(PHOTO OF
COLONIAL OBJECTS)
April 28, 1995
Dear Shareholder:
The first half of our 1995 fiscal year -- October 1, 1994, through March 31,
1995 -- presented us with two very different market environments. On the one
hand, an additional 125 basis point (1.25%) rise in short-term interest rates
made for challenging stock selection as the Federal Reserve, our nation's
central bank, continued to "tighten" its monetary policy in an effort to slow
economic growth and control the pace of inflation.
On the other hand, a measure of relief came in the first quarter of 1995
as it appeared that the Fed was making good headway in navigating a "soft
landing" for the economy. As confidence in the financial markets rose, stocks
began to recover some of last year's losses, and general equity stock funds
posted their strongest gains in over two years, according to Lipper
Analytical Services Inc.
For the six-month period, DelCap Fund A Class had a total return
(capital change plus income) that surpassed the broad, small stock market.
The table below shows the Fund's results compared with the return of the
NASDAQ Industrial Index, an unmanaged index comprised of stocks similar in
market capitalization to those in DelCap Fund. We also show the performance
of the Lipper Mid-Cap Average, which includes 100 mutual funds that invest in
companies with average market capitalizations and/or revenues between $800
million and $2 billion, the primary focus of DelCap Fund.
- ------------------------------------------------------------------------------
TOTAL RETURN
SIX MONTHS ENDED
MARCH 31, 1995
DelCap Fund A +3.98%
NASDAQ Industrial Index +3.12%
Lipper Mid-Cap Average +5.43%
DelCap Fund's performance is based on net asset value. Performance
information for all classes of the Fund can be found on page 6.
- ------------------------------------------------------------------------------
Because small- and mid-cap stocks are generally more sensitive to rising
interest rates and, therefore, suffered greater fourth quarter losses than
large capitalization stocks, their performance lagged the broad equity market
over the past six months. The S&P 500, an unmanaged index comprised
primarily of "blue chip" large-cap stocks, had a total return of +9.71% for
the period.
Amid signs that economic growth has slowed and inflation has remained
relatively low, it appears that the Fed has taken a respite from further rate
increases, at least in the near-term. As such, we do not anticipate a stock
market in 1995 as volatile as we saw in 1994.
This report contains an update from the portfolio managers of the Fund,
who explain how DelCap Fund is being positioned to capitalize on the earnings
potential of small- and mid-cap companies. As always, we thank you for your
continued confidence.
WAYNE A STORK BRIAN F. WRUBLE
- ---------------------------- -------------------------------------
Wayne A. Stork Brian F. Wruble
Chairman, Board of Directors President and Chief Executive Officer
Delaware Group DelCap Fund Delaware Group DelCap Fund
<PAGE>
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Portfolio Manager's Market Review
As investors' perceptions of the economy and inflation have changed over
the past six months, many people now believe that the Federal Reserve will
not raise rates with the same magnitude or frequency as last year and
confidence in the financial markets has risen. In the first calendar quarter
of 1995, this translated into strong gains for the overall equity market and
for DelCap Fund, as the table below illustrates.
TOTAL RETURN
-----------------------------------------
4th Quarter '94 1st Quarter '95
(10/1/94-12/31/94) (1/1/95-3/31/95)
----------------- ---------------
DelCap Fund A Class -4.14% +8.47%
NASDAQ Industrial Index -3.04% +6.35%
S&P 500 Index -0.02% +9.73%
Within the small and mid-cap stock arena, "growth" stocks --
characterized by high growth rates and high price-to-earnings ratios -- were
particularly affected by the Fed's 1994 rate increases and this is reflected
in DelCap Fund's fourth quarter performance. Simply put, in a period of
rising interest rates, such as the 75 basis point (0.75%) rise in the fourth
quarter of 1994, small-cap growth stocks historically have underperformed the
market. Conversely, in a period of stabilizing or declining interest rates,
small-cap stocks have done relatively well over time. So far in 1995, the Fed
has raised rates only once (an increase of 0.50%) and interest rates appear
to have stabilized. While there are many factors that affect the performance
of growth stocks, it is important not to underestimate the impact that
interest rates can have on this market.
Because of our long-term approach to managing your Fund, we do not try to
predict the direction of interest rates. Instead, our goal, and our
challenge, in managing the DelCap portfolio is to own stocks in companies
that will experience rapid earnings growth in the future. To this end, we
spend a tremendous amount of time visiting the companies we consider buying,
as well as their competitors and suppliers. This gives us a better sense of
each company's position within a particular industry -- our focus being on the
"leaders"-- and the strength of their underlying management. These factors, in
addition to a company's history of earnings growth, help us establish a
company's potential for continued growth.
DELCAP FUND INVESTMENT OBJECTIVE
--------------------------------
To seek long-term capital growth by investing in primarily common stocks
of companies that have a demonstrated history of growth and have the
potential to support continued growth.
<PAGE>
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COLONIAL OBJECTS)
Inside the DelCap Portfolio
Let's talk first about some of the key industry sectors in the portfolio
and their impact on performance. As has frequently been the case in the past,
the three most significant sectors in the DelCap portfolio are health care,
technology, and consumer goods and services. These sectors, which account for
a significant portion of the Fund's net assets, generally include many
companies that fit our earnings profile (described earlier). However, as our
interests within each of the areas have shifted somewhat since our annual
report to you, we would like to review some key points.
HEALTH CARE FOCUS SHIFTS TO PROVIDERS
Almost since the inception of DelCap Fund, health care companies have held
a place in the portfolio. For years, our primary focus was on "managed care"
companies that aim to reduce the costs of health care delivery. After their
growth expectations were met in 1994 which, consequently, caused their stocks
to become overpriced, we sold most of our managed care holdings. Since then,
we have made a gradual shift toward health care "providers" who, after losing
ground to the price-slashing efforts of managed care providers, have begun to
fight back. Consequently, we have been adding to the Fund's health care
position with the stocks of health management companies such as Columbia/HCA
Healthcare Corporation and HEALTHSOUTH Rehabilitation Corporation.
* Columbia/HCA Healthcare Corporation. One of the largest hospital
management companies in the U.S., Columbia/HCA Healthcare recently
acquired HealthTrust Inc., another healthcare giant. This transaction was
one of the largest hospital mergers in U.S. history and will enable
Columbia/HCA to expand into new markets. Their current plan is to
operate a chain of 320 hospitals in 36 states with an estimated annual
revenue of over $15 billion. As of March 31, 1995, Columbia/HCA
Healthcare was the Fund's top holding, representing 2.43% of net assets.
Though this company's internal growth has continued to accelerate and its
underlying fundamentals appear strong, its stock did not appreciate
during the six month period and therefore, it did not add to the Fund's
positive performance.
* HEALTHSOUTH Rehabilitation Corporation. This company operates the
nation's largest chain of rehabilitation hospitals and clinics. In
December 1994, HEALTHSOUTH acquired a rival chain, ReLife, which operated
more than 40 rehabilitation facilities in 12 states. HEALTHSOUTH, which
represented 2.13% of the Fund's net assets as of March 31st, reported a
40% rise in net income for the first quarter of 1995. Though HEALTHSOUTH
contributed only modestly to the Fund's performance over the past six
months, we believe this company will continue to demonstrate strong
earnings growth in the future which could lead to more significant
appreciation.
With regard to drug and medical equipment providers, we stopped investing
in these groups two to three years ago because they lost their pricing
flexibility. These stocks appear to have reached low valuation levels in the
fourth quarter of 1994 and we are now selectively looking for potential
investment opportunities.
<PAGE>
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COLONIAL OBJECTS)
Computer Networking Drives Technology Sector
Over the past six months, computer networking companies have been the
shining stars of the technology sector. Computer networking has benefited
from the rapidly increasing power of desktop computers along with the growing
desire of individuals and organizations to share data.
Examples of how we are positioning the Fund to participate in this trend
are Compuware Corporation and Silicon Graphics. While these companies are not
really recognized as "computer networking" businesses the way that Novell and
Bay Networks are, they are involved in networking as a peripheral aspect of
their business.
* Compuware Corporation. This company develops and maintains mainframe
programming and client server software products. Recently, Compuware has
delivered lower-than-expected earnings, which we believe is due, in part,
to their difficulty in integrating their 1994 acquisition -- Uniface
Holding -- into their business. As a consequence, the company's stock
price declined during the six month period and detracted from your Fund's
performance. This merger was going to give them entry into the client
server business, which is one of the fastest growing applications in the
computer networking industry. It remains to be seen whether Compuware
will make any progress with respect to this venture. As of March 31st,
Compuware represented 2.25% of the Fund's net assets.
* Silicon Graphics. A relatively new addition to the DelCap portfolio,
representing 0.65% of net assets, Silicon Graphics is a rapidly growing
supplier of visual computing workstations and high performance file
servers, with annual revenues of about $1.5 billion. This company's
products are used to solve visual computing problems in technical,
scientific, corporate and entertainment applications such as: molecular
modeling, flight simulation, film special effects and computer-aided
design. We believe that key industry alliances with companies like AT&T,
Nintendo and Walt Disney place Silicon Graphics in an excellent position
to take advantage of new opportunities for growth.
Related to the developments in computer networking has been the ability
to meld data, voice and video through digital technologies. As a result,
we've seen increased demand for telecommunication services and the equipment
needed to support the new digital world. Telecommunications have continued to
become more complex, thus driving demand for new technology capable of
sending information to more places, both faster and less expensively. We
believe this makes the telecommunications industry a prime candidate for
strong future earnings growth.
One area of the technology market that we are cautious about is the
semiconductor and computer chip manufacturing business. While the reported
earnings from these companies has been strong -- worldwide sales of
semiconductors grew from $63 billion in 1990 to $111 billion in 1994 -- we
believe many of their businesses are essentially cyclical, based on supply
and demand imbalances. Right now, demand is high. However, when supply meets
demand, we believe earnings will ultimately decline, and thus, we are limiting
our investments in this area of the technology sector.
<PAGE>
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COLONIAL OBJECTS)
Consumers Redefine 'Value'
Just about every retail business in America has witnessed a dramatic
change in consumer buying habits over the past few years. In short, there
seems to be a new definition in consumer value based on tangible versus
intangible value. To illustrate this concept, we refer you to a fundamental
difference we perceive between two major clothing retailers: the Limited and
the Gap. While the Limited focuses much of its business on capturing and
delivering the latest fashion to consumers (representing intangible value),
the Gap is, in our judgement, more fashion-neutral and tends to provide
consumers with products that offer more utility (representing tangible
value).
As of March 31st, the Gap was one of the smallest holdings in the DelCap
portfolio, accounting for only 0.33% of the Fund's net assets. Though this
company's business has been weak over the past six months -- a problem that
has affected many apparel stores due to restrained consumer spending in this
area -- we believe that it still represents a core brand of apparel and that
ultimately, people will return to the Gap to refurbish their wardrobes. We
believe this trend toward tangible value will hold true for some time and we
are responding to it selectively.
Looking Ahead
As always, our job of managing the DelCap portfolio motivates us to figure
out what is going to happen in the fastest growing companies and industries
in America. We will continue to search out consistently growing companies
that we can incorporate into your Fund's portfolio. We remain committed to a
long-term fundamental approach to growth stock investing and will make every
effort to warrant your continued support.
EDWARD N. ANTOIAN
- -------------------------
Edward N. Antoian
Senior Portfolio Manager
DAVID C. DALRYMPLE
- -------------------------
David C. Dalrymple
Portfolio Manager
<PAGE>
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Long-Term Performance
During the past three months, a growing belief that the Federal Reserve has
succeeded in setting the stage for a non-inflationary growth environment
brought stock investors back from their year-long retreat. This gave most
equity funds the boost they needed to recover much of the losses they
suffered in 1994. Growth funds stood out, rising +7.4% after falling -1.33%
for all of 1994, according to Lipper Analytical Services Inc. DelCap Fund's
recovery was even more dramatic, rising 8.47% in the first calendar quarter
of 1995 after falling -5.32 in calendar year 1994.
The sharp change in DelCap Fund's performance over the past six months is
not uncommon given the aggressive nature of the securities in which the Fund
invests. Though the short-term ups and downs of the stock market's performance
and, consequently, DelCap Fund's performance, can be nerve wracking for the
people who invest in them, these periods combine over time to produce the strong
long-term results in the chart below.
As the performance below illustrates, DelCap Fund has successfully met its
goal to provide long-term capital appreciation. With all distributions
reinvested, a $10,000 investment in DelCap Fund since its inception on March
27, 1986, would have grown to $56,127 by March 31, 1995, for an average
annual return of +21.09% at offering price.
DELCAP FUND
<CHART>
DelCap
Mar-86 $ 9426
Dec-86 18905
Dec-87 22141
Dec-88 26081
Dec-89 34923
Dec-90 33693
Dec-91 47954
Dec-92 48854
Dec-93 54651
Dec-94 51744
Mar-95 56127
Chart assumes a $10,000 investment in DelCap Fund A Class since its inception
on 3/27/86 through 3/31/95. All distributions were reinvested. No adjustments
were made for the payment of taxes.
DELCAP FUND
CLASS A CLASS B
Average Annual Total Returns(1) Aggregate Total Returns(2)
Lifetime +21.09% Lifetime +5.30%
Excluding Sales Charge
5 Years +8.51% Lifetime +1.41%
Including Sales Charge
1 Year -1.41%
Through March 31, 1995
Return and share value will fluctuate so that shares, when redeemed, may be
worth more or less than the original investment. Past performance is not a
guarantee of future results.
(1) Class A returns reflect the 5.75% maximum sales charge and a 12b-1 fee, and
the reinvestment of all distributions.
(2) Class B returns including deferred sales charge reflect the reinvestment of
all distributions, the impact of the maximum 4% contingent deferred sales
charge and a 1% annual distribution and service fee, for the period from
introduction of Class B on September 6, 1994, through March 31, 1995.
Returns excluding the deferred sales charge assume that the investment was
not redeemed. Performance for this short time period may not be
representative of longer term performance of this class. Average annual
return for the six-month period ended 3/31/95 was +7.64% (excluding sales
charge).
The average annual total returns for DelCap Fund's Institutional Class, which
is available without sales or asset-based distribution charges only to
certain eligible institutional accounts, were +21.98%, +9.96%, +4.94% and
+8.53% respectively, for the lifetime, five-, one-year and six-month periods
ended 3/31/95. The Institutional Class was initially made available on
11/9/92. Performance for the Institutional Class for periods prior to this
date is based on Class A performance, adjusted to eliminate the sales charge,
but not the asset-based distribution charge.
<PAGE>
Financial Statements
Delaware Group DelCap Fund Inc.--Concept I Series
Statement of Net Assets
March 31, 1995
(Unaudited)
Number Market
of Shares Value
COMMON STOCK-88.28%
BASIC INDUSTRY/CAPITAL GOODS-2.63%
TriMas....................... 697,200 $ 15,512,700
Wabash National.............. 289,850 9,492,588
------------
Total Basic Industry/Capital Goods 25,005,288
------------
BUSINESS SERVICES-13.28%
Distributors-0.39%
Intelligent Electronics...... 380,000 3,681,250
------------
3,681,250
Environmental-0.92%
Dames & Moore................ 728,900 8,746,800
------------
8,746,800
------------
Media & Publishing-4.23%
*International Family
Entertainment Class B........ 515,600 7,927,350
*King World Productions....... 346,300 13,635,563
*Multimedia................... 451,700 17,079,906
Reynolds & Reynolds Class A.. 57,800 1,589,500
------------
40,232,319
------------
Other-7.74%
*ADT Limited.................. 951,100 11,650,975
+*BISYS Group.................. 832,400 18,729,000
Cyrk......................... 415,700 6,988,956
First Financial Management... 294,900 21,306,525
*Gartner Group Class A........ 154,200 6,611,325
*Isomedix..................... 568,300 8,382,425
------------
73,669,206
------------
Total Business Services...... 126,329,575
------------
CONSUMER NON-DURABLES-10.75%
Retail-7.87%
Gap.......................... 100,000 3,550,000
*General Nutrition............ 254,000 6,985,000
*Gymboree..................... 391,600 10,010,275
Home Depot................... 150,000 6,637,500
*Kohl's....................... 203,700 9,013,725
*Musicland Stores............. 863,700 8,097,188
*Neostar Retail Group......... 203,600 2,494,100
*Price/Costco................. 551,200 8,095,750
Quality Food Centers......... 46,697 974,800
*Sports Authority............. 61,500 1,122,375
*Staples...................... 518,850 13,587,384
*Value City Department Stores. 532,200 4,324,125
-----------
74,892,222
-----------
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Other-1.97%
Callaway Golf................ 304,900 $ 4,268,600
*Canandaigua Wine Class A..... 250,700 10,466,725
*Hormel Foods................. 34,300 930,388
*Nature's Bounty.............. 537,400 3,106,844
------------
18,772,557
------------
Textiles and Apparel-0.91%
*Tommy Hilfiger............... 391,600 8,615,200
------------
8,615,200
------------
Total Consumer Non-Durables.. 102,279,979
------------
CONSUMER SERVICES-13.25%
Restaurants-3.82%
*Bertucci's................... 377,800 3,305,750
*Brinker International........ 281,450 4,679,106
*Foodmaker.................... 1,256,450 5,182,856
*Lone Star Steakhouse/Saloon.. 444,600 12,087,563
*Papa John's International.... 130,200 4,654,650
Sbarro....................... 232,500 6,422,813
-----------
36,332,738
-----------
Entertainment & Leisure-5.84%
*Circus Circus Enterprises.... 101,200 3,263,700
*MGM Grand.................... 96,700 2,925,175
*Mirage Resorts............... 603,700 16,903,600
TCA Cable TV................. 120,000 3,112,500
*Tele-Communications Class A.. 200,000 4,187,500
*Viacom Class A............... 82,024 3,752,598
*Viacom Class B............... 204,385 9,146,229
*WMS Industries............... 588,200 12,205,150
-----------
55,496,452
-----------
Other-3.59%
Barefoot..................... 669,800 7,158,488
Cash America International... 1,121,600 7,851,200
+*CUC International............ 492,525 19,146,909
-----------
34,156,597
-----------
Total Consumer Services...... 125,985,787
-----------
ENERGY-2.24%
*AES.......................... 493,197 8,630,948
Enron Oil & Gas.............. 250,000 6,156,250
Snyder Oil................... 447,800 6,549,075
-----------
Total Energy................. 21,336,273
-----------
<PAGE>
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
FINANCIAL-6.47%
Insurance-5.93%
AMBAC................................ 446,200 $ 18,126,875
Blanch (E.W.) Holdings............... 683,300 12,641,050
CMAC Investment...................... 341,200 12,880,300
MBIA................................. 202,400 12,725,900
------------
56,374,125
------------
Other-0.54%
SEI.................................. 274,700 5,150,625
------------
5,150,625
------------
Total Financial...................... 61,524,750
------------
HEALTHCARE-19.84%
Devices-1.14%
*Sunrise Medical...................... 304,000 10,868,000
------------
10,868,000
------------
Services-15.66%
+Columbia/HCA Healthcare.............. 537,867 23,128,281
+*Health Management Associates Class A. 750,987 21,684,750
+*HEALTHSOUTH ......................... 498,300 20,243,438
*Homedco Group........................ 277,500 15,158,438
*NovaCare............................. 260,600 2,052,225
*Quantum Health Resources............. 695,800 14,524,825
*Quorum Health Group.................. 613,800 12,697,988
+*Value Health......................... 600,296 22,961,322
*Vivra................................ 512,050 16,513,613
-----------
148,964,880
-----------
Other-3.04%
*FHP International.................... 414,800 12,340,300
United Healthcare.................... 354,400 16,568,200
-----------
28,908,500
-----------
Total Healthcare..................... 188,741,380
-----------
TECHNOLOGY-18.83%
Communications-1.47%
*Cabletron Systems.................... 271,750 12,194,781
*Shiva................................ 54,300 1,757,963
-----------
13,952,744
-----------
Hardware-9.34%
*Altera............................... 137,000 7,637,750
*Bay Networks ........................ 266,700 9,851,231
*CliniCom............................. 291,800 5,361,825
Dallas Semiconductor................. 564,800 10,378,200
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Hardware (Continued)
*In Focus Systems........................ 19,500 $ 507,000
*Maxim Integrated Products............... 39,200 1,435,700
*Silicon Graphics........................ 296,900 10,539,950
*Stratus Computer........................ 446,400 13,950,000
+*Xilinx ................................. 281,300 19,022,913
*Zilog................................... 283,100 10,120,825
-----------
88,805,394
-----------
Software-8.02%
Adobe Systems........................... 196,400 9,746,350
+*Compuware............................... 584,100 21,465,675
HBO & Co................................ 75,517 3,275,550
*Informix................................ 250,100 8,565,925
+*Novell.................................. 959,100 18,162,956
Shared Medical Systems.................. 299,300 10,943,156
*VMARK Software.......................... 314,200 4,163,150
-----------
76,322,762
-----------
Total Technology........................ 179,080,900
-----------
TRANSPORTATION-0.99%
Illinois Central........................ 273,500 9,435,750
-----------
Total Transportation.................... 9,435,750
-----------
Total Common Stock (Cost $635,714,215).. 839,719,682
-----------
PREFERRED STOCK-1.54%
SAP AG-VORZUG........................... 18,850 14,674,725
-----------
Total Preferred Stock (Cost $9,953,794). 14,674,725
-----------
STOCK RIGHTS-0.13%
*Viacom.................................. 1,025,300 1,217,544
-----------
Total Stock Rights (Cost $918,066)...... 1,217,544
-----------
REPURCHASE AGREEMENTS-10.34%
With Deutsche Bank 6.20% 4/3/95
(dated 3/31/95, collateralized by $12,048,000
U.S. Treasury Bills due 9/28/95,
market value $11,698,795 and $26,725,000
U.S. Treasury Notes 7.125% due 9/30/99,
market value $26,766,314).............. $37,688,000 $37,688,000
- ------------------
+Ten largest common stock investments representing 21.6% of net assets.
<PAGE>
Statement of Net Assets (Continued)
Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With J.P. Morgan Securities 6.00%
4/3/95 (dated 3/31/95, collateralized
by $5,043,000 U.S. Treasury Notes 4.25%
due 5/15/96, market value $4,998,633
and $17,131,000 U.S. Treasury Notes
8.75% due 10/15/97, market value
$18,538,884).................................. $23,005,000 $23,005,000
With PaineWebber Securities
6.20% 4/3/95 (dated 3/31/95,
collateralized by $3,274,000 U.S.
Treasury Notes 5.125% due 3/31/96,
market value $3,228,744 and
$16,463,000 U.S. Treasury Notes
8.75% due 10/15/97, market value $17,815,868
and $16,789,000 U.S. Treasury Notes
7.375% due 11/15/97, market value
$17,421,551). ................................ 37,689,000 37,689,000
------------
Total Repurchase Agreements
(cost $98,382,000)............................. 98,382,000
------------
TOTAL MARKET VALUE OF SECURITIES
OWNED-100.29% (cost $744,968,075) ............. $953,993,951
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS-(0.29%)....................... (2,808,063)
------------
NET ASSETS APPLICABLE TO 38,641,708
SHARES ($.01 PAR VALUE)
OUTSTANDING-100.00%............................ $951,185,888
============
NET ASSET VALUE-DELCAP FUND A CLASS
($840,256,609 / 34,165,030 shares) ............ $24.59
======
NET ASSET VALUE-DELCAP FUND B CLASS
($1,280,141 / 52,204 shares) .................. $24.52
======
NET ASSET VALUE-DELCAP FUND
INSTITUTIONAL CLASS
($109,649,138 / 4,424,474 shares) ............. $24.78
======
COMPONENTS OF NET ASSETS AT MARCH 31, 1995:
Common stock, $.01 par value,
500,000,000 shares authorized
to the DelCap Fund, Inc.-Concept I Series ..... $728,569,654
Accumulated undistributed income:
Net investment loss............................ (16,673,944)
Net realized gain on investments............... 30,264,302
Net unrealized appreciation of investments .... 209,025,876
------------
Total net assets............................... $951,185,888
============
See accompanying notes
- ------------
*Non-income producing security for the six months ended March 31, 1995.
<PAGE>
Delaware Group DelCap Fund, Inc.--Concept I Series
Statement of Operations
Six Months Ended March 31, 1995
(Unaudited)
INVESTMENT INCOME:
Interest................................... $2,114,648
Dividends.................................. 1,635,210 $3,749,858
----------
EXPENSES:
Investment management fees ($3,509,826)
and directors' fees ($7,805).............. $3,517,631
Distribution expenses...................... 1,248,813
Dividend disbursing and transfer
agent fees and expenses................... 1,206,655
Salaries................................... 116,149
Reports to shareholders.................... 75,760
Taxes, other than taxes on income ......... 45,900
Custodian fees............................. 42,425
Professional fees.......................... 29,336
Registration fees.......................... 27,000
Other...................................... 56,956 6,366,625
---------- -----------
NET INVESTMENT LOSS........................ (2,616,767)
-----------
NET REALIZED GAIN AND UNREALIZED
LOSS ON INVESTMENTS:
Net realized gain from
security transactions .................... 43,030,717
Net unrealized depreciation of
investments during the period............. (5,317,804)
-----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS...................... 37,712,913
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................. $35,096,146
===========
See accompanying notes
<PAGE>
Delaware Group DelCap Fund, Inc.--Concept I Series
Statement of Changes in Net Assets
Six Months
Ended Year
3/31/95 Ended
(Unaudited) 9/30/94
OPERATIONS:
Net investment loss........................ $ (2,616,767) $ (6,993,212)
Net realized gain from security
transactions ............................. 43,030,717 66,202,686
Unrealized depreciation
during the period......................... (5,317,804) (46,415,425)
------------ -------------
Net increase in net assets resulting
from operations........................... 35,096,146 12,794,049
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET REALIZED GAIN ON
SECURITY TRANSACTIONS:
DelCap Fund A Class........................ (61,939,346) (31,409,900)
DelCap Fund B Class........................ (46,008) --
DelCap Fund Institutional Class ........... (8,026,850) (2,880,741)
------------ -------------
(70,012,204) (34,290,641)
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
DelCap Fund A Class....................... 82,198,491 191,838,977
DelCap Fund B Class....................... 1,258,317 284,647
DelCap Fund Institutional Class 21,399,029 49,327,046
Net asset value of shares issued upon
reinvestment of dividends
from net realized gain on
security transactions:
DelCap Fund A Class....................... 54,466,056 28,187,308
DelCap Fund B Class....................... 45,490 --
DelCap Fund Institutional Class 8,023,944 2,880,741
------------ ------------
167,391,327 272,518,719
------------ ------------
Cost of shares repurchased:
DelCap Fund A Class....................... (156,000,672) (366,368,314)
DelCap Fund B Class....................... (327,757) --
DelCap Fund Institutional Class .......... (26,161,351) (26,399,149)
------------ ------------
(182,489,780) (392,767,463)
------------ ------------
Decrease in net assets derived from
capital share transactions ............... (15,098,453) (120,248,744)
------------ ------------
NET DECREASE IN NET ASSETS ................ (50,014,511) (141,745,336)
NET ASSETS:
Beginning of period........................ 1,001,200,399 1,142,945,735
------------- --------------
End of period.............................. $951,185,888 $1,001,200,399
============= ==============
See accompanying notes
<PAGE>
Delaware Group DelCap Fund, Inc.--Concept I Series
Notes to Financial Statements
March 31, 1995
(Unaudited)
Delaware Group DelCap Fund, Inc.-Concept I Series (the "Fund") is registered
as a diversified open-end investment company under the Investment Company Act
of 1940. The Fund is organized as a Maryland corporation and offers three
classes of shares.
1. Significant Accounting Policies
The following accounting policies are in accordance with general accounting
principles and are consistently followed by the Fund for financial statement
preparation:
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm on the valuation date. Securities not traded
are valued at the last quoted bid price. Securities not listed on an exchange
are valued at the mean of the last quoted bid and asked prices. Money market
instruments having less than 60 days to maturity are valued at amortized
cost. 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.
Repurchase Agreements - The Fund may invest in a pooled cash account along
with other members of the Delaware Group Family of Funds. The aggregated
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 the Fund's custodian bank until the maturity of the respective
repurchase agreements. Each repurchase agreement is 102% collateralized.
However, in the event of default or bankruptcy by the counterparty to the
agreement, realization of the collateral may be subject to legal proceedings.
Class Accounting - Investment income, common expenses and gain (loss) 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 Family of
Funds are allocated amongst the funds on the basis of average net assets.
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 and interest income is recorded on
an accrual basis.
<PAGE>
Notes to Financial Statements (Continued)
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 rate of 0.75% of the net
assets of the Fund less fees paid to the independent directors. At March 31,
1995, the Fund had a liability for Investment Management fees payable to DMC
for $38,409.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee of 0.30%
of the average daily net assets of the A Class and 1.00% of the average daily
net assets of the B Class. No distribution expenses are paid by the
Institutional Class. At March 31, 1995, the Fund had a liability for
distribution fees and other expenses payable to DDLP for $33,989. For the six
months ended March 31, 1995, the Fund paid DDLP $91,472 for commissions
earned on sales of DelCap Fund A Class shares.
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
period ended March 31, 1995, DSC received $1,169,105 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 has heretofore conducted its relationship with the Fund.
The same personnel who managed the operation and affairs of the Fund before
the Merger have continued to manage its operations and affairs since the
Merger.
3. Investments
During the six months ended March 31, 1995, the Fund made purchases of
$159,026,693 and sales of $257,237,050 of investment securities other than
U.S. Government securities and temporary cash investments.
At March 31, 1995, unrealized appreciation for financial reporting and
federal income tax purposes aggregated $207,324,485 of which $258,259,174
related to unrealized appreciation of securities and $50,934,689 related to
unrealized depreciation of securities.
The realized gain for federal income tax purposes was $43,061,174 for the six
months ended March 31, 1995.
<PAGE>
4. Capital Stock
Transactions in capital stock shares were as follows:
Six Months Year
Ended Ended
3/31/95 9/30/94
Shares sold:
DelCap Fund A Class................... 3,502,635 7,533,859
DelCap Fund B Class................... 53,125 11,224
DelCap Fund Institutional Class ...... 900,199 1,922,292
Shares issued upon reinvestment
of dividends from net realized
gain from security transactions:
DelCap Fund A Class.................... 2,419,638 1,093,510
DelCap Fund B Class.................... 2,023 --
DelCap Fund Institutional Class ....... 354,102 111,355
----------- ------------
7,231,722 10,672,240
----------- ------------
Shares repurchased:
DelCap Fund A Class.................... (6,595,382) (14,339,288)
DelCap Fund B Class.................... (14,168) --
DelCap Fund Institutional Class (1,112,607) (1,024,685)
----------- ------------
(7,722,157) (15,363,973)
----------- ------------
Net decrease........................... (490,435) (4,691,733)
=========== ============
5. Lines of Credit
The Fund has a committed line of credit for $15,000,000. No
amount was outstanding at March 31, 1995, or at any time during the last
fiscal period.
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
DelCap Fund A Class
-----------------------------------------------------------------------------
Six Months*
Ended Year Ended September 30,
3/31/95 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $25.570 $26.080 $20.730 $21.470 $15.810 $19.060
Income (loss) from investment operations:
Net investment income (loss)..................... (0.080) (0.218) (0.125) (0.059) 0.064 0.419
Net realized and unrealized gain (loss)
from security transactions...................... 0.930 0.528 5.475 (0.651) 6.496 (3.219)
-------- -------- -------- -------- -------- --------
Total from investment operations................. 0.850 0.310 5.350 (0.710) 6.560 (2.800)
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income............. none none none (0.030) (0.410) (0.160)
Distributions from net
realized gain on security transactions.......... (1.830) (0.820) none none (0.490) (0.290)
-------- -------- -------- -------- -------- --------
Total distributions.............................. (1.830) (0.820) none (0.030) (0.900) (0.450)
-------- -------- -------- -------- -------- --------
Net asset value, end of period................... $24.590 $25.570 $26.080 $20.730 $21.470 $15.810
======== ======== ======== ======== ======== ========
Total return**................................... 8.15% 1.17% 25.81% (3.32%) 43.25% (14.99%)
Ratios/supplemental data:
Net assets, end of period (000 omitted).......... $840,257 $890,787 $1,057,358 $993,125 $512,356 $155,392
Ratio of expenses to average net assets.......... 1.39% 1.35% 1.30% 1.39% 1.43% 1.41%
Ratio of net investment income
(loss) to average net assets..................... (0.59%) (0.68%) (0.43%) (0.26%) 0.63% 2.61%
Portfolio turnover............................... 37% 34% 51% 24% 33% 45%
</TABLE>
- -----------------
* Ratios and total return have been annualized.
** Does not include maximum sales charge of 5.75% nor the 1% limited
contingent deferred sales charge that would apply in the event of certain
redemptions within 12 months of purchase.
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
DelCap DelCap
Fund B Class Institutional Class
---------------------- ------------------------------------
Six Months*** 9/6/94* Six Months*** Year 11/9/92*
Ended to Ended Ended to
3/31/94 9/30/94 3/31/95 9/30/94 9/30/93
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $25.560 $25.180 $25.710 $26.140 $22.000
Income from investment operations:
Net investment loss............................. (0.081) (0.008) (0.032) (0.080) (0.027)
Net realized and unrealized gain from
security transactions.......................... 0.871 0.388 0.932 0.470 4.167
-------- -------- -------- -------- --------
Total from investment operations................ 0.790 0.380 0.900 0.390 4.140
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income............ none none none none none
Distributions from net realized gain
on security transactions....................... (1.830) none (1.830) (0.820) none
-------- -------- -------- -------- --------
Total distributions............................. (1.830) none (1.830) (0.820) none
-------- -------- -------- -------- --------
Net asset value, end of period................... $24.520 $25.560 $24.780 $25.710 $26.140
======== ======== ======== ======== ========
Total return**................................... 7.64% 1.51% 8.53% 1.48% 21.31%
Ratios/supplemental data:
Net assets, end of period (000 omitted)......... $1,280 $287 $109,649 $110,126 $85,588
Ratio of expenses to average net assets......... 2.09% 2.05% 1.09% 1.05% 1.02%
Ratio of net investment loss to average net assets (1.29%) (1.38%) (0.29%) (0.38%) (0.15%)
Portfolio turnover.............................. 37% 34% 37% 34% 51%
</TABLE>
- ---------------
* Date of initial public offering; ratios and total return have been
annualized for DelCap Fund Institutional Class. Ratios have been annualized
and total return has not been annualized for DelCap Fund B Class.
** Does not include contingent deferred sales charge which varies from 1%-4%
depending upon the holding period for DelCap Fund B Class.
*** Ratios and total return have been annualized.
<PAGE>
DELAWARE GROUP OF FUNDS
FOR GROWTH OF CAPITAL FOR TAX-FREE
Trend Fund CURRENT INCOME
DelCap Fund Tax-Free USA Fund
Value Fund Tax-Free Insured Fund
Tax-Free USA
FOR TOTAL RETURN Intermediate Fund
Dividend Growth Fund Tax-Free Pennsylvania Fund
Decatur Total Return Fund
Decatur Income Fund MONEY MARKET FUNDS
Delaware Fund Delaware Cash Reserve
U.S. Government Money Fund
FOR GLOBAL Tax-Free Money Fund
DIVERSIFICATION
International Equity Fund CLOSED-END EQUITY/INCOME
Global Assets Fund Dividend and Income Fund
Global Bond Fund Global Dividend and
Income Fund
FOR CURRENT INCOME
Delchester Fund
U.S. Government Fund
Treasury Reserves
Intermediate Fund
<PAGE>
BOARD MEMBERS
MR. WAYNE A. STORK
Chairman
Delaware Group of Funds
Philadelphia, PA
MR. WALTER P. BABICH
Board Chairman
Citadel Constructors, Inc.
King of Prussia, PA
MR. ANTHONY D. KNERR
Consultant
Anthony Knerr & Associates
New York, NY
MS. ANN R. LEVEN
Treasurer
National Gallery of Art
Washington, DC
MR. W. THACHER LONGSTRETH
Vice Chairman
Packquisition Corp.
Philadelphia, PA
MR. CHARLES E. PECK
Secretary of Enterprise Homes, Inc.
Fredericksburg, VA
former Chairman and CEO
The Ryland Group, Inc.
Columbia, MD
OTHER AFFILIATED OFFICERS
MR. KEITH E. MITCHELL
President and CEO
Delaware Distributors, L.P.
MR. DAVID K. DOWNES
President
Delaware Management Trust Company
MR. GEORGE M. CHAMBERLAIN, JR.
Secretary
Delaware Group of Funds
This semi-annual report is for the information of DelCap Fund shareholders,
but it may be used with prospective investors when preceded or accompanied by
a current Prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the Fund. Summary investment results are
documented in the current Statement of Additional Information. If used with
prospective investors after June 30, 1995, this report must also be
accompanied by a DelCap Fund Performance Update for the most recently
completed calendar quarter. The figures in this report represent past
results, which 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.
<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
closed-end equity/income funds and global funds give investors the ability
to create a portfolio that fits their personal financial goals. For more
information, including a prospectus of any Delaware Group fund, contact
your financial adviser or call Delaware Group at 800-523-4640 or
215-988-1333 in Philadelphia. Read the prospectus carefully before
investing.
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 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.
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
5/95-PP-SA-016 Printed in the U.S.A.
DELAWARE GROUP
A TRADITION OF SOUND INVESTING SINCE 1929
(PHOTO OF U.S. COLONIAL DOCUMENTS AND VARIOUS COLONIAL OBJECTS)
1995
SEMI-
ANNUAL
REPORT
DELAWARE
GROUP
===========
DELCAP FUND
BULK RATE
U.S. POSTAGE
PAID
Permit No.145
Conshohocken, PA
