<PAGE>
1996
Annual
Report
- ----------------------
Delaware
Group
Cash Reserve
- ----------------------
[PHOTO OF CITY OF PHILADELPHIA AND LIBERTY BELL]
A Tradition of Sound Investing Since 1929
DELAWARE GROUP
- ---------------------
Philadelphia * London
<PAGE>
Cash Reserve
- ----------------------------
Investment
- ----------------------------
Objective
- ----------------------------
To provide maximum current income while preserving principal and maintaining
liquidity.
[PHOTO OF CITY OF PHILADELPHIA]
About Our Cover
- ----------------
Headquartered in Philadelphia, Pennsylvania, Delaware Group shares in the
tradition of a city built on the vision of opportunity. Amidst the city's
historic sites, symbolic of our nation's freedom and prosperity, Delaware Group
provides both individual and institutional investors with a conservative,
disciplined approach to money management.
Delaware Group
- ----------------------------
A Tradition of
- ----------------------------
Sound Investing
- ----------------------------
Delaware Management Company's investment experience dates back to 1929. Our
first mutual fund was established in 1938. Headquartered in Philadelphia with an
affiliate in London, Delaware provides a full range of mutual fund investments,
annuities and retirement plan services. Delaware International Advisers Ltd.,
our London-based international affiliate, was established in 1990.
Delaware Group manages mutual funds with the same time-tested,
disciplined strategies demanded by the large public and private pension plans,
foundations and endowments that are among our clients. With over 60 years of
experience, we have demonstrated our commitment to quality investment management
and service.
Today, Delaware manages some $29 billion in mutual funds and
institutional investment advisory accounts. We measure our success by the
financial success and satisfaction of our nearly 500,000 shareholders.
<PAGE>
May 1, 1996
Dear
- --------------------------
Shareholder:
- --------------------------
For the fiscal year ended March 31, 1996, Delaware Cash Reserve A Class provided
a total return of 5.01% with dividends reinvested - its best results in four
years.
In May 1995, we reported on the positive impact the Federal Reserve
Board's interest rate increases had on money market fund yields. Since
short-term interest rates are an important tool for controlling inflation and
the growth of the U.S. economy, the Federal Reserve had increased rates to rein
in an expanding economy and quell inflationary fears. Then, as this objective
appeared to have been achieved, the situation was reversed; interest rates fell
by 0.25% in July and then again in December as the Federal Reserve Board lowered
its target for the federal funds rate (the interest rate banks charge each other
for overnight loans).
Despite the declining rates, your Fund benefited from the fact that
yields of short-term securities (those maturing in 90 days or less) did not drop
as much as yields of longer term fixed-income securities, which are usually more
severely impacted by market conditions.
- -------------------------------------------------
Total Return
---------------
12 months ended
March 31, 1996
---------------
Delaware Cash Reserve
A Class +5.01%
Consumer Price Index
(Inflation) +2.78%
Performance of Delaware Cash Reserve A Class assumes reinvestment of dividends.
Performance information for all classes can be found on page 4.
- -----------------------------------------------------------------------------
Since January 1996, we have seen yet another change in interest rates.
Bond investors have focused their attention on the rate of job growth in the
U.S. and its effect on inflation. This concern sparked a substantial increase in
interest rates amid speculation that the Fed may reverse its current policy if
monthly increases in the prices of goods and services become excessive.
Such a period of short-term uncertainty can present money market fund
investors with opportunities to increase current income without taking on the
risks associated with long-term bonds. We believe your Fund is well-positioned
to maintain high-liquidity and capitalize on any rise in interest rates.
We are pleased to report that your Fund's total return for the fiscal
year 1996, was substantially higher than the level of inflation during this
period, as measured by the U.S. government's Consumer Price Index, shown below.
This means an investment in the Fund would have retained and added slightly to
your "real" purchasing power during the fiscal year. On the following pages,
Gary Reed - your Fund's Senior Portfolio Manager - reviews the past year's
market conditions and explains what steps he took to provide a competitive level
of income while preserving principal.
Delaware Cash Reserve is not designed for long-term growth, but it can
be a sensible place to hold money for your short-term needs or to hold money
while you and your financial adviser develop and implement a suitable asset
allocation plan to meet your long-range investment objectives.
Sincerely,
/s/ Wayne A. Stork
- ----------------------------------
Wayne A. Stork
Chairman, President
and Chief Executive Officer
1
<PAGE>
Portfolio
- -----------------------
Manager's
- -----------------------
Review
- -----------------------
Portfolio Positioning
Depending on the current economic and interest rate environment, the average
maturity of a money market fund can be very short, or as long as 90 days (the
maximum amount allowed by the Securities and Exchange Commission). Generally, we
lengthen the average maturity of Delaware Cash Reserve to "lock in" high
interest rates when the economy moves into a period of declining interest rates
and shorten maturity when we believe higher rates lie ahead.
Over much of the past year we lengthened Delaware Cash Reserve's
average maturity from 38 days last year end, to 44 days at the end of this
fiscal year in an effort to preserve its competitive yield as interest rates
declined. This was still well below the 52-day average maturity for money market
funds in general.
Yield Curve
A yield curve shows the income potential of bonds with different maturities,
illustrating the cost of borrowing money for various time periods. As you can
see in the chart below, the income potential of investing in high quality
securities maturing in less than six months was much less on March 31, 1996 than
on March 31, 1995. Thus, your Fund's yield at the end of this fiscal period was
lower than that reported 12 months ago. (For more information see page 4.)
Yields on Money-Market Securities Have Dropped.
March 31, 1995 vs March 31, 1996
CHART
Maturites Yield March 31, 1995 March 31, 1996
- --------- ----- -------------- --------------
1 Week 6.75% 6.1250% 5.5000%
1 Month 6.50% 6.1250% 5.4375%
2 Months 6.50% 6.1875% 5.4375%
3 Months 6.50% 6.2500% 5.4727%
4 Months 6.50% 6.3125% 5.4727%
5 Months 6.50% 6.4062% 5.4805%
6 Months 6.50% 6.5000% 5.5000%
Interest rates are shown on
the vertical axis, and
various maturities are
shown across the bottom.
2
<PAGE>
An Emphasis on High Quality
The composition of Fund assets, which is currently focused toward commercial
paper and bank certificates of deposits, remained relatively consistent over the
past year. All commercial paper (short-term obligations of corporations) held by
the Fund was rated at the highest quality available from Standard & Poors and
Moody's Investor's Services, two bond-rating agencies. This means that your Fund
is invested in the top quality securities available to money market funds.
Looking Ahead
Recent economic data, such as the rise in consumer spending and residential
construction, as well as the increase in consumer prices, suggests that the
economy is beginning to show signs of improving. If growth accelerates and
inflation pressures start to rise, the Federal Reserve may raise interest rates
and we will again reposition the average maturity of Delaware Cash Reserve
accordingly.
No matter what the future interest rate environment might hold,
Delaware Cash Reserve will continue to offer you a diversified portfolio of high
quality securities along with full-service management by a professional
investment staff. As always, we strive to offer shareholders a competitive yield
while maintaining a stable net asset value.
[PHOTO OF GARY A. REED]
/s/ Gary A. Reed
- -------------------------------
Gary A. Reed
Senior Portfolio Manager
May 1, 1996
Diverse Composition
PIE CHART
Commercial Paper 42%
Short-Term Time Deposits 18%
Floating Rate Notes 12%
U.S. Government Obligations 11%
Certificates of Deposit 10%
Other 5%
Based on Net Assets as of March 31, 1996.
3
<PAGE>
Your Fund's
- ---------------------
Performance
- ---------------------
Yields on money market securities, such as those held by Delaware Cash Reserve,
are closely associated with the federal funds rate (the interest rates banks
charge each other for overnight loans). For most of the fiscal year, the bond
market seemed to believe that the Federal Reserve would continue to lower
interest rates. Thus, your Fund's yield for Class A, which was at 4.49% for the
seven-day period ended March 31, 1996 was lower than the 5.13% yield reported 12
months ago. (Money market fund yields, or the income paid by the fund over a
given period of time, are usually for seven-day periods, expressed as annual
percentage rates.)
Over the past 10-, five- and one-year periods, Delaware Cash Reserve A
Class returns have outpaced inflation, as measured by the U.S. Consumer Price
Index. Although the Fund is obviously not designed for long-term growth, this
shows that it has historically helped to maintain shareholders' purchasing
power.
Delaware Cash Reserve Performance
Average Annual Total Returns through March 31, 1996
<TABLE>
<CAPTION>
Ten Years Five Years One Year
<S> <C> <C> <C>
Class A +5.50% +3.86% +5.01%
Seven-Day Yield (as of 3/31/96) 4.49%
- -------------------------------------------------------------------------------------------------------------
Consultant Class +5.27% +3.60% +4.75%
Seven-Day Yield (as of 3/31/96) 4.24%
- -------------------------------------------------------------------------------------------------------------
Lifetime One Year
Class B
including sales charge +1.51% -0.03%
excluding sales charge +3.55% +3.97%
Seven-Day Yield (as of 3/31/96) 3.49%
- -------------------------------------------------------------------------------------------------------------
Class C
including sales charge +0.24% --
excluding sales charge +1.24% --
Seven-Day Yield (as of 3/31/96) 3.49%
</TABLE>
Past performance does not guarantee future results. Return and yield will
fluctuate. Performance information for these classes reflects the reinvestment
of all distributions.
Class A shares are available without sales charges and any 12b-1 fee.
Consultant class performance after March 31, 1988, reflects the impact of a
12b-1 fee.
Class B was initially offered on May 2, 1994. Class B shares do not carry a
front-end sales charge, but are subject to a 1% annual distribution and service
fee. They are subject to a deferred sales charge if redeemed before the end of
the sixth year.
Class C was initially offered on November 29, 1995. Performance information for
this short a time period may not be representative of longer term investment
results. C shares are subject to a 1% annual distribution and service fee and
will be subject to a deferred sales charge of up to 1% if redeemed within the
first 12 months.
Delaware Cash Reserve Class B and Class C are only available as part of an
overall investment program using other Delaware Group Class B and Class C funds.
Lifetime performance "excluding sales charge" for these classes assumes the
investment was not redeemed.
4
<PAGE>
How Maturity
- -------------------------------
Affects Risk
- -------------------------------
and Return
- -------------------------------
Generally, longer term bonds offer higher interest rates to make up for the
additional risk of tying up money for longer periods. That's why some investors
choose mutual funds that invest in intermediate (three to 10-year) bonds or
long-term bonds (maturing in 10 to 30 years) for a portion of their investments.
For investors who want more income, longer term bonds can be very
appealing. That was the case during much of the past fiscal year, when
expectations that the Federal Reserve Board would lower its target for
short-term interest rates prompted some investors to seek longer maturity
securities to maximize income.
Though this allowed investors to take advantage of the extra income
potential, since prices on longer term bonds are more sensitive to interest rate
changes, longer maturities also increase the possibility of a decline in
principal value should interest rates rise rather than fall.
The table below illustrates how different types of fixed-income mutual
funds typically invest. Money market funds, such as Delaware Cash Reserve do
offer the advantage of low risk, however, as the table shows, the trade-off is
that they provide relatively lower income.
Your financial adviser can help you pick the right Delaware Group bond
fund to address your current income needs, your tolerance for risk and your
desire to participate in the opportunities available in the dynamic U.S.
government, global and corporate bond markets.
- -------------------------------------------------------------------------------
How Fixed-Income Mutual Funds Invest
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Type of Range of Income Principal
Fund Average Maturity Potential Volatility
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Funds 90 Days or Less Low Negligible
- ---------------------------------------------------------------------------------------------------------------
Short or Limited-Term Funds Three Years or Less Moderate Moderate
- ---------------------------------------------------------------------------------------------------------------
Intermediate-Term Funds Three to 10 Years Moderate to High Higher
- ---------------------------------------------------------------------------------------------------------------
Long-Term Bond Funds 10 Years or More High Highest
</TABLE>
Generally, investors should have a longer investment time horizon when
considering fixed-income mutual funds that have a portfolio of bonds with a
longer average maturity.
- -------------------------------------------------------------------------------
5
<PAGE>
Financial
- --------------------------
Statements
- --------------------------
Delaware Group Cash Reserve, Inc.*
Statement of Net Assets
March 31, 1996
Principal
Amount Value
COMMERCIAL PAPER - 41.57%
Financial Services - 16.90%
ABN AMRO North American Financial, Chicago
5.61% 4/25/96. . . . . . . . . . . . . . . 10,000,000 $ 9,962,600
ABN AMRO North American Financial, Chicago
5.25% 5/20/96. . . . . . . . . . . . . . . 10,000,000 9,928,542
ABN AMRO North American Financial, Chicago
5.01% 9/25/96. . . . . . . . . . . . . . . 6,000,000 5,852,205
Banc One Funding 5.03% 5/22/96 . . . . . . . 5,000,000 4,964,371
Bank of America, Illinois
5.17% 4/22/96. . . . . . . . . . . . . . . 10,000,000 10,000,000
Ciesco L.P. 5.28% 4/04/96. . . . . . . . . . 3,000,000 2,998,680
Dresdner U.S. Finance 4.99% 7/31/96. . . . . 10,000,000 9,832,281
Internationale-Nederlanden (U.S.)
Insurance Holdings 5.10% 5/20/96 . . . . . 4,000,000 3,972,233
MetLife Funding 5.12% 4/25/96. . . . . . . . 10,000,000 9,965,867
SAFECO Credit Co. 5.33% 4/23/96. . . . . . . 5,500,000 5,482,085
Southwestern Bell Capital
5.33% 6/04/96. . . . . . . . . . . . . . . 10,000,000 9,905,244
Unum 5.33% 4/19/96 . . . . . . . . . . . . . 11,000,000 10,970,685
USAA Capital Corporation
5.27% 4/08/96. . . . . . . . . . . . . . . 10,000,000 9,989,753
-----------
Total Financial Services . . . . . . . . . . 103,824,546
-----------
Industrial - 12.38%
American Brands 5.25% 4/23/96. . . . . . . . 4,000,000 3,987,167
Dupont (E.I.) DeNemours
5.55% 7/19/96. . . . . . . . . . . . . . . 8,000,000 7,865,567
Golden Peanut 5.20% 5/08/96 . . . . . . . . 4,000,000 3,978,622
Hewlett Packard 5.16% 6/14/96. . . . . . . . 10,000,000 9,893,933
McCormick & Co. 5.47% 6/11/96. . . . . . . . 5,000,000 4,946,060
PHH 5.12% 4/12/96. . . . . . . . . . . . . . 10,000,000 9,984,356
Sandoz 5.27% 4/24/96 . . . . . . . . . . . . 9,750,000 9,717,172
Southwestern Bell Telephone
5.31% 4/16/96. . . . . . . . . . . . . . . . 5,750,000 5,737,278
U.S. Borax 5.375% 4/12/96. . . . . . . . . . 10,000,000 9,983,576
U.S. Borax 5.22% 04/29/96. . . . . . . . . . 10,000,000 9,959,400
-----------
Total Industrial . . . . . . . . . . . . . . 76,053,131
-----------
Mortgage Bankers and Brokers - 12.29%
Bear Stearns Cos. 5.03% 5/14/96. . . . . . . 10,000,000 9,939,919
Bear Stearns Cos. 5.06% 5/24/96. . . . . . . 10,000,000 9,925,506
CS First Boston 5.21% 4/03/96. . . . . . . . 10,000,000 9,997,106
CS First Boston 5.06% 6/21/96. . . . . . . . 5,000,000 4,943,075
<PAGE>
Principal
Amount Value
COMMERCIAL PAPER (Continued)
Goldman Sachs Group 5.17% 7/12/96. . . . . . 5,000,000 4,926,758
Morgan (J.P.) & Co. 5.32% 4/15/96. . . . . . 10,000,000 9,979,311
Morgan Stanley Group 5.32% 4/22/96 . . . . . 8,000,000 7,975,173
Morgan Stanley Group 5.15% 5/10/96 . . . . . 8,000,000 7,955,367
Morgan Stanley Group 5.23% 6/03/96 . . . . . 5,000,000 4,954,238
Morgan Stanley Group 5.26% 8/26/96 . . . . . 5,000,000 4,892,608
-----------
Total Mortgage Bankers and Brokers . . . . . 75,489,061
-----------
Total Commercial Paper . . . . . . . . . . . 255,366,738
-----------
CERTIFICATES OF DEPOSIT - 9.77%
Euro-Certificates of Deposit - 1.63%
Barclays Bank 5.455% 4/16/96 . . . . . . . . 5,000,000 5,000,170
Bayerische Verinsbank 5.43% 5/07/96. . . . . 5,000,000 5,000,437
------------
Total Euro-Certificates of Deposit 10,000,607
------------
Domestic Certificates of Deposit - 1.63%
Harris Trust & Savings Bank
5.23% 4/08/96. . . . . . . . . . . . . . . 10,000,000 9,999,294
------------
Total Domestic Certificates of Deposit . . . 9,999,294
------------
Yankee Certificates of Deposit - 6.51%
Bayerische Hypotheken, New York
5.12% 5/06/96. . . . . . . . . . . . . . . 10,000,000 10,000,012
Bayerische Hypotheken, New York
5.78% 4/12/96 . . . . . . . . . . . . . . 10,000,000 10,000,059
Societe Generale, New York
5.20% 5/02/96. . . . . . . . . . . . . . . 10,000,000 10,000,011
West Deutsche, New York
5.22% 4/01/96. . . . . . . . . . . . . . . 10,000,000 10,000,000
-----------
Total Yankee Certificates of Deposit . . . . 40,000,082
-----------
Total Certificates of Deposit. . . . . . . . 59,999,983
-----------
FLOATING RATE NOTES+ - 12.53%
Merrill Lynch Floating Rate Medium-Term Note
5.46% 4/01/96. . . . . . . . . . . . . . . 10,000,000 10,000,000
Merrill Lynch Floating Rate Medium-Term Note
5.45% 4/01/96. . . . . . . . . . . . . . . 10,000,000 10,000,000
Morgan (J.P.) Floating Rate Medium-Term
Note 5.39% 4/01/96 . . . . . . . . . . . . 10,000,000 9,994,700
Student Loan Marketing Association
5.41% 04/01/96 . . . . . . . . . . . . . . 10,000,000 10,000,000
Student Loan Marketing Association
5.27% 4/02/96 . . . . . . . . . . . . . . 15,000,000 15,000,000
Student Loan Marketing Association
5.34% 4/02/96. . . . . . . . . . . . . . . 5,000,000 5,000,000
Student Loan Marketing Association
5.37% 4/02/96. . . . . . . . . . . . . . . 7,000,000 6 ,997,389
Student Loan Marketing Association
5.37% 4/02/96. . . . . . . . . . . . . . . 10,000,000 10,000,000
-----------
Total Floating Rate Notes. . . . . . . . . . 76,992,089
-----------
* This Fund is known and does business as Delaware Cash Reserve.
6
<PAGE>
Statement of Net Assets (Continued)
Principal
Amount Value
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 10.83%
Federal Farm Credit Bank Interest
Bearing Note 5.125% 6/03/96 .................... 9,000,000 $ 9,000,000
Federal Home Loan Bank
6.09% 5/23/96 .................................. 4,000,000 4,005,467
Federal Home Loan Mortgage Corporation
Discount Note 5.28% 4/22/96 .................... 9,750,000 9,719,970
Federal National Mortgage Association
Discount Note 5.06% 4/23/96 .................... 10,000,000 9,969,078
Federal National Mortgage Association
Discount Note 5.26% 4/18/96 .................... 5,000,000 4,987,580
Federal National Mortgage Association
Discount Note 4.83% 8/09/96 .................... 7,000,000 6,877,908
Federal National Mortgage Association
Medium-Term Note 4.97% 3/10/97 ................. 5,000,000 4,989,800
Federal National Mortgage Association
Medium-Term Note 5.50% 6/12/96 ................. 10,000,000 9,992,090
Federal National Mortgage Association
Medium-Term Note 5.64% 9/09/96 ................. 7,000,000 6,994,531
-----------
Total U.S. Government Agency
Obligations .................................... 66,536,424
-----------
SHORT-TERM TIME DEPOSITS - 18.10%
Berliner Handels-und Frankfurter Bank,
New York 5.50% 4/01/96 ......................... 27,000,000 27,000,000
Commonwealth Bank of Australia, New York
5.50% 4/01/96 .................................. 27,000,000 27,000,000
National Bank of Detroit, Toronto
5.50% 4/01/96 .................................. 3,162,000 3,162,000
Royal Bank of Scotland, New York
5.50% 4/01/96 .................................. 27,000,000 27,000,000
Union Bank of Switzerland, Toronto
5.4687% 4/01/96 ................................ 27,000,000 27,000,000
-----------
Total Short-Term Time Deposits ................. 111,162,000
-----------
Principal
Amount Value
MISCELLANEOUS INVESTMENTS - 4.89%
Bayerische Landis Bank, New York
Medium-Term Note 5.51% 11/20/96 .............. 10,000,000 10,016,579
General Electric Medium-Term Note
5.17% 1/21/97 ................................ 10,000,000 9,996,801
National Bank Of Detroit, Bank Note
6.40% 4/25/96 ................................ 10,000,000 10,003,443
----------
Total Miscellaneous Investments .............. 30,016,823
----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 97.69 %
WHICH APPROXIMATES COST FOR FINANCIAL
REPORTING AND INCOME TAX PURPOSES) ........... 600,074,057
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 2.31% ................... 14,185,896
-----------
NET ASSETS APPLICABLE TO 585,484,926 DELAWARE
CASH RESERVE A CLASS SHARES, 8,127,114 DELAWARE
CASH RESERVE B CLASS SHARES, 304,072 DELAWARE
CASH RESERVE C CLASS SHARES AND 20,343,841
DELAWARE CASH RESERVE CONSULTANT CLASS SHARES
OUTSTANDING; EQUIVALENT TO $1.00 PER
SHARE - 100.00% .............................. $614,259,953
============
- --------------
+ For Floating Rate Notes, the maturity date shown is the next reset date.
See accompanying notes
7
<PAGE>
Delaware Group Cash Reserve, Inc.
Statement of Operations
Year Ended March 31, 1996
INVESTMENT INCOME:
Interest ....................................... $35,429,997
EXPENSES:
Management fees ($2,965,417)
and directors' fees ($54,611)................... $3,020,028
Dividend disbursing, transfer agent
and shareholder servicing fees ................. 1,727,380
Reports and statements to shareholders ......... 394,329
Taxes (other than taxes on income) ............. 166,434
Salaries ....................................... 148,903
Federal and state registration fees ............ 82,133
Distribution expenses .......................... 64,440
Professional fees .............................. 61,970
Custodian fees ................................. 58,045
Other .......................................... 70,094 5,793,756
--------- -----------
NET INVESTMENT INCOME .......................... $29,636,241
===========
See accompanying notes
Delaware Group Cash Reserve, Inc.
Statement of Changes in Net Assets
Year Ended Year Ended
3/31/96 3/31/95
OPERATIONS:
Net investment income .................... $ 29,636,241 $ 26,885,730
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
Delaware Cash Reserve A Class ............ (28,739,955) (26,037,518)
Delaware Cash Reserve B Class ............ (74,692) (28,585)
Delaware Cash Reserve C Class ............ (1,591) --
Delaware Cash Reserve Consultant
Class .................................... (820,003) (819,627)
--------------- ---------------
(29,636,241) (26,885,730)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Delaware Cash Reserve A Class ............ 863,751,720 915,796,166
Delaware Cash Reserve B Class ............ 13,054,027 6,007,137
Delaware Cash Reserve C Class ............ 664,891 --
Delaware Cash Reserve Consultant
Class .................................... 162,437,882 122,026,623
Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
Delaware Cash Reserve A Class ............ 27,828,422 25,020,061
Delaware Cash Reserve B Class ............ 68,533 26,110
Delaware Cash Reserve C Class ............ 1,592 --
Delaware Cash Reserve Consultant
Class .................................... 803,490 776,742
--------------- ---------------
1,068,610,557 1,069,652,839
--------------- ---------------
Cost of shares repurchased:
Delaware Cash Reserve A Class ............ (912,087,916) (1,033,935,245)
Delaware Cash Reserve B Class ............ (6,083,457) (4,945,236)
Delaware Cash Reserve C Class ............ (362,411) --
Delaware Cash Reserve Consultant
Class .................................... (161,283,826) (126,978,425)
--------------- ---------------
(1,079,817,610) (1,165,858,906)
--------------- ---------------
Decrease in net assets derived
from capital share transactions .......... (11,207,053) (96,206,067)
--------------- ---------------
NET DECREASE IN NET ASSETS ............... (11,207,053) (96,206,067)
--------------- ---------------
NET ASSETS:
Beginning of period ...................... 625,467,006 721,673,073
--------------- ---------------
End of period ............................ $ 614,259,953 $ 625,467,006
=============== ===============
See accompanying notes
8
<PAGE>
Delaware Group Cash Reserve, Inc.
Notes to Financial Statements
March 31, 1996
Delaware Group Cash Reserve, Inc. (the "Fund") is registered as a no-load,
diversified, open-end investment company under the Investment Company Act of
1940. The Fund is organized as a Maryland corporation and offers four classes of
shares.
The Fund's objective is to provide current income by investing in high-quality
money market instruments with maturities of no more than 13 months. Though there
is no guarantee that this goal will be met, the Fund strives to maintain a
stable net asset value of $1.00.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund:
Security Valuation - Securities are valued at amortized cost which approximates
market value. Security transactions are recorded on the date the securities are
purchased or sold (trade date).
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes is required in the financial
statements.
Class Accounting - Investment income and common expenses are allocated to the
various classes of the Fund on the basis of daily net assets of each class.
Distribution expenses relating to a specific class are charged directly to that
class.
Other - Expenses common to all funds within the Delaware Group of Funds are
allocated among the funds on the basis of average net assets. Premiums and
discounts are amortized on a pro-rata basis and included in interest income. The
Fund declares dividends daily from net investment income and pays such dividends
monthly.
Certain fund expenses may be paid directly by brokers. The amount of these
expenses was less than 0.01 percent of the Fund's average net assets.
2. Investment Management and Distribution Agreements
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC) the Investment Manager of the Fund,
an annual fee which is calculated daily at the following rate less fees paid to
the independent directors: .50% of the first $500 million of average daily net
assets of the Fund, .475% on the next $250 million, .45% on the next $250
million, .425% on the next $250 million, .375% on the next $250 million, .325%
on the next $250 million, .3% on the next $250 million and .275% on the average
daily net assets over $2 billion. At March 31, 1996, the Fund had a liability
for Investment Management fees and other expenses payable to DMC of $80,205.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P., (DDLP) the Distributor and an affiliate of DMC, an annual fee of 1.00% of
the average daily net assets of the B Class and C Class and .25% of the average
daily net assets of the Consultant Class. No distribution expenses are paid by
<PAGE>
the A Class. At March 31, 1996, the Fund had a liability for distribution fees
and other expenses payable to DDLP of $8,237.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to serve as dividend disbursing and transfer agent for the Fund. For the year
ended March 31, 1996, the Fund expensed $1,727,380 for these services.
Certain officers of the Investment Manager are officers, directors and/or
employees of the Fund. These officers, directors and employees are paid no
compensation by the Fund.
On April 3, 1995, Delaware Management Holdings, Inc., the indirect parent of
DMC, DDLP and DSC, through a merger transaction (the "Merger") became a
wholly-owned subsidiary of Lincoln National Corporation. Other than the
resulting change in ownership, the Merger will not materially change the manner
in which DMC, DDLP and DSC have heretofore conducted their respective
relationships with the Fund.
3. Fund Shares
Transactions in capital stock shares of the Fund were as follows:
Year Ended Year Ended
3/31/96 3/31/95
Shares sold:
Delaware Cash Reserve A Class .............. 863,751,720 915,796,166
Delaware Cash Reserve B Class .............. 13,054,027 6,007,137
Delaware Cash Reserve C Class .............. 664,891 --
Delaware Cash Reserve Consultant
Class ...................................... 162,437,882 122,026,623
Shares issued upon reinvestment
of dividends from net investment income:
Delaware Cash Reserve A Class .............. 27,828,422 25,020,061
Delaware Cash Reserve B Class .............. 68,533 26,110
Delaware Cash Reserve C Class .............. 1,592 --
Delaware Cash Reserve Consultant
Class ...................................... 803,490 776,742
-------------- --------------
1,068,610,557 1,069,652,839
-------------- --------------
Shares repurchased:
Delaware Cash Reserve A Class .............. (912,087,916) (1,033,935,245)
Delaware Cash Reserve B Class .............. (6,083,457) (4,945,236)
Delaware Cash Reserve C Class .............. (362,411) --
Delaware Cash Reserve Consultant
Class ...................................... (161,283,826) (126,978,425)
-------------- --------------
(1,079,817,610) (1,165,858,906)
-------------- --------------
Net decrease ............................... (11,207,053) (96,206,067)
-------------- --------------
9
<PAGE>
Notes to Financial Statements (Continued)
4. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Delaware Cash Reserve A Class
----------------------------------------------------
Year Ended
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from investment operations:
Net investment income ....................................... 0.0490 0.0394 0.0227 0.0283 0.0501
Net realized and unrealized gain on security transactions ... none none none none none
------- ------- ------- ------- -------
Total from investment operations ............................ 0.0490 0.0394 0.0227 0.0283 0.0501
------- ------- ------- ------- -------
Less distributions:
Dividends ................................................... (0.0490) (0.0394) (0.0227) (0.0283) (0.0501)
Distributions from net realized gain on security transactions none none none none none
------- ------- ------- ------- -------
Total distributions ......................................... (0.0490 (0.0394 (0.0227 (0.0283 (0.0501)
------- ------- ------- ------- -------
Net asset value, end of period .............................. $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total return ................................................ 5.01% 4.01% 2.28% 2.87% 5.13%
Ratios/supplemental data:
Net assets, end of period (000 omitted) ..................... $585,485 $605,993 $699,112 $672,034 $911,548
Ratio of expenses to average net assets ..................... 0.95% 1.01% 1.00% 0.90% 0.81%
Ratio of net investment income to average net assets ........ 4.90% 3.91% 2.27% 2.88% 5.04%
</TABLE>
10
<PAGE>
Notes to Financial Statements (continued)
4. Financial Highlights (continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Delaware Delaware Delaware
Cash Reserve Cash Reserve Cash Reserve
B Class C Class Consultant Class
------------------ ----------- -------------------------------------------------
Period Period
5/2/94(1) 11/29/95(1) Year Ended
to to --------------------------------------------------
3/31/96 3/31/95 3/31/96 3/31/96 3/31/95 3/31/94 3/31/93 3/31/92
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .............................. $1.0000 $1.0000 $1.0000 $1.0000 $1.000 $1.0000 $1.0000 $1.0000
Income from investment operations:
Net investment income................... 0.0390 0.0279 0.0124 0.0465 0.0369 0.0202 0.0259 0.0476
Net realized and unrealized gain
on security transactions .............. none none none none none none none none
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations........ 0.0390 0.0279 0.0124 0.0465 0.0369 0.0202 0.0259 0.0476
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends .............................. (0.0390) (0.0279) (0.0124) (0.0465) (0.0369) (0.0202) (0.0259) (0.0476)
Distributions from net realized gain
on security transactions .............. none none none none none none none none
------- ------- ------- ------- ------- ------- ------- -------
Total distributions .................... (0.0390) (0.0279) (0.0124) (0.0465) (0.0369) (0.0202) (0.0259) (0.0476)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period ......... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= ======= ======= =======
Total return(2)......................... 3.97% 3.10% 1.24% 4.75% 3.75% 2.04% 2.62% 4.87%
Ratios/supplemental data:
Net assets, end of period
(000 omitted).......................... $8,127 $1,088 $304 $20,344 $18,386 $22,561 $13,191 $26,183
Ratio of expenses to
average net assets .................... 1.95% 2.01% 1.95% 1.20% 1.26% 1.25% 1.15% 1.06%
Ratio of net investment
income to average
net assets............................. 3.90% 2.91% 3.90% 4.65% 3.66% 2.02% 2.63% 4.79%
</TABLE>
- ------------------
(1)Date of initial public offering; ratios and total return have been
annualized.
(2)Does not include contingent deferred sales charge, which varies from 1%-4%
for Delaware Cash Reserve B class and 1% for Delaware Cash Reserve C class,
depending upon the holding period.
11
<PAGE>
Delaware Group Cash Reserve, Inc.
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Cash Reserve, Inc.
We have audited the accompanying statement of net assets of Delaware Group Cash
Reserve, Inc. as of March 31, 1996, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these fina ncial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. 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
Delaware Group Cash Reserve, Inc. at March 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
May 3, 1996
A Report on Delaware Group Cash Reserves' Annual Meeting
At an annual meeting of shareholders held on March 29, 1995, the following
matters were submitted for shareholder vote: the election of directors, the
ratification of the selection of Ernst & Young LLP as independent auditors of
the Fund and the approval of a new investment management agreement. The new
investment management agreement was proposed in connection with the April 3,
1995 merger of Delaware Management Holdings, Inc. (the parent of Delaware
Management Company, Inc.) and a subsidiary of Lincoln National Corporation.
Whenever there is a change in control of an investment manager, the Investment
Company Act of 1940 requires shareholders to vote on a new investment management
agreement.
Below are the names of each director elected at the meeting as well as the
results of the other matters voted on by shareholders.
Number of Votes**
-----------------------------------------
For Against/Withheld Abstentions
Elections of Directors:*
Wayne A. Stork .................. 349,614,076 12,331,516 --
Walter P. Babich ................ 349,617,551 12,328,042 --
Anthony D. Knerr ................ 349,650,496 12,295,096 --
Ann R. Leven .................... 349,629,914 12,315,678 --
W. Thacher Longstreth ........... 349,482,089 12,463,503 --
Charles E. Peck ................. 349,618,211 12,327,381 --
Selection of Ernst & Young LLP
as Independent Auditors ......... 339,434,797 3,070,653 19,440,142
Approval of the New
Investment Management
Agreement ....................... 335,407,402 8,675,269 17,862,921
- -----------
* Voted upon by all shareholders of the Company.
** Please note that the results of this meeting were not audited by Ernst &
Young LLP.
12
<PAGE>
This annual report is for the information of Cash Reserve shareholders, but it
may be used with prospective investors when preceded or accompanied by a current
Prospectus for Cash Reserve, which sets forth details about charges, expenses,
investment objectives and operating policies of the Fund. You should read the
prospectus carefully before you invest. Summary investment results are
documented in the Fund's current Statement of Additional Information. The
figures in this report represent past results which are not a guarantee of
future results. The goal of a money market fund is to maintain a constant share
price of $1. However, there can be no guarantee that this goal will be met.
Board
- -----------------------------
Members
- -----------------------------
Wayne A. Stork
Chairman, President and Chief Executive Officer
Delaware Group of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Treasurer, National Gallery of Art
Washington, DC
W. Thacher Longstreth
Vice Chairman, Packquisition Corp.
Philadelphia, PA
Charles E. Peck
Secretary of Enterprise Homes, Inc.
Fredericksburg, VA
former Chairman and CEO
The Ryland Group, Inc.
Columbia, MD
Affiliated
- ------------------------
Officers
- ------------------------
George M. Chamberlain, Jr.
Senior Vice President and Secretary,
Delaware Group of Funds
Philadelphia, PA
Keith E. Mitchell
President and CEO,
Delaware Distributors, L.P.
Philadelphia, PA
David K. Downes
Senior Vice President, Chief Financial Officer and
Chief Administrative Officer
Delaware Group of Funds
Philadelphia, PA
<PAGE>
Delaware Group
- ----------------------------------
of Funds
- ----------------------------------
For Global Diversification
Emerging Markets Fund
New Pacific Fund
International Equity Fund
World Growth Fund
Global Assets Fund
Global Bond Fund
For Growth of Capital
Trend Fund
Enterprise Fund
DelCap Fund
Value Fund
U.S. Growth Fund
For Total Return
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
Delaware Fund
For Current Income
Delchester Fund
Corporate Income Fund
Federal Bond Fund
U.S. Government Fund
Limited-Term Government Fund
For Tax-Free Current Income
Tax-Free Pennsylvania Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Money Market Funds
Delaware Cash Reserve
U.S. Government Money Fund
Tax-Free Money Fund
Closed-End Equity/Income*
Dividend and Income Fund
Global Dividend and Income Fund
This report must be preceded or accompanied by a current Cash Reserve prospectus
and the Delaware Group Fund Performance Update for the most recently completed
calendar quarter. For a prospectus of any other Delaware Group fund, contact
your financial adviser or Delaware Group.
* Delaware Group Dividend and Income Fund and Delaware Group Global Dividend
and Income Fund purchases can be made through any registered broker.
LOGO
<PAGE>
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
are not obligations of or deposits of any bank or any credit union, and involve
investment risk, including the possible loss of principal. Shares of the Fund
are not bank or credit union deposits.
Investment Manager
Delaware Management Company, Inc.
Philadelphia
International Affiliate
Delaware International Advisers Ltd.
London
National Distributor
Delaware Distributors, L.P.
Philadelphia
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
Nationwide (800) 523-4640
Securities Dealers Only
Nationwide (800) 362-7500
Financial Institutions Representatives Only
Nationwide (800) 659-2265
(Copy Rights) Delaware Distributors, L.P.
(Recycled Symbol) Printed in the U.S.A. on recycled paper.
AR-008[3/96]TKO5/96
