<PAGE>
----------------------------------------
DELAWARE GROUP
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PREMIUM FUND
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ANNUAL REPORT
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DECEMBER 31, 1995
EQUITY/INCOME SERIES
HIGH YIELD SERIES
CAPITAL RESERVES SERIES
MULTIPLE STRATEGY SERIES
GROWTH SERIES
INTERNATIONAL EQUITY SERIES
EMERGING GROWTH SERIES
VALUE SERIES
MONEY MARKET SERIES
DM-017-AR [12/95] UG2/96
<PAGE>
January 15, 1996
Dear Policyholder:
The year 1995 was marked by renewed vitality in U.S. stock and bond
markets, providing strong returns that contrasted sharply with the very sluggish
period both markets faced a year earlier.
Low inflation, falling long-term interest rates, higher corporate earnings
and improved productivity at many industrial companies drove the U.S. stock
market higher. Meanwhile, as interest rates moved lower, the U.S. bond market
recovered from a difficult 1994. Although few overseas stock markets were as
robust as the U.S., many established markets also performed better than in 1994.
<TABLE>
<CAPTION>
1995 Total Return
<S> <C>
Standard & Poor's 500 Index +37.58%
Lehman Brothers Intermediate Government Corporate Bond Index +15.33%
Morgan Stanley Europe Australia Far East (EAFE) Index +9.42%
</TABLE>
Performance quoted above assumes reinvestment of dividends. It is not intended
to represent the performance of any Premium Series. Performance information for
each Series can be found following each discussion section of this report.
A year ago, we pointed out that periods of below-average performance are
part of natural market cycles and have typically been balanced by subsequent
periods of stronger performance. While the future can never be predicted, 1995's
market results show that investors should be mindful of history when investing.
It remains to be seen whether the capital appreciation bonanza will extend
into 1996. Consumer spending has been weak and leading economic indicators
suggest subdued growth ahead, but lower interest rates have the potential to
fuel additional demand for goods and services. We believe the outlook for
established international equity markets, however, is bright, particularly in
Europe.
If stock and bond price appreciation is harder to come by than in 1995, the
time-tested income and value-oriented strategies of many of the Premium Fund
investment series available through your annuity have the potential to help
reduce exposure to market risks. Summaries of the strategies and performance for
each Premium Fund series are included in the pages that follow.
Keep in mind that your annuity is designed as a long-term investment and
that any earnings compound tax-deferred until withdrawal. This can help increase
your earnings potential. We thank you for the confidence you have expressed in
Delaware Group.
Sincerely,
/s/ Wayne A. Stork
Wayne A. Stork
Chairman, President and Chief Executive Officer
Delaware Group Premium Fund
<PAGE>
Equity/Income Series
Portfolio Strategy and Performance in 1995
In a year when stock price appreciation was fairly high and dividend yields
among stocks in the Standard & Poor's 500 Index reached historic lows, the
Equity/Income Series strategy of focusing on dividends provided solid results.
The management of the Equity/Income Series sees dividends as more than a source
of income. We believe dividend yield (yield = annual dividend/stock price) is a
mechanism to uncover a stock's capital appreciation potential. Our strategy
provided a strong +36.12% total return* (with dividends and capital gains
reinvested) for the year ended December 31.
To be considered for the portfolio, stocks must yield more than the average
yield of stocks in the S&P 500 Index. (The Index' dividend yield stood at 2.2%
as of December 31, 1995.) This process helps us screen out companies whose stock
prices are so high that there may be limited opportunities for future
appreciation.
A higher-than-average yield relative to the S&P 500 Index is often a sign a
stock is temporarily out-of-favor with investors. We analyze these companies'
operations to help us determine whether the stock has the potential to advance
to a higher "true value" within a reasonable time. If the yield falls below the
average of the Index, the investment manager will then begin to sell the stock.
The Series may also sell a stock if the company doesn't meet our earnings
expectations even if its yield is higher than that of the Index.
We believe the dividend income from these stocks has the potential to
enhance total return. Dividends have proven to be a significant contributor to
total return (47% of total S&P 500 Index return since 1926, according to
Ibbotson Associates) as well as a more reliable contributor than capital
appreciation.
A Look at the Portfolio
A little more than a year ago, in the fall of 1994, as the Federal Reserve
Board was still raising interest rates to fight anticipated inflation, we
purchased stocks of banks and capital goods companies whose prices we believed
to be unjustifiably depressed. These investments were especially strong
performers during fiscal 1995.
In addition, we built a greater weighting than the S&P 500 Index in tobacco
and drug companies, two sectors that enhanced performance. We also had a larger
concentration than the S&P 500 Index in energy and chemical companies, sectors
with strong dividend yields but which did not perform as well as the overall
market. The Series also did not own any technology stocks, a sector that
performed very well during the first half of 1995 but generally did not meet our
stringent dividend requirements.
- --------------------------------------------------------------------------------
Equity/Income Series Investment Objective
Seeks to achieve long-term growth by investing primarily in stocks that
provide the potential for income and capital appreciation without undue risk
to principal.
- --------------------------------------------------------------------------------
2
<PAGE>
Investment Outlook
The investment manager of the Equity/Income Series is finding potential
investments among financial firms and cyclical companies whose earnings depend
on the strength of the U.S. economy. These stocks generally have above-average
dividend yields and, in our opinion, have potential for positive earnings
surprises in 1996 and 1997.
While it is possible that the stock market's very strong recent performance
may continue, a more likely scenario is a return to a historical performance
norm. We anticipate that 1996 will see much more normal levels of volatility--
that is, short-term fluctuations of more than 10%.
We are very pleased to have fully participated in the stock market's robust
capital appreciation during 1995, a year that was the best for stock investments
since 1975 and remain convinced that dividend-paying stocks offer some of the
best opportunities to outpace inflation over the long-term. We believe that the
dividend-driven style of the Series can help shareholders take advantage of
those opportunities.
$10,000 Initial Investment* July 28, 1988 through December 31, 1995
<TABLE>
<CAPTION>
Equity/Income S&P 500
Series Stock Index
<S> <C> <C>
Jul. 28 '88 $10,000 $10,000
Dec. 31 '88 $10,160 $10,365
Dec. 31 '89 $11,408 $13,639
Dec. 31 '90 $ 9,955 $13,212
Dec. 31 '91 $12,178 $17,231
Dec. 31 '92 $13,252 $18,540
Dec. 31 '93 $15,299 $20,406
Dec. 31 '94 $15,269 $20,663
Dec. 31 '95 $20,784 $28,402
</TABLE>
<TABLE>
<CAPTION>
Equity/Income Series
Average Annual Total Returns*
- ----------------------------
<S> <C>
Lifetime +10.35%
Five Years +15.86%
One Year +36.12%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Return and share price
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
The chart above shows a $10,000 investment in both the Equity/Income Series and
the unmanaged S&P 500 Index for the period from the Series' inception on July
28, 1988 through December 31, 1995. All dividends and capital gains were
reinvested. The Index is unmanaged, with no set investment objective and does
not include the "real world" costs of managing a mutual fund. Earnings from a
variable annuity investment compound tax-free until withdrawal, so no
adjustments were made for income taxes. The effect of an expense limitation is
included in the chart.
*Performance does not reflect insurance fees related to a variable product
investment nor the deferred sales charge that would apply to certain
withdrawals of investments held for less than eight years. Performance shown
here would have been reduced if such fees were included and the expense
limitation removed. For more information about fees, consult your variable
annuity prospectus.
3
<PAGE>
High Yield Series
Portfolio Strategy and Performance in 1995
Since 1988, the goal of the High Yield Series has remained constant--to
provide an above-average income stream consistent with a defensive, conservative
approach to credit risk management. The Series provided a +15.5% total return*
for the year ended December 31 (dividends reinvested).
High-yield bonds, like all bonds, react to changes in interest rates and
the sharp rate decline during 1995 helped lift high-yield bond prices.
The Series emphasizes income as the main component of total return, with
capital preservation taking precedence over capital appreciation. High-yield
bonds provide higher income because issuers have a lesser ability to pay
interest and repay principal than "investment-grade" companies. The tax-deferred
status of your annuity allowed you to benefit from the full value of the above-
average income generated: your investment compounds free of income taxes.
High-yield bond prices are subject to changes in the perceived strength of
the U.S. economy and the relative health of the industry of the issuer. During
1995, high-yield bond prices were helped by the fact that many industries had
reported strong profits despite a slowing U.S. economy.
A Look at the Portfolio
Managed with a focus on income and relative quality, the Series benefited
from both high income and capital appreciation during the year, which
contributed to strong overall performance.
Over the past year, we emphasized bonds rated BB and B, the highest tiers
available in the high yield market, and avoided lower rated bonds. Bonds rated
BB benefited the most from falling interest rates.
Lower-rated bonds--those rated CCC--have not enjoyed much price
appreciation in recent months because of an apparent fear that issuers will be
adversely affected by a slowdown in U.S. economic growth. Early in the fiscal
year, CCC bonds had outperformed other high-yield bonds, but this changed during
the summer as the economy continued to soften.
BB and B rated bonds, we believed, had an attractive risk/reward profile
because they paid higher income than investment-grade bonds, but had less credit
risk than bonds with lower ratings. As of December 31, bonds rated BB yielded,
on average, about 2.9 percentage points more than comparable maturity U.S.
Treasury Bonds while bonds rated B yielded about 5.5 percentage points more than
Treasuries. Of course, the principal and income of high-yield bonds are not
backed by the U.S. government like U.S. Treasury Bonds.
- --------------------------------------------------------------------------------
High Yield Series Investment Objective
Seeks the highest current income by investing primarily in those securities
having a liberal and consistent yield and those tending to reduce the risk of
market fluctuations such as rated and unrated corporate bonds, including higher
non-investment grade bonds, U.S. government securities and commercial paper.
- --------------------------------------------------------------------------------
4
<PAGE>
Bonds in the High Yield Series' portfolio had an average effective maturity
of 5.6 years and an average duration of 3.9 years at year end. Duration, the
most common measure of a bond's sensitivity to interest rates, indicates the
likely percentage change in a bond's price given a 1% movement in interest
rates.
Investment Outlook
In the months ahead, we believe the high yield market may divide into two
groups based on the market's anticipation of a cyclical downturn in certain
industries. One group of bond issuers will be industries reporting lackluster
earnings or outright losses. In our opinion, these could include retailing,
restaurants and trucking companies, and we have been avoiding bonds issued by
these companies.
The other group we expect will be companies whose cash flow and ability to
meet interest payments will not be substantially affected by a slowing U.S.
economy. We are emphasizing these non-cyclical companies in the Series'
portfolio. Among the industry groups falling into the latter category, in our
view, are health-care, export-oriented companies and media/entertainment
businesses such as cable television.
$10,000 Initial Investment* July 28, 1988 through December 31, 1995
<TABLE>
<CAPTION> Merrill Lynch
High Yield High-Yield
Series Master Index
<S> <C> <C>
Jul. 28 '88 $10,000 $10,000
Dec. 31 '88 $10,342 $10,374
Dec. 31 '89 $10,820 $10,813
Dec. 31 '90 $10,048 $10,343
Dec. 31 '91 $13,819 $13,919
Dec. 31 '92 $15,677 $16,447
Dec. 31 '93 $18,241 $19,273
Dec. 31 '94 $17,718 $19,049
Dec. 31 '95 $20,465 $22,842
</TABLE>
<TABLE>
<CAPTION>
High Yield Series
Average Annual Total Returns*
- ----------------------------
<S> <C>
Lifetime +10.12%
Five Years +15.29%
One Year +15.50%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Return and share price
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
The chart above shows a $10,000 investment in both the High Yield Series and the
Merrill Lynch High-Yield Master Index for the period from the Series' inception
on July 28, 1988 through December 31, 1995. All dividends and capital gains were
reinvested. The Index is unmanaged, with no set investment objective and does
not include the "real world" costs of managing a mutual fund. Earnings from a
variable annuity investment compound tax-free until withdrawal, so no
adjustments were made for income taxes. The effect of an expense limitation is
included in the chart.
*Performance does not reflect insurance fees related to a variable product
investment nor the deferred sales charge that would apply to certain
withdrawals of investments held for less than eight years. Performance shown
here would have been reduced if such fees were included and the expense
limitation removed. For more information about fees, consult your variable
annuity prospectus.
5
<PAGE>
Capital Reserves Series
Portfolio Strategy and Performance in 1995
In 1995, Capital Reserves Series provided a total return of +14.08%*, the
best return in its seven-year history and a level more than twice that of the
+5.6% annual average for bond market investments since the 1920s.
Interest rates began declining in December 1994, when the bond market
anticipated that the Federal Reserve Board would lower its target for the
Federal Funds rate--the rate banks charge each other on overnight loans. The
Federal Funds rate was lowered on July 6, 1995 and again on December 19, 1995 as
evidence mounted that the U.S. economy's growth rate was slowing and inflation
was subdued.
By the end of the year, the yield on the five-year U.S. Treasury note had
dropped to 5.54% from 7.83% at the end of 1994, generating substantial price
appreciation for bond investors. In 1995, Treasury securities with a maturity of
between two and 10 years had the sharpest drop in yield (and highest price
appreciation) of any segment of the U.S. Treasury market.
During the year, we focused on the intermediate segment of the bond market
because we believed it offered the most attractive risk/reward profile. In this
segment, investors can generally obtain a large portion of the income available
from longer maturity bonds, but with less risk to principal should interest
rates rise.
A Look at the Portfolio
Our holdings consisted primarily of mortgage-related securities issued by
government agencies such as the Federal National Mortgage Association and very
high quality bonds issued by large industrial corporations.
Corporate bonds did well in 1995 and the Series benefited from having a
larger percentage of Series' assets invested in corporate bonds than did the
benchmark Lehman Brothers Intermediate Government Corporate Bond Index (35% of
Series' net assets vs. 19% of the Index).
However for much of 1995, mortgage securities, a leading component of the
Series' bond portfolio, did not do as well as some other bonds because more
homeowners refinanced mortgages as interest rates fell. Such prepayments had the
effect of reducing the value of securities in the Fund's portfolio. Another
factor in this year's performance was that the share of the Series' portfolio
devoted to U.S. Treasuries was less than that of the Lehman Index and Treasuries
rose sharply in value in the past year.
Bonds in the Series' portfolio had an average quality rating of AA2 (an
indication of low credit risk), an average effective maturity of 4.7 years and
an average duration of 3.2 years at year's end. This duration was slightly
shorter than a year ago. Duration, the most common measure of a bond's
sensitivity to interest rates, indicates the likely percentage change in a
bond's price given a 1% movement in interest rates.
- --------------------------------------------------------------------------------
Capital Reserves Series Investment Objective
Seeks a high, stable level of current income while attempting to minimize
fluctuations in principal and provide maximum liquidity by investing in short-
and intermediate-term securities.
- --------------------------------------------------------------------------------
6
<PAGE>
Investment Outlook
We believe interest rates may fall further in the coming months and this
leads us to conclude that the high quality bonds in the Series have the
potential to perform relatively well. In our opinion, the Federal Reserve Board
will continue to ease credit modestly in an effort to prevent a slow-growing
U.S. economy from slipping into recession. Still, we will continue to position
the portfolio in a conservative posture, focusing on both high income and long-
term stability rather than short-term price gains.
The magnitude of any interest rate reduction in the months ahead is not
likely to be as pronounced as the 1995 rate decline, in our opinion. While that
means investors should not expect the kind of price appreciation they enjoyed
last year, it should bode well for mortgage securities. A relatively stable rate
environment tends to keep mortgage refinancing at a moderate level. Meanwhile,
corporate profits still appear fairly strong despite the slowing economy, and
that should help performance of corporate bonds.
$10,000 Initial Investment* July 28, 1988 through December 31, 1995
<TABLE>
<CAPTION>
Lehman Brothers
Capital Reserves Government/Corporate
Series Bond Index
<S> <C> <C>
Jul. 28 '88 $10,000 $10,000
Dec. 31 '88 $10,303 $10,344
Dec. 31 '89 $11,216 $11,816
Dec. 31 '90 $12,139 $12,795
Dec. 31 '91 $13,213 $14,858
Dec. 31 '92 $14,164 $15,985
Dec. 31 '93 $15,276 $17,748
Dec. 31 '94 $14,866 $17,125
Dec. 31 '95 $16,958 $20,421
</TABLE>
<TABLE>
<CAPTION>
Capital Reserves Series
Average Annual Total Returns*
- -----------------------------
<S> <C>
Lifetime +7.37%
Five Years +6.91%
1 Year +14.08%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Return and share price
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
The chart above shows a $10,000 investment in both the Capital Reserves Series
and the Lehman Brothers Government Corporate Bond Index for the period from the
Series' inception on July 28, 1988 through December 31, 1995. All dividends and
capital gains were reinvested. The Index is unmanaged, with no set investment
objective and does not include the "real world" costs of managing a mutual fund.
Earnings from a variable annuity investment compound tax-free until withdrawal,
so no adjustments were made for income taxes. The effect of an expense
limitation is included in the chart.
*Performance does not reflect insurance fees related to a variable product
investment nor the deferred sales charge that would apply to certain
withdrawals of investments held for less than eight years. Performance shown
here would have been reduced if such fees were included and the expense
limitation removed. For more information about fees, consult your variable
annuity prospectus.
7
<PAGE>
Multiple Strategy Series
Portfolio Strategy and Performance in 1995
The Multiple Strategy Series invests in both stocks and bonds with a goal
of providing long-term capital growth, current income and protection of
principal. This past year was one of robust capital appreciation for both stocks
and bonds, and the Series provided its highest return since 1991. The Series
total return was +26.58%* with dividends and capital gains reinvested.
We select stocks based on several factors--expected dividend increases,
history of consistent dividend growth and a belief that the company can sustain
that growth. We look for companies that are increasing dividends faster than
companies in the Standard & Poor's 500 Index. Cash dividends paid by companies
in the S&P 500 Index have grown by nearly 75% since 1985 while the consumer
price index, rose only 42% during the same 10-year period.
In the fixed income portion of the portfolio, the Series focuses on high
quality intermediate maturity bonds. We follow this approach because we believe
intermediate bonds have an attractive risk/reward profile. They offer most of
the income potential of longer-term bonds, but generally experience less change
in principal when interest rates rise and fall.
Bonds in the Series' portfolio had an average quality rating of AA (an
indication of low credit risk), an average effective maturity of 4.5 years and
an average duration of 3.2 years as of December 31, 1995. Duration, the most
common measure of a bond's sensitivity to interest rates, indicates the likely
percentage change in a bond's price given a 1% movement in interest rates.
A Look at the Portfolio
As of December 31, 1995, stocks comprised approximately 60% of net assets
while bonds accounted for about 30% of net assets. The remainder was cash. Early
in the year, we slightly increased the percentage allocated to stocks to
maximize our participation in the equity market during the past year.
Our stock holdings in financial companies, industrial conglomerates and
multinational consumer growth businesses benefited from falling long-term
interest rates, a decline in the value of the dollar and stronger than expected
corporate earnings. The weak dollar helped U.S. exporters by making products
cheaper for foreigners to buy. Our bond portfolio was aided by a declining
inflation rate and a slow U.S. economy, both of which prompted the Federal
Reserve Board to reduce short-term interest rates.
- --------------------------------------------------------------------------------
Multiple Strategy Series Investment Objective
Seeks a balance of capital appreciation, income and preservation of capital by
strategically allocating assets using an income-oriented valuation strategy to
select stocks and bonds that we believe demonstrate potential for income and
capital growth.
- --------------------------------------------------------------------------------
8
<PAGE>
Investment Outlook
Although long-term economic trends remain favorable in our opinion, the
sharp and rapid price appreciation of both stocks and bonds during the past year
was unusual, and investors should not expect such strong performance without
interruption, year after year. Since the Multiple Strategy Series invests in
both stocks and bonds, we have compared the Series' performance in the chart
below with both the S&P 500 Index and the Lehman Brothers Government/Corporate
Bond Index.
When price appreciation from stocks or bonds is hard to come by, stock
dividends and the income generated by bonds can take on a much greater role in
generating total return. We believe many companies are in a strong position to
increase the cash dividends paid on their stock since, in 1995, just 40% of
corporate profits were paid out as cash dividends, the lowest level since the
1990s.
We believe the Federal Reserve Board will continue to ease credit modestly
to bolster the U.S. economy and therefore interest rates are more likely to
decline than rise in the coming months. This outlook leads us to conclude that
the high quality bonds in the Series have the potential to perform relatively
well because of the strong income they generate.
$10,000 Initial Investment* July 28, 1988 through December 31, 1995
<TABLE>
<CAPTION>
Lehman Brothers
Multiple Strategy S&P 500 Government/Corporate
Series Stock Index Bond Index
<S> <C> <C> <C>
Jul. 28 '88 $10,000 $10,000 $10,000
Dec. 31 '88 $10,160 $10,365 $10,317
Dec. 31 '89 $11,846 $13,639 $11,786
Dec. 31 '90 $11,825 $13,212 $12,762
Dec. 31 '91 $14,968 $17,231 $14,820
Dec. 31 '92 $17,041 $18,540 $15,944
Dec. 31 '93 $18,435 $20,406 $17,703
Dec. 31 '94 $18,408 $20,663 $17,081
Dec. 31 '95 $23,301 $28,402 $20,368
</TABLE>
<TABLE>
<CAPTION>
Multiple Strategy Series
Average Annual Total Returns*
- -----------------------------
<S> <C>
Lifetime +12.06%
Five Years +14.53%
One Year +26.58%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Return and share price
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
The chart above shows a $10,000 investment in both the Multiple Strategy
Series, the S&P 500 Index and the Lehman Brothers Government/Corporate Bond
Index for the period from the Series' inception on July 28, 1988 through
December 31, 1995. All dividends and capital gains were reinvested. Each
Index is unmanaged, with no set investment objective and does not include the
"real world" costs of managing a mutual fund. Earnings from a variable
annuity investment compound tax-free until withdrawal, so no adjustments were
made for income taxes. The effect of an expense limitation is included in the
chart.
*Performance does not reflect insurance fees related to a variable product
investment nor the deferred sales charge that would apply to certain
withdrawals of investments held for less than eight years. Performance shown
here would have been reduced if such fees were included and the expense
limitation removed. For more information about fees, consult your variable
annuity prospectus.
9
<PAGE>
Growth Series
Portfolio Strategy and Performance in 1995
We are pleased to report that the Growth Series provided a total return
of +29.53%* in 1995 (with capital gains and dividends reinvested). This was
better than the +27.97% total return of the NASDAQ Industrial Index, an
unmanaged portfolio of small and mid-size companies that reflects the Series'
investment focus. The Standard & Poor's 500 Index provided a +37.58% total
return.
Low inflation, strong earnings expectations and investor enthusiasm for
the technology sector contributed to the Series' performance.
The Growth Series is managed with the goal of providing capital
appreciation over time. In selecting investments for the portfolio, we search
for stocks of small and mid-size companies that show a history of
profitability, leadership within their industries, strong balance sheets and
management teams, and the potential to continue growing rapidly.
We look at each company individually and meet with its management, visit
its plants, analyze the product or service, talk to customers and review the
competition. We require a consistent track record of growth in quarterly
earnings and market share.
A Look at the Portfolio
Overall, our portfolio was broadly diversified--with technology, health
care and consumer stocks representing about two-thirds of the Series' net
assets. We tend to avoid cyclical companies and take a long-term view of the
market. We focus on classic growth industry sectors that have historically
provided consistent returns.
Technology was one of the more volatile market sectors in 1995 and with
a slower growing economy our focus was on companies that we believe are not
dependent on overall economic growth. These included companies that
specialize in linking together groups of computers rather than companies that
produce commodity items such as basic semiconductors. Technology stocks
rallied sharply in the spring and early summer as the market expected that
the use of personal computers and on-line services would increase following
the introduction of new software. By year's end, however, the rally began to
fade as earnings of some cyclical technology companies did not meet the
market's expectations.
During the year, our health care stocks advanced amid merger activity
and cost-cutting efforts by hospitals and medical service providers. We
expect that increasing competition and consumer demand for better and more
affordable service will force the industry to be more efficient.
The retail sector did not perform as well as the market and was a
disappointment for the Series' portfolio. We reduced our position in this
sector and focused on those companies that we believe have successfully
adapted to the consumer's focus on "value"--a trend that appears to be the
product of stagnant real wages and shifting social priorities.
- ------------------------------------------------------------------------------
Growth Series Investment Objective
Seeks long-term capital appreciation by investing primarily in stocks and
convertible securities that in the investment manager's opinion, are of
superior quality.
- ------------------------------------------------------------------------------
10
<PAGE>
Investment Outlook
Although many of the companies within our area of focus had substantial
price appreciation in 1995, overall the small- and mid-capitalization
companies underperformed large-cap companies. The Dow Jones Industrial
Average--an unmanaged portfolio of 30 large stocks--rose +36.89%, marking
only the eighth time since the mid-1920s that this Index has risen more than
30% in value in a single year.
Larger companies tend to be more export-oriented than smaller businesses
and thus their earnings tend to be affected more by the value of the dollar.
The dollar declined in value in the first half of 1995--making export
products cheaper for foreigners to buy--boosting the earnings of large
companies. In recent months, however, the dollar has rebounded in value,
which could make the earnings potential of smaller companies relatively more
attractive.
Looking forward, we believe that more investors will be attracted to
smaller companies with a record of steady growth whose prices do not
currently reflect the company's earnings growth potential. While the future
can never be predicted, we believe our "fundamental" approach to
investing--one that emphasizes long-term growth trends, earnings consistency
and strong management--has the potential to outperform strategies that rely
solely on the short-term price momentum of a company's stock.
$10,000 Initial Investment* July 2, 1991 through December 31, 1995
<TABLE>
<CAPTION>
NASDAQ
Industrial S&P 500
Growth Series Index Stock Index
<S> <C> <C> <C>
Jul. 2 '91 $10,000 $10,000 $10,000
Dec. 31 '91 $11,030 $12,011 $10,894
Dec. 31 '92 $11,250 $13,015 $11,722
Dec. 31 '93 $12,550 $14,469 $12,902
Dec. 31 '94 $12,106 $13,537 $13,064
Dec. 31 '95 $15,681 $17,324 $17,957
</TABLE>
<TABLE>
<CAPTION>
Growth Series
Average Annual Total Returns*
- -----------------------------
<S> <C>
Lifetime +10.58%
One Year +29.53%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Return and share price
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
The chart above shows a $10,000 investment in both the Growth Series, the S&P
500 Index and the NASDAQ Industrial Index for the period from the Series'
inception on July 31, 1991 through December 31, 1995. All dividends and
capital gains were reinvested. The Index is unmanaged, with no set investment
objective and does not include the "real world" costs of managing a mutual
fund. Earnings from a variable annuity investment compound tax-free until
withdrawal, so no adjustments were made for income taxes. The effect of an
expense limitation is included in the chart.
*Performance does not reflect insurance fees related to a variable product
investment nor the deferred sales charge that would apply to certain
withdrawals of investments held for less than eight years. Performance shown
here would have been reduced if such fees were included and the expense
limitation removed. For more information about fees, consult your variable
annuity prospectus.
11
<PAGE>
International Equity Series
Portfolio Strategy and Performance in 1995
While the returns available from some European countries were very
strong, few of the established international stock markets kept pace with
soaring U.S. equity prices in 1995, even after adjusting for currency
fluctuations.
Still, the International Equity Series provided a total return of
+13.98%* (with capital gains and dividends reinvested) that was substantially
higher than the +9.4% total return of the benchmark Morgan Stanley Europe
Australia Far East (EAFE) Index. The generally weak performance of the U.S.
dollar in 1995 enhanced the Series' and the Index' return by making
investments denominated in other currencies worth more in dollars.
The Series outperformed the EAFE Index in part because it was
overweighted in the United Kingdom, whose FT-SE 100 Index rose +25.7% (the
Financial Times-Stock Exchange Index represents the market capitalization of
100 large public companies). The Series was also underweighted in Japan,
where the benchmark Nikkei Index rose only +1.4%.
International Equity Series seeks to avoid undue risk to principal by
diversifying among companies in established markets and by limiting holdings
in markets we believe to be overvalued or particularly risky due to economic
or political instability.
We generally favor stocks with higher than average dividend yields. We
believe dividend income can help protect investors in two ways. First, this
focus leads us to stocks of relatively stable, large and mid-size companies,
while avoiding smaller, and in our opinion, riskier companies. And second,
income can help to cushion losses when stock prices fall.
A Look at the Portfolio
Many of our investments in European countries such as the United
Kingdom, the Netherlands and Belgium performed well. Investments in the U.K.
represented about 27% of net assets as of December 31, 1995 and included a
major airline, food processors, retailers and an entertainment company that
operates "pubs."
Companies based in the British Commonwealth countries of Australia, New
Zealand and Canada represented another 15% of net assets and generally
performed well. These countries benefited from low inflation and/or
government efforts to reform fiscal policy.
The Series did not participate in the robust markets of Sweden and
Switzerland, Europe's best performing markets in 1995. We did not own any
stocks in these countries because they generally did not fit the Series'
income-oriented selection criteria.
Our Japanese stocks--about 14% of net assets consisted primarily of
technology stocks whose earnings were driven by exports to countries such as
the U.S. These stocks generally outperformed the Nikkei and made a positive
contribution to the performance of the Series.
- --------------------------------------------------------------------------------
International Equity Series Investment Objective
Seeks long-term growth without undue risk to principal by investing
primarily in stocks of foreign issuers providing the potential for capital
appreciation and income.
- --------------------------------------------------------------------------------
12
<PAGE>
Investment Outlook
Overall, the Series expects to maintain a higher concentration in Europe
than the EAFE Index. This is based on our belief that European economic
growth will remain strong compared to Japan. In our opinion, European
companies could surprise securities analysts with better-than-expected
profits, as U.S. companies did early in fiscal 1995. We base this expectation
on our observation that interest rates and inflation in Europe are declining.
European companies are also reducing overhead and other costs to improve
productivity.
Although the Japanese market rebounded in the later months of 1995, we
remain wary of this market. Many banks continue to have their debt ratings
downgraded by bond rating services amid continuing problems with bad loans.
We believe a "credit crunch" will continue to affect the ability of Japanese
industrial companies in Japan to expand.
In general, we believe established markets around the world stand to
benefit in the years ahead from what we see as very favorable long-term
developments in the 1990s--the disappearance of socialist regimes, the
privatization of state enterprises, the gradual breakdown of trade barriers
and the peaceful resolution of international disputes.
$10,000 Initial Investment* October 29, 1992 through December 31, 1995
<TABLE>
<CAPTION>
International Morgan Stanley Europe
Equity Asia Far East (EAFE)
Series Index
<S> <C> <C>
Oct. 29 '92 $10,000 $10,000
Dec. 31 '92 $10,030 $10,152
Mar. 31 '93 $10,090 $11,379
Jun. 30 '93 $10,150 $12,533
Sept. 30 '93 $10,801 $13,373
Dec. 31 '93 $11,632 $13,497
Mar. 31 '94 $11,669 $13,978
Jun. 30 '94 $11,810 $14,701
Sept. 30 '94 $12,042 $14,725
Dec. 31 '94 $11,931 $14,585
Mar. 31 '95 $12,323 $14,855
Jun. 30 '95 $12,499 $14,988
Sept. 30 '95 $13,225 $15,625
Dec. 31 '95 $13,609 $16,270
</TABLE>
<TABLE>
<CAPTION>
International Equity Series
Average Annual Total Returns*
- -----------------------------
<S> <C>
Lifetime +10.17%
One Year +13.98%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Return and share price
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
The chart above shows a $10,000 investment in both the International Equity
Series and the Morgan Stanley Europe Asia Far East (EAFE) Index for the
period from the Series' inception on October 29, 1992 through December 31,
1995. All dividends and capital gains were reinvested. The Index is
unmanaged, with no set investment objective and does not include the "real
world" costs of managing a mutual fund. Earnings from a variable annuity
investment compound tax-free until withdrawal, so no adjustments were made
for income taxes. The effect of an expense limitation is included in the
chart.
*Performance does not reflect insurance fees related to a variable product
investment nor the deferred sales charge that would apply to certain
withdrawals of investments held for less than eight years. Performance shown
here would have been reduced if such fees were included and the expense
limitation removed. For more information about fees, consult your variable
annuity prospectus.
13
<PAGE>
The Emerging Growth Series
Portfolio Strategy and Performance in 1995
We are pleased to report that the Emerging Growth Series provided a
strong total return +39.21%* in its second complete year of operation. The
Series outperformed the NASDAQ Industrial Index, an unmanaged portfolio of
small and mid-size companies that rose +27.97% in value in 1995.
We identify changes in the American marketplace and strive to position
the portfolio in companies that are likely to profit from these trends. The
strategy is a "bottom up" approach to the market, meaning that we evaluate
each company individually and decide whether or not to buy it on its merits
and ability to meet changing trends rather than broad expectations for the
economy or for the stock market.
The Series' goal is to identify companies that can "stand on their own"
through new products or services regardless of the market environment.
Overall, in 1995, the performance of small-cap stocks was led by emerging
"information superhighway" and biotechnology companies. Investors speculated
that the Internet--a global, interactive information exchange system--has the
potential to revolutionize communications and were attracted to companies
linked to this new technology.
A Look at the Portfolio
Stocks in the Series' portfolio generally have higher price-to-earnings
ratios than other stock groups and, therefore, tend to be more sensitive to
interest rate moves. We focus on companies in the early stages of their
growth cycles. These companies tend to be smaller, with names that are not
widely recognized or researched by the investment community.
At the beginning of the calendar year, the Series had approximately 54%
of its net assets in cash, reflecting the relative newness of the Series. We
substantially reduced cash to 26% of net assets by year end as we found
investment opportunities in technology, health care and consumer services.
Our participation in the technology sector has been conservative, with a
focus on hardware, software and communications companies whose earnings
growth is not dependent on overall economic growth. Thus we did not have a
large commitment to cyclical technology companies such as semiconductor
manufacturers.
- --------------------------------------------------------------------------------
Emerging Growth Series Investment Objective
Seeks long-term capital appreciation by investing primarily in common stocks
and convertible securities of emerging and other growth-oriented companies
which we believe are responsive to changes in the marketplace and have
fundamental characteristics to support growth.
- --------------------------------------------------------------------------------
14
<PAGE>
Investment Outlook
We believe that the recent cycle of strong performance for large stocks may
be slowing due to an anticipated peak in earnings momentum for that sector,
relative to small stocks. The Series' management sees this as a potential
opportunity for small stocks to perform relatively well by comparison.
Small company stocks will always involve short-term risk as prices rise
and fall, and these risks are generally greater than the risks associated
with established companies. However, the potential rewards have also
generally been greater, especially for investors who take a long-term
oriented approach and maintain a well-diversified portfolio.
While the future can never be predicted, the Series' 1995 results marked
a sharp turnaround from a flat 1994. We believe our disciplined approach to
small-cap investing has positioned the Series' portfolio well for the year
ahead.
$10,000 Initial Investment* December 27, 1993 through December 31, 1995
<TABLE>
<CAPTION>
Emerging NASDAQ
Growth Industrial
Series Index
<S> <C> <C>
Dec. 27 '93 $10,000 $10,000
Dec. 31 '93 $10,200 $10,000
Mar. 31 '94 $10,060 $ 9,668
Jun. 30 '94 $ 9,790 $ 8,864
Sept. 30 '94 $10,220 $ 9,648
Dec. 31 '94 $10,160 $ 9,356
Mar. 31 '95 $10,784 $ 9,951
Jun. 30 '95 $11,995 $10,985
Sept. 30 '95 $13,670 $12,184
Dec. 31 '95 $14,144 $11,974
</TABLE>
<TABLE>
<CAPTION>
Emerging Growth Series
Average Annual Total Returns*
- -----------------------------
<S> <C>
Lifetime +18.79%
One Year +39.21%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Return and share price
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
The chart above shows a $10,000 investment in both the Emerging Growth Series
and the NASDAQ Industrial Index for the period from the Series' inception on
December 27, 1993 through December 31, 1995. All dividends and capital gains
were reinvested. The Index is unmanaged, with no set investment objective and
does not include the "real world" costs of managing a mutual fund. Earnings
from a variable annuity investment compound tax-free until withdrawal, so no
adjustments were made for income taxes. The effect of an expense limitation
is included in the chart.
*Performance does not reflect insurance fees related to a variable product
investment nor the deferred sales charge that would apply to certain
withdrawals of investments held for less than eight years. Performance shown
here would have been reduced if such fees and the expense limitation removed.
For more information about fees, consult your variable annuity prospectus.
15
<PAGE>
Value Series
Portfolio Strategy and Summary of Performance in 1995
The Series generally invests in companies with a market capitalization
of between $100 million and $3 billion. We tend to be attracted to companies
whose stocks are trading near or at the low end of their historical
valuations. Our goal is to distinguish between companies that are simply
cheap and those whose management is improving shareholder value in ways
likely to be recognized by the market within a reasonable time.
During the past year, the Series provided a total return of +23.85%*, a
marked improvement from 1994, the Series' first full year of operation and a
period when interest rates were rising sharply.
Our "value" stock niche benefited from falling interest rates in 1995,
although this segment's performance was eclipsed by the very strong
performance of stocks that fit the parameters of portfolio managers employing
a "growth" strategy--that is, a focus on companies with accelerating earnings
or sales. "Growth" companies typically trade at higher prices relative to
earnings than does the overall stock market.
The Series' "value" portfolio contains many stocks whose price relative
to the company's book value--that is, the company's net worth for accounting
purposes--is lower than the price-to-book ratio of stocks in the S&P 500
Index and Russell 2000 Index, unmanaged portfolios that reflect large and
small- to mid-size capitalization companies, respectively.
A Look at the Portfolio
During the year, we took several steps to position the Series to benefit
from market developments we believe may occur in 1996 as well as concentrate
our efforts in sectors that appear to offer the most value.
. We reduced the number of portfolio holdings so the Series' management
and research team could devote more time to each stock we select and
hold. However, we remained well-diversified within the small-cap "value"
segment of the market.
. Our research efforts led us to purchase more stocks of health care and
selected consumer service businesses. This allowed us to reduce our cash
position from 69% of net assets, a position that reflected the relative
newness of the Series, to 9.9% of net assets as of December 31, 1995.
. We sold our position in commodity and basic materials companies such
as steel and natural resources, businesses that tend to be adversely
affected by economic slowdowns to a greater degree than the overall U.S.
economy.
- ------------------------------------------------------------------------------
Value Series Investment Objective
Seeks capital appreciation by investing primarily in common stocks and
convertible securities whose market value, in our opinion, appears low
relative to underlying value or future earnings or growth potential. Emphasis
is placed on companies that may be temporarily out-of-favor or whose value is
not yet recognized by the market.
- -----------------------------------------------------------------------------
16
<PAGE>
Investment Outlook
In the coming months, large companies may find it difficult to improve
upon the robust earnings they enjoyed in 1995 given that U.S. economic growth
has slowed and the value of the U.S. dollar has recently rebounded,
potentially making exports slightly more expensive. On a relative basis, the
earnings growth of selected small companies--especially those whose fortunes
appear to be rising--may begin to attract investors.
Despite the sharp gain in stock prices in 1995, we continue to find
well-managed companies whose stocks, in our opinion, are trading at
discounted prices. We believe the Series can benefit as the stock market
moves into a new cycle that we think will favor "value" investments.
$10,000 Initial Investment* December 27, 1993 through December 31, 1995
<TABLE>
<CAPTION>
Value Russell 2000
Series Index
<S> <C> <C>
Dec. 27 '93 $10,000 $10,000
Dec. 31 '93 $10,000 $10,000
Mar. 31 '94 $10,140 $ 9,735
Jun. 30 '94 $ 9,980 $ 9,356
Sept. 30 '94 $10,470 $10,005
Dec. 31 '94 $10,210 $ 9,818
Mar. 31 '95 $10,639 $10,270
Jun. 30 '95 $11,180 $11,233
Sept. 30 '95 $12,069 $12,342
Dec. 31 '95 $12,744 $12,610
</TABLE>
<TABLE>
<CAPTION>
Value Series
Average Annual Total Returns*
- -----------------------------
<S> <C>
Lifetime +12.80%
One Year +23.85%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Return and share price
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
The chart above shows a $10,000 investment in both the Value Series and the
Russell 2000 Index for the period from the Series' inception on December 27,
1993 through December 31, 1995. All dividends and capital gains were
reinvested. The Index is unmanaged, with no set investment objective and does
not include the "real world" costs of managing a mutual fund. Earnings from a
variable annuity investment compound tax-free until withdrawal, so no
adjustments were made for income taxes. The effect of an expense limitation
is included in the chart.
*Performance does not reflect insurance fees related to a variable product
investment nor the deferred sales charge that would apply to certain
withdrawals of investments held for less than eight years. Performance shown
here would have been reduced if such fees were included and the expense
limitation removed. For more information about fees, consult your variable
annuity prospectus.
17
<PAGE>
Money Market Series
In 1995, long-term and intermediate-term interest rates fell much faster
than short-term interest rates as inflation fears subsided and U.S. economic
growth slowed. This trend helped the Money Market Series preserve some of the
yield increases that occurred on short-term investments in 1994 when the
Federal Reserve Board sharply raised its target for the Federal Funds
rate--the rate banks charge each other for overnight loans.
Still, falling interest rates did have a negative effect on the Series.
As of December 31, 1995, the yield on a three month U.S. Treasury Bill stood
at 5.07%, down from 5.68% a year earlier. By the end of 1995, the yields
available on short-term commercial paper--short-term obligations of
corporations which represent the most significant component of the Series'
portfolio and generally offer higher yields than Treasuries--had also
declined by a similar amount.
The Money Market Series provided a total return of +5.48% for the year
ended December 31, significantly better than its five year average return of
+4.09%.
Keep in mind that your annuity investment is tax-deferred and compounds
without taxation, unlike income from directly owned U.S. Treasury Bills or
commercial paper, which are subject to federal income tax for the year income
is received. Your annuity investment helps you keep more of the interest you
earn working for you.
Although there is no guarantee that money market funds can maintain a
constant share value, when interest rates rise, a short-term investment such
as the Money Market Series can provide the benefit of more income without the
declining principal value that longer-term bonds typically experience.
Yield Outlook
We believe that interest rates, especially short-term rates, are more
likely to decline than rise in the months ahead. While such an environment
does not bode well for money market yields, investors can take some comfort
in government statistics that show the growth rate in consumer prices is also
on the decline. This is important because it means the money you've invested
in this Series is not losing ground to inflation--a very distinct risk of
short-term investments.
While not designed for most investors' long-term goals, money market
funds can make sense as a small component of a diversified long-term
portfolio since such funds generally provide a relatively stable source of
income.
<TABLE>
<CAPTION>
Money Market Series
Average Annual Total Returns
<S> <C>
Lifetime +5.35%
Five Years +4.09%
One Year +5.48%
Through December 31, 1995
</TABLE>
Past performance is not a guarantee of future results. Yields will fluctuate
and are not guaranteed. An investment in the Series is neither insured nor
guaranteed by the U.S. Government.
The average annual returns reflect reinvestment of all dividends. Earnings
from a variable annuity investment compound tax-free until withdrawal, so no
adjustments were made for income taxes. The effect of an expense limitation
is included in the chart. Performance does not reflect insurance fees related
to a variable product investment nor the deferred sales charge that would
apply to certain withdrawals of investments held for less than eight years.
Performance shown here would have been reduced if such fees and the expense
limitation removed. For more information about fees, consult your variable
annuity prospectus.
- --------------------------------------------------------------------------------
Money Market Series Investment Objective
Seeks to provide maximum income which preserving principal and maintaining
liquidity. While every effort will be made to maintain a fixed net asset value,
there can be no assurance that this objective will be achieved.
- --------------------------------------------------------------------------------
18
<PAGE>
Delaware Group Premium Fund, Inc.-Equity/Income Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK-96.80%
Aerospace & Defense-1.42%
General Dynamics........................................................... 26,200 $ 1,549,075
------------
1,549,075
------------
Automotives & Automotive Parts-4.21%
Chrysler................................................................... 37,041 2,051,145
Ford Motor................................................................. 43,800 1,270,200
Genuine Parts.............................................................. 30,800 1,262,800
------------
4,584,145
------------
Banking, Finance & Insurance-22.05%
American General........................................................... 32,200 1,122,975
AmSouth Bancorporation..................................................... 25,000 1,009,375
Aon........................................................................ 35,950 1,793,006
Bank of Boston............................................................. 29,800 1,378,250
Beneficial................................................................. 25,000 1,165,625
Block (H&R)................................................................ 37,500 1,518,750
Chase Manhattan............................................................ 28,600 1,733,875
CIGNA...................................................................... 12,100 1,249,325
CoreStates Financial....................................................... 4,200 159,075
Crestar Financial.......................................................... 21,300 1,259,363
First Chicago NBD.......................................................... 36,625 1,446,688
Fleet Financial Group...................................................... 35,100 1,430,325
Marsh & McLennan........................................................... 11,400 1,011,750
Mellon Bank................................................................ 24,700 1,327,625
Meridian Bancorp........................................................... 41,500 1,932,344
St. Paul................................................................... 26,200 1,457,375
UJB Financial.............................................................. 42,700 1,526,525
U.S. Bancorp............................................................... 45,200 1,517,025
------------
24,039,276
------------
Cable, Media & Publishing-2.45%
McGraw-Hill................................................................ 30,600 2,666,025
------------
2,666,025
------------
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Chemicals-9.19%
Dow Chemical............................................................... 11,000 $ 774,125
DuPont (E.I.) deNemours.................................................... 38,400 2,683,200
Imperial Chemical-SP ADR................................................... 29,700 1,388,475
Monsanto................................................................... 21,000 2,572,500
Occidental Petroleum....................................................... 43,300 925,538
Witco...................................................................... 57,300 1,676,025
------------
10,019,863
------------
Electronics & Electrical-5.69%
General Electric........................................................... 39,700 2,858,400
Pitney Bowes............................................................... 50,800 2,387,600
Thomas & Betts............................................................. 12,900 951,375
------------
6,197,375
------------
Energy-11.60%
Amoco...................................................................... 28,100 2,019,688
Atlantic Richfield......................................................... 10,300 1,140,725
Exxon...................................................................... 32,600 2,612,075
Imperial Oil Limited....................................................... 25,800 932,025
McDermott International.................................................... 14,700 323,400
Sonat...................................................................... 45,700 1,628,063
Tenneco.................................................................... 27,400 1,359,725
Ultramar................................................................... 59,500 1,532,125
Williams................................................................... 25,000 1,096,875
------------
12,644,701
------------
Food, Beverage & Tobacco-7.12%
General Mills.............................................................. 18,900 1,091,475
Heinz (H.J.)............................................................... 63,500 2,103,438
Philip Morris.............................................................. 27,200 2,461,600
RJR Nabisco Holdings....................................................... 41,840 1,291,810
UST........................................................................ 24,300 811,013
------------
7,759,336
------------
</TABLE>
19
<PAGE>
Equity/Income Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Healthcare & Pharmaceuticals-9.06%
American Home Products..................................................... 21,800 $ 2,114,600
Bristol-Myers Squibb....................................................... 24,700 2,121,113
Glaxo Wellcome PLC-SP ADR.................................................. 44,000 1,243,000
Pharmacia & Upjohn......................................................... 15,000 581,250
SmithKline Beecham PLC-SP ADR Unit......................................... 34,300 1,903,650
Warner-Lambert............................................................. 19,700 1,913,363
------------
9,876,976
------------
Industrial Machinery-2.88%
Cooper Industries.......................................................... 42,300 1,554,525
Minnesota Mining & Manufacturing........................................... 24,000 1,590,000
------------
3,144,525
------------
Paper & Forest Products-3.70%
Federal Paper Board........................................................ 18,000 933,750
Kimberly-Clark............................................................. 22,500 1,861,875
Union Camp................................................................. 26,000 1,238,250
------------
4,033,875
------------
Real Estate-1.83%
Liberty Property Trust..................................................... 45,000 933,750
Simon Property Group....................................................... 43,700 1,065,188
------------
1,998,938
------------
Retail-3.27%
May Department Stores...................................................... 22,800 963,300
Penney (J.C.).............................................................. 54,700 2,605,088
------------
3,568,388
------------
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Transportation and Related-1.88%
Union Pacific.............................................................. 31,000 $ 2,046,000
------------
2,046,000
------------
Utilities-10.45%
ALLTEL..................................................................... 43,100 1,271,450
BellSouth.................................................................. 27,000 1,174,500
Consolidated Edison Company of New York.................................... 10,700 342,400
Frontier................................................................... 51,500 1,545,000
GTE........................................................................ 29,700 1,306,800
Houston Industries......................................................... 62,400 1,513,200
NYNEX...................................................................... 16,000 864,000
Royal PTT Nederland-SP ADR................................................. 40,000 1,450,000
SBC Communications......................................................... 23,800 1,368,500
Texas Utilities............................................................ 13,600 559,300
------------
11,395,150
------------
Total Common Stock (cost $90,523,875)...................................... 105,523,648
------------
CONVERTIBLE PREFERRED STOCK-0.61%
Freeport McMoRan Copper & Gold 7.00% pfd cv................................ 23,000 661,250
------------
Total Convertible Preferred Stock
(cost $629,493).......................................................... 661,250
------------
</TABLE>
20
<PAGE>
Equity/Income Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS-2.45%
With Chase Manhattan 5.60% 1/2/96 (dated
12/29/95, collateralized by $510,000
U.S. Treasury Notes 7.875% due 7/31/96,
market value $534,249 and $352,000
U.S. Treasury Notes 7.00% due 9/30/96,
market value $362,006)................................................... $874,000 $ 874,000
With Morgan (J.P.) 5.75% 1/2/96 (dated 12/29/95,
collateralized by $548,000 U.S. Treasury Notes
6.00% due 8/31/97, market value $565,479 and
$335,000 U.S. Treasury Notes 7.375% due
11/15/97, market value $351,145)......................................... 898,000 898,000
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 5.875% 1/2/96 (dated 12/29/95,
collateralized by $500,000 U.S. Treasury Notes
7.50% due 12/31/96, market value $529,778 and
$373,000 U.S. Treasury Notes 6.875% due
2/28/97, market value $388,117).......................................... $899,000 $ 899,000
------------
Total Repurchase Agreements
(cost $2,671,000)........................................................ 2,671,000
------------
TOTAL MARKET VALUE OF SECURITIES OWNED-99.86% (cost $93,824,368)........... 108,855,898
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-0.14%...................... 147,558
------------
NET ASSETS APPLICABLE TO 7,348,563 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $14.83 PER SHARE-100.00%................................... $109,003,456
============
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1995
Common stock, $.01 par value, 500,000,000 authorized to the
Fund with 50,000,000 allocated to the Series............................. $ 84,357,520
Accumulated undistributed:
Net investment income.................................................... 852,092
Net realized gain on investments......................................... 8,762,314
Net unrealized appreciation of investments............................... 15,031,530
------------
Total net assets........................................................... $109,003,456
============
</TABLE>
See accompanying notes
21
<PAGE>
Delaware Group Premium Fund, Inc.-High Yield Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
CORPORATE BONDS-84.91%
Aerospace & Defense-1.69%
Alliant Techsystems 11 3/4% sr sub notes 2003.............................. $500,000 $ 550,625
K&F Industries 13 3/4% sr sub debs 2001.................................... 389,000 408,936
-----------
959,561
-----------
Automobile/Auto Equipment-4.42%
Aftermarket Tech. 12% sr sub notes 2004.................................... 500,000 530,000
American General 12 7/8% sr notes 2002..................................... 300,000 301,500
Exide 10 3/4% sr notes 2002................................................ 100,000 108,250
Exide 0%/12 1/4% sr sub deb 2004........................................... 400,000 337,000
Exide 10% sr notes 2005.................................................... 400,000 432,000
Harvard Industries 11 1/8% sr notes 2005................................... 150,000 152,250
SPX 11 3/4% sr sub notes 2002.............................................. 600,000 643,500
----------
2,504,500
----------
Banking, Finance & Insurance-0.79%
Bankers Life Holding 13% sr sub notes 2002................................. 200,000 228,750
Life Partners Group 12 3/4% sr sub notes 2002.............................. 200,000 217,000
----------
445,750
----------
Buildings & Materials-3.09%
American Standard 10 7/8% sr notes 1999................................... 400,000 441,000
Eagle Industries 0%/10 1/2% sr notes 2003................................. 500,000 417,500
Schuller International Group 10 7/8%
sr notes 2004............................................................ 300,000 337,500
Southdown 14% sr sub notes 2001............................................ 500,000 553,125
---------
1,749,125
---------
Cable, Media & Publishing-10.03%
Allbritton Communications 11 1/2%
sr sub debs 2004......................................................... 150,000 158,250
Cablevision Industries 9 1/4% sr debs 2008................................ 200,000 214,000
Century Communications 9 3/4% sr notes 2002............................... 750,000 780,000
Century Communications 11 7/8% sr
sub debs 2003............................................................ 400,000 430,500
*Continental Cablevision 8.3% sr notes 2006................................ 500,000 503,125
Continental Cablevision 9% sr debs 2008.................................... 500,000 525,000
Infinity Broadcasting 10 3/8%
sr sub notes 2002........................................................ 250,000 269,375
K-III Communications 10 5/8% sr sec
notes 2002............................................................... 490,000 521,850
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
CORPORATE BONDS (Continued)
Cable, Media & Publishing (Continued)
Lamar Advertising 11% sr sec notes 2003.................................... $ 450,000 $ 464,625
Marcus Cable 0%/14 1/4% sr disc notes 2005................................ 800,000 544,000
Rogers Cablesystems 10% sr sec debs 2007................................... 440,000 473,550
Rogers Cablesystems 11% notes 2015......................................... 270,000 291,263
*Sullivan Graphics 12 3/4% sr sub notes 2005............................... 500,000 501,250
-----------
5,676,788
-----------
Chemicals-7.60%
Berry Plastic 12 1/4% sr sub notes 2004.................................... 400,000 423,000
Foamex LP 11 7/8% sr sub debs 2004........................................ 400,000 399,000
G-I Holdings 0% sr disc notes 1998......................................... 1,200,000 912,000
Huntsman 10 5/8% 1st mtg notes 2001....................................... 816,000 913,920
NL Industries 11 3/4% sr sec notes 2003.................................... 265,000 283,881
NL Industries 0%/13% sr sec disc notes 2005................................ 600,000 463,500
Polymer Group 12 1/4% sr notes 2002........................................ 625,000 645,313
UCC Investors Holdings 0%/12%
sub disc notes 2005...................................................... 350,000 263,375
---------
4,303,989
---------
Computer/Technology-2.71%
ADT Operations 9 1/4% sr sub notes 2003.................................... 1,000,000 1,070,000
MagneTek 10 3/4% sr sub debs 1998......................................... 300,000 309,000
Unisys 13 1/2% notes 1997................................................. 160,000 152,800
----------
1,531,800
----------
Consumer Products-3.29%
American Safety Razor 9 7/8% sr notes 2005................................ 400,000 408,000
*Calmar 11 1/2% sr sub notes 2005......................................... 500,000 505,625
Dictaphone 11 3/4% sr sub notes 2005...................................... 400,000 388,000
Mafco 11 7/8% sr sub notes 2002........................................... 250,000 255,938
*Remington Arms 10% sr sub notes 2003...................................... 350,000 304,500
---------
1,862,063
---------
Energy-2.68%
Ferrellgas Partners LP 10% sr notes 2001................................... 1,000,000 1,070,000
Global Marine 12 3/4% notes 1999.......................................... 400,000 448,000
---------
1,518,000
---------
Food, Beverage & Tobacco-0.77%
Specialty Foods 11 1/8% sr notes 2002..................................... 450,000 436,500
---------
436,500
---------
</TABLE>
22
<PAGE>
High Yield Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
CORPORATE BONDS (Continued)
Healthcare & Pharmaceuticals-3.81%
HEALTHSOUTH Rehabilitation 9 1/2%
sr sub notes 2001........................................................ $ 500,000 $ 536,250
Tenet Healthcare 10 1/8% sr sub notes 2005................................. 1,460,000 1,620,600
-----------
2,156,850
-----------
Industrial Machinery-2.78%
*Coinmach 11 3/4% sr notes 2005........................................... 500,000 506,250
IMO Industries 12% sr sub debs 2001........................................ 550,000 562,375
*Norcal Waste System 12 1/2% sr sub notes 2005............................ 500,000 505,000
-----------
1,573,625
-----------
Leisure, Lodging & Entertainment-4.20%
Aztar 13 3/4% sr sub notes 2004........................................... 250,000 278,750
Cinemark USA 12% sr notes 2002............................................. 200,000 218,250
Coleman Holdings 0% sr sec disc notes 1998................................. 700,000 567,000
MGM Grand Hotel 11 3/4% 1st mtg notes 1999................................ 100,000 106,500
MGM Grand Hotel 12% 1st mtg notes 2002..................................... 150,000 165,000
NWCG Holdings 0% sr sec disc notes 1999.................................... 600,000 415,500
Six Flags Theme Parks 12 1/4%
sr sub disc notes 2005................................................... 800,000 626,000
---------
2,377,000
---------
Metals & Mining-10.99%
Acme Metals 12 1/2% sr notes 2002......................................... 500,000 501,250
AK Steel 10 3/4% sr notes 2004............................................ 750,000 829,688
Algoma Steel 12 3/8% 1st mtg notes 2005................................... 400,000 361,000
GS Technologies 12% sr notes 2004.......................................... 1,100,000 1,102,750
GS Technologies 12 1/4% sr notes 2005..................................... 750,000 752,813
Inland Steel 12 3/4% notes 2002........................................... 400,000 446,000
Interlake 12% sr sub notes 2001............................................ 400,000 405,000
Kaiser Aluminum 12 3/4% sr sub notes 2003................................. 400,000 441,000
Maxxam Group 14% sr sub notes 2000......................................... 83,000 86,943
Maxxam Group 11 1/4% sr sec notes 2003.................................... 950,000 944,063
NS Group 13 1/2% sr sec notes 2003........................................ 400,000 352,000
---------
6,222,507
---------
Packaging & Containers-5.23%
Ivex Packaging 12 1/2% sr sub notes 2002.................................. 450,000 477,563
Owens-Illinois 11% debs 2003............................................... 1,000,000 1,132,500
Silgan Holdings 0%/13 1/4% sr disc debs 2002.............................. 950,000 912,000
U.S. Can 13 1/2% sr sub notes 2002........................................ 400,000 438,500
---------
2,960,563
---------
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
CORPORATE BONDS (Continued)
Paper & Forest Products-8.83%
Crown Paper 11% sr sub notes 2005.......................................... $ 400,000 $ 351,000
Doman Industries 8 3/4% sr notes 2004..................................... 1,000,000 950,000
Domtar 11 3/4% sr notes 1999.............................................. 1,200,000 1,333,500
Pacific Lumber 10 1/2% sr notes 2003...................................... 700,000 663,250
Repap Wisconsin 9 7/8% sr sec notes 2006.................................. 500,000 475,000
SD Warren 12% sr sub notes 2004............................................ 400,000 441,000
Stone Consolidated 10 1/4% sr sec notes 2000.............................. 250,000 268,750
Stone Container 11 7/8% sr notes 1998..................................... 250,000 262,500
Stone Container 11 1/2% sr notes 2004..................................... 250,000 250,625
---------
4,995,625
---------
Retail-2.84%
Fleming Companies 10 5/8% sr notes 2001................................... 500,000 498,750
General Nutrition 11 3/8% sr sub notes 2000............................... 185,000 200,956
Pathmark Stores 0%/10 3/4% jr sub notes 2003.............................. 400,000 244,000
Penn Traffic 10.65% sr notes 2004.......................................... 250,000 240,000
Ralph's Grocery 13 3/4% sr sub notes 2005................................. 400,000 423,500
---------
1,607,206
---------
Telecommunications-6.84%
CAI Wireless System 12 1/4% sr notes 2002................................. 500,000 535,000
Comcast Cellular 0% sr notes 2000.......................................... 600,000 456,000
Galaxy Telecom LP 12 3/8% sr sub notes 2005............................... 500,000 502,500
*IXC Communications 12 1/2% sr notes 2005................................. 500,000 535,000
Pronet 11 7/8% sr sub notes 2005.......................................... 500,000 553,750
Rogers Cantel Mobile 11 1/8% sr sub notes 2002............................ 1,200,000 1,288,500
---------
3,870,750
----------
Transportation & Shipping-0.87%
Eletson Holdings 9 1/4% 1st mtg notes 2003................................ 500,000 495,000
----------
495,000
----------
Utilities-1.45%
Midland Funding II 13 1/4% sub sec 2006................................... 750,000 819,375
----------
819,375
----------
Total Corporate Bonds (cost $46,416,957)................................... 48,066,577
----------
</TABLE>
23
<PAGE>
High Yield Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED STOCK-0.44%
Pantry Pride $14.875 pfd................................................... 2,500 $ 250,000
-----------
Total Convertible Preferred Stock
(cost $262,500).......................................................... 250,000
-----------
STOCK WARRANTS-0.01%
Berry Plastic.............................................................. 400 5,000
-----------
Total Stock Warrants (cost $3,600)......................................... 5,000
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS-11.60%
With Chase Manhattan 5.60% 1/2/96 (dated
12/29/95, collateralized by $1,255,000
U.S. Treasury Notes 7.875% due 7/31/96,
market value $1,313,576 and $866,000
U.S. Treasury Notes 7% due 9/30/96,
market value $891,171)................................................... $2,150,000 $ 2,150,000
With Morgan (J.P.) 5.75% 1/2/96 (dated 12/29/95,
collateralized by $1,346,000 U.S. Treasury
Notes 6% due 8/31/97, market value $1,389,199
and $825,000 U.S. Treasury Notes 7.375% due
11/15/97, market value $863,573)......................................... 2,207,000 2,207,000
With PaineWebber 5.875% 1/2/96 (dated 12/29/95,
collateralized by $1,228,000 U.S. Treasury
Notes 7.5% due 12/31/96, market value
$1,300,457 and $915,000 U.S. Treasury Notes
6.875% due 2/28/97, market value $952,929)............................... 2,207,000 2,207,000
-----------
Total Repurchase Agreements
(cost $6,564,000)........................................................ 6,564,000
-----------
TOTAL MARKET VALUE OF SECURITIES OWNED-96.96% (cost $53,247,057)........... 54,885,577
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-3.04%...................... 1,719,377
-----------
NET ASSETS APPLICABLE TO 6,330,569 SHARES ($.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $8.94 PER SHARE-100.00%.................................... $56,604,954
===========
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1995
Common stock, $.01 par value, 500,000,000 shares authorized to the Fund
with 50,000,000 allocated to the Series.................................. $58,748,274
Accumulated undistributed:
Net realized loss on investments......................................... (3,781,840)
Net unrealized appreciation of investments............................... 1,638,520
-----------
Total net assets........................................................... $56,604,954
===========
</TABLE>
- ----------------------------
*Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1995, these securities amounted to $3,360,750 or 5.94% of net assets.
See accompanying notes
24
<PAGE>
Delaware Group Premium Fund, Inc.-Capital Reserves Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
CORPORATE BONDS-32.58%
Allstate 5.875% 6/15/98.................................................... $ 385,000 $ 386,444
American General Finance 7.00% 10/1/97..................................... 520,000 532,350
Aristar 8.125% 12/1/97..................................................... 460,000 481,275
AVCO Financial Services 5.50% 5/1/98....................................... 350,000 348,688
Capital One Bank 6.66% 8/17/98............................................. 500,000 509,375
CNA Financial 6.25% 11/15/03............................................... 550,000 547,250
Columbia/HCA Healthcare 8.70% 2/10/10...................................... 440,000 528,000
Federal Express 7.53% 9/23/06.............................................. 306,825 326,001
Ford Motor Credit 6.25% 11/8/00............................................ 600,000 607,500
General Motor Acceptance Corporation
floating rate 5.26% 3/3/99............................................... 380,000 373,825
H.F. Ahmanson & Company 6.35% 9/1/98....................................... 700,000 711,375
ITT 6.25% 11/15/00......................................................... 240,000 242,100
ITT Hartford 6.375% 11/1/02................................................ 575,000 582,188
Noranda Forest 6.875% 11/15/05............................................. 475,000 485,688
Ontario Province 6.125% 6/28/00............................................ 325,000 330,281
Pep Boys 7.00% 6/1/05...................................................... 535,000 559,744
Raytheon 6.50% 7/15/05..................................................... 550,000 567,188
Transamerica Finance 8.08% 11/4/99......................................... 520,000 557,700
Wendy's International 6.35% 12/15/05....................................... 420,000 424,200
----------
Total Corporate Bonds (Cost $8,823,169).................................... 9,101,172
----------
U.S. TREASURY OBLIGATIONS-7.10%
U.S. Treasury Notes 6.375% 1/15/00......................................... 1,205,000 1,250,151
U.S. Treasury Notes 5.75% 8/15/03.......................................... 725,000 734,751
----------
Total U.S. Treasury Obligations
(Cost $1,941,201)........................................................ 1,984,902
----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OBLIGATIONS
(GNMA)-13.14%
GNMA 7.50% 2023............................................................ 575,572 592,479
GNMA 9.00% 2021............................................................ 1,695,978 1,805,746
GNMA 10.00% 2020........................................................... 314,758 345,938
GNMA 10.50% 2019........................................................... 299,155 331,501
GNMA 11.00% 2009 to 2010................................................... 175,712 197,786
GNMA 12.00% 2011 to 2013................................................... 98,932 113,185
GNMA II 12.00% 2014 to 2016................................................ 254,510 282,903
----------
Total Government National Mortgage
Association Obligations (Cost $3,635,980)................................ 3,669,538
----------
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
MORTGAGE-BACKED SECURITIES-20.82%
Federal Home Loan Mortgage Corporation-
Gold 7.00% 10/1/17....................................................... $ 217,078 $ 221,827
Federal Home Loan Mortgage Corporation
7.50% 5/1/09............................................................. 160,839 164,108
Federal Home Loan Mortgage Corporation
8.50% 9/1/08............................................................. 183,927 193,640
Federal Home Loan Mortgage Corporation-
Gold 8.50% 6/1/14........................................................ 185,978 195,626
Federal Home Loan Mortgage Corporation
10.00% 6/15/20........................................................... 260,000 281,407
Federal National Mortgage Association
6.50% 11/1/10 to 2/1/24.................................................. 1,299,189 1,295,045
Federal National Mortgage Association
7.00% 10/1/10............................................................ 786,365 801,600
Federal National Mortgage Association
8.00% 12/1/09 to 1/1/10.................................................. 935,355 969,846
Federal National Mortgage Association
8.00% 9/1/16............................................................. 389,490 406,652
Federal National Mortgage Association
9.00% 10/1/06............................................................ 430,960 458,434
Federal National Mortgage Association
9.50% 11/1/21 to 5/1/22.................................................. 777,519 828,544
----------
Total Mortgage-Backed Securities
(Cost $5,707,965)........................................................ 5,816,729
----------
AGENCY OBLIGATIONS-0.90%
Federal Home Loan Bank 6.745% 4/17/97...................................... 150,000 152,880
Federal Home Loan Mortgage Corporation
Global Bond 7.125% 7/21/99............................................... 95,000 99,916
----------
Total Agency Obligations (Cost $246,034)................................... 252,796
----------
COLLATERALIZED MORTGAGE
OBLIGATIONS-7.79%
FDIC REMIC Trust 94-C1 2A2 7.85% 9/25/25................................... 585,000 598,528
Federal Home Loan Mortgage Corporation
1666E 6.00% 12/15/19..................................................... 575,000 575,262
Nomura Asset Securities 95-MD3 8.17% 3/4/20................................ 510,772 551,314
Resolution Trust 95-C1 6.55% 2/25/27....................................... 450,000 450,281
----------
Total Collateralized Mortgage Obligations
(Cost $2,154,835)........................................................ 2,175,385
----------
</TABLE>
25
<PAGE>
Capital Reserves Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
ASSET-BACKED SECURITIES-16.43%
Advanta 93-1A2 5.95% 5/25/09............................................... $ 70,486 $ 69,380
American Financial Home Equity Loan
Trust Series 94-2A1 6.95% 6/25/24........................................ 385,569 389,636
American Financial Home Equity Loan
Trust Series 91-1A 8.00% 7/25/06......................................... 58,205 59,846
Case Equipment Loan Trust 95-B A3
6.15% 9/15/02............................................................ 550,000 555,801
Dayton Hudson Credit Card Master Trust
95-1 A 6.10% 2/25/02..................................................... 550,000 558,162
Discover Card Trust 93-BA 6.75% 2/16/02.................................... 400,000 413,449
Nomura Asset Securities 95-2 2A2 6.25% 1/25/26............................. 200,000 200,094
Olympic Automobile Receivables Trust
95-B 7.35% 10/15/01...................................................... 488,611 500,915
Premier Auto Trust 93-3A3 4.90% 12/15/98................................... 340,744 338,408
Standard Credit Card Master Trust 94-2A
7.25% 4/7/08............................................................. 370,000 397,750
Travelers Mortgage Securities J-Z2 12.00% 3/1/14........................... 255,280 289,265
World Omni Automobile Lease Securitization
Trust 94-BA 7.95% 1/25/01................................................ 500,000 513,339
World Omni Automobile Lease Securitization
Trust 95-A A 6.05% 11/25/01.............................................. 300,000 302,388
----------
Total Asset-Backed Securities (Cost $4,481,436)............................ 4,588,433
----------
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS-0.45%
With Chase Manhattan 5.60% 1/2/96 (dated
12/29/95 collateralized by $24,000 U.S. Treasury
Notes 7.875% due 7/31/96, market value $25,636
and $17,000 U.S. Treasury Notes 7.00% due
9/30/96, market value $17,434)........................................... $ 42,000 $ 42,000
With Morgan (J.P.) 5.75% 1/2/96 (dated 12/29/95
collateralized by $26,000 U.S. Treasury Notes
6.00% due 8/31/97, market value $26,539 and
$16,000 U.S. Treasury Notes 7.375% due
11/15/97, market value $16,332).......................................... 42,000 42,000
With PaineWebber 5.875% 1/2/96 (dated 12/29/95
collateralized by $23,000 U.S. Treasury Notes
7.50% due 12/31/96, market value $24,498 and
$18,000 U.S. Treasury Notes 6.875% due
2/28/97, market value $18,384)........................................... 42,000 42,000
----------
Total Repurchase Agreements (Cost $126,000)................................ 126,000
----------
<CAPTION>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES OWNED-99.21% (Cost $27,116,620)................................ 27,714,955
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-0.79%........................................... 219,784
-----------
NET ASSETS APPLICABLE TO 2,812,927 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $9.93 PER SHARE-100.00%......................................................... $27,934,739
===========
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1995
Common stock, $0.01 par value, 500,000,000 shares authorized to the
Fund with 50,000,000 allocated to the Series.................................................. $28,667,081
Accumulated undistributed:
Net realized loss on investments.............................................................. (1,330,677)
Net unrealized appreciation of investments.................................................... 598,335
-----------
Total net assets................................................................................ $27,934,739
===========
</TABLE>
See accompanying notes
26
<PAGE>
Delaware Group Premium Fund, Inc.-Multiple Strategy Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK-59.24%
Aerospace & Defense-5.07%
AlliedSignal............................................................... 12,800 $ 608,000
GenCorp.................................................................... 31,600 387,100
General Motors Class H..................................................... 12,700 623,888
Lockheed Martin............................................................ 13,000 1,027,000
Rockwell International..................................................... 10,600 560,475
----------
3,206,463
----------
Automobiles & Auto Parts-1.07%
Armor All Products......................................................... 6,400 115,200
Danaher.................................................................... 17,600 558,800
----------
674,000
----------
Banking, Finance & Insurance-2.95%
Bank of NewYork............................................................ 4,400 214,500
Chubb...................................................................... 5,400 522,450
Equitable of Iowa Companies................................................ 5,200 167,050
Federal National Mortgage.................................................. 4,000 496,500
MBNA....................................................................... 5,850 215,719
Wilmington Trust........................................................... 8,000 248,000
----------
1,864,219
----------
Building & Materials-0.90%
Foster Wheeler............................................................. 13,400 569,500
----------
569,500
----------
Cable, Media & Publishing-2.22%
American Greetings Class A................................................. 32,600 902,613
Banta...................................................................... 11,300 501,438
----------
1,404,051
----------
Chemicals-3.84%
Air Products & Chemicals................................................... 9,200 485,300
Loctite.................................................................... 20,100 954,750
Praxair.................................................................... 25,400 854,075
RPM........................................................................ 8,375 137,141
----------
2,431,266
----------
Computers & Technology-1.28%
Reynolds & Reynolds Class A................................................ 20,800 808,600
----------
808,600
----------
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Consumer Products-1.40%
Procter & Gamble........................................................... 10,700 $ 888,100
----------
888,100
----------
Electronics & Electrical-2.79%
Diebold.................................................................... 3,975 220,116
General Electric........................................................... 14,800 1,065,600
Teleflex................................................................... 11,700 479,700
----------
1,765,416
----------
Energy-5.30%
Imperial Oil Limited....................................................... 9,400 339,575
Kerr-McGee................................................................. 9,500 603,250
Royal Dutch Petroleum...................................................... 5,500 776,188
Sonat...................................................................... 15,500 552,188
Southwestern Energy........................................................ 11,000 140,250
Total ADR.................................................................. 12,958 440,572
Unocal..................................................................... 17,200 500,950
----------
3,352,973
----------
Environmental Services-1.88%
WMX Technologies........................................................... 39,700 1,186,038
----------
1,186,038
----------
Farming & Agriculture-2.68%
ConAgra.................................................................... 41,100 1,695,375
----------
1,695,375
----------
Food, Beverage & Tobacco-4.30%
Philip Morris.............................................................. 20,800 1,882,400
RJR Nabisco Holdings....................................................... 19,800 611,325
Sbarro..................................................................... 10,550 226,825
----------
2,720,550
----------
Healthcare & Pharmaceuticals-6.46%
Abbott Laboratories........................................................ 12,700 530,225
Rite Aid................................................................... 36,100 1,236,425
Schering-Plough............................................................ 16,200 886,950
SmithKline Beecham plc-ADR Unit............................................ 18,400 1,021,200
United Healthcare.......................................................... 6,200 406,100
----------
4,080,900
----------
</TABLE>
27
<PAGE>
Multiple Strategy Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Metals & Mining-0.48%
Zeigler Coal Holdings...................................................... 21,700 $ 301,088
----------
301,088
----------
Real Estate-3.74%
Colonial Properties Trust.................................................. 7,000 178,500
Developers Diversified Realty.............................................. 20,900 627,000
Health Care Property Investors............................................. 13,700 481,213
Nationwide Health Properties............................................... 11,300 474,600
Security Capital Industrial Trust.......................................... 14,257 249,497
Storage Trust Realty....................................................... 3,900 88,725
Sun Communities............................................................ 10,000 263,750
----------
2,363,285
----------
Retail-1.56%
American Stores............................................................ 15,400 411,950
May Department Stores...................................................... 9,900 418,275
Storage USA................................................................ 4,800 156,600
----------
986,825
----------
Utilities-5.45%
ALLTEL..................................................................... 27,400 808,300
CMS Energy................................................................. 32,000 956,000
Illinova................................................................... 24,900 747,000
SCEcorp.................................................................... 26,000 461,500
Tele Danmark ADR........................................................... 17,000 469,625
----------
3,442,425
----------
Miscellaneous-5.87%
Service Corp. International................................................ 29,000 1,276,000
Tomkins plc ADR............................................................ 23,000 411,125
Tyco International......................................................... 56,800 2,023,500
----------
3,710,625
----------
Total Common Stock (cost $30,238,093)...................................... 37,451,699
----------
PREFERRED STOCK-0.38%
Freeport-McMoRan Copper & Gold............................................. 8,700 237,075
----------
Total Preferred Stock (cost $201,026)...................................... 237,075
----------
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
U.S. TREASURY OBLIGATIONS-4.34%
U.S. Treasury Notes 5.875% 3/31/99......................................... $1,210,000 $ 1,232,191
U.S. Treasury Notes 7.75% 11/30/99......................................... 110,000 119,279
U.S. Treasury Notes 6.375% 1/15/00......................................... 580,000 601,733
U.S. Treasury Notes 5.75% 8/15/03.......................................... 700,000 709,415
U.S. Treasury Notes 6.50% 5/15/05.......................................... 75,000 79,862
----------
Total U.S. Treasury Obligations
(cost $2,670,302)........................................................ 2,742,480
----------
ASSET-BACKED SECURITIES-4.89%
Advanta 93-1A2 5.95% 5/25/09............................................... 93,981 92,507
American Finance Home Equity Loan Trust
Series 94-2A1 6.95% 6/25/24.............................................. 109,123 110,274
American Finance Home Equity Loan Trust
Series 92-5A 7.20% 2/15/08............................................... 167,101 169,574
American Finance Home Equity Loan Trust
Series 91-1A 8.00% 7/25/06............................................... 20,614 21,196
Case Equipment Loan Trust
Series 95-B 6.15% 9/15/02................................................ 500,000 505,274
Dayton Hudson Credit Card Trust
Series 95-1A 6.10% 2/25/02............................................... 425,000 431,307
Discover Credit Card Trust
Series 93-B 6.75% 2/16/02................................................ 125,000 129,203
Nomura Asset Securities 95-2A2 6.25% 1/25/26............................... 120,000 120,056
Olympic Automobiles Receivable Trust
Series 95B 7.35% 10/15/01................................................ 401,030 411,128
Premier Auto Trust 93-3 A3 4.90% 12/15/98.................................. 217,140 215,652
Standard Credit Card Class 94-2A 7.25% 4/7/08.............................. 275,000 295,625
World Omni Automobile Lease Securitization Trust
94-BA1 7.95% 1/25/01..................................................... 400,000 410,671
World Omni Automobile Lease Securitization Trust
95-A 6.05% 11/25/01...................................................... 175,000 176,393
----------
Total Asset-Backed Securities (cost $3,027,190)............................ 3,088,860
----------
</TABLE>
28
<PAGE>
Multiple Strategy Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS-3.04%
FDIC REMIC Trust 94-C1 2A2 7.85% 9/25/25................................... $ 380,000 $ 388,788
Federal Home Loan Mortgage Corporation
1666E 6.00% 12/15/19..................................................... 400,000 400,183
Federal Home Loan Mortgage Corporation
1614K 10.00% 6/15/20..................................................... 200,000 216,467
Nomura Asset Securities 95-MD3 8.17% 3/4/20................................ 364,837 393,796
Resolution Trust 95-C1 6.55% 2/25/27....................................... 330,000 330,206
Travelers Mortgage Securities Corporation Series
1-Z2 12.00% 3/1/14....................................................... 171,823 194,697
----------
Total Collateralized Mortgage Obligations
(cost $1,902,059)........................................................ 1,924,137
----------
MORTGAGE-BACKED SECURITIES-9.41%
Federal National Mortgage Association
6.50% 10/1/10 to 2/1/24.................................................. 833,291 829,462
Federal National Mortgage Association
7.00% 10/1/10............................................................ 583,591 594,898
Federal National Mortgage Association
8.00% 12/1/09 to 9/1/16.................................................. 777,743 808,299
Federal National Mortgage Association
9.50% 6/1/19 to 1/1/22................................................... 594,026 633,008
Federal Home Loan Mortgage Corporation-Gold
7.00% 10/1/17............................................................ 123,415 126,115
Federal Home Loan Mortgage Corporation
7.50% 5/1/09............................................................. 91,908 93,776
Federal Home Loan Mortgage Corporation-Gold
8.50% 6/1/14............................................................. 101,573 106,842
Federal Home Loan Mortgage Corporation
8.50% 9/1/08............................................................. 129,324 136,153
Government National Mortgage Association
8.50% 8/15/21 to 11/15/21................................................ 706,502 744,477
Government National Mortgage Association
9.00% 6/15/21 to 11/15/21................................................ 1,626,347 1,731,769
Government National Mortgage Association
10.00% 1/15/18........................................................... 128,165 141,502
----------
Total Mortgage-Backed Securities
(cost $5,813,050)........................................................ 5,946,301
----------
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
AGENCY OBLIGATIONS-0.25%
Federal National Mortgage Association
7.90% 4/10/02............................................................ $155,000 $ 158,819
----------
Total Agency Obligations (cost $153,547)................................... 158,819
----------
CORPORATE BONDS-10.11%
ABN-AMRO Bank N.V. 8.25% 8/1/09............................................ 80,000 87,300
American General Finance 7.00% 10/1/97..................................... 340,000 348,075
Allstate 5.875% 6/15/98.................................................... 225,000 225,844
Aristar 8.125% 12/1/97..................................................... 250,000 261,563
AVCO Financial Services 5.50% 5/1/98....................................... 140,000 139,475
CNA Financial 6.25% 11/15/03............................................... 410,000 407,950
Capital One Bank 6.66% 8/17/98............................................. 375,000 382,031
Columbia/HCA Healthcare 8.70% 2/10/10...................................... 300,000 360,000
Federal Express Series A1 7.53% 9/23/06.................................... 165,213 175,539
Ford Motor Credit 6.25% 11/8/00............................................ 450,000 455,625
General Motors Acceptance Corporation
8.375% 5/1/97............................................................ 65,000 67,356
General Motors Acceptance Corporation
floating rate 5.26% 3/3/99............................................... 250,000 245,938
HF Ahmanson & Company 6.35% 9/1/98......................................... 500,000 508,125
ITT 6.25% 11/15/00......................................................... 180,000 181,575
ITT Hartford 6.375% 11/01/02............................................... 350,000 354,375
MBNA 6.875% 10/1/99........................................................ 321,000 331,433
Noranda Forest 6.875% 11/15/05............................................. 350,000 357,875
Pep Boys 7.00% 6/1/05...................................................... 395,000 413,269
Raytheon 6.50% 7/15/05..................................................... 400,000 412,500
Transamerica Finance 8.08% 11/4/99......................................... 340,000 364,650
Wendy's International 6.35% 12/15/05....................................... 310,000 313,100
----------
Total Corporate Bonds (cost $6,182,666).................................... 6,393,598
----------
</TABLE>
29
<PAGE>
Multiple Strategy Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS-8.24%
With Chase Manhattan 5.60% 1/2/96 (dated
12/29/95, collateralized by $996,000
U.S. Treasury Notes 7.875% due 07/31/96,
market value, $1,043,000 and $687,000
U.S. Treasury Notes 7.00% due 9/30/96,
market value, $707,000).................................................. $1,706,000 $ 1,706,000
With Morgan (J.P.) 5.75% 1/2/96 (dated 12/29/95,
collateralized by $1,067,000 U.S. Treasury Notes
6.00% due 8/31/97, market value $1,101,000
and $655,000 U.S. Treasury Notes 7.375%
due 11/15/97, market value $686,000)..................................... 1,751,000 1,751,000
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 5.875% 1/2/96 (dated
12/29/95, collateralized by $726,000
U.S. Treasury Notes 6.875% due 2/28/97,
market value $755,806 and $975,000
U.S. Treasury Notes 7.50% due 12/31/96,
market value $1,032,000)................................................. $1,751,000 $ 1,751,000
-----------
Total Repurchase Agreements
(cost $5,208,000)........................................................ 5,208,000
-----------
<S> <C>
TOTAL MARKET VALUE OF SECURITIES OWNED-99.90% (cost $55,395,933)................................ 63,150,969
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-0.10%........................................... 64,207
-----------
NET ASSETS APPLICABLE TO 4,079,570 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $15.50 PER SHARE-100.00%........................................................ $63,215,176
===========
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1995
Common stock, $0.01 par value, 500,000,000 shares authorized to the Fund with
50,000,000 allocated to the Series............................................................ $51,245,338
Accumulated undistributed:
Net investment income......................................................................... 1,545,561
Net realized gain on investments.............................................................. 2,669,241
Net unrealized appreciation of investments.................................................... 7,755,036
----------
Total net assets................................................................................ $63,215,176
===========
</TABLE>
See accompanying notes
30
<PAGE>
Delaware Group Premium Fund, Inc.-Money Market Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
COMMERCIAL PAPER-53.28%
Financial Services-21.38%
Bayerische Landesbank Girozentrale
5.74% 1/2/96............................................................. $750,000 $ 749,880
Ciesco L.P. 5.70% 1/19/96.................................................. 750,000 747,862
Deutsche Bank Financial 5.67% 1/9/96....................................... 750,000 749,055
Fleet Funding 5.73% 1/18/96................................................ 750,000 747,971
Safeco Credit 5.70% 1/25/96................................................ 500,000 498,100
----------
Total Financial Services................................................... 3,492,868
----------
Industrial-13.65%
McCormick & Co. 5.43% 3/29/96.............................................. 750,000 740,045
Schering-Plough 5.65% 1/31/96.............................................. 750,000 746,469
Siemens 5.60% 3/01/96...................................................... 750,000 743,000
----------
Total Industrial........................................................... 2,229,514
----------
Mortgage Bankers and Brokers-18.25%
CS First Boston 5.73% 2/2/96............................................... 750,000 746,180
Goldman Sachs Group L.P. 5.62% 3/18/96..................................... 750,000 740,985
Merrill Lynch 5.72% 1/31/96................................................ 750,000 746,425
Morgan Stanley Group 5.69% 1/12/96......................................... 750,000 748,696
----------
Total Mortgage Bankers and Brokers......................................... 2,982,286
----------
Total Commercial Paper..................................................... 8,704,668
----------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
FLOATING RATE NOTES*-26.01%
Federal Farm Credit Bank 5.70% 2/1/96...................................... 500,000 $ 499,974
Student Loan Marketing Association
5.22% 1/3/96............................................................. 750,000 750,000
Student Loan Marketing Association
5.25% 1/3/96............................................................. 750,000 750,000
Student Loan Marketing Association
5.30% 1/3/96............................................................. 750,000 750,000
Student Loan Marketing Association
5.20% 1/3/96............................................................. 1,000,000 1,000,000
Student Loan Marketing Association
5.30% 1/3/96............................................................. 500,000 499,814
----------
Total Floating Rate Notes.................................................. 4,249,788
----------
U.S. GOVERNMENT AGENCY
OBLIGATIONS-13.76%
Federal National Mortgage Association
Discount Note 5.51% 1/4/96............................................... 500,000 499,770
Federal National Mortgage Association
Medium-Term Note 5.50% 6/12/96........................................... 750,000 748,657
Federal National Mortgage Association
Medium-Term Note 5.64% 9/9/96............................................ 500,000 499,388
Student Loan Marketing Association
5.97% 10/4/96............................................................ 500,000 500,000
----------
Total U.S. Government Agency Obligations................................... 2,247,815
----------
</TABLE>
31
<PAGE>
Money Market Series Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MISCELLANEOUS INVESTMENTS-4.59%
Wachovia Bank, Bank Notes 5.75% 1/24/96.................................... $750,000 $ 750,000
----------
Total Miscellaneous Investments............................................ 750,000
----------
REPURCHASE AGREEMENTS-2.69%
With Chase Manhattan 5.60% 1/2/96 (dated
12/29/95, collateralized by $84,000
U.S. Treasury Notes 7.875% due 7/31/96, market
value $88,081 and $58,000 U.S. Treasury Notes
7.00% due 9/30/96, market value $59,717)................................. 144,000 144,000
<CAPTION>
Principal
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS (Continued)
With Morgan (J.P.) 5.75% 1/2/96 (dated 12/29/95,
collateralized by $90,000 U.S. Treasury Notes
6.00% due 8/31/97, market value $93,089 and
$55,000 U.S. Treasury Notes 7.375% due
11/15/97, market value $57,916).......................................... $148,000 $ 148,000
With PaineWebber 5.875% 1/2/96 (dated 12/29/95,
collateralized by $82,000 U.S. Treasury Notes
7.50% due 12/31/96, market value $87,194 and
$61,000 U.S. Treasury Notes 6.875% due
2/28/97, market value $63,851)........................................... 148,000 148,000
----------
Total Repurchase Agreements................................................ 440,000
----------
<S> <C>
TOTAL MARKET VALUE OF SECURITIES OWNED-100.33% (WHICH APPROXIMATES COST
FOR FINANCIAL REPORTING AND INCOME TAX PURPOSES).............................................. 16,392,271
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS-(0.33%)......................................... (54,089)
NET ASSETS APPLICABLE TO 1,633,818 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $10.00 PER SHARE-100.00%........................................................ $16,338,182
==========
</TABLE>
- --------------------
*For Floating Rate Notes, the maturity date shown is the next interest reset
date.
See accompanying notes
32
<PAGE>
Delaware Group Premium Fund, Inc.-Growth Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK-95.36%
Basic Industry/Capital Goods-4.01%
*Smith International....................................................... 27,900 $ 655,650
TriMas.................................................................... 27,000 509,625
*UCAR International........................................................ 13,900 469,125
*Wolverine Tube............................................................ 18,600 697,500
-----------
2,331,900
Business Services/Distributors-1.30% -----------
*Compucom Systems.......................................................... 37,900 362,419
Intelligent Electronics................................................... 54,200 328,588
*Peak Technologies Group................................................... 2,100 65,100
-----------
756,107
-----------
Business Services/Environmental-2.43%
Dames & Moore............................................................. 37,100 449,838
*Sanifill.................................................................. 15,700 523,988
*United Waste Systems...................................................... 11,900 440,300
-----------
1,414,126
-----------
Business Services/Media & Publishing-1.09%
*International Family Entertainment Class B................................ 27,200 445,400
Reynolds & Reynolds Class A............................................... 4,900 190,488
-----------
635,888
Business Services/Other-9.51% -----------
*BISYS Group............................................................... 44,600 1,360,300
*Corestaff................................................................. 1,700 62,688
*Corporate Express......................................................... 9,700 291,000
*Cyrk...................................................................... 12,800 125,600
*DST Systems............................................................... 6,500 185,250
First Data................................................................ 20,823 1,392,538
*Gartner Group Class A..................................................... 15,800 756,425
*Interim Services.......................................................... 17,900 619,788
*Isomedix.................................................................. 24,800 356,500
Manpower.................................................................. 13,400 376,875
-----------
5,526,964
Consumer Durables/Cyclical-0.60% -----------
*Castle & Cooke............................................................ 6,133 102,728
Harley-Davidson........................................................... 5,600 161,000
Polaris Industries........................................................ 2,900 85,188
-----------
348,916
-----------
Consumer Non-Durables/Retail-8.72%
*CompUSA................................................................... 2,300 $ 71,588
*Fabri-Centers of America Class A.......................................... 1,800 23,850
*Fabri-Centers of America Class B.......................................... 1,900 20,425
*General Nutrition Companies............................................... 60,000 1,395,000
*Gymboree.................................................................. 15,400 316,663
*Kohl's.................................................................... 14,400 756,000
*Micro Warehouse........................................................... 13,200 574,200
*Musicland Stores.......................................................... 50,200 213,350
*Neostar Retail Group...................................................... 14,600 106,763
*Office Depot.............................................................. 4,700 92,825
*Staples................................................................... 39,200 960,400
Talbots................................................................... 11,100 319,125
*Value City Department Stores.............................................. 32,300 218,025
-----------
5,068,214
Consumer Non-Durables/Textiles -----------
& Apparel-3.38%
*Adidas-SP ADR............................................................. 8,900 236,406
*Gucci Group............................................................... 14,700 571,463
*Tommy Hilfiger............................................................ 22,100 936,488
Warnaco Group Class A..................................................... 8,700 217,500
-----------
1,961,857
Consumer Non-Durables/Other-2.88% -----------
Callaway Golf............................................................. 26,600 601,825
*Canandaigua Wine Class A.................................................. 8,800 288,200
Dole Food................................................................. 18,400 644,000
*Nature's Bounty........................................................... 29,800 142,481
-----------
1,676,506
Consumer Services/Entertainment -----------
& Leisure-7.75%
*Bristol Hotel............................................................. 2,800 68,250
*Circus Circus Enterprises................................................. 8,000 223,000
*HFS....................................................................... 13,400 1,095,450
La Quinta Inns............................................................ 7,000 191,625
*MGM Grand................................................................. 4,500 103,500
*Mirage Resorts............................................................ 25,100 865,950
*Station Casinos........................................................... 29,700 438,075
TCA Cable TV.............................................................. 6,700 186,344
</TABLE>
33
<PAGE>
Growth Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Consumer Services/Entertainment
& Leisure (Continued)
*Viacom Class A............................................................ 4,532 $ 207,906
*Viacom Class B non-voting................................................. 12,347 584,939
*WMS Industries............................................................ 33,000 540,375
-----------
4,505,414
Consumer Services/Restaurants-1.54% -----------
*Bertucci's................................................................ 3,250 16,453
*Daka International........................................................ 14,100 385,988
*Foodmaker................................................................. 61,800 363,075
*Landry's Seafood Restaurants.............................................. 5,800 99,688
Sbarro.................................................................... 1,300 27,950
-----------
893,154
Consumer Services/Other-4.18% -----------
*ADT Limited............................................................... 55,600 834,000
Barefoot.................................................................. 36,500 376,406
Cash America International................................................ 19,100 105,050
*CUC International......................................................... 32,575 1,111,622
-----------
2,427,078
Energy-1.19% -----------
*AES....................................................................... 28,797 689,328
-----------
689,328
Financial/Insurance-5.28% -----------
AMBAC..................................................................... 18,300 857,813
Blanch (E.W.) Holdings.................................................... 35,900 839,163
CMAC Investment........................................................... 13,300 585,200
MBIA...................................................................... 10,500 787,500
-----------
3,069,676
Financial/Other-2.97% -----------
Aames Financial........................................................... 9,400 262,025
Advanta-Class B........................................................... 10,800 394,200
Money Store (The)......................................................... 11,350 177,344
*Olympic Financial Limited................................................. 18,900 308,306
SEI....................................................................... 20,000 430,000
*WFS Financial............................................................. 7,800 154,050
-----------
1,725,925
-----------
Healthcare/Pharmaceuticals-1.88%
*Dura Pharmaceuticals...................................................... 4,800 $ 166,800
*Genzyme................................................................... 12,900 803,025
Teva Pharmaceutical ADR................................................... 2,700 125,044
-----------
1,094,869
Healthcare/Services-15.13% -----------
*Access Health............................................................. 9,500 422,750
*Apria Healthcare Group.................................................... 34,100 971,850
Columbia/HCA Healthcare................................................... 18,817 954,963
*Community Health Systems.................................................. 4,900 174,563
*HCIA...................................................................... 10,300 480,238
*HEALTHSOUTH............................................................... 55,300 1,610,613
*Health Management Association Class A..................................... 61,030 1,594,409
*Physician Reliance Network................................................ 9,100 365,138
*Quantum Health Resources.................................................. 40,400 396,425
*Quorum Health Group....................................................... 32,200 704,375
*Summit Care............................................................... 3,100 70,719
*Value Health.............................................................. 17,512 481,580
*Vivra..................................................................... 22,575 567,197
-----------
8,794,820
Healthcare/Other-3.25% -----------
*Oxford Health Plans....................................................... 8,100 597,375
United Healthcare......................................................... 19,700 1,290,350
-----------
1,887,725
Technology/Communications-2.68% -----------
*Cabletron Systems......................................................... 14,150 1,146,150
*InterVoice................................................................ 20,600 388,825
*Seer Technologies......................................................... 1,900 23,513
-----------
1,558,488
Technology/Hardware-8.60% -----------
*Altera.................................................................... 8,500 422,344
*Analog Devices............................................................ 8,900 314,838
*Bay Networks.............................................................. 39,200 1,609,650
*Dallas Semiconductor...................................................... 17,500 363,125
*Maxim Integrated Products................................................. 1,900 73,150
*Microchip Technology...................................................... 16,700 611,638
*Silicon Valley Group...................................................... 11,500 291,094
</TABLE>
34
<PAGE>
Growth Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Technology/Hardware (Continued)
*StorMedia Class A......................................................... 4,500 $ 164,813
*Trimble Navigation Limited................................................ 10,900 204,375
*Xilinx.................................................................... 13,100 397,913
*Zilog..................................................................... 14,900 545,713
-----------
4,998,653
Technology/Software-5.97% -----------
Adobe Systems............................................................. 10,900 677,163
HBO & Co.................................................................. 6,820 521,730
*Informix.................................................................. 27,100 814,694
*NetManage................................................................. 23,300 538,813
*Novell.................................................................... 35,800 507,913
Shared Medical Systems.................................................... 7,600 411,825
-----------
3,472,138
Transportation-1.02% -----------
*Eagle USA Airfreight...................................................... 1,000 26,125
Illinois Central.......................................................... 14,700 564,113
-----------
590,238
-----------
Total Common Stock (cost $45,680,914)..................................... 55,427,984
-----------
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS-4.96%
With Chase Manhattan 5.60% 1/2/96 (dated
12/29/95, collateralized by $551,000
U.S. Treasury Notes 7.875% due 7/31/96,
market value $576,931 and $380,000
U.S. Treasury Notes 7.00% due 9/30/96,
market value $391,144).................................................. $944,000 $ 944,000
With Morgan (J.P.) 5.75% 1/2/96 (dated 12/29/95,
collateralized by $591,000 U.S. Treasury Notes
6.00% due 8/31/97, market value $609,731 and
$362,000 U.S. Treasury Notes 7.375% due
11/15/97, market value $379,347)........................................ 969,000 969,000
With PaineWebber 5.875% 1/2/96 (dated 12/29/95,
collateralized by $539,000 U.S. Treasury Notes
7.50% due 12/31/96, market value $571,123 and
$402,000 U.S. Treasury Notes 6.875% due
2/28/97, market value $418,223)......................................... 969,000 969,000
Total Repurchase Agreements -----------
(cost $2,882,000)....................................................... 2,882,000
-----------
TOTAL MARKET VALUE OF SECURITIES OWNED-100.32% (cost $48,562,914)......... 58,309,984
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS -(0.32%).................. (187,395)
-----------
NET ASSETS APPLICABLE TO 3,840,882 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $15.13 PER SHARE-100.00%.................................. $58,122,589
------------------------------ ===========
*Non-income producing security for the year ended December 31, 1995.
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1995
Common stock, $0.01 par value, 500,000,000 authorized to the Fund
with 50,000,000 allocated to the Series...................................................... $43,617,204
Accumulated undistributed:
Net investment income........................................................................ 266,670
Net realized gain on investments............................................................. 4,491,645
Net unrealized appreciation of investments................................................... 9,747,070
-----------
Total net assets............................................................................... $58,122,589
===========
</TABLE>
See accompanying notes
35
<PAGE>
Delaware Group Premium Fund, Inc.-International Equity Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Market
Number Value
of Shares (U.S. $)
<S> <C> <C>
COMMON STOCK--91.62%
Australia-8.44%
CSR Limited............................................................... 762,966 $ 2,485,897
National Australia Bank................................................... 302,167 2,719,795
Pacific Dunlop............................................................ 716,926 1,679,920
-----------
6,885,612
-----------
Belgium-5.18%
Cimenteries CBR Cementbedrijven........................................... 460 185,616
*Cimenteries CBR Cementbedrijven
Put Warrants............................................................ 460 2,720
Electrabel NPV............................................................ 10,700 2,545,100
G.I.B. Holdings........................................................... 33,700 1,479,502
G.I.B. Holdings-VVPR...................................................... 170 7,279
-----------
4,220,217
-----------
Canada-2.53%
BC Telecom................................................................ 113,800 2,065,222
-----------
2,065,222
-----------
France-6.84%
Alcatel Alsthom........................................................... 9,872 852,273
Campagnie de Saint Gobain................................................. 19,289 2,137,788
Elf Aquitaine............................................................. 34,259 2,527,533
Societe Television Francaise.............................................. 526 56,468
-----------
5,574,062
-----------
Germany-6.10%
Bayer..................................................................... 6,960 1,851,721
Continental............................................................... 57,200 809,264
Siemens................................................................... 4,205 2,315,056
-----------
4,976,041
-----------
Hong Kong-2.72%
Hong Kong Electric........................................................ 305,000 999,981
Wharf Holdings Limited.................................................... 366,000 1,218,911
-----------
2,218,892
-----------
Indonesia-1.37%
PT Bank Dagang Nasional................................................... 885,500 726,160
PT Semen Gresik........................................................... 140,000 391,878
-----------
1,118,038
-----------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value
of Shares (U.S. $)
<S> <C> <C>
COMMON STOCK (Continued)
Japan-13.93%
Amano..................................................................... 160,000 $ 2,016,448
Eisai..................................................................... 116,000 2,035,449
Hitachi................................................................... 168,000 1,693,816
Kinki Coca-Cola Bottling.................................................. 120,000 1,628,669
Matsushita Electric....................................................... 136,000 2,214,990
Nichido Fire & Marine..................................................... 220,000 1,770,208
-----------
11,359,580
-----------
Malaysia-2.07%
Oriental Holdings Berhad.................................................. 133,000 675,765
Sime Darby Berhad......................................................... 380,000 1,010,280
-----------
1,686,045
-----------
Netherlands-6.71%
Elsevier-CVA.............................................................. 119,500 1,595,321
Koninklijke Van Ommeren Ceteco NV......................................... 40,100 1,250,780
Royal Dutch Petroleum..................................................... 11,350 1,587,442
Unilever NV-CVA........................................................... 7,360 1,035,359
-----------
5,468,902
-----------
New Zealand-3.57%
Carter Holt Harvey Limited................................................ 277,800 599,333
Telecom Corp. of New Zealand.............................................. 535,784 2,311,829
-----------
2,911,162
-----------
Philippines-1.12%
Philippine Long Distance Telephone
Company ADR............................................................. 16,900 910,487
-----------
910,487
-----------
Singapore-1.22%
Jardine Matheson Holdings Limited......................................... 145,622 997,511
-----------
997,511
-----------
Spain-2.98%
Banco Central Hispanoamer S.A............................................. 25,449 516,045
Telefonica de Espana...................................................... 138,500 1,917,965
-----------
2,434,010
-----------
</TABLE>
36
<PAGE>
International Equity Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Market
Number Value
of Shares (U.S. $)
<S> <C> <C>
COMMON STOCK(Continued)
United Kingdom-26.84%
Bass plc.................................................................. 173,000 $ 1,931,175
Blue Circle Industries plc................................................ 342,000 1,818,584
British Airways plc....................................................... 230,000 1,664,027
British Gas plc........................................................... 500,000 1,971,744
Cable & Wireless plc...................................................... 225,000 1,606,893
Dalgety plc............................................................... 291,250 1,835,856
GKN plc................................................................... 162,000 1,959,292
Great Universal Stores plc................................................ 206,000 2,190,809
RTZ....................................................................... 105,100 1,527,303
Sears plc................................................................. 914,000 1,475,796
Taylor Woodrow plc........................................................ 855,000 1,559,734
Unigate plc............................................................... 368,000 2,348,207
-----------
21,889,420
-----------
Total Common Stock (cost $69,878,090)..................................... 74,715,201
-----------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value
Amount** (U.S. $)
<S> <C> <C>
BONDS-0.03%
World Bank 10.625% 9/8/98................................................. Sp3,000,000 $ 25,780
-----------
Total Bonds (cost $25,194)................................................ 25,780
-----------
GOVERNMENT OBLIGATIONS-1.80%
Bonos Y Obligation Del Estado
8.20% 2/28/09 Sp204,000,000 1,466,318
-----------
Total Government Obligations
(cost $1,308,092)....................................................... 1,466,318
-----------
MASTER REPURCHASE
AGREEMENTS-5.51%
With Chase Manhattan 5.60% 1/2/96 (dated
12/29/95, collateralized by $4,211,000
U.S. Treasury Notes 7.75% due 11/30/99
market value $4,581,998)................................................ $4,489,000 4,489,000
-----------
Total Master Repurchase Agreements
(cost $4,489,000)....................................................... 4,489,000
-----------
</TABLE>
<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES OWNED-98.96% (cost $75,700,376).......................... 80,696,299
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-1.04%..................................... 851,740
-----------
NET ASSETS APPLICABLE TO 6,217,817 SHARES ($.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $13.12 PER SHARE-100.00%.................................................. $81,548,039
===========
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1995
Common stock, $.01 par value, 500,000,000 authorized to the Fund
with 50,000,000 allocated to the Series................................................. $72,995,760
Accumulated undistributed:
Net investment***....................................................................... 2,405,240
Net realized gain on investments***..................................................... 701,810
Net unrealized appreciation on investments and foreign currencies....................... 5,445,229
-----------
Total net assets.......................................................................... $81,548,039
===========
</TABLE>
_____________________
*Non-income producing security for the year ended December 31, 1995.
**Principal amount is stated in the currency in which each bond is
denominated.
***Accumulated net investment income includes net realized gain on foreign
currencies. During the current fiscal year, the Fund reclassified $166,165
from accumulated net realized gain on investments to accumulated net
investment income. Sp-Spanish pesetas
See accompanying notes
37
<PAGE>
Delaware Group Premium Fund, Inc.-Emerging Growth Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK-73.29%
Basic Industry/Capital Goods-4.50%
AAR...................................................................... 4,200 $ 92,400
*AES China Generating Class A............................................. 10,000 77,500
*Central Sprinkler........................................................ 12,200 423,950
Champion Road Machinery Ltd.............................................. 4,500 30,656
*Kellstrom Industries..................................................... 10,400 51,675
Lesco.................................................................... 3,700 54,575
*Park-Ohio Industries..................................................... 5,500 89,375
*TII Industries........................................................... 11,700 102,375
-----------
922,506
-----------
Business Services/Distributors-1.23%
*Elcom International...................................................... 5,900 89,238
*Global Direct Mail....................................................... 1,200 33,000
*Government Technology Services........................................... 1,600 6,900
*InaCom................................................................... 8,800 123,200
-----------
252,338
-----------
Business Services/Environmental-4.36%
*Continental Waste Industries............................................. 11,000 124,437
*Republic Industries...................................................... 16,460 591,531
*Sanifill................................................................. 3,800 126,825
*York Research............................................................ 9,600 51,000
-----------
893,793
-----------
Business Services/Media & Publishing-3.12%
*Central European Media Entertainment Class A............................. 6,900 140,588
*Evergreen Media Class A.................................................. 2,900 92,800
*Infinity Broadcasting Class A............................................ 4,000 149,000
*Playboy Enterprises Class B non-voting................................... 5,200 43,550
Readers Digest Association Class B....................................... 1,600 75,600
*Young Broadcasting Class A............................................... 5,000 138,750
-----------
640,288
-----------
Business Services/Other-5.74%
*AirTouch Communications.................................................. 4,600 129,950
*Cellular Communications Class A.......................................... 1,300 65,163
*GTECH Holdings........................................................... 6,000 156,000
*HighwayMaster Communications............................................. 2,900 29,725
*NFO Research............................................................. 4,000 104,000
Norrell.................................................................. 1,600 47,000
*Norwood Promotional Products............................................. 9,700 166,113
*NuCo2.................................................................... 3,300 41,663
*Paging Network........................................................... 7,000 168,438
*Palmer Wireless.......................................................... 3,600 78,750
Pittston Services Group.................................................. 6,100 191,388
-----------
1,178,190
-----------
Consumer Durables/Cyclical-0.26%
*Custom Chrome............................................................ 2,300 52,756
-----------
52,756
-----------
Consumer Non-Durables/Retail-4.45%
Duty Free International.................................................. 5,700 91,200
*Finish Line Class A...................................................... 3,100 23,250
*General Nutrition Companies.............................................. 7,200 167,400
*Mac Frugals Bargains Close-Out........................................... 4,400 61,600
*Neostar Retail Group..................................................... 1,900 13,894
*Petco Animal Supplies.................................................... 1,300 38,675
*Piercing Pagoda.......................................................... 1,400 25,025
Schultz Sav-O Stores..................................................... 17,800 269,225
*Staples.................................................................. 4,500 110,250
*Urban Outfitters......................................................... 3,200 75,600
*Value City Department Stores............................................. 5,500 37,125
-----------
913,244
-----------
Consumer Non-Durables/Textiles
and Apparel-0.81%
*Chaus (Bernard).......................................................... 6,100 22,113
*Cutter & Buck............................................................ 3,500 29,313
*Hyde Athletic Industries Class B......................................... 6,000 23,625
*Sport-Haley.............................................................. 1,200 11,700
Wolverine World Wide..................................................... 2,500 78,750
-----------
165,501
-----------
</TABLE>
38
<PAGE>
Emerging Growth Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK(Continued)
Consumer Non-Durables/Other-4.98%
Anthony Industries....................................................... 4,100 $ 94,300
Armor All Products....................................................... 5,300 95,400
*Bell Sports.............................................................. 6,407 51,656
Dreyer's Grand Ice Cream................................................. 4,300 144,588
*Equity Marketing......................................................... 6,300 79,931
*ERO...................................................................... 4,200 25,725
*Galoob (Lewis) Toys...................................................... 5,600 65,800
*GT Bicycles.............................................................. 3,900 36,563
*Hart Brewing............................................................. 7,700 115,500
*Lincoln Snacks........................................................... 7,300 14,144
*Marvel Entertainment Group............................................... 4,400 57,200
*Rawlings Sporting Goods.................................................. 1,700 13,494
*Robert Mondavi Class A................................................... 2,900 81,200
*Toy Biz.................................................................. 6,700 145,725
-----------
1,021,226
-----------
Consumer Services/Entertainment
& Leisure-7.92%
*Adelphia Communications Class A.......................................... 8,600 56,975
*All American Communications.............................................. 2,800 27,475
*American Coin Merchandising.............................................. 6,300 39,769
*Ascent Entertainment Group............................................... 17,500 277,813
*Cinergi Pictures Entertainment........................................... 14,600 38,325
Comcast Class A.......................................................... 4,600 81,075
*Comcast UK Cable Partners Ltd............................................ 4,800 60,000
*Echostar Communications Class A.......................................... 3,600 88,425
*Extended Stay America.................................................... 2,800 76,300
*HFS...................................................................... 629 51,421
*Mirage Resorts........................................................... 5,600 193,200
*Monarch Casino & Resort.................................................. 7,900 29,625
*Players International.................................................... 3,300 35,475
*Rio Hotel & Casino....................................................... 8,800 103,400
*Savoy Pictures Entertainment............................................. 15,600 98,475
*Speedway Motorsports..................................................... 200 6,000
*Studio Plus Hotels....................................................... 1,800 46,800
*Tele-Communications International........................................ 7,000 158,813
*United International Holdings Class A.................................... 4,000 58,500
*WMS Industries........................................................... 5,900 96,613
-----------
1,624,479
-----------
Consumer Services/Restaurants-3.06%
*Dave & Buster's.......................................................... 7,700 94,325
*HomeTown Buffet.......................................................... 8,800 97,350
*Logan's Roadhouse........................................................ 7,300 125,013
*Quantum Restaurant Group................................................. 6,600 74,250
*Rock Bottom Restaurants.................................................. 1,100 14,300
*Sonic.................................................................... 11,850 222,188
-----------
627,426
-----------
Consumer Services/Other-0.68%
Barefoot................................................................. 4,800 49,500
*Protection One........................................................... 8,800 89,100
-----------
138,600
-----------
Energy-0.26%
Mitchell Energy & Development Class B.................................... 2,900 54,375
-----------
54,375
-----------
Financial/Insurance-0.18%
*Penn Treaty American..................................................... 2,200 36,025
-----------
36,025
-----------
Financial/Other-0.09%
*CRW Financial............................................................ 3,460 19,463
-----------
19,463
-----------
Healthcare/Devices-3.21%
*AVECOR Cardiovascular.................................................... 4,800 83,400
*Bio-Vascular............................................................. 1,500 17,625
*i-STAT................................................................... 200 6,450
*Lifecore Biomedical...................................................... 3,700 69,838
*Molecular Dynamics....................................................... 7,900 48,881
*Norland Medical Systems.................................................. 4,400 100,650
*Ostex International...................................................... 9,900 186,863
*Ventritex................................................................ 8,200 144,013
-----------
657,720
-----------
</TABLE>
39
<PAGE>
Emerging Growth Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Healthcare/Pharmaceuticals-2.93%
*ARIAD Pharmaceuticals.................................................... 6,400 $ 30,000
*Ethical Holdings plc..................................................... 7,300 65,244
*Gilead Sciences.......................................................... 8,900 287,025
*Guilford Pharmeceuticals................................................. 3,400 53,550
*La Jolla Pharmaceutical.................................................. 5,300 26,169
*Sano..................................................................... 8,200 92,250
*Vertex Pharmaceuticals................................................... 1,800 47,025
-----------
601,263
-----------
Healthcare/Services-3.65%
*American Oncology Resources.............................................. 900 43,763
*Apria Healthcare Group................................................... 4,800 136,800
*FPA Medical Management................................................... 17,500 164,063
*HPR...................................................................... 200 6,000
*Mecon.................................................................... 1,200 19,050
*National Surgery Centers................................................. 1,000 22,750
*Pediatrix Medical Group.................................................. 1,700 47,175
*Renal Treatment Centers.................................................. 4,700 206,800
*Safeguard Health Enterprises............................................. 3,200 37,200
*Sheridan Healthcare...................................................... 2,500 29,844
*Total Renal Care Holdings................................................ 1,200 35,400
-----------
748,845
-----------
Technology/Communications-3.83%
*C-COR Electronics........................................................ 5,900 137,175
*Digital Microwave........................................................ 3,700 36,538
*EIS International........................................................ 7,100 114,488
*Gandalf Technologies..................................................... 13,000 221,813
*General DataComm Industries.............................................. 3,200 54,800
*IntelCom Group........................................................... 5,900 73,013
*NetStar.................................................................. 2,800 52,500
*PSINet................................................................... 3,100 71,106
*Tollgrade Communications................................................. 1,600 24,400
-----------
785,833
-----------
Technology/Hardware-5.48%
*Alpha Industries......................................................... 600 8,475
*Iomega................................................................... 2,100 102,244
*ITI Technologies......................................................... 5,900 173,313
*Jabil Circuit............................................................ 9,600 105,600
*Micronics Computers...................................................... 6,500 23,156
*Mylex.................................................................... 300 5,794
*Percon................................................................... 900 11,363
*Plasma & Materials Technology............................................ 1,600 18,000
*Radius................................................................... 4,900 9,877
*Read-Rite................................................................ 6,900 159,994
Scientific-Atlanta....................................................... 5,800 87,000
*Smartflex Systems........................................................ 1,200 21,300
*Standard Microsystems.................................................... 11,800 196,175
*Trimble Navigation Ltd................................................... 600 11,250
*TriQuint Semiconductor................................................... 4,900 66,456
*Zycon.................................................................... 10,900 123,988
-----------
1,123,985
-----------
Technology/Software-11.63%
*Acclaim Entertainment.................................................... 2,700 33,581
*Activision............................................................... 19,100 211,294
*A.D.A.M. Software........................................................ 2,200 14,575
*Bachman Information Systems.............................................. 5,000 47,813
+*Bachman Information Systems 144A......................................... 22,100 183,858
*Broadway & Seymour....................................................... 5,700 91,200
*Cadence Design Systems................................................... 4,800 201,600
*Cheyenne Software........................................................ 5,500 143,688
*Excalibur Technologies................................................... 7,700 280,088
*Fulcrum Technologies..................................................... 3,900 123,825
HBO & Company............................................................ 836 63,954
*MetaTools................................................................ 400 10,300
*Phamis................................................................... 1,000 30,000
*PLATINUM technology...................................................... 12,195 224,845
*Prophet 21............................................................... 4,800 23,100
*Ross Systems............................................................. 10,100 31,247
*Secure Computing......................................................... 2,000 111,500
*Sierra On-Line Class A................................................... 10,400 297,700
*SPSS..................................................................... 4,400 84,975
*Symantec................................................................. 7,600 176,225
-----------
2,385,368
-----------
</TABLE>
40
<PAGE>
Emerging Growth Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Technology/Other-0.49%
*TechForce................................................................ 11,700 $ 100,181
-----------
100,181
-----------
Transportation-0.43%
*Midwest Express Holdings................................................. 2,600 72,150
*Western Pacific Airlines................................................. 1,000 17,000
-----------
89,150
-----------
Total Common Stock (cost $12,518,292).................................... 15,032,555
-----------
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
SHORT-TERM INVESTMENTS-4.85%
Federal National Mortgage Association
Discount Notes 2/1/96.................................................. $1,000,000 995,281
-----------
Total Short-Term Investments (cost $995,281)............................. 995,281
-----------
REPURCHASE AGREEMENTS-21.33%
With Chase Manhattan 5.60% 1/2/96 (dated
12/29/95, collateralized by $837,000
U.S. Treasury Notes 7.875% due 7/31/96,
market value $875,606 and $577,000
U.S. Treasury Notes 7.00% due 9/30/96,
market value $593,637)................................................. $1,432,000 $ 1,432,000
With Morgan (J.P) 5.75% 1/2/96 (dated 12/29/95,
collateralized by $897,000 U.S. Treasury Notes
6.00% due 8/31/97, market value $925,385 and
$550,000 U.S. Treasury Notes 7.375% due
11/15/97, market value $575,734)....................................... 1,471,000 1,471,000
With PaineWebber 5.875% 1/2/96 (dated
12/29/95, collateralized by $819,000
U.S. Treasury Notes 7.50% due 12/31/96,
market value $866,791 and $610,000
U.S. Treasury Notes 6.875% due 2/28/97,
market value $634,737)................................................. 1,471,000 1,471,000
-----------
Total Repurchase Agreements
(cost $4,374,000)...................................................... 4,374,000
-----------
TOTAL MARKET VALUE OF SECURITES OWNED-99.47% (cost $17,887,573).......... 20,401,836
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-0.53%.................... 107,828
-----------
NET ASSETS APPLICABLE TO 1,462,978 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $14.02 PER SHARE-100.00%................................. $20,509,664
===========
</TABLE>
- --------------------
*Non-income producing security for the year ended December 31, 1995.
+This security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At December 31, 1995, this security
amounted to $183,858 or 0.90% of net assets.
<TABLE>
<S> <C>
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1995
Common stock, $0.01 par value, 500,000,000 authorized to the Fund
with 50,000,000 shares allocated to the Series......................... $16,703,739
Accumulated undistributed:
Net investment income.................................................. 126,741
Net realized gain on investments....................................... 1,164,921
Net unrealized appreciation of investments............................. 2,514,263
-----------
Total net assets......................................................... $20,509,664
===========
</TABLE>
See accompanying notes
41
<PAGE>
Delaware Group Premium Fund, Inc.-Value Series
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK-89.89%
Aerospace & Defense-1.63%
*Moog...................................................................... 5,000 $ 86,250
Thiokol................................................................... 3,200 108,400
-----------
194,650
-----------
Automotives & Automotive Parts-2.66%
*Custom Chrome............................................................. 6,300 144,506
Smith (A.O.).............................................................. 5,100 105,825
Titan Wheel International................................................. 4,100 66,625
-----------
316,956
-----------
Banking, Finance & Insurance-17.54%
*Amresco................................................................... 5,600 70,000
Allmerica Property & Casualty............................................. 5,900 159,300
*AmeriCredit............................................................... 13,300 181,213
California Federal Bank................................................... 10,300 162,225
First Security............................................................ 4,600 175,950
FirstMerit................................................................ 1,700 50,363
Fourth Financial.......................................................... 1,500 61,125
Hibernia Class A.......................................................... 5,600 60,200
Horace Mann Educators..................................................... 3,500 109,375
Mid Ocean Limited......................................................... 3,400 125,375
Money Store (The)......................................................... 7,750 121,094
ONBANCorp................................................................. 3,500 117,031
PMI Group................................................................. 2,300 104,075
PartnerRe Limited......................................................... 2,900 79,206
Prudential Reinsurance Holdings........................................... 3,800 88,825
Titan Holdings............................................................ 2,200 31,625
*Transport Holdings Class A................................................ 1,300 54,113
U.S. Bancorp.............................................................. 4,410 148,011
USF&G..................................................................... 6,200 104,625
Union Planters............................................................ 2,800 89,250
-----------
2,092,981
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Building, Housing & Materials-8.27%
Apogee Enterprises........................................................ 2,000 $ 34,250
Centex.................................................................... 4,900 170,275
*Centex Construction Products.............................................. 2,600 37,375
*Central Sprinkler......................................................... 2,400 83,400
*Champion Enterprises...................................................... 5,400 166,725
Continental Homes Holding................................................. 8,400 206,850
Elcor..................................................................... 3,100 67,425
*Griffon................................................................... 4,600 41,400
Kaufman & Broad Home...................................................... 8,600 127,925
*Southern Energy Homes..................................................... 3,000 51,375
-----------
987,000
-----------
Chemicals-3.75%
Betz Laboratories......................................................... 1,400 57,400
*CFC International......................................................... 2,200 19,525
*Carbide/Graphite Group.................................................... 2,900 41,688
Ferro..................................................................... 4,600 106,950
*Scotts.................................................................... 6,700 129,813
*Sterling Chemicals........................................................ 11,300 91,813
-----------
447,189
-----------
Energy & Energy Services-10.06%
*Belden & Blake............................................................ 4,250 75,438
*Brown (Tom)............................................................... 7,600 110,200
*Chesapeake Energy......................................................... 1,650 54,863
Cross Timbers Oil......................................................... 2,200 38,775
Devon Energy.............................................................. 4,100 104,550
*Global Marine............................................................. 12,900 112,875
*Nabors Industries......................................................... 3,200 35,600
*Noble Drilling............................................................ 10,350 92,503
*Offshore Logistics........................................................ 7,100 89,638
*Seacor Holdings........................................................... 6,500 176,719
USX-Delhi Group........................................................... 5,700 59,138
Valero Energy............................................................. 5,500 134,750
Western Gas Resources..................................................... 7,100 114,488
-----------
1,199,537
-----------
</TABLE>
42
<PAGE>
Value Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Food, Beverage & Tobacco-2.02%
*Bush Boake Allen.......................................................... 2,700 $ 73,913
*Daka International........................................................ 3,100 84,863
International Multifoods.................................................. 4,100 82,513
-----------
241,289
-----------
Healthcare & Pharmaceuticals-10.64%
*Arbor Health Care......................................................... 6,100 108,275
*Community Health Systems.................................................. 3,300 117,563
*Lincare Holdings.......................................................... 3,200 79,600
*Mariner Health Group...................................................... 9,200 155,250
*Marquette Electronics Class A............................................. 4,100 84,563
*Maxicare Health Plans..................................................... 7,200 194,850
*Mid Atlantic Medical Services............................................. 6,800 164,900
*Multicare................................................................. 5,300 127,200
Owens & Minor............................................................. 3,200 40,800
*Sunrise Medical........................................................... 2,900 53,650
*Sybron International...................................................... 600 14,250
*Universal Health Services Class B......................................... 2,900 128,688
-----------
1,269,589
-----------
Industrial Machinery-10.04%
Cascade................................................................... 3,400 46,750
*Global Industries Technology.............................................. 8,000 151,000
Greenfield Industries..................................................... 4,000 124,500
IDEX...................................................................... 3,500 143,500
JLG Industries............................................................ 5,200 153,400
Keystone International.................................................... 6,100 122,000
Manitowoc................................................................. 4,800 147,000
Regal-Beloit.............................................................. 6,100 132,675
*Rexel..................................................................... 6,700 90,450
TriMas.................................................................... 2,700 50,963
Varlen.................................................................... 1,640 35,465
-----------
1,197,703
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Media, Leisure & Entertainment-5.04%
Callaway Golf............................................................. 2,000 $ 45,250
*Carmike Cinemas Class A................................................... 5,600 126,000
*Devon Group............................................................... 5,000 146,875
*Hollywood Park............................................................ 9,200 92,000
Polaris Industries........................................................ 4,000 117,500
*Valassis Communications................................................... 4,200 73,500
-----------
601,125
-----------
Metals & Mining-1.19%
AK Steel Holding.......................................................... 3,300 113,025
*Universal Stainless & Alloy Products...................................... 2,700 28,856
-----------
141,881
-----------
Paper & Forest Products-4.55%
Boise Cascade............................................................. 3,000 103,875
Chesapeake................................................................ 3,800 112,575
Longview Fibre............................................................ 7,200 117,000
Rayonier.................................................................. 2,900 96,788
Willamette Industries..................................................... 2,000 112,500
-----------
542,738
-----------
Real Estate-5.81%
Developers Diversified Realty............................................. 3,600 108,000
Highwoods Properties...................................................... 4,200 118,650
Public Storage............................................................ 5,400 102,600
ROC Communities........................................................... 4,800 115,200
Reckson Associates Realty................................................. 4,100 120,438
Starwood Lodging Trust.................................................... 4,300 127,925
-----------
692,813
-----------
Retail & Apparel-0.85%
*Lands' End................................................................ 3,700 50,413
Pier 1 Imports............................................................ 4,500 51,188
-----------
101,601
-----------
</TABLE>
43
<PAGE>
Value Series
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Technology-1.56%
*Cherry Class A............................................................ 1,900 $ 19,000
*Cherry Class B............................................................ 3,700 36,538
Methode Electronics Class A............................................... 9,150 130,388
-----------
185,926
-----------
Textiles & Furniture-1.23%
Juno Lighting............................................................. 5,700 89,775
*Mohawk Industries......................................................... 3,700 56,656
-----------
146,431
-----------
Transportation & Related-3.05%
*ABC Rail Products......................................................... 3,700 82,094
Airborne Freight.......................................................... 4,100 109,163
*Landstar Systems.......................................................... 2,500 67,813
TNT Freightways........................................................... 5,200 104,650
-----------
363,720
-----------
Total Common Stock (cost $9,504,980)...................................... 10,723,129
-----------
</TABLE>
<TABLE>
<CAPTION>
Number Market
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENTS-9.87%
With Chase Manhattan 5.60% 1/2/96
(dated 12/29/95, collateralized by $225,000
U.S. Treasury Notes 7.875% due 7/31/96,
market value $235,849 and $155,000
U.S. Treasury Notes 7.00% due 9/30/96,
market value $159,878).................................................. $386,000 $ 386,000
With Morgan (J.P.) 5.75% 1/2/96 (dated 12/29/95,
collateralized by $241,000 U.S. Treasury Notes
6.00% due 8/31/97, market value $249,056
and $148,000 U.S. Treasury Notes 7.375%
due 11/15/97, market value $155,157).................................... 396,000 396,000
With PaineWebber 5.875% 1/2/96 (dated
12/29/95, collateralized by $221,000
U.S. Treasury Notes 7.50% due 12/31/96,
market value $233,756 and $164,000
U.S. Treasury Notes 6.875% due 2/28/97,
market value $170,567).................................................. 396,000 396,000
-----------
Total Repurchase Agreements
(cost $1,178,000)....................................................... 1,178,000
-----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES OWNED-99.76% (cost $10,682,980).............................. 11,901,129
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-0.24%......................................... 28,181
-----------
NET ASSETS APPLICABLE TO 956,504 SHARES ($.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $12.47 PER SHARE-100.00%...................................................... $11,929,310
===========
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1995
Common stock, $.01 par value, 500,000,000 authorized to the Fund
with 50,000,000 allocated to the Series..................................................... $10,078,774
Accumulated undistributed:
Net investment income....................................................................... 181,687
Net realized gain on investments............................................................ 450,700
Net unrealized appreciation of investments and foreign currencies........................... 1,218,149
-----------
Total net assets.............................................................................. $11,929,310
===========
</TABLE>
- ----------------------
*Non-income producing security for the year ended December 31, 1995.
See accompanying notes
44
<PAGE>
Delaware Group Premium Fund, Inc.
Statement of Operations
<TABLE>
<CAPTION>
Year Ended December 31, 1995
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market
Series Series Series Series Series
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest..................................... $ 138,169 $ 5,475,837 $1,947,644 $ 1,505,376 $1,137,281
Dividends (net of foreign tax withheld
$334,303 for the International Equity
Series).................................... 3,371,106 37,188 -- 941,168 --
----------- ----------- ---------- ----------- ----------
3,509,275 5,513,025 1,947,644 2,446,544 1,137,281
----------- ----------- ---------- ----------- ----------
EXPENSES:
Management fees.............................. 528,481 311,242 157,204 329,278 93,257
Dividend disbursing and transfer agent
fees and expenses.......................... 12,010 6,887 3,630 7,409 2,479
Custodian fees............................... 18,058 6,784 3,418 7,101 2,448
Professional fees............................ 9,614 4,457 5,115 5,591 3,468
Salaries..................................... 22,021 12,873 6,624 13,427 4,718
Taxes other than income...................... 7,492 4,938 3,271 2,993 1,571
Directors' fees.............................. 1,624 1,624 1,624 1,624 1,624
Registration fees............................ 2,873 3,629 14 1,335 1,450
Amortization of organization expenses........ -- -- -- -- --
Reports to shareholders...................... 5,633 2,977 4,087 4,415 2,700
Other........................................ 9,574 6,181 3,779 6,235 3,602
----------- ----------- ---------- ----------- ----------
617,380 361,592 188,766 379,408 117,317
Less expenses absorbed by Delaware
Management Company, Inc. or Delaware
International Advisers Ltd................. -- -- -- -- --
----------- ----------- ---------- ----------- ----------
617,380 361,592 188,766 379,408 117,317
----------- ----------- ---------- ----------- ----------
NET INVESTMENT INCOME........................ 2,891,895 5,151,433 1,758,878 2,067,136 1,019,964
----------- ----------- ---------- ----------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions.................... 8,991,108 (2,216,446) 135,624 3,430,187 --
Foreign currencies......................... -- -- -- -- --
----------- ----------- ---------- ----------- ----------
Net realized gain (loss)..................... 8,991,108 (2,216,446) 135,624 3,430,187 --
Net unrealized appreciation of investments
and foreign currencies during
the period................................. 15,300,401 4,534,509 1,589,424 7,556,374 --
----------- ----------- ---------- ----------- ----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCIES......................... 24,291,509 2,318,063 1,725,048 10,986,561 --
----------- ----------- ---------- ----------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS................................. $27,183,404 $ 7,469,496 $3,483,926 $13,053,697 $1,019,964
=========== =========== ========== =========== ==========
<CAPTION>
Year Ended December 31, 1995
International Emerging
Growth Equity Growth Value
Series Series* Series Series*
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest..................................... $ 548,723 $ 430,301 $ 209,430 $ 152,913
Dividends (net of foreign tax withheld
$334,303 for the International Equity
Series).................................... 126,000 2,247,629 18,178 103,969
----------- ---------- ---------- ----------
674,723 2,677,930 227,608 256,882
----------- ---------- ---------- ----------
EXPENSES:
Management fees.............................. 357,930 525,376 92,985 65,528
Dividend disbursing and transfer agent
fees and expenses.......................... 6,322 9,204 1,658 1,097
Custodian fees............................... 9,957 48,038 5,618 7,795
Professional fees............................ 4,281 4,270 5,064 1,528
Salaries..................................... 11,787 17,309 2,989 2,139
Taxes other than income...................... 4,429 5,616 1,425 742
Directors' fees.............................. 1,624 1,624 1,624 1,624
Registration fees............................ 2,754 6,098 3,797 1,248
Amortization of organization expenses........ -- 17 -- --
Reports to shareholders...................... 3,519 5,390 2,792 2,176
Other........................................ 3,389 5,184 1,665 243
----------- ---------- ---------- ----------
405,992 628,126 119,617 84,120
Less expenses absorbed by Delaware
Management Company, Inc. or Delaware
International Advisers Ltd................. (21,585) (67,625) (20,626) (14,512)
----------- ---------- ---------- ----------
384,407 560,501 98,991 69,608
----------- ---------- ---------- ----------
NET INVESTMENT INCOME........................ 290,316 2,117,429 128,617 187,274
----------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions.................... 4,648,144 726,008 1,200,003 451,557
Foreign currencies......................... -- 478,025 -- (1,324)
----------- ---------- ---------- ----------
Net realized gain (loss)..................... 4,648,144 1,204,033 1,200,003 450,233
Net unrealized appreciation of investments
and foreign currencies during
the period................................. 7,352,687 5,972,496 2,501,445 1,319,759
----------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCIES......................... 12,000,831 7,176,529 3,701,448 1,769,992
----------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS................................. $12,291,147 $9,293,958 $3,830,065 $1,957,266
=========== ========== ========== ==========
</TABLE>
- --------------------
*The International Equity Series and the Value Series were the only Series of
the Fund which engaged in foreign currency transactions during the year ended
December 31, 1995.
See accompanying notes
45
<PAGE>
Delaware Group Premium Fund, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31, 1995
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market
Series Series Series Series Series
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income......................... $ 2,891,895 $ 5,151,433 $ 1,758,878 $ 2,067,136 $ 1,019,964
Net realized gain (loss) on investments
and foreign currencies...................... 8,991,108 (2,216,446) 135,624 3,430,187 --
Net unrealized appreciation of investments
and foreign currencies during the period.... 15,300,401 4,534,509 1,589,424 7,556,374 --
------------ ----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations............................. 27,183,404 7,469,496 3,483,926 13,053,697 1,019,964
------------ ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income......................... (2,866,310) (5,151,209) (1,758,878) (1,726,534) (1,019,964)
Net realized gain from security transactions.. (1,335,871) -- -- -- --
------------ ----------- ----------- ----------- -----------
(4,202,181) (5,151,209) (1,758,878) (1,726,534) (1,019,964)
------------ ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold..................... 20,442,574 14,846,158 3,683,164 8,013,382 33,835,327
Net asset value of shares issued
upon reinvestment of dividends from
net investment income....................... 2,866,310 5,150,169 1,759,031 1,726,534 1,019,729
Net asset value of shares issued upon
reinvestment of distributions from net
realized gain from security transactions.... 1,335,871 -- -- -- --
------------ ----------- ----------- ----------- -----------
24,644,755 19,996,327 5,442,195 9,739,916 34,855,056
Cost of shares repurchased.................... (11,347,305) (9,395,328) (5,207,601) (5,582,634) (38,641,425)
------------ ----------- ----------- ----------- -----------
Increase (decrease) in net assets derived
from capital share transactions............. 13,297,450 10,600,999 234,594 4,157,282 (3,786,369)
------------ ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS.................................. 36,278,673 12,919,286 1,959,642 15,484,445 (3,786,369)
NET ASSETS:
Beginning of period........................... 72,724,783 43,685,668 25,975,097 47,730,731 20,124,551
------------ ----------- ----------- ----------- -----------
End of period................................. $109,003,456 $56,604,954 $27,934,739 $63,215,176 $16,338,182
============ =========== =========== =========== ===========
Undistributed net investment income........... $ 852,092 -- -- $ 1,545,561 --
============ =========== =========== =========== ===========
<CAPTION>
Year Ended December 31, 1995
International Emerging
Growth Equity Growth Value
Series Series* Series Series*
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income......................... $ 290,316 $ 2,117,429 $ 128,617 $ 187,274
Net realized gain (loss) on investments
and foreign currencies...................... 4,648,144 1,204,033 1,200,003 450,233
Net unrealized appreciation of investments
and foreign currencies during the period.... 7,352,687 5,972,496 2,501,445 1,319,759
----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations............................. 12,291,147 9,293,958 3,830,065 1,957,266
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income......................... (249,375) (1,199,737) (57,059) (94,859)
Net realized gain from security transactions.. -- (449,901) -- (44,268)
----------- ----------- ----------- -----------
(249,375) (1,649,638) (57,059) (139,127)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold..................... 13,930,551 22,650,087 13,704,620 4,512,315
Net asset value of shares issued
upon reinvestment of dividends from
net investment income....................... 249,375 1,199,737 57,059 94,859
Net asset value of shares issued upon
reinvestment of distributions from net
realized gain from security transactions.... -- 449,901 -- 44,268
----------- ----------- ----------- -----------
14,179,926 24,299,725 13,761,679 4,651,442
Cost of shares repurchased.................... (7,443,317) (8,045,244) (4,111,780) (831,456)
----------- ----------- ----------- -----------
Increase (decrease) in net assets derived
from capital share transactions............. 6,736,609 16,254,481 9,649,899 3,819,986
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS.................................. 18,778,381 23,898,801 13,422,905 5,638,125
NET ASSETS:
Beginning of period........................... 39,344,208 57,649,238 7,086,759 6,291,185
----------- ----------- ----------- -----------
End of period................................. $58,122,589 $81,548,039 $20,509,664 $11,929,310
=========== =========== =========== ===========
Undistributed net investment income........... $ 266,670 $ 2,405,240 $ 126,741 $ 181,687
=========== =========== =========== ===========
</TABLE>
- --------------------
*The International Equity Series and the Value Series were the only Series of
the Fund which engaged in foreign currency transactions during the year ended
December 31, 1995.
See accompanying notes
46
<PAGE>
Delaware Group Premium Fund, Inc.
Statement of Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1994
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market
Series Series Series Series Series
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income......................... $ 2,563,952 $ 4,254,047 $ 1,664,805 $ 1,635,472 $ 627,526
Net realized gain (loss) on investments
and foreign currencies...................... 1,326,221 (1,450,110) (1,447,823) (723,778) --
Net unrealized appreciation (depreciation)
of investments and foreign currencies
during the period........................... (4,146,440) (3,933,977) (896,017) (1,112,198) --
------------ ------------ ----------- ----------- ------------
Net increase (decrease) in net assets
resulting from operations................... (256,267) (1,130,040) (679,035) (200,504) 627,526
------------ ------------ ----------- ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income......................... (2,461,871) (4,254,270) (1,664,805) (1,052,342) (627,526)
Net realized gain from security transactions.. (3,167,456) -- (132,532) (855,762) --
------------ ------------ ----------- ----------- ------------
(5,629,327) (4,254,270) (1,797,337) (1,908,104) (627,526)
------------ ------------ ----------- ----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold..................... 20,542,246 22,991,853 9,189,632 15,602,794 38,911,281
Net asset value of shares issued
upon reinvestment of dividends from
net investment income....................... 2,461,871 4,254,270 1,664,805 1,052,342 651,015
Net asset value of shares issued upon
reinvestment of distributions from
realized gain from security transactions.... 3,167,456 -- 132,532 855,762 --
------------ ------------ ----------- ----------- ------------
26,171,573 27,246,123 10,986,969 17,510,898 39,562,296
Cost of shares repurchased.................... (13,080,317) (13,090,790) (6,708,277) (4,906,327) (29,683,173)
------------ ------------ ----------- ----------- ------------
Increase in net assets derived from
capital transactions........................ 13,091,256 14,155,333 4,278,692 12,604,571 9,879,123
------------ ------------ ----------- ----------- ------------
NET INCREASE IN NET ASSETS.................... 7,205,662 8,771,023 1,802,320 10,495,963 9,879,123
NET ASSETS:
Beginning of period........................... 65,519,121 34,914,645 24,172,777 37,234,768 10,245,428
------------ ------------ ----------- ----------- ------------
End of period................................. $ 72,724,783 $ 43,685,668 $25,975,097 $47,730,731 $ 20,124,551
============ ============ =========== =========== ============
Undistributed net investment income........... $ 826,507 $ (224) -- $ 1,204,959 --
============ ============ =========== =========== ============
<CAPTION>
Year Ended December 31, 1994
International Emerging
Growth Equity Growth Value
Series Series* Series Series*
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income......................... $ 237,132 $ 1,346,221 $ 55,183 $ 90,596
Net realized gain (loss) on investments
and foreign currencies...................... 159,943 124,691 (35,082) 43,411
Net unrealized appreciation (depreciation)
of investments and foreign currencies
during the period........................... (1,816,840) (1,593,702) 9,655 (105,827)
----------- ----------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations................... (1,419,765) (122,790) 29,756 28,180
----------- ----------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income......................... (168,541) (117,179) -- --
Net realized gain from security transactions.. -- (16,740) -- --
----------- ----------- ----------- ----------
(168,541) (133,919) -- --
----------- ----------- ----------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold..................... 16,716,420 43,657,308 9,130,736 6,276,621
Net asset value of shares issued
upon reinvestment of dividends from
net investment income....................... 168,541 117,179 -- --
Net asset value of shares issued upon
reinvestment of distributions from
realized gain from security transactions.... -- 16,740 -- --
----------- ----------- ----------- ----------
16,884,961 43,791,227 9,130,736 6,276,621
Cost of shares repurchased.................... (9,132,551) (2,549,135) (2,277,534) (224,105)
----------- ----------- ----------- ----------
Increase in net assets derived from
capital transactions........................ 7,752,410 41,242,092 6,853,202 6,052,516
----------- ----------- ----------- ----------
NET INCREASE IN NET ASSETS.................... 6,164,104 40,985,383 6,882,958 6,080,696
NET ASSETS:
Beginning of period........................... 33,180,104 16,663,855 203,801 210,489
----------- ----------- ----------- ----------
End of period................................. $39,344,208 $57,649,238 $ 7,086,759 $6,291,185
=========== =========== =========== ==========
Undistributed net investment income........... $ 225,729 $ 1,321,383 $ 55,183 $ 90,596
=========== =========== =========== ==========
</TABLE>
*The International Equity Series and the Value Series are the only Series of
the Fund which engaged in foreign currency transactions during the year ended
December 31, 1994.
See accompanying notes
47
<PAGE>
Delaware Group Premium Fund, Inc.
Notes to Financial Statements
December 31, 1995
Delaware Group Premium Fund, Inc. (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 nine series: the Equity/Income
Series, the High Yield Series, the Capital Reserves Series, the Multiple
Strategy Series, the Money Market Series, the Growth Series, the International
Equity Series, the Emerging Growth Series and the Value Series (the "Series").
The shares of the Fund are sold only to separate accounts of life insurance
companies.
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 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. Long-term debt securities are valued by an
independent pricing service and are believed to reflect the fair value of such
securities. Securities listed on a foreign exchange are valued at the last
quoted sale price before the time when the Fund's securities are valued. Money
market instruments having less than 60 days to maturity are valued at amortized
cost which approximates market value.
Federal Income Taxes--Each Series 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--Each Series may invest in a pooled cash account along
with other members of the Delaware Group of Funds. The aggregate daily balance
of the pooled cash account is invested in repurchase agreements secured by
obligations of the U.S. Government. The respective collateral is held by each
Series' 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.
Foreign Currencies--The values of all assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the exchange rate of such
currencies against the U.S. dollar as of 3:00 pm EST. Forward foreign currency
contracts are valued at the mean between the bid and asked prices of the
contracts. Interpolated values are derived when the settlement date of the
contract is an interim date for which quotations are not available.
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 the
accrual basis. Original issue discounts are accreted to interest income over the
lives of the respective securities. The High Yield Series, the Capital Reserves
Series and the Money Market Series declare dividends daily from net investment
income and pay such dividends monthly.
Certain series expenses are paid directly by brokers. The amount of these
expenses is less than 0.01% of each Series' average net assets.
48
<PAGE>
Notes to Financial Statements (Continued)
2. Investment Management Fees and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. ("DMC"), the investment manager of each
Series except the International Equity Series, and Delaware International
Advisers Ltd. ("DIAL"), the investment manager of the International Equity
Series, a fee which is calculated on the average daily net assets of each
Series, at an annual rate less fees paid to the unaffiliated directors for the
Equity/Income Series, the High Yield Series, the Capital Reserves Series, the
Multiple Strategy Series, the Money Market Series, the Growth Series and the
International Equity Series. The management fee for the Emerging Growth Series
and the Value Series are calculated daily on the net assets of each Series at an
annual rate without consideration of amounts paid to unaffiliated directors. The
management fee rates are as follows:
<TABLE>
<CAPTION>
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market
Series Series Series Series Series
------ ------ -------- -------- ------
<S> <C> <C> <C> <C> <C>
Management fees as a percentage of average daily net assets
(per annum) ....................................................... 0.60% 0.60% 0.60% 0.60% 0.50%
<CAPTION>
International Emerging
Growth Equity Growth Value
Series Series Series Series
<S> <C> <C> <C> <C>
Management fees as a percentage of average daily net assets
(per annum) ....................................................... 0.75% 0.75% 0.75% 0.75%
</TABLE>
DMC and DIAL have elected voluntarily to waive their fees and reimburse each
Series to the extent that annual operating expenses, exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, exceed 0.80% of
average daily net assets for each Series through June 30, 1996. Total expenses
absorbed by DMC and DIAL for the year ended December 31, 1995 are as follows:
<TABLE>
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market
Series Series Series Series Series
------ ------ -------- -------- ------
<S> <C> <C> <C> <C> <C>
Total expenses absorbed by DMC or DIAL .............................. -- -- -- -- --
<CAPTION>
International Emerging
Growth Equity Growth Value
Series Series Series Series
------ ------ ------ ------
<S> <C> <C> <C> <C>
Total expenses absorbed by DMC or DIAL .............................. $21,585 $67,625 $20,626 $14,512
</TABLE>
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. 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 December 31, 1995, the amounts expensed for each
Series are as follows:
<TABLE>
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market
Series Series Series Series Series
------ ------ -------- -------- ------
<S> <C> <C> <C> <C> <C>
Dividend disbursing and transfer agent fees and other expenses ...... $12,010 $6,887 $3,630 $7,409 $2,479
<CAPTION>
International Emerging
Growth Equity Growth Value
Series Series Series Series
------ ------ ------ ------
<S> <C> <C> <C> <C>
Dividend disbursing and transfer agent fees and other expenses ...... $ 6,322 $9,204 $1,658 $1,097
</TABLE>
On December 31, 1995, the Series had payables to affiliates as follows:
<TABLE>
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market
Series Series Series Series Series
------ ------ -------- -------- ------
<S> <C> <C> <C> <C> <C>
Investment management fee payable to DMC or DIAL .................... $28,408 $12,942 $13,730 $20,962 $6,984
Dividend disbursing and transfer agent fees and other expenses
payable to DSC .................................................... 195 66 -- 36 --
Other expenses payable to DMC and its affiliates .................... -- 95 51 102 36
<CAPTION>
International Emerging
Growth Equity Growth Value
Series Series Series Series
------ ------ ------ ------
<S> <C> <C> <C> <C>
Investment management fee payable to DMC or DIAL .................... $34,754 $42,104 $10,299 $ 3,986
Dividend disbursing and transfer agent fees and other expenses
payable to DSC .................................................... 84 120 106 20
Other expenses payable to DMC and its affiliates .................... 146 129 1,072 --
</TABLE>
On April 3, 1995, Delaware Management Holdings, Inc., the indirect parent of
DMC, DIAL and DSC, through a merger transaction (the "Merger") became a wholly-
owned subsidiary of Lincoln National Corporation. Other than the resulting
change in ownership, the Merger will not materially change the manner in which
DMC, DIAL and DSC have heretofore conducted their relationships with the Fund.
49
<PAGE>
Notes to Financial Statements (Continued)
3. Investments
Investment securities based on cost for federal income tax purposes at December
31, 1995 are as follows:
<TABLE>
Equity/ High Capital Multiple
Income Yield Reserves Strategy
Series Series Series Series
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Costs of investments...................... $ 93,906,158 $53,247,057 $27,116,785 $55,399,069
Aggregate unrealized appreciation......... 15,190,232 1,946,373 619,605 7,862,393
Aggregate unrealized depreciation......... (240,492) (307,853) (21,435) (110,493)
------------ ----------- ----------- -----------
Market value of investments............... $108,855,898 $54,885,577 $27,714,955 $63,150,969
============ =========== =========== ===========
Net realized gain (loss) for federal
income tax purposes................... $ 8,885,198 $(2,216,446) $ 126,156 $ 3,416,692
============ =========== =========== ===========
<CAPTION>
Money International Emerging
Market Growth Equity Growth Value
Series Series Series Series Series
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Costs of investments...................... $16,392,271 $48,644,405 $75,700,376 $17,887,843 $10,682,980
Aggregate unrealized appreciation......... -- 13,266,041 7,777,986 3,603,228 1,499,133
Aggregate unrealized depreciation......... -- (3,600,462) (2,782,063) (1,089,235) (280,984)
------------ ----------- ----------- ----------- -----------
Market value of investments............... $16,392,271 $58,309,984 $80,696,299 $20,401,836 $11,901,129
============ =========== =========== =========== ===========
Net realized gain (loss) for federal
income tax purposes................... -- $ 4,687,743 $ 726,008 $ 1,193,499 $ 451,557
============ =========== =========== =========== ===========
</TABLE>
For federal income tax purposes, the Fund had accumulated capital losses at
December 31, 1995 of $3,781,875 for the High Yield Series and $1,328,634 for the
Capital Reserves Series, which may be carried forward and applied against future
capital gains. The capital loss carryover for the High Yield Series expires as
follows: 1998--$96,435, 2001--$18,884, 2002--$1,450,110 and 2003--$2,216,446.
The capital loss carryover for the Capital Reserves Series expires in 2002.
During the year ended December 31, 1995, the Series made purchases and sales of
investment securities, other than direct U.S. Government securities and
temporary cash investments, as follows:
<TABLE>
<CAPTION>
Equity/ High Capital Multiple International Emerging
Income Yield Reserves Strategy Growth Equity Growth Value
Series Series Series Series Series Series Series Series
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchases.... $84,153,795 $39,091,241 $29,196,399 $45,962,987 $42,545,218 $28,644,997 $14,696,714 $11,475,833
Sales........ 73,959,207 34,614,381 29,035,194 43,471,290 28,680,312 12,951,634 6,792,479 4,429,646
</TABLE>
50
<PAGE>
Notes to Financial Statements (Continued)
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
Equity/ High Capital
Income Yield Reserves
Series Series Series
-------------------- --------------------- ---------------------
Year Ended Year Ended Year Ended
12/31/95 12/31/94 12/31/95 12/31/94 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Shares sold..................................... 1,543,303 1,740,016 1,698,338 2,489,839 378,909 943,459
Shares issued upon reinvestment of dividends
from net investment income and distributions
from net realized gain from security
transactions.................................. 345,969 473,709 583,026 470,533 181,276 186,005
--------- --------- --------- --------- --------- ---------
1,889,272 2,213,725 2,281,364 2,960,372 560,185 1,129,464
Shares repurchased.............................. (877,396) (1,112,428) (1,066,859) (1,419,313) (541,075) (691,333)
--------- --------- --------- --------- -------- --------
Net increase (decrease)....................... 1,011,876 1,101,297 1,214,505 1,541,059 19,110 438,131
========= ========= ========= ========= ======== ========
<CAPTION>
Multiple Money
Strategy Market
Series Series
-------------------- ---------------------
Year Ended Year Ended
12/31/95 12/31/94 12/31/95 12/31/94
Shares sold...................................... 578,964 1,207,619 3,383,533 3,891,128
Shares issued upon reinvestment of dividends
from net investment income and distributions
from net realized gain from security
transactions................................... 135,116 147,148 101,973 65,101
-------- -------- -------- --------
714,080 1,354,767 3,485,506 3,956,229
Shares repurchased............................... (399,695) (381,885) (3,864,143) (2,968,317)
-------- -------- --------- ---------
Net increase (decrease)........................ 314,385 972,882 (378,637) 987,912
======== ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
International Emerging
Growth Equity Growth
Series Series Series
-------------------- --------------------- --------------------
Year Ended Year Ended Year Ended
12/31/95 12/31/94 12/31/95 12/31/94 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Shares sold................................... 1,057,838 1,387,910 1,858,798 3,638,259 1,127,143 793,025
Shares issued upon reinvestment of dividends
from net investment income and distributions
from net realized gain from security
transactions................................ 21,169 13,581 146,765 11,188 5,605 --
--------- --------- --------- --------- --------- --------
1,079,007 1,401,491 2,005,563 3,649,447 1,132,748 793,025
Shares repurchased............................ (585,294) (764,027) (654,821) (215,836) (367,575) (115,208)
--------- --------- --------- --------- --------- --------
Net increase................................ 493,713 637,464 1,350,742 3,433,611 765,173 677,817
========= ========= ========= ========= ========= ========
<CAPTION>
Value
Series
-------------------
Year Ended
12/31/95 12/31/94
<S> <C> <C>
Shares sold .................................. 407,375 612,652
Shares issued upon reinvestment of dividends
from net investment income and distributions
from net realized gain from security
transactions................................ 13,885 --
-------- --------
421,260 612,652
Shares repurchased............................ (76,146) (21,876)
-------- --------
Net increase................................ 345,114 590,776
======== ========
</TABLE>
Dividends from net investment income and distributions from net realized gain
from security transactions payable on January 29, 1996 to shareholders of
record January 25, 1996 were as follows:
<TABLE>
<CAPTION>
Equity/ Multiple International Emerging
Income Strategy Growth Equity Growth Value
Series Series Series Series Series Series
------- -------- ------ ------------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Dividends per share from net investment
income........................................... $ 0.120 $ 0.380 $0.070 $ 0.420 $ 0.090 $0.180
Distributions per share from net realized gain from
security transactions............................ 1.205 0.655 1.185 0.113 0.800 0.450
</TABLE>
The ex-dividend date was January 26, 1996.
51
<PAGE>
Notes to Financial Statements (Continued)
5. Foreign Exchange Contracts
The following currency forward contracts were outstanding at December 31, 1995:
<TABLE>
<CAPTION>
International Equity Series
-----------------------------------------------------------------------------
Contract to In Exchange Settlement Unrealized
Deliver for Date Gain/(Loss)
----------- ----------- ----------- -----------
<C> <S> <C> <C> <C>
85,920,000 Belgian Francs $3,000,000 1/31/96 $ 72,437
4,170,000 Deutsche Marks 3,000,000 1/31/96 92,658
4,671,000 Dutch Guilders 3,000,000 1/31/96 82,867
14,730,000 French Francs 3,000,000 1/31/96 (10,395)
746,475,000 Japanese Yen 7,500,000 1/31/96 209,660
--------
$447,227
========
</TABLE>
6. Financial Highlights
Selected data for a share of each Series outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Equity/Income Series
------------------------------------------------
Year Ended
<S> <C> <C> <C> <C> <C>
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
Net asset value, beginning of period.................... $11.4800 $12.5100 $11.2200 $10.7500 $9.2400
Income from investment operations:
Net investment income................................. 0.4155 0.4121 0.4341 0.4155 0.4502
Net realized and unrealized gain
(loss) from security transactions................... 3.5745 (0.4221) 1.2659 0.5045 1.5498
-------- -------- -------- -------- --------
Total from investment operations...................... 3.9900 (0.0100) 1.7000 0.9200 2.0000
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income.................. (0.4300) (0.4200) (0.4100) (0.4500) (0.4900)
Distributions from net realized gain from
security transactions............................... (0.2100) (0.6000) none none none
-------- -------- -------- -------- --------
Total distributions................................... (0.6400) (1.0200) (0.4100) (0.4500) (0.4900)
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $14.8300 $11.4800 $12.5100 $11.2200 $10.7500
======== ======== ======== ======== ========
Total return............................................ 36.12% (0.20%) 15.45% 8.82% 22.32%
Ratios/supplemental data:
Net assets, end of period (000's omitted)............. $109,003 $72,725 $65,519 $38,278 $38,840
Ratio of expenses to average net assets............... 0.69% 0.71% 0.75% 0.79% 0.85%
Ratio of expenses to average net assets
prior to expense limitation......................... 0.69% 0.71% 0.76% 0.81% 0.85%
Ratio of net investment income to average
net assets.......................................... 3.24% 3.63% 3.95% 3.86% 4.46%
Ratio of net investment income to average
net assets prior to expense limitation.............. 3.24% 3.63% 3.94% 3.84% 4.46%
Portfolio turnover rate............................... 85% 91% 67% 72% 79%
</TABLE>
<TABLE>
<CAPTION>
High Yield Series
------------------------------------------------
Year Ended
<S> <C> <C> <C> <C> <C>
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
Net asset value, beginning of period $8.5400 $9.7700 $9.2900 $9.1300 $7.4800
Income from investment operations:
Net investment income 0.8715 0.9621 0.9758 1.0224 1.0316
Net realized and unrealized gain
(loss) from security transactions 0.4000 (1.2300) 0.4800 0.1600 1.6500
-------- -------- -------- -------- --------
Total from investment operations 1.2715 (0.2679) 1.4558 1.1824 2.6816
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.8715) (0.9621) (0.9758) (1.0224) (1.0316)
Distributions from net realized gain from
security transactions none none none none none
-------- -------- -------- -------- --------
Total distributions (0.8715) (0.9621) (0.9758) (1.0224) (1.0316)
-------- -------- -------- -------- --------
Net asset value, end of period $8.9400 $8.5400 $9.7700 $9.2900 $9.1300
======== ======== ======== ======== ========
Total return 15.50% (2.87%) 16.36% 13.44% 37.53%
Ratios/supplemental data:
Net assets, end of period (000's omitted) $56,605 $43,686 $34,915 $11,311 $5,918
Ratio of expenses to average net assets 0.69% 0.72% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation 0.69% 0.72% 0.82% 0.94% 1.06%
Ratio of net investment income to average
net assets 9.87% 10.56% 10.05% 10.93% 12.05%
Ratio of net investment income to average
net assets prior to expense limitation 9.87% 10.56% 10.03% 10.79% 11.80%
Portfolio turnover rate 74% 47% 43% 73% 70%
</TABLE>
52
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights (Continued)
Selected data for a share of each Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Capital Reserves Series
--------------------------------------------------------------------
Year Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $ 9.3000 $10.2600 $10.2000 $10.2300 $10.0400
Income from investment operations:
Net investment income............................... 0.6431 0.6355 0.6357 0.6474 0.6687
Net realized and unrealized gain (loss) from
security transactions............................ 0.6300 (0.9050) 0.1450 0.0600 0.1900
-------- -------- -------- -------- --------
Total from investment operations.................... 1.2731 (0.2695) 0.7807 0.7074 0.8587
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income................ (0.6431) (0.6355) (0.6357) (0.6474) (0.6687)
Distributions from net realized
gain from security transactions.................... none (0.0550) (0.0850) (0.0900) none
-------- -------- -------- -------- --------
Total distributions................................. (0.6431) (0.6905) (0.7207) (0.7374) (0.6687)
-------- -------- -------- -------- --------
Net asset value, end of period........................ $ 9.9300 $ 9.3000 $10.2600 $10.2000 $10.2300
======== ======== ======== ======== ========
Total return.......................................... 14.08% (2.68%) 7.85% 7.20% 8.85%
Ratios/supplemental data:
Net assets, end of period (000's omitted)........... $ 27,935 $ 25,975 $ 24,173 $ 9,790 $ 4,392
Ratio of expenses to average net assets............ 0.71% 0.74% 0.80% 0.80% 0.80%
Ratio of expenses to average net
assets prior to expense limitation................ 0.71% 0.74% 0.85% 0.98% 1.15%
Ratio of net investment income to
average net assets................................ 6.64% 6.57% 6.20% 6.39% 6.62%
Ratio of net investment income to average net assets
prior to expense limitation....................... 6.64% 6.57% 6.15% 6.21% 6.27%
Portfolio turnover rate............................... 145% 219% 198% 241% 95%
<CAPTION>
Multiple Strategy Series
--------------------------------------------------------------------
Year Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S>................................................... <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $12.6800 $13.3300 $13.5500 $12.9800 $10.8400
Income from investment operations:
Net investment income............................... 0.5088 0.4373 0.3280 0.4572 1.0824
Net realized and unrealized gain
(loss) from security transactions................. 2.7612 (0.4473) 0.6920 1.2328 1.6676
-------- -------- -------- -------- --------
Total from investment operations.................... 3.2700 (0.0100) 1.0200 1.6900 2.7500
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income................ (0.4500) (0.3400) (0.4600) (1.0600) (0.3500)
Distributions from net realized
gain from security transactions.................... none (0.3000) (0.7800) (0.0600) (0.2600)
-------- -------- -------- -------- --------
Total distributions................................. (0.4500) (0.6400) (1.2400) (1.1200) (0.6100)
-------- -------- -------- -------- --------
Net asset value, end of period........................ $15.5000 $12.6800 13.3300 $13.5500 $12.9800
======== ======== ======== ======== ========
Total return.......................................... 26.58% (0.15%) 8.18% 13.85% 26.58%
Ratios/supplemental data:
Net assets, end of period (000's omitted)........... $ 63,215 $ 47,731 $ 37,235 $ 15,150 $ 12,138
Ratio of expenses to average net assets............ 0.69% 0.70% 0.80% 0.86% 1.03%
Ratio of expenses to average net assets
prior to expense limitation....................... 0.69% 0.70% 0.89% 0.94% 1.03%
Ratio of net investment income to
average net assets................................ 3.75% 3.71% 3.33% 3.60% 11.35%
Ratio of net investment income to average net assets
prior to expense limitation....................... 3.75% 3.71% 3.24% 3.52% 11.35%
Portfolio turnover rate............................... 106% 140% 162% 202% 1,010%
</TABLE>
53
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights (Continued)
Selected data for a share of each Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Money Market Series
----------------------------------------------------
Year Ended
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................................... $10.0000 $10.0000 $10.0000 $10.0000 $10.0000
Income from investment operations:
Net investment income................................................ 0.5349 0.3614 0.2451 0.3202 0.5443
Net realized and unrealized gain (loss) from security transactions... none none none none none
-------- -------- -------- -------- --------
Total from investment operations..................................... 0.5349 0.3614 0.2451 0.3202 0.5443
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income................................. (0.5349) (0.3614) (0.2451) (0.3202) (0.5443)
Distributions from net realized gain from security transactions...... none none none none none
-------- -------- -------- -------- --------
Total distributions.................................................. (0.5349) (0.3614) (0.2451) (0.3202) (0.5443)
-------- -------- -------- -------- --------
Net asset value, end of period......................................... $10.0000 $10.0000 $10.0000 $10.0000 $10.0000
======== ======== ======== ======== ========
Total return........................................................... 5.48% 3.68% 2.48% 3.25% 5.58%
Ratios/supplemental data:
Net assets, end of period (000's omitted)............................ $ 16,338 $ 20,125 $ 10,245 $ 7,774 $ 7,768
Ratio of expenses to average net assets.............................. 0.62% 0.66% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets prior to expense limitation.. 0.62% 0.66% 0.86% 0.85% 0.99%
Ratio of net investment income to average net assets................. 5.35% 3.79% 2.44% 3.21% 5.45%
Ratio of net investment income to average net assets prior to
expense limitation................................................. 5.35% 3.79% 2.38% 3.16% 5.26%
Portfolio turnover rate.............................................. -- -- -- -- --
<CAPTION>
Growth Series
----------------------------------------------------
7/12/91/1/
Year Ended to
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................................... $11.7500 $12.2400 $11.1200 $11.0300 $10.0000
Income from investment operations:
Net investment income................................................ 0.0720 0.0694 0.0558 0.0225 0.0098
Net realized and unrealized gain (loss) from security transactions... 3.3780 (0.4994) 1.2142 0.1975 1.0202
-------- -------- -------- -------- --------
Total from investment operations..................................... 3.4500 (0.4300) 1.2700 0.2200 1.0300
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income................................. (0.0700) (0.0600) (0.0200) (0.0100) none
Distributions from net realized gain from security transactions...... none none (0.1300) (0.1200) none
-------- -------- -------- -------- --------
Total distributions.................................................. (0.0700) (0.0600) (0.1500) (0.1300) none
-------- -------- -------- -------- --------
Net asset value, end of period......................................... $15.1300 $11.7500 $12.2400 $11.1200 $11.0300
======== ======== ======== ======== ========
Total return........................................................... 29.53% (3.54%) 11.56% 1.99% 21.60%
Ratios/supplemental data:
Net assets, end of period (000's omitted)............................ $ 58,123 $ 39,344 $ 33,180 $ 14,251 $ 6,950
Ratio of expenses to average net assets.............................. 0.80% 0.80% 0.80% 0.98% 1.94%
Ratio of expenses to average net assets prior to expense limitation.. 0.85% 0.88% 1.00% 1.25% 1.94%
Ratio of net investment income to average net assets................. 0.61% 0.64% 0.67% 0.28% 0.33%
Ratio of net investment income to average net assets prior to
expense limitation................................................. 0.56% 0.56% 0.47% 0.01% 0.33%
Portfolio turnover rate.............................................. 73% 43% 57% 52% 40%
</TABLE>
- --------------------
/1/ Date of initial public offering: ratios and total return have been
annualized.
54
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights (Continued)
Selected data for a share of each Series outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
International Equity Series
-----------------------------------------
10/29/92/1/
Year Ended to
12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C>
Net asset value, beginning of period....................................... $11.8400 $11.6200 $10.0300 $10.0000
Income from investment operations:
Net investment income.................................................... 0.4194 0.2198 0.0523 0.0153
Net realized and unrealized gain (loss) from security transactions....... 1.1906 0.0802 1.5477
-------- -------- -------- --------
Total from investment operations......................................... 1.6100 0.3000 1.6000 0.0300
-------- -------- -------- --------
Less distributions:
Dividends from net investment income..................................... (0.2400) (0.0700) (0.0100) none
Distributions from net realized gain from security transactions.......... (0.0900) (0.0100) none none
-------- -------- -------- --------
Total distributions...................................................... (0.3300) (0.0800) (0.0100) none
-------- -------- -------- --------
Net asset value, end of period............................................. $13.1200 $11.8400 $11.6200 $10.0300
======== ======== ======== ========
Total return............................................................... 13.98% 2.57% 15.97% 1.73%
Ratios/supplemental data:
Net assets, end of period (000's omitted)................................ $ 81,548 $ 57,649 $ 16,664 $ 177
Ratio of expenses to average net assets.................................. 0.80% 0.80% 0.80% /2/
Ratio of expenses to average net assets prior to expense limitation...... 0.89% 1.01% 1.85% /2/
Ratio of net investment income to average net assets..................... 3.69% 2.63% 1.85% /2/
Ratio of net investment income to average net assets prior to
expense limitation..................................................... 3.60% 2.42% 0.80% /2/
Portfolio turnover rate.................................................. 19% 13% 9% /2/
</TABLE>
<TABLE>
<CAPTION>
Emerging Growth Series
--------------------------------
12/27/93/1/
Year Ended to
12/31/95 12/31/94 12/31/93
<S> <C> <C> <C>
Net asset value, beginning of period....................................... $10.1600 $10.2000 $10.0000
Income from investment operations:
Net investment income.................................................... 0.0976 0.0791 none
Net realized and unrealized gain (loss) from security transactions....... 3.8524 (0.1191) 0.2000
-------- -------- --------
Total from investment operations......................................... 3.9500 (0.0400) 0.2000
-------- -------- --------
Less distributions:
Dividends from net investment income..................................... (0.0900) none none
Distributions from net realized gain from security transactions.......... none none none
-------- -------- --------
Total distributions...................................................... (0.0900) none none
Net asset value, end of period............................................. $14.0200 $10.1600 $10.2000
======== ======== ========
Total return............................................................... 39.21% (0.39%) 2.00%
Ratios/supplemental data:
Net assets, end of period (000's omitted)................................ $ 20,510 $ 7,087 $ 204
Ratio of expenses to average net assets.................................. 0.80% 0.80% /2/
Ratio of expenses to average net assets prior to expense limitation...... 0.96% 1.47% /2/
Ratio of net investment income to average net assets..................... 1.03% 1.63% /2/
Ratio of net investment income to average net assets prior to
expense limitation..................................................... 0.87% 0.96% /2/
Portfolio turnover rate.................................................. 76% 59% /2/
</TABLE>
<TABLE>
<CAPTION>
Value Series
--------------------------------
12/27/93/1/
Year Ended to
12/31/95 12/31/94 12/31/93
<S> <C> <C> <C>
Net asset value, beginning of period....................................... $10.2900 $10.2100 $10.0000
Income from investment operations:
Net investment income.................................................... 0.1918 0.1481 none
Net realized and unrealized gain (loss) from security transactions....... 2.2082 (0.0681) 0.2100
-------- -------- --------
Total from investment operations......................................... 2.4000 0.0800 0.2100
-------- -------- --------
Less distributions:
Dividends from net investment income..................................... (0.1500) none none
Distributions from net realized gain from security transactions.......... (0.0700) none none
-------- -------- --------
Total distributions...................................................... (0.2200) none none
-------- -------- --------
Net asset value, end of period............................................. $12.4700 $10.2900 $10.2100
======== ======== ========
Total return............................................................... 23.85% 0.78% 2.10%
Ratios/supplemental data:
Net assets, end of period (000's omitted)................................ $ 11,929 $ 6,291 $ 210
Ratio of expenses to average net assets.................................. 0.80% 0.80% /2/
Ratio of expenses to average net assets prior to expense limitation...... 0.96% 1.41% /2/
Ratio of net investment income to average net assets..................... 2.13% 2.62% /2/
Ratio of net investment income to average net assets prior to
expense limitation..................................................... 1.97% 2.01% /2/
Portfolio turnover rate.................................................. 71% 26% /2/
</TABLE>
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/1/ Date of initial public offering; ratios and total return have been
annualized.
/2/ The ratios of expenses and net investment income to average net assets and
portfolio turnover have been omitted as management believes that such ratios
are not meaningful due to the limited net assets of these Series.
55
<PAGE>
Delaware Group Premium Fund, Inc.
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Premium Fund, Inc.
We have audited the accompanying statements of net assets of the Equity/Income
Series, the High Yield Series, the Capital Reserves Series, the Multiple
Strategy Series, the Money Market Series, the Growth Series, the International
Equity Series, the Emerging Growth Series and the Value Series (collectively
referred to as "Delaware Group Premium Fund, Inc." or the "Fund") as of
December 31, 1995, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended for the Equity/Income Series, High Yield Series, Capital
Reserves Series, Multiple Strategy Series and Money Market Series and the
financial highlights for each period from the date of the initial public
offering through December 31, 1995 for the Growth Series, International Equity
Series, Emerging Growth Series and Value Series. 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
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
Series of Delaware Group Premium Fund, Inc. at December 31, 1995, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended for the Equity/Income Series,
High Yield Series, Capital Reserves Series, Multiple Strategy Series and Money
Market Series and the financial highlights for each period from the date of the
initial public offering through December 31, 1995, for the Growth Series,
International Equity Series, Emerging Growth Series and Value Series in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 9, 1996
56
<PAGE>
A Report on Premium Fund's Annual Meeting
At an annual meeting of shareholders held on March 29, 1995, the following
matters were submitted for a shareholder vote: the election of directors, the
ratification of the selection of Ernst & Young LLP as independent auditors of
the Fund and the approval of a new investment management agreement. The new
investment management agreement was proposed in connection with the April 3,
1995, merger of Delaware Management Holdings, Inc. (the parent of Delaware
Management Company, Inc.) and a subsidiary of Lincoln National Corporation.
Whenever there is a change in control of an investment manager, the Investment
Company Act of 1940 requires shareholders to vote on a new investment management
agreement.
Below are the names of each director elected at the meeting as well as the
results of the other matters voted on by shareholders.
<TABLE>
<CAPTION>
Number of Votes/+/
-----------------
For Against/Withheld Abstentions
<S> <C> <C> <C>
Election of Directors*:
Wayne A. Stork 28,056,542 1,129,907 --
Walter P. Babich 28,073,011 1,113,438 --
Anthony D. Knerr 28,051,129 1,135,321 --
Ann R. Leven 28,063,092 1,123,357 --
W. Thacher Longstreth 28,032,490 1,153,960 --
Charles E. Peck 28,057,779 1,128,670 --
Approval of the New Investment Management Agreement:
Equity/Income Series 5,341,196 122,926 592,968
High Yield Series 4,088,103 186,968 601,403
Capital Reserves Series 2,387,510 144,890 104,168
Multiple Strategy Series 3,379,965 71,605 194,874
Money Market Series 1,861,239 45,525 72,697
Growth Series 3,269,385 85,117 231,847
International Equity Series 4,771,443 118,918 262,574
Emerging Growth Series 573,637 35,824 15,283
Value Series 587,144 22,898 16,279
Selection of Ernst & Young LLP as Independent Auditors* 27,692,406 232,186 1,261,857
</TABLE>
- --------------------
/+/ Please note that the results of this meeting were not audited by Ernst &
Young LLP.
* Voted upon by all shareholders of the Fund.
57
