<PAGE>
1996
Annual
Report
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Delaware
Group
Delcap
Fund
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(Photo of Historical sites and buildings of Philadelphia)
A Tradition of Sound Investing Since 1929
DELAWARE
GROUP
=========
Philadelphia o London
<PAGE>
DelCap Fund
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Investment
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Objective
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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.
(Photo of Historical sites and buildings of Philadelphia)
About Our Cover
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Headquartered in Philadelphia, Pennsylvania, Delaware Group shares in the
tradition of a city built on the vision of opportunity. Amidst the city's
historic sites, symbolic of our nation's freedom and prosperity, Delaware Group
provides both individual and institutional investors with a conservative,
disciplined approach to money management.
Delaware Group
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A Tradition of
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Sound Investing
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Delaware Management Company's investment experience dates back to 1929. Our
first mutual fund was established in 1938. Headquartered in Philadelphia with an
affiliate in London, Delaware manages a full range of mutual fund and annuity
investments and also offers retirement plan services. Delaware International
Advisers Ltd., our London-based international affiliate, was established in
1990.
Delaware Group manages mutual funds with the same time-tested, disciplined
strategies demanded by the large public and private pension plans, foundations
and endowments that are among our clients. With over 60 years of experience, we
have demonstrated our commitment to quality investment management and service.
Today, Delaware manages more than $30 billion in mutual funds and
institutional investment advisory accounts. We measure our success by the
financial success and satisfaction of our nearly 500,000 shareholders.
<PAGE>
November 8, 1996
Dear
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Shareholder:
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This past fiscal year DelCap Fund achieved superior results despite increased
market volatility. It was a time to both reflect on our accomplishments and
position your Fund to take advantage of new opportunities.
For the 12 months ended September 30, 1996, DelCap Fund's A Class shares
provided a strong +21.09% return (with distributions reinvested at net asset
value). This return outpaced the S&P 500 Index and the NASDAQ Industrial Index.
Since DelCap Fund's inception more than 10 years ago, senior portfolio
manager Edward N. Antoian has consistently employed a "fundamental" approach to
investing - a path that emphasizes long-term growth and careful
company-by-company analysis.
On June 3, 1996, Delaware welcomed Gerald S. Frey to co-manage DelCap and
continue our disciplined strategy. Mr. Frey focuses primarily on technology
stock selection for the Fund.
At times, long-term investment strategies have not been the most fashionable
course on Wall Street. By sticking to this route, however, we were able to
outperform our benchmarks in fiscal 1996 even as market fluctuations this summer
left some investors adrift.
During the past year, rapidly shifting views about consumer prices, U.S.
economic growth and interest rates affected the stock market. In the end,
inflation was subdued, corporate profits were healthy and interest rates
declined. As of September 30, 1996, the Federal Funds rate - the rate banks
charge each other for overnight loans - was 50 basis points (0.50%) lower than
12 months earlier.
Your Fund increased its holdings of health care companies during the period
while reducing exposure to technology companies. These adjustments were
moderate, however; most of our top 10 holdings as of the fiscal year-end were
stocks your Fund held in 1995.
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<TABLE>
<CAPTION>
Average Annual Total Return
Six Months Ended 12 Months Ended 10 Years Ended
September 30, 1996 September 30, 1996 September 30, 1996
---------------------- ----------------------- ------------------------
<S> <C> <C> <C>
DelCap Fund A +10.58% +21.09% +17.17%
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NASDAQ Industrial Index +7.82% +15.19% +12.39%
Standard & Poor's 500 Index +6.36% +20.89% +14.95%
Lipper Mid-Cap Fund Average +8.36% +16.72% +14.68%
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</TABLE>
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 9. The Lipper Average consisted of 163, 140 and 21 funds,
respectively, for the six-month, 12-month and 10-year periods ending September
30, 1996.
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1
<PAGE>
Our long-term investment philosophy is evident in the fact that since 1988,
DelCap's annual portfolio turnover rate has consistently been lower than the
average of funds in Morningstar's Growth Fund category. This has helped the Fund
provide superior long-term tax-adjusted returns compared to its peers, as shown
on page 8.
Although November's federal election results have had a positive effect on
interest rates and the stock market, the long-term outlook remains unclear.
Still, we believe our approach has the potential to weather the uncertainties
ahead and provide greater rewards than investing styles relying on short-term
investor sentiment.
With a diversified mix of small and mid-size companies, we believe DelCap
Fund's portfolio is well-positioned. We thank you for being among DelCap's more
than 60,000 shareholders. We encourage you to read Mr. Antoian's and Mr. Frey's
review of the Fund's performance and their outlook for 1997.
Sincerely,
/s/ Wayne A. Stork
- -----------------------------------
Wayne A. Stork
Chairman, President
and Chief Executive Officer
(Photo of Edward N. Antoian and Gerald S. Frey)
Edward N. Antoian (standing) has managed DelCap Fund since its inception.
Gerald S. Frey joined Delaware Management Co. on June 3, 1996.
A Conversation With
Edward N. Antoian and Gerald S. Frey
Your Fund's
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Portfolio
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Managers
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Q: DelCap Fund had an excellent year even though stock prices declined in
July. What contributed to the Fund's performance? Antoian: Investor demand for
stocks of companies that demonstrate quality growth was strong. Many of our
consumer stocks, especially apparel companies, did well. We achieved solid
returns from stocks of selected health care, business services and financial
companies that are industry leaders. We also benefited from a few company
mergers. Overall, stocks of medium size companies - our primary area of focus -
generally outpaced both large cap stocks and stocks of small companies.
2
<PAGE>
Q: What exactly is the mid-cap market? Why did it do well and how does DelCap
fit in?
Antoian: Stocks are measured by market capitalization - a stock's price times
number of shares outstanding. Generally mid-cap companies have a market cap
of between $250 million and $1.5 billion. We were in the upper end of that
range as of September 30
(see Portfolio Highlights chart).
In 1996, both interest rates and the dollar's value compared to other
currencies rose. Many investors perceived mid-cap companies as offering high
growth potential and less risk than other companies because:
o The profits of mid-cap companies are generally not as vulnerable to the
effects of a rising dollar as large multinational corporations. When the
dollar rises in value, as it did this past year, the overseas earnings of big
companies tend to be reduced since a given amount of yen, marks etc. get
repatriated into fewer dollars.
* Small cap companies tend to be more adversely affected by rising interest
rates than mid-cap companies since smaller firms are more likely to rely on
borrowed money to expand. Even though interest rates were actually lower on
September 30 than 12 months earlier, many investors have been expecting the
Federal Reserve to raise rates to curtail inflation. Those expectations,
though unfulfilled, adversely affected small cap stock prices, and contributed
to the market's sharp decline in July. Only 1.4% of DelCap's portfolio was
invested in small cap stocks as of September 30.
The Fund's Investment Strategy
Q: What do you look for when you invest? Antoian: We pick one company at a time
and look for a solid track record of growth in quarterly earnings and market
share. We meet with management, visit plants, analyze products, 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.
<TABLE>
<CAPTION>
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Portfolio Highlights
September 30, 1995 September 30, 1996
----------------------- -----------------------
<S> <C> <C>
Market Value of Companies*
Less than $250 million 8.5% 1.4%
$250 million to $1.5 billion 45.2% 44.4%
Greater than $1.5 billion 46.3% 54.2%
Median Market Capitalization $956 million $1.2 billion
Number of Stocks 115 103
Cash Position* 4.6% 11%
Average Stock
Price-To-Earnings Ratio** 18 24.9
Beta*** 0.90 1.11
</TABLE>
*percent of net assets **based on a consensus of analysts' earnings estimates
for 1997 as reported to I/B/E/S.
***A measure of volatility relative to the S&P 500 Index for the past three
years ended September 30. A number less than 1.0 means a security has fluctuated
in price less than the Index. A number more than 1.0 means the security has
fluctuated in price more than the Index.
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3
<PAGE>
Frey: Our investment discipline is to buy shares of companies whose stock price
relative to its earnings (P/E ratio) is less than 70% of the company's earnings
growth rate. We believe this indicates capital appreciation potential,
especially if a company can show consistent earnings growth and industry
leadership.
Q: The Fund's portfolio turnover rate in 1996 was 72%, much lower than many
growth-oriented mutual funds. When do you sell a stock? Antoian: When a
company's P/E equals its growth rate or there is a negative fundamental change
in the company or the environment in which it operates, we take it as a sell
signal. Of course, we use other indicators as well. We truly try to understand
whether a company is doing what it needs to do to grow at the same rate in the
future. We're not preoccupied with a stock's short-term price momentum.
Our Strategic Positioning
The Consumer Sector
Q: Consumer stocks are affected by people's ability to spend. Given that problem
loans at credit card companies are at an all-time high, why does this broad
sector make up the largest share of DelCap portfolio? Antoian: Overall,
households have piled up a lot of debt. And that's one reason why we are
underweighted in financial stocks. However, we believe robust spending is likely
to continue among the affluent and teenagers. We look for companies with the
products, the management and the financial strength to capitalize on long-term
trends. We like businesses that anticipate changing consumer tastes.
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ANNUAL PORTFOLIO TURNOVER
DELCAP FUND MORNINGSTAR GROWTH FUND CATEGORY
1988 77% 92%
1989 42% 83%
1990 45% 90%
1991 33% 91%
1992 24% 75%
1993 51% 77%
1994 34% 81%
1995 51% 90%
1996 72% 88%
Past performance does not guarantee future results. There were 853 funds in
the Morningstar Growth Fund category as of June 30, 1996, the date of
Morningstar's latest report.
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Q: Any examples?
Antoian: Gucci Group and
Tommy Hilfiger. Gucci - an apparel brand name synonymous with flamboyance and
affluence - went public last October and its stock has done well. The Tommy line
of casual clothing has become popular with young adults, and the share price has
reflected the company's leadership position in a growing market. Both stocks
were among the Fund's top 10 holdings as of September 30.
A disappointment during 1996 was General Nutrition Centers. We believe the
vitamin and health products retailer has the potential to do well as America's
population ages. But being "diet conscious" has become somewhat less fashionable
than a few years ago, and the company has suffered.
4
<PAGE>
Health Care: Patience and Growth
Q: Health care stocks did well in 1996, and the Fund's weighting in this
sector was slightly more than that of the Wilshire MidCap Index as of September
30. What's been driving earnings growth in this area? Antoian: Bigger is better,
and we expect managed care companies and hospitals to continue to merge. Both
industries see a need to consolidate to increase service and shift the balance
of power (for pricing services) from insurance companies and others who pay
medical bills back to care providers. During the year, shares of Health
Management Associates, a Florida based hospital chain whose stock we have held
for several years, appreciated significantly. The company's stock became our
second largest holding (2.54% of net assets as of September 30).
Generally, we look for companies that can maintain profit margins, increase
volume and capture market share. That requires patience when the market punishes
strong companies that don't meet short-term expectations. We saw that happen in
July to United Healthcare, a DelCap holding whose share price dropped sharply
when the company warned analysts of weak short-term results. We maintained our
position because we were confident of the company's long-term prospects. In
September, the American Association of Retired Persons awarded United and other
companies a contract to provide services to AARP members.
Frey: This year, we also shifted our health care mix to put a somewhat
greater emphasis on small drug, service and medical device companies we believe
are positioned to benefit from the introduction of new products. A year ago, we
owned no pharmaceutical companies. As of September 30, this industry represented
more than 4% of the Fund's net assets. Our holdings included several
biotechnology companies.
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Broad Sector Diversification
DelCap Fund vs. Wilshire MidCap Index
September 30, 1996
<TABLE>
<CAPTION>
Share of Fund's Share of
Broad Sector Net Assets Index Investment Rationale
- --------------- ----------------- --------- --------------------------
<S> <C> <C> <C>
Consumer Goods and 32% 27% Higher Spending
Consumer Services by Affluent People/Teens
Health Care 15% 14% Industry Consolidation,
Aging Population
Business Services 18% 9% Corporate Outsourcing Trend
Technology 13% 21% Earnings Growth Inconsistent
Financial 8% 8% High Consumer Debt
Basic Industry/Energy 2% 16% Low Growth Potential
Transportation/Utilities 1% 2% Unstable Earnings,
Industry Turmoil
</TABLE>
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5
<PAGE>
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DELCAP FUND'S PERFORMANCE AMID SHORT-TERM MARKET VOLATILITY
Total Return March 31, 1996 to September 30, 1996
NASDAQ Industrial Index S&P 500 Index DelCap Fund A
3/29/96 0 0 0
4/5/96 1.73% 1.64% 1.37%
4/12/96 1.10% -1.28% -.83%
4/19/96 3.95% .03% 2.48%
4/26/96 8.84% 1.35% 5.97%
5/3/96 9.16% -.44% 5.14%
5/10/96 11.13% 1.26% 6.76%
5/17/96 14.95% 3.98% 10.18%
5/24/96 16.30% 5.50% 11.47%
5/31/96 15.60% 4.09% 10.04%
6/7/96 13.43% 4.80% 9.50%
6/14/96 12.02% 3.70% 8.96%
6/21/96 7.49% 3.86% 5.61%
6/28/96 8.47% 4.49% 6.80%
7/5/96 6.12% 2.47% 4.46%
7/12/96 .16% .78% -1.65%
7/19/96 -.78% -.37% -2.73%
7/26/96 -3.21% -.81% -2.91%
8/2/96 .04% 3.41% 1.08%
8/9/96 .74% 3.41% 2.77%
8/16/96 .83% 3.96% 2.99%
8/23/96 1.89% 4.28% 3.31%
8/30/96 2.74% 1.98% 4.10%
9/6/96 2.27% 2.61% 4.03%
9/13/96 5.61% 6.57% 8.38%
9/20/96 7.12% 7.63% 9.93%
9/27/96 8.32% 7.54% 10.43%
Past performance does not guarantee future results. See pages 8 an 9 for
long-term standard performance information for all classes.
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During the last six months of the fiscal year, a period of increased market
volatility, your Fund provided higher returns with less volatility than the
NASDAQ Industrial Index.
Technology: Connecting With
the Future
Q: Technology shares have been very volatile during the past year. What's
your view on this sector's prospects for 1997? Frey: In 1996, we reduced our
holdings in technology as the computer industry's short-term growth prospects
faded. We avoided cyclical semiconductor companies and emphasized software and
database management companies. We plan to continue this strategy while gradually
increasing the percentage of technology companies to match that of the overall
market.
In the coming months, we plan to focus more on companies that have market
leading technologies. We want to participate in the growth of such businesses.
Some companies we've added recently include Affiliated Computer Se rvices, a
leader in processing transactions from automated teller machines, and Netscape
Communications, whose technology has introduced millions of Americans to the
Internet.
During 1996, we sold our position in Bay Networks of California, our second
largest holding a year ago. We concluded that the company faced too many
internal challenges that might impede earnings growth.
6
<PAGE>
Market Outlook
Q: Do you think the small and mid-cap stock market's short-term fluctuations
in 1997 will be as pronounced as they were this past summer? Frey: If the
direction of interest rates remains unclear and corporate profit growth slows,
you'll likely have a tug of war between investors who think the glass is half
empty and those who think it's half full. We're somewhat cautious. We believe a
modest increase in interest rates by the Federal Reserve Board is likely, but
that inflation will remain relatively tame. Consequently, our cash position has
increased from 4.6% a year to 11% as of September 30.
We're currently striving for a somewhat more concentrated yet diversified
portfolio - that is, fewer names and somewhat larger positions in a broad range
of industries. This will allow us to spend even more time keeping abreast of
what's happening at each company we own. At the fiscal year's end, our top 10
holdings amounted to 22% of net assets. No one company was more than 3% of net
assets.
Q: In 1937, 1957 and 1973 - years following the re-election of an incumbent
U.S. President - the stock market declined. Is the current economic and
political environment positive for growth stocks? Antoian: The past is not a
foolproof predictor. Stocks did well in 1985 after Reagan was re-elected, for
instance. Anyway, we don't seek clues from history. Ours is a bottoms-up
approach that focuses on individual company performance and what we learn from
first-hand research. We're most concerned with consistency of earnings and the
strength of management.
We have always believed that the health care, technology and consumer sectors
offer superior long-term growth potential, and some of that potential could well
be recognized in 1997. As the 20th century draws to a close, the U.S. is a
country with an aging population that wants simpler, more convenient products
and services. More companies want to "outsource" parts of their business to
focus on what makes them unique. Our task is to find those companies that have
the expertise, the means and the strategy to capitalize on change.
Q: Thank you, gentlemen. We look forward to your next report in January.
7
<PAGE>
DelCap Fund
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and Taxes
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As shown on page 4, DelCap's portfolio turnover rate has historically been
lower than the average of comparable mutual funds. We believe this has helped
your Fund provide superior long-term returns after taking into account the
impact of federal taxes. Of course, the tax impact on investors is but one of
many considerations when the portfolio managers decide whether to sell a stock.
By paying more long-term gains than short-term gains since 1986, the Fund
increased the potential tax savings for investors in higher tax brackets. That
is because short-term gains have been taxed at a higher rate since federal tax
reform in 1986.
Of course, investors who own DelCap Fund through an Individual
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Tax-Adjusted Average
Annual Total Returns
(Dividends and capital gains reinvested,
4.75% sales charge, assumes 39.6% tax bracket)
Morningstar
DelCap Growth
Fund A Fund Average
Three Years +13.81% +12.74% (505 funds)
Five Years +12.76% +12.59% (317 funds)
10 Years +12.45% +9.40% (196 funds)
Source: Morningstar Inc.
Morningstar does not calculate one-year tax-adjusted returns. Above results
reflect all elements of total return and the latest available data for the
periods ended June 30, 1996. Results assume a 28% tax on realized long-term
capital gains and a 39.6% tax on realized short-term gains. The Fund has capital
gains and losses that have not yet been realized and this may affect future
tax-adjusted returns. Returns would be higher for investors in lower tax
brackets. B and C class shares do not yet have three-year records. Non-tax
adjusted returns for all classes can be found on page 9. Past performance does
not guarantee future results.
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Retirement Account or other tax-deferred investment account generally incur
no capital gains taxes.
We believe DelCap Fund's tax-efficiency is worth reviewing as you and your
financial adviser work to achieve your long-term financial goals.
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DelCap Fund Capital Gains History
September 30, 1986 through September 30, 1996 (Dollars Per Share)
Fiscal Year Short-Term Gains Long-Term Gains Total
1987 $0.000 $7.420 $7.420
1988 $0.000 $0.265 $0.265
1989 $0.000 $0.000 $0.000
1990 $0.000 $0.290 $0.290
1991 $0.000 $0.490 $0.490
1992 $0.000 $0.000 $0.000
1994 $0.075 $0.745 $0.820
1995 $0.000 $1.830 $1.830
1996 $0.810 $2.730 $3.540
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Total $0.885 $13.770 $14.655
The IRS taxes short-term capital gains, those gains realized in less than a
year, as ordinary income. Long-term capital gains are currently taxed at a 28%
rate, which for some taxpayers is lower than the rate they pay on ordinary
income. Past performance does not guarantee future results.
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8
<PAGE>
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DelCap Fund's Long-Term Performance
<TABLE>
<CAPTION>
With Reinvestment Without Reinvestment
of Distributions of Distributions NASDAQ Industrial Index S&P 500 Index
<S> <C> <C> <C> <C>
Sept. '86 $9,528 $9,528 $10,000 $10,000
Sept. '87 $15,537 $8,600 $13,811 $14,343
Sept. '88 $15,185 $8,018 $11,281 $12,569
Sept. '89 $20,978 $10,979 $13,337 $16,710
Sept. '90 $17,834 $9,107 $10,708 $15,166
Sept. '91 $25,547 $12,368 $17,152 $19,882
Sept. '92 $24,698 $11,941 $18,041 $22,077
Sept. '93 $31,073 $15,023 $22,671 $24,942
Sept. '94 $31,434 $14,729 $22,596 $25,862
Sept. '95 $38,376 $16,630 $28,534 $33,541
Sept. '96 $46,453 $17,707 $32,195 $40,346
</TABLE>
Capital gains and dividend reinvestment have provided more than half of the
total return of DelCap Fund for the past 10 years.
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DelCap Fund Performance
Average Annual Total Return Through September 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Lifetime Ten Years Five Years One Year
Class A (Est.1986) +21.95% +16.60% +11.61% +15.33%
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Class B (Est.1994)
Excluding Sales Charge +20.92% +20.27%
Including Sales Charge +19.73% +16.27%
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Class C* (Est.1995)
Excluding Sales Charge +20.38%
Including Sales Charge +19.38%
*aggregate return through September 30, 1996
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</TABLE>
All performance includes reinvestment of distributions and applicable sales
charges as described below. 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. Performance for Class B and C shares
"excluding sales charge" assumes the investment was not redeemed.
Class A shares, initially offered March 27, 1986, carry a 4.75% maximum
front-end sales charge and a 12b-1 fee. Class B shares, initially offered May 2,
1994, 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 deferred sales charge
if redeemed before the end of the sixth year. Class C shares, initially offered
November 29, 1995, have a 1% annual distribution and service fee. If shares are
redeemed within 12 months, a 1% contingent deferred sales charge applies.
The average annual total returns for the lifetime, ten-year, five-year and
one-year periods ended September 30, 1996 for DelCap Fund's Institutional Class,
which is available without sales or asset-based distribution charges only to
certain eligible institutional accounts, were, +22.65%, +17.30%, +12.97% and
+21.44%. The Institutional Class was initially made available November 9, 1992;
performance prior to that date was adjusted to eliminate the effect of the sales
charge, but not Class A's asset-based distribution charge.
9
<PAGE>
Financial
- -------------------
Statements
- -------------------
Delaware Group DelCap Fund, Inc. -
Concept I Series
Statement of Net Assets
September 30, 1996
Number Market
of Shares Value
COMMON STOCK - 92.39%
Banking, Finance and Insurance - 8.73%
AMBAC ........................................... 76,300 $ 4,253,725
Aames Financial ................................. 337,200 16,986,450
ADVANTA - Class B ............................... 174,400 7,444,700
Blanch(E.W.)Holdings ............................ 509,600 9,809,800
CMAC Investment ................................. 215,100 13,658,850
MBIA ............................................ 169,700 14,551,775
*Oxford Health Plans ............................. 75,600 3,765,825
The Money Store ................................. 467,600 12,303,725
United Healthcare ............................... 189,000 7,867,125
*Value Health .................................... 211,296 3,961,800
*WFS Financial ................................... 138,160 2,866,820
------------
97,470,595
------------
Cable, Media, & Publishing - 1.52%
*International Family Entertainment
Class B ....................................... 546,875 8,955,078
Reynolds & Reynolds Class A ..................... 307,400 8,030,825
------------
16,985,903
------------
Computers & Technology - 18.96%
*3COM ............................................ 128,400 7,712,025
*Affiliated Computer Services Class A ............ 400,000 23,400,000
*BMC Software .................................... 204,800 16,307,200
*BISYS Group ..................................... 594,500 24,523,125
*DST Systems ..................................... 103,900 3,324,800
*Documentum ...................................... 95,600 2,987,500
First Data ...................................... 261,561 21,349,917
*Gartner Group Class A ........................... 411,900 13,901,625
HBO & Co. ....................................... 279,774 18,622,457
*HCIA ............................................ 187,600 11,326,350
*Informix ........................................ 80,200 2,240,588
*Netscape Communications ......................... 112,900 5,228,681
*Newbridge Networks .............................. 130,800 8,338,500
*Premisys Communications ......................... 149,500 5,503,469
*Pure Atria ...................................... 502,000 19,013,250
SEI ............................................. 322,100 7,448,563
Shared Medical Systems .......................... 119,800 6,806,138
*Sterling Commerce ............................... 32,000 944,000
*Sterling Software ............................... 130,800 9,989,850
*Symbol Technologies ............................. 58,600 2,695,600
------------
211,663,638
------------
Consumer Products - 0.31%
*Revlon - Class A ................................ 111,000 3,441,000
------------
3,441,000
------------
Note: Top 10 holdings are in bold face ........
<PAGE>
Number Market
of Shares Value
Electronics & Electrical - 2.66%
Dallas Semiconductor .......................... 279,800 $ 5,106,350
*LSI Logic ..................................... 224,800 5,226,600
*Microchip Technology .......................... 222,200 8,360,275
*StorMedia Class A ............................. 440,900 5,401,025
*Xilinx ........................................ 166,100 5,637,019
------------
29,731,269
------------
Environmental Services - 4.08%
*Philip Environmental .......................... 986,900 9,375,550
*USA Waste Services ............................ 691,470 21,781,305
*United Waste Systems .......................... 417,400 14,400,300
------------
45,557,155
------------
Food, Beverage and Tobacco - 0.37%
*Performance Food Group ........................ 245,250 4,107,937
------------
4,107,937
------------
Healthcare & Pharmaceuticals - 15.10%
*Access Health ................................. 154,500 8,748,563
*Apria Healthcare Group ........................ 437,200 8,197,500
*ClinTrials .................................... 150,200 6,026,775
Dentsply International ........................ 227,400 10,090,875
*Dura Pharmaceuticals .......................... 325,200 11,971,425
*Genetics Institute ............................ 75,900 5,256,075
*Health Management Associates Class A .......... 1,141,395 28,392,201
*Healthsouth ................................... 667,700 25,622,988
*Mariner Health Group .......................... 94,200 1,436,550
*MedPartners ................................... 391,800 8,913,450
*NBTY .......................................... 462,300 7,627,950
*Oakley ........................................ 209,400 8,899,500
*Phycor ........................................ 128,500 4,899,063
*Physician Reliance Network .................... 294,000 4,483,500
*Quorum Health Group ........................... 410,300 10,103,638
*Sunglass Hut International .................... 375,700 5,987,719
*Vivra ......................................... 365,675 11,930,147
------------
168,587,919
------------
Leisure, Lodging, & Entertainment - 11.80%
*Boston Chicken ................................ 305,100 10,773,843
Callaway Golf ................................. 408,400 13,936,650
*Circus Circus Enterprises ..................... 128,700 4,552,763
*Foodmaker ..................................... 928,450 9,284,500
*HFS ........................................... 529,400 35,403,625
*Interstate Hotels ............................. 217,400 6,005,675
La Quinta Inns ................................ 335,700 6,546,150
*Landry's Seafood Restaurants .................. 282,300 6,986,924
*Lone Star Steakhouse/Saloon ................... 482,400 14,683,050
*Mirage Resorts ................................ 586,600 15,031,625
*Prime Hospitality ............................. 308,900 5,096,850
*Station Casinos ............................... 292,100 3,505,200
------------
131,806,855
------------
Retail - 10.82%
*CompUSA ..................................... 263,000 14,202,000
*General Nutrition ........................... 862,200 15,196,275
Home Depot .................................. 150,000 8,531,250
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Retail -
*Kohl's ...................................... 355,200 $ 12,787,200
*Micro Warehouse ............................. 262,300 6,737,831
*Saks Holdings ............................... 355,900 12,456,500
St. John Knits .............................. 158,800 7,959,850
*Staples ..................................... 950,737 21,094,477
Talbots ..................................... 225,100 6,753,000
*Tech Data ................................... 350,100 9,715,275
*Value City Department Stores ................ 520,600 4,685,400
*Vitalink Pharmacy Services .................. 29,600 703,000
--------------
120,822,058
--------------
Telecommunications - 1.58%
*American Portable Telecom ................... 152,400 1,514,475
*Octel Communications ........................ 237,200 6,908,450
*Tellabs ..................................... 130,600 9,223,625
--------------
17,646,550
--------------
Textiles, Apparel & Furniture - 6.25%
*Cyrk ........................................ 242,600 2,486,650
*Designer Holdings Ltd. ...................... 345,800 9,034,025
Gucci Group N.V ............................. 317,200 22,997,000
*Nine West Group ............................. 197,600 10,719,800
*Tommy Hilfiger .............................. 357,400 21,175,950
Warnaco Group Class A ....................... 142,500 3,384,375
--------------
69,797,800
--------------
Transportation & Shipping - 1.00%
Illinois Central ............................. 353,550 11,181,019
--------------
11,181,019
--------------
Utilities - 1.91%
*AES ......................................... 542,097 21,311,187
--------------
21,311,187
--------------
Miscellaneous - 7.30%
*ADT Limited ................................. 901,900 17,248,837
*CUC International ........................... 526,737 21,003,637
*Donna Karan International ................... 161,300 3,689,738
*Interim Services ............................ 250,900 10,725,975
Olsten ...................................... 377,174 9,382,203
*Personnel Group of America .................. 243,900 6,341,400
*TAG Heuer International ADR ................. 242,400 4,848,000
*Wind River Systems .......................... 187,800 8,310,150
--------------
81,549,940
--------------
Total Common Stock
(cost $690,968,676) ......................... $1,031,660,825
--------------
Principal
Amount
REPURCHASE AGREEMENTS - 10.29%
With Chase Manhattan 5.60% 10/1/96
(dated 9/30/96, collateralized by
$38,772,000 U.S. Treasury Notes
6.125% due 5/31/97, market
value $39,673,033)............................ 38,851,000 38,851,000
<PAGE>
Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With J.P. Morgan Securities 5.60%
10/1/96 (dated 9/30/96,
collateralized by $37,884,000 U.S.
Treasury Notes 6.625% due 6/30/01,
market value $38,794,821).................... $38,022,000 $ 38,022,000
With PaineWebber Securities 5.65%
10/1/96 (dated 9/30/96,
collateralized by $26,405,000 U.S.
Treasury Notes 6.125% due 5/15/98,
market value $27,048,120 and
$11,499,000 U.S. Treasury Notes
5.65% due 8/31/99, market value
$11,746,152)................................. 38,022,000 38,022,000
----------- --------------
Total Repurchase Agreements
(cost $114,895,000).......................... 114,895,000
--------------
TOTAL MARKET VALUE OF SECURITIES OWNED -
102.68% (cost $805,863,676) ................. 1,146,555,825
--------------
LIABILITIES NET OF RECEIVABLES AND OTHER
ASSETS - (2.68%)............................. (29,924,131)
--------------
NET ASSETS APPLICABLE TO 36,257,226 SHARES
($.01 Par Value) OUTSTANDING - 100.00%....... $1,116,631,694
==============
NET ASSET VALUE - DELCAP FUND A CLASS
($923,248,133 / 30,037,007 shares)........... $30.74
=======
NET ASSET VALUE - DELCAP FUND B CLASS
($13,239,311 / 436,896 shares)............... $30.30
=======
NET ASSET VALUE - DELCAP FUND C CLASS
($1,946,863 / 63,681 shares) ................ $30.57
=======
NET ASSET VALUE - DELCAP FUND INSTITUTIONAL
($178,197,387 / 5,719,642 shares)........... $31.16
=======
*Non-income producing security for the year ended September 30, 1996.
COMPONENTS OF NET ASSETS AT SEPTEMBER 30, 1996:
Common stock $.01 par value, 500,000,000 shares
authorized to the Fund......................... $652,498,731
Accumulated undistributed income:
Net investment loss............................ (7,244,771)
Net realized gain on investments. 130,685,585
Net unrealized appreciation of investments 340,692,149
-------------
Total Net Assets............................... $1,116,631,694
=============
- -----------------
In accordance with Statement of Position 93-2, Determination, Disclosure and
Financial Statements 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
Year Ended September 30, 1996
INVESTMENT INCOME:
Interest. . . . . . . . . . . . . . . . . $3,758,068
Dividends. . . . . . . . . . . . . . . . 2,529,993 $6,288,061
----------- --------------
EXPENSES:
Management fees ($7,751,575) and
directors' fees ($17,903) 7,769,478
Distribution expenses. . . . 2,707,273
Dividend disbursing and transfer agent
fees and expenses. . . . . . . . 2,274,846
Accounting services and salaries 268,454
Taxes (other than income) 113,500
Federal and state registration fees 80,389
Reports and statements to shareholders 80,225
Professional fees. . . . . . . . 55,250
Custodian fees. . . . . . . . . . . 37,729
Other. . . . . . . . . . . . . . . . . . . . 145,688 13,532,832
----------- --------------
NET INVESTMENT LOSS. . . . . . (7,244,771)
--------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain from security
transactions. . . . . . . . . . . . . 141,476,838
Net unrealized appreciation of investments
during the period. . . . . . . . 65,285,809
------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS. . . . . . 206,762,647
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $199,517,876
============
NET ASSET VALUE AND OFFERING PRICE
PER SHARE - DELCAP FUND A CLASS:
Net asset value per share (A) $30.74
Sales charges (4.75% of offering price, or 4.98% of amount
invested per share) (B). . . . . . . 1.53
------
Offering price. . . . . . . . . . . $32.27
======
- -----------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000
or more and purchase options not including the payment of a front end
sales charge.
See accompanying notes
<PAGE>
Delaware Group DelCap Fund, Inc. -
Concept I Series
Statement of Changes in Net Assets
Year Ended Year Ended
9/30/96 9/30/95
OPERATIONS:
Net investment loss ...................... $ (7,244,771) $ (6,001,322)
Net realized gain from security
transactions ............................. 141,476,838 135,186,480
Net unrealized appreciation during
the period ............................... 65,285,809 61,062,660
--------------- ---------------
Net increase in net assets resulting
from operations .......................... 199,517,876 190,247,818
--------------- ---------------
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 ...................... 317,170,421 172,133,494
DelCap Fund B Class ...................... 10,431,359 2,481,501
DelCap Fund C Class ...................... 1,855,616
DelCap Fund Institutional Class .......... 76,237,748 41,376,161
Net asset value of shares issued upon
reinvestment of dividends from net
realized gain on security transactions:
DelCap Fund A Class ...................... 94,027,731 54,475,614
DelCap Fund B Class ...................... 418,429 45,490
DelCap Fund C Class ...................... 4
DelCap Fund Institutional Class .......... 15,971,018 8,023,944
--------------- ---------------
516,112,326 278,536,204
--------------- ---------------
Cost of shares repurchased:
DelCap Fund A Class ...................... (439,149,860) (333,842,781)
DelCap Fund B Class ...................... (1,186,427) (437,022)
DelCap Fund C Class ...................... (29,965)
DelCap Fund Institutional Class .......... (56,897,203) (45,032,949)
--------------- ---------------
(497,263,455) (379,312,752)
--------------- ---------------
Increase (decrease) in net assets
derived from capital share
transactions ............................. 18,848,871 (100,776,548)
--------------- ---------------
NET INCREASE IN NET ASSETS ............... 95,972,229 19,459,066
--------------- ---------------
NET ASSETS:
Beginning of period ...................... 1,020,659,465 1,001,200,399
--------------- ---------------
End of period ............................ $ 1,116,631,694 $ 1,020,659,465
=============== ===============
See accompanying notes
<PAGE>
Delaware Group DelCap Fund, Inc. -
Concept I Series
Notes to Financial Statements
September 30, 1996
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 four classes of
shares.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund:
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.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm EST on the valuation date. Securities not
traded or 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 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. Original issue discounts are accreted to interest income over the
lives of the respective securities.
<PAGE>
2. Investment Management, Distribution and Other 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 September 30, 1996, the Fund had
a liability for Investment Management fees and other expenses payable to DMC for
$82,558.
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 and C Class. No distribution expenses are paid by the
Institutional Class. At September 30, 1996, the Fund had a liability for
distribution fees and other expenses payable to DDLP for $47,633. For the year
ended September 30, 1996, the Fund paid DDLP $219,171 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 year
ended September 30, 1996, the Fund has expensed $2,274,846 for these services.
Effective August 19, 1996, the Fund also engaged DSC to provide accounting
services for the Fund. For the period from August 19, 1996 to September 30,
1996, the Fund has expensed $26,448 for these services. Previously, Fund
personnel provided this service and the related costs were recorded in salaries
and other expense categories in the statement of operations. At September 30,
1996, the Fund had a liability for dividend disbursing, transfer agent, and
accounting service fees and other expenses payable to DSC for $69,582.
Certain Fund expenses are paid directly by brokers. The amount of these expenses
is less than 0.01% of each Fund's average net assets.
3. Investments
During the year ended September 30, 1996, the Fund made purchases of
$705,598,503 and sales of $844,843,288 of investment securities other than U.S.
government securities and temporary cash investments.
At September 30, 1996 unrealized appreciation for federal income tax purposes
aggregated $339,609,078 of which $372,627,371 related to unrealized appreciation
of securities and $33,018,293 related to unrealized depreciation of securities.
The realized gain for federal income tax purposes was $140,977,947 for the year
ended September 30, 1996.
<PAGE>
4. Capital Stock
Transactions in capital stock shares were as follows:
Year Ended Year Ended
9/30/96 9/30/95
Shares sold:
Delcap Fund A Class .......................... 11,382,634 6,866,401
Delcap Fund B Class .......................... 368,919 99,480
Delcap Fund C Class .......................... 64,725
Delcap Fund Institutional Class .............. 2,690,557 1,642,627
Shares issued upon reinvestment of
dividends from net realized gain from
security transactions:
Delcap Fund A Class .......................... 3,634,623 2,420,065
Delcap Fund B Class .......................... 16,313 2,023
Delcap Fund C Class ..........................
Delcap Fund Institutional Class .............. 610,514 354,102
----------- -----------
18,768,285 11,384,698
=========== ===========
4. Capital Stock (Continued)
Shares repurchased:
Delcap Fund A Class .......................... (15,762,489) (13,342,366)
Delcap Fund B Class .......................... (42,795) (18,268)
Delcap Fund C Class .......................... (1,044)
Delcap Fund Institutional Class .............. (2,022,635) (1,838,303)
----------- -----------
(17,828,963) (15,198,937)
----------- -----------
Net increase (decrease) ..................... 939,322 (3,814,239)
=========== ===========
5. Lines of Credit
The Fund has a committed line of credit for $15 million. No amount was
outstanding at September 30, 1996 or at any time during the last fiscal period.
6.Financial Highlights
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DelCap Fund A Class
----------------------------------------------------
Year Ended September 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......................... $28.870 $25.570 $26.080 $20.730 $21.470
Income (loss) from investment operations:
Net investment loss1.......................................... (0.208) (0.166) (0.218) (0.125) (0.059)
Net realized and unrealized gain (loss) from security
transactions 5.618 5.296 0.528 5.475 (0.651)
------- -------- ------ ------ -------
Total from investment operations.............................. 5.410 5.130 0.310 5.350 (0.710)
------- -------- ------ ------ -------
Less distributions:
Dividends from net investment income.......................... none none none none (0.030)
Distributions from net realized gain on security transactions (3.540) (1.830) (0.820) none none
------- -------- ------ ------ -------
Total distributions........................................... (3.540) (1.830) (0.820) none (0.030)
------- -------- ------ ------ -------
Net asset value, end of period................................ $30.740 $28.870 $25.570 $26.080 $20.730
------- -------- ------ ------ -------
Total return(2)............................................... 21.09% 22.04% 1.17% 25.81% (3.32%)
Ratios/supplemental data:
Net assets, end of period (000 omitted)....................... $923,248 $888,571 $890,787 $1,057,358 $993,125
Ratio of expenses to average net assets....................... 1.35% 1.37% 1.35% 1.30% 1.39%
Ratio of net investment loss to average net assets............ (0.74%) (0.67%) (0.68%) (0.43%) (0.26%)
Portfolio turnover............................................ 72% 51% 34% 51% 24%
Average commission rate paid.................................. $0.06 N/A N/A N/A N/A
- -----------------
</TABLE>
1.The per share information for the years ended 9/30/96 and 9/30/95 were based
on the average share outstanding method.
2.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 Institutional Class
---------------------------- ------------ -------------------------------------------
Year Year 9/6/94(1) 11/29/95(1) Year Year Year 11/9/92(1)
Ended Ended to to Ended Ended Ended to
9/30/96 9/30/95 9/30/94 9/30/96 9/30/96 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 loss2. . (0.400) (0.340) (0.008) (0.359) (0.123) (0.091) (0.080) (0.027)
Net realized and unrealized gain from
security transactions. 5.560 5.290 0.388 5.589 5.693 5.341 0.470 4.167
------- ------- ------- ------- ------- ------- ------- ------
Total from investment operations 5.160 4.950 0.380 5.230 5.570 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 $30.300 $28.680 $25.560 $30.570 $31.160 $29.130 $25.710 $26.140
======= ======= ======= ======= ======= ======= ======= ======
Total return3. . . . . . . . . 20.27% 21.34% 1.51% 20.38% 21.44% 22.45% 1.48% 21.31%
Ratios/supplemental data:
Net assets, end of period
(000 omitted). . . . . . . . . $13,239 $2,710 $287 $1,947 $178,197 $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. . . . 72% 51% 34% 72% 72% 51% 34% 51%
Average commission rate paid $0.06 N/A N/A $0.06 $0.06 N/A N/A N/A
</TABLE>
- -----------------
1 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.
2 The per share information for the years ended 9/30/96 and 9/30/95 were based
on the average shares outstanding method.
3 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>
Delaware Group DelCap Fund, Inc. - Concept I Series
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group DelCap Fund, Inc. - Concept I Series
We have audited the accompanying statement of net assets of Delaware Group
DelCap Fund, Inc. - Concept I Series as of September 30, 1996, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1996 by correspondence with the custodi an and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group DelCap Fund, Inc. - Concept I Series at September 30, 1996, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
November 8, 1996
<PAGE>
This 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 for DelCap Fund, which sets forth details about charges,
expenses, investment objectives and operating policies of the Fund. You should
read the prospectus carefully before you invest. Summary investment results are
documented in the Fund's current Statement of Additional Information. The
figures in this report represent past results which are not a guarantee of
future results. The return and principal value of an investment in the Fund
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
Board
- -------------------------------------------------------------------------------
Members
- -------------------------------------------------------------------------------
Wayne A. Stork
Chairman, President and Chief Executive Officer
Delaware Group of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Treasurer, National Gallery of Art
Washington, DC
W. Thacher Longstreth
Vice Chairman, Packquisition Corp.
Philadelphia, PA
Charles E. Peck
Secretary of Enterprise Homes, Inc.
Fredericksburg, VA
former Chairmand CEO
The Ryland Group, Inc.
Columbia, MD
AFFILIATED
- ---------------------------------------
OFFICERS
- ---------------------------------------
George M. Chamberlain, Jr.
Senior Vice President and Secretary,
Delaware Group of Funds
Philadelphia, PA
Bruce D. Barton
President and CEO,
Delaware Distributors, L.P.
Philadelphia, PA
David K. Downes
Senior Vice President, Chief Financial Officer and
Chief Administrative Officer
Delaware Group of Funds
Philadelphia, PA
<PAGE>
Delaware Group
- ---------------------------------------
of Funds
- ---------------------------------------
For 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 Global Diversification
Emerging Markets Fund
New Pacific Fund
World Growth Fund
International Equity Fund
Global Assets Fund
Global Bond Fund
For Current Income
Delchester Fund
Strategic Income Fund
Corporate Income Fund
Federal Bond Fund
U.S. Government Fund
Limited-Term Government Fund
For Tax-Free Current Income
Tax-Free Pennsylvania Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Money Market Funds
Delaware Cash Reserve
U.S. Government Money Fund
Tax-Free Money Fund
Closed-End Equity/Income*
Dividend and Income Fund
Global Dividend and Income Fund
This report must be preceded or accompanied by a current DelCap Fund prospectus
and the Delaware Group Fund Performance Update for the most recently completed
calendar quarter. For a prospectus of any other Delaware Group fund, contact
your financial adviser or Delaware Group.
*Delaware Group Dividend and Income Fund and Delaware Group Global Dividend and
Income Fund purchases can be made through any registered broker.
DELAWARE
GROUP
========
Philadelphia o London
<PAGE>
Be sure to consult your financial adviser when making investment decisions.
Mutual funds can be a valuable part of your financial plan; however, shares of
the DelCap Fund are not FDIC or NCUSIF insured, are not guaranteed by any bank
or any credit union, are not obligations of or deposits of any bank or any
credit union, and involve investment risk, including the possible loss of
principal. Shares of the Fund are not bank or credit union deposits.
Investment Manager
Delaware Management Company, Inc.
Philadelphia, Pennsylvania
International Affiliate
Delaware International Advisers Ltd.
London, England
National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
Nationwide (800) 523-4640
Securities Dealers Only
Nationwide (800) 362-7500
Financial Institutions Representatives Only
Nationwide (800) 659-2265
Copy Rights Delaware Distributors, L.P.
Printed in the U.S.A. on recycled paper.
