Excluding Sales Charge +12.14% +15.17%
Including Sales Charge +9.68% +8.56%
Class B (Est. 8/1/03)
Excluding Sales Charge +11.41% +14.43%
Including Sales Charge +10.54% +10.43%
Class C (Est. 8/1/03)
Excluding Sales Charge +11.41% +14.43%
Including Sales Charge +11.41% +13.43%
Returns reflect the reinvestment of all distributions and any applicable sales
charges as noted below. 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.
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. They are also subject to an annual
distribution and service fee of 1%.
The average annual total returns for the lifetime and one-year periods ended
March 31, 2006 for Optimum Large Cap Growth Funds Institutional Class were
+12.54% and +15.57%, respectively. 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 table above 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
Fund Basics
As of March 31, 2006
Fund objective
The Fund seeks long-term growth of capital.
Total fund net assets
$578 million
Number of holdings
142
Fund start date
August 1, 2003
Advisor:
Delaware Management Company
Subadvisors:
T. Rowe Price Associates, Inc.
Marsico Capital Management, LLC
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, 2006
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Optimum Large Cap Growth Fund Performance of $10,000 investment chart
Optimum Large
Cap Growth Fund - Russell 1000
Class A Shares % gain Growth Index % gain
August 1, 2003 $9,425 $10,000
Sep-03 $9,581 1.65% $10,139 1.39%
Dec-03 $10,434 8.91% $11,194 10.41%
Mar-04 $10,612 1.70% $11,283 0.79%
Jun-04 $10,644 0.31% $11,502 1.94%
Sep-04 $10,511 -1.25% $10,900 -5.23%
Dec-04 $11,664 10.97% $11,900 9.17%
Mar-05 $11,110 -4.75% $11,413 -4.09%
Jun-05 $11,465 3.19% $11,694 2.46%
Sep-05 $11,897 3.77% $12,163 4.01%
Dec-05 $12,362 3.91% $12,525 2.98%
Mar-06 $12,795 3.50% $12,912 3.09%
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 management review
Optimum Large Cap Value Fund
April 11, 2006
Subadvisors:
Massachusetts Financial Services Company (MFS)
TCW Investment Management Company (TCW)
Established August 1, 2003, the Optimum Large Cap Value Fund focuses on
long-term growth of capital and may also seek income by investing primarily in
large capitalization companies. The Fund invests mostly in common stocks of U.S.
companies, but it may also invest in other securities that the subadvisors
believe will provide opportunities for capital growth and income.
For the 12 months ended March 31, 2006, the Optimum Large Cap Value Fund
returned +9.82% at net asset value and +3.52% including the maximum applicable
sales charge (both figures reflect performance for Class A shares with all
distributions reinvested). By comparison, the Funds benchmark -- the Russell
1000 Value Index -- rose +13.14% for same period. For complete, annualized Fund
performance, please see the table on page 16.
In the role of subadvisor for the Fund, managers of the MFS portion of the Funds
assets seek to achieve a gross yield that exceeds that of the S&P 500 Index
through a bottom-up stock selection approach.
In late July 2005, TCW replaced Morgan Stanley Investment Management Inc. as the
Fund's second subadvisor. TCW employs a three-step process that first entails
the use of quantitative metrics to measure five separate valuation
characteristics. The managers then conduct in-depth fundamental analysis and
execute careful portfolio construction. During its term as one of the Funds
subsidiaries, Morgan Stanley used a stock selection approach that focused
primarily on a security's potential for capital growth and income. For more on
each subadvisors investment approach, please see the Fund's prospectus.
The fiscal year large cap value increase in returns, measured by the Russell
1000 Value Index at 13.14%, showed considerably less strength than the small cap
value increases in returns, which rose 23.77% as measured by the Russell 2000
Value Index.
MFS
Q: What influenced performance in the MFS portion of the Fund?
Overall, the Fund underperformed compared to the benchmark. Stock selection and
- -- to a lesser extent -- a heavier weighting than the benchmark in the
industrial goods and services sector boosted relative performance. Our decision
to avoid major index constituent General Electric positively affected results
relative to the index, as the stock lagged behind the market's returns. In
similar fashion, the Fund benefited from our not holding cable services provider
Comcast, as that major index constituent fell during the period.
EOG Resources was among the top individual contributors and, as a group, our
holdings in the energy sector affected performance.
Stocks in other sectors that were relatively strong performers included
investment banking firm Goldman Sachs Group, railroad company Burlington
Northern Santa Fe, insurance company MetLife, and defense contractors Lockheed
Martin and Northrop Grumman.
Q: What contributed negatively to performance?
A: Positioning in the basic materials sector detracted from relative
performance in our portion of the Fund. Within the sector, we had a lesser
weighting than the benchmark index, and our holdings lagged. Within the sector,
PPG Industries, a global supplier of coatings, chemicals, and glass products,
hurt results.
14
Our holdings in weak-performing wireless phone services provider Vodafone Group
and electricity and natural gas distributor Dominion Resources also proved
disappointing in terms of relative returns.
In the strong-performing technology sector, MFS missed some opportunities for
strong performance as we trimmed our exposure to computer products in late July
2005, selling off some shares of Hewlett-Packard; the stock price for
Hewlett-Packard rose considerably over the remainder of the reporting period.
Elsewhere, healthcare company Johnson & Johnson, clothing retailer Gap, and
insurance provider Allstate detracted from results.
During the reporting period, the Funds currency exposure was also a detractor
from relative performance. Investment decisions at MFS are driven generally by
the fundamentals of each individual opportunity and, as such, it is common for
our portion of the Fund to reflect different currency exposure than the
benchmark does.
We also held a cash position during the year, as we typically do in order to buy
new holdings and to provide liquidity in the Fund. In periods when equity
markets rise, holding cash may hurt performance versus the benchmark, which has
no cash position.
TCW
Q: Describe some factors that affected performance in your portion of the Fund
during the fiscal year.
A: In general, the 12 months were a favorable period for large-capitalization
stocks, with the representative Russell 1000 Value Index returning an annualized
average +13.14%. During the period, the market trended upward, save for two
bouts of temporary weakness, one in the spring 2005 and the other in October.
Our investment style emphasizes greater-than-market dividend yield and a search
for "value poised for growth" -- a style that was less common during the portion
of the fiscal year that we managed the Fund. We came on board the Fund as a
second subadvisor in July, and performance in our portion of the Fund's
investment portfolio trailed the benchmark from that time until the end of the
fiscal year.
By the end of the fiscal year, our portion of the Fund was positioned with
overall lower price-to-earnings and price-to-cash flow ratios than the broad
market, and a higher average dividend yield.
Q: What adjustments did you make within the Fund?
A: During the fiscal year, we added BCE to the portfolio. BCE is a leading
telecommunications provider in Canada that meets all of our five valuation
criteria. The company is undergoing a cost-cutting program to improve its
balance sheet and cost structure, which we believe may lead to improved cash
flow and, possibly, enhanced share buybacks or dividend payouts.
We also added Pfizer and Capital One Financial. Pfizer, which recently announced
plans to sell off its consumer products business, has a strong balance sheet in
our opinion and offers a $4 billion stock buyback program that ultimately may be
expanded.
Noteworthy sales in the TCW portion of the Fund included AMD, Allstate, and Bank
of America. In the case of AMD, the stock traded through our pre-determined
target valuations in early 2006. Regarding Bank of America, we believed the
synergies from the companys past two acquisitions (FleetBoston Financial and
MBNA) to be fully reflected in the stock price. In the case of Allstate, we
believed the current environment for the companys various insurance business
lines was such that it could face a period of eroding margins.
15
Performance summary
Optimum Large Cap Value
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.
Fund Performance
Average Annual Total Returns
Through March 31, 2006 Lifetime One Year
Class A (Est. 8/1/03)
Excluding Sales Charge +14.31% +9.82%
Including Sales Charge +11.80% +3.52%
Class B (Est. 8/1/03)
Excluding Sales Charge +13.56% +9.05%
Including Sales Charge +12.72% +5.05%
Class C (Est. 8/1/03)
Excluding Sales Charge +13.56% +9.16%
Including Sales Charge +13.56% +8.16%
Returns reflect the reinvestment of all distributions and any applicable sales
charges as noted below. 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.
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. They are also subject to an annual
distribution and service fee of 1%.
The average annual total returns for the lifetime and one-year periods ended
March 31, 2006 for Optimum Large Cap Value Funds Institutional Class were
+14.69% and +10.19%, 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 table above 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
Fund Basics
As of March 31, 2006
Fund objective
The Fund seeks long-term growth of capital and may seek income.
Total fund net assets
$540 million
Number of holdings
139
Fund start date
August 1, 2003
Advisor:
Delaware Management Company
Subadvisors:
Massachusetts Financial Services Company
TCW Investment Management Company
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, 2006
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Optimum Large Cap Value Fund Performance of $10,000 investment chart
Optimum Large
Cap Value Fund - Russell 1000
Class A Shares % gain Value Index % gain
August 1, 2003 $9,425 $10,000
Sep-03 $9,547 1.29% $10,057 0.57%
Dec-03 $10,766 12.77% $11,484 14.19%
Mar-04 $10,943 1.65% $11,832 3.03%
Jun-04 $11,099 1.42% $11,936 0.88%
Sep-04 $11,155 0.51% $12,120 1.54%
Dec-04 $12,250 9.81% $13,378 10.38%
Mar-05 $12,261 0.09% $13,390 0.09%
Jun-05 $12,396 1.10% $13,614 1.67%
Sep-05 $12,819 3.42% $14,142 3.88%
Dec-05 $12,917 0.76% $14,322 1.27%
Mar-06 $13,465 4.24% $15,171 5.93%
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 management review
Optimum Small Cap Growth Fund
April 11, 2006
Advisor:
Delaware Management Company (DMC)
Subadvisors:
Columbia Wanger Asset Management L.P. (CWAM)
Oberweis Asset Management, Inc. (Oberweis)
In the fiscal year ended March 31, 2006, the Optimum Small Cap Growth Fund
gained a total return of 22.04% at net asset value and +15.00% including the
maximum applicable sales charge (both figures reflect performance for Class A
shares with all distributions reinvested). By comparison, the Russell 2000
Growth Index gained 27.84%.
The Funds advisor, Delaware Management Company, selected two subadvisors to
manage the Funds assets, each of which is responsible for day-to-day investment
management of a portion of the Fund's assets.
Subadvisor CWAM adheres to a 34-year-old philosophy and process of seeking
under-followed stocks with above average growth and reasonable valuations.
To find these companies, CWAM compares growth potential, financial strength, and
fundamental value among companies. In addition, managers may identify what we
believe are important economic, social, or technological trends and try to
identify companies that may benefit from these trends.
Subadvisor Oberweis builds portfolios of companies with above-average long-term
growth potential, based on a variety of factors such as low price-to-earnings
ratio in relation to the companys expected future growth rate. For more on each
subadvisors investment approach, please see the Funds prospectus.
CWAM
Q: What influenced performance in your portion of the Fund during the period?
A: Small-cap stocks continued their dominance over large caps throughout the
period, but in the final quarter more speculative small caps with high
valuations and little-to-no earnings were generally the leading performers. The
CWAM portion of the Fund underperformed the Russell 2000 Growth Index largely
because we did not invest in these speculative, higher risk stocks.
Q: Can you describe some areas that aided or detracted from performance?
A: The largest detractors to performance from a sector standpoint were
healthcare, technology, and retail. The retail stocks in our portion of the Fund
were down during the period while the retail sector within the benchmark made
double-digit gains. Within the retail sector, our largest detractor was Petco
Animal Supplies. The stock fell significantly due to a slowdown in sales from
its core customers, as discretionary spending was adversely affected by rising
energy and gas prices.
Technology stocks were strong as a group during the fiscal year. Although
technology holdings in our portion of the Fund were strong performers as well,
often making double-digit gains, our performance in this sector did not keep
pace with the benchmark.
The worst performer in the sector for our portion of the Fund was Symbol
Technologies, a designer and manufacturer of systems used in enterprise mobility
solutions. Its stock was lower because of a slowdown in sales from several large
customers in the retail space. On the positive side, Fund holding Tellabs was a
strong performer and a contributor to performance versus the index. Tellabs
designs and markets equipment to telecommunications providers worldwide, and the
demand for its equipment increased during the year.
Telecommunication services was the Fund's best performing sector. An overweight
position and good stock selection added value, with the Fund's stocks up more
than twice the benchmark increase.
18
Oberweis
Q: What influenced performance in your portion of the fund during the period?
A: Equity markets delivered healthy gains for the period ended March 31, 2006.
Global equity markets also delivered gains for the year, attributable to
reasonable valuations, modest expectations, and economic growth. Small-cap
stocks performed particularly well, and the Russell 2000 Growth Index gained
value. Within the Russell universe of small-company stocks, growth stocks
outperformed value stocks.
This positive performance came at a time of unpredictable events. Commodities,
oil, and gold prices surged amid continued geopolitical uncertainties, increased
demand in Asia, and supply disruptions associated with natural disasters in the
U.S. The price of gold surged to a record high since 1983, while oil went to a
record of more than $70 per barrel last autumn. This was partly the result of
Hurricane Katrina, which wreaked havoc in New Orleans and the Mississippi Delta.
Q: Which holdings contributed to and detracted from Fund performance?
A: The largest contributors to performance from a sector standpoint were
consumer discretionary, financial services, consumer staples, and materials. The
largest detractors to performance from a sector standpoint were healthcare,
technology, and producer durables. As a result of our strict high growth
discipline, we generally invest more heavily in sectors such as technology,
healthcare, and consumer discretionary. We typically invest less heavily in
slower growth sectors, such as financial services, utilities and producer
durables.
Two of the top contributors for the year were Focus Media Holding LTD and
aQuantive. In contrast, two of the leading detractors for the year were Tessera
Technologies Inc and Sigmatel.
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.
Fund Performance
Average Annual Total Returns
Through March 31, 2006 Lifetime One Year
Class A (Est. 8/1/03)
Excluding Sales Charge +21.67% +22.04%
Including Sales Charge +18.99% +15.00%
Class B (Est. 8/1/03)
Excluding Sales Charge +20.93% +21.22%
Including Sales Charge +20.18% +17.22%
Class C (Est. 8/1/03)
Excluding Sales Charge +20.93% +21.22%
Including Sales Charge +20.93% +20.22%
Returns reflect the reinvestment of all distributions and any applicable sales
charges as noted below. 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.
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. They are also subject to an annual
distribution and service fee of 1%.
The average annual total returns for the lifetime and one-year periods ended
March 31, 2006 for Optimum Small Cap Growth Funds Institutional Class were
22.08% and 22.42%, 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 table above 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
Fund Basics
As of March 31, 2006
Fund objective
The Fund seeks long-term growth of capital.
Total fund net assets
$118 million
Number of holdings
178
Fund start date
August 1, 2003
Advisor
Delaware Management Company
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, 2006
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Optimum Small Cap Growth Fund Performance of $10,000 investment chart
Optimum Small
Cap Growth Fund - Russell 2000
Class A Shares % gain Growth Index % gain
August 1, 2003 $9,425 $10,000
Sep-03 $9,968 5.76% $10,270 2.70%
Dec-03 $11,797 18.35% $11,572 12.68%
Mar-04 $12,485 5.83% $12,218 5.58%
Jun-04 $12,753 2.15% $12,229 0.09%
Sep-04 $11,844 -7.13% $11,494 -6.01%
Dec-04 $13,740 16.01% $13,227 15.08%
Mar-05 $13,030 -5.17% $12,324 -6.83%
Jun-05 $13,473 3.40% $12,753 3.48%
Sep-05 $14,304 6.17% $13,559 6.32%
Dec-05 $14,470 1.16% $13,777 1.61%
Mar-06 $15,901 9.89% $15,755 14.36%
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 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
Portfolio management review
Optimum Small Cap Value Fund
April 11, 2006
Advisor:
Delaware Management Company
Subadvisors:
Delafield Asset Management (Delafield)
Hotchkis and Wiley Capital Management, LLC (H&W)
The Killen Group, Inc. (Killen)
The Optimum Small-Cap Value Fund seeks the long-term growth of capital. The
Funds advisor, Delaware Management Company, selected three subadvisors for the
Funds assets, each of whom is responsible for day-today investment management of
a portion of the Funds assets. Each selects investments for its portion of the
Fund based on its own investment style and strategy, which are generally
intended to complement those of the other subadvisors. For more information on
the investment approach of the subadvisors, please see the Funds prospectus.
General market returns, and those for small cap stocks in particular, were
healthy over the 12-month period ending March 31, 2006. The Fund returned
+17.17% at net asset value and +10.41% including the maximum applicable sales
charge (both figures are for Class A shares with distributions reinvested). By
comparison, the Russell 2000 Value Index rose +23.77% for the fiscal year.
Delafield
Q: Could you give an overview of economic factors that may have influenced
small-cap investors?
A: We believe the U.S. trade deficit remains alarmingly large. Interest rates
- -- at least short- and medium-term rates -- have steadily continued to rise.
Another economic negative is high energy costs.
On the plus side, the consumers well being, as measured by real household net
worth, rose to another record high at fiscal year end. The prospect of
continuing this happy state of affairs is heavily dependent on business
conditions remaining favorable and on housing values, which in turn are
dependent on relatively low interest rates.
Q: What drove performance in your portion of the Fund?
Delafield's focus remained on identifying special situations that tend to spark
performance that more closely parallels the underlying drivers of the individual
company rather than the broad markets. This can cause performance on a
short-term basis to be out of sync with the overall market.
The stocks selected by Delafield generally performed well. Our cash position
remained steady at fiscal year end and was a detractor from the Fund's
performance relative to its benchmark in a strong-performing small-cap market.
In keeping with Delafield's identified discipline, we continued to attempt to
invest at measured prices. We believe our high cash position may allow us to
take advantage of potential volatility in the marketplace in future periods.
Given today's political and economic crosscurrents, we are comfortable with this
position.
Positive performance found in our portion of the Fund was generally spread out,
as our top five performers generated just 6.2% of the gains. The two largest
contributors were Thermo Electron and Commercial Metals Company. In the case of
Thermo Electron, the company has consistently improved operating margins across
its business while posting good volume gains. Commercial Metals has been a
beneficiary of rising metal prices, which have widened margins. Given the
cyclical nature of the business, we chose to sell a portion of our holdings on
the advance in the stock.
22
On the negative side, ProQuest was our biggest detractor. Its educational
business missed earnings expectations in the third quarter, and subsequently the
company announced an accounting irregularity relating to the booking of
subscriber revenue.
Another drag on the portfolio was our largest position, Foot Locker, which was
off nearly 19% over the 12 months. This is a core holding, which we added to
after the companys European business softened.
H&W
Q: What drove performance in your portion of the Fund?
A: Despite some volatility, the U.S. small-cap equity markets had a good year.
Small-cap stocks easily topped large caps. In terms of style, growth
outperformed value in small caps. In large caps, value had a slight edge. In
general, stocks that were exposed to oil risks performed well. Industrial
companies and companies with interest rate sensitivity were generally the worst
performers during the year.
We believe that much of the relative underperformance in our portion of the Fund
was due to weak returns in interest rate-sensitive industries such as
homebuilders and mortgage REITs, as well as a lack of exposure to exceptional
returns in the metals and mining, semiconductor, and telecom equipment
industries. Price declines for holdings prior to March 31, 2006, in forest
products company Pope and Talbot, specialty retailer Eddie Bauer Holdings, and
auto parts manufacturer Lear also hurt performance. The industrials sector added
the most to our return, including gains from equipment manufacturer Flowserve,
staffing company Spherion, and mortgage services provider PHH.
Q: What was your approach to Fund positioning at fiscal year-end?
A: We continue to employ our disciplined investment process that seeks to
exploit irrational investor behavior. Our reliance on fundamental research and
long-term value remains unchanged.
At period end, we were perceiving value in stocks in the consumer discretionary,
financials, and industrials sectors.
Killen
Q: As the Fund's newest subadvisor, can you tell us more about your investment
approach?
A: We employ a bottom-up, company-specific value approach. Finding
attractively positioned companies in a diverse group of industries and then
purchasing their securities at attractive levels has served us well throughout
our history. Given the current global competitive environment, we continue to
believe that this strategy can yield positive results over time.
Although general price appreciation over the past few years within the small-cap
market has made it more difficult to implement our strategy, we continue to find
sufficient opportunities to construct a portfolio that we feel can yield
long-term success. Going forward, we intend to seek a diversified group of
stocks with valuations that appear attractive in relation to the long-term
earnings power of the business.
Q: What drove performance in your portion of the Fund?
A: During the approximately two and a half month period that we served on the
Fund, the stock market continued to display the strength and resilience seen in
prior quarters. During this short period, our portion of the Fund contributed
positively but trailed a strong-performing Russell 2000 Value Index.
Briefly with regard to holdings, Labranche & Company, a provider of specialist
services, led performance within the financials sector. The robust economy in
early 2006 has also been positive for the basic materials sector, in which we
hold Hercules, a specialty chemical company that was one of our better
performers during our short time with the Fund.
Our industrial sector and consumer discretionary sector holdings -- which
included trucking company YRC Worldwide, fitness equipment manufacturer
Nautilus, and apparel company Russell -- did not perform as well as we
anticipated.
It is always important, especially during periods of underperformance, to
re-evaluate the situation and determine whether or not the company can improve
its competitive position going forward. This constant assessment of the
companies in which we are invested is a routine, ongoing part of our research
process.
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.
Fund Performance
Average Annual Total Returns
Through March 31, 2006 Lifetime One Year
Class A (Est. 8/1/03)
Excluding Sales Charge +23.94% 17.17%
Including Sales Charge +21.21% 10.41%
Class B (Est. 8/1/03)
Excluding Sales Charge +23.14% 16.35%
Including Sales Charge +22.41% 12.35%
Class C (Est. 8/1/03)
Excluding Sales Charge +23.14% 16.35%
Including Sales Charge +23.14% 15.35%
Returns reflect the reinvestment of all distributions and any applicable sales
charges as noted below. 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.
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. They are also subject to an annual
distribution and service fee of 1%.
The average annual total returns for the lifetime and one-year periods ended
March 31, 2006 for Optimum Small Cap Value Funds Institutional Class were 24.36%
and 17.66%, 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 table above 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
Fund Basics
As of March 31, 2006
Fund objective
The Fund seeks long-term growth of capital.
Total fund net assets
$109 million
Number of holdings
151
Fund start date
August 1, 2003
Advisor:
Delaware Management Company
Subadvisors:
Delafield Asset Management
Hotchkis and Wiley Capital Management, LLC
The Killen Group, Inc.
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, 2006
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Optimum Small Cap Value Fund Performance of $10,000 investment chart
Optimum Small
Cap Value Fund - Russell 2000
Class A Shares % gain Value Index % gain
August 1, 2003 $9,425 $10,000
Sep-03 $9,813 4.12% $10,261 2.61%
Dec-03 $11,367 15.83% $11,941 16.37%
Mar-04 $12,282 8.05% $12,767 6.92%
Jun-04 $12,655 3.04% $12,876 0.85%
Sep-04 $12,689 0.27% $12,895 0.15%
Dec-04 $14,354 13.12% $14,597 13.20%
Mar-05 $14,262 -0.64% $14,016 -3.98%
Jun-05 $14,473 1.48% $14,728 5.08%
Sep-05 $14,983 3.52% $15,183 3.09%
Dec-05 $15,458 3.17% $15,283 0.66%
Mar-06 $16,711 8.11% $17,348 13.51%
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 composite that measures the
stocks of small, value-oriented companies. 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 of Fund Expenses
For the Period October 1, 2005 to March 31, 2006
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, 2005 to March 31, 2006.
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 Funds' actual expense ratios and an assumed rate of return of 5% per year
before expenses, which is not the Funds' 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 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 tables 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 each 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. Each Funds actual expenses shown in the appropriate table reflect fee
waivers in effect. The expenses shown in each table assume reinvestment of all
dividends and distributions.
In each case, "Expenses Paid During Period" are equal to the Funds 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 10/1/05 to
10/1/05 3/31/06 Ratio 3/31/06
- --------------------------------------------------------------------
Actual Fund Return
Class A $1,000.00 $1,000.30 1.25% $6.23
Class B 1,000.00 996.10 1.90% 9.46
Class C 1,000.00 997.20 1.90% 9.46
Institutional Class 1,000.00 1,001.00 0.90% 4.49
- --------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $1,000.00 $1,018.70 1.25% 6.29
Class B 1,000.00 1,015.46 1.90% 9.55
Class C 1,000.00 1,015.46 1.90% 9.55
Institutional Class 1,000.00 1,020.44 0.90% 4.53
- --------------------------------------------------------------------
Optimum International Fund
Expense Analysis of an Investment of $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 10/1/05 to
10/1/05 3/31/06 Ratio 3/31/06
- --------------------------------------------------------------------
Actual Fund Return
A Class $1,000.00 $1,128.00 1.91% $10.13
B Class 1,000.00 1,124.60 2.56% 13.56
C Class 1,000.00 1,124.60 2.56% 13.56
Institutional Class 1,000.00 1,130.00 1.56% 8.28
- --------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
A Class $1,000.00 $1,015.41 1.91% $ 9.60
B Class 1,000.00 1,012.17 2.56% 12.84
C Class 1,000.00 1,012.17 2.56% 12.84
Institutional Class 1,000.00 1,017.15 1.56% 7.85
- --------------------------------------------------------------------
26
Disclosure of Fund Expenses
For the Period October 1, 2005 to March 31, 2006
Optimum International Fund
Expense Analysis of an Investment of $1,000*
* Effective September 29, 2005, Alliance Capital Management assumed the
sub-advisory relationship from Marsico. Alliance did not charge the Fund a
sub-advisory fee in the interim period between the change in sub-advisor
and shareholder approval of this transaction. DMC waived a portion of the
management fee equal to the fees which would have been paid to Marsico in
the interim period. Had this waiver not been in effect during this interim
period, expenses paid would have been higher. The Funds expense analysis
would be as follows:
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 $1,127.47 2.01% $10.66
Class B 1,000.00 1,124.07 2.66% 14.09
Class C 1,000.00 1,124.07 2.66% 14.09
Institutional Class 1,000.00 1,129.46 1.66% 8.82
- --------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $1,000.00 $1,014.91 2.01% 10.10
Class B 1,000.00 1,011.67 2.66% 13.34
Class C 1,000.00 1,011.67 2.66% 13.34
Institutional Class 1,000.00 1,016.65 1.66% 8.35
- --------------------------------------------------------------------
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 10/1/05 to
10/1/05 3/31/06 Ratio 3/31/06
- --------------------------------------------------------------------
Actual Fund Return
Class A $1,000.00 $1,075.50 1.69% $ 8.74
Class B 1,000.00 1,071.80 2.34% 12.09
Class C 1,000.00 1,071.80 2.34% 12.09
Institutional Class 1,000.00 1,077.70 1.34% 6.94
- --------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $1,000.00 $1,016.50 1.69% $ 8.50
Class B 1,000.00 1,013.26 2.34% 11.75
Class C 1,000.00 1,013.26 2.34% 11.75
Institutional Class 1,000.00 1,018.25 1.34% 6.74
- --------------------------------------------------------------------
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 10/1/05 to
10/1/05 3/31/06 Ratio 3/31/06
- --------------------------------------------------------------------
Actual Fund Return
Class A $1,000.00 $1,050.30 1.55% $ 7.92
Class B 1,000.00 1,046.50 2.20% 11.22
Class C 1,000.00 1,046.50 2.20% 11.22
Institutional Class 1,000.00 1,052.10 1.20% 6.14
- --------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $1,000.00 $1,017.20 1.55% $ 7.80
Class B 1,000.00 1,013.96 2.20% 11.05
Class C 1,000.00 1,013.96 2.20% 11.05
Institutional Class 1,000.00 1,018.95 1.20% 6.04
- --------------------------------------------------------------------
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 10/1/05 to
10/1/05 3/31/06 Ratio 3/31/06
- --------------------------------------------------------------------
Actual Fund Return
Class A $1,000.00 $1,111.60 1.95% $10.27
Class B 1,000.00 1,108.40 2.60% 13.67
Class C 1,000.00 1,108.40 2.60% 13.67
Institutional Class 1,000.00 1,113.90 1.60% 8.43
- --------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $1,000.00 $1,015.21 1.95% 9.80
Class B 1,000.00 1,011.97 2.60% 13.04
Class C 1,000.00 1,011.97 2.60% 13.04
Institutional Class 1,000.00 1,016.95 1.60% 8.05
- --------------------------------------------------------------------
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 10/1/05 to
10/1/05 3/31/06 Ratio 3/31/06
- --------------------------------------------------------------------
Actual Fund Return
Class A $1,000.00 $1,115.30 1.76% $ 9.28
Class B 1,000.00 1,110.40 2.41% 12.68
Class C 1,000.00 1,111.30 2.41% 12.69
Institutional Class 1,000.00 1,116.80 1.41% 7.44
- --------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $1,000.00 $1,016.16 1.76% $ 8.85
Class B 1,000.00 1,012.91 2.41% 12.09
Class C 1,000.00 1,012.91 2.41% 12.09
Institutional Class 1,000.00 1,017.90 1.41% 7.09
- --------------------------------------------------------------------
27
Sector/Country allocations and credit rating breakdown
Optimum Fixed Income 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
- --------------------------------------------------------------------------------
Agency Asset-Backed Securities 0.06%
- --------------------------------------------------------------------------------
Agency Collateralized Mortgage Obligations 8.33%
- --------------------------------------------------------------------------------
Agency Mortgage-Backed Securities 8.81%
- --------------------------------------------------------------------------------
Agency Obligations 1.45%
- --------------------------------------------------------------------------------
Collateralized Debt Obligations 0.04%
- --------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities 4.60%
- --------------------------------------------------------------------------------
Corporate Bonds 27.22%
- --------------------------------------------------------------------------------
Banking 3.19%
Basic Industry 1.97%
Brokerage 0.56%
Capital Goods 0.65%
Communications 4.52%
Consumer Cyclical 4.37%
Consumer Non-Cyclical 1.75%
Electric 2.49%
Energy 0.46%
Finance Companies 2.10%
Industrial - Other 0.40%
Insurance 2.55%
Natural Gas 0.72%
Real Estate 0.33%
Technology 0.54%
Transportation 0.62%
Foreign Agencies 1.52%
Municipal Bonds 2.56%
Non-Agency Asset-Backed Securities 4.60%
Non-Agency Collateralized Mortgage Obligations 18.46%
Regional Agency 0.13%
Regional Authority 0.87%
Senior Secured Loan 0.97%
Sovereign Agencies 0.23%
Percentage
Sector of Net Assets
- --------------------------------------------------------------------------------
Sovereign Debt 7.58%
- --------------------------------------------------------------------------------
Supranational Banks 1.04%
- --------------------------------------------------------------------------------
U.S. Treasury Obligations 9.33%
- --------------------------------------------------------------------------------
Convertible Bonds 0.01%
- --------------------------------------------------------------------------------
Common Stock 0.04%
- --------------------------------------------------------------------------------
Preferred Stock 0.08%
- --------------------------------------------------------------------------------
Currency Options Purchased 0.00%
- --------------------------------------------------------------------------------
Warrant 0.10%
- --------------------------------------------------------------------------------
Repurchase Agreements 3.66%
- --------------------------------------------------------------------------------
Total Market Value of Securities 101.69%
- --------------------------------------------------------------------------------
Liabilities Net of Receivables and Other Assets (1.69%)
- --------------------------------------------------------------------------------
Total Net Assets 100.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Credit Rating Breakdown
(as a % of fixed income investments)
- --------------------------------------------------------------------------------
AAA 63.2%
AA 3.5%
A 7.9%
BBB 10.5%
BB 6.2%
B 6.4%
CCC 1.2%
Other 1.1%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
28
Sector/Country allocations and credit rating breakdown
Optimum International Fund
As of March 31, 2006
Country and sector designations may be different than the country and sector
designations presented in other Fund materials.
Percentage
Country of Net Assets
- --------------------------------------------------------------------------------
Common Stock 97.50%
- --------------------------------------------------------------------------------
Australia 5.28%
Austria 0.52%
Belgium 1.45%
Brazil 0.93%
Canada 2.11%
China 0.17%
Finland 1.19%
France 9.56%
Germany 6.69%
Hong Kong 1.62%
Hungary 0.10%
Israel 0.10%
Italy 3.85%
Japan 21.85%
Luxembourg 0.69%
Netherlands 4.97%
New Zealand 0.74%
Philippines 0.08%
Republic of Korea 1.15%
Singapore 1.65%
South Africa 0.90%
Spain 4.81%
Switzerland 1.50%
Taiwan 0.92%
Thailand 0.09%
United Kingdom 24.58%
- --------------------------------------------------------------------------------
Repurchase Agreements 2.43%
- --------------------------------------------------------------------------------
Total Market Value of Securities 99.93%
- --------------------------------------------------------------------------------
Receivables and Other Assets Net of Liabilities 0.07%
- --------------------------------------------------------------------------------
Total Net Assets 100.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Percentage
Sector of Net Assets
- --------------------------------------------------------------------------------
Automobiles & Components 6.46%
Banking & Finance 22.65%
Capital Goods 1.05%
Commercial Services 3.10%
Consumer Durables & Apparel 0.69%
Consumer Services 0.84%
Energy 12.09%
Food & Staples Retailing 2.63%
Food, Beverage & Tobacco 4.43%
Insurance 6.96%
Materials 11.10%
Media 0.99%
Pharmaceuticals & Biotechnology 5.01%
Real Estate 0.45%
Semiconductors 0.27%
Technology Hardware & Equipment 4.16%
Telecommunication Services 7.25%
Transportation & Shipping 1.34%
Utilities 6.03%
- --------------------------------------------------------------------------------
Total 97.50%
- --------------------------------------------------------------------------------
29
Sector/Country allocations and credit rating breakdown
Sector designations may be different than the sector designations presented in
other Fund materials.
Optimum Large Cap Growth Fund
As of March 31, 2006
Percentage
Sector of Net Assets
- --------------------------------------------------------------------------------
Common Stock 95.12%
- --------------------------------------------------------------------------------
Basic Industry/Capital Goods 7.58%
Business Services 2.81%
Consumer Durables 3.42%
Consumer Non-Durables 13.09%
Consumer Services 7.11%
Energy 4.87%
Finance 17.99%
Health Care 16.09%
Technology 16.83%
Transportation 5.33%
- --------------------------------------------------------------------------------
Repurchase Agreements 5.16%
- --------------------------------------------------------------------------------
Total Market Value of Securities 100.28%
- --------------------------------------------------------------------------------
Liabilities Net of Receivables and Other Assets (0.28%)
- --------------------------------------------------------------------------------
Total Net Assets 100.00%
- --------------------------------------------------------------------------------
Optimum Large Cap Value Fund
As of March 31, 2006
Percentage
Sector of Net Assets
- --------------------------------------------------------------------------------
Common Stock 95.89%
- --------------------------------------------------------------------------------
Consumer Discretionary 9.21%
Consumer Staples 7.44%
Energy 8.40%
Financials 24.91%
Health Care 9.21%
Industrials 11.15%
Information Technology 5.19%
Materials 7.53%
Telecommunication Services 8.98%
Utilities 3.87%
- --------------------------------------------------------------------------------
Repurchase Agreements 5.96%
- --------------------------------------------------------------------------------
Total Market Value of Securities 101.85%
- --------------------------------------------------------------------------------
Liabilities Net of Receivables and Other Assets (1.85%)
- --------------------------------------------------------------------------------
Total Net Assets 100.00%
- --------------------------------------------------------------------------------
30
Sector/Country allocations and credit rating breakdown
Sector designations may be different than the sector designations presented in
other Fund materials.
Optimum Small Cap Growth Fund
As of March 31, 2006
Percentage
Sector of Net Assets
- --------------------------------------------------------------------------------
Common Stock 93.09%
- --------------------------------------------------------------------------------
Basic Industry/Capital Goods 15.52%
Business Services 10.59%
Consumer Durables 0.86%
Consumer Non-Durables 5.26%
Consumer Services 7.79%
Energy 6.66%
Financials 2.87%
Health Care 16.56%
Real Estate 1.09%
Technology 24.81%
Transportation 0.63%
Utilities 0.45%
- --------------------------------------------------------------------------------
Repurchase Agreements 7.25%
- --------------------------------------------------------------------------------
Total Market Value of Securities 100.34%
- --------------------------------------------------------------------------------
Liabilities Net of Receivables and Other Assets (0.34%)
- --------------------------------------------------------------------------------
Total Net Assets 100.00%
- --------------------------------------------------------------------------------
Optimum Small Cap Value Fund
As of March 31, 2006
Percentage
Sector of Net Assets
- --------------------------------------------------------------------------------
Common Stock 92.22%
- --------------------------------------------------------------------------------
Basic Industry 17.66%
Business Services 11.32%
Capital Spending 7.83%
Conglomerates 1.04%
Consumer Cyclical 10.21%
Consumer Services 10.71%
Energy 4.14%
Financial Services 4.47%
Health Care 1.17%
Real Estate 6.76%
Technology 11.87%
Transportation 4.15%
Utilities 0.89%
- --------------------------------------------------------------------------------
Exchange Traded Funds 0.09%
- --------------------------------------------------------------------------------
Repurchase Agreements 7.83%
- --------------------------------------------------------------------------------
Total Market Value of Securities 100.14%
- --------------------------------------------------------------------------------
Liabilities Net of Receivables and Other Assets (0.14%)
- --------------------------------------------------------------------------------
Total Net Assets 100.00%
- --------------------------------------------------------------------------------
31
Statements of net assets
Optimum Fixed Income Fund
March 31, 2006
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Agency Asset-Backed Securities - 0.06%
- --------------------------------------------------------------------------------
*t Freddie Mac Structured Pass
Through Securities Series T-30 A5
8.61% 12/25/30 USD 323,805 $ 323,603
-------------
Total Agency Asset-Backed Securities
(cost $322,996) 323,603
-------------
- --------------------------------------------------------------------------------
Agency Collateralized Mortgage Obligations - 8.33%
- --------------------------------------------------------------------------------
Fannie Mae
Series 1996-46 ZA 7.50% 11/25/26 53,905 56,981
Series 2001-14 Z 6.00% 5/25/31 111,018 111,612
Series 2002-90 A1 6.50% 6/25/42 35,764 36,193
Series 2002-90 A2 6.50% 11/25/42 183,012 185,731
Series 2003-34 DV 4.00% 2/25/22 1,440 1,435
Series 2003-122 AJ 4.50% 2/25/28 211,209 204,541
Series 2004-8 GD 4.50% 10/25/32 1,350,000 1,247,003
Series 2004-52 NE 4.50% 7/25/33 385,000 355,135
Series 2005-14 ME 5.00% 10/25/33 1,910,000 1,800,841
Series 2005-22 HE 5.00% 10/25/33 740,000 698,440
Series 2005-29 QD 5.00% 8/25/33 816,000 768,946
Series 2005-44 PE 5.00% 7/25/33 390,000 367,641
Series 2005-54 AK 4.50% 9/25/32 1,222,374 1,175,499
Series 2005-94 YD 4.50% 8/25/33 1,480,000 1,355,462
Series 2005-110 MB 5.50% 9/25/18 925,000 918,845
Fannie Mae Grantor Trust
Series 1999-T2 A1 7.50% 1/19/39 52,644 54,628
Series 2001-T8 A2 9.50% 7/25/41 28,380 30,516
Series 2002-T4 A3 7.50% 12/25/41 197,716 204,780
Series 2004-T1 1A2 6.50% 1/25/44 75,222 76,570
Fannie Mae Whole Loan
Series 2003-W14 1A5 4.71% 9/25/43 51 51
Series 2003-W18 1A3
4.732% 8/25/43 57,735 57,510
Series 2003-W19 1A3
4.783% 11/25/33 12,623 12,561
Series 2004-W1 1A3
4.49% 11/25/43 43,375 43,157
Series 2004-W4 A2 5.00% 6/25/34 1,090,000 1,075,525
Series 2004-W9 2A1
6.50% 2/25/44 96,160 97,906
Series 2004-W10 A23
5.00% 8/25/34 1,150,000 1,143,821
Series 2004-W11 1A2
6.50% 5/25/44 295,559 300,972
Series 2004-W15 1A1
6.00% 8/25/44 492,548 492,125
Freddie Mac
Series 1730 Z 7.00% 5/15/24 331,485 345,470
Series 2113 QE 6.00% 11/15/27 28,521 28,633
Series 2141 N 5.55% 11/15/27 265,553 265,450
Series 2326 ZQ 6.50% 6/15/31 571,447 591,001
Series 2480 EH 6.00% 11/15/31 540 540
Series 2497 BM 5.00% 2/15/22 518,906 513,140
Series 2526 CA 5.00% 6/15/16 133,624 132,636
Series 2552 KB 4.25% 6/15/27 842,355 832,707
Series 2612 LJ 4.00% 7/15/22 213,570 210,874
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Agency Collateralized Mortgage Obligations (continued)
- --------------------------------------------------------------------------------
Freddie Mac (continued)
Series 2662 DG 5.00% 10/15/22 USD 57,000 $ 54,151
Series 2662 MA 4.50% 10/15/31 384,135 374,545
Series 2700 PG 4.50% 5/15/32 1,300,000 1,207,261
Series 2721 PE 5.00% 1/15/23 100,000 95,721
Series 2727 PE 4.50% 7/15/32 1,480,000 1,371,670
Series 2737 YD 5.00% 8/15/32 170,000 162,200
Series 2755 LE 4.00% 9/15/30 557,000 506,858
Series 2778 JD 5.00% 12/15/32 845,000 802,903
Series 2780 TE 5.00% 1/15/33 785,000 746,915
Series 2783 PD 5.00% 1/15/33 1,076,000 1,023,875
Series 2802 NE 5.00% 2/15/33 600,000 570,293
Series 2827 TE 5.00% 4/15/33 1,335,000 1,268,994
Series 2836 EG 5.00% 12/15/32 1,980,000 1,881,226
Series 2840 OE 5.00% 2/15/33 1,800,000 1,705,006
Series 2841 YA 5.50% 7/15/27 1,693,342 1,691,648
Series 2844 PD 5.00% 12/15/32 745,000 707,837
Series 2849 AJ 5.00% 5/15/18 380,000 377,226
Series 2864 PE 5.00% 6/15/33 1,095,000 1,040,888
Series 2869 BG 5.00% 7/15/33 224,000 212,359
Series 2872 GC 5.00% 11/15/29 405,000 391,681
Series 2881 TE 5.00% 7/15/33 1,080,000 1,024,308
Series 2889 OG 5.00% 5/15/33 117,000 110,989
Series 2890 PC 5.00% 7/15/30 265,000 257,080
Series 2890 PD 5.00% 3/15/33 1,265,000 1,199,358
Series 2893 PD 5.00% 2/15/33 65,000 61,628
Series 2915 KD 5.00% 9/15/33 447,000 422,601
Series 2915 KP 5.00% 11/15/29 490,000 475,981
Series 2921 NE 5.00% 9/15/33 1,095,000 1,036,899
Series 2937 JG 5.00% 8/15/33 1,410,000 1,340,442
Series 2938 ND 5.00% 10/15/33 1,050,000 993,756
Series 2939 PD 5.00% 7/15/33 665,000 628,336
Series 2941 XD 5.00% 5/15/33 150,000 141,878
Series 2987 KG 5.00% 12/15/34 1,430,000 1,350,354
Series 3022 MB 5.00% 12/15/28 260,000 253,654
Series 3026 PC 4.50% 1/15/34 605,000 552,299
Series 3036 ND 5.00% 5/15/34 1,220,000 1,150,931
Series 3056 HD 5.00% 2/15/34 1,225,000 1,154,108
Series 3057 MD 4.50% 8/15/34 760,000 695,095
Series 3063 PC 5.00% 2/15/29 490,000 477,040
t Freddie Mac Structured Pass
Through Securities
Series T-54 2A 6.50% 2/25/43 63,983 64,864
Series T-58 1A2 3.108% 5/25/35 17,506 17,427
Series T-58 2A 6.50% 9/25/43 35,192 35,680
GNMA
Series 2004-11 QE 5.00% 12/16/32 459,000 432,805
Series 2004-30 PD 5.00% 2/20/33 276,000 261,470
-------------
Total Agency Collateralized Mortgage
Obligations (cost $47,337,781) 46,127,118
-------------
32 (continued)
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Agency Mortgage-Backed Securities - 8.81%
- --------------------------------------------------------------------------------
Fannie Mae
5.50% 1/1/13 USD 473,868 $ 470,462
5.73% 12/1/08 98,951 99,724
6.50% 8/1/17 186,630 190,421
6.765% 1/1/07 128,340 128,500
7.13% 1/1/12 342,251 343,427
b*Fannie Mae ARM
3.249% 10/1/33 803,220 804,084
5.068% 8/1/35 427,078 418,362
Fannie Mae Relocation 15 yr
4.00% 9/1/20 909,159 849,496
Fannie Mae Relocation 30 yr
5.00% 11/1/33 61,534 59,208
5.00% 1/1/34 166,529 160,174
5.00% 2/1/34 72,520 69,778
5.00% 8/1/34 136,386 131,059
5.00% 11/1/34 298,145 286,499
5.00% 4/1/35 409,728 393,211
5.00% 10/1/35 313,819 301,168
5.00% 1/1/36 747,825 717,679
Fannie Mae S.F. 15 yr TBA
5.00% 3/1/35 415,000 404,625
Fannie Mae S.F. 20 yr
5.00% 9/1/23 629,790 606,370
5.00% 4/1/25 927,479 891,249
5.00% 8/1/25 1,220,810 1,173,122
5.50% 7/1/24 1,269,665 1,251,017
5.50% 10/1/24 405,690 399,732
5.50% 12/1/24 1,280,715 1,261,905
5.50% 8/1/25 640,371 630,365
Fannie Mae S.F. 30 yr
4.50% 8/1/33 613,932 569,230
4.50% 10/1/33 2,529,620 2,345,432
5.00% 10/1/33 418,349 399,523
5.00% 2/1/34 369,132 352,521
5.00% 5/1/34 314,482 300,035
5.50% 3/1/29 247,560 242,686
5.50% 4/1/29 126,779 124,283
5.50% 12/1/33 279,627 273,597
6.50% 11/1/33 66,304 67,733
6.50% 11/1/35 1,767,509 1,803,964
6.50% 1/1/36 469,955 479,648
6.50% 2/1/36 2,613,338 2,669,300
6.50% 3/1/36 1,990,000 2,031,044
7.00% 11/1/35 1,077,261 1,109,915
7.50% 3/1/32 3,473 3,629
7.50% 4/1/32 17,285 18,062
7.50% 6/1/32 18,133 18,949
Fannie Mae S.F. 30 yr TBA
5.00% 4/1/35 3,045,000 2,899,412
5.50% 4/1/36 9,660,000 9,430,576
6.00% 4/1/36 1,425,000 1,425,000
6.50% 4/1/36 1,510,000 1,540,672
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Agency Mortgage-Backed Securities (continued)
- --------------------------------------------------------------------------------
Freddie Mac
5.00% 4/1/33 USD 1,625,000 $ 1,546,289
6.00% 8/1/35 861,190 858,224
7.00% 1/1/08 202,876 204,271
b* Freddie Mac ARM
2.996% 12/1/33 877,058 869,405
3.733% 4/1/34 78,996 78,921
Freddie Mac Relocation 30 yr
5.00% 9/1/33 7,301 7,039
Freddie Mac S.F. 20 yr
5.50% 10/1/23 1,119,882 1,104,484
5.50% 8/1/24 274,182 270,240
5.50% 9/1/24 469,706 462,954
6.00% 12/1/25 1,237,614 1,244,962
Freddie Mac S.F. 30 yr
5.00% 4/1/35 910,433 868,894
6.00% 10/1/33 58,702 58,794
6.50% 10/1/33 17,293 17,649
6.50% 11/1/33 138,691 141,551
6.50% 1/1/35 686,838 701,863
GNMA II
6.00% 4/20/34 115,994 116,863
7.00% 8/20/34 82,319 85,097
-------------
Total Agency Mortgage-Backed
Securities (cost $49,456,664) 48,784,348
-------------
- --------------------------------------------------------------------------------
Agency Obligations - 1.45%
- --------------------------------------------------------------------------------
Fannie Mae
3.00% 8/15/07 455,000 442,566
^5.328% 10/9/19 9,250,000 4,292,785
Fannie Mae 6.375% 8/15/07 AUD 450,000 324,929
b* Farm Credit Bank
7 .561% 11/29/49 USD 136,000 145,842
^Financing Corporation Fico Strip
CPN D 5.08% 9/26/11 170,000 129,156
CPN 13 5.161% 12/27/12 135,000 95,405
PRN 4.569% 9/26/19 2,575,000 1,261,379
PRN 16 4.741% 4/5/19 630,000 317,237
Freddie Mac 4.75% 1/19/16 410,000 396,582
^Resolution Funding Strip Interest
5.24% 10/15/25 1,650,000 600,666
-------------
Total Agency Obligations
(cost $8,417,306) 8,006,547
-------------
- --------------------------------------------------------------------------------
Collateralized Debt Obligations - 0.04%
- --------------------------------------------------------------------------------
@=# Magnetite Asset Investor Series 3
C1 144A 8.786% 1/31/08 250,000 252,047
-------------
Total Collateralized Debt Obligation
(cost $250,000) 252,047
-------------
(continued) 33
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities - 4.60%
- --------------------------------------------------------------------------------
b* Banc of America Commercial
Mortgage Securities
Series 2005-1 AJ
5.153% 11/10/42 USD 1,160,000 $ 1,126,356
Series 2005-2 A5
4.857% 7/10/43 40,000 37,973
Series 2005-5 A4
5.115% 10/10/45 2,125,000 2,056,565
Series 2006-1 AJ 5.46% 9/10/45 220,000 216,175
#Bear Stearns Commercial Mortgage
Securities Series 2004-ESA E 144A
5.064% 5/14/16 420,000 416,963
b* Citigroup/Deutsche Bank Commercial
Mortgage Trust Series 2005-CD1 AJ
5.40% 7/15/44 45,000 43,732
t#Commercial Mortgage Pass Through
Certificates Series 2001-J1A A2 144A
6.457% 2/14/34 284,541 294,326
#Crown Castle Towers
Series 2005-1A C 144A
5.074% 6/15/35 175,000 168,647
Deutsche Mortgage & Asset Receiving
Series 1998-C1 D 7.231% 6/15/31 1,807,000 1,875,032
#First Union National Bank Commercial
Mortgage Series 2001-C2 L 144A
6.46% 1/12/43 200,000 195,493
First Union-Lehman Brothers-Bank of
America Series 1998-C2 A2
6.56% 11/18/35 60,749 61,893
General Electric Capital Commercial
Mortgage Trust
Series 2002-1A A3 6.269% 12/10/35 325,000 338,396
Series 2005-C3 A3FX 4.863% 7/10/45 135,000 132,197
Greenwich Capital Commercial Funding
Series 2005-GG3 A2 4.305% 8/10/42 60,000 57,905
b* Series 2005-GG3 AJ 4.859% 8/10/42 330,000 311,561
b* Series 2005-GG3 B 4.894% 8/10/42 555,000 523,628
GS Mortgage Securities
Series 2005-GG4 A4
4.761% 7/10/39 2,180,000 2,054,592
Series 2005-GG4 AJ
4.782% 7/10/39 2,282,000 2,136,572
Series 2006-GG6 AJ 5.782% 4/10/38 245,000 244,236
#Hilton Hotel Pool Trust
Series 2000-HLTA A1 144A
7.055% 10/6/15 55,122 57,236
JPMor Chase Commercial
Mortgage Securities
Series 2002-C1 A3 5.376% 7/12/37 720,000 716,385
Series 2002-C2 A2 5.05% 12/12/34 665,000 648,724
Series 2003-C1 A2 4.985% 1/12/37 90,000 87,345
b* Series 2005-LDP5 A4
5.179% 12/15/44 1,505,000 1,470,331
b* Series 2005-LDP5 F 5.336% 12/15/44 2,300,000 2,227,862
b* Series 2006-CB14 AJ
5.501% 12/12/44 100,000 99,190
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities (continued)
- --------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust
Series 2002-C1 A4
6.462% 3/15/31 USD 245,000 $ 258,024
Series 2005-C3 AJ
4.843% 7/15/40 1,345,000 1,263,092
Series 2006-C1 A2
5.084% 2/15/31 165,000 162,912
Merrill Lynch Mortgage Trust
b* Series 2004-BPC1 A3
4.467% 10/12/41 85,000 80,960
b* Series 2005-CIP1 B
5.10% 7/12/38 155,000 149,553
#Series 2005-GGP1 E 144A
4.33% 11/15/10 110,000 108,264
#Series 2005-GGP1 F 144A
4.35% 11/15/10 105,000 103,296
Morgan Stanley Capital I
#Series 1999-FNV1 G 144A
6.12% 3/15/31 140,000 140,115
Series 2005-HQ6 A2A
4.882% 8/13/42 210,000 205,853
Mortgage Capital Funding
Series 1998-MC3 A2
6.337% 11/18/31 1,185,015 1,202,059
#NYC Mortgage Loan Trust
Series 1996 A3 144A 6.75% 9/25/19 125,707 127,050
#STRIPs III Series 2003-1A AFIX 144A
3.308% 3/24/18 53,988 51,706
#Tower 144A
Series 2004-2A A 4.232% 12/15/14 195,000 187,827
Series 2006-1 B 5.588% 2/15/36 160,000 158,645
Series 2006-1 C 5.707% 2/15/36 250,000 248,000
b* Wachovia Bank Commercial
Mortgage Trust
Series 2005-C20 AMFX
5.179% 7/15/42 2,095,000 2,020,202
Series 2005-C22 A4
5.441% 12/15/44 1,395,000 1,370,145
Series 2006-C23 AJ
5.515% 1/15/45 20,000 19,688
-------------
Total Commercial Mortgage-Backed
Securities (cost $26,023,578) 25,456,706
-------------
- --------------------------------------------------------------------------------
Corporate Bonds - 27.22%
- --------------------------------------------------------------------------------
Banking - 3.19%
#Banco BMG 144A 9.15% 1/15/16 476,000 489,090
b* #Banco Santander 144A 5.22% 12/9/09 150,000 150,217
Bank Nederlandse Gemeenten
6.75% 9/21/11 NZD 2,409,000 1,503,466
Barclays Bank 6.278% 12/29/49 USD 200,000 191,956
b* #Chinatrust Communications Bank
144A 5.625% 3/29/49 635,000 598,037
Citigroup 5.875% 2/22/33 340,000 331,459
Credit Suisse First Boston USA
6.125% 11/15/11 140,000 143,978
34 (continued)
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Banking (continued)
b* #DBS Capital Funding 144A
7.657% 3/31/49 USD 464,000 $ 501,867
#Dresdner Funding Trust I 144A
8.151% 6/30/31 900,000 1,052,966
b* #HBOS 144A 5.92% 9/29/49 300,000 290,158
Kazkommerts International BV
8.00% 11/3/15 572,000 592,649
Mizuho Financial Group
8.375% 12/29/49 1,395,000 1,486,479
#Mizuho Financial Group 144A
5.79% 4/15/14 175,000 175,720
Popular North America
4.25% 4/1/08 320,000 312,234
5.20% 12/12/07 2,500,000 2,486,726
Popular North America Capital Trust
6.564% 9/15/34 385,000 375,643
b* #Rabobank Capital Funding II 144A
5.26% 12/29/49 200,000 192,537
b* RBS Capital Trust I 4.709% 12/29/49 175,000 162,293
Regions Financial 6.375% 5/15/12 310,000 323,876
b* #Resona Bank 144A 5.85% 9/29/49 510,000 495,791
b* #Resona Preferred Global Securities
Cayman 144A 7.191% 12/29/49 1,315,000 1,374,387
Royal Bank of Scotland
9.118% 3/31/49 124,000 139,058
Russian Agriculture Bank
6.875% 11/29/10 795,000 802,217
b* #Shinsei Finance 144A 6.418% 1/29/49 570,000 562,057
b* #Svenska Hanelbanken 144A
7.125% 3/29/49 355,000 361,376
Wachovia Bank NA 5.60% 3/15/16 875,000 868,074
Wachovia Capital Trust III
5.80% 8/29/49 1,065,000 1,047,448
#Washington Mutual Preferred Funding
Cayman 144A 7.25% 3/29/49 400,000 391,993
Western Financial Bank 9.625% 5/15/12 210,000 236,775
-------------
17,640,527
-------------
Basic Industry - 1.97%
Abitibi-Consolidated
6.95% 12/15/06 135,000 136,519
7.875% 8/1/09 720,000 718,200
AK Steel 7.875% 2/15/09 275,000 277,750
Aleris International 9.00% 11/15/14 290,000 305,225
Alrosa Finance 8.875% 11/17/14 321,000 366,935
@#Alrosa Finance 144A 8.875% 11/17/14 498,000 568,965
Barrick Gold Finance 7.50% 5/1/07 115,000 117,556
Bowater
9.00% 8/1/09 275,000 287,375
9.50% 10/15/12 440,000 468,600
Celulosa Arauco
5.125% 7/9/13 325,000 307,659
5.625% 4/20/15 510,000 491,213
7.75% 9/13/11 360,000 390,131
#Codelco 144A 5.625% 9/21/35 285,000 269,849
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Basic Industry (continued)
Donohue Forest Products
7.625% 5/15/07 USD 305,000 $ 309,575
#Evraz Group 144A
8.25% 11/10/15 799,000 808,988
Georgia-Pacific
8.875% 5/15/31 885,000 955,800
9.50% 12/1/11 165,000 181,500
Huntsman International
10.125% 7/1/09 70,000 72,100
#Ineos Group Holdings 144A
8.50% 2/15/16 75,000 71,625
Lubrizol 4.625% 10/1/09 70,000 67,874
Lyondell Chemical 10.50% 6/1/13 30,000 33,375
#Nell AF Sarl 144A 8.375% 8/15/15 150,000 149,625
Newmont Mining 5.875% 4/1/35 449,000 421,171
Norske Skog 8.625% 6/15/11 400,000 404,000
#Port Townsend Paper 144A
12.00% 4/15/11 295,000 233,050
Potlatch 13.00% 12/1/09 175,000 205,111
Rhodia 8.875% 6/1/11 219,000 226,665
Smurfit Capital Funding 7.50% 11/20/25 550,000 514,250
Solutia 6.72% 10/15/37 375,000 319,688
Southern Peru Copper 7.50% 7/27/35 555,000 541,444
Tembec Industries 8.625% 6/30/09 525,000 318,938
Vale Overseas 6.25% 1/11/16 220,000 217,525
Weyerhaeuser 7.125% 7/15/23 50,000 51,501
Witco 6.875% 2/1/26 125,000 118,750
-------------
10,928,532
-------------
Brokerage - 0.56%
Amvescap 4.50% 12/15/09 350,000 337,447
E Trade Financial 8.00% 6/15/11 460,000 480,125
Franklin Resources 3.70% 4/15/08 45,000 43,584
Goldman Sachs
4.75% 7/15/13 185,000 175,037
6.345% 2/15/34 335,000 333,284
LaBranche & Co.
9.50% 5/15/09 195,000 209,625
11.00% 5/15/12 250,000 278,750
b* Merrill Lynch 4.79% 3/12/07 215,000 213,695
Morgan Stanley
4.75% 4/1/14 85,000 79,433
5.375% 10/15/15 975,000 946,103
-------------
3,097,083
-------------
Capital Goods - 0.65%
Allied Waste North America
9.25% 9/1/12 325,000 352,219
Armor Holdings 8.25% 8/15/13 245,000 263,988
#BAE Systems Series 2001 AT 144A
7.156% 12/15/11 372,665 385,237
Casella Waste Systems 9.75% 2/1/13 410,000 440,749
General Electric 5.00% 2/1/13 345,000 336,060
Geo Subordinate 11.00% 5/15/12 275,000 272,250
Graham Packaging 9.875% 10/15/14 225,000 228,938
(continued) 35
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Capital Goods (continued)
Graphic Packaging International
9.50% 8/15/13 USD 85,000 $ 79,900
Interface 10.375% 2/1/10 235,000 258,500
Intertape Polymer 8.50% 8/1/14 270,000 267,300
#Panolam Industrial 144A
10.75% 10/1/13 110,000 107,250
Tyco International Group
6.875% 1/15/29 342,000 358,133
7.00% 6/15/28 227,000 239,520
-------------
3,590,044
-------------
Communications 4.52%
JAdelphia Communications
8.125% 7/15/06 205,000 123,000
American Cellular 10.00% 8/1/11 135,000 147,150
American Tower 7.125% 10/15/12 265,000 276,925
AT&T 9.05% 11/15/11 325,000 351,734
BellSouth 4.20% 9/15/09 130,000 124,833
British Telecommunications
8.875% 12/15/30 1,267,000 1,625,512
#C&M Finance 144A 8.10% 2/1/16 298,000 298,704
CCH I Notes 11.00% 10/1/15 345,000 288,506
Centennial Communications
10.00% 1/1/13 140,000 146,125
JCentury Communications 9.50% 9/1/06 210,000 206,850
Cenveo 9.625% 3/15/12 160,000 173,000
Charter Communication Holdings
11.125% 1/15/11 325,000 173,875
13.50% 1/15/11 350,000 204,750
#Charter Communications Operating 144A
8.375% 4/30/14 225,000 225,563
Cincinnati Bell 8.375% 1/15/14 390,000 398,288
b* #Cleveland Unlimited 144A
13.16% 12/15/10 100,000 103,000
Comcast
6.45% 3/15/37 250,000 241,336
6.50% 11/15/35 95,000 92,475
Comcast Cable Communications Holdings
9.455% 11/15/22 531,000 671,404
Comcast Cablevision 9.00% 9/1/08 339,000 364,417
Cox Communications 4.625% 1/15/10 175,000 167,899
CSC Holdings
8.125% 7/15/09 100,000 103,875
8.125% 8/15/09 150,000 155,625
10.50% 5/15/16 385,000 407,138
Deutsche Telekom International Finance
5.12% 3/23/09 615,000 615,654
5.75% 3/23/16 1,115,000 1,091,264
Dex Media East 12.125% 11/15/12 150,000 172,125
#Digicel Limited 144A 9.25% 9/1/12 100,000 106,250
GTE 7.90% 2/1/27 670,000 700,699
GTE California 7.65% 3/15/07 685,000 698,840
Inmarsat Finance 10.375% 11/15/12 1,470,000 1,256,849
Insight Midwest 10.50% 11/1/10 1,133,000 1,198,147
iPCS 11.50% 5/1/12 45,000 51,525
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Communications (continued)
b* IWO 8.35% 1/15/12 USD 30,000 $ 31,388
b* Liberty Media 6.41% 9/17/06 137,000 137,732
MCI 6.908% 5/1/07 226,000 228,825
Mediacom Capital 9.50% 1/15/13 480,000 477,600
#News America 144A 6.40% 12/15/35 193,000 185,130
Qwest
7.875% 9/1/11 90,000 96,525
8.16% 6/15/13 100,000 110,500
#RH Donnelley 144A 8.875% 1/15/16 270,000 282,150
Rural Cellular 9.875% 2/1/10 175,000 187,688
b* #Rural Cellular 144A 10.43% 11/1/12 120,000 125,100
SBC Communications 5.875% 2/1/12 463,000 466,309
Sheridan Group 10.25% 8/15/11 160,000 165,400
Sirius Satellite Radio 9.625% 8/1/13 275,000 269,500
Sprint Capital
4.78% 8/17/06 210,000 209,586
7.625% 1/30/11 365,000 395,145
TCI Communications
8.75% 8/1/15 432,000 506,314
9.875% 6/15/22 290,000 377,189
10.125% 4/15/22 329,000 432,260
Telecom Italia Capital
4.00% 1/15/10 905,000 851,515
4.95% 9/30/14 560,000 516,182
5.25% 11/15/13 1,030,000 977,431
#Telecom Personal 144A
9.25% 12/22/10 547,000 564,778
Telefonos de Mexico 4.50% 11/19/08 395,000 385,073
THOMSON 5.75% 2/1/08 85,000 85,432
Time Warner Entertainment
8.375% 3/15/23 170,000 192,663
Triton Communications 9.375% 2/1/11 230,000 157,550
b* US LEC 12.716% 10/1/09 125,000 135,625
US Unwired 10.00% 6/15/12 295,000 332,244
Verizon Global Funding 7.75% 12/1/30 578,000 640,392
Verizon New England 6.50% 9/15/11 11,000 11,180
Verizon Wireless 5.375% 12/15/06 490,000 490,137
Vertis 10.875% 6/15/09 435,000 429,563
Vimpel Communications
10.00% 6/16/09 507,000 546,293
#Wind Acquisition Finance 144A
10.75% 12/1/15 465,000 504,525
XM Satellite Radio 12.00% 6/15/10 468,000 524,745
-------------
24,993,006
-------------
Consumer Cyclical - 4.37%
Accuride 8.50% 2/1/15 175,000 174,344
Auburn Hills Trust 12.375% 5/1/20 181,000 263,508
Brickman Group 11.75% 12/15/09 95,000 103,669
Carrols 9.00% 1/15/13 125,000 126,250
#CCM Merger 144A 8.00% 8/1/13 305,000 305,000
Centex
b* 4.93% 8/1/07 230,000 230,109
5.45% 8/15/12 431,000 418,167
36 (continued)
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Consumer Cyclical (continued)
Corrections Corporation of America
7.50% 5/1/11 USD 308,000 $ 318,780
CVS 3.875% 11/1/07 240,000 234,710
DaimlerChrysler NA Holdings
4.75% 1/15/08 416,000 410,343
b* 5.21% 10/31/08 467,000 469,112
b* 5.33% 3/13/09 1,110,000 1,111,093
#Dave & Busters 144A
11.25% 3/15/14 135,000 137,363
DR Horton 5.25% 2/15/15 640,000 586,593
Ford Motor 7.45% 7/16/31 1,120,000 837,200
Ford Motor Credit
5.625% 10/1/08 55,000 50,325
5.70% 1/15/10 165,000 146,545
6.50% 1/25/07 697,000 694,466
6.625% 6/16/08 290,000 274,618
#Galaxy Entertainment Finance 144A
9.875% 12/15/12 1,064,000 1,113,209
Gaylord Entertainment
8.00% 11/15/13 245,000 256,638
General Motors 8.375% 7/15/33 255,000 188,063
General Motors Acceptance Corporation
6.75% 12/1/14 155,000 139,752
6.875% 9/15/11 1,715,000 1,600,278
8.00% 11/1/31 3,190,000 3,022,766
Harrahs Operating
5.625% 6/1/15 1,118,000 1,073,119
5.75% 10/1/17 134,000 127,145
Home Depot 5.40% 3/1/16 520,000 514,712
Johnson Controls 5.00% 11/15/06 80,000 79,734
Landrys Restaurant 7.50% 12/15/14 190,000 184,300
Lodgenet Entertainment
9.50% 6/15/13 595,000 645,575
Mandalay Resort Group
9.50% 8/1/08 260,000 277,875
10.25% 8/1/07 75,000 79,313
Metaldyne 10.00% 11/1/13 310,000 291,400
MGM Mirage 9.75% 6/1/07 80,000 83,700
#Neiman Marcus 144A
9.00% 10/15/15 375,000 398,438
10.375% 10/15/15 885,000 944,738
OCharleys 9.00% 11/1/13 80,000 184,500
Penney (J.C.)
7.375% 8/15/08 190,000 198,217
7.40% 4/1/37 85,000 92,073
7.65% 8/15/16 125,000 138,290
Playtex Products 9.375% 6/1/11 245,000 257,250
Pulte Homes
6.25% 2/15/13 181,000 181,016
7.875% 8/1/11 535,000 578,582
Royal Caribbean Cruises
7.25% 3/15/18 73,000 76,858
Target 5.95% 5/15/06 75,000 75,060
Time Warner
7.625% 4/15/31 870,000 950,493
8.18% 8/15/07 395,000 409,178
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Consumer Cyclical (continued)
ITown Sports International
11.00% 2/1/14 USD 145,000 $ 110,381
True Temper Sports
8.375% 9/15/11 350,000 322,000
#Uno Restaurant 144A
10.00% 2/15/11 175,000 142,625
Visteon
7.00% 3/10/14 50,000 38,750
8.25% 8/1/10 1,725,000 1,431,749
Warnaco 8.875% 6/15/13 195,000 208,163
Warner Music Group
7.375% 4/15/14 425,000 422,875
Wheeling Island Gaming
10.125% 12/15/09 410,000 431,013
-------------
24,162,023
-------------
Consumer Non-Cyclical 1.75%
Accellent 10.50% 12/1/13 180,000 193,050
#AmerisourceBergen 144A
5.875% 9/15/15 430,000 425,081
Amgen 4.00% 11/18/09 80,000 76,573
#Angiotech Pharmaceuticals 144A
7.75% 4/1/14 225,000 228,375
Biovail 7.875% 4/1/10 1,067,000 1,093,675
Constellation Brands 8.125% 1/15/12 240,000 252,900
Cott Beverages 8.00% 12/15/11 350,000 359,625
#CRC Health 144A 10.75% 2/1/16 300,000 310,500
Doane Pet Care 10.625% 11/15/15 160,000 170,400
Dole Food 8.875% 3/15/11 100,000 99,500
Gold Kist 10.25% 3/15/14 150,000 162,750
HCA 5.50% 12/1/09 210,000 205,647
#Highmark 144A 6.80% 8/15/13 206,000 214,924
Kraft Foods
4.125% 11/12/09 240,000 229,600
6.50% 11/1/31 105,000 109,908
#Le-Natures 144A 10.00% 6/15/13 305,000 321,775
Marsh Supermarket 8.875% 8/1/07 35,000 32,638
Medco Health Solutions
7.25% 8/15/13 915,000 986,603
MedPartners 7.375% 10/1/06 595,000 600,950
#Miller Brewing 144A 4.25% 8/15/08 280,000 273,314
National Beef Packing 10.50% 8/1/11 245,000 248,675
Pilgrims Pride 9.625% 9/15/11 255,000 267,113
Pinnacle Foods Holdings 8.25% 12/1/13 125,000 124,375
RJ Reynolds Tobacco Holdings
6.50% 6/1/07 165,000 166,650
b* Safeway 5.315% 3/27/09 595,000 595,302
US Oncology
9.00% 8/15/12 160,000 166,400
10.75% 8/15/14 310,000 340,225
UST 6.625% 7/15/12 265,000 275,378
IVanguard Health 11.25% 10/1/15 510,000 374,850
#Warner Chilcott 144A 9.25% 2/1/15 399,000 398,003
Wyeth 5.50% 2/1/14 400,000 395,304
-------------
9,700,063
-------------
(continued) 37
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Electric - 2.49%
America Electric Power
4.709% 8/16/07 USD 965,000 $ 956,006
Avista
7.75% 1/1/07 85,000 86,219
9.75% 6/1/08 140,000 151,643
// #Calpine 144A 9.90% 7/15/07 146,625 137,094
CC Fund Trust I 6.90% 2/16/07 660,000 667,329
#Centrais Eletricas Brasileiras 144A
7.75% 11/30/15 1,177,000 1,229,965
Consumer Energy 5.00% 2/15/12 530,000 510,139
Dominion Resources
5.687% 5/15/08 495,000 496,124
5.95% 6/15/35 515,000 476,396
Duke Capital
4.302% 5/18/06 355,000 354,794
5.668% 8/15/14 190,000 188,047
#Dynegy Holdings 144A
10.125% 7/15/13 335,000 384,228
Elwood Energy 8.159% 7/5/26 245,514 262,632
Entergy Louisiana 6.30% 9/1/35 190,000 182,179
Entergy Mississippi 5.92% 2/1/16 310,000 305,731
#FPL Energy National 144A
5.608% 3/10/24 456,182 439,368
Indiana Michigan Power
6.125% 12/15/06 190,000 190,881
Midwest Generation
8.30% 7/2/09 190,000 196,324
8.75% 5/1/34 270,000 293,625
Mirant Americas Generation
8.30% 5/1/11 400,000 416,000
Nisource Finance 3.20% 11/1/06 55,000 54,339
NRG Energy 7.25% 2/1/14 400,000 407,500
Oncor Electric Delivery 7.00% 5/1/32 35,000 37,987
Orion Power Holdings 12.00% 5/1/10 180,000 203,850
Pacificorp 6.375% 5/15/08 290,000 296,506
#Pedernales Electric 144A
6.202% 11/15/32 620,000 642,131
Pepco Holdings 5.50% 8/15/07 390,000 390,168
#Power Contract Financing 144A
6.256% 2/1/10 260,000 261,548
Progress Energy 7.00% 10/30/31 505,000 544,393
PSI Energy 6.12% 10/15/35 753,000 733,241
Puget Energy 7.69% 2/1/11 250,000 272,788
b* SCANA 4.97% 3/1/08 185,000 185,290
Southern California Edison
b* 4.965% 12/13/07 190,000 190,151
6.00% 1/15/34 155,000 154,215
Southern Capital Funding 5.30% 2/1/07 200,000 199,209
#TXU Australia 144A 6.15% 11/15/13 375,000 386,045
TXU Energy 7.00% 3/15/13 384,000 400,510
Westar Energy 5.95% 1/1/35 472,000 439,689
Xcel Energy 7.00% 12/1/10 80,000 84,389
-------------
13,808,673
-------------
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Energy - 0.46%
Bluewater Finance
10.25% 2/15/12 USD 165,000 $ 174,075
#Canadian Oil Sands 144A
4.80% 8/10/09 155,000 150,742
Compton Petroleum Finance
7.625% 12/1/13 100,000 100,500
#Hilcorp Energy 144A
7.75% 11/1/15 250,000 250,624
10.50% 9/1/10 95,000 105,094
Nexen 5.875% 3/10/35 200,000 187,055
Quicksilver Resources 7.125% 4/1/16 150,000 148,875
b* Secunda International 12.60% 9/1/12 170,000 182,750
SESI 8.875% 5/15/11 150,000 157,500
Siberian Oil 10.75% 1/15/09 445,000 497,910
Talisman Energy 5.125% 5/15/15 170,000 163,152
USX 9.125% 1/15/13 15,000 17,873
Valero Energy 6.125% 4/15/07 40,000 40,313
#VeraSun Energy 144A
9.875% 12/15/12 190,000 202,350
Weatherford International
4.95% 10/15/13 20,000 19,246
Whiting Petroleum 7.25% 5/1/13 130,000 130,325
-------------
2,528,384
-------------
Finance Companies - 2.10%
American General Finance
4.00% 3/15/11 864,000 806,586
4.875% 5/15/10 650,000 633,847
4.875% 7/15/12 985,000 942,407
b* Berkshire Hathaway 4.61% 1/11/08 195,000 195,366
#Festival Fun Park 144A
10.875% 4/15/14 100,000 101,188
FINOVA Group 7.50% 11/15/09 605,000 204,188
FTI Consulting 7.625% 6/15/13 200,000 211,500
HSBC Finance 4.625% 9/15/10 500,000 482,601
b* HSBC Finance Capital Trust IX
5.911% 11/30/35 500,000 491,457
b* #ILFC E-Capital Trust II 144A
6.25% 12/21/65 380,000 364,829
International Lease Finance
4.625% 6/2/08 40,000 39,397
#Mantis Reef 144A 4.692% 11/14/08 1,100,000 1,070,540
b* MUFG Capital Finance 1
6.346% 7/29/49 2,045,000 2,019,706
Residential Capital
6.00% 2/22/11 980,000 973,189
6.125% 11/21/08 635,000 636,399
6.375% 6/30/10 257,000 259,145
6.875% 6/30/15 1,430,000 1,493,343
SLM 6.50% 6/15/10 NZD 1,170,000 719,597
-------------
11,645,285
-------------
38 (continued)
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Industrial - Other 0.40%
Adesa 7.625% 6/15/12 USD 245,000 $ 251,738
#Autopista Del Maipo 144A
7.373% 6/15/22 650,000 728,257
Foster Wheeler Series A
10.359% 9/15/11 44,000 48,840
Interline Brands 11.50% 5/15/11 283,000 313,776
#Knowledge Learning 144A
7.75% 2/1/15 145,000 138,838
Mueller Group 10.00% 5/1/12 275,000 302,500
I Mueller Holdings 14.75% 4/15/14 305,000 250,100
Trimas 9.875% 6/15/12 215,000 197,800
-------------
2,231,849
-------------
Insurance - 2.55%
21st Century Insurance 5.90% 12/15/13 275,000 268,014
#ASIF Global Financing 144A
3.85% 11/26/07 42,000 41,074
#Farmers Exchange Capital 144A
7.05% 7/15/28 555,000 564,512
#Farmers Insurance Exchange 144A
6.00% 8/1/14 140,000 138,288
8.625% 5/1/24 615,000 720,254
#Liberty Mutual 144A 5.75% 3/15/14 90,000 87,625
Marsh & McLennan
b* 4.72% 7/13/07 400,000 399,698
5.15% 9/15/10 310,000 303,308
5.375% 3/15/07 210,000 209,470
MetLife 5.00% 6/15/15 205,000 195,458
#Nationwide Mutual Insurance 144A
7.875% 4/1/33 355,000 407,967
#Nippon Life Insurance 144A
4.875% 8/9/10 345,000 334,659
#NLV Financial 144A 6.50% 3/15/35 720,000 660,286
tb*#North Front Pass Through Trust 144A
5.81% 12/15/24 500,000 486,764
b* #Oil Insurance 144A 5.15% 8/15/33 390,000 384,090
#Pennsylvania Mutual Life Insurance 144A
6.65% 6/15/34 419,000 440,804
Reinsurance Group 6.75% 12/15/65 655,000 622,477
St. Paul Travelers 5.01% 8/16/07 355,000 351,952
#Symetra Financial 144A
6.125% 4/1/16 1,125,000 1,119,183
tb* #Twin Reefs Pass Through Trust 144A
5.698% 12/31/49 400,000 400,396
United Healthcare
5.375% 3/15/16 470,000 460,404
5.80% 3/15/36 365,000 348,777
#UnumProvident Finance 144A
6.85% 11/15/15 270,000 274,972
WellPoint
4.25% 12/15/09 140,000 134,550
5.25% 1/15/16 1,295,000 1,251,172
5.85% 1/15/36 205,000 194,350
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Insurance (continued)
Willis Group
5.125% 7/15/10 USD 575,000 $ 563,422
5.625% 7/15/15 725,000 707,556
#ZFS Finance USA 144A
6.15% 12/15/65 1,000,000 974,866
6.45% 12/15/65 1,105,000 1,065,209
-------------
14,111,557
-------------
Natural Gas - 0.72%
#Atlas Pipeline Partners 144A
8.125% 12/15/15 300,000 314,250
b* Atmos Energy 4.975% 10/15/07 255,000 255,339
#Copano Energy 144A 8.125% 3/1/16 75,000 78,000
#Dynegy Holdings 144A 8.375% 5/1/16 100,000 100,000
El Paso Natural Gas 7.625% 8/1/10 55,000 57,613
El Paso Production Holding 7.75% 6/1/13 150,000 156,188
Enterprise Products Operating
4.00% 10/15/07 125,000 122,332
4.625% 10/15/09 355,000 343,337
4.95% 6/1/10 310,000 300,980
5.00% 3/1/15 327,000 303,927
7.50% 2/1/11 317,000 338,733
Inergy Finance 6.875% 12/15/14 90,000 85,950
#Inergy Finance 144A 8.25% 3/1/16 75,000 77,250
Kinder Morgan Finance 5.35% 1/5/11 455,000 448,206
Oneok 5.51% 2/16/08 335,000 334,633
b* Sempra Energy 5.24% 5/21/08 240,000 240,422
Tennessee Gas Pipeline 8.375% 6/15/32 65,000 74,495
Valero Logistics Operations
6.05% 3/15/13 350,000 354,439
-------------
3,986,094
-------------
Real Estate - 0.33%
American Real Estate 8.125% 6/1/12 265,000 273,613
BF Saul REIT 7.50% 3/1/14 280,000 288,400
Developers Diversified Realty
4.625% 8/1/10 95,000 91,227
5.25% 4/15/11 100,000 97,623
5.375% 10/15/12 440,000 428,884
ERP Operating 6.95% 3/2/11 66,000 69,835
HRPT Properties Trust 5.75% 2/15/14 170,000 166,108
Tanger Properties 9.125% 2/15/08 200,000 211,015
United Dominion Realty Trust
3.90% 3/15/10 205,000 193,597
-------------
1,820,302
-------------
Technology - 0.54%
Chartered Semiconductor Manufacturing
6.25% 4/4/13 252,000 249,727
Cisco Systems 5.50% 2/22/16 666,000 657,230
Dell 6.55% 4/15/08 150,000 153,276
Magnachip Semiconductor
8.00% 12/15/14 485,000 455,900
Motorola 4.608% 11/16/07 140,000 138,485
Sanmina-SCI 8.125% 3/1/16 85,000 86,275
(continued) 39
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
- --------------------------------------------------------------------------------
Technology (continued)
#Solectron 144A 8.00% 3/15/16 USD 200,000 $ 201,500
#Sunguard Data Systems 144A
10.25% 8/15/15 540,000 571,050
#Telcordia Technologies 144A
10.00% 3/15/13 535,000 492,200
-------------
3,005,643
-------------
Transportation - 0.62%
American Airlines
6.817% 5/23/11 175,000 171,938
7.379% 5/23/16 123,166 111,773
Continental Airlines 6.503% 6/15/11 390,000 393,941
b* CSX 4.99% 8/3/06 147,000 147,130
#Erac USA Finance 144A
5.30% 11/15/08 100,000 99,513
5.90% 11/15/15 375,000 374,117
7.35% 6/15/08 380,000 394,780
IH-Lines Finance Holdings
11.00% 4/1/13 391,000 326,485
#Hertz 144A
8.875% 1/1/14 140,000 145,950
10.50% 1/1/16 55,000 59,950
Horizon Lines 9.00% 11/1/12 139,000 147,688
Kansas City Southern Railway
9.50% 10/1/08 255,000 273,488
OMI 7.625% 12/1/13 370,000 380,174
Seabulk International 9.50% 8/15/13 90,000 100,350
Stena 9.625% 12/1/12 265,000 290,175
-------------
3,417,452
-------------
Total Corporate Bonds (cost $153,344,928) 150,666,517
-------------
- --------------------------------------------------------------------------------
Foreign Agencies - 1.52%
- --------------------------------------------------------------------------------
Austria - 0.23%
Oesterreichesche Kontrollbank
1.80% 3/22/10 JPY 145,000,000 1,260,890
-------------
1,260,890
-------------
Germany - 0.88%
KFW
4.75% 12/7/10 GBP 368,000 641,150
6.00% 2/28/11 NZD 167,000 100,914
6.50% 11/15/11 NZD 3,918,000 2,435,543
KFW International Finance
1.75% 3/23/10 JPY 107,000,000 928,686
Rentenbank 1.375% 4/25/13 JPY 92,000,000 766,207
-------------
4,872,500
-------------
Mexico - 0.15%
#Pemex Master Trust 144A
6.625% 6/15/35 USD 440,000 425,590
Pemex Project Funding Master Trust
6.625% 6/15/35 USD 411,000 397,540
-------------
823,130
-------------
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Foreign Agencies (continued)
- --------------------------------------------------------------------------------
Sweden - 0.21%
Swedish Export Credit
10.50% 9/30/15 TRY 1,500,000 $ 1,165,861
-------------
1,165,861
-------------
Ukraine - 0.05%
Exim of Ukraine 7.75% 9/23/09 USD 270,000 274,212
-------------
274,212
-------------
Total Foreign Agencies (cost $8,974,165) 8,396,593
-------------
- --------------------------------------------------------------------------------
Municipal Bonds - 2.56%
- --------------------------------------------------------------------------------
Allentown, Pennsylvania
3.98% 10/1/11 (AMBAC) 320,000 299,782
Aruba Airport Authority Series A
7.70% 1/1/13 (MBIA) 166,000 175,079
Augusta, Georgia Water & Sewer
Revenue 5.25% 10/1/39 (FSA) 260,000 275,816
California Industry Urban Development
Agency Series 1A
4.50% 5/1/10 (MBIA) 195,000 188,271
California State
5.00% 2/1/33 60,000 61,461
5.00% 2/1/33 5,000 5,115
California State Economic Recovery
Series A 5.25% 7/1/13 105,000 113,836
California State University Systemwide
Revenue 5.00% 11/1/30 (AMBAC) 195,000 203,009
Colorado Department of Transportation
Revenue Series B
5.00% 12/15/12 (FGIC) 85,000 90,506
Delaware River Port Authority Series A
7.54% 1/1/13 (FSA) 805,000 892,874
Escondido, California Revenue
(Wastewater Capital Projects)
Series B 5.75% 9/1/25 (MBIA) 565,000 565,153
Fairfield, California Pension Obligation
Series B 5.42% 6/1/34 (AMBAC) 765,000 724,424
Forsyth, Montana Pollution
Control Revenue
(Portland General Project)
Series A 5.20% 5/1/33 20,000 20,516
Fuller Road Management Corporation
New York Lease Revenue
(300MM North Facilities Project)
Series A 5.21% 9/1/11 (XLCA) 1,555,000 1,532,467
Hoboken, New Jersey
6.50% 4/1/26 (MBIA) 25,000 27,470
Series B 4.26% 2/1/10 (MBIA) 325,000 312,783
Series B 5.33% 2/1/18 (MBIA) 335,000 329,097
Illinois State Taxable Pension
5.10% 6/1/33 120,000 112,507
40 (continued)
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
La Quinta, California Redevelopment
Agency Tax Allocation Project #1
5.45% 9/1/13 (AMBAC) USD 295,000 $ 292,012
6.24% 9/1/23 (AMBAC) 230,000 238,009
Los Angeles, California
Community Redevelopment
Series B 5.83% 12/1/17 (FSA) 525,000 531,179
Series D 5.60% 7/1/18 (MBIA) 80,000 78,774
Manchester, New Hampshire Series C
5.375% 12/1/11 (FGIC) 110,000 110,300
Massachusetts Health & Education
Facilities Authority Revenue
Series A 5.00% 7/15/36 355,000 370,936
Metropolitan Washington,
District of Columbia Airport Authority
Series C 4.62% 10/1/10 (FGIC) 15,000 14,618
New Jersey Economic Development
Authority Revenue Cigarette Tax
5.75% 6/15/29 100,000 105,299
New York State Sales Tax Asset Receivables
Series A 5.25% 10/15/27 (AMBAC) 155,000 166,172
New York State Urban Development
Series A-1 5.25% 3/15/34 (FGIC) 125,000 132,685
Oregon State 5.892% 6/1/27 65,000 67,216
Oregon State Local Governments
3.145% 6/1/06 (AMBAC) 325,000 324,071
Philadelphia, Pennsylvania Authority
for Industrial Development Pension
Funding Retirement System
Series A 5.64% 4/15/06 (MBIA) 1,103,000 1,103,243
Reeves County, Texas Certificates
Participation 7.25% 6/1/11 (ACA) 455,000 461,288
Sacramento County, California Public
Finance Authority Revenue
(Housing Tax County Project) Series B
3.82% 12/1/08 (FGIC) 65,000 62,813
5.18% 12/1/13 (FGIC) 105,000 102,439
San Diego, California Redevelopment
Tax Allocation Series C
5.81% 9/1/19 (XLCA) 645,000 647,303
South Texas Detention Complex
Local Development Corporation
Revenue 4.92% 2/1/14 (MBIA) ,150,000 1,108,922
University Enterprises Series B
5.42% 10/1/37 (FGIC) 1,455,000 1,381,245
Waterbury, Connecticut Series B
5.43% 4/1/09 (FSA) 329,000 328,757
West Virginia Economic
Development Authority
5.37% 7/1/20 (MBIA) 590,000 581,581
6.07% 7/1/26 45,000 45,610
-------------
Total Municipal Bonds
(cost $14,429,611) 14,184,638
-------------
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Non-Agency Asset-Backed Securities - 4.60%
- --------------------------------------------------------------------------------
#ABSC NIMs Trust
Series 2004-HE1 A 144A
7.00% 1/17/34 USD 1,225 $ 1,216
#Aegis Asset Backed
Securities Trust 144A
Series 2005-3N N1
4.75% 8/25/35 379,187 377,962
Series 2005-5N N1
4.50% 12/25/23 798,198 788,266
b* Ameriquest Mortgage Securities
Series 2006-R1 A2C
5.008% 3/25/36 335,000 334,996
Capital One Auto Finance Trust
Series 2003-A A4A
2.47% 1/15/10 18,719 18,385
Centex Home Equity
Series 2002-A AF6 5.54% 1/25/32 58,361 58,166
Citibank Credit Card Issuance Trust
Series 2002-A1 A1 4.95% 2/9/09 265,000 264,211
Series 2003-A7 A7 4.15% 7/7/17 65,000 59,479
Countrywide Asset-Backed Certificates
#Series 2004-1 NIM Note 144A
6.00% 5/25/34 230 227
#Series 2004-2N N1 144A
5.00% 2/25/35 10,177 10,096
#Series 2004-BC1N Note 144A
5.50% 4/25/35 3,993 3,941
Series 2004-S1 A2 3.872% 3/25/20 230,000 225,666
b* Series 2005-7 AF2 4.367% 7/25/35 1,465,000 1,441,747
b* Series 2005-12 2A2 4.898% 2/25/36 575,000 568,451
b* Series 2006-3 2A2 4.998% 6/25/36 800,000 799,991
b* Series 2006-4 2A2 4.998% 7/25/36 935,000 935,000
Credit-Based Asset Service
and Securitization
Series 2004-CB4 A3
4.632% 5/25/35 694,420 690,619
Series 2005-CB8 AF1B 5.451%
12/25/35 1,055,757 1,051,038
#Drive Auto Receivables Trust
Series 2005-2 A2 144A
4.12% 1/15/10 1,420,000 1,401,412
#Encore Credit Receivables NIM Trust
Series 2005-4 Note 144A
4.50% 1/25/36 766,170 756,426
#First Franklin NIM Trust 144A
Series 2004-FF6A Note
5.75% 7/25/34 24,964 24,966
Series 2004-FFH4 N1
4.212% 1/21/35 142,102 141,825
#GSAA Trust Series 2004-4N
Note 144A 6.25% 5/25/34 27,686 27,634
Honda Automobile Receivables
Owners Trust Series 2004-2 A4
3.81% 10/15/09 70,000 68,376
(continued) 41
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Non-Agency Asset-Backed Securities (continued)
- --------------------------------------------------------------------------------
JPMorgan Mortgage Acquisition
Corporation Series 2005-FRE1
A2F1 5.375% 10/25/35 USD 929,872 $ 925,506
MASTR Asset Backed Securities
Series 2005-AB1 A1B
5.143% 11/25/35 1,442,276 1,434,342
#MBNA Master Credit Card Trust
USA Series 2000-D C 144A
8.40% 9/15/09 110,000 113,255
b* Merrill Lynch Mortgage Investors
Series 2005-NCB A1A
5.451% 7/25/36 1,185,653 1,180,989
Mid-State Trust
Series 2004-1 A 6.005% 8/15/37 56,193 56,671
Series 2005-1 A 5.745% 1/15/40 301,100 295,266
MMCA Automobile Trust
Series 2002-2 A4 4.30% 3/15/10 157,419 156,987
Series 2002-2 B 4.67% 3/15/10 193,158 190,670
b* Option One Mortgage Loan Trust
Series 2005-4 A3 5.078% 11/25/35 685,000 686,147
Ownit Mortgage Loan Asset
Backed Certificates
Series 2006-1 AF1 5.424% 12/25/36 1,284,599 1,277,543
Series 2006-2 A2B 5.633% 1/25/37 170,000 170,000
#Park Place Securities NIM Trust 144A
Series 2004-MCW1 A
4.458% 9/25/34 20,507 20,486
Series 2004-WCW1 A
4.25% 9/25/35 587,991 585,234
Series 2004-WHQ1 D
7.384% 9/25/34 315,656 316,360
Series 2004-WHQ2 A
4.00% 2/25/35 46,438 46,277
Series 2005-WCH1 A
4.00% 2/25/35 119,731 119,373
Renaissance Home Equity Loan Trust
Series 2004-4 AF2 3.856% 2/25/35 225,000 223,195
Series 2005-4 A2 5.399% 2/25/36 235,000 233,639
Series 2005-4 A3 5.565% 2/25/36 150,000 148,938
b* Residential Asset Mortgage Products
Series 2004-RZ2 AI3 4.30% 1/25/31 125,000 123,368
Residential Asset Securities
Series 2000-KS5 AI6 7.175% 12/25/31 61,204 61,090
b* Series 2006-KS3 AI3 4.992% 4/25/36 940,000 940,000
b* Residential Funding Mortgage Securities II
Series 2005-HI2 A1 4.958% 5/25/35 477,221 477,272
#Sail NIM Notes Series 2004-4A A 144A
5.00% 4/27/34 3,215 3,211
#Securitized Asset Backed NIM Trust
Series 2005-FR4 144A
6.00% 1/25/36 1,383,282 1,373,515
Structured Asset Securities
Series 2001-SB1 A2 3.375% 8/25/31 145,321 131,557
b* Series 2005-NC1 A7 5.048% 2/25/35 105,539 105,632
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Non-Agency Asset-Backed Securities (continue)
- --------------------------------------------------------------------------------
Terwin Mortgage Trust
Series 2005-14HE AF2
4.849% 7/25/36 USD 2,022,000 $ 1,973,724
Vanderbilt Mortgage Finance
Series 2001-A A4 7.235% 6/7/28 223,743 233,182
WFS Financial Owner Trust
Series 2002-2 A4 4.50% 2/20/10 52,629 52,650
Series 2005-1 D 4.09% 8/17/12 649,098 637,111
Whole Auto Loan Trust
Series 2003-1 B 2.24% 3/15/10 1,150,008 1,135,355
-------------
Total Non-Agency Asset-Backed
Securities (cost $25,409,961) 25,478,641
-------------
- --------------------------------------------------------------------------------
Non-Agency Collateralized Mortgage Obligations - 18.46%
- --------------------------------------------------------------------------------
ABN Amro Mortgage
Series 2003-4 A5 4.75% 3/25/33 771,402 762,823
b* Adjustable Rate Mortgage Trust
Series 2005-10 3A31
5.435% 1/25/36 1,145,000 1,123,540
b* American Home Mortgage
Investment Trust Series 2004-2 4A2
3.635% 2/25/44 136,721 136,484
Balta 2006-3 A3 6.202% 5/25/36 635,000 638,772
Bank of America Alternative Loan Trust
Series 2003-10 2A1 6.00% 12/25/33 23,703 23,584
Series 2004-2 1A1 6.00% 3/25/34 74,510 74,138
Series 2004-10 1CB1 6.00% 11/25/34 272,015 270,633
Series 2005-3 2A1 5.50% 4/25/20 187,149 185,219
Series 2005-5 2CB1 6.00% 6/25/35 435,567 433,253
Series 2005-6 7A1 5.50% 7/25/20 563,675 557,510
Series 2005-9 5A1 5.50% 10/25/20 515,402 509,443
Bank of America Mortgage Securities
Series 2003-2 1A11 5.50% 4/25/33 1,245,000 1,233,303
b* Series 2003-I 2A4 3.828% 10/25/33 3,693 3,660
b* Series 2003-J 2A8 4.199% 11/25/33 1,150,000 1,119,707
Series 2004-3 1A2O 4.25% 4/25/34 659,552 650,525
b* Series 2004-G 2A6 4.657% 8/25/34 1,165,000 1,139,898
Series 2005-9 2A1 4.75% 10/25/20 555,933 536,237
b* Series 2005-A 1A1 4.054% 2/25/35 144,764 142,050
b* Series 2005-E 2A1 4.978% 6/25/35 257,056 252,343
Bear Stearns Adjustable Rate Mortgage Trust
Series 2005-4 2A3 4.45% 8/25/35 770,000 743,253
Series 2005-7 1A2 4.75% 8/25/35 193,508 188,037
Series 2006-1 1A1 4.625% 2/25/36 3,375,471 3,303,478
Bear Stearns Asset Backed Securities
Series 2005-AC8 A5 5.50% 11/25/35 624,859 617,620
Cendant Mortgage Trust
Series 2003-1 A6 5.50% 2/25/33 40,518 40,263
Series 2004-1 A3 5.50% 2/25/34 807,533 803,253
Chase Mortgage Finance
Series 2003-S8 A2 5.00% 9/25/18 919,166 890,023
Series 2004-S3 2A1 5.25% 3/25/34 660,741 654,358
b* Series 2005-A1 3A1 5.279% 12/25/35 970,760 954,345
42 (continued)
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Non-Agency Collateralized Mortgage Obligations (continued)
- --------------------------------------------------------------------------------
Citicorp Mortgage Securities
Series 2003-3 A4
5.50% 3/25/33 USD 203,409 $ 202,615
Series 2004-1 1A1
5.25% 1/25/34 1,949,406 1,928,726
Series 2004-8 1A1
5.50% 10/25/34 876,998 864,908
Citigroup Mortgage Loan Trust
Series 2004-NCM1 1A2
6.50% 7/25/34 1,435,998 1,460,679
Series 2004-NCM2 1CB2
6.75% 8/25/34 291,088 296,819
Countrywide Alternative Loan Trust
Series 2002-11 A4 6.25% 10/25/32 803,928 803,649
Series 2003-21T1 A2
5.25% 12/25/33 1,165,016 1,151,222
Series 2004-1T1 A2 5.50% 2/25/34 1,410,782 1,402,265
Series 2004-14T2 A6 5.50% 8/25/34 1,177,731 1,157,433
Series 2004-28CB 6A1 6.00% 1/25/35 774,300 770,087
Series 2004-35T2 A1 6.00% 2/25/35 668,487 668,714
Series 2004-J1 1A1 6.00% 2/25/34 40,320 40,102
Series 2004-J2 7A1 6.00% 12/25/33 71,021 70,266
b* Series 2004-J7 1A2 4.673% 8/25/34 146,555 145,182
b* Series 2005-43 4A3 5.761% 10/25/35 764,795 759,543
b* Series 2005-63 3A1 5.906% 11/25/35 632,731 633,327
Series 2006-2CB A3 5.50% 3/25/36 467,997 464,994
tCountrywide Home Loan Mortgage
Pass Through Trust
Series 2003-21 A1 4.089% 5/25/33 20,500 20,147
Series 2005-29 A1 5.75% 12/25/35 1,961,066 1,924,612
Series 2006-1 A2 6.00% 3/25/36 488,118 481,389
Series 2006-HYB3 3A1 6.148% 5/25/36 580,000 583,852
Credit Suisse First Boston Mortgage Securities
Series 2003-17 4A1 5.50% 6/25/33 936,089 930,659
Series 2003-29 5A1 7.00% 12/25/33 24,552 24,897
b* Series 2003-AR22 2A3 4.107% 9/25/33 89,205 88,751
Series 2004-1 3A1 7.00% 2/25/34 11,475 11,614
First Horizon Alternative Mortgage
Securities Series 2004-FA1 1A1
6.25% 10/25/34 760,149 762,348
b* First Horizon Asset Securities
Series 2004-AR5 4A1
5.673% 10/25/34 91,502 90,643
Series 2005-AR2 2A1
5.133% 6/25/35 1,035,573 1,021,384
General Motors Acceptance
Corporation Mortgage Loan Trust
b* Series 2005-AR2 A4 5.195% 5/25/35 504,967 490,060
Series 2006-J1 A1 5.75% 4/25/36 2,045,000 2,038,865
#GSMPS Mortgage Loan Trust 144A
Series 1998-3 A 7.75% 9/19/27 39,565 41,197
Series 1999-3 A 8.00% 8/19/29 64,918 68,022
Series 2005-RP1 1A3 8.00% 1/25/35 550,110 578,396
Series 2005-RP1 1A4 8.50% 1/25/35 267,720 289,566
Series 2006-RP1 7.50% 1/25/36 620,524 653,871
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Non-Agency Collateralized Mortgage Obligations (continued)
- --------------------------------------------------------------------------------
GSR Mortgage Loan Trust
Series 2005-AR6 4A5
4.554% 9/25/35 USD 1,200,000 $ 1,157,460
b* Series 2006-AR1 2A4
5.201% 1/25/36 2,215,000 2,183,280
b* Indymac Index Mortgage Loan Trust
Series 2005-AR25 1A21
5.906% 10/25/35 592,928 593,303
Series 2006-AR2 1A1A
5.038% 4/25/46 732,088 732,088
Series 2006-AR7 5A1
6.166% 5/25/36 415,000 417,465
b* JPMorgan Mortgage Trust
Series 2005-A2 2A1
4.711% 4/25/35 331,403 328,917
Series 2005-A6 1A2
5.153% 9/25/35 605,000 589,784
Series 2005-A8 2A1
4.961% 11/25/35 1,018,432 1,006,961
Series 2006-A2 2A4
5.773% 4/25/36 2,025,000 2,018,520
Lehman Mortgage Trust
Series 2005-2 2A3 5.50% 12/25/35 518,003 515,581
b* MASTR Adjustable Rate Mortgages Trust
Series 2003-6 1A2 2.887% 12/25/33 7,934 7,901
MASTR Alternative Loans Trust
Series 2003-6 3A1 8.00% 9/25/33 27,129 27,541
Series 2003-9 1A1 5.50% 12/25/18 21,231 20,999
Series 2004-3 2A1 6.25% 4/25/34 561,732 562,786
Series 2004-3 8A1 7.00% 4/25/34 53,307 53,345
Series 2004-5 3A1 6.50% 6/25/34 49,270 49,870
Series 2004-5 6A1 7.00% 6/25/34 379,001 382,576
Series 2005-3 7A1 6.00% 4/25/35 252,783 251,387
MASTR Asset Securitization Trust
Series 2003-6 8A1 5.50% 7/25/33 138,435 134,152
Series 2003-9 2A7 5.50% 10/25/33 616,386 596,161
Series 2003-11 6A12 4.75% 12/25/33 370,000 363,266
Series 2004-4 2A1 5.00% 4/25/34 1,243,240 1,222,350
#MASTR Reperforming Loan Trust 144A
Series 2005-1 1A5 8.00% 8/25/34 227,404 238,661
Series 2005-2 1A4 8.00% 5/25/35 750,866 788,879
#MASTR Specialized Loan Trust
Series 2005-2 A2 144A
5.15% 7/25/35 457,131 448,132
b* Merrill Lynch Mortgage Investors
Series 2005-A5 A9 4.886% 6/25/35 608,383 597,440
Series 2005-A9 2A1C
5.183% 12/25/35 2,435,000 2,381,804
b* MLCC Mortgage Investors
Series 2005-1 1A 4.738% 4/25/35 435,827 432,694
Morgan Stanley Mortgage Loan Trust
Series 2006-2 6A 6.50% 2/25/36 268,745 272,945
Nomura Asset Acceptance
Series 2005-WF1 2A2 4.786% 3/25/35 475,000 464,686
#Novastar NIM Trust
Series 2005-N1 144A
4.777% 10/26/35 392,198 390,468
(continued) 43
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Non-Agency Collateralized Mortgage Obligations (continued)
- --------------------------------------------------------------------------------
Prime Mortgage Trust
Series 2004-CL1 1A1
6.00% 2/25/34 USD 62,900 $ 62,232
Residential Accredit Loans
Series 2002-QS17 CB1
6.00% 11/25/32 1,124,631 1,119,359
Series 2004-QS2 CB 5.75% 2/25/34 177,736 174,959
Residential Asset Mortgage Products
Series 2004-SL1 A3 7.00% 11/25/31 28,857 29,332
Series 2004-SL4 A3 6.50% 7/25/32 137,860 139,848
Series 2005-SL1 A2 6.00% 5/25/32 297,038 300,425
b* Structured Adjustable Rate
Mortgage Loan Trust
Series 2004-18 5A 5.50% 12/25/34 125,334 123,259
Series 2005-18 1A1 5.711% 9/25/35 983,507 974,793
Series 2005-18 6A1 5.328% 9/25/35 1,104,932 1,090,914
Series 2005-18 9A1 5.25% 9/25/35 915,280 905,991
Series 2005-21 6A3 5.40% 11/25/35 1,065,000 1,040,705
Series 2005-3XS A2 5.068% 1/25/35 638,825 639,216
Series 2006-1 7A4 5.62% 2/25/36 1,305,000 1,260,548
Structured Asset Securities
b* Series 2002-22H 1A 6.983% 11/25/32 21,480 21,736
Series 2004-5H A2 4.43% 12/25/33 485,479 479,729
Series 2004-12H 1A 6.00% 5/25/34 203,926 202,014
Series 2005-6 4A1 5.00% 5/25/35 706,410 669,544
b* Thornburg Mortgage Securities
Trust 2005-3 A1 5.048% 10/25/35 551,678 552,391
Washington Mutual
Series 2002-S8 2A1 4.50% 1/25/18 119,865 118,932
b* Series 2003-AR9 1A7 4.032% 9/25/33 158,660 154,860
b* Series 2003-AR10 A6
4.035% 10/25/33 955,000 926,628
b* Series 2003-AR11 A6
3.985% 10/25/33 1,410,000 1,362,404
b* Series 2004-AR4 A6 3.803% 6/25/34 1,180,000 1,123,264
b* Series 2004-AR5 A6 3.849% 6/25/34 555,000 530,375
b* Series 2004-AR9 A7 4.172% 8/25/34 701,000 674,543
Series 2004-CB2 4A 6.50% 8/25/34 189,226 192,478
Series 2004-CB3 1A 6.00% 10/25/34 256,295 253,301
Series 2004-CB3 4A 6.00% 10/25/19 142,053 143,518
b* Series 2005-AR12 1A6
4.843% 9/25/35 2,075,000 2,015,770
b* Series 2005-AR14 1A1
5.08% 12/25/35 1,084,032 1,072,677
b* Series 2005-AR16 1A3
5.121% 12/25/35 1,225,000 1,192,465
b* Series 2005-AR18 1A3A
5.279% 1/25/36 2,200,000 2,169,922
b* Series 2006-AR2 1A1
5.332% 2/28/36 1,978,447 1,979,606
tWashington Mutual Alternative
Mortgage Pass Through Certificates
Series 2005-1 5A2 6.00% 3/25/35 142,815 139,746
Series 2005-1 6A2 6.50% 3/25/35 33,754 33,924
Series 2005-9 3CB 5.50% 10/25/20 568,923 562,245
Series 2006-2 2CB 6.50% 3/25/36 393,055 395,214
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Non-Agency Collateralized Mortgage Obligations (continued)
- --------------------------------------------------------------------------------
Wells Fargo Mortgage Backed
Securities Trust
b* Series 2004-I 1A1
3.387% 7/25/34 USD 250,922 $ 251,984
b* Series 2004-T A1
3.452% 9/25/34 348,527 348,163
Series 2005-12 1A7
5.50% 11/25/35 682,763 654,386
Series 2005-17 1A1
5.50% 1/25/36 579,558 558,550
Series 2005-17 1A2
5.50% 1/25/36 535,355 516,283
b* Series 2005-AR10 2A14
4.109% 4/25/09 1,365,000 1,318,215
b* Series 2005-AR10 2A15
4.109% 6/25/35 2,080,000 2,008,709
b* Series 2005-AR10 2A17
3.499% 6/25/35 830,000 789,178
b* Series 2005-AR16 2A1
4.946% 10/25/35 742,047 734,253
b* Series 2005-AR16 4A1
4.993% 10/25/35 1,006,668 996,823
b* Series 2005-AR16 4A2
4.993% 10/25/35 1,610,000 1,570,278
Series 2006-1 A3 5.00% 3/25/21 749,735 724,900
Series 2006-2 3A1 5.75% 3/25/36 602,932 593,046
b* Series 2006-AR2 2A5
5.094% 2/28/36 4,388,586 4,320,013
b* Series 2006-AR4 1A1
5.87% 4/25/36 860,000 857,093
b* Series 2006-AR4 2A1
5.798% 4/25/36 580,000 575,331
b* Series 2006-AR5 2A1
5.552% 4/25/36 375,000 372,979
-------------
Total Non-Agency Collateralized
Mortgage Obligations
(cost $103,360,353) 102,159,009
-------------
- --------------------------------------------------------------------------------
Regional Agency - 0.13%
- --------------------------------------------------------------------------------
Australia - 0.13%
Queensland Treasury
6.00% 8/14/13 AUD 301,000 221,588
6.00% 10/14/15 AUD 645,000 477,564
-------------
Total Regional Agency
(cost $738,610) 699,152
-------------
44 (continued)
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Regional Authority - 0.87%
- --------------------------------------------------------------------------------
Canada - 0.86%
Hydro Quebec 9.40% 2/1/21 USD 35,000 $ 48,590
Ontario Province
1.875% 1/25/10 JPY 144,000,000 1,256,304
4.50% 3/8/15 CAD 224,000 191,453
6.25% 6/16/15 NZD 4,395,000 2,694,050
Quebec Province 6.75% 11/9/15 NZD 510,000 319,693
Saskatchewan Province
5.00% 3/5/37 CAD 360,000 321,792
-------------
Total Regional Authority
(cost $5,119,329) 4,831,882
-------------
- --------------------------------------------------------------------------------
GSenior Secured Loan - 0.97%
- --------------------------------------------------------------------------------
AWAS Capital
Tranche A 6.75% 3/21/13 USD 400,000 400,000
Tranche B 11.00% 3/21/13 300,000 303,000
Georgia Pacific
Loan B 6.561% 12/20/12 1,200,000 1,212,000
Loan C 7.561% 12/23/13 800,000 818,000
Healthsouth 8.15% 3/10/13 1,500,000 1,513,124
United Airlines Bank Loan Tranche B
8.125% 2/1/12 62,500 63,438
8.625% 2/1/12 1,027,500 1,042,913
-------------
Total Senior Secured Loan
(cost $5,314,203) 5,352,475
-------------
- --------------------------------------------------------------------------------
Sovereign Agencies - 0.23%
- --------------------------------------------------------------------------------
Canada - 0.14%
Canada Housing Trust No. 1
3.75% 3/15/10 CAD 920,000 774,113
-------------
774,113
-------------
Japan - 0.09%
Development Bank of Japan
1.70% 9/20/22 JPY 65,000,000 526,011
-------------
526,011
-------------
Total Sovereign Agencies
(cost $1,346,798) 1,300,124
-------------
- --------------------------------------------------------------------------------
Sovereign Debt - 7.58%
- --------------------------------------------------------------------------------
Argentina - 0.12%
Republic of Argentina
H1.33% 12/31/38 USD 1,691,000 647,484
b* 4.889% 8/3/12 USD 750 617
-------------
648,101
-------------
Austria - 0.54%
Republic of Austria
5.25% 1/4/11 EUR 1,247,000 1,619,754
9.00% 9/15/06 ISK 99,500,000 1,374,081
-------------
2,993,835
-------------
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Sovereign Debt (continued)
- --------------------------------------------------------------------------------
Brazil - 1.39%
Federal Republic of Brazil
6.00% 8/15/10 BRL 8,744,177 $ 3,561,403
8.00% 1/15/18 USD 508,000 551,688
8.75% 2/4/25 USD 834,000 957,015
12.25% 3/6/30 USD 743,000 1,133,075
12.50% 1/5/16 BRL 3,149,000 1,468,953
-------------
7,672,134
-------------
Colombia - 0.13%
Republic of Colombia
8.375% 2/15/27 USD 387,000 446,985
10.50% 7/9/10 USD 220,000 257,290
-------------
704,275
-------------
Dominican Republic - 0.11%
Dominican Republic
9.04% 1/23/18 USD 147,196 160,297
#Dominican Republic 144A
8.625% 4/20/27 USD 423,000 436,747
-------------
597,044
-------------
France - 0.47%
France Government O.A.T.
3.50% 4/25/15 EUR 533,000 631,733
French Treasury Note
2.75% 3/12/08 EUR 1,640,000 1,966,669
-------------
2,598,402
-------------
Germany - 0.99%
Deutschland Republic
3.50% 1/4/16 EUR 544,000 644,879
4.00% 1/4/37 EUR 423,000 512,966
4.75% 7/4/08 EUR 1,616,000 2,017,498
6.25% 1/4/24 EUR 824,000 1,285,526
6.50% 7/4/27 EUR 622,000 1,020,566
-------------
5,481,435
-------------
Indonesia - 0.08%
#Republic of Indonesia 144A
6.875% 3/9/17 USD 424,000 418,700
-------------
418,700
-------------
Mexico - 0.53%
Mexican Bonos
9.00% 12/20/12 MXN 9,251,000 877,375
Mexican United States
8.30% 8/15/31 USD 1,691,000 2,047,801
-------------
2,925,176
-------------
Netherlands - 0.37%
Netherlands Government
5.75% 2/15/07 EUR 1,635,000 2,025,951
-------------
2,025,951
-------------
Norway - 0.37%
Norwegian Government
5.00% 5/15/15 NOK 6,290,000 1,039,101
6.00% 5/16/11 NOK 6,025,000 1,012,335
-------------
2,051,436
-------------
(continued) 45
Statements of net assets
Optimum Fixed Income Fund
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Sovereign Debt (continued)
- --------------------------------------------------------------------------------
Panama - 0.15%
Republic of Panama
7.125% 1/29/26 USD 504,000 $ 516,600
8.125% 4/28/34 USD 255,000 288,788
-------------
805,388
-------------
Philippines - 0.28%
Republic of Phillippines
7.75% 1/14/31 USD 960,000 972,000
#Republic of Philippines 144A
8.75% 10/7/16 USD 500,000 560,625
-------------
1,532,625
-------------
Poland - 0.11%
Poland Government
6.00% 11/24/10 PLN 1,956,000 633,635
-------------
633,635
-------------
Portugal - 0.14%
Portuguese Government
3.20% 4/15/11 EUR 668,000 794,233
-------------
794,233
-------------
Russia - 0.00%
@#Russian Paris Club Participation
Note 144A 2.375% 8/20/20 JPY 853,237 7,250
-------------
7,250
-------------
South Africa - 0.18%
Republic of South Africa
13.00% 8/31/10 ZAR 2,625,000 515,634
13.50% 9/15/15 ZAR 2,145,000 487,145
-------------
1,002,779
-------------
Sweden - 0.35%
Sweden Government
3.50% 12/1/15 SEK 2,055,000 332,953
5.00% 12/1/20 SEK 3,230,000 475,809
5.25% 3/15/11 SEK 8,195,000 1,137,210
-------------
1,945,972
-------------
Turkey - 0.31%
Republic of Turkey
7.25% 3/15/15 USD 691,000 722,959
8.00% 2/14/34 USD 439,000 485,095
11.50% 1/23/12 USD 425,000 533,375
-------------
1,741,429
-------------
United Kingdom - 0.58%
U.K. Treasury
4.75% 9/7/15 GBP 1,397,000 2,492,751
9.00% 7/12/11 GBP 341,000 718,155
-------------
3,210,906
-------------
Uruguay - 0.06%
Republic of Uruguay
7.625% 3/21/36 USD 338,000 339,690
-------------
339,690
-------------
Principal Market
Amount * Value (U.S.$)
- --------------------------------------------------------------------------------
Sovereign Debt (continued)
- --------------------------------------------------------------------------------
Venezuela - 0.32%
Venezuela Government
5.75% 2/26/16 USD 1,060,000 $ 982,567
6.00% 12/9/20 USD 882,000 813,204
-------------
1,795,771
-------------
Total Sovereign Debt
(cost $42,875,376) 41,926,167
-------------
- --------------------------------------------------------------------------------
Supranational Banks - 1.04%
- --------------------------------------------------------------------------------
Asia Development Bank
0.50% 10/9/12 AUD 457,000 235,931
European Investment Bank
1.40% 6/20/17 JPY 95,100,000 770,897
4.00% 10/15/37 EUR 812,000 953,894
4.25% 12/7/10 GBP 376,000 641,670
4.375% 7/8/15 GBP 369,000 628,223
Inter-American Development Bank
1.90% 7/8/09 JPY 131,000,000 1,143,446
^International Bank for
Reconstruction & Development
6.888% 8/20/07 NZD 2,435,000 1,369,666
-------------
Total Supranational Banks
(cost $6,051,520) 5,743,727
-------------
- --------------------------------------------------------------------------------
U.S. Treasury Obligations - 9.33%
- --------------------------------------------------------------------------------
U.S. Treasury Bonds
4.50% 2/15/36 USD 3,850,000 3,613,587
5.375% 2/15/31 545,000 573,868
6.00% 2/15/26 9,973,000 11,130,805
6.25% 8/15/23 155,000 175,840
U.S. Treasury Inflation Index Notes
0.875% 4/15/10 94,184 89,240
1.875% 7/15/15 163,078 156,887
2.00% 1/15/16 84,903 82,386
2.00% 1/15/26 184,789 175,174
~ 3.00% 7/15/12 2,034,334 2,120,555
3.875% 1/15/09 948,947 993,800
U.S. Treasury Notes
2.875% 11/30/06 922,000 910,403
4.50% 11/15/10 17,659,000 17,427,244
4.50% 2/15/16 3,845,000 3,740,766
5.00% 8/15/11 8,922,000 9,003,208
^U.S. Treasury Strip 4.199% 11/15/13 2,065,000 1,425,015
-------------
Total U.S. Treasury Obligations
(cost $52,718,718) 51,618,778
-------------
- --------------------------------------------------------------------------------
Convertible Bonds - 0.01%
- --------------------------------------------------------------------------------
#Charter Communications 144A
5.875% 11/16/09 65,000 44,281
-------------
Total Convertible Bonds (cost $63,444) 44,281
-------------
46 (continued)
Statements of net assets
Optimum Fixed Income Fund
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock - 0.04%
- --------------------------------------------------------------------------------
B&G Foods 3,400 $ 49,028
+ Foster Wheeler 1,044 49,392
+ Mirant 5,254 131,350
-------------
Total Common Stock (cost $166,937) 229,770
-------------
- --------------------------------------------------------------------------------
Preferred Stock - 0.08%
- --------------------------------------------------------------------------------
Arch Capital Group 8.00% 5,809 149,401
Axis Capital 7.50% 2,065 207,726
Nexen 7.35% 3,225 85,301
-------------
Total Preferred Stock (cost $438,380) 442,428
-------------
- --------------------------------------------------------------------------------
Currency Options Purchased - 0.00%
- --------------------------------------------------------------------------------
Put USD 2,034,000,
Call JPY 233,740,000,
expiration date 6/2/06 2,848
-------------
Total Currency Options Purchased
(cost $11,797) 2,848
-------------
- --------------------------------------------------------------------------------
Warrant - 0.10%
- --------------------------------------------------------------------------------
+ Argentina GDP Linked Security,
expiration date 12/15/35 6,329,000 564,863
-------------
Total Warrant (cost $479,290) 564,863
-------------
Principal
Amount
- --------------------------------------------------------------------------------
Repurchase Agreements - 3.66%
- --------------------------------------------------------------------------------
With BNP Paribas 4.45% 4/3/06
(dated 3/31/06, to be repurchased
at $10,119,751, collateralized by
$10,422,000 U.S. Treasury Bills
due 4/20/06, market
value $10,399,635) USD 10,116,000 10,116,000
With Cantor Fitzgerald
4.48% 4/3/06 (dated 3/31/06,
to be repurchased at $4,871,818,
collateralized by $1,369,000
U.S. Treasury Bills due 6/22/06,
market value $1,355,652,
$1,579,000 U.S. Treasury Bills
due 7/20/06, market value
$1,558,386, $1,316,000
U.S. Treasury Bills due 8/17/06,
market value $1,293,574 and
$765,000 U.S. Treasury Notes
2.625% due 11/15/06,
market value $762,114) 4,870,000 4,870,000
With UBS Warburg
4.48% 4/3/06 (dated 3/31/06,
to be repurchased at $5,265,965
collateralized by $5,499,000
U.S. Treasury Bills due 9/28/06,
market value $5,373,507) 5,264,000 5,264,000
-------------
Total Repurchase Agreements
(cost $20,250,000) 20,250,000
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Market Value of Securities - 101.69%
(cost $572,901,745) $562,842,262
Liabilities Net of Receivables and
Other Assets (1.69%) (9,376,036)
-------------
Net Assets Applicable to 63,352,144 Shares
Outstanding - 100.00% $553,466,226
-------------
Net Asset Value - Optimum Fixed Income Fund
Class A ($47,955,918 / 5,489,487 Shares) $8.74
-------------
Net Asset Value - Optimum Fixed Income Fund
Class B ($9,277,897 / 1,061,275 Shares) $8.74
-------------
Net Asset Value - Optimum Fixed Income Fund
Class C ($186,869,151 / 21,367,963 Shares) $8.75
-------------
Net Asset Value - Optimum Fixed Income Fund
Institutional Class ($309,363,260 / 35,433,419) $8.73
-------------
Components of Net Assets at March 31, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $564,292,554
Undistributed net investment income 3,066,548
Accumulated net realized loss on investments (3,969,075)
Net unrealized depreciation of investments
and foreign currencies (9,923,801)
-------------
Total net assets $553,466,226
-------------
* Principal amount shown is stated in the currency in which each security is
denominated.
AUD - Australian Dollar
BRL - Brazilian Real
CAD - Canadian Dollar
EUR - European Monetary Unit
GBP - British Pound Sterling
ISK - Iceland Kronor
JPY - Japanese Yen
MXN - Mexican Peso
NOK - Norwegian Kroner
NZD - New Zealand Dollar
PLN - Polish Zlotych
SEK - Swedish Kronor
TRY - Turkish Lira
USD - U.S. Dollar
ZAR - South African Rand
(continued) 47
Statements of net assets
Optimum Fixed Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
+ Non-income producing security for the year ended March 31, 2006.
// Non-income producing security. Security is currently in default.
b* Variable rate security. The interest rate shown is the rate as of March 31,
2006.
I 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.
H Step coupon bond. Coupon increases periodically based on a predetermined
schedule. Stated interest rate in effect at March 31, 2006.
J Security is currently in default. The issue has missed the maturity date.
Bankruptcy proceedings are in process to determine distribution of assets.
The date listed is the estimate of when proceedings will be finalized.
# Security exempt from registration under Rule 144A of the Securities Act of
1933. At March 31, 2006, the aggregate amount of Rule 144A securities
equals $48,453,362, which represented 8.75% of the Funds net assets. See
Note 9 in "Notes to Financial Statements."
~ Fully or partially pledged as collateral for financial futures contracts.
= Security is being fair valued in accordance with the Funds fair valuation
policy. At March 31, 2006, the aggregate amount of fair valued securities
equals $252,047, which represented 0.05% of the Funds net assets. See Note
1 in "Notes to Financial Statements."
@ Illiquid security. At March 31, 2006, the aggregate amount of illiquid
securities equals $828,262, which represented 0.15% of the Funds net
assets. See Note 9 in "Notes to Financial Statements."
t Pass Through Agreement. Security represents the contractual right to
receive a proportionate amount of underlying payments due to the
counterparty pursuant to various agreements related to the rescheduling of
obligations and the exchange of certain notes.
G Senior Secured Loans in which the Fund invests generally pay interest at
rates which are periodically redetermined by reference to a base lending
rate plus a premium. These base lending rates are generally (i) the prime
rate offered by one or more United States banks, (ii) the lending rate
offered by one or more European banks such as the London Inter-Bank Offered
Rate (LIBOR) and (iii) the certificate of deposit rate. Senior Secured
Loans may be subject to restrictions on resale.
^ Zero coupon security. The interest rate shown is the yield at the time of
purchase.
Summary of Abbreviations:
ACA - Insured by American Capital Access
AMBAC - Insured by the AMBAC Assurance Corporation
ARM - Adjustable Rate Mortgage
CPN - Interest Coupon Only
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
GNMA - Government National Mortgage Association
GSMPS - Goldman Sachs Reperforming Mortgage Securities
MBIA - Insured by the Municipal Bond Insurance Association
NIM - Net Interest Margin
O.A.T - Obligation Assimilable au Tresor (Treasury Security)
PRN - Principal Only
REIT - Real Estate Investment Trust
S.F. - Single Family
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) $8.74
Sales charge (4.50% of offering price) (B) 0.41
-------------
Offering price $9.15
=============
(A) Net asset value per share, as illustrated, is the amount which would be
paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
The following foreign currency exchange contracts and futures contracts were
outstanding at March 31, 2006:
Foreign Currency Exchange Contracts(1)
In Unrealized
Contracts to Exchange Settlement Appreciation
Receive (Deliver) For Date (Depreciation)
(447,800) AUD EUR 268,218 4/6/06 $ 4,534
(447,800) AUD JPY 37,891,493 4/6/06 1,577
(3,470,745)EUR JPY 489,196,026 4/24/06 (40,658)
260,488 EUR PLN (1,018,000) 4/24/06 1,364
279,667 EUR PLN (1,090,214) 4/24/06 2,312
643,439 EUR GBP (446,000) 4/24/06 5,760
770,743 EUR GBP (535,000) 4/24/06 5,580
827,256 EUR SEK (7,741,000) 4/24/06 8,215
1,230,208 EUR NOK (9,790,000) 4/24/06 (3,056)
(1,018,000) GBP USD 1,778,924 4/24/06 9,829
(108,430,470) ISK USD 1,579,928 9/15/06 105,489
10,843,520 JPY NZD (149,700) 4/24/06 461
45,413,270 JPY EUR (322,000) 4/24/06 (3,534)
144,583,754 JPY NZD (1,998,000) 4/24/06 4,943
157,457,419 JPY CAD (1,542,600) 4/6/06 17,374
(12,826,674) NZD USD 7,993,583 4/24/06 111,038
(817,000) TRY USD 601,354 4/10/06 (5,168)
(6,309,000) ZAR USD 1,009,392 4/6/06 (13,603)
--------
$212,457
========
48 (continued)
Statements of net assets
Optimum Fixed Income Fund
Futures Contracts(2)
Notional Unrealized
Contracts to Cost Notional Expiration Appreciation
to Buy (Sell) (Proceeds) Value Date (Depreciation)
- ------------ ---------- -------- ---------- --------------
(30) Euro-Bund
Future USD(4,262,892) USD(4,259,598) 6/30/06 $ 3,294
(4) U.S. Treasury
5 year Notes (419,843) (417,750) 6/30/06 2,093
(72) U.S. Treasury
10 year Notes (7,730,143) (7,660,125) 6/30/06 70,018
26 U.S. Treasury
long Bond 2,897,177 2,838,063 6/30/06 (59,114)
--------
$ 16,291
========
The use of futures contracts involves elements of market risk and risks in
excess of the amount recognized in the financial statements. The notional
amounts presented above represent the Funds total exposure in such contracts,
whereas only the net unrealized appreciation (depreciation) is reflected in the
Funds net assets.
Swap Agreements(3)
Notional Expiration Unrealized
Amount Date Description Depreciation
- -------- ---------- ----------- ------------
$5,025,000 5/1/06 Agreement with Goldman Sachs to receive $(66,120)
the notional amount multiplied by the
return on the Lehman Brothers Commercial
MBS Index AAA and to pay the notional
amount multiplied by the 3 month BBA
LIBOR adjusted by a spread of plus
0.07%.
Because there is no organized market for these swap agreements, the value of
open swaps may differ from that which would be realized in the event the Fund
terminated its position in the agreement. Risks of entering into these
agreements include the potential inability of the counterparty to meet the terms
of the agreements. This type of risk is generally limited to the amount of
favorable movements in the value of the underlying security, instrument, or
basket of instruments, if any, at the day of default. Risks also arise from
potential losses from adverse market movements and such losses could exceed the
related unrealized amounts shown above.
(1)See Note 6 in "Notes to Financial Statements."
(2)See Note 7 in "Notes to Financial Statements."
(3)See Note 8 in "Notes to Financial Statements."
See accompanying notes
49
Statements of net assets
Optimum International Fund
March 31, 2006
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock - 97.50% x
- --------------------------------------------------------------------------------
Australia - 5.28%
Amcor 234,104 $ 1,239,982
Coles Myer 183,546 1,403,948
Fosters Group 532,455 2,022,772
Macquarie Airports 70,000 168,603
National Australia Bank 109,340 2,944,140
Promina Group 39,700 155,253
Telstra 573,620 1,533,361
Wesfarmers 34,238 853,824
-------------
10,321,883
-------------
Austria - 0.52%
OMV 3,100 207,300
Voestalpine 5,800 810,885
-------------
1,018,185
-------------
Belgium - 1.45%
Fortis Group 61,789 2,199,073
KBC Groep 6,000 642,823
-------------
2,841,896
-------------
Brazil - 0.93%
Braskem Preferred Class A 13,500 100,138
Gerdau ADR 9,700 218,444
Petroleo Brasiliero ADR 12,117 1,050,181
Unibanco ADR 2,800 206,948
Usinas Siderurgicas de Minas Gerais
Preferred Class A 6,300 233,220
-------------
1,808,931
-------------
Canada - 2.11%
Canadian Natural Resources 20,200 1,122,799
+ Celestica 18,900 215,773
EnCana 7,100 331,406
Metro Class A 15,600 397,482
Nexen 13,200 726,927
Royal Bank of Canada 5,200 219,250
Teck Cominco Class B 10,800 695,026
TELUS 10,800 417,811
-------------
4,126,474
-------------
China - 0.17%
China Petroleum & Chemical 280,000 163,419
PetroChina 170,000 178,237
-------------
341,656
-------------
Finland - 1.19%
Sampo Oyj Class A 29,900 628,981
UPM-Kymmene 71,800 1,692,716
-------------
2,321,697
-------------
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
France - 9.56%
Assurances Generales de France 11,700 $ 1,409,632
BNP Paribas 11,440 1,058,692
Cie de Saint-Gobain 30,728 2,141,177
Credit Agricole 26,490 1,026,611
Renault 18,200 1,928,607
Sanofi-Aventis 17,098 1,621,302
Societe Generale 27,681 4,147,645
Suez 4,600 180,772
+ Suez Strip 9,260 112
Total 19,618 5,171,743
-------------
18,686,293
-------------
Germany - 6.69%
Allianz 5,000 833,918
Bayer 49,699 1,991,524
Continental 13,693 1,509,070
E.ON 13,700 1,505,583
+Epcos 13,300 175,947
MAN 13,100 910,482
Muenchener Rueckversicherungs 10,000 1,415,489
RWE 47,619 4,138,845
TUI 30,200 591,503
-------------
13,072,361
-------------
Hong Kong - 1.62%
Hong Kong Electric Holdings 312,500 1,470,494
Kerry Properties 55,500 202,954
Orient Overseas International 48,000 162,055
Sino Land 147,900 211,989
Wharf Holdings 307,000 1,125,748
-------------
3,173,240
-------------
Hungary - 0.10%
Mol Magyar Olaj-es Gazipari GDR 1,890 192,119
-------------
192,119
-------------
Israel - 0.10%
+ Mizrahi Tefahot Bank 32,100 186,543
-------------
186,543
-------------
Italy - 3.85%
Banca Intesa 597,727 3,562,253
Buzzi Unicem 34,900 831,549
ENI 57,500 1,637,245
UniCredito Italiano 206,990 1,492,795
-------------
7,523,842
-------------
50 (continued)
Statements of net assets
Optimum International Fund
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Japan - 21.85%
Canon 70,900 $ 4,679,217
Cosmo Oil 28,000 146,706
East Japan Railway 86 636,987
EDION 28,200 676,332
Fanuc 99 9,516
Hitachi 211,000 1,493,679
Honda 21,500 1,327,085
Itochu 76,000 653,976
Japan Tobacco 350 1,231,735
JFE Holdings 44,800 1,811,851
Kao 36,000 947,237
KDDI 383 2,045,695
Kobe Steel 166,000 631,286
Leopalace21 12,495 466,812
Millea Holdings 56 1,104,892
Mitsui & Company 56,000 808,837
Mitsubishi 39,000 889,268
Mitsubishi UFJ Financial Group 91 1,383,957
Mitsui Chemicals 120,000 882,330
Mitsui OSK Lines 142,000 960,262
Nintendo 2,700 403,208
Nippon Mining Holdings 103,000 868,764
Nissan Motor 55,400 658,076
Oki Electric Industry 139,000 441,719
v ORIX 6,000 1,863,621
Rengo 25,000 193,511
Sanyo Shinpan Finance 7,600 471,703
Sega Sammy Holdings 11,000 446,525
Sumitomo Heavy Industries 119,000 1,141,313
Sumitomo Metal Industries 145,000 622,679
Sumitomo Mitsui Financial Group 173 1,909,704
Takeda Pharmaceutical 52,300 2,975,200
Tokyo Electric Power 26,700 665,921
Tokyo Gas 118,000 515,779
Toyota Motor 110,000 5,989,667
West Japan Railway 176 742,731
----------
42,697,781
----------
Luxembourg - 0.69%
Arcelor 25,400 999,281
SES Global FDR 22,500 357,582
----------
1,356,863
----------
Netherlands - 4.97%
ABN AMRO Holding 21,100 630,468
European Aeronautic Defence & Space 19,890 835,568
ING Groep 141,590 5,576,059
Koninklijke Philips Electronics 16,920 569,502
Reed Elsevier 129,385 1,850,713
Royal KPN 22,400 251,845
----------
9,714,155
----------
New Zealand - 0.74%
Telecom of New Zealand 422,794 1,442,556
----------
1,442,556
----------
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Philippines - 0.08%
Philippine Long Distance Telephone 4,200 $ 157,648
----------
157,648
----------
Republic of Korea - 1.15%
Honam Petrochemical 2,900 175,771
Hyundai Mobis 1,730 152,918
Hyundai Motor 260 21,802
Industrial Bank of Korea 9,740 179,944
Kookmin Bank 2,700 231,423
POSCO 1,200 308,071
POSCO ADR 14,400 918,720
Samsung Electronics 360 232,438
Shinhan Financial Group 370 16,500
----------
2,237,587
----------
Singapore - 1.65%
Flextronics International 45,500 470,925
Jardine Matheson 4,400 80,799
Neptune Orient Lines 84,000 113,210
Oversea-Chinese Banking 370,800 1,537,083
lecommunications 630,000 1,031,644
----------
3,233,661
----------
South Africa - 0.90%
Sanlam 121,610 324,189
Sasol 25,350 958,255
Standard Bank Group 11,200 153,570
Telkom 6,390 166,041
Tiger Brands 5,576 156,947
----------
1,759,002
----------
Spain - 4.81%
Banco Santander Central Hispano 143,518 2,092,939
Iberdrola 84,209 2,710,553
Repsol YPF 45,500 1,292,160
Telefonica 211,384 3,310,308
----------
9,405,960
----------
Switzerland - 1.50%
Credit Suisse Group 25,700 1,438,141
Novartis 7,310 405,712
Xstrata 33,220 1,077,293
----------
2,921,146
----------
Taiwan - 0.92%
Chunghwa Telecom ADR 50,200 983,418
HON HAI Precision Industry 36,000 222,079
Quanta Computer 176,000 288,361
Taiwan Semiconductor Manufacturing 153,000 300,037
----------
1,793,895
----------
Thailand - 0.09%
PTT PCL 27,800 167,336
----------
167,336
----------
(continued) 51
Statements of net assets
Optimum International Fund
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
United Kingdom - 24.58%
AstraZeneca 32,900 $ 1,652,918
Aviva 167,571 2,323,813
BAE Systems 133,300 972,970
Barclays 121,300 1,416,577
BG Group 213,518 2,668,618
BHP Billiton 28,000 513,665
BOC Group 52,997 1,422,510
Boots 100,159 1,248,650
BP 298,523 3,436,032
Brambles Industries 138,769 1,036,400
British American Tobacco 65,200 1,579,609
Compass Group 65,712 260,288
Corus Group 357,500 549,239
Enterprise Inns 30,291 499,551
GKN 181,424 1,044,467
GlaxoSmithKline 119,981 3,138,752
HBOS 248,518 4,144,013
Intercontinental Hotels Group 36,719 599,599
International Power 121,300 595,076
J Sainsbury 142,400 820,468
Lloyds TSB Group 347,481 3,322,497
Mitchells & Butlers 69,500 577,499
Punch Taverns 32,300 471,818
Rio Tinto 31,822 1,633,268
Royal & Sun Alliance Insurance 192,200 461,126
Royal Bank of Scotland Group 116,567 3,792,201
Royal Dutch Shell Class A 105,254 3,295,140
SABMiller 18,800 370,384
Trinity Mirror 8,300 82,057
Unilever 202,641 2,070,756
Vodafone Group 971,800 2,027,397
----------
48,027,358
----------
Total Common Stock
(cost $161,388,705) 190,530,068
----------
Principal
Amount
- --------------------------------------------------------------------------------
Repurchase Agreements - 2.43%
- --------------------------------------------------------------------------------
With BNP Paribas 4.45% 4/3/06
(dated 3/31/06, to be repurchased
at $2,369,879, collateralized by
$2,441,000 U.S. Treasury Bills
due 4/20/06, market
value $2,435,826) $2,369,000 2,369,000
Principal Market
Amount Value (U.S.$)
- --------------------------------------------------------------------------------
Repurchase Agreements (continued)
- --------------------------------------------------------------------------------
With Cantor Fitzgerald 4.48%
4/3/06 (dated 3/31/06, to be
repurchased at $1,141,426,
collateralized by $321,000
U.S. Treasury Bills due 6/22/06,
market value $317,524,
$370,000 U.S. Treasury Bills
due 7/20/06, market value
$365,009, $308,000 U.S. Treasury
Bills due 8/17/06, market value
$302,984 and $179,000
U.S. Treasury Notes 2.625%
due 11/15/06, market
value $178,504) $1,141,000 $ 1,141,000
With UBS Warburg 4.48% 4/3/06
(dated 3/31/06, to be repurchased
at $1,233,460, collateralized by
$1,288,000 U.S. Treasury Bills due
9/28/06, market value $1,258,595) 1,233,000 1,233,000
------------
Total Repurchase Agreements
(cost $4,743,000) 4,743,000
------------
Total Market Value of Securities - 99.93%
(cost $166,131,705) 195,273,068
Receivables and Other Assets
Net of Liabilities - 0.07% 128,823
------------
Net Assets Applicable to 14,536,818 Shares
Outstanding - 100.00% $195,401,891
============
Net Asset Value - Optimum International Fund Class A
($20,247,689 / 1,503,136 Shares) $13.47
------
Net Asset Value - Optimum International Fund Class B
($4,593,743 / 345,784 Shares) $13.29
------
Net Asset Value - Optimum International Fund Class C
($70,827,692 / 5,328,609 Shares) $13.29
------
Net Asset Value - Optimum International Fund
Institutional Class ($99,732,767 / 7,359,289 Shares) $13.55
------
52 (continued)
Statements of net assets
Optimum International Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Components of Net Assets at March 31, 2006: $162,751,135
Shares of beneficial interest
(unlimited authorization - no par)
Undistributed net investment income 943,832
Accumulated net realized gain on investments 2,439,178
Net unrealized appreciation of investments
and foreign currencies 29,267,746
-------------
Total net assets $195,401,891
=============
x Securities have been classified by country of origin. Classification has
been presented on page 29 in "Sector/Country Allocations."
+ Non-income producing security for the year ended March 31, 2006.
v Passive Foreign Investment Company
Summary of Abbreviations:
ADR - American Depositary Receipts
FDR - Foreign Depositary Receipts
GDR - Global Depositary Receipts
USD - U.S. Dollar
The following foreign currency exchange contracts were outstanding at March 31,
2006:
Foreign Currency Exchange Contracts(1)
In Unrealized
Contracts to Exchange Settlement Appreciation
Receive (Deliver) For Date (Depreciation)
- --------------------------------------------------------------------
(2,814,000)
British Pounds USD 5,031,432 4/28/06 $141,009
390,000
Canadian Dollars USD (335,602) 4/3/06 (1,574)
195,000
European
Monetary Units USD (236,677) 4/3/06 (361)
61,000,000
Japanese Yen USD (519,182) 4/3/06 (810)
11,732,000
Japanese Yen USD (99,753) 4/4/06 (40)
------------
$138,224
============
(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) $13.47
Sales charge (5.75% of offering price) (B) 0.82
-------
Offering price $14.29
=======
(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 $75,000 or more.
See accompanying notes
(continued) 53
Statements of net assets
Optimum Large Cap Growth Fund
March 31, 2006
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock - 95.12%
- --------------------------------------------------------------------------------
Basic Industry/Capital Goods - 7.58%
Archer-Daniels-Midland 28,891 $ 972,182
BHP Billiton (Australia) 176,100 3,530,206
Caterpillar 119,803 8,603,053
Cia Vale do Rio Doce ADR 54,942 2,666,335
Danaher 79,900 5,077,645
Deere & Company 54,735 4,326,802
General Electric 319,950 11,127,862
Gramin 21,800 1,731,574
Monsanto 36,296 3,076,086
United Technologies 46,575 2,699,953
-----------
43,811,698
-----------
Business Services - 2.81%
Accenture Limited Class A 148,300 4,459,381
+ Affiliated Computer Services Class A 16,200 966,492
Automatic Data Processing 74,300 3,394,024
+ Discovery Holding 42,470 637,050
First Data 45,800 2,144,356
Grupo Televisa ADR 70,000 1,393,000
Rogers Communications 41,900 1,598,485
Sysco 50,700 1,624,935
-----------
16,217,723
-----------
Consumer Durables - 3.42%
Harman International 19,400 2,155,922
KB HOME 62,025 4,030,385
Lennar 88,050 5,316,459
+ Toll Brothers 42,702 1,478,770
Toyota Motor ADR 62,589 6,815,942
-----------
19,797,478
-----------
Consumer Non-Durables - 13.09%
Best Buy 21,650 1,210,885
+ Coach 74,967 2,592,359
CVS 62,317 1,861,409
Home Depot 238,912 10,105,978
Inditex (Spain) 21,200 818,232
+ Kohls 78,000 4,134,780
Lowes 184,500 11,889,179
NIKE 27,500 2,340,250
PepsiCo 50,727 2,931,513
PETsMART 75,600 2,127,384
Procter & Gamble 226,285 13,038,541
Reckitt Benckiser (United Kingdom) 39,700 1,397,429
+ Starbucks 124,568 4,688,740
Target 126,673 6,588,263
Wal-Mart de Mexico ADR 28,200 738,840
Wal-Mart Stores 131,000 6,188,440
Walgreen 71,095 3,066,327
-----------
75,718,549
-----------
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Consumer Services - 7.11%
Carnival 61,250 $ 2,901,413
Cendant 93,900 1,629,165
+ eBay 32,800 1,281,168
Four Seasons Hotels 11,815 599,021
International Game Technology 43,250 1,523,265
+ Las Vegas Sands 92,618 5,247,736
+ Liberty Media Class A 352,400 2,893,204
+ MGM MIRAGE 178,634 7,697,338
Station Casinos 14,692 1,166,104
Time Warner 77,000 1,292,830
+ Univision Communications Class A 64,850 2,235,380
+ Viacom Class B 61,100 2,370,680
+ Wynn Resorts 74,862 5,753,144
Yum Brands 93,148 4,551,211
-----------
41,141,659
-----------
Energy - 4.87%
Baker Hughes 37,500 2,565,000
Exxon Mobil 44,800 2,726,528
Halliburton 59,463 4,341,988
Murphy Oil 35,100 1,748,682
Peabody Energy 58,108 2,929,224
Schlumberger 82,714 10,469,111
Total (France) 12,900 3,400,729
-----------
28,181,262
-----------
Finance - 17.99%
American Express 88,000 4,624,400
American International Group 76,600 5,062,494
Anglo Irish Bank (Ireland) 144,800 2,386,374
Chicago Mercantile Exchange 15,326 6,858,385
Citigroup 111,200 5,253,088
Countrywide Financial 53,000 1,945,100
+ E Trade Financial 53,000 1,429,940
Erste Bank Der Oesterreichischen
Sparkassen (Austria) 24,500 1,444,672
Franklin Resources 14,800 1,394,752
Genworth Financial 130,371 4,358,303
Goldman Sachs Group 47,395 7,439,119
Hartford Financial Services Group 24,150 1,945,283
Legg Mason 14,000 1,754,620
Lehman Brothers Holdings 66,587 9,623,818
Marsh & McLennan 51,900 1,523,784
Merrill Lynch 36,050 2,839,298
Northern Trust 46,900 2,462,250
Progressive 22,016 2,295,388
Prudential Financial 19,100 1,447,971
Schwab (Charles) 125,100 2,152,971
SLM 175,051 9,092,149
St. Joe 26,066 1,637,987
State Street 52,060 3,145,986
+ TD Ameritrade Holding 40,200 838,974
UBS 123,113 13,538,736
UBS (Switzerland) 56,300 6,185,959
UniCredito Italiano (Italy) 192,400 1,387,573
-----------
104,069,374
-----------
54 (continued)
Statements of net assets
Optimum Large Cap Growth Fund
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Health Care - 16.09%
Alcon 11,500 $ 1,198,990
+ Amgen 59,280 4,312,620
+ Amylin Pharmaceuticals 90,406 4,425,374
Caremark Rx 88,000 4,327,840
+ Genentech 180,265 15,234,195
+ Genzyme 44,627 2,999,827
+ Gilead Sciences 32,260 2,007,217
+ Humana 43,800 2,306,070
Johnson & Johnson 28,400 1,681,848
Medtronic 162,456 8,244,642
Novartis (Switzerland) 62,000 3,441,062
Pfizer 70,900 1,766,828
Quest Diagnostics 67,347 3,454,901
Roche Holding (Switzerland) 13,200 1,965,871
+ Sepracor 20,100 981,081
+ St. Jude Medical 34,300 1,406,300
Stryker 22,600 1,002,084
UnitedHealth Group 404,754 22,609,559
+ WellPoint 29,500 2,284,185
Wyeth 25,900 1,256,668
+ Zimmer Holdings 91,248 6,168,365
-----------
93,075,527
-----------
Technology - 16.83%
+ Amdocs 58,400 2,105,904
America Movil ADR 192,331 6,589,260
Analog Devices 73,200 2,802,828
Applied Materials 70,300 1,230,953
+ Cisco Systems 194,703 4,219,214
+ Corning 104,200 2,804,022
+ Crown Castle International 85,300 2,418,255
+ Dell 147,000 4,374,720
+ EMC 218,700 2,980,881
Ericsson LM Class B (Sweden) 258,000 980,523
General Dynamics 161,790 10,351,324
+ Google Class A 8,600 3,354,000
Intel 94,500 1,828,575
+ Intuit 30,300 1,611,657
+ Juniper Networks 83,600 1,598,432
Lockheed Martin 35,045 2,632,931
+ Marvell Technology Group 45,100 2,439,910
Maxim Integrated Products 74,650 2,773,248
Microsoft 324,400 8,826,924
Motorola 328,186 7,518,741
Nokia OYJ (Finland) 115,400 2,388,497
+ Oracle 163,200 2,234,208
QUALCOMM 191,812 9,707,605
Samsung Electronics (Republic of Korea) 2,300 1,485,020
TELUS 34,700 1,342,890
TELUS (Canada) 10,500 412,050
Texas Instruments 37,900 1,230,613
Xilinx 76,900 1,957,874
+ Yahoo 97,000 3,129,220
-----------
97,330,279
-----------
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Transportation - 5.33%
Burlington Northern Santa Fe 117,999 $ 9,832,857
FedEx 111,853 12,632,678
Southwest Airlines 104,100 1,872,759
Union Pacific 69,269 6,466,261
-----------
30,804,555
-----------
Total Common Stock (cost $481,678,193) 550,148,104
-----------
Principal
Amount
- --------------------------------------------------------------------------------
Repurchase Agreements - 5.16%
- --------------------------------------------------------------------------------
With BNP Paribas 4.45% 4/3/06
(dated 3/31/06, to be repurchased
at $14,919,530, collateralized by
$15,366,000 U.S. Treasury Bills
due 4/20/06, market
value $15,332,401) $14,914,000 14,914,000
With Cantor Fitzgerald 4.48%
4/3/06 (dated 3/31/06, to be
repurchased at $7,181,680,
collateralized by $2,018,000
U.S. Treasury Bills due 6/22/06,
market value $1,998,667,
$2,329,000 U.S. Treasury Bills
due 7/20/06, market value
$2,297,562, $1,940,000
U.S. Treasury Bills due 8/17/06,
market value $1,907,143 and
$1,127,000 U.S. Treasury Notes
2.625% due 11/15/06, market
value $1,123,600) 7,179,000 7,179,000
With UBS Warburg 4.48%
4/3/06 (dated 3/31/06, to be
repurchased at $7,764,898,
collateralized by $8,108,000
U.S. Treasury Bills due 9/28/06,
market value $7,922,274) 7,762,000 7,762,000
------------
Total Repurchase Agreements
(cost $29,855,000) 29,855,000
------------
Total Market Value of Securities - 100.28%
(cost $511,533,193) 580,003,104
Liabilities Net of Receivables and
Other Assets (0.28%) (1,596,231)
------------
Net Assets Applicable to 50,102,571 Shares
Outstanding 100.00% $578,406,873
============
(continued) 55
Statements of net assets
Optimum Large Cap Growth Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net Asset Value - Optimum Large Cap Growth Fund
Class A ($47,282,850 / 4,097,738 Shares) $11.54
------
Net Asset Value - Optimum Large Cap Growth Fund
Class B ($10,167,730 / 896,303 Shares) $11.34
------
Net Asset Value - Optimum Large Cap Growth Fund
Class C ($164,995,229 / 14,547,386 Shares) $11.34
------
Net Asset Value - Optimum Large Cap Growth Fund
Institutional Class ($355,961,064 / 30,561,144 Shares) $11.65
------
Components of Net Assets at March 31, 2006:
Shares of beneficial interest
(unlimited authorization no par) $503,186,041
Accumulated net investment loss (21,931)
Accumulated net realized gain on investments 6,774,467
Net unrealized appreciation of investments
and foreign currencies 68,468,296
------------
Total net assets $578,406,873
============
+ Non-income producing security for the year ended March 31, 2006.
ADR - American Depositary Receipts
Net Asset Value and Offering Price per Share -
Optimum Large Cap Growth Fund
Net asset value Class A (A) $11.54
Sales charge (5.75% of offering price) (B) 0.70
------
Offering price $12.24
======
(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 $75,000 or more.
See accompanying notes
56 (continued)
Statements of net assets
Optimum Large Cap Value Fund
March 31, 2006
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock - 95.89%
- --------------------------------------------------------------------------------
Consumer Discretionary - 9.21%
CBS Class B 44,580 $ 1,069,028
Clear Channel Communications 163,890 4,754,449
+Comcast Class A 100,200 2,621,232
Disney (Walt) 64,260 1,792,211
Federated Department Stores 49,080 3,582,840
Gap 152,760 2,853,557
General Motors 175,500 3,732,885
Hasbro 51,960 1,096,356
Home Depot 19,960 844,308
Johnson Controls 11,690 887,622
Mattel 95,300 1,727,789
McDonald's 44,900 1,542,764
NIKE 15,650 1,331,815
Reader's Digest Association Class A 40,300 594,425
Reed Elsevier (United Kingdom) 167,470 1,607,567
Regal Entertainment Class A 289,100 5,437,972
+Sears Holdings 32,300 4,271,352
Sherwin-Williams 18,660 922,550
Sony ADR 54,700 2,520,029
Time Warner 230,960 3,877,818
Tribune 31,740 870,628
+Viacom Class B 44,850 1,740,180
-------------
49,679,377
-------------
Consumer Staples - 7.44%
Altria Group 126,220 8,943,948
Archer-Daniels-Midland 49,990 1,682,164
Diageo (United Kingdom) 160,706 2,531,044
Flowers Foods 31,100 923,670
Kellogg 85,300 3,756,612
Kimberly-Clark 62,780 3,628,684
Kraft Foods Class A 152,950 4,635,915
Nestle (Switzerland) 5,147 1,528,343
PepsiCo 22,120 1,278,315
Sara Lee 417,310 7,461,503
Uni lever 54,760 3,790,487
-------------
40,160,685
-------------
Energy - 8.40%
Amerada Hess 16,790 2,390,896
Apache 19,240 1,260,412
BP ADR 43,340 2,987,860
Chevron 102,782 5,958,273
ConocoPhillips 236,890 14,959,603
Devon Energy 32,660 1,997,812
EOG Resources 27,940 2,011,680
Exxon Mobil 93,830 5,710,494
Noble 18,880 1,531,168
Total ADR 49,570 6,529,856
-------------
45,338,054
-------------
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Financials - 24.91%
Allstate 145,420 $ 7,577,836
American Express 47,580 2,500,329
American International Group 64,700 4,276,023
Ameriprise Financial 5,404 243,504
Bank of America 265,993 12,113,321
Bank of New York 24,320 876,493
Capital One Financial 32,200 2,592,744
CapitalSource 79,200 1,970,496
Chubb 72,300 6,900,312
Citigroup 357,920 16,908,141
Crescent Real Estate 192,400 4,053,868
Fannie Mae 151,710 7,797,894
Franklin Resources 14,430 1,359,883
Freddie Mac 20,800 1,268,800
Genworth Financial 29,930 1,000,560
Goldman Sachs Group 56,430 8,857,253
Hartford Financial Services Group 34,250 2,758,838
JPMorgan Chase 215,107 8,957,055
Lehman Brothers Holdings 15,580 2,251,777
Mellon Financial 67,700 2,410,120
Merrill Lynch 118,890 9,363,776
MetLife 141,900 6,863,703
PNC Financial Services Group 56,050 3,772,726
St. Paul Travelers 185,413 7,748,410
SunTrust Banks 78,110 5,683,284
UBS (Switzerland) 25,591 2,811,809
Wells Fargo 23,160 1,479,229
-------------
134,398,184
-------------
Health Care - 9.21%
Abbott Laboratories 50,440 2,142,187
Baxter International 13,360 518,502
+Boston Scientific 72,200 1,664,210
Cigna 9,790 1,278,770
HCA 113,700 5,206,323
Johnson & Johnson 121,990 7,224,248
Lilly (Eli) 19,450 1,075,585
erck & Co 121,940 4,295,946
Pfizer 130,800 3,259,536
Schering-Plough 186,600 3,543,534
+Tenet Healthcare 363,100 2,679,678
+Watson Pharmaceuticals 181,200 5,207,688
Wyeth 239,040 11,598,220
-------------
49,694,427
-------------
(continued) 57
Statements of net assets
Optimum Large Cap Value Fund
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Industrials - 11.15%
Burlington Northern Santa Fe 47,490 $ 3,957,342
CNF 68,460 3,418,892
Cooper Industries 29,280 2,544,432
CSX 98,900 5,914,220
Deere & Co. 75,185 5,943,374
Finning International (Canada) 8,100 267,780
Grainger (W.W.) 20,850 1,571,048
Honeywell International 51,500 2,202,655
Illinois Tool Works 18,730 1,803,886
Lockheed Martin 114,530 8,604,640
Masco 186,310 6,053,212
+ Nalco Holding 32,900 582,330
Norfolk Southern 17,920 968,934
Northrop Grumman 98,210 6,706,761
Tyco International 23,130 621,734
United Technologies 67,270 3,899,642
Waste Management 143,900 5,079,670
-------------
60,140,552
-------------
Information Technology - 5.19%
Accenture Limited Class A 109,100 3,280,637
Analog Devices 20,300 777,287
+ Cisco Systems 65,510 1,419,602
+ Dell 23,400 696,384
Electronic Data Systems 182,800 4,904,524
Hewlett-Packard 201,520 6,630,007
Intel 107,190 2,074,127
International Business Machines 24,900 2,053,503
+ Lucent Technologies 1,226,600 3,741,130
+ Oracle 127,370 1,743,695
+ Symantec 38,920 655,024
-------------
27,975,920
-------------
Materials - 7.53%
Air Products & Chemicals 80,730 5,424,249
Bowater 8,530 252,317
Dow Chemical 54,600 2,216,760
duPont (E.I.) deNemours 181,990 7,681,797
International Paper 73,580 2,543,661
MeadWestvaco 146,300 3,995,453
Packaging Corp America 298,800 6,705,072
PPG Industries 60,390 3,825,707
Praxair 31,030 1,711,305
+ Smurfit-Stone Container 57,690 782,853
Syngenta (Switzerland) 19,500 2,741,042
United States Steel 45,200 2,742,736
-------------
40,622,952
-------------
Number of Market
Shares Value (U.S.$)
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Telecommunication Services - 8.98%
ALLTEL 103,900 $ 6,727,525
AT&T 292,700 7,914,608
BCE 216,600 5,211,396
Nokia ADR 435,500 9,023,560
Qwest Communications International 640,900 4,358,120
Sprint 281,260 7,267,758
Verizon Communications 141,330 4,813,700
Vodafone Group (United Kingdom) 1,507,430 3,144,843
-------------
48,461,510
-------------
Utilities - 3.87%
American Electric Power 155,030 5,274,121
Dominion Resources 101,470 7,004,474
Entergy 14,890 1,026,517
Exelon 18,490 978,121
FPL Group 68,970 2,768,456
PPL 48,230 1,417,962
Public Service Enterprise Group 19,960 1,278,238
TXU 24,850 1,112,286
-------------
20,860,175
-------------
Total Common Stock
(cost $484,821,194) 517,331,836
-------------
Principal
Amount
- --------------------------------------------------------------------------------
Repurchase Agreements - 5.96%
- --------------------------------------------------------------------------------
With BNP Paribas 4.45% 4/3/06
(dated 3/31/06, to be repurchased
at $16,065,956, collateralized by
$16,547,000 U.S. Treasury Bills
due 4/20/06, market
value $16,511,026) $16,060,000 16,060,000
With Cantor Fitzgerald 4.48%
4/3/06 (dated 3/31/06, to be
repurchased at $7,734,886,
collateralized by $2,173,000
U.S. Treasury Bills due 6/22/06,
market value $2,152,307,
$2,508,000 U.S. Treasury Bills
due 7/20/06, market value
$2,474,179, $2,090,000
U.S. Treasury Bills due 8/17/06,
market value $2,053,748 and
$1,214,000 U.S. Treasury Notes
2.625% due 11/15/06, market
value $1,209,973) 7,732,000 7,732,000
With UBS Warburg 4.48% 4/3/06
(dated 3/31/06, to be repurchased
at $8,361,120, collateralized by
$8,731,000 U.S. Treasury Bills due
9/28/06, market value $8,531,271) 8,358,000 8,358,000
----------
Total Repurchase Agreements
(cost $32,150,000) 32,150,000
----------
58 (continued)
Statements of net assets
Optimum Large Cap Value Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Market Value of Securities - 101.85%
(cost $516,971,194) $549,481,836
Liabilities Net of Receivables and
Other Assets - (1.85%) (9,980,245)
------------
Net Assets Applicable to 47,737,782
Shares Outstanding - 100.00% $539,501,591
============
Net Asset Value - Optimum Large Cap Value Fund
Class A ($45,665,304 / 4,034,932 Shares) $11.32
Net Asset Value - Optimum Large Cap Value Fund
Class B ($10,102,916 / 898,533 Shares) $11.24
Net Asset Value - Optimum Large Cap Value Fund
Class C ($163,876,254 / 14,579,458 Shares) $11.24
Net Asset Value - Optimum Large Cap Value Fund
Institutional Class ($319,857,117 / 28,224,859 Shares) $11.33
Components of Net Assets at March 31, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $500,595,764
Undistributed net investment income 1,115,374
Accumulated net realized gain on investments 5,280,743
Net unrealized appreciation of investments
and foreign currencies 32,509,710
------------
Total net assets $539,501,591
============
+ Non-income producing security for the year ended March 31, 2006.
ADR - American Depositary Receipts
Net Asset Value and Offering Price per Share -
Optimum Large Cap Value Fund
Net asset value Class A (A) $11.32
Sales charge (5.75% of offering price) (B) 0.69
------
Offering price $12.01
======
(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
(continued) 59
Statements of net assets
Optimum Small Cap Growth Fund
March 31, 2006
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock - 93.09%
- --------------------------------------------------------------------------------
Basic Industry/Capital Goods - 15.52%
+ A.S.V 33,682 $ 1,085,234
Bucyrus International Class A 13,050 628,880
+ Ceradyne 32,691 1,631,281
Charles & Colvard 28,270 306,164
Donaldson 29,000 979,910
Florida Rock Industries 7,500 421,650
+ Genlyte Group 22,000 1,499,080
+ Intermec 14,000 427,140
+ IRIS International 19,200 300,096
Kaydon 10,000 403,600
+ Mettler-Toledo International 20,000 1,206,800
Mine Safety Appliances 8,000 336,000
+ Newpark Resources 37,000 303,400
Nordson 31,000 1,545,660
Pentair 33,400 1,361,050
+ Pride International 32,000 997,760
+ Quanta Services 50,000 801,000
+ Rogers 4,700 256,056
Scotts Miracle-Gro 26,800 1,226,368
Spartech 47,000 1,128,000
+ TurboChef Technologies 34,432 420,070
+ Waste Connections 27,300 1,086,813
-------------
18,352,012
-------------
Business Services - 10.59%
+ Answerthink 42,800 275,204
+ aQuantive 40,170 945,602
+ Ceridian 50,000 1,272,500
+ Concur Technologies 31,500 583,695
+ CRA International 9,088 447,675
+ Discovery Holding 65,000 975,000
+ Essex 24,900 548,298
+ Gemstar-TV Guide International 293,200 905,988
+ iVillage 27,200 228,752
+ Kenexa 15,500 476,625
+ LECG 24,677 475,526
+ Navigant Consulting 29,500 629,825
+ SkillSoft ADR 75,000 393,000
+ SSA Global Technologies 90,000 1,442,700
+ Stamps.com 13,512 476,433
Talx 14,932 425,263
+ ValueClick 52,315 885,170
+ Ventiv Health 18,869 626,828
+ WebSideStory 29,300 503,667
-------------
12,517,751
-------------
Consumer Durables - 0.86%
+ Desarrolladora Homex ADR 13,258 468,405
Polaris Industries 10,000 545,600
-------------
1,014,005
-------------
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Consumer Non-Durables - 5.26%
Abercrombie & Fitch Class A 22,200 $1,294,259
+ Carters 10,000 674,900
+ Central European Distribution 17,100 657,495
Christopher & Banks 7,950 184,520
+ Crocs 12,900 324,435
Oxford Industries 15,000 766,950
+ Parlux Fragrances 12,998 419,186
+ PETCO Animal Supplies 21,300 502,041
+ Restoration Hardware 52,500 298,725
+ Sports Authority 12,000 442,800
+ USANA Health Sciences 2,617 109,181
+ Volcom 15,500 550,715
-------------
6,225,207
-------------
Consumer Services - 7.79%
Central Parking 45,000 720,000
Ctrip.Com International ADR 5,517 456,256
+ Entravision Communications 120,000 1,099,200
+ Focus Media Holding ADR 33,900 1,966,878
+ HealthExtras 20,100 709,530
International Speedway Class A 15,500 788,950
+ ITT Educational Services 10,000 640,500
+ Kerzner International 3,300 256,806
+ Lions Gate Entertainment 85,000 862,750
+ Salem Communications Class A 45,000 675,450
+ Shuffle Master 7,200 257,328
+ Sonic 9,000 316,170
+ Spanish Broadcasting Systems Class A 36,400 201,292
Speedway Motorsports 6,800 259,828
-------------
9,210,938
-------------
Energy - 6.66%
+ ATP Oil & Gas 18,389 807,461
+ Bronco Drilling 26,100 686,430
+ Carrizo Oil & Gas 40,550 1,053,895
+ Dril-Quip 10,700 758,095
+ FMC Technologies 21,000 1,075,619
+ Hercules Offshore 7,300 248,273
Lufkin Industries 6,800 376,992
+ PetroHawk Energy 44,100 604,170
+ Pioneer Drilling 26,000 427,180
+ Quicksilver Resources 11,400 440,724
+ Veritas DGC 11,953 542,547
Western Gas Resources 17,800 858,850
-------------
7,880,236
-------------
Financials - 2.87%
+ AmeriCredit 19,500 599,235
+ Euronet Worldwide 21,157 800,369
HCC Insurance Holdings 28,050 976,140
+ Markel 500 168,840
TCF Financial 8,400 216,300
+ TradeStation Group 29,300 404,926
+ World Acceptance 8,500 232,900
-------------
3,398,710
-------------
60 (continued)
Statements of net assets
Optimum Small Cap Growth Fund
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Health Care - 16.56%
+ Abaxis 13,000 $ 294,840
+ Adams Respiratory Therapeutics 18,600 739,722
+ Adeza Biomedical 27,855 588,576
+ American Science & Engineering 4,766 445,144
+ Arrow International 20,000 653,400
+ Arthrocare 16,685 797,877
+ Aspect Medical Systems 13,210 362,482
+ Aspreva Pharmaceuticals 37,200 925,908
+ Centene 15,796 460,769
+ Charles River Laboratories International 21,500 1,053,930
+ Coventry Health Care 6,742 363,933
+ Edwards Lifesciences 6,000 261,000
+ Exelixis 47,000 564,470
+ First Horizon Pharmaceutical 21,045 530,544
+ Foxhollow Technologies 4,700 143,585
+ Healthways 8,972 457,034
+ InterMune 18,000 333,720
+ IntraLase 24,015 557,148
+ Kos Pharmaceuticals 14,511 693,190
+ Kyphon 18,919 703,787
+ La Jolla Pharmaceutical 25,000 124,500
+ LCA-Vision 36,701 1,839,088
+ Ligand Pharmaceuticals Class B 30,000 385,500
+ Lincare Holdings 16,000 623,360
+ Merge Technologies 16,488 263,313
+ Momenta Pharmaceuticals 10,000 196,600
+ Natus Medical 11,900 243,950
+ Neurocrine Biosciences 14,500 935,830
+ Palomar Medical Technologies 10,000 334,500
+ PRA International 22,500 557,775
+ Prestige Brands Holdings 25,000 304,250
+ Quidel 20,200 259,974
+ Salix Pharmaceuticals 28,468 470,007
+ Serologicals 33,000 807,180
+ Syneron Medical 21,112 616,682
+ United Therapeutics 6,621 438,840
+ Vital Images 7,400 252,192
-------------
19,584,600
-------------
Real Estate 1.09%
DiamondRock Hospitality 47,000 649,070
Kite Realty Group Trust 40,000 638,000
-------------
1,287,070
-------------
Technology 24.81%
ALLTEL 4,422 286,325
+ American Tower Class A 44,400 1,346,208
Amphenol Class A 10,000 521,800
+ AudioCodes 35,861 495,599
+ Aviall 17,000 647,360
+ Avid Technology 21,800 947,428
+ CNET Networks 90,000 1,278,900
+ Crown Castle International 18,400 521,640
CTS 26,000 347,880
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Technology (continued)
+ Dobson Communications Class A 92,000 $ 737,840
+ Entegris 70,000 744,800
+ ESCO Technologies 21,200 1,073,780
+ FalconStor Software 46,300 437,535
+ Glenayre Technologies 83,023 435,871
+ Ikanos Communications 14,900 293,679
+ #Indus International 80,000 291,200
+ Integrated Device Technology 47,000 698,420
+ Intermagnetics General 42,000 1,052,100
+ IXYS 20,000 184,400
+ Jupitermedia 29,757 535,031
+ Kronos 15,000 560,850
+ Neoware 17,200 509,464
+ Nice Systems ADR 22,000 1,121,120
+ Novell 140,400 1,078,272
+ Online Resources 45,010 585,130
+ Open Solutions 4,600 125,626
+ Openwave Systems 32,104 692,804
+ Orckit Communications 20,228 444,611
+ Parametric Technology 30,000 489,900
+ PDF Solutions 25,657 485,430
+ Rackable Systems 19,100 1,009,435
+ Redback Networks 13,700 297,153
+ Retalix 8,400 207,648
+ RightNow Technologies 17,734 281,439
+ SafeNet 7,203 190,735
+ Saifun Semiconductors 7,600 236,360
+ SeaChange International 9,300 72,261
+ Silicon Motion Technology ADR 31,800 385,734
Supertex 6,800 255,816
Symbol Technologies 50,000 529,000
Symmetricom 25,000 213,750
+ Tellabs 115,000 1,828,500
+ Tessera Technologies 14,063 451,141
+ Time Warner Telecom Class A 104,000 1,866,801
+ Trident Microsystems 46,100 1,339,666
+ Vasco Data Security International 47,100 385,278
+ WebMethods 20,446 172,155
+ Zhone Technologies 52,300 140,164
+ Zoran 23,400 511,992
-------------
29,346,031
-------------
Transportation - 0.63%
Heartland Express 34,400 749,576
-------------
749,576
-------------
Utilities - 0.45%
Northeast Utilities 27,000 527,310
-------------
527,310
-------------
Total Common Stock
(cost $86,169,135) 110,093,446
-------------
(continued) 61
Statements of net assets
Optimum Small Cap Growth Fund
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Repurchase Agreements - 7.25%
- --------------------------------------------------------------------------------
With BNP Paribas 4.45% 4/3/06
(dated 3/31/06, to be repurchased
at $4,287,589, collateralized by
$4,416,000 U.S. Treasury Bills due
4/20/06, market
value $4,406,364) $4,286,000 $ 4,286,000
With Cantor Fitzgerald 4.48%
4/3/06 (dated 3/31/06, to be
repurchased at $2,063,770,
collateralized by $580,000
U.S. Treasury Bills due 6/22/06,
market value $574,395,
$669,000 U.S. Treasury Bills
due 7/20/06, market value
$660,294, $558,000 U.S. Treasury
Bills due 8/17/06, market value
$548,092 and $324,000
U.S. Treasury Notes 2.625%
due 11/15/06, market
value $322,910) 2,063,000 2,063,000
With UBS Warburg 4.48% 4/3/06
(dated 3/31/06, to be repurchased
at $2,231,833, collateralized by
$2,330,000 U.S. Treasury Bills due
9/28/06, market value $2,276,775) 2,231,000 2,231,000
-------------
Total Repurchase Agreements
(cost $8,580,000) 8,580,000
-------------
Total Market Value of Securities - 100.34%
(cost $94,749,135) 118,673,446
Liabilities Net of Receivables and
Other Assets - (0.34%) (401,030)
-------------
Net Assets Applicable to 8,249,477 Shares
Outstanding - 100.00% $118,272,416
=============
Net Asset Value - Optimum Small Cap Growth Fund
Class A ($11,983,755 / 835,622 Shares) $14.34
------
Net Asset Value - Optimum Small Cap Growth Fund
Class B ($2,284,991 / 161,954 Shares) $14.11
------
Net Asset Value - Optimum Small Cap Growth Fund
Class C ($36,537,396 / 2,589,531 Shares) $14.11
------
Net Asset Value - Optimum Small Cap Growth Fund
Institutional Class ($67,466,274 / 4,662,370 Shares) $14.47
------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Components of Net Assets at March 31, 2006:
Shares of beneficial interest
(unlimited authorization no par) $ 93,257,311
Accumulated net realized gain on investments 1,090,794
Net unrealized appreciation of investments 23,924,311
------------
Total net assets $118,272,416
============
+ Non-income producing security for the year ended March 31, 2006.
# Restricted Security. Investment in a security not registered under the
Securities Act of 1933. This security has certain restrictions on resale
which may limit its liquidity. At March 31, 2006, the aggregate amount of
the restricted security equals $291,200 or 0.25% of the Funds net assets.
See Note 9 in Notes to Financial Statements.
ADR - American Depository Receipt
Net Asset Value and Offering Price Per Share -
Optimum Small Cap Growth Fund
Net asset value Class A (A) $14.34
Sales charge (5.75% of offering price) (B) 0.87
------
Offering price $15.21
======
(A) Net asset value per share, as illustrated, is the 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
62 (continued)
Statements of net assets
Optimum Small Cap Value Fund
March 31, 2006
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock - 92.22%
- --------------------------------------------------------------------------------
Basic Industry - 17.66%
Agrium 42,500 $1,073,550
+ Aleris International 29,000 1,394,030
Algoma Steel 10,100 278,558
AMETEK 7,000 314,720
+ Armor Holdings 500 29,145
Ashland 10,000 710,800
Cabot 7,500 254,925
Cambrex 42,000 820,680
CF Industries Holdings 109,700 1,863,803
Chemtura 65,000 765,700
Crane 19,500 799,695
Cytec Industries 26,000 1,560,260
ElkCorp 21,000 708,750
FMC 22,000 1,363,560
+ GrafTech International 30,000 183,000
+ Hercules 140,250 1,935,449
Longview Fibre 54,900 1,418,616
Lubrizol 12,900 552,765
+ Material Sciences 27,000 326,160
Novelis 20,000 411,400
+ Pioneer Companies 32,100 979,050
Sensient Technologies 9,025 162,901
Sonoco Products 18,000 609,660
St. Joe 7,000 439,880
Tronox Class A 10,800 183,168
+ Westmoreland Coal 5,915 155,269
----------
19,295,494
----------
Business Services - 11.32%
+ BearingPoint 120,500 1,023,045
Bowne & Company 86,900 1,448,623
Courier 4,655 206,403
Donnelley (R.R.) & Sons 15,000 490,800
Ennis 9,775 190,613
+ EPIQ Systems 5,810 110,390
IKON Office Solutions 94,100 1,340,925
Kelly Services 66,100 1,795,936
+ Live Nation 27,800 551,552
Nautilus 9,785 146,286
+ PHH 45,100 1,204,170
+ ProQuest 53,000 1,133,670
+ R.H. Donnelley 8,200 477,486
+ Spherion 61,700 641,680
+ Triple Crown Media 2,440 14,396
+ Valassis Communications 53,900 1,583,043
----------
12,359,018
----------
Capital Spending - 7.83%
Acuity Brands 37,000 1,480,000
Commercial Metals 17,000 909,330
+ Flowserve 51,800 3,022,012
Hardinge 1,585 25,503
Kennametal 33,000 2,017,620
+ NaviStar International 40,000 1,103,200
---------
8,557,665
---------
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Conglomerates - 1.04%
Honeywell International 24,000 $ 1,026,480
SPX 2,000 106,840
---------
1,133,320
---------
Consumer Cyclical - 10.21%
Beazer Homes USA 16,800 1,103,760
+ Comstock Homebuilding Class A 21,200 233,412
Cooper Tire & Rubber 8,805 126,264
Furniture Brands International 109,100 2,674,041
La-Z-Boy 10,550 179,350
Newell Rubbermaid 39,000 982,410
RadioShack 69,000 1,326,870
Standard Motor Products 75,000 666,000
Stanley Works 19,500 987,870
+ WCI Communities 93,100 2,590,042
+ William Lyon Homes 3,000 287,040
----------
11,157,059
----------
Consumer Services - 10.71%
+ BJs Wholesale Club 31,900 1,005,169
Delta Apparel 30,000 531,900
+ Eddie Bauer Holdings 28,400 366,360
Finish Line Class A 30,000 493,500
Foot Locker 85,000 2,029,800
Gray Television Class B 27,300 229,320
IHOP 3,660 175,460
Jones Apparel Group 45,000 1,591,650
Kenneth Cole Productions Class A 6,160 170,632
+ Magna Entertainment Class A 122,800 833,812
+ Maidenform Brands 52,000 572,520
Monaco Coach 11,775 157,785
Oakley 1,950 33,189
+ Pathmark Stores 55,200 577,392
+ Rent-A-Center 1,100 28,149
Russell 6,355 87,699
+ Sothebys Holdings Class A 7,200 209,088
+ Sunterra 42,800 611,184
+ Tommy Hilfiger 12,200 200,934
+ Warnaco Group Class A 74,900 1,797,600
----------
11,703,143
----------
Energy - 4.14%
+ Alpha Natural Resources 34,300 793,702
+ Callon Petroleum 7,665 161,118
+ Forest Oil 6,000 223,080
Foundation Coal Holdings 39,900 1,641,487
Gulf Island Fabrication 7,315 173,146
+ Input/Output 8,400 81,564
+ Mariner Energy 4,855 99,576
Southern Union 48,654 1,208,079
+ Southwestern Energy 4,365 140,509
---------
4,522,261
---------
(continued) 63
Statements of net assets
Optimum Small Cap Value Fund
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Financial Services - 4.47%
American Equity Investment Life Holding 13,945 $ 199,971
+ AmeriCredit 11,100 341,103
CFS Bancorp 2,075 31,084
+ Conseco 21,100 523,702
+ FPIC Insurance Group 4,600 173,880
Hanover Insurance Group 30,500 1,598,809
+ KMG America 44,600 381,776
+ LaBranche & Company 14,160 223,870
PMA Capital Class A 16,400 166,952
+ Quanta Capital Holdings 42,900 128,700
+ United America Indemnity Class A 48,564 1,112,116
---------
4,881,963
---------
Health Care - 1.17%
+ LifePoint Hospitals 4,220 131,242
+ Microtek Medical Holdings 41,965 147,717
+ Quidel 2,295 29,537
+ RehabCare Group 8,430 158,906
STERIS 25,000 616,999
Vital Signs 3,560 195,551
---------
1,279,952
---------
Real Estate - 6.76%
Aames Investment 84,700 481,096
Brookfield Homes 12,324 639,123
Capital Lease Funding 28,600 317,174
Eagle Hospitality Properties Trust 33,100 333,648
Equity Inns 10,090 163,458
Fieldstone Investment 63,600 750,480
Government Properties Trust 4,600 43,884
+ Jameson Inns 161,300 395,185
+ Lodgian 97,800 1,358,442
MI Developments Class A 63,400 2,212,660
MortgageIT Holdings 38,200 413,706
Thomas Properties Group 20,400 277,644
---------
7,386,500
---------
Technology - 11.87%
+ Agile Software 10,800 82,404
Agilysys 10,255 154,440
+ CIBER 28,830 183,935
Cohu 8,050 170,821
+ Ducommun 8,005 177,711
EDO 18,600 573,810
+ Esterline Technologies 4,050 173,138
+ Gerber Scientific 25,000 258,500
+ International Rectifier 33,000 1,367,190
+ Keane 43,000 677,250
+ Mercury Interactive 25,800 897,840
+ Metrologic Instruments 25,000 578,250
MTS Systems 3,035 126,954
+ Neoware 8,770 259,767
+ Novell 27,700 212,736
+ Paxar 50,000 978,500
Reynolds & Reynolds Class A 19,000 539,600
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Technology (continued)
+ Solectron 60,000 $ 240,000
Symbol Technologies 105,000 1,110,900
+ Thermo Electron 53,000 1,965,770
+ Tollgrade Communications 15,815 235,327
United Online 11,710 150,591
+ Vishay Intertechnology 67,000 954,080
+ Zebra Technologies Class A 20,000 894,400
----------
12,963,914
----------
Transportation - 4.15%
+ Alaska Air Group 30,000 1,063,500
Alexander & Baldwin 24,200 1,153,855
Overseas Shipholding Group 20,900 1,001,737
SkyWest 6,825 199,768
+ YRC Worldwide 29,345 1,116,871
----------
4,535,731
----------
Utilities - 0.89%
Alliant Energy 25,600 805,632
Duquesne Light Holdings 9,710 160,215
----------
965,847
----------
Total Common Stock
(cost $86,649,774) 100,741,867
-----------
- --------------------------------------------------------------------------------
Exchange Traded Funds - 0.09%
- --------------------------------------------------------------------------------
iShares Russell 2000 Value Index Fund 1,370 102,271
-------
Total Exchange Traded Funds
(cost $96,586) 102,271
-------
Principal
Amount
- --------------------------------------------------------------------------------
Repurchase Agreements - 7.83%
- --------------------------------------------------------------------------------
With BNP Paribas 4.45% 4/3/06
(dated 3/31/06, to be
repurchased at $4,273,584, collateralized by
$4,401,000 U.S. Treasury Bills
due 4/20/06, market
value $4,391,471) $4,272,000 4,272,000
With Cantor Fitzgerald 4.48%
4/3/06 (dated 3/31/06, to be
repurchased at $2,056,768,
collateralized by $578,000
U.S. Treasury Bills due 6/22/06,
market value $572,454 ,
$667,000 U.S. Treasury Bills
due 7/20/06, market value
$658,062, $556,000
U.S. Treasury Bills due 8/17/06,
market value $546,239 and
$323,000 U.S. Treasury Notes
2.625% due 11/15/06, market
value $321,819) 2,056,000 2,056,000
64 (continued)
Statements of net assets
Optimum Small Cap Value Fund
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Repurchase Agreements (continued)
- --------------------------------------------------------------------------------
With UBS Warburg 4.48%
4/3/06 (dated 3/31/06, to be
repurchased at $2,223,830
collateralized by $2,322,000
U.S. Treasury Bills due 9/28/06,
market value $2,269,079) $2,223,000 $2,223,000
----------
Total Repurchase Agreements
(cost $8,551,000) 8,551,000
----------
Total Market Value of Securities - 100.14%
(cost $95,297,360) 109,395,138
Liabilities Net of Receivables and
Other Assets - (0.14%) (151,326)
----------
Net Assets Applicable to 8,053,414 Shares
Outstanding - 100.00% $109,243,812
===========
Net Asset Value - Optimum Small Cap Value Fund
Class A ($13,300,355 / 978,475 Shares) $13.59
----------
Net Asset Value - Optimum Small Cap Value Fund
Class B ($2,358,795 / 176,653 Shares) $13.35
----------
Net Asset Value - Optimum Small Cap Value Fund
Class C ($38,781,376 / 2,904,871 Shares) $13.35
----------
Net Asset Value - Optimum Small Cap Value Fund
Institutional Class ($54,803,286 / 3,993,415 Shares) $13.72
----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Components of Net Assets at March 31, 2006:
Shares of beneficial interest
(unlimited authorization no par) $ 92,853,232
Accumulated net realized gain on investments 2,292,802
Net unrealized appreciation of investments 14,097,778
------------
Total net assets $109,243,812
============
+ Non-income producing security for the year ended March 31, 2006.
Net Asset Value and Offering Price Per Share -
Optimum Small Cap Value Fund
Net asset value Class A (A) $13.59
Sales charge (5.75% of offering price) (B) 0.83
----------
Offering price $14.42
==========
(A) Net asset value per share, as illustrated, is the 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
65
Statements of assets and liabilities
Optimum Fund Trust
March 31, 2006
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 $562,842,262 $195,273,068 $580,003,104 $549,481,836 $118,673,446 $109,395,138
Cash 11,684,493 - 36,624 114,035 6,577 7,094
Foreign currencies 272,675 597,597 32 - - - -
Subscriptions receivable 1,979,002 605,713 2,069,438 1,924,552 333,746 282,980
Receivables for securities sold 16,201,611 138,217 1,307,382 3,728,380 33,786 529,964
Dividends receivable 1,450 1,063,213 437,394 927,555 16,417 93,431
Interest receivable 5,396,761 588 3,703 3,988 1,064 1,061
Mark to market on foreign
currency contracts 212,457 138,224 - - - -
Futures margin receivable 27,445 - - - - -
------------ ------------ ------------ ------------ ------------ ------------
Total assets 598,618,156 197,816,620 583,857,677 556,180,346 119,065,036 110,309,668
------------ ------------ ------------ ------------ ------------ ------------
Liabilities:
Cash overdraft - 467,294 - - - -
Payables for securities purchased 43,535,853 1,341,738 4,240,420 15,509,656 493,136 714,825
Liquidations payable 731,869 124,553 273,551 263,348 55,926 73,646
Mark to market on futures contracts 6,989 - - - - -
Swap agreement payable 66,120 - - - - -
Due to manager and affiliates 516,927 255,310 736,146 613,154 151,312 100,309
Other accrued expenses 216,175 225,834 200,687 292,597 92,246 177,076
Distributions payable 77,997 - - - - -
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities 45,151,930 2,414,729 5,450,804 16,678,755 792,620 1,065,856
------------ ------------ ------------ ------------ ------------ ------------
Total Net Assets $553,466,226 $195,401,891 $578,406,873 $539,501,591 $118,272,416 $109,243,812
============ ============ ============ ============ ============ ============
Investments at cost $572,901,745 $166,131,705 $511,533,193 $516,971,194 $ 94,749,135 $ 95,297,360
Foreign currencies at cost $ 273,514 $ 599,759 $ 32 $ - $ - $ -
See accompanying notes
66
Statements of operations
Optimum Fund Trust
Year Ended March 31, 2006
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 $ 14,952 $ 4,976,192 $ 4,314,821 $ 9,159,416 $ 276,173 $ 1,028,473
Interest 21,768,262 172,045 840,711 692,429 227,418 329,370
Foreign tax withheld - (248,212) (87,239) (117,474) (449) (13,539)
------------ ------------ ----------- ----------- ----------- -----------
21,783,214 4,900,025 5,068,293 9,734,371 503,142 1,344,304
------------ ------------ ----------- ----------- ----------- -----------
Expenses:
Management fees 2,784,184 1,173,105 3,407,574 3,036,354 968,191 886,144
Distribution expenses - Class A 149,124 54,846 133,545 132,578 31,861 36,626
Distribution expenses - Class B 90,249 39,220 90,547 92,037 19,620 21,111
Distribution expenses - Class C 1,622,684 540,862 1,300,309 1,323,092 280,914 315,114
Administration fees 1,588,998 500,650 1,523,544 1,440,858 310,914 296,405
Dividend disbursing and transfer agent fees
and expenses 915,815 464,178 923,346 881,073 382,943 385,587
Accounting fees 181,561 86,000 174,171 163,246 51,000 51,000
Professional fees 141,636 81,943 109,145 124,692 41,472 67,593
Trustees fees 82,655 25,150 76,066 72,459 15,700 15,077
Reports and statements to shareholders 90,588 119,836 69,174 160,442 13,840 107,340
Custodian fees 67,142 97,420 34,365 21,860 7,166 9,634
Registration fees 77,020 58,468 87,746 78,347 54,379 54,922
Pricing fees 29,158 12,764 2,811 2,113 1,294 900
Other 54,479 24,500 53,162 45,545 14,000 13,255
------------ ------------ ------------ ----------- ----------- -----------
7,875,293 3,278,942 7,985,505 7,574,696 2,193,294 2,260,708
Less expenses absorbed or waived (1,933,524) (349,924) (647,332) (1,133,870) (458,062) (695,176)
Less expense paid indirectly (5,911) -- (13) (1,532) (1,034) (1,431)
------------ ------------ ------------ ----------- ----------- -----------
Total expenses 5,935,858 2,929,018 7,338,160 6,439,294 1,734,198 1,564,101
------------ ------------ ------------ ----------- --------- -----------
Net Investment Income (Loss) 15,847,356 1,971,007 (2,269,867) 3,295,077 (1,231,056) (219,797)
------------ ------------ ------------ ----------- ----------- -----------
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currencies:
Net realized gain (loss) on:
Investments (3,081,973) 9,702,570 7,701,325 20,384,446 2,433,962 5,880,382
Futures contracts (92,072) - - - - -
Swap agreements (44,434) - - - - -
Foreign currencies (674,024) (73,782) (58,974) (422) - 181
------------ ------------ ------------ ----------- ----------- -----------
Net realized gain (loss) (3,892,503) 9,628,788 7,642,351 20,384,024 2,433,962 5,880,563
Net change in unrealized
appreciation/depreciation of
investments and foreign currencies (8,491,476) 21,688,222 55,920,475 16,355,560 17,760,785 9,123,924
------------ ------------ ------------ ----------- ----------- -----------
Net Realized and Unrealized Gain (Loss)
on Investments and foreign currencies (12,383,979) 31,317,010 63,562,826 36,739,584 20,194,747 15,004,487
------------ ------------ ------------ ----------- ----------- -----------
Net Increase in Net Assets Resulting
from Operations $ 3,463,377 $ 33,288,017 $ 61,292,959 $40,034,661 $18,963,691 $14,784,690
============ ============ ============ =========== =========== ===========
See accompanying notes
67
Statements of changes in net assets
Optimum Fund Trust
Optimum Fixed Income Fund Optimum International Fund
Year Ended Year Ended Year Ended Year Ended
3/31/06 3/31/05 3/31/06 3/31/05
Increase (Decrease) in Net Assets from Operations:
Net investment income $ 15,847,356 $ 5,547,740 $ 1,971,007 $ 163,243
Net realized gain (loss) on investments and foreign
currencies (3,892,503) 1,817,567 9,628,788 1,703,638
Net change in unrealized appreciation/depreciation
of investments and foreign currencies (8,491,476) (2,333,989) 21,688,222 5,225,103
------------- ---------- ---------- ---------
Net increase in net assets from operations 3,463,377 5,031,318 33,288,017 7,091,984
---------- ---------- ---------- ---------
Dividends and Distributions to Shareholders from:
Net investment income:
Class A (1,274,163) (607,462) (100,399) -
Class B (200,881) (149,152) (5,304) -
Class C (3,770,221) (1,862,660) (76,640) -
Institutional Class (8,427,841) (2,689,405) (665,959) (10,068)
Net realized gain on investments:
Class A (58,447) (169,911) (969,277) (70,371)
Class B (13,649) (60,676) (244,303) (28,750)
Class C (226,703) (711,907) (3,422,034) (247,759)
Institutional Class (303,646) (552,891) (4,392,786) (182,693)
------------ ---------- ---------- ---------
(14,275,551) (6,804,064) (9,876,702) (539,641)
------------ ----------- ----------- ---------
Capital Share Transactions:
Proceeds from shares sold:
Class A 21,516,919 23,242,345 7,479,635 7,124,904
Class B 1,902,359 4,359,127 706,771 1,644,652
Class C 78,822,876 78,034,924 25,628,967 23,236,383
Institutional Class 195,734,889 138,332,965 49,032,003 37,265,900
Net asset value of shares issued upon reinvestment of
dividends and distributions:
Class A 1,300,051 752,910 1,055,577 69,669
Class B 201,144 198,379 245,975 28,262
Class C 3,904,936 2,511,297 3,461,735 242,906
Institutional Class 8,460,551 3,143,227 4,970,506 189,814
----------- ----------- ---------- ----------
311,843,725 250,575,174 92,581,169 69,802,490
----------- ----------- ---------- ----------
Cost of shares repurchased:
Class A (7,183,605) (2,602,853) (2,104,304) (777,862)
Class B (1,063,150) (437,867) (337,867) (192,042)
Class C (17,617,845) (7,226,122) (5,391,571) (1,907,718)
Institutional Class (41,742,586) (9,763,291) (10,108,871) (5,473,673)
----------- ----------- ----------- ------------
67,607,186) (20,030,133) (17,942,613) (8,351,295)
----------- ------------ ----------- ------------
Increase in net assets derived from capital share
transactions 244,236,539 230,545,041 74,638,556 61,451,195
----------- ------------ ----------- ------------
Net Increase in Net Assets 233,424,365 228,772,295 98,049,871 68,003,538
Net Assets:
Beginning of year 320,041,861 91,269,566 97,352,020 29,348,482
----------- ------------ ----------- ------------
End of year $ 553,466,226 $ 320,041,861 $ 195,401,891 $ 97,352,020
============= ============ =========== ============
Undistributed net investment income (accumulated
loss) $ 3,066,548 $ 1,244,598 $ 943,832 $ (105,091)
=========== ============ =========== ============
See accompanying notes
68 (continued)
Statements of changes in net assets
Optimum Fund Trust
Optimum Large Cap Growth Fund Optimum Large Cap Value Fund
Year Ended Year Ended Year Ended Year Ended
3/31/06 3/31/05 3/31/06 3/31/05
Increase (Decrease) in Net Assets from Operations:
Net investment income (loss) $ (2,269,867) $ (753,193) $ 3,295,077 $ 892,477
Net realized gain (loss) on investments and foreign currencies 7,642,351 (595,831) 20,384,024 5,105,874
Net change in unrealized appreciation/depreciation of investments
and foreign currencies 55,920,475 9,674,113 16,355,560 13,825,365
---------- --------- ---------- ----------
Net increase in net assets from operations 61,292,959 8,325,089 40,034,661 19,823,716
---------- --------- ---------- ----------
Dividends and Distributions to Shareholders from:
Net investment income:
Class A - - (232,766) (56,275)
Class B - - - -
Class C - - - -
Institutional Class - - (2,296,205) (511,745)
Net realized gain on investments:
Class A - - (1,726,349) (217,926)
Class B - - (417,436) (82,157)
Class C - - (6,100,367) (809,638)
Institutional Class - - (10,676,069) (820,065)
---------- --------- ---------- ----------
- - (21,449,192) (2,497,806)
---------- --------- ---------- ----------
Capital Share Transactions:
Proceeds from shares sold:
Class A 20,928,160 17,733,530 19,869,935 17,926,107
Class B 1,997,102 4,016,377 1,945,951 4,013,859
Class C 67,942,559 57,805,803 66,507,062 58,790,101
Institutional Class 192,810,241 140,103,883 184,582,292 119,998,337
Net asset value of shares issued upon reinvestment of
dividends and distributions:
Class A - - 1,934,288 270,439
Class B - - 410,885 80,872
Class C - - 6,036,661 796,609
Institutional Class - - 12,773,412 1,311,059
---------- --------- ---------- ----------
283,678,062 219,659,593 294,060,486 203,187,383
---------- --------- ---------- ----------
Cost of shares repurchased:
Class A (5,206,320) (1,646,757) (5,348,169) (1,659,252)
Class B (648,672) (288,388) (724,403) (306,639)
Class C (11,875,323) (4,197,896) (12,376,689) (4,231,491)
Institutional Class (32,322,493) (7,968,074) (28,454,697) (6,974,417)
---------- --------- ---------- ----------
(50,052,808) (14,101,115) (46,903,958)
---------- --------- ---------- ----------
Increase in net assets derived from capital share transactions 233,625,254 205,558,478 247,156,528 190,015,584
---------- --------- ---------- ----------
Net Increase in Net Assets 294,918,213 213,883,567 265,741,997 207,341,494
---------- --------- ---------- ----------
Net Assets:
Beginning of year 283,488,660 69,605,093 273,759,594 66,418,100
---------- --------- ---------- ----------
End of year $ 578,406,873 $ 283,488,660 $ 539,501,591 $ 273,759,594
============= ============= ============= =============
Undistributed net investment income (accumulated loss) $ (21,931) $ (19,460) $ 1,115,374 $ 349,690
============= ============= ============= =============
See accompanying notes
(continued) 69
Statements of changes in net assets
Optimum Fund Trust
Optimum Small Cap Growth Fund Optimum Small Cap Value Fund
Year Ended Year Ended Year Ended Year Ended
3/31/06 3/31/05 3/31/06 3/31/05
Increase (Decrease) in Net Assets from Operations:
Net investment loss $ (1,231,056) $ (544,566) $ (219,797) $ (224,636)
Net realized gain (loss) on investments 2,433,962 (1,343,168) 5,880,563 3,066,721
Net change in unrealized appreciation/depreciation of investments 17,760,785 3,980,308 9,123,924 2,823,528
---------- --------- ---------- ----------
Net increase in net assets from operations 18,963,691 2,092,574 14,784,690 5,665,613
---------- --------- ---------- ----------
Dividends and Distributions to Shareholders from:
Net realized gain on investments:
Class A - (479) (691,256) (122,848)
Class B - (198) (140,472) (42,176)
Class C - (1,742) (2,090,114) (445,185)
Institutional Class - (2,549) (2,649,173) (415,985)
---------- --------- ---------- ----------
- (4,968) (5,571,015) (1,026,194)
---------- --------- ---------- ----------
Capital Share Transactions:
Proceeds from shares sold:
Class A 5,208,885 4,186,170 6,124,857 5,061,730
Class B 368,790 858,140 345,948 881,752
Class C 13,465,739 12,540,122 13,083,206 13,687,307
Institutional Class 31,730,182 29,515,787 26,704,023 22,067,117
Net asset value of shares issued upon reinvestment of dividends
and distributions:
Class A - 472 679,548 120,917
Class B - 195 138,269 41,348
Class C - 1,708 2,068,790 437,878
Institutional Class - 2,524 2,582,357 409,196
---------- --------- ---------- ----------
50,773,596 47,105,118 51,726,998 42,707,245
---------- --------- ---------- ----------
Cost of shares repurchased:
Class A (1,294,228) (404,618) (1,927,172) (578,700)
Class B (141,727) (61,613) (178,922) (72,026)
Class C (2,628,027) (886,607) (3,359,047) (1,223,649)
Institutional Class (6,909,249) (8,971,226) (6,157,132) (6,771,964)
---------- --------- ---------- ----------
(10,973,231) (10,324,064) (11,622,273) (8,646,339)
---------- --------- ---------- ----------
Increase in net assets derived from capital share transactions 39,800,365 36,781,054 40,104,725 34,060,906
---------- --------- ---------- ----------
Net Increase in Net Assets 58,764,056 38,868,660 49,318,400 38,700,325
---------- --------- ---------- ----------
Net Assets:
Beginning of year 59,508,360 20,639,700 59,925,412 21,225,087
---------- --------- ---------- ----------
End of year $118,272,416 $ 59,508,360 $ 109,243,812 $ 59,925,412
========== ========== =========== ==========
Undistributed net investment income $ - $ - $ - $ -
========== ========== =========== ==========
See accompanying notes
70
Financial highlights
Optimum Fixed Income Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class A Class B
- ---------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.890 $ 8.980 $ 8.500 $8.900 $ 8.990 $ 8.500
Income (loss) from investment operations:
Net investment income(2) 0.316 0.279 0.171 0.258 0.221 0.133
Net realized and unrealized gain (loss) on investments
and foreign currencies (0.199) (0.061) 0.417 (0.209) (0.055) 0.420
------- ------- ------- ------ ------- -------
Total from investment operations 0.117 0.218 0.588 0.049 0.166 0.553
------- ------- ------- ------ ------- -------
Less dividends and distributions from:
Net investment income (0.253) (0.228) (0.098) (0.195) (0.176) (0.053)
Net realized gain on investments (0.014) (0.080) (0.010) (0.014) (0.080) (0.010)
------- ------- ------- ------ ------- -------
Total dividends and distributions (0.267) (0.308) (0.108) (0.209) (0.256) (0.063)
------- ------- ------- ------ ------- -------
Net asset value, end of period $ 8.740 $ 8.890 $8.980 $8.740 $8.900 $ 8.990
======= ======= ======= ====== ======= =======
Total return(3) 1.31% 2.59% 6.82% 0.54% 1.88% 6.52%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $47,956 $33,251 $12,049 $9,278 $ 8,405 $ 4,296
Ratio of expenses to average net assets 1.25% 1.24% 1.20% 1.90% 1.89% 1.85%
Ratio of expenses to average net assets prior to
expense limitation 1.67% 1.70% 2.25% 2.32% 2.35% 2.90%
Ratio of net investment income to average net assets 3.55% 3.12% 2.88% 2.90% 2.47% 2.23%
Ratio of net investment income to average net assets prior to
expense limitation 3.13% 2.66% 1.83% 2.48% 2.01% 1.18%
Portfolio turnover 298% 352% 383% 298% 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
(continued) 71
Financial highlights
Optimum Fixed Income Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class C Institutional Class
- ----------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.900 $ 8.990 $ 8.500 $ 8.890 $ 8.970 $ 8.500
Income (loss) from investment operations:
Net investment income(2) 0.258 0.221 0.133 0.348 0.310 0.192
Net realized and unrealized gain (loss) on investments
and foreign currencies (0.199) (0.055) 0.420 (0.209) (0.050) 0.407
------ ------ ----- ----- ----- -----
Total from investment operations 0.059) 0.166 0.553 0.139 0.260 0.599
------ ------ ----- ----- ----- -----
Less dividends and distributions from:
Net investment income (0.195) (0.176) (0.053) (0.285) (0.260) (0.119)
Net realized gain on investments (0.014) (0.080) (0.010) (0.014) (0.080) (0.010)
------ ------ ----- ----- ----- -----
Total dividends and distributions (0.209) (0.256) (0.063) (0.299) (0.340) (0.129)
------ ------ ----- ----- ----- -----
Net asset value, end of period $ 8.750 $ 8.900 $ 8.990 $ 8.730 $ 8.890 $ 8.970
======== ========= ======== ========= ========= ========
Total return(3) 0.65% 1.88% 6.52% 1.56% 2.96% 7.07%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $186,869 $125,301 $52,649 $ 309,363 $ 153,085 $ 22,276
Ratio of expenses to average net assets 1.90% 1.89% 1.85% 0.90% 0.89% 0.85%
Ratio of expenses to average net assets prior to
expense limitation 2.32% 2.35% 2.90% 1.32% 1.35% 1.90%
Ratio of net investment income to average net assets 2.90% 2.47% 2.23% 3.90% 3.47% 3.23%
Ratio of net investment income to average net assets prior
to expense limitation 2.48% 2.01% 1.18% 3.48% 3.01% 2.18%
Portfolio turnover 298% 352% 383% 298% 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
72 (continued)
Financial highlights
Optimum International Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.660 $ 10.670 $ 8.500 $ 11.530 $ 10.620 $ 8.500
Income (loss) from investment operations:
Net investment income (loss)(2) 0.180 0.050 0.021 0.102 (0.020) (0.023)
Net realized and unrealized gain on investments
and foreign currencies 2.456 1.069 2.155 2.426 1.059 2.149
---- ----- ------ ------ ----- -----
Total from investment operations 2.636 1.119 2.176 2.528 1.039 2.126
---- ----- ------ ------ ----- -----
Less dividends and distributions from:
Net investment income (0.074) (0.016)
Net realized gain on investments (0.752) (0.129) (0.006) (0.752) (0.129) (0.006)
---- ----- ------ ------ ----- -----
Total dividends and distributions (0.826) (0.129) (0.006) (0.768) (0.129) (0.006)
---- ----- ------ ------ ----- -----
Net asset value, end of period $ 13.470 $ 11.660 $ 10.670 $ 13.290 $ 11.530 $ 10.620
=========== =========== =========== =========== ========== ==========
Total return(3) 23.54% 10.62% 25.61% 22.81% 9.91% 25.02%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $20,247 $11,300 $ 4,083 $ 4,594 $3,386 $1,624
Ratio of expenses to average net assets 1.96% 1.98% 1.92% 2.61% 2.63% 2.57%
Ratio of expenses to average net assets prior to
expense limitation 2.20% 2.30% 3.82% 2.85% 2.95% 4.47%
Ratio of net investment income (loss) to average net assets 1.47% 0.45% 0.30% 0.82% (0.20%) (0.35)
Ratio of net investment income (loss) to average net assets
prior to expense limitation 1.23% 0.13% (1.60%) 0.58% (0.52%) (2.25%)
Portfolio turnover 68% 82% 49% 68% 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
(continued) 73
Financial highlights
Optimum International Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class C Institutional Class
- ----------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.540 $ 10.620 $ 8.500 $ 11.720 $ 10.690 $ 8.500
Income (loss) from investment operations:
Net investment income (loss)(2) 0.102 (0.020) (0.023) 0.224 0.089 0.045
Net realized and unrealized gain on investments
and foreign currencies 2.416 1.069 2.149 2.464 1.079 2.151
----- ----- ------ ------ ----- -----
Total from investment operations 2.518 1.049 2.126 2.688 1.168 2.196
----- ----- ------ ------ ----- -----
Less dividends and distributions from:
Net investment income (0.016) - - (0.106) (0.009) -
Net realized gain on investments (0.752) (0.129) (0.006) (0.129) (0.006)
------ ------ ------ ------ ------ -----
Total dividends and distributions (0.768) (0.129) (0.006) (0.858) (0.138) 0.006)
------ ------ ------ ------ ------ -----
Net asset value, end of period $ 13.290 $ 11.540 $ 10.620 $ 13.550 $ 11.720 $10.690
====== ====== ====== ====== ====== ======
Total return(3) 22.69% 10.01% 25.02% 23.91% 11.08% 25.84%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 70,828 $ 38,517 $ 14,339 $ 99,733 $ 44,149 $ 9,302
Ratio of expenses to average net assets 2.61% 2.63% 2.57% 1.61% 1.63% 1.57%
Ratio of expenses to average net assets prior to
expense limitation 2.85% 2.95% 4.47% 1.85% 1.95% 3.47%
Ratio of net investment income (loss) to average net assets 0.82% (0.20%) (0.35%) 1.82% 0.80% 0.65%
Ratio of net investment income (loss) to average net assets
prior to expense limitation 0.58% (0.52%) (2.25%) 1.58% 0.48% (1.25%)
Portfolio turnover 68% 82% 49% 68% 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
74 (continued)
Financial highlights
Optimum Large Cap Growth Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.020 $ 9.570 $ 8.500 $ 9.910 $ 9.530 $ 8.500
Income (loss) from investment operations:
Net investment loss(2) (0.057) (0.036) (0.037) (0.126) (0.099) (0.077)
Net realized and unrealized gain on investments
and foreign currencies 1.577 0.486 1.107 1.556 0.479 1.107
----- ----- ----- ----- ----- -----
Total from investment operations 1.520 0.450 1.070 1.430 0.380 1.030
----- ----- ----- ----- ----- -----
Net asset value, end of period $ 11.540 $10.020 $ 9.570 $ 11.340 $ 9.910 $ 9.530
====== ====== ===== ====== ===== =====
Total return(3) 15.17% 4.70% 12.59% 14.43% 3.99% 12.12%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 47,283 $26,252 $ 9,337 $ 10,168 $ 7,603 $ 3,568
Ratio of expenses to average net assets 1.69% 1.67% 1.61% 2.34% 2.32% 2.26%
Ratio of expenses to average net assets prior to
expense limitation 1.84% 1.87% 2.51% 2.49% 2.52% 3.16%
Ratio of net investment loss to average net assets (0.52%) (0.37%) (0.61%) (1.17%) (1.02%) (1.26)
Ratio of net investment loss to average net assets prior
to expense limitation (0.67%) (0.57%) (1.51%) (1.32%) (1.22%) (2.16%)
Portfolio turnover 48% 37% 51% 48% 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
(continued) 75
Financial highlights
Optimum Large Cap Growth Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class C Institutional Class
- ----------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.910 $ 9.530 $ 8.500 $ 10.080 $ 9.590 $ 8.500
Income (loss) from investment operations:
Net investment loss(2) (0.126) (0.099) (0.077) (0.019) (0.002) (0.015)
Net realized and unrealized gain on investments
and foreign currencies 1.556 0.479 1.107 1.589 0.492 1.105
------ ------ ------ ------ ------ ------
Total from investment operations 1.430 0.380 1.030 1.570 0.490 1.090
------ ------ ------ ------ ------ ------
Net asset value, end of period $ 11.340 $ 9.910 $ 9.530 $ 11.650 $ 10.080 $ 9.590
====== ====== ====== ====== ====== ======
Total return(3) 14.43% 3.99% 12.12% 15.57% 5.11% 12.82%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 164,995 $ 91,434 $ 35,143 $ 355,961 $ 158,200 $ 21,557
Ratio of expenses to average net assets 2.34% 2.32% 2.26% 1.34% 1.32% 1.26%
Ratio of expenses to average net assets prior to
expense limitation 2.49% 2.52% 3.16% 1.49% 1.52% 2.16%
Ratio of net investment loss to average net assets (1.17%) (1.02%) (1.26%) (0.17%) (0.02%) (0.26%)
Ratio of netinvestment loss to average net assets prior
to expense limitation (1.32%) (1.22%) (2.16%) (0.32%) (0.22%) (1.16%)
Portfolio turnover 48% 37% 51% 48% 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
76 (continued)
Financial highlights
Optimum Large Cap Value Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.840 $ 9.830 $ 8.500 $ 10.780 $ 9.810 $ 8.500
Income (loss) from investment operations:
Net investment income (loss)(2) 0.092 0.074 0.038 0.021 0.008 (0.003)
Net realized and unrealized gain on investments
and foreign currencies 0.947 1.100 1.331 0.933 1.098 1.329
------- ------- ------- ------- ------- -------
Total from investment operations 1.039 1.174 1.369 0.954 1.106 1.326
------- ------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income (0.065) (0.028) (0.023) - - -
Net realized gain on investments (0.494) (0.136) (0.016) (0.494) (0.136) (0.016)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.559) (0.164) (0.039) (0.494) (0.136) (0.016)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 11.320 $ 10.840 $ 9.830 $ 11.240 $10.780 $9.810
======= ========= ======== ======== ======= =======
Total return(3) 9.82% 12.04% 16.12% 9.05% 11.36% 15.61%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 45,666 $27,524 $ 9,115 $ 10,103 $ 8,072 $ 3,609
Ratio of expenses to average net assets 1.55% 1.53% 1.50% 2.20% 2.18% 2.15%
Ratio of expenses to average net assets prior to
expense limitation 1.83% 1.84% 2.52% 2.48% 2.49% 3.17%
Ratio of net investment income (loss) to average net
assets 0.83% 0.72% 0.59% 0.18% 0.07% (0.06%)
Ratio of net investment income (loss) to average net
assets prior to expense limitation 0.55% 0.41% (0.43%) (0.10%) (0.24%) (1.08%)
Portfolio turnover 52% 38% 38% 52% 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
(continued) 77
Financial highlights
Optimum Large Cap Value Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class C Institutional Class
- ----------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.780 $ 9.810 $ 8.500 $ 10.860 $ 9.840 $ 8.500
Income (loss) from investment operations:
Net investment income (loss)(2) 0.021 0.008 (0.003 0.131 0.110 0.060
Net realized and unrealized gain on investments
and foreign currencies 0.933 1.098 1.329 0.936 1.110 1.330
-------- ------- ------- ------- ------- -------
Total from investment operations 0.954 1.106 1.326 1.067 1.220 1.390
-------- ------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income (0.103) (0.064) (0.034) - - -
Net realized gain on investments (0.494) (0.136) (0.016) (0.494) (0.136) (0.016)
-------- ------- ------- ------- ------- -------
Total dividends and distributions (0.494) (0.136) (0.016) (0.597) (0.200) (0.050)
-------- ------- ------- ------- ------- -------
Net asset value, end of period $11.240 $10.780 $9.810 $ 11.330 $10.860 $9.840
======== ======= ======= ======= ======= =======
Total return(3) 9.16% 11.36% 15.61% 10.19% 12.41% 16.38%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $163,876 $97,823 $35,732 $319,857 $140,341 $17,962
Ratio of expenses to average net assets 2.20% 2.18% 2.15% 1.20% 1.18% 1.15%
Ratio of expenses to average net assets prior to
expense limitation 2.48% 2.49% 3.17% 1.48% 1.49% 2.17%
Ratio of net investment income (loss) to average
net assets 0.18% 0.07% (0.06%) 1.18% 1.07% 0.94%
Ratio of net investment income (loss) to average net assets
prior to expense limitation (0.10%) (0.24%) (1.08%) 0.90% 0.76% (0.08%)
Portfolio turnover 52% 38% 38% 52% 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
78 (continued)
Financial highlights
Optimum Small Cap Growth Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class A Class B
- --------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.750 $ 11.260 $ 8.500 $ 11.640 $ 11.230 $ 8.500
Income (loss) from investment operations:
Net investment loss(2) (0.176) (0.161) (0.100) (0.257) (0.233) (0.146)
Net realized and unrealized gain on investments 2.766 0.653 2.860 2.727 0.645 2.876
-------- ------- ------- ------- ------- -------
Total from investment operations 2.590 0.492 2.760 2.470 0.412 2.730
-------- ------- ------- ------- ------- -------
Less dividends and distributions from:
Net realized gain on investments -- (0.002) -- -- (0.002) --
-------- ------- ------- ------- ------- -------
Total dividends and distributions -- (0.002) -- -- (0.002) --
-------- ------- ------- ------- ------- -------
Net asset value, end of period $14.340 $11.750 $11.260 $14.110 $11.640 $11.230
======== ======= ======= ======= ======= =======
Total return(3) 22.04% 4.37% 32.47% 21.22% 3.67% 32.12%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $11,984 $6,133 $2,115 $2,285 $1,665 $792
Ratio of expenses to average net assets 1.95% 1.80% 1.81% 2.60% 2.45% 2.46%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 2.46% 2.69% 4.11% 3.11% 3.34% 4.76%
Ratio of net investment loss to average net assets (1.38%) (1.42%) (1.41%) (2.03%) (2.07%) (2.06%)
Ratio of net investment loss to average net assets prior to
expense limitation and expenses paid indirectly (1.89%) (2.31%) (3.71%) (2.54%) (2.96%) (4.36%)
Portfolio turnover 47% 44% 16% 47% 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
(continued) 79
Financial highlights
Optimum Small Cap Growth Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class C Institutional Class
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.640 $11.230 $8.500 $11.820 $11.280 $8.500
Income (loss) from investment operations:
Net investment loss(2) (0.257) (0.233) (0.146) (0.131) (0.121) (0.075)
Net realized and unrealized gain on investments 2.727 0.645 2.876 2.781 0.663 2.855
----- ----- ----- ----- ----- -----
Total from investment operations 2.470 0.412 2.730 2.650 0.542 2.780
----- ----- ----- ----- ----- -----
Less dividends and distributions from:
Net realized gain on investments - (0.002) - - (0.002) -
------- ------- ------- ------- ------- ------
Total dividends and distributions - (0.002) - - (0.002) -
------- ------- ------- ------- ------- ------
Net asset value, end of period $14.110 $11.640 $11.230 $14.470 $11.820 $11.280
======= ======= ======= ======= ======= =======
Total return(3) 21.22% 3.67% 32.12% 22.42% 4.81% 32.71%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $36,537 $19,883 $7,521 $67,466 $31,827 $10,212
Ratio of expenses to average net assets 2.60% 2.45% 2.46% 1.60% 1.45% 1.46%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 3.11% 3.34% 4.76% 2.11% 2.34% 3.76%
Ratio of net investment loss to average net assets (2.03%) (2.07%) (2.06%) (1.03%) (1.07%) (1.06%)
Ratio of net investment loss to average net assets prior to
expense limitation and expenses paid indirectly (2.54%) (2.96%) (4.36%) (1.54%) (1.96%) (3.36%)
Portfolio turnover 47% 44% 16% 47% 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
80 (continued)
Financial highlights
Optimum Small Cap Value Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.410 $11.010 $ 8.500 $12.280 $10.970 $8.500
Income (loss) from investment operations:
Net investment loss(2) (0.022) (0.055) (0.046) (0.102) (0.129) (0.090)
Net realized and unrealized gain on investments 2.043 1.801 2.616 2.013 1.785 2.620
----- ----- ----- ----- ----- -----
Total from investment operations 2.021 1.746 2.570 1.911 1.656 2.530
----- ----- ----- ----- ----- -----
Less dividends and distributions from:
Net realized gain on investments (0.841) (0.346) (0.060) (0.841) (0.346) (0.060)
----- ----- ----- ----- ----- -----
Total dividends and distributions (0.841) (0.346) (0.060) (0.841) (0.346) (0.060)
----- ----- ----- ----- ----- -----
Net asset value, end of period $13.590 $12.410 $11.010 $13.350 $12.280 $10.970
======= ======= ======= ======= ======= =======
Total return(3) 17.17% 16.12% 30.30% 16.35% 15.35% 29.83%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $13,300 $ 7,297 $ 2,126 $2,359 $1,859 $ 819
Ratio of expenses to average net assets 1.76% 1.73% 1.67% 2.41% 2.38% 2.32%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 2.58% 2.61% 4.08% 3.23% 3.26% 4.73%
Ratio of net investment loss to average net assets (0.17%) (0.47%) (0.69%) (0.82%) (1.12%) (1.34%)
Ratio of net investment loss to average net assets prior to
expense limitation and expenses paid indirectly (0.99%) (1.35%) (3.10%) (1.64%) (2.00%) (3.75%)
Portfolio turnover 42% 46% 40% 42% 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
(continued) 81
Financial highlights
Optimum Small Cap Value Fund
Selected data for each share of the Fund outstanding throughout each period were
as follows:
Class C Institutional Class
- ------------------------------------------------------------------------------------------------------------------------------------
Year Year 8/1/03(1) Year Year 8/1/03(1)
Ended Ended to Ended Ended to
3/31/06 3/31/05 3/31/04 3/31/06 3/31/05 3/31/04
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.280 $10.970 $ 8.500 $12.470 $11.040 $ 8.500
Income (loss) from investment operations:
Net investment income (loss)(2) (0.102) (0.129) (0.090) 0.023 (0.014) (0.022)
Net realized and unrealized gain on investments 2.013 1.785 2.620 2.068 1.790 2.622
----- ----- ----- ----- ----- -----
Total from investment operations 1.911 1.656 2.530 2.091 1.776 2.600
----- ----- ----- ----- ----- -----
Less dividends and distributions from:
Net realized gain on investments (0.841) (0.346) (0.060) (0.841) (0.346) (0.060)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.841) (0.346) (0.060) (0.841) (0.346) (0.060)
------- ------- ------- ------- ------- -------
Net asset value, end of period $13.350 $12.280 $10.970 $13.720 $12.470 $11.040
======= ======= ======= ======= ======= =======
Total return(3) 16.35% 15.35% 29.83% 17.66% 16.35% 30.66%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $38,782 $23,869 $ 9,018 $54,803 $26,900 $ 9,262
Ratio of expenses to average net assets 2.41% 2.38% 2.32% 1.41% 1.38% 1.32%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 3.23% 3.26% 4.73% 2.23% 2.26% 3.73%
Ratio of net investment income (loss) to average net assets (0.82%) (1.12%) (1.34%) 0.18% (0.12%) (0.34%)
Ratio of net investment loss to average net assets prior to
expense limitation and expenses paid indirectly (1.64%) (2.00%) (3.75%) (0.64%) (1.00%) (2.75%)
Portfolio turnover 42% 46% 40% 42% 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
82
Notes to financial statements
Optimum Fund Trust
March 31, 2006
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 only to certain eligible 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 and forward foreign cross 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 Trusts 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 Funds 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.
(continued) 83
Notes to financial statements
Optimum Fund Trust
1. Significant Accounting Policies (continued)
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) 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. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Discounts and premiums on non-convertible bonds 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 distributions 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
non-rebatable tax withholdings. Withholding taxes on foreign dividends have been
recorded in accordance with each Funds understanding of the applicable countrys
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
expect to declare and pay dividends from net investment income, if any,
annually. Optimum Fixed Income Fund expects to declare and pay dividends from
net investment income quarterly. Each Fund will declare and pay distributions
from net realized gain on investments, if any, at least annually, and may
distribute net capital gains twice a year. 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, 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.
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 Trusts
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 Funds assets
among one or more current or additional sub-advisers, and to monitor the
sub-advisers compliance with the relevant Funds investment objective, policies
and restrictions. DMC pays 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
84 (continued)
Notes to financial statements
Optimum Fund Trust
2. Investment Management, Administration Agreements and Other Transactions with
Affiliates (continued)
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 - Aberdeen Asset Management Inc. (AAMI)*; Optimum
International Fund - Mondrian Investment Partners Limited and Alliance Capital
Management L.P.**; Optimum Large Cap Growth Fund - Marsico Capital Management,
LLC (Marsico) and T. Rowe Price Associates, Inc.; Optimum Large Cap Value Fund -
Massachusetts Financial Services Company and TCW Investment Management Company
(TCW)***; 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, Delafield Asset Management (a division of
Reich & Tang Asset Management, LLC), and The Killen Group, Inc. (Killen)****.
*Effective December 2, 2005, Aberdeen Asset Management Inc. replaced Deutsche
Investment Management Americas Inc. as the Funds sub-advisor.
** Effective September 29, 2005, Alliance Capital Management L.P. replaced
Marsico Capital Management, LLC as the sub-advisor for Optimum International
Fund.
***Effective July 26, 2005, TCW replaced Morgan Stanley Investment Management
Inc. as the sub-advisor for Optimum Large Cap Value Fund.
****Effective January 18, 2006, The Killen Group Inc. was added as one of three
sub-advisors to the Fund.
For the year ended March 31, 2006, 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
---- ---- ----------- ---------- ----------- ----------
$957,748 $559,738 $1,958,735 $1,703,498 $641,752 $594,103
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, 2006
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%
*Effective September 29, 2005, Alliance assumed the sub-advisory relationship
from Marsico. Alliance did not charge DMC a sub-advisory fee until approved by
the shareholders of Optimum International Fund on December 20, 2005. In the
interim period, DMC waived a portion of the management fee equal to the fees
which would have been paid to Marsico. This additional waiver was only in effect
during the period Alliance provided sub-advisory services at no charge.
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 Trusts 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 Trusts 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 such services, the Trust pays DSC a fee at an
annual rate of 0.15% of the Trusts total average daily net assets, subject to
certain minimums, plus out-of-pocket expenes.
Delaware Distributors, L.P. (DDLP), an affiliate of DMC, serves as the national
distributor of each Funds 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.
(continued) 85
Notes to financial statements
Optimum Fund Trust
2. Investment Management, Administration Agreements and Other Transactions with
Affiliates (continued)
At March 31, 2006, 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 $ 52,445 $ 88,946 $ 277,174 $ 191,231 $ 47,262 $ 2,798
Dividend disbursing, transfer agent fees,
accounting and other expenses payable to DSC 263,249 97,849 272,173 255,213 62,611 59,604
Distribution fees payable to DDLP 180,345 68,515 160,325 159,778 35,303 37,907
Other expenses payable to DMC and affiliates* 20,888 - 26,474 6,932 6,136 -
*DMC, as part of its administrative services, pays operating expenses on behalf
of the Funds and is reimbursed on a periodic basis. Such expenses include items
such as printing of shareholder reports, professional fees, registration fees
and trustees fees.
For the year ended March 31, 2006, DDLP received gross contingent deferred sales
charge commissions on redemptions of the Funds Class B and Class C shares,
respectively, and these commissions were entirely used to offset up-front
commissions previously paid by DDLP to broker-dealers on sales of those shares.
Contingent Deferred Contingent Deferred
Sales Charge Commissions Sales Charge Commissions
------------------------ ------------------------
Optimum Fixed Income Fund Class B $23,817 Optimum Large Cap Value Fund Class B $18,827
Optimum Fixed Income Fund Class C 45,641 Optimum Large Cap Value Fund Class C 30,804
Optimum International Fund Class B 7,617 Optimum Small Cap Growth Fund Class B 3,443
Optimum International Fund Class C 12,170 Optimum Small Cap Growth Fund Class C 6,560
Optimum Large Cap Growth Fund Class B 17,133 Optimum Small Cap Value Fund Class B 3,829
Optimum Large Cap Growth Fund Class C 32,436 Optimum Small Cap Value Fund Class C 6,096
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, 2006, 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 $1,016,950,052 $159,630,599 $412,338,496 $423,703,282 $72,685,104 $64,301,698
Purchases of U.S. government securities 540,222,151 - - - - -
Sales other than U.S. government securities 775,053,692 93,654,448 197,306,733 203,535,660 38,944,400 31,877,412
Sales of U.S. government securities 528,410,627 - - - - -
At March 31, 2006, 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 $574,781,406 $167,080,885 $512,350,126 $518,203,825 $94,779,520 $95,345,504
============ ============ ============ ============ =========== ============
Aggregate unrealized appreciation $1,251,292 $ 30,620,886 $ 74,059,956 $ 45,046,693 $26,114,428 $16,675,214
Aggregate unrealized depreciation (13,190,436) (2,428,703) (6,406,978) (13,768,682) (2,220,502) (2,625,580)
------------ ------------ ------------ ------------ ----------- -----------
Net unrealized appreciation (depreciation) $(11,939,144) $ 28,192,183 $ 67,652,978 $ 31,278,011 $23,893,926 $ 14,049,634
============ ============ ============ ============ =========== ============
86 (continued)
Notes to financial statements
Optimum Fund Trust
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 years ended March 31, 2006 and 2005
was as follows:
Year Ended March 31, 2006:
Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Small Cap
Fund Fund Value Fund Value Fund
---- ---- ---------- ----------
Ordinary Income $14,192,009 $7,486,399 $12,984,026 $1,969,351
Long-Term Capital Gain 83,542 2,390,303 8,465,166 3,601,664
----------- ---------- ----------- ----------
Total $14,275,551 $9,876,702 $21,449,192 $5,571,015
----------- ---------- ----------- ----------
Year Ended March 31, 2005:
Optimum Optimum Optimum Optimum Optimum
Fixed Income International Large Cap Small Cap Small Cap
Fund Fund Value Fund Growth Fund Value Fund
---- ---- ---------- ----------- ----------
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
---------- -------- ---------- ------ ----------
Optimum Large Cap Growth Fund did not make any distributions in either
year.Optimum Small Cap Growth Fund did not make any distributions during the
year ended March 31, 2006.
As of March 31, 2006, the components of net assets on a tax basis were as
follows:
Optimum Optimum Optimum
Fixed Income International Large Cap
Fund Fund Value Fund
---- ---- ----------
Shares of beneficial interest $564,292,554 $162,751,135 $503,186,041
Undistributed ordinary income 3,209,248 2,788,391 3,589,953
Undistributed long-term capital gain - 1,682,024 4,001,447
Capital loss carryforward (611,531) - -
Post-October losses (1,501,236) - -
Post-October currency losses - - (21,931)
Unrealized appreciation (depreciation) of
investments and foreign currencies (11,922,809) 28,180,341 67,651,363
------------ ---------- ----------
Net assets $ 553,466,226 $195,401,891 $578,406,873
============= ============ ============
Optimum Optimum Optimum
Large Cap Small Cap Small Cap
Value Fund Growth Fund Value Fund
---------- ----------- ----------
Shares of beneficial interest $500,595,764 $93,257,311 $92,853,232
Undistributed ordinary income 3,939,108 - 1,220,773
Undistributed long-term capital gain 3,689,640 1,121,179 1,120,173
Unrealized appreciation of investments
and foreign currencies 31,277,079 23,893,926 14,049,634
---------- ---------- ----------
Net assets $539,501,591 $118,272,416 $109,243,812
============ ============ ============
(continued) 87
Notes to financial statements
Optimum Fund Trust
4. Dividend and Distribution Information (continued)
The differences between book basis and tax basis components of net assets are
primarily attributable to tax deferral of losses on wash sales, tax treatment of
contingent payment debt instruments, mark-to-market on futures contracts,
forward foreign currency contracts and passive foreign investment companies.
Post-October losses and Post-October currency losses represent losses realized
on investment and foreign currency transactions from November 1, 2005 through
March 31, 2006 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. Reclassifications are primarily
due to tax treatment of net operating losses, dividends and distributions, 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. For the year ended March 31, 2006, the Funds
recorded the following 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) $(352,300) $(73,782) $2,267,396 $(422) $1,231,056 $219,797
Accumulated net realized gain (loss) 352,300 73,782 58,974 422 - (219,797)
Paid-in capital - - (2,326,370) - (1,231,056) -
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, 2006 will expire as follows:
Year of Expiration
2014
------------------
Optimum Fixed Income Fund $611,531
In 2006, the Funds utilized capital loss carryforwards as follows:
Capital Loss
Carryforwards
Utilized
--------
Optimum Large Cap Growth Fund $240,163
Optimum Small Cap Growth Fund 638,746
88 (continued)
Notes to financial statements
Optimum Fund Trust
5. Capital Shares
Transactions in capital shares were as follows:
Optimum Optimum Optimum
Fixed Income International Large Cap
Fund Fund Growth Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
3/31/06 3/31/05 3/31/06 3/31/05 3/31/06 3/31/05
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold:
Class A 2,411,550 2,604,696 616,189 649,124 1,952,410 1,811,897
Class B 213,339 493,163 59,206 155,552 189,679 422,024
Class C 8,832,658 8,745,628 2,141,181 2,136,364 6,426,511 5,966,892
Institutional Class 21,953,576 15,486,338 4,000,058 3,390,313 17,796,833 14,258,695
---------- ---------- --------- --------- ---------- ----------
33,411,123 27,329,825 6,816,634 6,331,353 26,365,433 22,459,508
---------- ---------- --------- --------- ---------- ----------
Shares issued upon reinvestment of
dividends and distributions:
Class A 147,102 84,653 87,398 6,568 - -
Class B 22,744 22,307 20,671 2,694 - -
Class C 441,733 282,189 290,252 23,074 - -
Institutional Class 958,739 352,862 408,920 17,714 - -
------- ------- ------- ------ - -
1,570,318 742,011 807,241 50,050 - -
--------- ------- ------- ------ - -
Shares repurchased:
Class A (808,521) (292,493) (169,365) (69,596) (475,458) (167,095)
Class B (119,376) (48,904) (27,724) (17,567) (60,469) (29,466)
Class C (1,982,783) (807,764) (440,893) (171,311) (1,106,014) (428,897)
Institutional Class (4,702,334) (1,098,366) (817,720) (510,431) (2,937,531) (804,930)
----------- ----------- --------- --------- ----------- ---------
(7,613,014) (2,247,527) (1,455,702) (768,905) (4,579,472) (1,430,388)
----------- ----------- ----------- --------- ----------- -----------
Net increase 27,368,427 25,824,309 6,168,173 5,612,498 21,785,961 21,029,120
=========== ========== =========== ========= ========== ==========
Optimum Optimum Optimum
Large Cap Small Cap Small Cap
Value Fund Growth Fund Growth Fund
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
3/31/06 3/31/05 3/31/06 3/31/05 3/31/06 3/31/05
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold:
Class A 1,801,005 1,745,346 412,930 369,365 485,960 435,139
Class B 177,930 402,786 29,986 77,974 28,191 79,351
Class C 6,073,885 5,763,734 1,087,467 1,116,607 1,059,341 1,191,177
Institutional Class 16,691,580 11,651,128 2,503,167 2,602,503 2,111,147 1,898,666
---------- ---------- ---------- ---------- ---------- ----------
24,744,400 19,562,994 4,033,550 4,166,449 3,684,639 3,604,333
---------- ---------- ---------- ---------- ---------- ----------
Shares issued upon reinvestment of
dividends and distributions:
Class A 177,086 25,981 - 42 54,964 10,324
Class B 37,795 7,883 - 18 11,351 3,579
Class C 555,895 77,527 - 154 169,791 37,840
Institutional Class 1,169,476 124,785 - 226 207,166 34,839
---------- ---------- ---------- ---------- ---------- ----------
1,940,252 236,176 - 440 443,272 86,582
---------- ---------- ---------- ---------- ---------- ----------
Shares repurchased:
Class A (481,502) (160,453) (99,159) (35,344) (150,684) (50,198)
Class B (65,846) (29,848) (11,149) (5,450) (6,218)
Class C (1,125,476) (409,019) (206,396) (78,255) (268,751) (106,442)
Institutional Class (2,564,455) (673,193) (534,279) (814,146) (481,357) (616,300)
---------- ---------- ---------- ---------- ---------- ----------
(4,237,279) (1,272,513) (850,983) (933,195) (915,055) (779,158)
---------- ---------- ---------- ---------- ---------- ----------
Net increase 22,447,373 18,526,657 3,182,567 3,233,694 3,212,856 2,911,757
========== ========== ========== ========== ========== ==========
(continued) 89
Notes to financial statements
Optimum Fund Trust
6. Foreign Currency 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 and forward foreign cross 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 and forward foreign cross
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 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. Subsequent payments are received from the broker
or paid to the broker 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. Swap Agreements
The Optimum Fixed Income Fund may enter 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.
9. Credit and Market Risk
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 countrys 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 & Poors
Ratings Group and/or Ba or lower by Moodys 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.
90 (continued)
Notes to financial statements
Optimum Fund Trust
9. Credit and Market Risk (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 Funds 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 its 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.
While maintaining oversight, the Board of Trustees has delegated to DMC the
day-to-day functions of determining whether individual securities are liquid for
purposes of a Funds limitation on investments in illiquid assets. Rule 144A and
illiquid securities have been identified on the Statements 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.
10. 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.
(continued) 91
Notes to financial statements
Optimum Fund Trust
11. 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, 2006, each Fund designates distributions
paid during the year as follows:
(A) (B)
Long-Term Ordinary (C)
Capital Gains Income Total Qualifying
Distributions Distributions* Distributions Dividends(1)
(Tax Basis) (Tax Basis) (Tax Basis)
Optimum Fixed Income Fund 1% 99% 100% -
Optimum International Fund 24% 76% 100% -
Optimum Large Cap Value Fund 39% 61% 100% 63%
Optimum Small Cap Value Fund 65% 35% 100% -
(A) and (B) are based on a percentage of each Funds total distributions.
(C) is based on a percentage of each Funds ordinary income distributions.
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
*For the fiscal year ended March 31, 2006 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 Funds intend to designate up
to a maximum of the following amounts to be taxed at a maximum rate of 15%.
Complete information was computed and reported in conjunction with your 2005 or
2006 Form 1099-DIV, as applicable.
Maximum Amount to be
Taxed at a Maximum Rate of 15%
------------------------------
Optimum Fixed Income Fund $ 14,952
Optimum International Fund 848,302
Optimum Large Cap Value Fund 2,528,971
The Optimum International Fund intends to pass through foreign tax credits in
the maximum amount of $179,143. The gross foreign source income earned during
the fiscal year 2006 by Optimum International Fund was $4,785,525. This amount
may change depending on the tax laws of certain countries. Complete information
will be computed and reported in conjunction with your 2005 or 2006 Form
1099-DIV, as applicable.
92
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, 2006, and the related
statements 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 two years in the period 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, 2006, by correspondence with the Funds
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, 2006, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the two years in the period 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, 2006
93
Other fund information
Optimum Fund Trust
Proxy Results
The shareholders of Optimum Fund Trust (the "Trust") voted on the following
proposals (as applicable) at the special meeting of shareholders on December 20,
2005, as adjourned. The description of each proposal and number of shares voted
are as follows:
Optimum Large Cap Value Fund
1. To approve a new Sub-Advisory Agreement between Delaware Management
Company, a series of Delaware Management Business Trust and the Funds
investment manager, and TCW Investment Management Company ("TCW") under
which TCW would serve as one of two sub-advisers to such Fund.
Affirmative 17,727,404.125
Against 305,364.000
Abstain 557,222.000
Optimum Small Cap Value Fund
2. To approve a new Sub-Advisory Agreement between Delaware Management
Company, a series of Delaware Management Business Trust and the Funds
investment manager, and The Killen Group, Inc. ("Killen") under which
Killen would serve as one of three sub-advisers to such Fund.
Affirmative 3,218,386.253
Against 50,956.000
Abstain 91,085.000
Optimum International Fund
3. To approve a new Sub-Advisory Agreement between Delaware Management Company,
a series of Delaware Management Business Trust and the Funds investment manager,
and Alliance Capital Management L.P. ("Alliance") under which Alliance would
serve as one of two sub-advisers to such Fund.
Affirmative 5,497,936.120
Against 88,063.000
Abstain 158,484.000
Optimum Fixed Income Fund
4. To approve a new Sub-Advisory Agreement between Delaware Management Company,
a series of Delaware Management Business Trust and the Funds investment manager,
and Aberdeen Asset Management Inc. ("AAMI") under which AAMI would serve as the
Funds sub-adviser.
Affirmative 25,985,563.188
Against 401,413.000
Abstain 924,558.000
94
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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 funds 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.
Number of
Portfolios in Fund Other
Name, Complex(1) Overseen Directorships
Address Position(s) Length of Principal Occupation(s) by Trustee Held by Trustee
and Age Held with Fund(s) Time Served During Past 5 Years or Officer or Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
Mark S. Casady(2) Trustee April 21, Chairman, President, and 6 None
2005 Market Street 2003 to Chief Executive Officer -
Philadelphia, PA present LPL Financial Services
19103 (2005 - Present)
Age 45 President and Chief Executive
Officer - LPL Financial Services
(2004 - 2005)
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 60 Executive Vice President
Global Marketing & Client Serivces
Delaware Managment 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 67
William W. Hennig Trustee July 17, 2003 Private Investor 6 None
2005 Market Street to present
Philadelphia, PA
19103
Age 75
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
Age 57 Whitehead Mann Inc.
(Executive Recruiting)
(1992 - 2003)
- ------------------------------------------------------------------------------------------------------------------------------------
96
Number of
Portfolios in Fund
Name, Complex(1) Overseen
Address Position(s) Length of Principal Occupation(s) by Trustee
and Age Held with Fund(s) Time Served During Past 5 Years or Officer
- -------------------------------------------------------------------------------------------------------------------------------
Independent Trustees (continued)
- -------------------------------------------------------------------------------------------------------------------------------
Kenneth R. Leibler Trustee July 17, 2003 Chairman - 6
2005 Market Street to present Boston Options Exchange
Philadelphia, PA (2005 - Present)
19103
Chairman and Chief Executive
Age 57 Officer - Boston Stock Exchange
(2001 - 2004)
President and Chief Executive
Officer - Liberty Financial Companies
(Financial Services)
(1995 - 2000)
Stephen Paul Mullin Trustee and July 17, 2003 President - Econsult Corporation 6
2005 Market Street Chairman to present (Economic Consulting)
Philadelphia, PA (2000 - Present)
19103
Age 50
Robert A. Rudell Trustee July 17, 2003 Private Investor 6
2005 Market Street to present (2002 - Present)
Philadelphia, PA
19103
Chief Operating Officer - ZSI
Age 57 (Asset Management)
(1998 - 2002)
Jon Edward Socolofsky Trustee July 17, 2003 Private Investor 6
2005 Market Street to present (2002 - Present)
Philadelphia, PA
19103 Senior Vice President -
The Northern Trust
Age 60 (Trust Bank)
(1970 - 2001)
- -------------------------------------------------------------------------------------------------------------------------------
Officers
- -------------------------------------------------------------------------------------------------------------------------------
Michael P. Bishof Senior Vice President July 17, 2003 Mr. Bishof has served in 6
2005 Market Street and Treasurer to present various executive capacities
Philadelphia, PA at different times at
19103 Delaware Investments.
Age 43
David F. Connor Vice President, Vice President since Mr. Connor has served as 6
2005 Market Street Deputy General July 17, 2003 Vice President and Deputy
Philadelphia, PA Counsel, and Secretary and Secretary General Counsel of
19103 since Delaware Investments since 2000.
December 6, 2005
Age 42
David P. O'Connor Senior Vice President, October 25, 2005 Mr. O'Connor has served in 6
2005 Market Street General Counsel, to present various executive and legal
Philadelphia, PA and Chief capacities at different times at
19103 Legal Officer Delaware Investments.
Age 40
Richard Salus Senior January 1, 2006 Mr. Salus has served in 6
2005 Market Street Vice President to present various executive capacities
Philadelphia, PA and at different times at
19103 Chief Financial Delaware Investments.
Officer
Age 42
- -------------------------------------------------------------------------------------------------------------------------------
Other
Name, Directorships
Address Held by Trustee
and Age or Officer
- ------------------------------------------------------------------
Independent Trustees (continued
- ------------------------------------------------------------------
Kenneth R. Leibler None
2005 Market Street
Philadelphia, PA
19103
Age 57
Stephen Paul Mullin None
2005 Market Street
Philadelphia, PA
19103
Age 50
Robert A. Rudell Director -
2005 Market Street Medtox Scientific, Inc.
Philadelphia, PA (Clinical Lab)
19103 (2002 - Present)
Age 57 Director -
Heartland Group, Inc.
Famliy of Funds
(3 mutual funds)
(2005 - Present)
Jon Edward Socolofsky None
2005 Market Street
Philadelphia, PA
19103
Age 60
- ------------------------------------------------------------------
Officers
- ------------------------------------------------------------------
Michael P. Bishof None(3)
2005 Market Street
Philadelphia, PA
19103
Age 43
David F. Connor None(3)
2005 Market Street
Philadelphia, PA
19103
Age 42
David P. O'Connor None(3)
2005 Market Street
Philadelphia, PA
19103
Age 40
Richard Salus None(3)
2005 Market Street
Philadelphia, PA
19103
Age 42
- ------------------------------------------------------------------
(1) The term "Fund Complex" refers to the Funds in the Optimum Fund Trust.
(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.
(3) Messrs Bishof, Connor, O'Connor and Salus also serve in similar capacities
for the Delaware Investments Family of Funds, a fund complex also managed
and distributed by Delaware Investments with 87 funds.
The Statement of Additional Information for the Fund(s) includes additional
information about the Trustees and Officers and is available, without
charge, upon request by calling your financial advisor or 800 914-0278.
97
About the organization
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
Mark S. Casady
Chairman, President and
Chief Executive Officer
LPL Financial Services
John C.E. Campbell
Executive Vice President
Delaware Investments
Nicholas D. Constan
Adjunct Professor -
University of Pennsylvania
William W. Hennig
Private Investor
Durant Adams Hunter
Principal -
Ridgeway Partners
Kenneth R. Leibler
Chairman
Boston Options Exchange
Stephen Paul Mullin
Principal -
Econsult Corporation
Robert A. Rudell
Private Investor
Jon Edward Socolofsky
Private Investor
Affiliated Officers
Michael P. Bishof
Senior Vice President and Treasurer
Optimum Fund Trust
Philadelphia, PA
David F. Connor
Vice President, Deputy General Counsel
and Secretary
Optimum Fund Trust
Philadelphia, PA
David P. O'Connor
Senior Vice President,
General Counsel
and Chief Legal Officer
Optimum Fund Trust
Philadelphia, PA
Richard Salus
Senior Vice President and
Chief Financial Officer
Optimum Fund Trust
Philadelphia, PA
Contact Information
Investment Manager
Delaware Management Company, a Series
of Delaware Management Business Trust
Philadelphia, PA
National Distributor
Delaware Distributors L.P.
Philadelphia, PA
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
Delaware Service Company Inc.
2005 Market Street
Philadelphia, PA 19103-7094
For Shareholders
800 914-0278
For Securities Dealers
and Financial Institutions
Representatives Only
800 362-7500
Web Site
www.optimummutualfunds.com
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
Forms 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 Funds 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 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 the Fund's Web site at
http://www.optimummutualfunds.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
98
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[LOGO] Delaware
Investments(R)
-----------------------------------
A member of Lincoln Financial Group
(440) Printed in the USA
AR-901 [3/06] CGI 5/06 ANN-0604-OPT PO10988
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:
Kenneth R. Leibler
Robert A. Rudell
Jon E. Socolofsky
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 $125,700
for the fiscal year ended March 31, 2006.
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.
(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 $13,300 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 $0for 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 $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.
(c) Tax fees.
The aggregate fees billed by the registrant's independent auditors for
tax-related services provided to the registrant were $21,900 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 returns and
review of annual excise distribution calculations.
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 $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 returns and
review of annual excise distribution calculations.
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 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
and other service providers under common control with the adviser were $212,460
and $239,134 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.
Optimum Fund Trust
John C.E. Campbell
- --------------------------------
By: John C.E. Campbell
Title: Chief Executive Officer
Date: June 6, 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.
John C.E. Campbell
- --------------------------------
By: John C.E. Campbell
Title: Chief Executive Officer
Date: June 6, 2006
Michael P. Bishof
- --------------------------------
By: Michael P. Bishof
Title: Chief Financial Officer
Date: June 6, 2006