<PAGE>
April 19, 1996
Dear
- ------------------
Shareholder:
- ------------------
DelCap Fund achieved strong results for the six months ended March 31, 1996,
even as overall volatility in the stock market increased amid uncertainty
about interest rates, inflation and corporate profits.
DelCap's A Class shares provided an attractive total return (capital
change plus income at net asset value) of +9.51% for first half of
fiscal 1996, as shown in the table below. During the period, your Fund made a
capital gain distribution of $3.54 a share, the largest payout since October
1986.
Last month, your Fund marked its 10th anniversary, and we have cause
to celebrate. DelCap has been ranked the #1 performing mutual fund for the 10
years ended March 31, 1996, by Lipper Analytical Services.(1) Your Fund
provided a total return of +665.27% (for Class A shares at net asset value
with distributions reinvested) during the period, ranking first among 584
equity funds that have operated as long as DelCap. This group was made up of
all kinds of stock funds, including technology and index funds.
Achieving "gold medal" results has required patience and persistence
on the part of both senior portfolio manager Edward Antoian, the Fund's
manager since DelCap began operating, and investors. Your Fund takes a
"fundamental" approach to investing - one that emphasizes long-term growth
trends, consistent profits and strong management. We look for companies that
we believe have enduring financial stamina.
At times this style has not been the most fashionable on Wall
Street. However, we believe our disciplined approach has the potential to
provide greater long-term rewards than investing styles that rely on
short-term stock price behavior. Think of DelCap Fund as a marathon runner,
not a sprinter.
As you can see in the chart to the left, your Fund's lifetime
performance at net asset value for Class A has eclipsed the total returns of
the unmanaged NASDAQ Industrial Index and the unmanaged S&P 500 Index. DelCap
has also outperformed the Lipper Mid-Cap Fund Average during the past six
months and for its lifetime.
The strong stock market performance of 1995 could be described as a
steadily rising tide that easily lifted many boats. That may not be the case
in 1996. In our opinion the stock selection skills of portfolio managers may
be put to the test, and experience could make a difference in dealing with
the winds of volatility.
- -------------------------------------------------------------------------------
TOTAL RETURN AVERAGE ANNUAL RETURN
Six-Months Ended March 27, 1986
March 31, 1996 To March 31, 1996
------------------ ---------------------
DelCap Fund Class A +9.51% +22.53%
NASDAQ Industrial Index +4.39% +10.60%
Standard & Poor's 500 Index +11.70% +13.95%
Lipper Mid-Cap Fund Average +7.96% +13.31%
All performance quoted above is based on net asset value without effect of
sales charges. Performance information for all classes of DelCap Fund can be
found on page 5. DelCap began operating on March 27, 1986. The Lipper Average
was comprised of 135 funds and 20 funds, respectively, for six-month and
lifetime periods ending March 31, 1996.
- -------------------------------------------------------------------------------
(1) DelCap Class A shares provided a total return of +28.53% at net asset value
with distributions reinvested for the one-year period ended March 31, 1996.
That ranked 1,074th out of 3,350 equity funds, according to Lipper
Analytical Services. For the three- and five-year periods ended March 31,
1996, DelCap Class A shares respectively ranked 556th out of 1,729 funds
and 727th out of 1,140 funds, with average annual returns of +15.17% and
+11.92% assuming reinvestment of distributions at net asset value. Past
performance does not guarantee future results.
<PAGE>
Your Fund's portfolio is focused on companies with proven products
whose management has achieved steady growth. During the past six months, we
have modestly increased holdings of health care companies while reducing our
exposure to technology companies. These adjustments were minor; most of our
top 10 holdings as of March 31 were stocks your Fund held six months earlier.
With a diversified mix of small- and mid-size companies, we believe
DelCap Fund's portfolio is well positioned for the months ahead. We encourage
you to read Mr. Antoian's review of the Fund's performance during the past
six months and his outlook for the rest of the fiscal year.
Sincerely,
/s/ Wayne A. Stork
- --------------------------------
Wayne A. Stork
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
===============================================================================
PORTFOLIO HIGHLIGHTS
(AS OF MARCH 31, 1996)
MEDIAN MARKET CAPITALIZATION $1.21 Billion
NUMBER OF STOCKS 130
AVERAGE STOCK
PRICE-TO-EARNINGS RATIO* 19.2
TOP INDUSTRY GROUP Health Care and
Pharmaceuticals
BETA** 0.89
* Based on median earnings estimates for fiscal 1996 as reported to First
Call by industry analysts.
** A measure of volatility relative to the S&P 500 Index for the past three
years ended March 31. A number less than 1.0 means the Fund's share price
has fluctuated in price less than the Index. A number greater than
1.0 means the Fund's share price has fluctuated in price more than
the Index.
- -------------------------------------------------------------------------------
PORTFOLIO
- ----------------
MANAGER'S REVIEW
- ----------------
The six months ended March 31, 1996, have been both challenging and rewarding.
Some economic developments - such as a U.S. dollar that has modestly increased
in value against major world currencies - have made small- and mid-size growth
stocks somewhat more attractive than the stocks of large, multinational
companies. However, U.S. interest rates have been volatile recently amid the
release of conflicting indicators about consumer spending, housing and
employment. In such a mixed environment, your Fund performed very well. Given
the relatively uncertain outlook for businesses whose fortunes are tied to
the ups and downs of the overall economy, we believe the stock market is more
likely to reward companies that display consistent growth in earnings, market
share and revenue.
THE FUND'S INVESTMENT STRATEGY
DelCap picks one company at a time and looks for a steady track
record of growth in quarterly earnings and market share. We meet with
companies' management and visit their plants, analyze the product, talk to
customers and review the competition. While two companies may grow at the
same rate, we believe HOW a business grows is as important as the rate of
growth, especially in times of slow economic activity.
A consistent growth rate and leadership within an industry often
show that a company has what it needs to continue growing at the same rate in
the future. DelCap Fund invests in companies that we believe have "quality
growth" characteristics.
<PAGE>
HEALTH CARE
Your Fund's health care stock holdings during the first half of the
1996 fiscal year increased to the point where the industry group was the
single largest sector in DelCap's portfolio as of March 31. We shifted our
mix of holdings to put a somewhat greater emphasis on smaller drug, service
and medical device companies we believe are well positioned to benefit from
the introduction of new products. In fiscal 1995, our primary emphasis had
been managed care businesses and hospital chains that we believed were
benefiting from industry consolidation.
=========================================
DelCap's Diverse Portfolio Mix
As of March 31, 1996
Health Care & Pharmaceuticals 22.5%
Technology 14.7%
Business Services 14.4%
Retail 10.3%
Financial 8.0%
Other Consumer Durables/
Nondurables 7.5%
Entertainment & Leisure 6.3%
Cash 5.7%
Other consumer Services 5.7%
Other 4.9%
- ------------------------------------------
Based on net assets
* We purchased shares of ACCESS HEALTH INC. The California company develops
information care and patient referral products to the health care industry.
We believe the company is capitalizing on a need among medical service
providers and managed care companies for more efficient information systems.
* SUNRISE MEDICAL INC. makes wheelchairs and physical rehabilitation
equipment. We sold the California-based company's shares as uncertainties
arose about its financial condition during the past six months.
TECHNOLOGY
Since September we have reduced our holdings in technology, as the
computer industry's growth prospects have ebbed. Still, technology remained
one of the largest industry groups in your Fund's portfolio. DelCap's focus
has generally been on software and database management companies that we
believe are poised to grow even as the pace of economic expansion slows.
Below are two examples of how we positioned the Fund during the past six
months:
* Shares of COMPUCOM SYSTEMS INC. were added to the Fund's portfolio. The
Texas-based company sells and services name-brand, business-oriented
microcomputer systems to corporations and government agencies. As of early
1996, the company reported 33 consecutive profitable quarters.
* We sold our V-MARK SOFTWARE INC. shares. The Massachusetts-based computer
software developer specializes in applications for the Unix operating
system. The company's operating results have not met our expectations.
THE CONSUMER SECTOR
Your Fund seeks to identify businesses that we believe have the
products, the management and the financial strength to capitalize on
long-term market and social trends, can anticipate change in consumer tastes
and consistently deliver quality products and services.
* We purchased shares of CALLAWAY GOLF CO., a maker of golf clubs. In our
opinion, the California company has been able to capitalize on the sport's
growing popularity with innovative and high-margin products.
* We liquidated our position in KING WORLD PRODUCTIONS, the New Jersey-based
talk and game show program syndicator. Although the stock's price has risen
since September, we were concerned about the company's long-term earnings
prospects given the fact that advertisers have been more reluctant to
promote products on "tabloid television."
<PAGE>
MARKET OUTLOOK
In the months ahead, we do not believe technology companies will
again lead the market, as the sector did in the first half of 1995. U.S.
business spending on new computers and software equipment, while still
growing, has slowed from the pace of a year ago. Cyclical technology
companies are now beginning to feel the effects of weakening demand. We are
thus emphasizing businesses we believe are poised to grow despite the
industry's short-term slowdown.
Overall, we are generally more confident in the earnings prospects
of the health care industry, particularly companies that have new products or
are niche service providers. In our opinion, the federal Food and Drug
Administration is taking a less adversarial approach to the regulatory
approval process, something that potentially bodes well for the industry's
ability to bring new products to consumers.
During your Fund's 10 years of operation, we have believed that
health care, technology and consumer sectors offer the most long-term growth
potential in the American economy. While our portfolio mix will change as
market conditions warrant, we expect that our company-by-company stock
selection process will generally result in these three sectors comprising a
sizable portion of your Fund's holdings.
/s/ Edward N. Antoian
- ------------------------------
Edward N. Antoian
VICE PRESIDENT AND
SENIOR PORTFOLIO MANAGER
APRIL 19, 1996
A Look at
- ------------------------
DelCap's
- ------------------------
Long-Term
- ------------------------
Performance
- ------------------------
We are pleased at DelCap's performance during the past six months and with
the Fund's lifetime record, which we believe confirms the potential benefits
of a consistent, disciplined investment strategy.
On the next page, you can see that an investor who invested $10,000
in DelCap Fund Class A shares on March 27, 1986, and reinvested all capital
gains distributions and dividends would have had holdings worth nearly
$70,000 as of March 31, 1996.
We believe DelCap's record illustrates the long-term potential of
small- and mid-size companies. Our record also shows the value of sticking
with an investment strategy during both strong and weak market cycles, and as
investment styles move in and out of favor on Wall Street.
As of March 31, 1996, more than 90% of DelCap's shareholders were
reinvesting capital gains and dividends, and thus benefiting from the effect
of compounding. We are pleased to report that as DelCap enters its second
decade, more than 64,000 investors have made the Fund a part of their
investment plan.
<PAGE>
THE FUND'S PERFORMANCE IS COMPARED TO THAT OF THE S&P 500 INDEX AND THE NASDAQ
INDUSTRIAL INDEX. CHART ASSUMES $10,000 INVESTED AT THE FUND'S INCEPTION ON
MARCH 27, 1986, AND INCLUDES THE EFFECT OF A 4.75% FRONT-END SALES CHARGE AND
THE REINVESTMENT OF ALL DIVIDENDS. PERFORMANCE OF OTHER CLASSES OF DELCAP FUND
WILL VARY DUE TO DIFFERING CHARGES AND EXPENSES.
<TABLE>
<CAPTION>
=================================================================================================================
How Capital Gains Reinvestment Makes A Difference
DelCap Fund Class A Performance
March 27, 1986 to March 31, 1996
$10,000 Investment
Nasdaq
Without Reinvestment of With Reinvestment of Industrial S&P
Dividends & Capital Gains Dividends & Capital Gains Index 500 Index
------------------------- ------------------------- ----- ---------
<S> <C> <C> <C> <C>
31-Mar-86 $ 9,524 $ 9,524 $10,000 $10,000
31-Mar-87 13,190 23,829 12,084 12,622
31-Mar-88 12,505 23,681 10,209 11,569
31-Mar-89 14,057 26,859 10,607 13,666
31-Mar-90 17,286 33,849 11,987 16,294
31-Mar-91 19,152 39,563 14,502 18,637
31-Mar-92 21,533 44,538 17,989 20,690
31-Mar-93 21,981 45,464 18,987 23,839
31-Mar-94 24,210 51,666 20,731 24,191
31-Mar-95 23,419 54,043 21,338 27,947
31-Mar-96 26,476 69,458 27,275 36,905
=================================================================================================================
</TABLE>
Capital gains and dividend reinvestment have provided more than half of the
total return of DelCap Fund Class A since your Fund began operating
on March 27, 1986.
<PAGE>
DELCAP FUND PERFORMANCE
AVERAGE ANNUAL RETURNS THROUGH MARCH 31, 1996
<TABLE>
<CAPTION>
LIFETIME 10 YEARS FIVE YEARS ONE YEAR
<S> <C> <C> <C> <C>
Class A (Est. 1986) +21.94% +21.39% +10.83% +22.40%
- ----------------------------------------------------------------------------------------------------------
Class B (Est. 1994)
Excluding Sales Charge +20.76% - -
Including Sales Charge +18.46% - - +23.63%
- ----------------------------------------------------------------------------------------------------------
Class C* (Est. 1995)
Excluding Sales Charge +9.20% - - -
Including Sales Charge +8.24% - - -
</TABLE>
*aggregate return through March 31, 1996
RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT SHARES WHEN REDEEMED MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST PERFORMANCE IS NOT A
GUARANTEE OF FUTURE RESULTS. RETURNS REFLECT THE REINVESTMENT OF ALL
DISTRIBUTIONS AND SALES CHARGES AS NOTED BELOW.
Class A returns reflect the effect of the 4.75% maximum front-end sales
charge and a 0.30% annual 12b-1 fee. Sales charges have varied over the life
of the Fund.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of 4% declining to 0% after six years. Lifetime
performance "excluding sales charge" assumes the investment was not redeemed.
Class B was initially offered on September 6, 1994.
Class C performance is for a four-month period and may not be representative
of longer term results. C shares do not have a front-end sales charge, but
have a 1% annual distribution and service fee. If shares are redeemed within
12 months, a 1% contingent deferred sales charge applies. Class C was
initially offered on November 29, 1995.
The average annual total returns for the 10-year, five-year, one-year and
six-month periods ended March 31, 1996, for DelCap Fund's Institutional
Class, which is available without sales or asset-based distribution charges
only to certain eligible institutional accounts, were +22.11%, +12.14%,
+28.93% and +9.67%. The Institutional Class was initially made available
November 9, 1992; performance prior to that date is based on Class A's
performance and has been adjusted to eliminate the effect of the sales
charge, but not Class A's asset-based distribution charge.
<PAGE>
Financial
- ------------------
Statements
- ------------------
DELAWARE GROUP DELCAP FUND, INC. -
CONCEPT I SERIES
STATEMENT OF NET ASSETS
MARCH 31, 1996
(UNAUDITED)
Number Market
of Shares Value
COMMON STOCK - 94.32%
Basic Industry/Capital Goods - 2.81%
*Smith International .................... 326,400 $ 8,241,600
*UCAR International ..................... 225,200 8,754,650
*Wolverine Tube ......................... 300,200 12,195,625
-----------
Total Basic Industry/Capital Goods ...... 29,191,875
-----------
Business Services - 14.40%
Distributors - 1.32%
*Compucom Systems ....................... 447,300 3,830,006
*Global DirectMail ...................... 15,100 526,613
Intelligent Electronics ................. 901,300 4,844,488
*Peak Technologies Group ................ 24,800 446,400
*Performance Food Group ................. 163,500 4,046,625
-----------
13,694,132
-----------
Environmental - 1.93%
*Sanifill ............................... 252,100 9,674,338
*United Waste Systems ................... 208,700 10,330,650
-----------
20,004,988
-----------
Media & Publishing - 1.20%
*International Family Entertainment
Class B ................................. 546,875 9,228,516
Reynolds & Reynolds Class A ............. 78,300 3,210,300
-----------
12,438,816
-----------
Other - 9.95%
*BISYS Group ............................ 719,200 23,643,700
*Corporate Express ...................... 233,600 7,694,200
*Cyrk ................................... 242,600 3,957,413
*DST Systems ............................ 103,900 3,181,938
First Data .............................. 300,661 21,196,601
*First USA Paymentech ................... 28,200 994,050
*Gartner Group Class A .................. 235,300 14,382,713
*Interim Services ....................... 288,400 10,959,200
*Isomedix ............................... 415,100 5,811,400
Manpower ................................ 141,500 4,386,500
*Petroleum Geo-Services A/S ADR ......... 226,800 5,712,525
*PIA Merchandising Services ............. 26,200 487,975
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Business Services (Continued)
Other (Continued)
*World Color Press ...................... 41,500 $ 788,500
------------
103,196,715
------------
Total Business Services ................. 149,334,651
------------
Consumer Durables/Cyclical - 0.69%
Harley-Davidson ......................... 87,400 3,397,675
Polaris Industries ...................... 121,450 3,734,588
------------
Total Consumer Durables/Cyclical ........ 7,132,263
------------
Consumer Non-Durables - 17.17%
Retail - 10.32%
*CompUSA ................................ 131,500 7,281,813
*General Nutrition ...................... 837,400 21,092,013
Home Depot .............................. 150,000 7,181,250
*Kohl's ................................. 196,900 12,478,538
*Micro Warehouse ........................ 334,700 13,848,213
*Neostar Retail Group ................... 245,900 1,137,288
*Office Depot ........................... 150,300 2,949,638
*Revlon Class A ......................... 111,000 3,052,500
*Staples ................................ 950,737 19,490,109
*Sunglass Hut International ............. 138,000 4,562,625
Talbots ................................. 176,700 6,714,600
*Tractor Supply ......................... 80,900 2,174,188
*Value City Department Stores ........... 520,600 5,075,850
------------
107,038,625
------------
Textiles and Apparel - 3.52%
*Adidas 144A ............................ 142,200 5,048,100
*Gucci Group N.V ........................ 242,700 11,649,600
*Tommy Hilfiger ......................... 357,400 16,395,725
Warnaco Group Class A ................... 142,500 3,437,813
------------
36,531,238
------------
Other - 3.33%
Callaway Golf ........................... 579,800 15,509,650
*Canandaiqua Wine Class A ............... 142,600 5,490,100
Dole Food ............................... 255,200 9,825,200
*NBTY ................................... 484,100 3,645,878
------------
34,470,828
------------
Total Consumer Non-Durables ............. 178,040,691
------------
Consumer Services - 12.00%
Entertainment & Leisure - 6.27%
*Circus Circus Enterprises .............. 128,700 4,327,538
*HFS .................................... 433,400 21,074,075
La Quinta Inns .......................... 110,500 3,245,938
*MGM Grand .............................. 71,600 2,747,650
*Mirage Resorts ......................... 404,300 17,738,663
<PAGE>
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
Consumer Services (Continued)
Entertainment & Leisure (Continued)
*Penske Motorsports ..................... 7,400 $ 277,500
*Station Casinos ........................ 292,100 3,432,175
TCA Cable TV ............................ 106,500 3,088,500
*WMS Industries ......................... 522,900 9,085,388
-----------
65,017,427
-----------
Restaurants - 2.06%
*DAKA International ..................... 179,500 4,532,375
*Foodmaker .............................. 960,750 6,725,250
*Lone Star Steakhouse/Saloon ............ 263,600 10,049,750
-----------
21,307,375
-----------
Other - 3.67%
*ADT Limited ............................ 898,000 15,827,250
Barefoot ................................ 476,900 5,156,481
Cash America International .............. 311,900 1,676,463
*CUC International ...................... 526,737 15,407,057
-----------
38,067,251
-----------
Total Consumer Services ................. 124,392,053
-----------
Energy - 1.12%
*AES .................................... 464,997 11,566,800
-----------
Total Energy ............................ 11,566,800
-----------
Financial - 8.04%
Insurance - 4.41%
AMBAC.................................... 221,900 10,678,938
Blanch (E.W.) Holdings .................. 509,600 10,192,000
CMAC Investment ......................... 215,100 12,153,150
MBIA..................................... 169,700 12,727,500
-----------
45,751,588
-----------
Other - 3.63%
Aames Financial ......................... 152,200 5,479,200
ADVANTA Class B ......................... 174,400 8,240,400
Money Store ............................. 242,900 6,740,475
*Olympic Financial Limited .............. 385,100 7,461,313
SEI...................................... 322,100 7,287,513
*WFS Financial .......................... 125,600 2,402,100
-----------
37,611,001
-----------
Total Financial ......................... 83,362,589
-----------
Health Care - 22.47%
Devices - 0.88%
Dentsply International .................. 227,400 9,124,425
-----------
9,124,425
-----------
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Health Care (Continued)
Pharmaceuticals - 3.41%
*ALZA ................................... 150,000 $ 4,612,500
*Centocor ............................... 102,500 3,709,219
*Dura Pharmaceuticals ................... 79,700 3,955,113
*Elan ADR ............................... 129,600 8,326,800
Jones Medical Industries ................ 75,300 2,899,050
*Noven Pharmaceuticals .................. 94,000 1,345,375
Teva Pharmaceutical Industries ADR ...... 195,000 7,483,125
*Watson Pharmaceuticals ................. 75,400 3,025,425
------------
35,356,607
------------
Services - 15.19%
*Access Health .......................... 228,600 8,915,400
*Apria Healthcare Group ................. 514,700 16,406,063
Columbia/HCA Healthcare ................. 267,767 15,463,544
*Community Health Systems ............... 77,800 3,189,800
*HCIA ................................... 164,600 7,612,750
*Health Management Associates Class A ... 840,230 29,408,050
*HEALTHSOUTH ............................ 746,100 25,367,400
*Living Centers of America .............. 151,100 5,628,475
*Mariner Health Group ................... 94,200 1,542,525
*MedPartners/Mullikin ................... 112,900 3,217,650
*Physician Reliance Network ............. 147,000 5,824,875
*Quantum Health Resources ............... 650,300 6,746,863
*Quorum Health Group .................... 357,800 8,430,663
*Summit Care ............................ 48,300 1,008,263
*Value Health ........................... 286,096 7,867,640
*Vivra .................................. 365,675 10,878,831
------------
157,508,792
------------
Other - 2.99%
*Oxford Health Plans .................... 130,500 11,467,688
United Healthcare ....................... 317,700 19,538,550
------------
31,006,238
------------
Total Health Care ....................... 232,996,062
------------
Technology - 14.65%
Communications - 2.97%
*Cabletron Systems ...................... 211,450 14,008,563
*Glenayre Technologies .................. 78,900 3,027,788
*InterVoice ............................. 314,800 9,050,500
*Newbridge Networks ..................... 75,400 4,241,250
*Premiere Technologies .................. 18,900 444,150
------------
30,772,251
------------
<PAGE>
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
Technology (Continued)
Hardware - 6.47%
*Altera ................................. 70,000 $ 3,906,875
*Analog Devices ......................... 56,400 1,579,200
*Bay Networks ........................... 632,650 19,453,988
Dallas Semiconductor .................... 246,100 4,522,088
*Maxim Integrated Products .............. 31,900 990,894
*Microchip Technology ................... 158,100 4,308,225
*Proxima ................................ 161,800 3,074,200
*Silicon Valley Group ................... 113,300 2,747,525
*StorMedia Class A ...................... 73,400 1,734,075
*Symbol Technologies .................... 226,100 7,941,763
*Trimble Navigation Limited ............. 141,500 3,219,125
*Xilinx ................................. 174,500 5,562,188
*Zilog .................................. 238,700 8,056,125
-----------
67,096,271
-----------
Software - 5.21%
Adobe Systems ........................... 63,000 2,027,813
HBO & Co. ............................... 180,237 17,054,926
*Informix ............................... 444,900 11,762,044
*NetManage .............................. 377,100 4,148,100
*Novell ................................. 188,100 2,527,594
*Prism Solutions ........................ 10,500 280,875
Shared Medical Systems .................. 119,800 7,217,950
*Sterling Commerce ...................... 32,000 984,000
*Sterling Software ...................... 113,200 7,980,600
-----------
53,983,902
-----------
Total Technology ........................ 151,852,424
-----------
Transportation - 0.97%
Illinois Central ........................ 353,550 10,076,175
-----------
Total Transportation .................... 10,076,175
-----------
Total Common Stock
(cost $679,511,121) .................... 977,945,583
-----------
Principal
Amount
REPURCHASE AGREEMENTS - 5.86%
With Chase Manhattan 5.35% 4/1/96
(dated 3/29/96, collateralized by
$19,840,000 U.S. Treasury Notes
6.875% due 3/31/00, market value
$21,056,800)............................ $20,469,000 $20,469,000
With J.P. Morgan Securities 5.35% 4/1/96
(dated 3/29/96, collateralized by
$20,539,000 U.S. Treasury Notes
4.375% due 8/15/96, market
value $20,574,880)...................... 20,160,000 20,160,000
<PAGE>
Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber Securities 5.40% 4/1/96
(dated 3/29/96, collateralized by
$19,731,000 U.S. Treasury Notes
6.75% due 5/31/99, market value
$20,572,777)............................ $20,160,000 $20,160,000
--------------
Total Repurchase Agreements
(cost $60,789,000)....................... 60,789,000
--------------
TOTAL MARKET VALUE OF SECURITIES
OWNED - 100.18% (cost $740,300,121)...... 1,038,734,583
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (0.18%)............... (1,851,809)
--------------
NET ASSETS APPLICABLE TO 37,223,453 SHARES
($.01 Par Value) OUTSTANDING - 100.00%.. $1,036,882,774
==============
NET ASSET VALUE - DELCAP FUND A CLASS
($878,098,130 / 31,576,768 shares)...... $27.81
======
NET ASSET VALUE - DELCAP FUND B CLASS
($5,625,246 / 204,459 shares)........... $27.51
======
NET ASSET VALUE - DELCAP FUND C CLASS
($189,256 / 6,822 shares)............... $27.74
======
NET ASSET VALUE - DELCAP FUND INSTITUTIONAL
CLASS ($152,970,142 / 5,435,404 shares).. $28.14
======
- -------------------
*Non-income producing security for the six months ended March 31, 1996.
Top 10 holdings are indicated by bold face.
COMPONENTS OF NET ASSETS AT MARCH 31, 1996:
Common stock $.01 par value, 500,000,000
shares authorized to the Fund........... $680,109,133
Accumulated undistributed income:
Net investment loss+ ................... (3,507,900)
Net realized gain on investments*....... 61,847,079
Net unrealized appreciation of
investments........................... 298,434,462
--------------
Total net assets......................... $1,036,882,774
==============
- -------------------
+ In accordance with Statement of Position 93-2, "Determination, Disclosure
and Financial Statement Presentation of Income, Capital Gain and Return of
Capital Gain Distributions by Investment Companies," the Fund reclassified
$6,001,322 of permanent book and tax basis differences from accumulated net
investment loss to accumulated net realized gain on investments. This amount
was the net investment loss for book and tax purposes for the fiscal year
ended September 30, 1995.
See accompanying notes
<PAGE>
DELAWARE GROUP DELCAP FUND, INC. -
CONCEPT I SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1996
(UNAUDITED)
INVESTMENT INCOME:
Interest ................................. $ 1,666,626
Dividends ................................ 1,387,848 $ 3,054,474
-------------
EXPENSES:
Management fees ($3,750,907)
and directors' fees ($5,056) ............. 3,755,963
Distribution expenses .................... 1,315,940
Dividend disbursing and transfer agent
fees and expenses ........................ 1,131,050
Salaries ................................. 114,870
Reports and statements to shareholders ... 59,775
Taxes (other than income) ................ 38,950
Federal and state registration fees ...... 27,989
Professional fees ........................ 23,750
Custodian fees ........................... 20,298
Other .................................... 73,789 6,562,374
------------- -------------
NET INVESTMENT LOSS ...................... (3,507,900)
-------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain
from security transactions ............... 72,638,332
Net unrealized appreciation of investments
during the period ........................ 23,028,122
-------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS ...................... 95,666,454
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................ $ 92,158,554
=============
See accompanying notes
<PAGE>
DELAWARE GROUP DELCAP FUND, INC. -
CONCEPT I SERIES
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
3/31/96 YEAR ENDED
(UNAUDITED) 9/30/95
OPERATIONS:
Net investment loss ...................... $ (3,507,900) $ (6,001,322)
Net realized gain from
security transactions .................... 72,638,332 135,186,480
Net unrealized appreciation
during the period ........................ 23,028,122 61,062,660
------------- -------------
Net increase in net assets
resulting from operations ................ 92,158,554 190,247,818
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET REALIZED GAIN ON
SECURITY TRANSACTIONS:
DelCap Fund A Class ...................... (106,000,980) (61,939,346)
DelCap Fund B Class ...................... (422,917) (46,008)
DelCap Fund C Class ...................... (4) --
DelCap Fund Institutional Class .......... (15,970,617) (8,026,850)
--------------- ---------------
(122,394,518) (70,012,204)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
DelCap Fund A Class ...................... 149,987,944 172,133,494
DelCap Fund B Class ...................... 2,831,001 2,481,501
DelCap Fund C Class ...................... 186,846 --
DelCap Fund Institutional Class .......... 36,541,250 41,376,161
Net asset value of shares issued upon
reinvestment of dividends from net
realized gain from security transactions:
DelCap Fund A Class ...................... 94,027,813 54,475,614
DelCap Fund B Class ...................... 415,318 45,490
DelCap Fund C Class ...................... 4 --
DelCap Fund Institutional Class .......... 15,970,617 8,023,944
--------------- ---------------
299,960,793 278,536,204
--------------- ---------------
Cost of shares repurchased:
DelCap Fund A Class ...................... (227,220,356) (333,842,781)
DelCap Fund B Class ...................... (322,920) (437,022)
DelCap Fund C Class ...................... (995) --
DelCap Fund Institutional Class .......... (25,957,249) (45,032,949)
--------------- ---------------
(253,501,520) (379,312,752)
--------------- ---------------
Increase (decrease) in net assets derived
from capital share transactions .......... 46,459,273 (100,776,548)
--------------- ---------------
NET INCREASE IN NET ASSETS ............... 16,223,309 19,459,066
--------------- ---------------
NET ASSETS:
Beginning of period ...................... 1,020,659,465 1,001,200,399
--------------- ---------------
End of period ............................ $ 1,036,882,774 $ 1,020,659,465
=============== ===============
See accompanying notes
<PAGE>
Delaware Group DelCap Fund, Inc.-
Concept I Series
Note to Financial Statements
March 31, 1996
(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, as amended. The Fund is organized as a Maryland corporation and
offers four classes of shares.
The investment objective of the Fund is to seek long-term capital growth by
investing in common stocks and securities convertible into common stocks of
companies that have a demonstrated history of growth and have the potential
to support continued growth.
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 listed on an exchange are valued at the last
quoted sales price as of 4:00 pm on the valuation date. Securities not traded
or securities not listed on a 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 which approximates market value.
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 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 at least 100%
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 of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale
of investment securities are those of the specific securities sold. Dividend
income is recorded on the ex-dividend date and interest income is recorded
on an accrual basis.
Certain fund expenses are paid directly by brokers. The amount of these
expenses was less than 0.01% of each Fund's average net assets.
<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, 1996, the Fund had a liability for Investment
Management fees and other expenses payable to DMC for $101,455.
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 each of the B Class and C Class. No distribution expenses are
paid by the Institutional Class. At March 31, 1996, the Fund had a liability
for distribution fees and other expenses payable to DDLP for $48,539. For the
six months ended March 31, 1996, the Fund paid DDLP $88,328 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
six months ended March 31, 1996, DSC received $1,131,050 for these services.
At March 31, 1996, the Fund had a liability for such fees and other expenses
payable to DSC for $1,334.
Certain officers of DMC are officers, directors, and/or employees of the
Fund. These officers, directors and employees are paid no compensation by the
Fund.
3. Investments
During the six months ended March 31, 1996, the Fund made purchases of
$286,950,490 and sales of $370,606,448 of investment securities other than
U.S. government securities and temporary cash investments.
At March 31, 1996, unrealized appreciation for federal income tax purposes
aggregated $296,922,730 of which $344,031,816 related to unrealized
appreciation of securities and $47,109,086 related to unrealized depreciation
of securities.
The realized gain for federal income tax purposes was $72,568,101 for the
six months ended March 31, 1996.
4. Capital Stock
Transactions in capital stock shares were as follows:
Six Months Year
Ended Ended
3/31/96 9/30/95
---------- ----------
Shares sold:
DelCap Fund A Class. . . . . . . . 5,554,951 6,866,401
DelCap Fund B Class. . . . . . . . 105,676 99,480
DelCap Fund C Class. . . . . . . . 6,859 -
DelCap Fund Institutional Class. . 1,334,707 1,642,627
Shares issued upon reinvestment
of dividends from net realized
gain from security
transactions:
DelCap Fund A Class. . . . . . . . 3,634,628 2,420,065
DelCap Fund B Class. . . . . . . . 16,192 2,023
DelCap Fund C Class. . . . . . . . - -
DelCap Fund Institutional Class. . 610,498 354,102
---------- -----------
11,263,511 11,384,698
---------- -----------
Shares repurchased:
DelCap Fund A Class. . . . . . . . (8,395,050) (13,342,366)
DelCap Fund B Class. . . . . . . . (11,868) (18,268)
DelCap Fund C Class. . . . . . . . (37) -
DelCap Fund Institutional Class. . (951,007) (1,838,303)
---------- -----------
(9,357,962) (15,198,937)
---------- -----------
Net increase (decrease). . . . . . 1,905,549 (3,814,239)
---------- -----------
5. Lines of Credit
The Fund has a committed line of credit for $15 million. No amount was
outstanding at March 31, 1996, 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,
3/31/96(1) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period. . . . . . . $28.870 $25.570 $26.080 $20.730 $21.470 $15.810
Income (loss) from investment operations:
Net investment income (loss)(2) . . . . . . . . . (0.100) (0.166) (0.218) (0.125) (0.059) 0.064
Net realized and unrealized gain (loss)
from security transactions. . . . . . . . . . 2.580 5.296 0.528 5.475 (0.651) 6.496
-------- -------- -------- ---------- -------- --------
Total from investment operations. . . . . . . . . 2.480 5.130 0.310 5.350 (0.710) 6.560
-------- -------- -------- ---------- -------- --------
Less distributions:
Dividends from net investment income. . . . . . . none none none none (0.030) (0.410)
Distributions from net realized gain
on security transactions. . . . . . . . . . . . (3.540) (1.830) (0.820) none none (0.490)
-------- -------- -------- ---------- -------- --------
Total distributions. . . . . . . . . . . . . . . (3.540) (1.830) (0.820) none (0.030) (0.900)
-------- -------- -------- ---------- -------- --------
Net asset value, end of period. . . . . . . . . $27.810 $28.870 $25.570 $26.080 $20.730 $21.470
======== ======== ======== ========== ======== ========
Total return3. . . . . . . . . . . . . . . . . . 9.51% 22.04% 1.17% 25.81% (3.32%) 43.25%
Ratios/supplemental data:
Net assets, end of period (000 omitted). . . . . $878,098 $888,571 $890,787 $1,057,358 $993,125 $512,356
Ratio of expenses to average net assets. . . . . 1.35% 1.37% 1.35% 1.30% 1.39% 1.43%
Ratio of net investment loss to average
net assets (0.74%) (0.67%) (0.68%) (0.43%) (0.26%) 0.63%
Portfolio turnover. . . . . . . . . . . . . . . . 60% 51% 34% 51% 24% 33%
</TABLE>
- ---------------
1 Ratios have been annualized and total return has not been annualized.
2 The per share information for the six months ended 3/31/96 and the year
ended 9/30/95 was based on the average shares outstanding method.
3 Does not include maximum sales charge that is or was in effect 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 Delcap
Fund B Class Fund C Class Fund Institutional Class
-------------------------------- ------------ -----------------------------------------
Six Months Year 9/6/94(2) 11/29/95(2) Six Months Year Year 11/9/92(2)
Ended Ended to to Ended Ended Ended to
3/31/96(1) 9/30/95 9/30/94 3/31/96 3/31/96(1) 9/30/95 9/30/94 9/30/93
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $28.680 $25.560 $25.180 $28.880 $29.130 $25.710 $26.140 $22.000
Income (loss) from investment operations:
Net investment loss3 . . . . . . . (0.192) (0.340) (0.008) (0.136) (0.059) (0.091) (0.080) (0.027)
Net realized and unrealized gain
from security transactions. . 2.562 5.290 0.388 2.536 2.609 5.341 0.470 4.167
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 2.370 4.950 0.380 2.400 2.550 5.250 0.390 4.140
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income none none none none none none none none
Distributions from net realized gain
on security transactions. . . . (3.540) (1.830) none (3.540) (3.540) (1.830) (0.820) none
------- ------- ------- ------- ------- ------- ------- -------
Total distributions. . . . . . . . . (3.540) (1.830) none (3.540) (3.540) (1.830) (0.820) none
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $27.510 $28.680 $25.560 $27.740 $28.140 $29.130 $25.710 $26.140
======= ======= ======= ======= ======= ======= ======= =======
Total return4. . . . . . . . . . . . . . . 9.12% 21.34% 1.51% 9.20% 9.67% 22.45% 1.48% 21.31%
Ratios/supplemental data:
Net assets, end of period (000 omitted) $5,625 $2,710 $287 $190 $152,970 $129,378 $110,126 $85,588
Ratio of expenses to average net assets 2.05% 2.07% 2.05% 2.05% 1.05% 1.07% 1.05% 1.02%
Ratio of net investment loss to
average net assets. . . . . . . . . . (1.44%) (1.37%) (1.38%) (1.44%) (0.44%) (0.37%) (0.38%) (0.15%)
Portfolio turnover . . . . . . . . . 60% 51% 34% 60% 60% 51% 34% 51%
</TABLE>
- ---------------
1 Ratios have been annualized and total return has not been annualized.
2 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 and
DelCap Fund C Class.
3 The per share information for the six months ended 3/31/96 and the year
ended 9/30/95 was based on the average shares outstanding method.
4 Does not include contingent deferred sales charge which varies from 1%-4%
for Delcap Fund B Class and 1% for DelCap Fund C Class depending upon the
holding period.
<PAGE>
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 sets forth details about charges, expenses,
investment objectives and operating policies of the Fund. 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 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.
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
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.
<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.
This report must be preceded or accompanied by a current DelCap Fund PROSPECTUS
and the Delaware Group Fund Performance Update for the most recently
completed calendar quarter.
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-BANK
Copy Rights Delaware Distributors, L.P.
Printed in the U.S.A. on recycled paper.
SA - 016 [3/96] PP5/96
<PAGE>
- ---------------------------
DELAWARE
GROUP
DELCAP
FUND
- ---------------------------
1996
SEMI-ANNUAL
REPORT
A Tradition of Sound Investing Since 1929
DELAWARE
GROUP
----------------
Philadelphia * London
