DELAWARE GROUP PREMIUM FUND INC, 485APOS, 1997-02-13

DELAWARE GROUP PREMIUM FUND INC
485APOS, 1997-02-13

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

File No. 33-14363
File No. 811-5162

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. / /

Post-Effective Amendment No. 19 /X/

AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

Amendment No. 19

DELAWARE GROUP PREMIUM FUND, INC.
(Exact Name of Registrant as Specified in Charter)

1818 MARKET STREET, PHILADELPHIA, PENNSYLVANIA 19103
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (215) 255-2923

GEORGE M. CHAMBERLAIN, JR., 1818 MARKET STREET, PHILADELPHIA, PA 19103
(Name and Address of Agent for Service)

Approximate Date of Public Offering: May 1, 1997

It is proposed that this filing will become effective:

__ immediately upon filing pursuant to paragraph (b)

__ on (date) pursuant to paragraph (b)

__ 60 days after filing pursuant to paragraph (a)(1)

__ on (date) pursuant to paragraph (a)(1)

__ 75 days after filing pursuant to paragraph (a)(2)

X on May 1, 1997 pursuant to paragraph (a)(2) of Rule 485
__

Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940. The Rule 24f-2 Notice for Registrant's most recent fiscal year will be
filed on or about February 28, 1997.

<PAGE> 2

--- C O N T E N T S ---

This Post-Effective Amendment No. 19 to Registration File No. 33-14363 includes
the following:

1. Facing Page

2. Contents Page

3. Cross-Reference Sheet

4. Part A - Prospectus

5. Part B - Statement of Additional Information

6. Part C - Other Information

7. Signatures

<PAGE> 3

CROSS-REFERENCE SHEET

PART A

<TABLE>
<CAPTION>
Item No. Description Location in Prospectus
- -------- ----------- ----------------------
<S> <C> <C>
1 Cover Page ........................................................ Cover

2 Synopsis .......................................................... Summary Information

3 Condensed Financial Information ................................... Financial Highlights

4 General Description of Registrant ................................. Investment Objectives and
Policies; Description of
Fund Shares; Other
Considerations

5 Management of the Fund ............................................ Management of the Fund

6 Capital Stock and Other Securities ................................ Dividends and Distributions;
Taxes; Description of
Fund Shares

7 Purchase of Securities Being Offered .............................. Cover; Purchase and Redemption;
Calculation of Offering Price and
Net Asset Value Per Share;
Management of the Fund

8 Redemption or Repurchase .......................................... Purchase and Redemption

9 Legal Proceedings ................................................. None
</TABLE>

<PAGE> 4
CROSS-REFERENCE SHEET

PART B

<TABLE>
<CAPTION>
Location in Statement of
Item No. Description Additional Information
- -------- ----------- ----------------------
<S> <C> <C>
10 Cover Page ........................................................ Cover

11 Table of Contents ................................................. Table of Contents

12 General Information and History ................................... General Information

13 Investment Objectives and Policies ................................ Investment Objectives
and Policies

14 Management of the Registrant ...................................... Officers and Directors

15 Control Persons and Principal Holders of Securities ............... Officers and Directors

16 Investment Advisory and Other Services ............................ Investment Management
Agreements; Officers and
Directors; General Information;
Financial Statements

17 Brokerage Allocation .............................................. Trading Practices and Brokerage

18 Capital Stock and Other Securities ................................ Capitalization and Noncumulative
Voting (under General
Information)

19 Purchase, Redemption and Pricing of Securities
Being Offered ..................................................... Offering Price

20 Tax Status ........................................................ Accounting and Tax Issues;
Taxes

21 Underwriters ...................................................... Investment Management
Agreements

22 Calculation of Performance Data ................................... Performance Information

23 Financial Statements .............................................. Financial Statements
</TABLE>

<PAGE> 5

CROSS-REFERENCE SHEET

PART C

<TABLE>
<CAPTION>
Item No. Description Location in Part C
- -------- ----------- ------------------
<S> <C> <C>
24 Financial Statements and Exhibits........................................... Item 24

25 Persons Controlled by or under Common
Control with Registrant.................................................. Item 25

26 Number of Holders of Securities............................................. Item 26

27 Indemnification............................................................. Item 27

28 Business and Other Connections of Investment Adviser........................ Item 28

29 Principal Underwriters...................................................... Item 29

30 Location of Accounts and Records............................................ Item 30

31 Management Services......................................................... Item 31

32 Undertakings................................................................ Item 32
</TABLE>
<PAGE> 6
PROSPECTUS

MAY 1, 1997

DELAWARE GROUP PREMIUM FUND, INC.
1818 Market Street, Philadelphia, PA 19103

Delaware Group Premium Fund, Inc. (the "Fund") is an open-end management
investment company which is intended to meet a wide range of investment
objectives with its 15 separate Portfolios. Each Portfolio ("Series") is in
effect a separate fund issuing its own shares. The shares of the Fund are sold
only to separate accounts of life insurance companies ("life companies"). The
separate accounts are used in conjunction with variable annuity contracts and
variable life insurance policies ("variable contracts"). The separate accounts
invest in shares of the various Series in accordance with allocation
instructions received from contract owners. The investment objectives and
principal policies of the Series are described below. See Investment Objectives
and Policies. Although each Series will constantly strive to attain its
objective, there can be no assurance that it will be attained.

This Prospectus sets forth information that you should read and consider
before you invest. Please retain it for future reference. A Statement of
Additional Information ("Part B" of the Fund's registration statement), dated
May 1, 1997 as it may be amended from time to time, contains additional
information about the Fund and has been filed with the Securities and Exchange
Commission. Part B is incorporated by reference into this Prospectus and is
available, without charge, by writing to Delaware Distributors, L.P. at the
above address or by calling 1-800-523-1918. The Series' financial statements
appear in the Fund's Annual Report, which will accompany any response to
requests for Part B.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK
OR CREDIT UNION DEPOSITS.

DECATUR TOTAL RETURN SERIES--seeks the highest possible total rate of
return by selecting issues that exhibit the potential for capital appreciation
while providing higher than average dividend income. This Series, formerly known
as Equity/Income Series, has the same objective and investment disciplines as
Decatur Total Return Fund of Delaware Group Equity Funds II, Inc., a separate
Delaware Group fund, in that it invests generally, but not exclusively, in
common stocks and income-producing securities convertible into common stocks,
consistent with the Series' objective.

DELCHESTER SERIES--seeks as high a current income as possible by
investing in rated and unrated corporate bonds (including high-yield bonds
commonly known as junk bonds), U.S. government securities and commercial paper.
This Series, formerly known as High Yield Series, has the same objective and
investment

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<PAGE> 7

disciplines as Delchester Fund of Delaware Group Income Funds, Inc., a separate
Delaware Group fund. An investment in this Series may involve greater risks than
an investment in a portfolio comprised primarily of investment grade bonds.

CAPITAL RESERVES SERIES--seeks a high stable level of current income
while minimizing fluctuations in principal by investing in a diversified
portfolio of short- and intermediate-term securities.

CASH RESERVE SERIES--a money market fund which seeks the highest level of
income consistent with preservation of capital and liquidity through investments
in short-term money market instruments. This Series, formerly known as Money
Market Series, has the same objective and investment disciplines as Delaware
Group Cash Reserve, Inc., a separate Delaware Group fund. THE SHARES OF CASH
RESERVE SERIES ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND
THERE IS NO ASSURANCE THAT THE SERIES WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $10.00 PER SHARE.

GROWTH SERIES--seeks long-term capital appreciation by investing its
assets in a diversified portfolio of securities exhibiting the potential for
significant growth. This Series has the same objective and investment
disciplines as DelCap Fund of Delaware Group Equity Funds IV, Inc., a separate
Delaware Group fund, in that it invests in common stocks and other securities
including but not limited to, convertible securities, warrants, preferred
stocks, bonds and foreign securities, consistent with the Series' objective.

DELAWARE SERIES--seeks a balance of capital appreciation, income and
preservation of capital. It uses a dividend-oriented valuation strategy to
select securities issued by established companies that are believed to
demonstrate potential for income and capital growth. This Series, formerly known
as Multiple Strategy Series, has the same objective and investment disciplines
as Delaware Fund of Delaware Group Equity Funds I, Inc., a separate Delaware
Group fund, in that, as a "balanced" fund, the Series, consistent with its
objective, invests at least 25% of its assets in fixed-income securities and the
remainder primarily in equity securities.

INTERNATIONAL EQUITY SERIES--seeks long-term growth without undue risk to
principal by investing primarily in equity securities of foreign issuers
providing the potential for capital appreciation and income. This Series has the
same objective and investment disciplines as International Equity Series of
Delaware Group Global & International Funds, Inc., a separate Delaware Group
fund, in that it invests in a broad range of equity securities of foreign
issuers, including common stocks, preferred stocks, convertible securities and
warrants, consistent with the Series' objective.

VALUE SERIES--seeks capital appreciation by investing in small- to
mid-cap common stocks whose market value appears low relative to their
underlying value or future earnings and growth potential. Emphasis will also be
placed on securities of companies that may be temporarily out of favor or whose
value is not yet recognized by the market. This Series has the same objective
and investment disciplines as Value Fund of Delaware Group Equity Funds V, Inc.,
a separate Delaware Group fund.

TREND SERIES--seeks long-term capital appreciation by investing primarily
in small-cap common stocks and convertible securities of emerging and other
growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. This Series,
formerly known as Emerging Growth Series, has the same objective and investment
disciplines as Delaware Group Trend Fund, Inc., a separate Delaware Group fund.

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<PAGE> 8

GLOBAL BOND SERIES--seeks current income consistent with preservation of
principal by investing primarily in fixed-income securities that may also
provide the potential for capital appreciation. This Series is a global fund, as
such, at least 65% of the Series' assets will be invested in fixed-income
securities of issuers organized or having a majority of their assets in or
deriving a majority of their operating income in at least three different
countries, one of which may be the United States. This Series has the same
objective and investment disciplines as Global Bond Series of Delaware Group
Global & International Funds, Inc., a separate Delaware Group fund.

STRATEGIC INCOME SERIES--seeks high current income and total return. The
Series seeks to achieve its objective by using a multi-sector investment
approach, investing primarily in three sectors of the fixed-income securities
markets: high-yield, higher risk securities; investment grade fixed-income
securities; and foreign government and other foreign fixed-income securities. In
addition, the Series may invest in U.S. equity securities. This Series has the
same objective and investment disciplines as Strategic Income Fund of Delaware
Group Income Funds, Inc., a separate Delaware Group fund.

DEVON SERIES--seeks current income and capital appreciation. The Series
will seek to achieve its objective by investing primarily in income-producing
common stocks, with a focus on common stocks that the investment manager
believes have the potential for above-average dividend increases over time.
Under normal circumstances, the Series will invest at least 65% of its total
assets in dividend paying common stocks. This Series has the same objective and
investment disciplines as Devon Fund of Delaware Group Equity Funds I, Inc., a
separate Delaware Group fund.

EMERGING MARKETS SERIES--seeks to achieve long-term capital
appreciation. The Series seeks to achieve its objective by investing primarily
in equity securities of issuers located or operating in emerging countries. The
Series is an international fund. As such, under normal market conditions, at
least 65% of the Series' assets will be invested in equity securities of issuers
organized or having a majority of their assets or deriving a majority of their
operating income in at least three countries that are considered to be emerging
or developing. This Series has the same objective and investment disciplines as
Emerging Markets Series of Delaware Group Global & International Funds, Inc., a
separate Delaware Group fund.

CONVERTIBLE SECURITIES SERIES--seeks a high level of total return on its
assets through a combination of capital appreciation and current income. The
Series intends to pursue its investment objective by investing primarily in
convertible securities. Under normal conditions, the Series intends to invest at
least 65% of its total assets in convertible securities, which may include
privately placed convertible securities. In pursuit of its investment objective,
the Series may invest the balance of its assets in, among other things,
preferred and common stock, U.S. government securities, non-convertible
fixed-income securities and money market securities.

QUANTUM SERIES--seeks to achieve long-term capital appreciation. The
Series seeks to achieve its objective by investing primarily in equity
securities of medium to large-sized companies expected to grow over time that
meet the Series "Social Criteria" strategy. This Series has the same objective
and investment disciplines as Quantum Fund of Delaware Group Equity Funds II,
Inc., a separate Delaware Group fund.

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<PAGE> 9

TABLE OF CONTENTS

Cover Page....................................................................
Summary Information...........................................................
Financial Highlights..........................................................

Investment Objectives and Policies............................................
Introduction...........................................................
Decatur Total Return Series............................................
Delchester Series......................................................
Capital Reserves Series................................................
Cash Reserve Market Series.............................................
Growth Series..........................................................
Delaware Series........................................................
International Equity Series............................................
Value Series...........................................................
Trend Series...........................................................
Global Bond Series.....................................................
Strategic Income Series................................................
Devon Series...........................................................
Emerging Markets Series................................................
Convertible Securities Series..........................................
Quantum Series.........................................................

Purchase and Redemption.......................................................
Dividends and Distributions...................................................
Taxes.........................................................................
Calculation of Offering Price and Net Asset Value Per Share...................
Management of the Fund........................................................

Performance Information................................................
Distribution and Service...............................................
Expenses...............................................................
Description of Fund Shares.............................................

Other Considerations..........................................................
Appendix A--Ratings...........................................................

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<PAGE> 10

SUMMARY INFORMATION

CAPITALIZATION

The Fund has a present authorized capitalization of five hundred million
shares of capital stock with a $.01 par value per share, with fifty million
shares allocated to each of the Fund's 15 Series. See Description of Fund Shares
under Management of the Fund.

INVESTMENT MANAGERS

Delaware Management Company, Inc. ("Delaware Management") furnishes
investment management services to the Decatur Total Return, Delchester, Capital
Reserves, Cash Reserve, Growth, Delaware, Value, Trend, Strategic Income, Devon,
Convertible Securities and Quantum Series, subject to the supervision and
direction of the Fund's Board of Directors. Under the Investment Management
Agreement between Delaware Management and these 12 Series, the annual
compensation paid to Delaware Management is equal to the following percentages
of the average daily net assets of the Series, less, in the case of the Decatur
Total Return, Delchester, Capital Reserves, Cash Reserve, Growth and Delaware
Series, a proportionate share of all directors' fees paid to the unaffiliated
directors of the Fund:

Decatur Total Return Series 0.60%,
Delchester Series 0.60%
Capital Reserves Series 0.60%
Cash Reserve Series 0.50%
Growth Series 0.75%,
Delaware Series 0.60%
Value Series 0.75%
Trend Series 0.75%
Strategic Income Series 0.65%
Devon Series 0.60%
Convertible Securities Series 0.75%
Quantum Series 0.75%

Delaware Management has elected voluntarily to waive its management fee
and to reimburse the respective Series to the extent necessary to maintain a
limit on the total operating expenses of each of these Series for a limited
period. See Management of the Fund.

Delaware International Advisers Ltd. ("Delaware International") furnishes
investment management services to the International Equity, Global Bond and
Emerging Markets Series, subject to the supervision and direction of the Fund's
Board of Directors. Under the Investment Management Agreement between each
Series and Delaware International, the annual compensation paid to Delaware
International is equal to the following percentages of the average daily net
assets of the Series, less, in the case of the International Equity Series, a
proportionate share of all directors' fees paid to the unaffiliated directors of
the Fund:

International Equity Series 0.75%
Global Bond Series 0.75%
Emerging Markets Series 1.25%

Delaware International has elected voluntarily to waive its management
fee and to reimburse the International Equity, Global Bond and Emerging Markets
Series to the extent necessary to maintain a limit on

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<PAGE> 11

the total operating expenses of each of these Series for a limited period.
Delaware International also serves as Sub-Adviser to Strategic Income Series.
See Management of the Fund.

Lynch & Mayer, Inc. ("Lynch & Mayer") serves as Sub-Adviser to
Convertible Securities Series. Vantage Global Advisors, Inc. ("Vantage") serves
as Sub-Adviser to Quantum Series. See Management of the Fund.

INVESTMENT OBJECTIVES AND POLICIES

Each of the Fund's 15 Series has a different investment objective and
seeks to achieve its objective by pursuing different investment strategies. See
Cover Page of this Prospectus and Investment Objectives and Policies.

OPEN-END INVESTMENT COMPANY

The Fund, which was organized as a Maryland corporation in 1987, is an
open-end registered management investment company. With the exception of Global
Bond and Emerging Markets Series, each Series operates as a diversified fund as
defined by the Investment Company Act of 1940 (the "1940 Act"). Global Bond and
Emerging Markets Series operate as nondiversified funds as defined by the 1940
Act.

PURCHASE AND REDEMPTION

Shares of the Series are sold only to separate accounts of life insurance
companies. Purchases and redemptions are made at the net asset value calculated
after receipt of the purchase or redemption order. None of the Series nor
Delaware Distributors, L.P. (the "Distributor"), assesses a charge for purchases
or redemptions.

See Purchase and Redemption.

SPECIAL CONSIDERATIONS AND RISK FACTORS

Prospective investors should consider a number of factors depending upon
the Series in which they propose to invest:

1. The International Equity and Emerging Markets Series invest
primarily in securities issued by non-United States companies. The Global Bond
Series will invest at least 65% of its assets in fixed-income securities of
issuers organized or having a majority of their assets in or deriving a majority
of their operating income in at least three different countries, one of which
may be the United States. Each of the other 12 Series may also invest a portion
of their assets in securities of such issuers and companies. Investing in
securities of non-United States companies which are generally denominated in
foreign currencies, and utilization of forward foreign currency exchange
contracts in connection with transactions in such securities involve certain
considerations comprising both risk and opportunity not typically associated
with investing in the securities of United States companies and issuers. See
Foreign Currency Transactions under International Equity Series and Foreign
Securities and Foreign Currency Transactions and Special Risk Considerations
under Other Considerations.

2. Each Series has the right to engage in certain options transactions
for hedging purposes to counterbalance portfolio volatility. The Series do not
engage in such activities for speculative purposes, but there are certain risks
associated with the use of options which a prospective investor should consider.
See Options under Other Considerations.

3. The International Equity, Value, Trend, Global Bond, Strategic
Income, Devon, Emerging Markets, Convertible Securities and Quantum Series also
may engage in certain hedging transactions involving

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<PAGE> 12

futures contracts and options on such contracts, and in connection with such
activities will maintain certain collateral in special accounts established with
futures commission merchants. While the Series do not engage in such
transactions for speculative purposes, there are risks which result from the use
of these instruments which an investor should consider. The Fund is not
registered as a commodity pool operator nor is Delaware International, Delaware
Management or the Sub-Advisers registered as a commodities trading adviser in
reliance upon various exemptive rules. See Futures Contracts and Options on
Futures Contracts and Risk Factors under International Equity Series and Futures
Contracts and Options on Futures Contracts under Other Considerations.

4. The assets of Delchester, Strategic Income and Convertible Securities
Series may be invested primarily in high-yield securities (junk bonds) and
greater risks may be involved in an investment in these Series than in an
investment in a mutual fund comprised primarily of investment grade bonds. See
Risk Factors under Delchester Series.

5. The Global Bond Series may invest in interest rate swaps for hedging
purposes which could subject the Series to increased risks. See Interest Rate
Swaps under Global Bond Series - Investment Strategy and Special Risk
Considerations under Other Considerations.

6. While Global Bond and Emerging Markets Series intend to seek to
qualify as "diversified" investment companies under provisions of Subchapter M
of the Internal Revenue Code, as amended (the "Code"), the Series will not be
diversified under the 1940 Act. Thus, while at least 50% of a Series' total
assets will be represented by cash, cash items, and other securities limited in
respect of any one issuer to an amount not greater than 5% of the Series' total
assets, it will not satisfy the 1940 Act requirement in this respect, which
applies that test to 75% of the Series' assets. A nondiversified portfolio is
believed to be subject to greater risk because adverse effects on the
portfolio's security holdings may affect a larger portion of the overall assets.

7. The International Equity, Global Bond and Strategic Income Series may
invest in issuers located or operating in markets of emerging countries, and the
Emerging Markets Series will invest primarily in such issuers. The securities
markets in these countries may be subject to a greater degree of economic,
political or social instability than is the case in the United States, Western
Europe and other developed markets. See Special Risk Considerations under Other
Considerations.

8. The Convertible Securities Series may invest in Rule 144A securities,
as well as enhanced convertible securities. Investing in such securities could
have the effect of increasing the level of the Series' illiquidity to the extent
that the trading market for such securities may be thin at any given time. See
Private Placements and Enhanced Convertible Securities under Convertible
Securities Series.

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<PAGE> 13

FINANCIAL HIGHLIGHTS

The following financial highlights are derived from the financial statements of
Delaware Group Premium Fund, Inc. and have been audited by Ernst & Young LLP,
independent auditors. The data should be read in conjunction with the financial
statements, related notes, and the report of Ernst & Young LLP covering such
financial information and highlights, all of which are incorporated by reference
into Part B. Further information about each Series' performance is contained in
the Fund's Annual Report to shareholders. A copy of the Fund's Annual Report
(including the report of Ernst & Young LLP) may be obtained from the Fund upon
request at no charge. No shares of Strategic Income, Devon, Emerging Markets,
Convertible Securities or Quantum Series were sold to investors prior to the
date of this Prospectus; consequently, no financial highlights are presented for
these Series.

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<PAGE> 14

<TABLE>
<CAPTION>
DECATUR TOTAL RETURN SERIES
---------------------------------------------------------------------
YEAR ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $00.0000 $11.4800 $12.5100 $11.2200 $10.7500 $9.2400

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................................... 0.0000 0.4155 0.4121 0.4341 0.4155 0.4502
Net Gains (Losses) on Securities
(both realized and unrealized)................. 0.0000 3.5745 (0.4221) 1.2659 0.5045 1.5498
-------- -------- -------- -------- -------- --------
Total From Investment Operations..................... 0.0000 3.9900 (0.0100) 1.7000 0.9200 2.0000
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends (from net investment income)................... (0.0000) (0.4300) (0.4200) (0.4100) (0.4500) (0.4900)
Distributions (from capital gains)....................... (0.0000) (0.2100) (0.6000) none none none
Returns of Capital....................................... none none none none none none
-------- -------- -------- -------- -------- --------
Total Distributions.................................. (0.0000) (0.6400) (1.0200) (0.4100) (0.4500) (0.4900)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period........................... $00.0000 $14.8300 $11.4800 $12.5100 $11.2200 $10.7500
======== ======== ======== ======== ======== ========
TOTAL RETURN(2).......................................... 0.00% 36.12% (0.20%) 15.45%(3) 8.82%(3) 22.32%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................ $000,000 $109,003 $72,725 $65,519 $38,278 $38,840
Ratio of Expenses to Average Net Assets.................. 0.00% 0.69% 0.71% 0.75% 0.79% 0.85%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation.......................... 0.00% 0.69% 0.71% 0.76% 0.81% 0.85%
Ratio of Net Investment Income to Average Net Assets 0.00% 3.24% 3.63% 3.95% 3.86% 4.46%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation.......................... 0.00% 3.24% 3.63% 3.94% 3.84% 4.46%
Portfolio Turnover Rate.................................. 000% 85% 91% 67% 72% 79%
Average Commission Rate Paid............................. $0.0000 N/A N/A N/A N/A N/A

DECATUR TOTAL RETURN SERIES
----------------------------------
YEAR ENDED
7/28/88(1)
THROUGH
12/31/90 12/31/89 12/31/88
<S> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $11.4000 $10.1600 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................................... 0.4489 0.2813 0.0934
Net Gains (Losses) on Securities
(both realized and unrealized)................. (1.9189) 1.0337 0.0666
-------- -------- --------
Total From Investment Operations..................... (1.4700) 1.3150 0.1600
-------- -------- --------
LESS DISTRIBUTIONS
Dividends (from net investment income)................... (0.5600) (0.0750) none
Distributions (from capital gains)....................... (0.1300) none none
Returns of Capital....................................... none none none
-------- -------- --------
Total Distributions.................................. (0.6900) (0.0750) none
-------- -------- --------
Net Asset Value, End of Period........................... $ 9.2400 $11.4000 $10.1600
======== ======== ========
TOTAL RETURN(2).......................................... (13.31%) 13.04% 3.77%

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................ $29,598 $12,959 $1,873
Ratio of Expenses to Average Net Assets.................. 0.96% 1.31% 2.00%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation.......................... 0.96% 1.31% 2.00%
Ratio of Net Investment Income to Average Net Assets 5.80% 5.06% 6.40%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation.......................... 5.80% 5.06% 6.40%
Portfolio Turnover Rate.................................. 34% 26% ---
Average Commission Rate Paid............................. N/A N/A N/A
</TABLE>

- --------------
(1) Date of initial public offering; ratios and total return have been
annualized.

(2) Total return does not reflect expenses that apply to the Separate
Accounts or to the related insurance policies and inclusion of these
charges would reduce total return figures for all periods shown.

(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

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<PAGE> 15
<TABLE>
<CAPTION>
DELCHESTER SERIES
--------------------------------------------------------------------
YEAR ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $0.0000 $8.5400 $9.7700 $9.2900 $9.1300 $7.4800

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................................ 0.0000 0.8715 0.9621 0.9758 1.0224 1.0316
Net Gains (Losses) on Securities
(both realized and unrealized)............. (0.0000) 0.4000 (1.2300) 0.4800 0.1600 1.6500
------- ------- ------- ------- ------- -------
Total From Investment Operations................. 0.0000 1.2715 (0.2679) 1.4558 1.1824 2.6816
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net investment income)............... (0.0000) (0.8715) (0.9621) (0.9758) (1.0224) (1.0316)
Distributions (from capital gains)................... none none none none none none
Returns of Capital................................... none none none none none none
------- ------- ------- ------- ------- -------
Total Distributions.............................. (0.0000) (0.8715) (0.9621) (0.9758) (1.0224) (1.0316)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period....................... $0.0000 $8.9400 $8.5400 $9.7700 $9.2900 $9.1300
======= ======= ======= ======= ======= =======
TOTAL RETURN(2)...................................... 0.00% 15.50% (2.87%) 16.36%(3) 13.44%(3) 37.53%(3)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)............ $00,000 $56,605 $43,686 $34,915 $11,311 $5,918
Ratio of Expenses to Average Net Assets.............. 0.00% 0.69% 0.72% 0.80% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation...................... 0.00% 0.69% 0.72% 0.82% 0.94% 1.06%
Ratio of Net Investment Income to Average Net Assets. 0.00% 9.87% 10.56% 10.05% 10.93% 12.05%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation...................... 0.00% 9.87% 10.56% 10.03% 10.79% 11.80%
Portfolio Turnover Rate.............................. 000% 74% 47% 43% 73% 70%
Average Commission Rate Paid......................... N/A N/A N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
DELCHESTER SERIES
----------------------------------
YEAR ENDED
7/28/88(1)
THROUGH
12/31/90 12/31/89 12/31/88
<S> <C> <C> <C>
Net Asset Value, Beginning of Period................. $9.2000 $9.8600 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................................ 1.1135 1.0846 0.4754
Net Gains (Losses) on Securities
(both realized and unrealized)............. (1.7200) (0.6350) (0.1400)
------- ------- -------
Total From Investment Operations................. (0.6065) 0.4496 0.3354
------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net investment income)............... (1.1135) (1.0846) (0.4754)
Distributions (from capital gains)................... none (0.0250) none
Returns of Capital................................... none none none
------- ------- -------
Total Distributions.............................. (1.1135) (1.1096) (0.4754)
------- ------- -------
Net Asset Value, End of Period....................... $7.4800 $9.2000 $9.8600
======= ======= =======
TOTAL RETURN(2)...................................... (7.13%)(3) 4.62%(3) 8.15%(3)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)............ $5,092 $4,427 $2,425
Ratio of Expenses to Average Net Assets.............. 0.80% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation...................... 1.17% 1.50% 1.21%
Ratio of Net Investment Income to Average Net Assets. 13.30% 11.21% 11.00%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation...................... 12.93% 10.50% 10.58%
Portfolio Turnover Rate.............................. 115% 19% 31%
Average Commission Rate Paid......................... N/A N/A N/A
</TABLE>

- -----------
(1) Date of initial public offering; ratios and total return have been
annualized.
(2) Total return does not reflect expenses that apply to the Separate
Accounts or to the related insurance policies and inclusion of these
charges would reduce total return figures for all periods shown.
(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

-10-
<PAGE> 16
<TABLE>
<CAPTION>
CAPITAL RESERVES SERIES
--------------------------------------------------------------
YEAR ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $0.0000 $9.3000 $10.2600 $10.2000 $10.2300

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................................... 0.0000 0.6431 0.6355 0.6357 0.6474
Net Gains (Losses) on Securities
(both realized and unrealized)................. (0.0000) 0.6300 (0.9050) 0.1450 0.0600
------- ------- ------- -------- --------
Total From Investment Operations..................... (0.0000) 1.2731 (0.2695) 0.7807 0.7074
------- ------- ------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income)................... (0.0000) (0.6431) (0.6355) (0.6357) (0.6474)
Distributions (from capital gains)....................... none none (0.0550) (0.0850) (0.0900)
Returns of Capital....................................... none none none none none
------- ------- ------- -------- --------
Total Distributions.................................. (0.0000) (0.6431) (0.6905) (0.7207) (0.7374)
------- ------- ------- -------- --------

Net Asset Value, End of Period........................... $0.0000 $9.9300 $9.3000 $10.2600 $10.2000
======= ======= ======= ======== ========

TOTAL RETURN(2).......................................... (0.00%) 14.08% (2.68%) 7.85%(3) 7.20%(3)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................ $00.000 $27,935 $25,975 $ 24,173 $ 9,790
Ratio of Expenses to Average Net Assets.................. 0.00% 0.71% 0.74% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation.......................... 0.00% 0.71% 0.74% 0.85% 0.98%
Ratio of Net Investment Income to Average Net Assets 0.00% 6.64% 6.57% 6.20% 6.39%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation.......................... 0.00% 6.64% 6.57% 6.15% 6.21%
Portfolio Turnover Rate.................................. 000% 145% 219% 198% 241%
Average Commission Rate Paid............................. N/A N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
CAPITAL RESERVES SERIES
----------------------------------------------------------
YEAR ENDED
7/28/88(1)
THROUGH
12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $10.0400 $9.9800 $9.9700 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................................... 0.6687 0.7325 0.8402 0.3293
Net Gains (Losses) on Securities
(both realized and unrealized)................. 0.1900 0.0600 0.0100 (0.0300)
-------- ------- ------- --------
Total From Investment Operations..................... 0.8587 0.7925 0.8502 0.2993
-------- ------- ------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income)................... (0.6687) (0.7325) (0.8402) (0.3293)
Distributions (from capital gains)....................... none none none none
Returns of Capital....................................... none none none none
-------- ------- ------- --------
Total Distributions.................................. (0.6687) (0.7325) (0.8402) (0.3293)
-------- ------- ------- --------

Net Asset Value, End of Period........................... $10.2300 $10.0400 $9.9800 $9.9700
======== ======== ======= ========

TOTAL RETURN(2).......................................... 8.85%(3) 8.23%(3) 8.86%(3) 7.20%(3)

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................ $4,392 $ 4,093 $ 2,575 $ 1,784
Ratio of Expenses to Average Net Assets.................. 0.80% 0.80% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation.......................... 1.15% 1.49% 1.80% 1.26%
Ratio of Net Investment Income to Average Net Assets 6.62% 7.32% 8.41% 7.63%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation.......................... 6.27% 6.62% 7.41% 7.16%
Portfolio Turnover Rate.................................. 95% 38% --- ---
Average Commission Rate Paid............................. N/A N/A N/A N/A
</TABLE>

- ----------
(1) Date of initial public offering; ratios and total return have been
annualized.

(2) Total return does not reflect expenses that apply to the Separate Accounts
or to the related insurance policies and inclusion of these charges would
reduce total return figures for all periods shown.

(3) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.

-11-
<PAGE> 17

<TABLE>
<CAPTION>
CASH RESERVE SERIES
------------------------------------------

YEAR ENDED
12/31/96 12/31/95 12/31/94 12/31/93

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .............................. $10.0000 $10.0000 $10.0000 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ............................................. 0.0000 0.5349 0.3614 0.2451
Net Gains (Losses) on Securities
(both realized and unrealized) .......................... none none none none
-------- -------- -------- --------
Total From Investment Operations .............................. 0.0000 0.5349 0.3614 0.2451
-------- -------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............................ (0.0000) (0.5349) (0.3614) (0.2451)
Distributions (from capital gains) ................................ none none none none
Returns of Capital ................................................ none none none none
-------- -------- -------- --------
Total Distributions ........................................... (0.0000) (0.5349) (0.3614) (0.2451)
-------- -------- -------- --------

Net Asset Value, End of Period .................................... $10.0000 $10.0000 $10.0000 $10.0000
======== ======== ======== ========

TOTAL RETURN(2) ................................................... 0.00% 5.48% 3.68% 2.48%(3)

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) ......................... $ 00,000 $ 16,338 $ 20,125 $ 10,245
Ratio of Expenses to Average Net Assets ........................... 0.00% 0.62% 0.66% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation ................................... 0.00% 0.62% 0.66% 0.86%
Ratio of Net Investment Income to Average Net Assets .............. 0.00% 5.35% 3.79% 2.44%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation ................................... 0.00% 5.35% 3.79% 2.38%
Portfolio Turnover Rate ........................................... -- -- -- --
Average Commission Rate Paid ...................................... N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
CASH RESERVE SERIES
------------------------------------------------------------------------
7/28/88(1)
YEAR ENDED THROUGH
12/31/92 12/31/91 12/31/90 12/31/89 12/31/88

<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 ................................... 0.3202 0.5443 0.7306 0.8288 0.3195
Net Gains (Losses) on Securities
(both realized and unrealized) ................ none none none none none
--------- --------- --------- --------- ---------
Total From Investment Operations .................... 0.3202 0.5443 0.7306 0.8288 0.3195
--------- --------- --------- --------- ---------

LESS DISTRIBUTIONS
Dividends (from net investment income) .................. (0.3202) (0.5443) (0.7306) (0.8288) (0.3195)
Distributions (from capital gains) ...................... none none none none none
Returns of Capital ...................................... none none none none none
--------- --------- --------- --------- ---------
Total Distributions ................................. (0.3202) (0.5443) (0.7306) (0.8288) (0.3195)
--------- --------- --------- --------- ---------

Net Asset Value, End of Period .......................... $ 10.0000 $ 10.0000 $ 10.0000 $ 10.0000 $ 10.0000
========= ========= ========= ========= =========

TOTAL RETURN(2) ......................................... 3.25%(3) 5.58%(3) 7.56%(3) 8.61%(3) 7.70%(3)

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) ............... $ 7,774 $ 7,768 $ 8,174 $ 2,109 $ 932
Ratio of Expenses to Average Net Assets ................. 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation ......................... 0.85% 0.99% 0.99% 2.01% 2.11%
Ratio of Net Investment Income to Average Net Assets .... 3.21% 5.45% 7.25% 8.26% 7.50%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation ......................... 3.16% 5.26% 7.05% 7.05% 6.19%
Portfolio Turnover Rate ................................. -- -- -- -- --
Average Commission Rate Paid ............................ N/A N/A N/A N/A N/A
</TABLE>

- ----------
(1) Date of initial public offering; ratios and total return have been
annualized.

(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

-12-

<PAGE> 18

<TABLE>
<CAPTION>
GROWTH SERIES
--------------------------------------------------
YEAR ENDED
12/31/96 12/31/95 12/31/94 12/31/93

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................... $00.0000 $11.7500 $12.2400 $11.1200

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ................................... (0.0000) 0.0720 0.0694 0.0558
Net Gains (Losses) on Securities
(both realized and unrealized) ................ 0.0000 3.3780 (0.4994) 1.2142
-------- -------- -------- --------
Total From Investment Operations .................... 0.0000 3.4500 (0.4300) 1.2700
-------- -------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income) .................. (0.0000) (0.0700) (0.0600) (0.0200)
Distributions (from capital gains) ...................... (0.0000) none none (0.1300)
Returns of Capital ...................................... none none none none
-------- -------- -------- --------
Total Distributions ................................. (0.0000) (0.0700) (0.0600) (0.1500)
-------- -------- -------- --------

Net Asset Value, End of Period .......................... $00.0000 $15.1300 $11.7500 $12.2400
======== ======== ======== ========

TOTAL RETURN(2) ......................................... 00.00% 29.53%(3) (3.54%)(3) 11.56%(3)

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) ............... $ 00,000 $ 58,123 $ 39,344 $ 33,180
Ratio of Expenses to Average Net Assets ................. 0.00% 0.80% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation ......................... 0.00% 0.85% 0.88% 1.00%
Ratio of Net Investment Income to Average Net Assets .... (0.00%) 0.61% 0.64% 0.67%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation ......................... (0.00%) 0.56% 0.56% 0.47%
Portfolio Turnover Rate ................................. 00% 73% 43% 57%
Average Commission Rate Paid ............................ $ 0.0000 N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
DELCAP SERIES
-------------------------
7/12/91(1)
YEAR ENDED THROUGH
12/31/92 12/31/91

<S> <C> <C>
Net Asset Value, Beginning of Period .................... $11.0300 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ................................... 0.0225 0.0098
Net Gains (Losses) on Securities
(both realized and unrealized) ................ 0.1975 1.0202
-------- --------
Total From Investment Operations .................... 0.2200 1.0300
-------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income) .................. (0.0100) none
Distributions (from capital gains) ...................... (0.1200) none
Returns of Capital ...................................... none none
-------- --------
Total Distributions ................................. (0.1300) none
-------- --------

Net Asset Value, End of Period .......................... $11.1200 $11.0300
======== ========

TOTAL RETURN(2) ......................................... 1.99%(3) 21.60%

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) ............... $ 14,251 $ 6,950
Ratio of Expenses to Average Net Assets ................. 0.98% 1.94%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation ......................... 1.25% 1.94%
Ratio of Net Investment Income to Average Net Assets .... 0.28% 0.33%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation ......................... 0.01% 0.33%
Portfolio Turnover Rate ................................. 52% 40%
Average Commission Rate Paid ............................ N/A N/A
</TABLE>

- ------------
(1) Date of initial public offering; ratios and total return have been
annualized.

(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

-13-

<PAGE> 19
<TABLE>
<CAPTION>
DELAWARE SERIES
-----------------------------------------------------------------------
YEAR ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91

<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $00.0000 $12.6800 $13.3300 $13.5500 $12.9800 $10.8400

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.0000 0.5088 0.4373 0.3280 0.4572 1.0824
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 0.0000 2.7612 (0.4473) 0.6920 1.2328 1.6676
-------- -------- -------- -------- -------- --------
Total From Investment Operations ............... 0.0000 3.2700 (0.0100) 1.0200 1.6900 2.7500
-------- -------- -------- -------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.0000) (0.4500) (0.3400) (0.4600) (1.0600) (0.3500)
Distributions (from capital gains) ................. (0.0000) none (0.3000) (0.7800) (0.0600) (0.2600)
Returns of Capital ................................. none none none none none none
-------- -------- -------- -------- -------- --------
Total Distributions ............................ (0.0000) (0.4500) (0.6400) (1.2400) (1.1200) (0.6100)
-------- -------- -------- -------- -------- --------

Net Asset Value, End of Period ..................... $00.0000 $15.5000 $12.6800 $13.3300 $13.5500 $12.9800
======== ======== ======== ======== ======== ========

TOTAL RETURN(2) .................................... 0.00% 26.58% (0.15%) 8.18%(3) 13.85%(3) 26.58%

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) .......... $ 00,000 $ 63,215 $ 47,731 $ 37,235 $ 15,150 $ 12,138
Ratio of Expenses to Average Net Assets ............ 0.00% 0.69% 0.70% 0.80% 0.86% 1.03%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.00% 0.69% 0.70% 0.89% 0.94% 1.03%

Ratio of Net Investment Income to Average Net Assets 0.00% 3.75% 3.71% 3.33% 3.60% 11.35%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 0.00% 3.75% 3.71% 3.24% 3.52% 11.35%
Portfolio Turnover Rate ............................ 000% 106% 140% 162% 202% 1,010%
Average Commission Rate Paid ....................... $ 0.0000 N/A N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
DELAWARE SERIES
---------------------------------------
7/28/88(1)
YEAR ENDED THROUGH
12/31/90 12/31/89 12/31/88

<S> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $11.8000 $10.1600 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.3411 0.1302 0.0638
Net Gains (Losses) on Securities
(both realized and unrealized) ........... (0.3911) 1.5498 0.0962
-------- -------- --------
Total From Investment Operations ............... (0.0500) 1.6800 0.1600
-------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.2700) (0.0400) none
Distributions (from capital gains) ................. (0.6400) none none
Returns of Capital ................................. none none none
-------- -------- --------
Total Distributions ............................ (0.9100) (0.0400) none
-------- -------- --------

Net Asset Value, End of Period ..................... $10.8400 $11.8000 $10.1600
======== ======== ========

TOTAL RETURN(2) .................................... (0.18%) 16.60% 3.77%

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) .......... $ 6,137 $ 3,182 $ 151
Ratio of Expenses to Average Net Assets ............ 1.35% 1.99% (4)
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 1.35% 1.99% (4)

Ratio of Net Investment Income to Average Net Assets 3.84% 2.22% (4)
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 3.84% 2.22% (4)
Portfolio Turnover Rate ............................ 210% 132% (4)
Average Commission Rate Paid ....................... N/A N/A N/A
</TABLE>

- ------------
(1) Date of initial public offering; ratios and total return have been
annualized.

(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

(4) 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 this
Series.

-14-

<PAGE> 20
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY SERIES
--------------------------------------------------------------
10/29/92(1)
YEAR ENDED THROUGH
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92

<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $00.0000 $11.8400 $11.6200 $10.0300 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.0000 0.4194 0.2198 0.0523 0.0153
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 0.0000 1.1906 0.0802 1.5477 0.0147
-------- -------- -------- -------- --------
Total From Investment Operations ............... 0.0000 1.6100 0.3000 1.6000 0.0300
-------- -------- -------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.0000) (0.2400) (0.0700) (0.0100) none
Distributions (from capital gains) ................. (0.0000) (0.0900) (0.0100) none none
Returns of Capital ................................. none none none none none
-------- -------- -------- -------- --------
Total Distributions ............................ (0.0000) (0.3300) (0.0800) (0.0100) none
-------- -------- -------- -------- --------

Net Asset Value, End of Period ..................... $00.0000 $13.1200 $11.8400 $11.6200 $10.0300
======== ======== ======== ======== ========

TOTAL RETURN(2) .................................... 0.00% 13.98%(3) 2.57%(3) 15.97%(3) 1.73%(3)

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) .......... $000,000 $ 81,548 $ 57,649 $ 16,664 $ 177
Ratio of Expenses to Average Net Assets ............ 0.00% 0.80% 0.80% 0.80% (4)
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.00% 0.89% 1.01% 1.85% (4)
Ratio of Net Investment Income to Average Net Assets 0.00% 3.69% 2.63% 1.85% (4)
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 0.00% 3.60% 2.42% 0.80% (4)
Portfolio Turnover Rate ............................ 0% 19% 13% 9% (4)
Average Commission Rate Paid ....................... $ 0.0000 N/A N/A N/A N/A
</TABLE>

- -------------
(1) Date of initial public offering; total return has been annualized.

(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

-15-

<PAGE> 21
<TABLE>
<CAPTION>
TREND SERIES
------------------------------------------------------
12/27/93(1)
YEAR ENDED THROUGH
12/31/96 12/31/95 12/31/94 12/31/93

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $00.0000 $10.1600 $10.2000 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.0000 0.0976 0.0791 none
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 0.0000 3.8524 (0.1191) 0.2000
-------- -------- -------- --------
Total From Investment Operations ............... 0.0000 3.9500 (0.0400) 0.2000
-------- -------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.0000) (0.0900) none none
Distributions (from capital gains) ................. (0.0000) none none none
Returns of Capital ................................. none none none none
-------- -------- -------- --------
Total Distributions ............................ (0.0000) (0.0900) none none
-------- -------- -------- --------

Net Asset Value, End of Period ..................... $00.0000 $14.0200 $10.1600 $10.2000
======== ======== ======== ========

TOTAL RETURN(2) .................................... 00.00% 39.21%(3) (0.39%)(3) 2.00%(3)

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) .......... $ 00,000 $ 20,510 $ 7,087 $ 204
Ratio of Expenses to Average Net Assets ............ 0.00% 0.80% 0.80% (4)
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.00% 0.96% 1.47% (4)
Ratio of Net Investment Income to Average Net Assets 0.00% 1.03% 1.63% (4)
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 0.00% 0.87% 0.96% (4)
Portfolio Turnover Rate ............................ 000% 76% 59% (4)
Average Commission Rate Paid ....................... $ 0.0000 N/A N/A N/A
</TABLE>

- -------------
(1) Date of initial public offering; total return has been annualized.

(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

-16-

<PAGE> 22
<TABLE>
<CAPTION>
VALUE SERIES
------------------------------------------------------
12/27/93(1)
YEAR ENDED THROUGH
12/31/96 12/31/95 12/31/94 12/31/93

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $00.0000 $10.2900 $10.2100 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.0000 0.1918 0.1481 none
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 0.0000 2.2082 (0.0681) 0.2100
-------- -------- -------- --------
Total From Investment Operations ............... 0.0000 2.4000 0.0800 0.2100
-------- -------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.0000) (0.1500) none none
Distributions (from capital gains) ................. (0.0000) (0.0700) none none
Returns of Capital ................................. none none none none
-------- -------- -------- --------
Total Distributions ............................ (0.0000) (0.2200) none none
-------- -------- -------- --------

Net Asset Value, End of Period ..................... $00.0000 $12.4700 $10.2900 $10.2100
======== ======== ======== ========

TOTAL RETURN(2) .................................... 0.00% 23.85%(3) 0.78%(3) 2.10%(3)

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) .......... $ 00,000 $ 11,929 $ 6,291 $ 210
Ratio of Expenses to Average Net Assets ............ 0.00% 0.80% 0.80% (4)
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.00% 0.96% 1.41% (4)
Ratio of Net Investment Income to Average Net Assets 0.00% 2.13% 2.62% (4)
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 0.00% 1.97% 2.01% (4)
Portfolio Turnover Rate ............................ 000% 71% 26% (4)
Average Commission Rate Paid ....................... $ 0.0000 N/A N/A N/A
</TABLE>

- -------------
(1) Date of initial public offering; total return has been annualized.

(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

-17-

<PAGE> 23

<TABLE>
<CAPTION>
GLOBAL BOND SERIES
------------------
5/2/96(1)
THROUGH
12/31/96

<S> <C>
Net Asset Value, Beginning of Period ............... $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.0000
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 0.0000
--------
Total From Investment Operations ............... 0.0000
--------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.0000)
Distributions (from capital gains) ................. none
Returns of Capital ................................. none
Total Distributions ............................ (0.0000)
--------

Net Asset Value, End of Period ..................... $00.0000
========

TOTAL RETURN(2) .................................... 0.00%

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) .......... $ 0,000
Ratio of Expenses to Average Net Assets ............ 0.00%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.00%
Ratio of Net Investment Income to Average Net Assets 0.00%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 0.00%
Portfolio Turnover Rate ............................ 00%
Average Commission Rate Paid ....................... N/A
</TABLE>

- -----------
(1) Date of initial public offering; ratios have been annualized but total
return has been annualized. Total return for this short of a time
period may not be representative of longer term results.

(3) Total return reflects the expense limitation referenced in Expenses
under Management of the Fund.

-18-
<PAGE> 24
INVESTMENT OBJECTIVES AND POLICIES

INTRODUCTION

The Fund, a corporation organized in Maryland on February 19, 1987, is an
open-end management investment company offering 15 Series of shares. The initial
public offering of the Growth Series was July 2, 1991 and the International
Equity Series commenced operations on October 29, 1992. The Value Series and the
Trend Series commenced operations on December 27, 1993. The Global Bond Series
was first publicly offered on May 1, 1996. The Strategic Income Series, Devon
Series, Emerging Markets Series, Convertible Securities Series and Quantum
Series commenced operations on May 1, 1997.

Each Series' investment objective is a fundamental policy and cannot be
changed without approval by the holders of a "majority" of that Series'
outstanding shares, as defined in the 1940 Act. Although each Series will
constantly strive to attain its objective, there can be no assurance that it
will be attained. In addition to the objective and investment techniques
described below for each Series, see Other Considerations for investment
techniques available to various Series of the Fund. Part B provides more
information on the Series' investment policies and restrictions.

DECATUR TOTAL RETURN SERIES
The objective of Decatur Total Return Series is to seek to achieve
long-term growth by investing primarily in securities that provide the potential
for income and capital appreciation without undue risk to principal. The Series
seeks to provide shareholders with a current return while allowing them to
participate in the capital gains potential associated with equity investments.

INVESTMENT STRATEGY
The Series generally invests in common stocks and income-producing
securities that are convertible into common stocks. The portfolio manager looks
for securities having a better dividend yield than the average of the Standard &
Poor's ("S&P") 500 Stock Index, as well as capital gains potential.

All available types of appropriate securities are under continuous study.
The Series may invest in all classes of securities, bonds and preferred and
common stocks in any proportion deemed prudent under existing market and
economic conditions. In seeking to obtain its objective, the Series may hold
securities for any period of time. For temporary, defensive purposes, the Series
may hold a substantial portion of its assets in cash or short-term obligations.

Income-producing convertible securities include preferred stock and
debentures that pay a stated or variable interest rate or dividend and are
convertible into common stock at an established ratio. These securities, which
are usually priced at a premium to their conversion value, may allow the Series
to receive current income while participating to some extent in any appreciation
in the underlying common stock. The value of a convertible security tends to be
affected by changes in interest rates, as well as factors affecting the market
value of the underlying common stock.

The Series may be suitable for the patient investor interested in
long-term growth. The investor should be willing to accept the risks associated
with investments in common stocks and income-producing securities, including
those that are convertible into common stocks. The Series is suitable for
investors who want a current return with the possibility of capital
appreciation. Naturally, the Series cannot assure a specific rate of return or
that principal will be protected. The value of the Series' shares can be
expected to fluctuate depending upon market conditions. However, through the
cautious selection and supervision of its portfolio, the Series will

-19-
<PAGE> 25
strive to achieve its objective of long-term growth through both income and
capital appreciation without undue risk to principal.

DELCHESTER SERIES
The objective of the Delchester Series is to seek the highest current
income which Delaware Management believes is consistent with prudent investment
management. The strategy is to invest primarily in those securities having a
liberal and consistent yield and those tending to reduce the risk of market
fluctuations. The Series will invest at least 80% of its assets at the time of
purchase in:

(1) Corporate Bonds. The Series will invest in both rated and unrated
bonds. See Appendix A to this Prospectus for information concerning ratings.
Unrated bonds may be more speculative in nature than rated bonds;

(2) Securities issued or guaranteed by the U.S. government, its agencies
or instrumentalities; and

(3) Commercial paper of companies rated A-1 or A-2 by S&P or rated P-1 or
P-2 by Moody's Investors Service, Inc. ("Moody's").

INVESTMENT STRATEGY
The Series expects to invest at least 80% of its assets in securities of
the types described above. The Series must invest the remaining assets, if any,
in income-producing securities, including common stocks and preferred stocks,
some of which may have convertible features or attached warrants. For temporary
defensive purposes, the Series may hold a substantial portion of its assets in
cash or short-term obligations. In the long run, the Series' assets are expected
to be invested primarily in unrated corporate bonds and bonds rated BBB or lower
by S&P.

RISK FACTORS

The assets of Delchester Series may be invested primarily in bonds rated
BBB or lower by S&P or Baa or lower by Moody's and in unrated corporate bonds.
See Appendix A to this Prospectus for more rating information. Investing in
these so-called "junk" or "high-yield" bonds entails certain risks, including
the risk of loss of principal, which may be greater than the risks involved in
investment grade bonds, and which should be considered by investors
contemplating an investment in the Series. Such bonds are sometimes issued by
companies whose earnings at the time of issuance are less than the projected
debt service on the junk bonds. In addition to the considerations discussed
elsewhere in this Prospectus, those risks include the following:

Youth and Volatility of the High-Yield Market. Although the market for
high-yield bonds has been in existence for many years, including periods of
economic downturns, the high-yield market grew rapidly during the long economic
expansion which took place in the United States during the 1980s. During that
economic expansion, the use of high-yield debt securities to fund highly
leveraged corporate acquisitions and restructurings increased dramatically. As a
result, the high-yield market grew substantially during that economic expansion.
Although experts disagree on the impact recessionary periods have had and will
have on the high-yield market, some analysts believe a protracted economic
downturn would severely disrupt the market for high-yield bonds, would adversely
affect the value of outstanding bonds and would adversely affect the ability of
high-yield issuers to repay principal and interest. Those analysts cite
volatility experienced in the high-yield market in the past as evidence for
their position. It is likely that protracted periods of economic uncertainty
would result in increased volatility in the market prices of high-yield bonds,
an increase in the

-20-
<PAGE> 26
number of high-yield bond defaults and corresponding volatility in the Series'
net asset value. At times in the past, uncertainty and volatility in the
high-yield market resulted in volatility in the Series' net asset value.

Redemptions. If, as a result of volatility in the high-yield market or
other factors, the Series experiences substantial net redemptions of the Series'
shares for a sustained period of time (i.e., more shares of the Series are
redeemed than are purchased), the Series may be required to sell securities
without regard to the investment merits of the securities to be sold. If the
Series sells a substantial number of securities to generate proceeds for
redemptions, the asset base of the Series will decrease and the Series' expense
ratio may increase.

Liquidity and Valuation. The secondary market for high-yield securities is
currently dominated by institutional investors, including mutual funds and
certain financial institutions. There is generally no established retail
secondary market for high-yield securities. As a result, the secondary market
for high-yield securities is more limited and less liquid than other secondary
securities markets. The high-yield secondary market is particularly susceptible
to liquidity problems when the institutions which dominate it temporarily cease
buying bonds for regulatory, financial or other reasons, such as the savings and
loan crisis. A less liquid secondary market may have an adverse affect on the
Series' ability to dispose of particular issues, when necessary, to meet the
Series' liquidity needs or in response to a specific economic event, such as the
deterioration in the creditworthiness of the issuer. In addition, a less liquid
secondary market makes it more difficult for the Series to obtain precise
valuations of the high-yield securities in its portfolio. During periods
involving such liquidity problems, judgment plays a greater role in valuing
high-yield securities than is normally the case. The secondary market for
high-yield securities is also generally considered to be more likely to be
disrupted by adverse publicity and investor perceptions than the more
established secondary securities markets. The Series' privately placed
high-yield securities are particularly susceptible to the liquidity and
valuation risks outlined above.

Legislative and Regulatory Action and Proposals. There are a variety of
legislative actions which have been taken or which are considered from time to
time by the United States Congress which could adversely affect the market for
high-yield bonds. For example, Congressional legislation limited the
deductibility of interest paid on certain high-yield bonds used to finance
corporate acquisitions. Also, Congressional legislation has, with some
exceptions, generally prohibited federally-insured savings and loan institutions
from investing in high-yield securities. Regulatory actions have also affected
the high-yield market. For example, many insurance companies have restricted or
eliminated their purchases of high-yield bonds as a result of, among other
factors, actions taken by the National Association of Insurance Commissioners.
If similar legislative and regulatory actions are taken in the future, they
could result in further tightening of the secondary market for high-yield
issues, could reduce the number of new high-yield securities being issued and
could make it more difficult for the Series to attain its investment objective.

Zero Coupon Bonds and Pay-in-Kind Bonds. Although the Series does not
generally purchase a substantial amount of zero coupon bonds or pay-in-kind
("PIK") bonds, from time to time the Series may acquire zero coupon bonds and,
to a lesser extent, PIK bonds. Zero coupon bonds and PIK bonds are generally
considered to be more interest-sensitive than income-bearing bonds, to be more
speculative than interest-bearing bonds, and to have certain tax consequences
which could, under certain circumstances, be adverse to the Series. For example,
the Series accrues, and is required to distribute to shareholders, income on its
zero coupon bonds. However, the Series may not receive the cash associated with
this income until the bonds are sold or mature. If the Series did not have
sufficient cash to make the required distribution of accrued income, the Series
could be required to sell other securities in its portfolio or to borrow to
generate the cash required.

-21-
<PAGE> 27
CAPITAL RESERVES SERIES
The Capital Reserves Series' objective is to seek a high stable level of
current income while attempting to minimize fluctuations in principal and
provide maximum liquidity. The Series intends to achieve its objective by
investing its assets in a diversified portfolio of short- and intermediate-term
securities, including securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities, instruments secured by such securities and
investment grade corporate notes, bonds and other debt securities. See
Diversification.

The Series is not a money market fund. A money market fund is designed for
stability of principal; consequently, the level of income fluctuates. The Series
is designed for greater stability of income at a relatively higher level;
consequently, the principal value will fluctuate over time.

INVESTMENT STRATEGY
The Series will attempt to provide investors with yields higher than those
available in money market vehicles by extending its portfolio maturities.

MATURITY RESTRICTIONS
The Series seeks to reduce the effects of interest rate volatility on
principal by normally maintaining the average weighted maturity of the Series'
portfolio within the five- to seven-year range and not in excess of ten years.
The decision to position the portfolio at any point within this permissible
maturity range will be guided by Delaware Management's perception of the
direction of interest rates and the risks in the fixed-income markets,
generally. If, in Delaware Management's judgment, interest rates are relatively
high and borrowing requirements in the economy are weakening, the manager,
generally, will extend the average weighted maturity of the Series. Conversely,
if, in its judgment, interest rates are relatively low and borrowing
requirements appear to be strengthening, it, generally, will shorten the average
weighted maturity. Delaware Management has the ability to purchase individual
securities with a remaining maturity of up to 15 years.

QUALITY RESTRICTIONS
The Series will invest in:

(1) securities issued or guaranteed by the U.S. government (e.g., Treasury
Bills and Notes), its agencies (e.g., Federal Housing Administration) or
instrumentalities (e.g., Federal Home Loan Bank) or government- sponsored
corporations (e.g., Federal National Mortgage Association) and repurchase
agreements collateralized by such securities;

(2) corporate notes, bonds and other debt securities rated investment
grade (e.g., BBB or better by S&P or Baa or better by Moody's) or, if unrated,
those securities considered to be of comparable quality by Delaware Management;

(3) mortgage-backed securities, i.e., bonds collateralized by
mortgage-backed pass-through securities such as GNMA, FNMA and FHLMC, rated
investment grade (e.g., BBB or better by S&P or Baa or better by Moody's) or, if
unrated, those securities considered to be of comparable quality by Delaware
Management. See Other Considerations - Mortgage-Backed Securities;

(4) certificates of deposit and obligations of both U.S. and foreign banks
if they have assets of at least one billion dollars;

(5) commercial paper of companies rated P-1 or P-2 by Moody's and/or A-1
or A-2 by S&P; and

-22-
<PAGE> 28

(6) asset-backed securities, i.e., securities backed by assets such as
home equity loans and credit card receivables rated in one of the four highest
rating categories by a reputable rating agency (e.g., BBB or better by S&P or
Baa or better by Moody's). See Other Considerations - Asset-Backed Securities.

Debt securities rated in the fourth category of investment grade (e.g.,
BBB by S&P or Baa by Moody's) may have speculative characteristics. Changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity by issuers of such debt to make principal and interest payments than is
the case with higher rated debt. To the extent that the rating of a corporate
debt security held by the Series falls below such fourth grade or Delaware
Management determines that an unrated security no longer is of comparable
quality, the Series, as soon as practicable, will dispose of such security,
unless such disposal, in the judgment of Delaware Management, would be
detrimental to the Series in light of then prevailing market conditions.

The Series may be suitable for the individual who wants relatively stable
and high income flow and the security associated with a portfolio of U.S.
government- (or agency-) backed and other investment grade investments. The
investor should be willing to accept the risks associated with investing in
these securities. The types of securities in which the Series invests is subject
to fluctuations in net asset value, as well as yield. Therefore, the Series may
not be suitable for people whose overriding objective is stability of principal.
The market value of fixed-income securities generally is affected by changes in
the level of interest rates. When interest rates rise, the share value will tend
to fall, and when interest rates fall, the share value will tend to rise.

As noted above, the Series will invest in securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities or certain
corporations sponsored or established by the U.S. government. U.S. Treasury
securities are backed by the "full faith and credit" of the United States.
Securities issued or guaranteed by Federal agencies and U.S. government
sponsored instrumentalities may or may not be backed by the full faith and
credit of the United States. In the case of securities not backed by the full
faith and credit of the United States, the investors must look principally to
the agency or instrumentality issuing or guaranteeing the obligation for
ultimate repayment, and may not be able to assert a claim against the United
States itself in the event the agency or instrumentality does not meet its
commitment. Agencies which are backed by the full faith and credit of the United
States include the Export-Import Bank, Farmers Home Administration, Federal
Financing Bank, and others. Certain agencies and instrumentalities, such as the
Government National Mortgage Association (GNMA), are, in effect, backed by the
full faith and credit of the United States through provisions in their charters
that they may make "indefinite and unlimited" drawings on the Treasury, if
needed to service its debt. Debt from certain other agencies and
instrumentalities, including the Federal Home Loan Bank and Federal National
Mortgage Association (FNMA), are not guaranteed by the United States, but those
institutions are protected by the discretionary authority for the U.S. Treasury
to purchase certain amounts of their securities to assist the institution in
meeting its debt obligations. Finally, other agencies and instrumentalities,
such as the Farm Credit System and the Federal Home Loan Mortgage Corporation
(FHLMC), are federally chartered institutions under U.S. government supervision,
but their debt securities are backed only by the creditworthiness of those
institutions, not the U.S. government.

Some of the U.S. government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and the Tennessee Valley Authority.

An instrumentality of the U.S. government agency is a government agency
organized under Federal charter with government supervision. Instrumentalities
issuing or guaranteeing securities include, among others, Federal Home Loan
Banks, the Federal Land Banks, Central Bank for Cooperatives, Federal Immediate
Credit Banks, and the Federal National Mortgage Associations.

-23-
<PAGE> 29

CASH RESERVE SERIES

As a money market fund, this Series' objective is to seek to provide
maximum current income, while preserving principal and maintaining liquidity, by
investing at least 80% of its assets in a diversified portfolio of money market
securities and managing the portfolio to maintain a constant $10 per share
value. While the Series will make every effort to maintain a fixed net asset
value of $10 per share, there can be no assurance that this objective will be
achieved.

QUALITY RESTRICTIONS
The Series limits its investments to those which the Board of Directors
has determined present minimal credit risks and are of high quality and which
will otherwise meet the maturity, quality and diversification conditions with
which taxable money market funds must comply.

The Series' investments include securities issued or guaranteed by the
U.S. government (e.g., Treasury Bills and Notes) or by the credit of its
agencies or instrumentalities (e.g., Federal Housing Administration and Federal
Home Loan Bank). The Series may invest in the certificates of deposit and
obligations of both U.S. and foreign banks if they have assets of at least one
billion dollars in accordance with the maturity, quality and diversification
conditions with which taxable money market funds must comply. The Series also
may purchase commercial paper and other corporate obligations; if such a
security or, as relevant, its issuer, is considered to be rated, at the time of
the proposed purchase, it or, as relevant, its issuer, must be so rated in one
of the two highest rating categories (e.g., for commercial paper, A-2 or better
by S&P and P-2 or better by Moody's; and, for other corporate obligations, AA or
better by S&P and Aa or better by Moody's) by at least two nationally-recognized
statistical rating organizations approved by the Board of Directors or, if such
security is not so rated, the purchase of the security must be approved or
ratified by the Board of Directors in accordance with the maturity, quality and
diversification conditions with which taxable money market funds must comply.
Appendix A of Part B describes the ratings of S&P, Moody's, Duff and Phelps,
Inc. and Fitch Investors Service, Inc. ("Fitch"), four of the better-known
statistical rating organizations.

MATURITY RESTRICTIONS
The Series maintains an average maturity of not more than 90 days. Also,
it does not purchase any instruments with an effective remaining maturity of
more than 13 months.

INVESTMENT TECHNIQUES
The Series intends to hold its investments until maturity, but may sell
them prior to maturity for a number of reasons. These reasons include: to
shorten or lengthen the average maturity, to increase the yield, to maintain the
quality of the portfolio or to maintain a stable share value.

If there were a national credit crisis, an issuer were to become insolvent
or interest rates were to rise, principal values could be adversely affected.
Investments in foreign banks and overseas branches of U.S. banks may be subject
to less stringent regulations and different risks than U.S. domestic banks.

GROWTH SERIES

The objective of the Series is long-term capital appreciation. The Series'
strategy is to invest primarily in common stocks that, in the judgment of
Delaware Management, are of superior quality and in securities that are
convertible into such common stocks.

-24-
<PAGE> 30
INVESTMENT STRATEGY
The Series will attempt to achieve its objective by purchasing securities
issued by companies whose earnings Delaware Management believes will grow more
rapidly than the average of those listed in the S&P 500 Stock Index. Delaware
Management's emphasis will be on the securities of companies that, in its
judgment, have the characteristics supporting such earnings growth. This
judgment will be based on, among other things, the financial strength of the
company, the expertise of its management, the growth potential of the company
within the industry and the growth potential of the industry itself. The focus
will be on those securities of companies Delaware Management believes have
established themselves within their industry while maintaining growth potential.

While management believes its objective may best be achieved by investing
in common stock, the Series may also invest in other securities including, but
not limited to, convertible securities, warrants, preferred stock, bonds and
foreign securities. Any specific investment will be dependent upon the judgment
of Delaware Management. Investments may be held for any period of time.

The Series may make foreign investments through the purchase and sale of
sponsored or unsponsored American Depositary Receipts ("ADRs"). ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. "Sponsored"
ADRs are issued jointly by the issuer of the underlying security and a
depository, whereas "unsponsored" ADRs are issued without participation of the
issuer of the deposited security. Holders of unsponsored ADRs generally bear all
the costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR.

Should the market warrant a temporary, defensive approach, the Series may
also invest in fixed-income obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, as well as corporate bonds of
investment quality rated Baa or above by Moody's or BBB or above by S&P.

The Series may be suitable for the patient investor interested in
long-term capital appreciation. Providing current income is not an objective of
the Series and any income produced is expected to be minimal. The investor
should be willing to accept the risks associated with investments in domestic
and international securities. Ownership of Series shares reduces the bookkeeping
and administrative inconveniences connected with direct purchases of these
securities. Because the net asset value may fluctuate at times in response to
market conditions, the Series is not appropriate for a short-term investor.

DELAWARE SERIES
The Delaware Series seeks to provide a balance of capital appreciation,
income and preservation of capital by strategically allocating its assets among
fixed-income and equity securities, that, in the judgment of Delaware
Management, are believed to have the best potential for achieving the Series'
objective.

INVESTMENT STRATEGY
The Series seeks a balance of capital appreciation, income and
preservation of capital. As a "balanced" fund, the Series will generally invest
at least 25% of its assets in fixed-income securities, including U.S. government
securities and corporate bonds. The balance of the portfolio will be allocated
to equity securities principally, including convertible securities, and also to
cash and cash equivalents. If the Series invested in

-25-
<PAGE> 31
convertible securities, the value of the convertible security would be allocated
to its fixed-income component and its conversion rights component for purposes
of the 25% fixed-income allocation.

The Series uses a dividend-oriented valuation strategy to select
individual securities in which it will invest. In seeking capital appreciation,
the Series invests primarily in common stocks of established companies believed
to have a potential for long-term capital growth. In seeking current income and
preservation of capital, in addition to capital appreciation, the Series invests
in various types of fixed-income securities, including U.S. government and
government agency securities and corporate bonds. The Series intends to invest
in bonds that are rated in the top four grades by a nationally-recognized rating
agency (i.e., Moody's or S&P) at the time of purchase, or, if unrated, are
determined to be equivalent to the top four grades in the judgment of Delaware
Management. The fourth grade is considered medium grade and may have some
speculative characteristics. To the extent that the rating of a security held by
the Series falls below the fourth grade or Delaware Management determines that
an unrated security no longer is of comparable quality, the Series, as soon as
practicable, will dispose of such security, unless such disposal, in the
judgment of Delaware Management, would be detrimental in light of then
prevailing market conditions. Typically, the maturity of the bonds will range
between five and 30 years. The Series may not concentrate investments in any
industry, which means not investing more than 25% of its assets in any one
industry.

The Series may invest in shares or convertible bonds issued by real estate
investment trusts ("REITS"). REITS invest primarily in income producing real
estate as well as real estate related loans or interests. A REIT is not taxed on
income distributed to shareholders if it complies with several requirements
relating to its organization, ownership, assets and income, and a requirement
that it distribute to its shareholders at least 95% of its taxable income (other
than net capital gains) for each taxable year. The Series anticipates investing
only in REITS that invest the majority of their assets directly in real property
and derive their income primarily from rents, which are known as "equity REITS."
Equity REITS can also realize capital gains by selling properties that have
appreciated in value.

In pursuing its investment objective, the Series may hold securities for
any period of time. For temporary, defensive purposes, the Series may hold a
substantial portion of its assets in cash or short-term obligations, including
repurchase agreements.

The value of the Series' shares can be expected to fluctuate depending
upon market conditions and, thus, an investment in the Series may not be
appropriate for a short-term investor. Investment results of the Series will be
affected by the ability of Delaware Management to anticipate changes in economic
and market conditions and, consequently, there can be no assurance that the
Series' investment objective will be realized.

INTERNATIONAL EQUITY SERIES
The objective of the International Equity Series is to achieve long-term
growth without undue risk to principal. The Series seeks to achieve this
objective by investing primarily in securities that provide the potential for
capital appreciation and income. The Series is an international fund. As such,
it may invest in securities issued in any currency and may hold foreign
currency. Under normal circumstances, at least 65% of the Series' assets will be
invested in the securities of issuers organized or having a majority of their
assets in or deriving a majority of their operating income in at least three
different countries outside of the United States. Securities of issuers within a
given country may be denominated in the currency of another country or in

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multinational currency units such as the European Currency Unit ("ECU"). The
Series will operate as a diversified fund for purposes of the 1940 Act.

INVESTMENT STRATEGY
The Series will attempt to achieve its objective by investing in a broad
range of equity securities including common stocks, preferred stocks,
convertible securities and warrants. Delaware International will employ a
dividend discount analysis across country boundaries and will also use a
purchasing power parity approach to identify currencies and markets that are
overvalued or undervalued relative to the U.S. dollar.

With a dividend discount analysis, Delaware International looks at future
anticipated dividends and discounts the value of those dividends back to what
they would be worth if they were being paid today. Delaware International uses
this technique to attempt to compare the value of different investments. With a
purchasing power parity approach, Delaware International attempts to identify
the amount of goods and services that a dollar will buy in the United States and
compare that to the amount of a foreign currency required to buy the same amount
of goods and services in another country. When the dollar buys less, the foreign
currency may be considered to be overvalued. When the dollar buys more, the
currency may be considered to be undervalued. Eventually, currencies should
trade at levels that should make it possible for the dollar to buy the same
amount of goods and services overseas as in the United States. The Series may
also invest in sponsored or unsponsored American Depositary Receipts or European
Depositary Receipts.

While the Series may purchase securities in any foreign country, developed
and underdeveloped, or emerging market countries, it is currently anticipated
that the countries in which the Series may invest will include, but not be
limited to, Canada, Germany, the United Kingdom, France, the Netherlands,
Belgium, Spain, Switzerland, Japan, Australia, Hong Kong, and
Singapore/Malaysia. With respect to certain countries, investments by an
investment company may only be made through investments in closed-end investment
companies that in turn are authorized to invest in the securities of such
countries. Any investment the Series may make in other investment companies is
limited in amount by the 1940 Act and would involve the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies.

For temporary, defensive purposes, the Series may invest all or a
substantial portion of its assets in high quality debt instruments issued by
foreign governments, their agencies, instrumentalities or political
subdivisions, the U.S. government, its agencies or instrumentalities and which
are backed by the full faith and credit of the U.S. government, or issued by
foreign or U.S. companies. Any corporate debt obligations will be rated AA or
better by S&P, or Aa or better by Moody's or, if unrated, will be determined to
be of comparable quality by Delaware International. For example, the Series may
enter the global fixed-income markets when Delaware International believes that
the global equity markets are excessively volatile or overvalued so that the
Series' objective cannot be achieved in such markets. In addition, the Series
may invest in the U.S. fixed-income markets for temporary, defensive purposes
when Delaware International believes that the international equity and
fixed-income markets are evidencing such excessive volatility or overvaluation.
The Series may also invest in the securities listed for defensive investing
pending investment of proceeds from new sales of Series shares and to maintain
sufficient cash to meet redemption requests.

The Series may be suitable for the patient investor interested in
long-term growth through investments that provide the potential for capital
appreciation and income. The investor should be willing to accept the risks
associated with investments in foreign equity securities in which the Series may
invest, as well as the special investment techniques in which the Series may
engage. Naturally, the Series cannot assure a specific rate of return or that
principal will be protected. The value of the Series' shares can be expected to
fluctuate depending

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<PAGE> 33

upon market conditions. However, through the cautious selection and supervision
of its portfolio, the Series will strive to achieve its objective of long-term
growth. See Other Considerations.

FOREIGN CURRENCY TRANSACTIONS
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Series will, however, from time to time, purchase or sell
foreign currencies and/or engage in forward foreign currency transactions in
order to expedite settlement of portfolio transactions and to minimize currency
value fluctuations. The Series may conduct its foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). A forward contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract, agreed upon by the parties, at a
price set at the time of the contract. The Series will convert currency on a
spot basis from time to time, and investors should be aware of the costs of
currency conversion.

The Series may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars or
foreign currency, of the amount of foreign currency involved in the underlying
security transaction, the Series will be able to protect itself against a
possible loss resulting from an adverse change in currency exchange rates during
the period between the date the security is purchased or sold and the date on
which payment is made or received.

When the Series' investment manager believes that the currency of a
particular country may suffer a significant decline against the U.S. dollar or
against another currency, the Series may enter into a forward foreign currency
contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or all
of the Series' securities denominated in such foreign currency.

The Series will not enter into forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Series to deliver an amount of foreign currency in excess of the
value of the Series' securities or other assets denominated in that currency.

At the maturity of a forward contract, the Series may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Series may realize a gain or loss from currency
transactions.

The Series also may purchase and write put and call options on foreign
currencies (traded on U.S. and foreign exchanges or over-the-counter) for
hedging purposes to protect against declines in the U.S. dollar cost of foreign
securities held by the Series and against increases in the U.S. dollar cost of
such securities to be acquired. Call options on foreign currency written by the
Series will be covered, which means that the Series will own the underlying
foreign currency. With respect to put options on foreign currency written by the
Series, the Series will establish a segregated account with its custodian bank
consisting of cash, U.S. government securities or other high-grade liquid debt
securities in an amount equal to the amount the Series will be required to pay
upon exercise of the put. See Futures Contracts and Options on Futures Contracts
under Other Considerations.

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FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

The Series may enter into contracts for the purchase or sale for future
delivery of securities or foreign currencies. The principal purpose of the
purchase or sale of futures contracts for the Series is to protect the Series
against the fluctuations in interest or exchange rates which otherwise might
adversely affect the value of the Series' portfolio securities or adversely
affect the prices of securities which the Series intends to purchase at a later
date without actually buying or selling such securities. See Other
Considerations - Futures Contracts and Options on Futures Contracts.

VALUE SERIES
The objective of the Series is capital appreciation. The strategy will be
to invest primarily in common stocks and issues convertible into common stocks
which, in the opinion of Delaware Management, have market values which appear
low relative to their underlying value or future earnings and growth potential.

Securities will be purchased that Delaware Management believes to be
undervalued in relation to asset value or long-term earning power of the
companies. Delaware Management may also invest in securities of companies where
current or anticipated favorable changes within a company provide an opportunity
for capital appreciation. Delaware Management's emphasis will be on securities
of companies that may be temporarily out of favor or whose value is not yet
recognized by the market.

Delaware Management will consider the financial strength of the company,
the nature of its management and any developments affecting the security, the
company or the industry. Securities may be out of favor due to a variety of
factors, such as lack of an institutional following, or unfavorable developments
affecting the issuer of the securities, such as poor earning reports, dividend
reductions or cyclical economic or business conditions. Other securities
considered by Delaware Management would include those of companies where current
or anticipated favorable changes such as a new product or service, technological
breakthrough, management change, projected takeovers, changes in capitalization
or redefinition of future corporate operations provide an opportunity for
capital appreciation. Delaware Management will also consider securities where
trading patterns suggest that significant positions are being accumulated by
officers of the company, outside investors or the company itself. Delaware
Management feels it may uncover situations where those who have a vested
interest in the company feel the securities are undervalued and have
appreciation potential.

Although the Series will constantly strive to attain the objective of
long-term growth, there can be no assurance that it will be attained. If
Delaware Management believes that market conditions warrant, the Series may
employ options strategies. Also, on a temporary, defensive basis, Delaware
Management may invest in fixed-income obligations. The objective of the Series
may not be changed without shareholder approval.

INVESTMENT STRATEGY
While management believes that the Series' objective may best be attained
by investing in common stocks, the Series may also invest in other securities
including, but not limited to, convertible securities, warrants, preferred
stocks, bonds and foreign securities. Although it is expected to receive
relatively less emphasis, the Series may also invest in fixed-income securities
without regard to a minimum grade level in pursuit of its objective where there
are favorable changes in a company's earnings or growth potential or where
general economic conditions and the interest rate environment provide an
opportunity for declining interest rates and consequent appreciation in these
securities. The strategies employed are dependent upon the judgment of Delaware
Management.

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<PAGE> 35
In investing for capital appreciation, the Series may hold securities for
any period of time. The degree of portfolio activity will affect brokerage costs
of the Series.

Should the market warrant a temporary, defensive approach, the Series may
also invest in fixed-income obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, as well as money market
instruments, and corporate bonds rated A or above by Moody's or S&P.

The Series may write covered call options on individual issues as well as
write call options on stock indices. The Series may also purchase put options on
individual issues and on stock indices. Delaware Management will employ these
techniques in an attempt to protect appreciation attained, to offset capital
losses and to take advantage of the liquidity available in the option markets.
The ability to hedge effectively using options on stock indices will depend, in
part, on the correlation between the composition of the index and the Series'
portfolio as well as the price movement of individual securities. The Series
does not currently intend to write or purchase stock index options.

While there is no limit on the amount of the Series' assets which may be
invested in covered call options, the Series will not invest more than 2% of its
net assets in put options. The Series will only use Exchange-traded options.
See Other Considerations - Options, below.

The Series may enter into futures contracts and buy and sell options on
futures contracts relating to securities, securities indices or interest rates.
See Other Considerations - Futures Contracts and Options on Futures Contracts,
below.

RISK FACTORS

The Series may be suitable for the patient investor interested in
long-term capital appreciation. The investor should be willing to accept the
risks associated with investments in domestic and international securities (and
currency hedging transactions in connection therewith), as these investments may
be speculative and subject the Series to an additional risk. See Foreign
Securities and Foreign Currency Transactions under Other Considerations.
Investing in a company temporarily out of favor may involve the risk that the
anticipated favorable change may not occur and, as a result, that security may
decline in value or not appreciate as expected. Although it will receive
relatively minor emphasis in pursuit of its objective, the Series may also
purchase, at times, lower rated or unrated corporate bonds without regard to a
grade minimum, which may be considered speculative and may increase the
portfolio's credit risk. Although the Series will not ordinarily purchase bonds
rated below B by Moody's or S&P (i.e., high-yield, high-risk fixed-income
securities), it may do so if Delaware Management believes that capital
appreciation is likely. The Series will not invest more than 25% of its net
assets in bonds rated below B. Investing in such lower rated debt securities may
involve certain risks not typically associated with higher rated securities.
Such bonds are considered very speculative and may possibly be in default or
have interest payments in arrears. See Delchester Series for additional
information on the risks associated with such securities.

Net asset value may fluctuate at times in response to market conditions
and, as a result, the Series is not appropriate for a short-term investor.

This Series is designed primarily for capital appreciation. Providing
current income is not an objective of the Series. Any income produced is
expected to be minimal.

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<PAGE> 36

TREND SERIES

INVESTMENT STRATEGY
The objective of the Series is long-term capital appreciation. The
strategy is to invest primarily in the common stocks and securities convertible
into common stocks of emerging and other growth-oriented companies that, in the
judgment of Delaware Management, are responsive to changes within the
marketplace and have the fundamental characteristics to support growth.

The Series will seek to identify changing and dominant trends within the
economy, the political arena and our society. The Series will purchase
securities which it believes will benefit from these trends and which have the
fundamentals to exploit them. The fundamentals include managerial skills,
product development and sales and earnings.

In investing for capital appreciation, the Series may hold securities for
any period of time. The Series may invest in repurchase agreements, but will not
normally do so except to invest excess cash balances. The Series may also invest
in foreign securities.

The Series may purchase privately placed securities the resale of which is
restricted under applicable securities laws. Such securities may offer a higher
return than comparably registered securities but involve some additional risk as
they can be resold only in privately negotiated transactions, in accordance with
an exemption from the registration requirements under applicable securities laws
or after registration.

Income is not an objective of the Series. However, should the market
warrant a temporary defensive approach, the Series may also invest in cash
equivalents, and fixed-income obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, as well as corporate bonds.

Although the Series will constantly strive to attain the objective of
long-term capital growth, there can be no assurance that it will be attained.
The objective of the Series may not be changed without shareholder approval.
Part B provides more information on the Series' investment policies and
restrictions.

The Series may be suitable for the patient investor interested in
long-term capital appreciation. The prices of common stock, especially those of
smaller companies, tend to fluctuate, particularly in the short-term. The
investor should be willing to accept the risks associated with investments in
growth-oriented securities, some of which may be speculative and subject the
Series to an additional risk.

Net asset value may fluctuate in response to market conditions and, as a
result, the Series is not appropriate for a short-term investor.

This Series is designed primarily for capital appreciation. Providing
current income is not an objective of the Series. Any income produced is
expected to be minimal. An investor should not consider a purchase of Series
shares as equivalent to a complete investment program.

For hedging purposes, the Series may engage in options activity and enter
into futures contracts and options on futures contracts. For a discussion on
these instruments, see Options and Futures Contracts and Options on Futures
Contracts under Other Considerations.

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GLOBAL BOND SERIES
The objective of the Global Bond Series is to achieve current income
consistent with the preservation of investors' principal. The Fund seeks to
achieve this objective by investing primarily in fixed-income securities that
may also provide the potential for capital appreciation. The Series is a global
fund. Under normal circumstances, at least 65% of the Series' assets will be
invested in the fixed-income securities of issuers organized or having a
majority of their assets in or deriving a majority of their operating income in
at least three different countries, one of which may be the United States. The
Series may invest in securities issued in any currency and may hold foreign
currency. Securities of issuers within a given country may be denominated in the
currency of another country or in multinational currency units such as the ECU.
For purposes of the 1940 Act, the Global Bond Series will operate as a
nondiversified fund.

INVESTMENT STRATEGY
The Series will attempt to achieve its objective by investing at least 65%
of its assets in a broad range of fixed-income securities, including foreign and
U.S. government securities and debt obligations of foreign and U.S. companies
which are generally rated A or better by S&P or Moody's, or if unrated, are
deemed to be of comparable quality by Delaware International. The Series may
also invest in zero coupon bonds and in the debt securities of supranational
entities denominated in any currency. Generally, the value of fixed-income
securities moves inversely to the movement of market interest rates. The value
of the Series' portfolio securities and, thus, an investor's shares will be
affected by changes in such rates.

Zero coupon bonds are debt obligations which do not entitle the holder to
any periodic payments of interest prior to maturity or a specified date when the
securities begin paying current interest, and therefore are issued and traded at
a discount from their face amounts or par value. See Zero Coupon Bonds and
Pay-In-Kind Bonds under Other Considerations. A supranational entity is an
entity established or financially supported by the national governments of one
or more countries to promote reconstruction or development. Examples of
supranational entities include, among others, the World Bank, the European
Economic Community, the European Coal and Steel Community, the European
Investment Bank, the Inter-Development Bank, the Export- Import Bank and the
Asian Development Bank. For increased safety, the Series currently anticipates
that a large percentage of its assets will be invested in U.S. and foreign
government securities and securities of supranational entities.

With respect to U.S. government securities, the Series may invest only in
securities issued or guaranteed as to the payment of principal and interest by
the U.S. government, and those of its agencies or instrumentalities which are
backed by the full faith and credit of the United States. Direct obligations of
the U.S. government which are available for purchase by the Series include
bills, notes, bonds and other debt securities issued by the U.S. Treasury. These
obligations differ mainly in interest rates, maturities and dates of issuance.
Agencies whose obligations are backed by the full faith and credit of the United
States include the Farmers Home Administration, Federal Financing Bank and
others.

With respect to securities issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the Series will generally invest in
such securities if they have been rated AAA or AA by S&P or Aaa or Aa by Moody's
or, if unrated, have been determined by Delaware International to be of
comparable quality.

From time to time, the Series may find opportunities to pursue its
objective outside of the fixed-income markets, but in no event will such
investments exceed 5% of the Series' net assets.

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<PAGE> 38

The Series may also invest in sponsored or unsponsored American Depositary
Receipts or European Depositary Receipts. While the Series may purchase
securities of issuers in any foreign country, developed and underdeveloped, or
emerging market countries, it is currently anticipated that the countries in
which the Series may invest will include, but not be limited to, Canada,
Germany, the United Kingdom, France, the Netherlands, Belgium, Spain,
Switzerland, Ireland, Denmark, Portugal, Italy, Austria, Norway, Sweden,
Finland, Luxembourg, Japan and Australia. With respect to certain countries,
investments by an investment company may only be made through investments in
closed-end investment companies that in turn are authorized to invest in the
securities of such countries. Any investment the Series may make in other
investment companies is limited in amount by the 1940 Act and would involve the
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies.

The Series may invest in restricted securities, including Rule 144A
Securities. See Liquidity and Rule 144A Securities under Other Considerations.
The Series may invest no more than 10% of the value of its net assets in
illiquid securities. The Series will not concentrate its investments in any
particular industry, which means that it will not invest 25% or more of its
total assets in any one industry.

It is anticipated that the average weighted maturity of the portfolio will
be in the five-to-ten year range. If, however, Delaware International
anticipates a declining interest rate environment, the average weighted maturity
may be extended past ten years. Conversely, if Delaware International
anticipates a rising rate environment, the average weighted maturity may be
shortened to less than five years.

INTEREST RATE SWAPS
In order to attempt to protect the Series' investments from interest rate
fluctuations, the Series may engage in interest rate swaps. The Series intends
to use interest rate swaps as a hedge and not as a speculative investment.
Interest rate swaps involve the exchange by the Series with another party of
their respective rights to receive interest, e.g., an exchange of fixed rate
payments for floating rate payments. For example, if the Series holds an
interest-paying security whose interest rate is reset once a year, it may swap
the right to receive interest at this fixed rate for the right to receive
interest at a rate that is reset daily. Such a swap position would offset
changes in the value of the underlying security because of subsequent changes in
interest rates. This would protect the Series from a decline in the value of the
underlying security due to rising rates, but would also limit its ability to
benefit from falling interest rates.

The Series may enter into interest rate swaps on either an asset-based or
liability-based basis, depending upon whether it is hedging its assets or its
liabilities, and will usually enter into interest rate swaps on a net basis,
i.e., the two payment streams are netted out, with the Series receiving or
paying, as the case may be, only the net amount of the two payments. Inasmuch as
these hedging transactions are entered into for non-speculative purposes and not
for the purpose of leveraging the Series' investments, Delaware International
and the Series believe such obligations do not constitute senior securities and,
accordingly, will not treat them as being subject to its borrowing restrictions.
The net amount of the excess, if any, of the Series' obligations over its
entitlement with respect to each interest rate swap will be accrued on a daily
basis and an amount of cash or high-quality liquid securities having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Custodian Bank. If the Series enters
into an interest rate swap on other than a net basis, the Series would maintain
a segregated account in the full amount accrued on a daily basis of the Series'
obligations with respect to the swap. See Other Considerations - Foreign
Securities and Foreign Currency Transactions and Special Risk Considerations
below.

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STRATEGIC INCOME SERIES
The objective of the Series is to seek to provide investors with high
current income and total return. Delaware Management will seek to achieve this
objective by allocating the Series' investments principally among the following
three sectors of the fixed-income securities markets:

-- a HIGH-YIELD SECTOR, consisting of high-yielding, lower-rated or
unrated fixed-income securities issued by U.S. companies;

-- an INVESTMENT GRADE SECTOR, consisting of investment grade debt
obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities, or by U.S. companies; and

-- an INTERNATIONAL SECTOR, consisting of obligations of foreign
governments, their agencies and instrumentalities, and other
fixed-income securities of issuers in foreign countries and
denominated in foreign currencies.

Delaware Management will determine the amount of assets of the Series that
will be allocated to each of the three sectors in which the Series will invest,
based on its analysis of economic and market conditions and its assessment of
the returns and potential for appreciation that can be achieved from investment
in each of the three sectors. Delaware Management will periodically reallocate
the Series' assets as it deems necessary, and as little as 20% and as much as
60% of the Series' assets among sectors may be invested in each fixed-income
sector. In addition, the Series may invest up to 10% of its assets in U.S.
equity securities.

INVESTMENT STRATEGY
Domestic High-Yield Sector. Delaware Management will invest the Series'
assets that are allocated to the domestic high-yield sector primarily in those
securities having a liberal and consistent yield and those tending to reduce the
risk of market fluctuations. The Series may invest in domestic corporate debt
obligations, including, corporate notes (including convertible notes), units
consisting of bonds with stock or warrants to buy stock attached, debentures,
convertible debentures, zero coupon bonds and pay-in-kind securities ("PIKs").
See Zero Coupon Bonds and Pay-In-Kind Bonds under Other Considerations. The
Series may also purchase preferred stock and convertible preferred stock.

The Series will invest in both rated and unrated bonds. The rated bonds
that the Series may purchase in this sector of its portfolio will generally be
rated BB or lower by S&P or Fitch, Ba or lower by Moody's, or similarly rated by
another nationally recognized statistical rating organization. See Appendix A to
this Prospectus for more rating information and Risk Factors under Delchester
Series for a description of the risks associated with investing in lower-rated
fixed-income securities. Unrated bonds may be more speculative in nature than
rated bonds.

Investment Grade Sector. In managing the Series' assets allocated to the
investment grade sector, Delaware Management will invest primarily in debt
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities and by U.S. corporations. The corporate debt obligations in
which the Series may invest include bonds, notes, debentures and commercial
paper of U.S. companies.

The U.S. government securities in which the Series may invest include a
variety of securities which are issued or guaranteed as to the payment of
principal and interest by the U.S. government, and by various agencies or
instrumentalities which have been established or sponsored by the U.S.
government. See Capital Reserves Series for a discussion of these types of
securities.

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The investment grade sector of the Series' portfolio may also be invested
in mortgage-backed securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities or by government sponsored corporations. Other
mortgage-backed securities in which the Series may invest are issued by certain
private, non-government entities. Two principal types of mortgage-backed
securities are collateralized mortgage obligations (CMOs) and real estate
mortgage investment conduits (REMICs). See Mortgage-Backed Securities under
Other Considerations for a discussion of these types of securities.

Subject to the quality limitations set forth in this Prospectus, the
Series may also invest in securities which are backed by assets such as
receivables on home equity and credit card loans, and receivables regarding
automobile, mobile home, recreational vehicle and other loans, wholesale dealer
floor plans and leases. See Asset-Backed Securities under Other Considerations.
The Series may also invest in futures contracts and options on futures contracts
subject to certain limitations. See Futures Contracts and Options on Futures
Contracts under Other Considerations.

Securities purchased by the Series within the investment grade sector will
be rated in one of the four highest rating categories or will be unrated
securities that are of comparable quality as determined by Delaware Management.
The four highest rating categories are AAA, AA, A or BBB by S&P and Fitch, or
Aaa, Aa, A or Baa by Moody's. Debt securities within the top three categories
comprise what are known as high-grade bonds and are regarded as having a strong
capacity to pay principal and interest. Securities in the fourth category, known
as medium-grade bonds, are regarded as having an adequate capacity to pay
principal and interest but with greater vulnerability to adverse economic
conditions and speculative characteristics. See Appendix A to this Prospectus
for more rating information.

International Sector. Delaware International will invest the assets of the
Series that are allocated to the international sector primarily in fixed-income
securities of issuers organized or having a majority of their assets or deriving
a majority of their operating income in foreign countries. These fixed-income
securities include foreign government securities, debt obligations of foreign
companies, and securities issued by supranational entities.

A supranational entity is an entity established or financially supported
by the national governments of one or more countries to promote reconstruction
or development. Examples of supranational entities include, among others, the
International Bank for Reconstruction and Development (more commonly known as
the World Bank), the European Economic Community, the European Coal and Steel
Community, the European Investment Bank, the Inter-Development Bank, the
Export-Import Bank and the Asian Development Bank.

The Series may invest in sponsored and unsponsored American Depositary
Receipts, European Depositary Receipts, or Global Depositary Receipts
("Depositary Receipts"). The Series may also invest in Brady Bonds, zero coupon
bonds and shares of other investment companies. See Foreign Securities and
Foreign Currency Transactions, Investment Company Securities, and Zero Coupon
Bonds and Pay-In-Kind Bonds under Other Considerations.

The Series may invest in securities issued in any currency and may hold
foreign currencies. See Foreign Currency Transactions under International Equity
Series and Foreign Securities and Foreign Currency Transactions under Other
Considerations.

While the Series may purchase securities of issuers in any foreign
country, developed and underdeveloped, no more than 15% of the Series' assets
may be invested in direct obligations of issuers located in emerging

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<PAGE> 41

market countries. See Emerging Markets Series and Foreign Securities and Foreign
Currency Transactions under Other Considerations.

The Series will invest in both rated and unrated foreign securities. The
rated securities that the Series may purchase in the international sector of its
portfolio may include those rated BBB or lower by S&P or Fitch, Baa or lower by
Moody's, or similarly rated by another nationally recognized statistical rating
organization. See Appendix A to this Prospectus for more rating information and
Risk Factors under Delchester Series and Foreign Securities and Foreign Currency
Transactions for a description of the risks associated with investing in
lower-rated fixed-income securities and foreign securities.

Equity Sector. Up to 10% of the Series' assets may be invested in U.S.
equity securities. Such investments may include common stocks, preferred stocks
(including adjustable rate preferred stocks) and other equity securities, such
as convertible securities and warrants, which may be used to create other
permissible investments. Such investments must be consistent with the Series'
objective of high current income and total return. In addition, the Series may
invest in shares or convertible bonds of real estate investment trusts
("REITs"). See REITs under Other Considerations for a discussion of these types
of securities.

For a description of the Series' other investment policies and for a
further description of some of the policies described above, see Other
Considerations.

In unusual market conditions, in order to meet redemption requests, for
temporary defensive purposes, and pending investment, the Series may hold a
substantial portion of its assets in cash or short-term fixed-income
obligations. The Series may invest in repurchase agreements, but it normally
does so only to invest cash balances. The Series is permitted to borrow money.

DEVON SERIES
The objective of Devon Series is to seek current income and capital
appreciation.

The Series may be suitable for investors interested in long-term capital
appreciation with a greater emphasis on common stocks and securities convertible
into common stocks. Investors in the Series should be willing to accept the
risks associated with investments in equity securities. Investors in the Devon
Series should also be willing to accept the risks associated with investments in
fixed-income securities. Net asset values may fluctuate in response to market
conditions and, as a result, the Series is not appropriate for a short-term
investor.

INVESTMENT STRATEGY
Devon Series will seek to achieve its objective by investing primarily in
income-producing common stocks, with a focus on common stocks that Delaware
Management believes have the potential for above average dividend increases over
time. Under normal circumstances, the Series will generally invest at least 65%
of its total assets in dividend paying common stocks.

In selecting stocks for the Series, Delaware Management will focus
primarily on dividend paying common stocks issued by companies with market
capitalizations in excess of $100 million, but is not precluded from purchasing
shares of companies with market capitalizations of less than $100 million. In
seeking stocks with potential for above average dividend increases, Delaware
Management will consider such factors as the historical growth rate of a
dividend, the frequency of prior dividend increases, the issuing company's
potential to generate cash flows, and the price/earnings multiple of the stock
relative to the market. Delaware Management will generally avoid stocks that it
believes are overvalued and may select stocks with current

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dividend yields that are lower than the current yield of the Standard & Poor's
500 Stock Index ("S&P 500") in exchange for anticipated dividend growth.

While Delaware Management believes that the Series' objective may best be
attained by investing in common stocks, the Series may also invest in other
securities including, but not limited to, convertible and preferred securities,
rights and warrants to purchase common stock, and various types of fixed-income
securities, such as U.S. government and government agency securities, corporate
debt securities and bank obligations, and may also engage in futures
transactions. The Series may invest in foreign securities.

For additional information about the Series' investment policies and
certain risks associated with investments in certain types of securities, see
Other Considerations.

EMERGING MARKETS SERIES
The objective of Emerging Markets Series is to achieve long-term capital
appreciation. The Series seeks to achieve this objective by investing primarily
in equity securities of issuers located or operating in emerging countries. The
Series is an international fund. Under normal circumstances, at least 65% of the
Series' assets will be invested in equity securities of issuers organized or
having a majority of their assets or deriving a majority of their operating
income in at least three different countries outside of the United States. The
Series will attempt to achieve its objective by investing in a broad range of
equity securities, including common stocks, preferred stocks, convertible
securities and warrants issued by companies located or operating in emerging
countries.

The Series considers an "emerging country" to be any country which is
generally recognized to be an emerging or developing country by the
international financial community, including the World Bank and the
International Finance Corporation, as well as countries that are classified by
the United Nations or otherwise regarded by their authorities as developing. In
addition, any country that is included in the IFC Free Index or MSCI EMF Index
will be considered to be an "emerging country." As of the date of this
Prospectus, there are more than 130 countries which, in Delaware International's
judgment, are generally considered to be emerging or developing countries by the
international financial community, approximately 40 of which currently have
stock markets. Within this group of developing or emerging countries are
included almost every nation in the world, except the United States, Canada,
Japan, Australia, New Zealand and most nations located in Western and Northern
Europe.

Currently, investing in many emerging countries is not feasible, or may,
in Delaware International's opinion, involve unacceptable political risks. The
Series will focus its investments in those emerging countries where Delaware
International considers the economies to be developing strongly and where the
markets are becoming more sophisticated. Delaware International believes that
investment opportunities may result from an evolving long-term international
trend favoring more market-oriented economies, a trend that may particularly
benefit certain countries having developing markets. This trend may be
facilitated by local or international political, economic or financial
developments that could benefit the capital markets in such countries.

In considering possible emerging countries in which the Series may invest,
Delaware International will place particular emphasis on certain factors, such
as economic conditions (including growth trends, inflation rates and trade
balances), regulatory and currency controls, accounting standards and political
and social conditions. It is currently anticipated that the countries in which
the Series may invest will include, but not be limited to, Argentina, Brazil,
Chile, China, Columbia, Czech Republic, Egypt, Greece, Hong Kong, Hungary,
India, Indonesia, Israel, Jamaica, Jordan, Kenya, Korea, Malaysia, Mexico,
Nigeria, Pakistan, Peru, the

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<PAGE> 43

Philippines, Poland, Portugal, Russia, South Africa, Sri Lanka, Taiwan,
Thailand, Turkey, Venezuela and Zimbabwe. As markets in other emerging countries
develop, Delaware International expects to expand and further diversify the
countries in which the Series invests.

Although not an exclusive list of criteria to be considered by Delaware
International, an emerging country equity security is one issued by a company
that, in the opinion of Delaware International, exhibits one or more of the
following characteristics: (i) its principal securities trading market is an
emerging country, as defined above; (ii) while traded in any market, alone or on
a consolidated basis, the company derives 50% or more of its annual revenues
from either goods produced, sales made or services performed in emerging
countries; or (iii) it is organized under the laws of, and has a principal
office in, an emerging country. Determinations as to eligibility will be made by
Delaware International based on publicly available information and inquiries
made of the companies.

The Series may invest in Depositary Receipts, and in both open-end and,
listed or unlisted, closed-end investment companies, as well as unregistered
investment companies. See Investment Company Securities under Other
Considerations. The Series may also invest in convertible preferred stocks that
offer enhanced yield features, such as Preferred Equity Redemption Cumulative
Stock, and certain other non-traditional equity securities.

The Series may invest up to 35% of its net assets in fixed-income
securities issued by emerging country companies, and foreign governments, their
agencies, instrumentalities or political subdivisions, all of which may be high
yield, high risk fixed-income securities rated lower than BBB by S&P and Baa by
Moody's or, if unrated, are considered by Delaware International to be of
equivalent quality and which present special investment risks. See Risk Factors
under Delchester Series. The Series may also invest in Brady Bonds and zero
coupon securities. See Foreign Securities and Foreign Currency Transactions
under Other Considerations.

For temporary defensive purposes, the Series may invest all or a
substantial portion of its assets in the high quality debt instruments in which
International Equity Series may invest. See Investment Strategy under
International Equity Series.

CONVERTIBLE SECURITIES SERIES
The investment objective of the Convertible Securities Series is to seek a
high level of total return on its assets through a combination of capital
appreciation and current income. The Series intends to pursue its investment
objective by investing primarily in "convertible securities." A convertible
security is a bond, debenture, note, preferred stock or other security which may
be converted at a specified price or formula into a prescribed amount of common
stock of the same or a different issuer. A convertible security entitles the
holder to receive interest paid on convertible debt or the dividend paid on a
preferred stock until such time as the convertible security matures or is
redeemed or converted. Convertible Securities may include subordinated debt
securities accompanied by warrants to purchase the common stock of the issuer.
In some instances the subordinated debt securities may be exchanged in payment
of the exercise price of the accompanying warrants.

The Series' policy of investing in convertible securities is premised on
the belief that the characteristics of these securities make them particularly
appropriate investments in seeking both capital appreciation and current income.
These characteristics include the potential for capital appreciation as the
value of the underlying common stock increases, the relatively high yield
received from interest or dividend payments on convertible securities as
compared to common stock dividends, and the decreased risks of a decline in
value of a convertible

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<PAGE> 44

security relative to the underlying common stock due to the income preferences
of a convertible security. See Convertible Securities below.

INVESTMENT STRATEGY
Lynch & Mayer's investment strategy will be dictated to a great extent by
prevailing market conditions. Under normal conditions, the Series intends to
invest at least 65% of its total assets (determined at the time of purchase) in
convertible securities, which may include privately placed convertible
securities. In pursuit of its investment objective, the Series may invest the
balance of its assets as described below under Other Investments, including
preferred and common stock, warrants, U.S. Government securities,
non-convertible fixed income securities and money market securities. However,
pending investment in convertible securities or for temporary defensive purposes
(when, in Lynch & Mayer's opinion, market conditions dictate), the Series
reserves the right to maintain all or a substantial portion of its assets in
cash, money market securities, U.S. government securities and investment grade
corporate debt securities. Securities or assets obtained upon the conversion of
convertible securities may be retained, subject to the Series' investment
objective. The Series may not invest more than 25% of its total assets in any
one industry, provided that there is no limitation on investments in U.S.
government securities. There are no size limitations on corporations in whose
securities the Series may invest.

Convertible Securities. Convertible securities rank senior to common stock
in a corporation's capital structure and therefore entail less risk than the
corporation's common stock. However, convertible securities are typically
subordinated to non-convertible securities of the same issuer. Convertible
securities may be rated below investment grade, that is, not rated within the
four highest categories by S&P and Moody's. Debt securities rated below
investment grade are often referred to as "high yield bonds" or "junk bonds,"
although these terms are not generally used in reference to convertible debt
securities. The Series will invest in convertible securities without regard to
rating categories. To the extent that securities acquired by the Series are not
of investment grade or are not rated, there may be a greater risk as to the
timely repayment of the principal of, and timely payment of interest on, such
securities. For a discussion of the risks associated with investments in
securities rated below investment grade, see Delchester Series -- Risk Factors.
See Appendix A for a description of the rating categories used by S&P and
Moody's.

The value of a convertible security is a function of its "investment
value" (its value as if it did not have a conversion privilege), and its
"conversion value" (the security's worth at market value if it were to be
exchanged for the underlying security pursuant to its conversion privilege). To
the extent that a convertible security's investment value is greater than its
conversion value, its price will primarily reflect that investment value and its
price will be likely to increase when interest rates fall and decrease when
interest rates rise, as with a fixed-income security. The credit standing of the
issuer and other factors may also have an effect on the convertible security's
value. As the conversion value nears or exceeds the investment value, the price
of the convertible security will rise above its investment value. The higher the
security's price relative to its investment value, the more directly the price
of the security will tend to fluctuate with the price of the underlying equity
security. The convertible security will typically have a premium over the
conversion value. This premium represents the price investors are willing to pay
for the privilege of purchasing a security having an income and capital
structure preference with a possibility of capital appreciation due to the
conversion privilege. Convertible securities may be purchased by the Series at
varying price levels above their investment values or their conversion values in
keeping with the Series' investment objective. Since a convertible security has
fixed interest or dividend payments, the convertible security tends to trade
increasingly on a yield basis as the market price of the underlying common stock
declines and thus may not depreciate to the same extent as the underlying common
stock. The extent of the decline, i.e., loss in value to the Series, will also
depend on the amount of the

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<PAGE> 45

premium. A convertible security may be subject to redemption at the option of
the issuer at a price established in the instrument pursuant to which the
convertible security was issued. If a convertible security held by the Series is
called for redemption, the Series will be required to redeem the security,
convert it into the underlying common stock or sell it to a third party.

The Series may invest in Eurodollar convertible securities. Eurodollar
convertible securities are income securities of a U.S. issuer convertible into
equity securities of that issuer. These Eurodollar securities are payable in
U.S. dollars outside of the United States. The Series may also invest in
securities of foreign issuers, including issuers located in emerging markets.
Such foreign securities may be traded on a foreign exchange, or they may be in
the form of depositary receipts or notes, such as American Depositary Receipts
(ADRs), American Depositary Notes (ADNs), European Depositary Receipts (EDRs),
European Depositary Notes (EDNs), Global Depositary Receipts (GDRs) or Global
Depositary Notes (GDNs). For a discussion of the investment strategies and risks
involved in foreign securities, see International Equity Series and Emerging
Markets Series, as well as Foreign Securities and Foreign Currency Transactions
under Other Considerations.

Private Placements. The portion of the Series' portfolio that may be
invested in convertible securities purchased in private placements will depend
upon the relative attractiveness of those securities as compared to convertible
securities which are publicly offered. Ordinarily, the Series expects that 50%
of its portfolio may be invested in convertible securities purchased in private
placements, but the percentage may vary substantially below or above 50%,
depending upon prevailing market conditions.

The Series anticipates that substantially all of the private placements it
purchases will be subject to Rule 144A under the 1933 Act and therefore may be
traded freely among qualified institutional buyers. The Series may not invest
more than 15% of its net assets in illiquid securities, but the Series may,
subject to procedures approved by the Fund's Board of Directors, treat Rule 144A
securities as liquid and therefore not subject to this 15% limitation. The
private placements purchased by the Series will typically include registration
rights for the convertible security and the underlying common stock which
require the underlying common stock to be registered with the SEC, generally
filed within one year of the private placement. This allows the Series to trade
the underlying common stock upon conversion, although such trading may be
subject to certain contractual or legal restrictions. For a more detailed
discussion of Rule 144A securities, see Liquidity and Rule 144A Securities under
Other Considerations.

Private placements of debt securities have frequently resulted in higher
yields and restrictive covenants providing greater protection for the purchaser,
such as longer call or refunding protection, than typically would be available
with publicly offered securities of the same type. Securities acquired through
private placements may also have special features not usually characteristic of
similar securities offered to the public, such as contingent interest or
warrants for the purchase of the issuer's stock. An issuer is often willing to
create more attractive features in its securities issued privately, because it
has avoided the expense and delay involved in a public offering of its
securities. For various reasons, an issuer may prefer or be required as a
practical matter to obtain private financing. At certain times, adverse
conditions in the public securities markets may preclude a public offering of an
issuer's securities.

Enhanced Convertible Securities. The Series may invest in convertible
securities that offer enhanced yield features, such as PRIDES (Preferred
Redeemable Increased Dividend Equity Securities) and DECS (Dividend Enhanced
Convertible Securities). Such securities all have the following features: (a)
the issuer's common stock will be received in the event the convertible
preferred stock is converted; (b) they do not have a capital appreciation limit;
(c) they seek to provide the investor with high current income with some
prospect of future

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<PAGE> 46

capital appreciation; (d) they are typically issued with three to four year
maturities; (e) they typically have some built-in call protection for the first
two to three years; (f) investors have the right to convert them into shares of
common stock at a preset conversion formula or hold them until maturity; and (g)
upon maturity they will automatically convert into either cash or a specified
number of shares of common stock. The Series may also invest in Preferred Equity
Redemption Cumulative Stock ("PERCS"), a preferred stock convertible into common
stock of the issuer which generally features a mandatory conversion date
(typically three years) as well as a capital appreciation limit which is usually
expressed in terms of a stated price. There may be additional types of
convertible securities which may be similar to those described above in which
the Series may invest, consistent with its investment objective and policies.

An investment in an enhanced convertible security may involve additional
risks to the Series. Unlike conventional convertible securities, enhanced
convertible securities do not usually have a fixed maturity (par) value. Rather,
enhanced convertible securities generally provide only for a mandatory
conversion into cash or common stock. As a result, the Series risks loss of
principal if the cash received or the price of the underlying common stock at
the time of conversion is less than the price paid for the enhanced convertible
security. Enhanced convertible securities may be more or less liquid than
conventional convertible securities or non-convertible debt securities. Any
purchases of illiquid enhanced convertible securities would be subject to the
Series' investment policy against investing more than 15% of the Series' net
assets in illiquid securities, and the Series therefore primarily intends to
acquire liquid enhanced convertible securities.

Short Sales Against the Box. The Series may engage in short sales "against
the box." While a short sale is made by selling a security the Series does not
own, a short sale is "against the box" to the extent that the Series
contemporaneously owns or has the right to obtain at no added cost securities
identical to those sold short.

Other Investments. The Series may invest in bank money market instruments
issued by depository institutions with total assets of at least $1 billion. The
Series' commercial paper investments at the time of purchase normally will be
rated at least "A-1" by S&P or at least "P-1" by Moody's or, if not rated, be
issued by corporations having an outstanding debt issue rated at least "A" by
S&P or Moody's. Although the Series may purchase non-convertible debt securities
rated below investment grade, it does not currently intend to invest more than
10% of its net assets in lower-rated non-convertible debt securities, and will
not invest in non-convertible debt securities rated below B- or the equivalent
by S&P or Moody's. The Series intends to invest in unrated securities only if
such securities are, in Lynch & Mayer's judgment, of comparable quality as rated
securities in which the Series may invest.

The Series may invest up to 10% of its net assets in warrants. Warrants
permit the Series to establish an equity position in selected securities by
committing a lower proportion of the portfolio to equities.

QUANTUM SERIES
The objective of Quantum Series is to achieve long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of medium to large-sized companies expected to grow over time.
Medium to large-size companies generally are those having a market
capitalization of greater than $1 billion at the time of investment. Vantage
will invest substantially all of the assets of the Series in equity securities
that it believes exhibit growth potential that significantly exceeds the average
anticipated growth rate of companies included in the S&P 500 and meet the
Series' "Social Criteria" strategy.

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<PAGE> 47

INVESTMENT STRATEGY
The Series will adhere to a Social Criteria strategy, which can be changed
by action of the Fund's Board of Directors. Vantage will utilize the Social
Investment Database published by Kinder, Lydenberg, Domini & Co. Inc. ("KLD") in
determining whether a company is engaged in any activity precluded by the
Series' Social Criteria. KLD specializes in providing the financial community
with social research on publicly traded U.S. corporations. The Series will not
purchase securities of any company for which the Social Investment Database
indicates a concern or a major concern relating to one or more of the Social
Criteria. See Social Criteria, below.

Because of the Social Criteria strategy, the Series may be underexposed
in certain sectors which may at times outperform the market.

While it is anticipated that the Series, under normal market conditions,
will invest principally in common stock, the Series may invest in all available
types of equity securities, including without limitation, preferred stock,
warrants and securities convertible into common stock. Such investments may be
made in any proportion deemed prudent under existing market and economic
conditions. See Other Considerations.

Up to 20% of the Series' total assets may be invested directly or
indirectly in securities of issuers domiciled in foreign countries, including
investments in American, European or Global Depositary Receipts. See Foreign
Securities and Foreign Currency Transactions under Other Considerations.

The Series may enter into options and futures transactions for hedging
purposes to counterbalance portfolio volatility. See Options and Futures
Contracts and Options on Futures Contracts under Other Considerations.

The Series may hold cash or invest in short-term debt securities and other
money market instruments when, in Vantage's opinion, such holdings are prudent
given then prevailing market conditions. The Series may also invest in such
instruments pending investment by the Series of proceeds from the sale of
portfolio securities or proceeds from new sales of Series shares pending
investment in other types of securities for the Series as to maintain sufficient
liquidity to meet redemptions. All such short-term investments will be of the
highest quality as determined by a nationally-recognized statistical rating
organization (e.g., S&P or Aaa by Moody's) or, if unrated, judged to be of
comparable quality as determined by Vantage.

The Series will constantly strive to achieve its objective and, in
investing to do so, may hold securities for any period of time. To the extent
the Series engages in short-term trading in attempting to achieve its objective,
it may increase the turnover rate and incur larger brokerage commissions and
other expenses than might otherwise be the case.

For additional information on the Series' investment policies and certain
risks associated with investments in certain types of securities, see Other
Considerations.

SOCIAL CRITERIA
Quantum Series will adhere to a Social Criteria strategy, which may be
changed by action of the Board of Directors. Vantage will utilize the Social
Investment Database published by KLD in determining whether a company is engaged
in any activity precluded by the Fund's Social Criteria. The Social Investment
Database reflects KLD's determination of the extent to which a company's
involvement in the activities prohibited by the Social Criteria is significant
enough to merit a concern or a major concern. Significance may be determined on
the basis of percentage of revenue generated by, or the size of the operations
attributable to, activities related to such Social Criteria, or other factors
selected by KLD. The social screening undergoes continual refinement and
modification.

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<PAGE> 48

Pursuant to the Social Criteria presently in effect, the Series will not
knowingly invest in or hold securities of companies which engage in:

1. Activities which result or likely to result in damage to the natural
environment;

2. The production of nuclear power, the design or construction of nuclear
power plants, or the manufacture or equipment for the production of
nuclear power;

3. The manufacture of, or contracting for, military weapons; or

4. The liquor, tobacco or gambling industries.

Because of its Social Criteria, the Series may not be able to take the
same advantage of certain investment opportunities as do funds which do not have
Social Criteria. Only securities of companies not excluded by any of the Social
Criteria will be eligible for consideration for purchase by the Series according
to its objective and policies described in this Prospectus.

The Series will commence the orderly sale of securities of a company when
it is determined by Vantage that such company no longer adheres to the Social
Criteria. The Series will sell such securities in a manner so as to minimize any
adverse affect on the Series' assets. Typically, such sales will be made within
90 days from the date of the Vantage's determination, unless a sale within the
90 day period would produce a significant loss to the overall value of the
Series' assets.

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<PAGE> 49

PURCHASE AND REDEMPTION

Shares are sold only to separate accounts of life companies at net asset
value. (See Calculation of Offering Price and Net Asset Value Per Share.)
Redemptions will be effected by the separate accounts at the net asset value
next determined after receipt of the order to meet obligations under the
variable contracts. Cash Reserve Series is managed to maintain a constant $10
per share net asset value although there is no assurance that this objective can
be achieved. Contract owners do not deal directly with the Fund with respect to
the acquisition or redemption of Fund shares.

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<PAGE> 50
DIVIDENDS AND DISTRIBUTIONS

Dividends for the Delchester, Capital Reserves, Cash Reserve and Strategic
Income Series are declared daily and paid monthly on the first business day
after the end of the month. Dividends for the Global Bond Series are declared
and paid monthly on the first business day after the end of the month.
Short-term capital gains distributions, if any, may be paid with the dividend;
otherwise, any distributions from net realized securities profits normally will
be distributed following the close of the fiscal year. The Fund's fiscal year
ends on December 31.

For the Decatur Total Return, Delaware, Devon, Convertible Securities and
Quantum Series, the Fund will make payments from the Series' net investment
income quarterly. Distributions from the respective Series' net realized
securities profits, if any, normally will be made following the close of the
fiscal year.

For the Growth, International Equity, Value and Emerging Markets Series,
the Fund will make payments from the Series' net income and net realized
securities profits, if any, once a year.

For the Trend Series, the Fund will make payments from the Series' net
investment income and net realized securities profits, if any, twice a year.

All dividends and distributions are automatically reinvested in additional
Series shares.

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<PAGE> 51
TAXES

The Fund has qualified as a regulated investment company under Subchapter
M of the Internal Revenue Code. As such, the Fund will not be subject to federal
income tax to the extent its earnings are distributed. The Fund intends to
distribute substantially all of the respective Series' net investment income and
net capital gains. Shareholders may be proportionately liable for taxes on
income and gains of the Series but shareholders not subject to tax on their
income will not be required to pay tax on amounts distributed to them, and the
Fund will inform shareholders of the amount and nature of such income or gains.

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<PAGE> 52
CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE

The offering price is the net asset value ("NAV") per share next
determined after an order is received. The offering price and net asset value
are computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the Exchange is open.

A Series' NAV per share is computed by adding the value of all securities
and other assets in that Series' portfolio, deducting any liabilities of that
Series (expenses and fees are accrued daily) and dividing by the number of that
Series' shares outstanding. The valuation criteria set forth below apply equally
to securities purchased in reliance upon Rule 144A of the 1933 Act. In
determining each Series' total net assets, portfolio securities listed or traded
on a national securities exchange, except for bonds, are valued at the last sale
price on the exchange upon which such securities are primarily traded.
Securities not traded on a particular day, over-the-counter securities and
government and agency securities are valued at the mean value between bid and
asked prices. Foreign securities expressed in foreign currency values will be
converted into U.S. dollar values at the mean between the currencies' bid and
offered quotations. Debt securities (other than short-term investments) are
priced at fair value by an independent pricing service using methods approved by
the Fund's Board of Directors. Short-term investments having a maturity of less
than 60 days are valued at amortized cost, which approximates market value. All
securities in the Cash Reserve Series are valued at amortized cost. Under the
direction of the Board of Directors, certain procedures have been adopted to
monitor the value of the Cash Reserve Series' securities and stabilize the price
per share at $10. All other securities are valued at their fair value as
determined in good faith and in a method approved by the Fund's Board of
Directors.

The International Equity and Emerging Markets Series' portfolio will be,
and the Global Bond Series' portfolio may be, comprised primarily of foreign
securities. From time to time, those securities may be listed primarily on
foreign exchanges which trade on days when the New York Stock Exchange is closed
(such as Saturday). As a result, the NAV of that Series may be significantly
affected by such trading on days when shareholders have no access to that
Series. To the extent other Series hold foreign securities which are so listed,
the net asset value of those Series also could be affected by trading on days
when shareholders have no access to those Series.

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<PAGE> 53
MANAGEMENT OF THE FUND

DIRECTORS
The business and affairs of the Fund are managed under the direction of
its Board of Directors. Part B contains additional information regarding the
directors and officers.

INVESTMENT MANAGERS AND SUB-ADVISERS
Delaware Management furnishes investment management services to each
Series of the Fund, other than International Equity, Global Bond and Emerging
Markets Series. Delaware International, an affiliate of Delaware Management,
furnishes investment management services to the International Equity, Global
Bond and Emerging Markets Series.

Delaware Management and its predecessors have been managing the funds in
the Delaware Group since 1938. On December 31, 1996, Delaware Management and its
affiliate, Delaware International, were supervising in the aggregate more than
$00 billion in assets in the various institutional (approximately
$00,000,000,000) and investment company (approximately $00,000,000,000)
accounts.

Delaware Management is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). Delaware International is also controlled by
DMH through several subsidiaries. On April 3, 1995, a merger between DMH and a
wholly owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH, Delaware Management and Delaware International are now indirect,
wholly owned subsidiaries, and subject to the ultimate control, of Lincoln
National. Lincoln National, with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management. Except for
Global Bond, Strategic Income, Devon, Emerging Markets, Convertible Securities
and Quantum Series, which were not yet in existence, in connection with the
merger, new Investment Management Agreements between the Fund on behalf of each
Series and its investment manager were executed following shareholder approval.
Delaware Management's address is One Commerce Square, 2005 Market Street,
Philadelphia, PA 19103. Delaware International's address is Veritas House, 125
Finsbury Pavement, London, England EC2A 1NQ.

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<PAGE> 54

Delaware Management manages each of the Series' (other than International
Equity, Global Bond and Emerging Markets Series) portfolios and makes investment
decisions which are implemented by the Fund's Trading Department. For these
services, Delaware Management is paid an annual fee equal to the following
percentage rates of the average daily net assets of the Series, less, in the
case of Decatur Total Return, Delchester, Capital Reserves, Money Market, Growth
and Delaware Series, a proportionate share of all directors' fees paid to the
unaffiliated directors of the Fund:

<TABLE>
<CAPTION>
<S> <C>
Decatur Total Return Series 0.60%,
Delchester Series 0.60%
Capital Reserves Series 0.60%
Cash Reserve Series 0.50%
Growth Series 0.75%,
Delaware Series 0.60%
Value Series 0.75%
Trend Series 0.75%
Strategic Income Series 0.65%
Devon Series 0.60%
Convertible Securities Series 0.75%
Quantum Series 0.75%
</TABLE>

See Expenses for a discussion of a voluntary waiver of its management fee
undertaken by Delaware Management. The investment management fee, as a
percentage of average daily net assets, incurred by each of the below Series for
the fiscal year ended October 31, 1996 was as follows:

<TABLE>
<CAPTION>
BEFORE VOLUNTARY AFTER VOLUNTARY
WAIVER WAIVER
------ ------
<S> <C> <C>
Decatur Total Return Series 0.00% 0.00%
Delchester Series 0.00% 0.00%
Capital Reserves Series 0.00% 0.00%
Cash Reserve Series 0.00% 0.00%
Growth Series 0.00% 0.00%
Delaware Series 0.00% 0.00%
Value Series 0.00% 0.00%
Trend Series 0.00% 0.00%
</TABLE>

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<PAGE> 55

Pursuant to the terms of Sub-Advisory Agreements with Delaware Management,
Lynch & Mayer and Vantage participate in the management of, respectively,
Convertible Securities Series' and Quantum Series' assets. Each Sub-Adviser is
responsible for day-to-day investment management of the Series, makes investment
decisions for the Series in accordance with the Series' investment objectives
and stated policies and places orders on behalf of the Series to effect the
investment decisions made. Delaware Management continues to have ultimate
responsibility for all investment advisory services in connection with the
management of the Series pursuant to the Investment Management Agreements and
supervises the Sub-Advisers' performance of such services For the services
provided to Delaware Management, Delaware Management pays Lynch & Mayer a fee
equal to 00% of the fee paid to Delaware Management under Convertible Securities
Series' Investment Management Agreement and Delaware Management pays Vantage a
fee equal to 00% of the fee paid to Delaware Management under Quantum Series'
Investment Management Agreement. Lynch & Mayer's address is 520 Madison Avenue,
New York, New York 10022. Vantage's address is 630 Fifth Avenue, New York, NY
10111

Delaware International manages the International Equity, Global Bond and
Emerging Markets Series' portfolios and implements investment decisions on
behalf of each of these Series. For these services, Delaware International is
paid an annual fee equal to the following percentage rates of the average daily
net assets of the Series, less, in the case of the International Equity Series,
a proportionate share of all directors' fees paid to the unaffiliated directors
of the Fund:

<TABLE>
<CAPTION>
<S> <C>
International Equity Series 0.75%
Global Bond Series 0.75%
Emerging Markets Series 1.25%
</TABLE>

See Expenses for a discussion of a voluntary waiver of its management fee
undertaken by Delaware International. The investment management fee, as a
percentage of average daily net assets, incurred by each Series for the fiscal
year ended October 31, 1996 was as follows:

<TABLE>
<CAPTION>
BEFORE VOLUNTARY AFTER VOLUNTARY
WAIVER WAIVER
------ ------
<S> <C> <C>
International Equity Series 0.00% 0.00%
Global Bond Series 0.00%* 0.00%*
</TABLE>

*Annualized. Commenced operations on May 2, 1996.

Subject to the overall supervision of Delaware Management, Delaware
International manages the international sector of Strategic Income Series'
portfolio and furnishes Delaware Management with investment recommendations,
asset allocation advice, research and other investment services with respect to
foreign securities. For the services provided to Delaware Management, Delaware
Management pays the Sub-Adviser a fee equal to 00% of the fee paid to Delaware
Management under the terms of Strategic Income Series' Investment Management
Agreement.

John B. Fields has primary responsibility for making day-to-day investment
decisions for the Decatur Total Return Series. He has been the Senior Portfolio
Manager of this Series since 1992. Mr. Fields, who has 25 years experience in
investment management, earned a bachelor's degree and an MBA from Ohio State
University. Before joining the Delaware Group in 1992, he was Director of
Domestic Equity Risk Management

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<PAGE> 56
at DuPont. Prior to that, he was Director of Equity Research at Comerica Bank.
Mr. Fields is a member of the Financial Analysts Society.

In making investment decisions for the Decatur Total Return Series, Mr.
Fields works with a team of 12 portfolio managers and analysts, each of whom
specializes in a different industry sector and makes recommendations
accordingly. Mr. Fields also regularly consults with Wayne A. Stork and Richard
G. Unruh, Jr. Mr. Stork, Chairman of Delaware Management and the Fund's Board of
Directors, is a graduate of Brown University and attended New York University's
Graduate School of Business Administration. Mr. Stork joined the Delaware Group
in 1962 and has served in various executive capacities at different times within
the Delaware organization. Mr. Unruh is a graduate of Brown University and
received his MBA from the University of Pennsylvania's Wharton School. He joined
the Delaware Group in 1982 after 19 years of investment management experience
with Kidder, Peabody & Co. Inc. Mr. Unruh was named an Executive Vice President
of the Fund in 1994. He is also a member of the Board of Directors of the
Delaware Management and Delaware International and was named an Executive Vice
President of Delaware Management in 1994.

Paul A. Matlack and Gerald T. Nichols have primary responsibility for
making day-to-day investment decisions for the Delchester Series. Mr. Matlack
and Mr. Nichols have been members of this Series' management team since 1990,
and were named co-managers of this Series in January 1993. A CFA charterholder,
Mr. Matlack is a graduate of the University of Pennsylvania with an MBA in
Finance from George Washington University. He began his career at Mellon Bank as
a credit specialist, and later served as a corporate loan officer for Mellon
Bank and then Provident National Bank.

Mr. Nichols is a graduate of the University of Kansas, where he received a
BS in Business Administration and an MS in Finance. Prior to joining the
Delaware Group, he was a high-yield credit analyst at Waddell & Reed, Inc. and
subsequently the investment officer for a private merchant banking firm. He is a
CFA charterholder.

In making investment decisions for Delchester Series, Mr. Matlack and Mr.
Nichols regularly consult with Paul E. Suckow. Mr. Suckow is Delaware
Management's Chief Investment Officer for Fixed-Income. A CFA charterholder, he
is a graduate of Bradley University with an MBA from Western Illinois
University. Mr. Suckow was a fixed-income portfolio manager at the Delaware
Group from 1981 to 1985. He returned to the Delaware Group in 1993 after eight
years with Oppenheimer Management Corporation, where he served as Executive Vice
President and Director of Fixed Income.

Gary A. Reed has primary responsibility for making investment decisions
for the Capital Reserves and Cash Reserve Series. He has been each Series'
senior portfolio manager since 1989. He holds an AB in Economics from the
University of Chicago and an MA in Economics from Columbia University. He began
his career in 1978 with the Equitable Life Assurance Company in New York City,
where he specialized in credit analysis. Prior to joining the Delaware Group in
1989, Mr. Reed was Vice President and Manager of the fixed-income department at
Irving Trust Company in New York. In making investment decisions for the Capital
Reserves and Cash Reserve Series, Mr. Reed regularly consults with Paul E.
Suckow.

Edward N. Antoian and Gerald S. Frey have primary responsibility for
making day-to-day investment decisions for the Growth and Trend Series. Mr.
Antoian, a Vice President/Senior Portfolio Manager of the Fund, has had such
responsibility since the Series' inception. A graduate of The State University
of New York at Albany with an MBA in Finance from the University of
Pennsylvania's Wharton School, Mr. Antoian began

-51-
<PAGE> 57

his career with Price Waterhouse. Prior to joining the Delaware Group in June
1984, he worked in the Institutional Equity Department of E.F. Hutton in
Philadelphia. Mr. Antoian is CFA charterholder, and a member of the Philadelphia
Finance Association and the Philadelphia Securities Association. Mr. Frey joined
Mr. Antoian as Vice President/Senior Portfolio Manager and Co-Manager of the
Series in June 1996. Mr. Frey has 20 years' experience in the money management
business and holds a BA in Economics from Bloomsburg University and an MBA from
Wilkes College. Prior to joining the Delaware Group in 1996, he was a Senior
Director with Morgan Grenfell Capital Management in New York.

In making investment decisions for the Series, Mr. Antoian and Mr. Frey
regularly consult with Wayne A. Stork, William H. Miller, Judith R. Finger and
Lori Wachs. Mr. Miller is a Vice President/Assistant Portfolio Manager. He holds
a BA in Economics from Trinity College. Prior to joining the Delaware Group in
1995, he worked as a technology analyst for Janney Montgomery Scott in
Philadelphia and he has also served as an institutional salesman for Rutherford
Brown & Catherwood. Ms. Finger is a Vice President/Assistant Portfolio Manager.
She joined the Delaware Group in 1995 from the New York-based Fred Alger
Management, where she was an equity analyst for three years. Prior to that, she
held positions with Chemical Bank and Dun & Bradstreet, in mergers and
acquisitions. She earned her BA in Finance from the University of Pennsylvania
and her MBA in Finance & Accounting from the University of Chicago. Ms. Wachs is
an Assistant Vice President. She joined the Delaware Group in 1992 from Goldman
Sachs, where she was an equity analyst for two years. She is a graduate of the
University of Pennsylvania's Wharton School, where she majored in Finance and
Oriental studies.

George H. Burwell and Gary A. Reed have primary responsibility for making
day-to-day investment decisions for the Delaware Series and Mr. Burwell has such
responsibility for Devon Series. Mr. Burwell, who has been Delaware Series'
senior portfolio manager for equities since 1992 and Devon Series' senior
portfolio manager since its inception, holds a BA from the University of
Virginia. Prior to joining the Delaware Group in 1992, Mr. Burwell was a
portfolio manager for Midlantic Bank in Edison, New Jersey, where he managed an
equity mutual fund and three commingled funds. Mr. Burwell is a CFA
charterholder. Mr. Reed has been the Delaware Series' senior portfolio manager
for fixed-income since 1989.

In making investment decisions for the Delaware and Devon Series, Mr.
Burwell and Mr. Reed regularly consult with Wayne A. Stork, Richard G. Unruh,
Jr. and Paul E. Suckow.

Effective August 21, 1995, David C. Dalrymple assumed primary
responsibility for making day-to-day investment decisions for the Value Series.
Prior to that time, Mr. Dalrymple served as an assistant portfolio manager of
DelCap Fund of Delaware Group Equity Funds IV, Inc. Mr. Dalrymple holds a BS in
Business Administration from Clarkson College in Potsdam, NY, and an MBA from
Cornell Johnson School of Management in Ithaca, NY. Prior to joining the
Delaware Group in 1991, he spent five years as an assistant portfolio manager
for Lord Abbett and Co. in New York. Mr. Dalrymple is a CFA charterholder and a
member of the Financial Analysts of Philadelphia.

In making investment decisions for Value Series, Mr. Dalrymple consults
with Wayne A. Stork and Richard G. Unruh, Jr.

Clive A. Gillmore has primary responsibility for making day-to-day
investment decisions for the International Equity and Emerging Markets Series.
He has been the senior portfolio manager for each of these Series since its
inception. A graduate of the University of Warwick and having begun his career
at Legal and General Investment Management, Mr. Gillmore joined the Delaware
Group in 1990 after eight years of

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<PAGE> 58
investment experience. His most recent position prior to joining the Delaware
Group was as a Pacific Basin equity analyst and senior portfolio manager for
Hill Samuel Investment Advisers Ltd. Mr. Gillmore completed the London Business
School Investment program.

In making investment decisions for these Series, Mr. Gillmore
regularly consults with an international equity team of nine members, five of
whom research the Pacific Basin and four of whom research the European Markets.
Mr. Gillmore also regularly consults with David G. Tilles. Mr. Tilles, who is
Chief Investment Officer for Delaware International, is a graduate of the
University of Warwick with a BS in management sciences. Before joining the
Delaware Group in 1990, he was Chief Investment Officer of Hill Samuel
Investment Advisers Ltd. He is a member of the Institute of Investment
Management & Research and the Operational Research Society. In making investment
decisions for Emerging Markets Series, in addition to the above team, Mr.
Gillmore consults regularly with Robert Akester. Prior to joining Delaware in
1996, Mr. Akester, who began his investment career in 1969, was most recently a
Director of Hill Samuel Investment Management, which he joined in 1985. His
prior experience included working as a Senior Analyst and head of the South-East
Asian Research team at James Capel, and as a Fund Manager at Prudential
Assurance Co., Ltd. Mr. Akester holds a BSc (Econ) in Statistics and Economics
from University College, London and is an associate of the Institute of
Actuaries, with a certificate in Finance and Investment.

Ian G. Sims and Christopher Moth have primary responsibility for making
day-to-day investment decisions for the Global Bond Series. Mr. Sims has been
the senior portfolio manager for this Series since its inception. Mr. Sims is a
graduate of the University of Newcastle-Upon-Tyne. He joined Delaware
International in 1990 as a senior international fixed-income and currency
manager. Mr. Sims began his investment career with the Standard Life Assurance
Co., and subsequently moved to the Royal Bank of Canada Investment Management
International Company, where he was an international fixed-income manager. Prior
to joining Delaware International, he was a senior fixed-income and currency
portfolio manager with Hill Samuel Investment Advisers Ltd. Mr. Moth became
Co-Manager of the Series in January 1997. Mr. Moth is a graduate of The City
University London. Mr. Moth joined Delaware in 1992. He previously worked at the
Guardian Royal Exchange in an actuarial capacity where he was responsible for
technical analysis, quantitative models and projections. Mr. Moth has been
awarded the certificate in Finance & Investment from the Institute of Actuaries
in London.

In making investment decisions for the Global Bond Series, Mr. Sims and
Mr. Moth regularly consult with Hywel Morgan. Mr. Morgan was educated at the
University of Wales and was subsequently an Economics Lecturer at Dundee
University. Prior to joining Delaware International, he was Associate Director
of the international fixed-income department and head of the credit review
committee at Hill Samuel Investment Management responsible for over $500 million
in multi-currency fixed interest accounts. His prior experience included working
as an economic adviser for Credit Suisse and the Economic Intelligence Unit. Mr.
Morgan started his business career as a Corporate Economist & Strategist at Ford
of Europe and Esso Petroleum.

Paul A. Matlack has primary responsibility for allocating Strategic Income
Series' assets among the fixed-income and equity sectors and for making
day-to-day investment decisions for the Series regarding its investments in the
high-yield sector. Mr. Matlack has been a member of the Series' management team
since its inception. Paul Grillo has primary responsibility for making
day-to-day investment decisions for this Series regarding its investments in
investment grade securities. Mr. Grillo has been a member of the Fund's
management team since its inception. Mr. Grillo, an Assistant Vice President and
Portfolio Manager of Income Funds, Inc., holds a BA in Business Management from
North Carolina State University and an MBA in Finance from Pace University.
Prior to joining the Manager in 1993, he served as mortgage strategist and
trader at the

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<PAGE> 59

Dreyfus Corporation. He also served as a mortgage strategist and portfolio
manager for the Chemical Investment Group and as financial analyst at the
Chemical Bank. Mr. Grillo is a CFA charterholder. Ian G. Sims has primary
responsibility for making day-to-day investment decisions for Strategic Income
Series regarding its investments in foreign securities. Mr. Sims has been a
member of the Fund's management team since its inception. Babak Zenouzi has
primary responsibility for making day-to-day investment decisions for this
Series regarding its investments in U.S. equity securities. Mr. Zenouzi, a Vice
President/Portfolio Manager of the Fund, has been a member of the Series'
management team since its inception. Mr. Zenouzi holds a BS in Finance and
Economics from Babson College in Wellesley, Massachusetts, and an MS in Finance
from Boston College. Prior to joining the Manager in 1992, he was with The
Boston Company where he held the positions of assistant vice president, senior
financial analyst, financial analyst and portfolio accountant.

Strategic Income Series' portfolio management team will from time to time
consult with Paul E. Suckow.

Vantage, the Sub-Adviser to Quantum Series, is an indirect, wholly-owned
subsidiary of Lincoln National and an affiliate of Delaware Management. Founded
in 1979, it provides investment advice to pension plans, endowments, insurance
and commingled products and has assets under management, as of , 1996, in excess
of $0.00 billion. T. Scott Wittman, President and Chief Investment Officer of
Vantage, has primary responsibility for making day-to-day investment decisions
for the Quantum Series. He has had such responsibility for this Series since its
inception. His responsibilities include both business administration and equity
portfolio management. A CFA charterholder, Mr. Wittman received both graduate
and undergraduate degrees in business administration from Indiana University. He
has spent his entire professional career in quantitative investment firms,
including TSA Capital Management, where he was a managing director, and Mellon
Bank, where he was Vice President and Manager of Quantitative Analysis and
Systems.

Lynch & Mayer, the Sub-Adviser to Convertible Securities Series, is an
indirect, wholly-owned subsidiary of Lincoln National and an affiliate of
Delaware Management. Lynch & Mayer is a New York-based investment manager of
equities and convertible securities. Founded in 1976 by Eldon Mayer and Dennis
Lynch, the firm currently has over $6 billion under management. Lynch & Mayer
manages both large- and mid-capitalization equity portfolios in addition to
convertible portfolios. Robert D. Schwartz, Vice President of Lynch & Mayer,
serves as Portfolio Manager for Convertible Securities Series. Before joining
Lynch & Mayer in 1993, Mr. Schwartz was Portfolio Manager, Salomon Brothers
Asset Management, Inc. (1989-1993); Portfolio Manager, First Boston Asset
Management (1988-1989); Senior Equity Research Associate, Morgan Stanley & Co.
(1984-1988). He received a BA from the State University of New York at Cortland
in 1980, Magna Cum Laude, and an MBA from New York University in 1987. Mr.
Schwartz was designated a CFA charterholder in 1991.

PORTFOLIO TRADING PRACTICES
The Series normally will not invest for short-term trading purposes.
However, the Series may sell securities without regard to the length of time
they have been held. Given the respective Series' investment objectives, the
annual portfolio turnover rates are not expected to exceed 100% for the Decatur
Total Return, Delchester, Growth, International Equity, Global Bond, Strategic
Income, Emerging Markets, Devon and Quantum Series, 200% for the Capital
Reserves, Delaware and Convertible Securities Series, and may exceed 100% for
the Value and Trend Series. A 100% turnover rate would occur if all of the
securities in a Series were sold and replaced within one year. The rate of
portfolio turnover is not a limiting factor when the investment manager deems it
desirable to purchase or sell securities. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs and may affect taxes payable by the Series' shareholders that are subject
to federal income taxes. The turnover rate may also be affected by cash
requirements from redemptions and repurchases of the Series' shares. The degree
of portfolio

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<PAGE> 60

activity may affect brokerage costs of the Series and taxes payable by
shareholders that are subject to federal income taxes.

The portfolio turnover rates for each of the below Series for the past two
years were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Decatur Total Return Series 00% 85%
Delchester Series 00% 74%
Capital Reserves Series 000% 145%
Delaware Series 000% 106%
Growth Series 00% 73%
International Equity Series 00% 19%
Value Series 00% 71%
Trend Series 00% 76%
Global Bond Series 00%* N/A
</TABLE>

*Annualized. Commenced operations on May 2, 1996.

Best efforts are used to obtain the best available price and most
favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the respective
investment manager or their respective advisory clients. These services may be
used by the respective investment manager in servicing any of their respective
accounts. Subject to best price and execution, the respective investment manager
may consider a broker/dealer's sales of variable contracts in placing portfolio
orders, and may place orders with broker/dealers that have agreed to defray
certain Series expenses such as custodian fees.

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<PAGE> 61
PERFORMANCE INFORMATION

DECATUR TOTAL RETURN, DELCHESTER, CAPITAL RESERVES, GROWTH, DELAWARE,
INTERNATIONAL EQUITY, VALUE, TREND, GLOBAL BOND, STRATEGIC INCOME, DEVON,
EMERGING MARKETS, CONVERTIBLE SECURITIES AND QUANTUM SERIES

From time to time, the Fund may quote the above listed Series' total
return performance in advertising and other types of literature. Total return
will be based on a hypothetical $1,000 investment, reflecting the reinvestment
of all distributions at net asset value. Each presentation will include the
average annual total return for one-, five- and ten-year (or life of Series, if
applicable) periods. The Fund may also advertise aggregate and average total
return information concerning the Series over additional periods of time.

From time to time, the Fund may also quote the Delchester, Capital
Reserves, Global Bond and Strategic Income Series' yield performance in
advertising and other types of literature. The current yield for these Series
will be calculated by dividing the annualized net investment income earned by
the Series during a recent 30-day period by the maximum offering price per share
on the last day of the period. The yield formula provides for semi-annual
compounding which assumes that net investment income is earned and reinvested at
a constant rate and annualized at the end of a six-month period.

Because securities' prices fluctuate, investment results of the Series
will fluctuate and past performance should not be considered as a representation
of future results.

CASH RESERVE SERIES

From time to time, the Fund may publish the Series' "yield" and "effective
yield." Both yield figures are based on historical earnings and are not intended
to indicate future performance. The "yield" of the Series refers to the income
generated by an investment in the Series over a specified seven-day period. This
income is then "annualized," which means the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
calculated in a similar manner but, when annualized, the income earned by an
investment in the Series is assumed to be reinvested. The "effective yield" will
be slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment. The Fund may also publish aggregate and average annual
total return information concerning the Series which will reflect the compounded
rate of return of an investment in the Series over a specified period of time
and will assume the investment of all distributions at net asset value. Yield
fluctuates and is not guaranteed. Past performance is not an indication of
future results.

DISTRIBUTION AND SERVICE

The Distributor, Delaware Distributors, L.P., serves as the Fund's
national distributor under Distribution Agreements dated April 3, 1995 for all
Series other than Global Bond, Strategic Income, Devon, Emerging Markets,
Convertible Securities and Quantum Series. The Global Bond Series' Distribution
Agreement is dated as of May 1, 1996. The Strategic Income, Devon, Emerging
Markets, Convertible Securities and Quantum Series' Distribution Agreements are
dated as of May 1, 1997. The Distributor bears all of the costs of promotion and
distribution.

Delaware Service Company, Inc. (the "Transfer Agent") is the shareholder
servicing, dividend disbursing and transfer agent for all Series, except for
Cash Reserve Series, under the Amended and Restated Shareholders Services
Agreement dated May 1, 1997, and for Cash Reserve Series under the Shareholders
Services Agreement dated June 29, 1988. The Transfer Agent also provides
accounting services to each Fund

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<PAGE> 62

pursuant to the terms of a separate Fund Accounting Agreement. The directors of
the Fund annually review service fees paid to the Transfer Agent.

The Distributor and the Transfer Agent are indirect, wholly owned
subsidiaries of DMH.

EXPENSES
Each Series is responsible for all of its own expenses other than those
borne by the respective investment manager under the Investment Management
Agreements and those borne by the Distributor under the Distribution Agreements.

With respect to the Delchester, Capital Reserves and Cash Reserve Series,
Delaware Management elected voluntarily to waive its fee and reimburse those
Series to limit certain expenses of those Series to 0.80% of average daily net
assets for six months following their initial public offering. This waiver has
been extended through June 30, 1997. For the year ended December 31, 1996, the
Delchester, Capital Reserves and Cash Reserve Series' ratios of expenses to
average daily net assets were 0.00%, 0.00% and 0.00%, respectively.

With respect to the Decatur Total Return, Delaware and Growth Series,
Delaware Management had elected voluntarily to waive its fee and reimburse those
Series to the extent necessary to limit certain expenses of each Series to 0.80%
of each Series' average daily net assets for the period July 1, 1992 through
June 30, 1993. This waiver has been extended through June 30, 1997. For the year
ended December 31, 1996, the Decatur Total Return, Delaware and Growth Series'
ratios of expenses to average daily net assets were 0.00%, 0.00% and 0.00%,
respectively. The expense ratio for the Growth Series reflects the waiver of
fees described above.

In connection with the Value and Trend Series, Delaware Management had
elected voluntarily to waive its fee and to reimburse the Series to the extent
necessary to limit certain expenses to 0.80% of average daily net assets for the
period from commencement of the public offering for the Series through June 30,
1994. This waiver has been extended through June 30, 1997. For the year ended
December 31, 1996, the Value and Trend Series' ratios of expenses to average
daily net assets were 0.00% and 0.00%, respectively.

With respect to the Strategic Income, Devon, Convertible Securities and
Quantum Series, Delaware Management had elected voluntarily to waive its fee and
reimburse those Series to the extent necessary to limit certain expenses of each
Series to 0.80% of each Series' average daily net assets for the from
commencement of the public offering through June 30, 1997.

With respect to the International Equity and Global Bond Series, Delaware
International has elected voluntarily to waive its fee and to reimburse the
Series to the extent necessary to limit certain expenses to 0.80% of average
daily net assets for the period from commencement of the public offering through
June 30, 1993 for the International Equity Series and through June 30, 1996 for
the Global Bond Series. These waivers have been extended through June 30, 1997.
For the year ended December 31, 1996, International Equity Series' ratio of
expenses to average daily net assets was 0.00%, reflecting the waiver. Global
Bond Series' ratio of expenses to average daily net assets is expected to equal
0.80%, reflecting the waiver.

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<PAGE> 63

With respect to Emerging Markets Series, Delaware International has
elected voluntarily to waive its fee and to reimburse the Series to the extent
necessary to limit certain expenses to 1.50% of average daily net assets for the
period from commencement of the public offering through June 30, 1997.

DESCRIPTION OF FUND SHARES
Shares of the Fund are sold only to separate accounts of life companies.
Currently, the shares of the Fund are sold only to Variable Annuity Account C
and Flexible Premium Variable Life Account K of Lincoln National Life Insurance
Company, Variable Accounts A and B of American International Life Assurance
Company of New York, Variable Accounts I and II of AIG Life Insurance Company,
Separate Accounts VA-K, VEL II and Inheiritage of First Allmerica Financial Life
Insurance Company and Separate Accounts VA-K, VEL, VEL II and Inheiritage of
Allmerica Financial Life Insurance and Annuity Company. In the future, shares of
the Fund may be sold to separate accounts of other affiliated or unaffiliated
life companies to fund variable contracts. The Fund's Board of Directors will
monitor events in order to identify any material irreconcilable conflicts which
may possibly arise and to determine what action, if any, should be taken in
response thereto. An irreconcilable conflict that is not resolved might result
in the withdrawal of a substantial amount of assets, causing a negative impact
on net asset value.

As a "series" type of mutual fund, the Fund issues separate classes or
series of stock, currently the 15 Series described in this Prospectus.
Additional series may be established in the future. An interest in the Fund is
limited to the assets of the particular Series in which shares are held, and
shareholders of each Series are entitled to a pro-rata share of all dividends
and distributions arising from an investment in such Series.

The Fund was organized as a Maryland corporation on February 19, 1987. The
authorized capital stock of the Fund consists of five hundred million shares of
common stock, $.01 par value. Each of the 15 Series is currently allocated fifty
million shares. The Fund may establish additional series and may allocate its
shares either to such new classes or to any of the 15 existing Series.

Each Series' shares have equal voting rights and are equal in all other
respects. Each Series will vote separately on any matter which affects only that
Series. Shareholders get one vote for each share held; fractional shares are
voted. The Fund will hold annual meetings as necessary for shareholder matters
to be voted under the 1940 Act or otherwise. Shares of each Series will have a
priority over shares of any other Series of the Fund in the assets and income of
that Series.

Because of current federal securities law requirements, the Fund expects
that its life company shareholders will offer their contract owners the
opportunity to instruct them as to how Series shares allocable to their variable
contracts will be voted with respect to certain matters, such as approval of
investment advisory agreements. An insurance company will vote all Series shares
held in a separate account in the same proportion as it receives instructions
from contract owners in that separate account. Under certain circumstances,
which are described more fully in the accompanying prospectuses for the separate
accounts which invest in the Fund, the voting instructions received from
contract owners may be disregarded.

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<PAGE> 64

OTHER CONSIDERATIONS

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
Consistent with their respective objectives, each Series may invest in
U.S. government securities and corporate debt obligations on a when-issued or
delayed delivery basis. Such transactions involve commitments to buy a new issue
with settlement up to 60 days later. The average settlement date for when-issued
or delayed delivery securities purchased by the Series is generally between 30
and 45 days. During the time between the commitment and settlement, the Series
do not accrue interest, but the market value of the bonds may fluctuate. This
can result in a Series' share value increasing or decreasing. The Series will
not ordinarily sell when-issued or delayed delivery securities prior to
settlement. If a Series invests in securities of this type, it will maintain a
segregated account to pay for them and mark the account to market daily.

MORTGAGE-BACKED SECURITIES
The Capital Reserves, Delaware, Strategic Income and Devon Series may
invest in mortgage-backed securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or government sponsored
corporations or those issued by certain private, non-government corporations,
such as financial institutions. Two principal types of mortgage-backed
securities are collateralized mortgage obligations (CMOs) and real estate
mortgage investment conduits (REMICs).

CMOs are debt securities issued by U.S. government agencies or by
financial institutions and other mortgage lenders and collateralized by a pool
of mortgages held under an indenture. CMOs are issued in a number of classes or
series with different maturities. The classes or series are retired in sequence
as the underlying mortgages are repaid. Prepayment may shorten the stated
maturity of the obligation and can result in a loss of premium, if any has been
paid. Certain of these securities may have variable or floating interest rates
and others may be stripped (securities which provide only the principal or
interest feature of the underlying security).

REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.

CMOs and REMICs issued by private entities are not government securities
and are not directly guaranteed by any government agency. They are secured by
the underlying collateral of the private issuer. Such private-backed securities
may be 100% collateralized at the time of issuance by securities issued or
guaranteed by the U.S. Government, its agencies, or instrumentalities (so-called
"agency mortgage-backed securities") or may not be so collateralized (so-called
"non-agency mortgage-backed securities"). The Series may invest in agency and
non-agency mortgage-backed securities. Non-agency mortgage-backed securities may
comprise up to 20% of the Series' respective assets, but all non-agency
mortgage-backed securities must (i) be rated at the time of purchase in the four
top rating categories by a nationally-recognized statistical rating organization
(e.g., BBB or better by Standard & Poor's Ratings Group ("S&P") or Baa or better
by Moody's Investors Service, Inc.("Moody's")) and (ii) represent interests in
whole-loan mortgages, multi-family mortgages, commercial mortgages or other
mortgage collateral supported by a first mortgage lien on real estate.
Non-agency mortgage-backed securities are subject to the interest rate and
prepayment risks to which other CMOs and REMICs issued by private issuers are
subject. Non-agency mortgage-backed securities may also be subject to a greater
risk of loss of interest and principal because they are not collateralized by
securities issued or guaranteed by the U.S. Government. In addition, timely

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information concerning the loans underlying these securities may not be as
readily available and the market for these securities may be less liquid than
the market for other CMOs and REMICs.

ASSET-BACKED SECURITIES
The Capital Reserves, Delaware, Cash Reserve, Strategic Income and Devon
Series may invest in securities which are backed by assets such as receivables
on home equity and credit loans, receivables regarding automobile, mobile home
and recreational vehicle loans, wholesale dealer floor plans and leases or other
loans or financial receivables currently available or which may be developed in
the future. For the Capital Reserves, Delaware, Strategic Income and Devon
Series, all such securities must be rated in one of the four highest rating
categories by a reputable rating agency (e.g., BBB or better by S&P or Baa or
better by Moody's). It is the Cash Reserve Series' current policy to limit
asset-backed investments to those rated in the highest rating category by a
reputable rating agency (e.g., AAA by S&P or Aaa by Moody's) and represented by
interests in credit card receivables, wholesale dealer floor plans, home equity
loans and automobile loans.

Such receivables are securitized in either a pass-through or a pay-through
structure. Pass-through securities provide investors with an income stream
consisting of both principal and interest payments in respect of the receivables
in the underlying pool. Pay-through asset-backed securities are debt obligations
issued usually by a special purpose entity, which are collateralized by the
various receivables and in which the payments on the underlying receivables
provide the funds to pay the debt service on the debt obligations issued.

The rate of principal payment on asset-backed securities generally depends
on the rate of principal payments received on the underlying assets. Such rate
of payments may be affected by economic and various other factors such as
changes in interest rates or the concentration of collateral in a particular
geographic area. Therefore, the yield may be difficult to predict and actual
yield to maturity may be more or less than the anticipated yield to maturity.
Due to the shorter maturity of the collateral backing such securities, there
tends to be less of a risk of substantial prepayment than with mortgage-backed
securities but the risk of such a prepayment does exist. See Mortgaged-Backed
Securities, above. Such asset-backed securities do, however, involve certain
risks not associated with mortgage-backed securities, including the risk that
security interests cannot be adequately or in many cases ever established, and
other risks which may be peculiar to particular classes of collateral. For
example, with respect to credit card receivables, a number of state and federal
consumer credit laws give debtors the right to set off certain amounts owed on
the credit cards, thereby reducing the outstanding balance. In the case of
automobile receivables, there is a risk that the holders may not have either a
proper or first security interest in all of the obligations backing such
receivables due to the large number of vehicles involved in a typical issuance
and technical requirements under state laws. Therefore, recoveries on
repossessed collateral may not always be available to support payments on the
securities.

REITS
The Delaware, Strategic Income and Devon Series may invest in REITs. REITs
are pooled investment vehicles which invest primarily in income-producing real
estate or real estate related loans or interests. REITs are generally classified
as equity REITs, mortgage REITs or a combination of equity and mortgage REITs.
Equity REITs invest the majority of their assets directly in real property and
derive income primarily from the collection of rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive income from the collection of interest payments. Like investment
companies, REITs are not taxed on income distributed to shareholders provided
they comply with several requirements in the Code. REITs are subject to
substantial cash

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flow dependency, defaults by borrowers, self-liquidation, and the risk of
failing to qualify for tax-free pass-through of income under the Code, and/or to
maintain exemptions from the 1940 Act.

FOREIGN SECURITIES AND FOREIGN CURRENCY TRANSACTIONS
As noted above, the International Equity and Emerging Markets Series
intend to invest their assets primarily in securities of foreign issuers and the
Global Bond Series will invest at least 65% of its assets in fixed-income
securities of issuers organized or having a majority of their assets in or
deriving a majority of their operating income in at least three different
countries, one of which may be the United States. Each of the other Series may
invest a portion of its assets in securities of issuers organized or having a
majority of their assets in or deriving a majority of their operating income
outside the United States. In connection with investments in foreign securities,
a Series may, from time to time, conduct foreign currency exchange transactions
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through entering into contracts to purchase or sell foreign
currencies at a future date (i.e., a "forward foreign currency" contract or
"forward" contract). A Series will engage in these foreign currency transactions
in order to expedite settlement of portfolio transactions and to minimize
currency value fluctuations. Investing in foreign securities and, in conjunction
therewith, engaging in foreign currency transactions present special
considerations not presented by investments in securities issued by United
States companies. See Foreign Currency Transactions under International Equity
Series for a discussion of these considerations.

The risk involved in investing in foreign securities include the
possibility of expropriation, nationalization or confiscatory taxation, taxation
of income earned in foreign nations or other taxes imposed with respect to
investments in foreign nations, foreign exchange control (which may include
suspension of the ability to transfer currency from a given country), default in
foreign government securities, political or social instability or diplomatic
developments which could affect investments in securities of issuers in those
nations. In addition, in many countries, there is less publicly available
information about issuers than is available in reports about companies in the
United States, and the information that is available is often of lesser quality
than information available on U.S. companies. Foreign companies are not subject
to uniform accounting, auditing and financial reporting standards, and auditing
practices and requirements may not be comparable to those applicable to United
States companies. Further, a Series may encounter difficulty or be unable to
pursue legal remedies and obtain judgments in foreign courts. Commission rates
on securities transactions in foreign countries, which are sometimes fixed
rather than subject to negotiation as in the United States, are likely to be
higher. Moreover, the settlement period of securities transactions in foreign
markets may be longer than in domestic markets. In many foreign countries, there
is less government supervision and regulation of business and industry
practices, stock exchanges, brokers and listed companies than in the United
States. The foreign securities markets of many of the countries in which a
Series may invest may also be smaller, less liquid and subject to greater price
volatility than those in the United States.

Emerging Markets. Compared to the United States and other developed
countries, emerging countries may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade a
small number of securities. Prices on these exchanges tend to be volatile and,
in the past, securities in these countries have offered greater potential for
gain (as well as loss) than securities of companies located in developed
countries. Further, investments by foreign investors (such as the Series) are
subject to a variety of restrictions in many emerging countries. These
restrictions may take the form of prior governmental approval, limits on the
amount or type of securities held by foreigners, and limits on the types of
companies in which foreigners may invest. Additional restrictions may be imposed
at any time by these or other countries in which a Series invests. In addition,
the repatriation of both investment income and capital from several foreign
countries is restricted and controlled under certain regulations, including, in
some cases, the need for certain

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governmental consents. Although these restrictions may in the future make it
undesirable to invest in emerging countries, Delaware International does not
believe that any current repatriation restrictions would affect its decision to
invest in such countries. Countries such as those in which a Series may invest
have historically experienced and may continue to experience, high rates of
inflation, high interest rates, exchange rate fluctuations or currency
depreciation, large amounts of external debt, balance of payments and trade
difficulties and extreme poverty and unemployment. Additional factors which may
influence the ability or willingness to service debt include, but are not
limited to, a country's cash flow situation, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of its debt
service burden to the economy as a whole, its government's policy towards the
International Monetary Fund, the World Bank and other international agencies and
the political constraints to which a government debtor may be subject.

With respect to investment in debt issues of foreign governments,
including Brady Bonds, the ability of a foreign government or government-related
issuer to make timely and ultimate payments on its external debt obligations
will also be strongly influenced by the issuer's balance of payments, including
export performance, its access to international credits and investments,
fluctuations in interest rates and the extent of its foreign reserves. A country
whose exports are concentrated in a few commodities or whose economy depends on
certain strategic imports could be vulnerable to fluctuations in international
prices of these commodities or imports. To the extent that a country receives
payment for its exports in currencies other than dollars, its ability to make
debt payments denominated in dollars could be adversely affected.

The issuers of the emerging market country government and
government-related high yield securities in which a Series may invest have in
the past experienced substantial difficulties in servicing their external debt
obligations, which have led to defaults on certain obligations and the
restructuring of certain indebtedness. Restructuring arrangements have included,
among other things, reducing and rescheduling interest and principal payments by
negotiating new or amended credit agreements or converting outstanding principal
and unpaid interest to Brady Bonds, and obtaining new credit to finance interest
payments. Holders of certain foreign government and government-related high
yield securities may be requested to participate in the restructuring of such
obligations and to extend further loans to their issuers. There can be no
assurance that the Brady Bonds and other foreign government and
government-related high yield securities in which a Series may invest will not
be subject to similar defaults or restructuring arrangements which may adversely
affect the value of such investments. Furthermore, certain participants in the
secondary market for such debt may be directly involved in negotiating the terms
of these arrangements and may therefore have access to information not available
to other market participants.

Foreign Currency Transactions. Series which invest in foreign securities
may also purchase options and forward contracts in foreign currency for hedging
purposes in connection with such foreign securities transactions. As in the case
of other kinds of options, the writing of an option on foreign currency will
constitute only a partial hedge, up to the amount of the premium received, and a
Series could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against
fluctuations in exchange rates, although, in the event of rate movements adverse
to a Series' position, the Series may forfeit the entire amount of the premium
plus related transaction costs.

With respect to forward foreign currency contracts, the precise matching
of forward contract amounts and the value of the securities involved is
generally not possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date

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the forward contract is entered into and the date it matures. The projection of
short-term currency strategy is highly uncertain.

It is impossible to forecast the market value of portfolio securities at
the expiration of the contract. Accordingly, it may be necessary for the Series
to purchase additional foreign currency on the spot market (and bear the expense
of such purchase) if the market value of the security is less than the amount of
foreign currency the Series is obligated to deliver (and if a decision is made
to sell the security and make delivery of the foreign currency). Conversely, it
may be necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security if its market value exceeds the
amount of foreign currency the Series is obligated to deliver.

Depositary Receipts. Each Series (other than Cash Reserve Series) may make
foreign investments through the purchase and sale of sponsored or unsponsored
American, European and Global Depositary Receipts ("Depositary Receipts").
Depositary Receipts are receipts typically issued by a U.S. or foreign bank or
trust company which evidence ownership of underlying securities issued by a
foreign corporation. "Sponsored" Depositary Receipts are issued jointly by the
issuer of the underlying security and a depository, whereas "unsponsored"
Depositary Receipts are issued without participation of the issuer of the
deposited security. Holders of unsponsored Depositary Receipts generally bear
all the costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored Depositary
Receipt.

OPTIONS
To achieve the Series' objectives, the Series, except for the Cash Reserve
Series, intend to use certain hedging techniques which might not be conveniently
available to individuals.

These techniques will be used at the respective investment manager's
discretion to protect a Series' principal value.

The Series may purchase put options, write covered call options and enter
into closing transactions in connection therewith in respect of securities in
which they may invest. The International Equity, Global Bond, Emerging Markets
and Convertible Securities Series may also purchase call options and enter into
related closing transactions. In addition, the Convertible Securities Series may
write covered put options. In purchasing put and call options, the premium paid
by the Series, plus any transaction costs, will reduce any benefit realized by
the Series upon exercise of the option.

Purchasing a put option gives a Series the right to sell one of its
securities for an agreed price up to an agreed date. The advantage is that the
Series can be protected should the market value of the security decline.
However, the Series must pay a premium for this right, whether it exercises it
or not.

Writing a covered call option obligates a Series to sell one of its
securities for an agreed price up to an agreed date. The advantage is that the
Series receives premium income, which may offset the cost of purchasing put
options. However, the Series may lose the potential market appreciation of the
security if the respective investment manager's judgment is wrong and interest
rates fall.

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A call option enables the purchaser, in return for the premium paid, to
purchase securities from the writer of the option at an agreed upon date. The
advantage is that the purchaser may hedge against an increase in the price of
securities it ultimately wishes to buy.

Closing transactions essentially let a Series offset a put option or call
option prior to its exercise or expiration. If it cannot effect a closing
transaction, it may have to hold a security it would otherwise sell with a
potential decline in net asset value, or deliver a security it might want to
hold.

Each Series, other than the International Equity, Global Bond, Devon,
Emerging Markets, Convertible Securities and Quantum Series, will use
Exchange-traded options, but reserve the right to use over-the-counter options
upon written notice to shareholders. The International Equity, Global Bond,
Devon, Emerging Markets, Convertible Securities and Quantum Series may use both
Exchange-traded and over-the-counter options. Certain over-the-counter options
may be illiquid. The International Equity, Global Bond, Devon, Emerging Markets,
Convertible Securities and Quantum Series will only invest in such options to
the extent consistent with its 10% limit on investments in illiquid securities
(15% in the case of Convertible Securities Series).

The Growth, International Equity, Value, Trend, Global Bond, Devon,
Emerging Markets, Convertible Securities and Quantum Series also may write call
options and purchase put options on stock indices and enter into closing
transactions in connection therewith. The International Equity, Global Bond,
Devon, Emerging Markets, Convertible Securities and Quantum Series also may
purchase call options on stock indices and enter into closing transactions in
connection therewith. No Series will engage in transactions on stock indices for
speculative purposes. Writing or purchasing a call option on stock indices is
similar to the writing or purchasing of a call option on an individual stock.
Purchasing a protective put option on stock indices is similar to the purchase
of protective puts on an individual stock. Stock indices used will include, but
will not be limited to, the S&P 100 and the S&P Over-the-Counter 250. The
ability to hedge effectively using options on stock indices will depend on the
degree to which price movements in the underlying index correlate with price
movements in the portfolio securities of, as the case may be, the applicable
Series.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
For hedging purposes, each of the International Equity, Value, Trend,
Global Bond, Devon, Emerging Markets, Convertible Securities and Quantum Series
may enter into futures contracts relating to securities, securities indices or
interest rates. In addition, the International Equity, Global Bond, Devon,
Emerging Markets, Convertible Securities and Quantum Series may enter into
futures transactions relating to foreign currency.

A futures contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement at a stated time
in the future for a fixed price. By its terms, a futures contract provides for a
specified settlement date on which, in the case of the majority of interest rate
and foreign currency futures contracts, the fixed-income securities or currency
underlying the contract are delivered by the seller and paid for by the
purchaser, or on which, in the case of securities index futures contracts and
certain interest rate and foreign currency futures contracts, the difference
between the price at which the contract was entered into and the contract's
closing value is settled between the purchaser and seller in cash. Futures
contracts differ from options in that they are bilateral agreements, with both
the purchaser and the seller equally obligated to complete the transaction. In
addition, futures contracts call for settlement only on the expiration date, and
cannot be "exercised" at any other time during their term.

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The purchase or sale of a futures contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalents, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin" as a good faith deposit. Subsequent payments
to and from the broker, referred to as "variation margin," are made on a daily
basis as the value of the index or instrument underlying the futures contract
fluctuates, making positions in the futures contract more or less valuable, a
process known as "marking to the market."

A futures contract may be purchased or sold only on an exchange, known as
a "contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a futures contract, by in effect
taking the opposite side of such contract. At any time prior to the expiration
of a futures contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.

Interest rate futures contracts currently are traded on a variety of
fixed-income securities, including long-term U.S. Treasury Bonds, U.S. Treasury
Notes, GNMA modified pass-through mortgage-backed securities, U.S. Treasury
Bills, bank certificates of deposit and commercial paper. In addition, interest
rate futures contracts include contracts on indexes of municipal securities.
Foreign currency futures contracts currently are traded on the British pound,
Canadian dollar, Japanese yen, Swiss franc, German mark and on Eurodollar
deposits.

A securities index or municipal bond index futures contract provides for
the making and acceptance of a cash settlement in much the same manner as the
settlement of an option on a securities index. The types of indexes underlying
securities index futures contracts are essentially the same as those underlying
securities index options, as described above. The index underlying a municipal
bond index futures contract is a broad based index of municipal securities
designed to reflect movements in the municipal securities market as a whole. The
index assigns weighted values to the securities included in the index and its
composition is changed periodically.

Each Series may also purchase and write options on the types of futures
contracts that Series could invest in.

A call option on a futures contract provides the holder with the right to
purchase, or enter into a "long" position in, the underlying futures contract. A
put option on a futures contract provides the holder with the right to sell, or
enter into a "short" position in, the underlying futures contract. In both
cases, the option provides for a fixed exercise price up to a stated expiration
date. Upon exercise of the option by the holder, the contract market clearing
house establishes a corresponding short position for the writer of the option,
in the case of a call option, or a corresponding long position in the case of a
put option and the writer delivers to the holder the accumulated balance in the
writer's margin account which represents the amount by which the market price of
the futures contract at exercise exceeds, in the case of a call, or is less
than, in the case of a put, the exercise price of the option on the futures
contract. In the event that an option written by a Series is exercised, the
Series will be subject to all the risks associated with the trading of futures
contracts, such as payment of variation

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market deposits. In addition, the writer of an option on a futures contract,
unlike the holder, is subject to initial and variation margin requirements on
the option position.

A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.

An option, whether based on a futures contract, a securities index, a
security or foreign currency, becomes worthless to the holder when it expires.
Upon exercise of an option, the exchange or contract market clearing house
assigns exercise notices on a random basis to those of its members which have
written options of the same series and with the same expiration date. A
brokerage firm receiving such notices then assigns them on a random basis to
those of its customers which have written options of the same series and
expiration date. A writer therefore has no control over whether an option will
be exercised against it, nor over the timing of such exercise.

To the extent that interest or exchange rates or securities prices move in
an unexpected direction, the Series may not achieve the anticipated benefits of
investing in futures contracts and options thereon, or may realize a loss. To
the extent that the Series purchases an option on a futures contract and fails
to exercise the option prior to the exercise date, it will suffer a loss of the
premium paid. Further, the possible lack of a secondary market could prevent the
Series from closing out its positions relating to futures.

BORROWINGS
Each Series may borrow money as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Series will not borrow money in
excess of one-third of the value of their net assets. See Part B for additional
possible restrictions on borrowing. The Series have no intention of increasing
their net income through borrowing. Any borrowing will be done from a bank and,
to the extent that such borrowing exceeds 5% of the value of the Series' net
assets, asset coverage of at least 300% is required. In the event that such
asset coverage shall at any time fall below 300%, the Series shall, within three
days thereafter (not including Sunday or holidays) or such longer period as the
U.S. Securities and Exchange Commission may prescribe by rules and regulations,
reduce the amount of their borrowings to an extent that the asset coverage of
such borrowings shall be at least 300%. Except for the International Equity,
Global Bond and Convertible Securities Series, no Series will pledge more than
15% of their net assets, or issue senior securities as defined in the 1940 Act,
except for notes to banks. The International Equity and Global Bond Series will
not pledge more than 10% of their net assets or issue senior securities as
defined in the 1940 Act, except for notes to banks. The Convertible Securities
Series does not have a limitation on the amount of its securities it may pledge.
Investment securities will not be purchased while the Series has an outstanding
borrowing.

REPURCHASE AGREEMENTS
The Series may also use repurchase agreements which are at least 100%
collateralized by U.S. government securities except that the International
Equity, Global Bond and Emerging Markets Series may accept as collateral any
securities in which such Series may invest. Each Series may enter into
repurchase agreements with broker/dealers or banks which are deemed creditworthy
by the respective investment manager under guidelines approved by the Board of
Directors. A repurchase agreement is a short-term investment in which the
purchaser (i.e., the Series) acquires ownership of a security and the seller
agrees to repurchase the security at a future time and set price, thereby
determining the yield during the purchaser's holding period. The value of the

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securities subject to the repurchase agreement is marked to market daily. In the
event of a bankruptcy or other default of the seller, the Series could
experience delays and expenses in liquidating the underlying securities.

The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow the
Delaware Group funds jointly to invest cash balances. Each Series may invest
cash balances in joint repurchase agreements in accordance with the terms of the
Order and subject to the conditions described above.

PORTFOLIO LOAN TRANSACTIONS
Each Series, except for the Cash Reserve Series, may, from time to time,
lend securities (but not in excess of 25% of its assets) from its portfolio to
brokers, dealers and financial institutions and receive collateral in cash or
short-term U.S. government securities. While the loan is outstanding, this
collateral will be maintained at all times in an account equal to at least 100%
of the current market value of the loaned securities plus accrued interest. Such
cash collateral will be invested in short-term securities, the income from which
will increase the return of the Series.

The major risk to which a Series would be exposed on a loan transaction is
the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, a Series will only enter into loan arrangements
after a review of all pertinent facts by the respective investment manager,
subject to overall supervision by the Board of Directors, including the
creditworthiness of the borrowing broker, dealer or institution and then only if
the consideration to be received from such loans would justify the risk. Credit
worthiness will be monitored on an ongoing basis by the respective investment
manager.

LIQUIDITY AND RULE 144A SECURITIES
In order to assure that each Series has sufficient liquidity, no Series
may invest more than 10% of its net assets in illiquid assets (except
Convertible Securities Series, which may invest up to 15% of its net assets in
illiquid securities). For all Series, other than the International Equity,
Value, Trend, Global Bond, Strategic Income, Emerging Markets and Convertible
Securities Series, this policy shall extend to all restricted securities,
including securities eligible for resale without registration pursuant to Rule
144A ("Rule 144A Securities") (described below), and repurchase agreements
maturing in more than seven days. With respect to the International Equity,
Value, Trend, Global Bond, Strategic Income, Emerging Markets and Convertible
Securities Series and subject to the following paragraphs, this policy shall not
limit the acquisition of securities purchased in reliance upon Rule 144A of the
Securities Act of 1933 ("1933 Act"). Rule 144A permits many privately placed and
legally restricted securities to be freely traded among certain institutional
buyers such as the Series. Investing in Rule 144A Securities could have the
effect of increasing the level of illiquidity of a Series to the extent that
qualified institutional buyers become uninterested, for a time, in purchasing
these securities.

While maintaining oversight, the Board of Directors has delegated to the
respective investment manager the day-to-day functions of determining whether or
not individual Rule 144A Securities are liquid for purposes of the 10%
limitation on investments in illiquid assets (15% in the case of Convertible
Securities Series). The Board has instructed the managers to consider the
following factors in determining the liquidity of a Rule 144A Security: (i) the
frequency of trades and trading volume for the security; (ii) whether at least
three dealers are willing to purchase or sell the security and the number of
potential purchasers; (iii) whether at least two dealers are making a market in
the security; (iv) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer).

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If the respective manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
applicable Series' holdings of illiquid securities exceed the Series' 10% limit
on investment in such securities (15% in the case of Convertible Securities
Series), the respective manager will determine what action shall be taken to
ensure that the Series continues to adhere to such limitation.

INVESTMENT COMPANY SECURITIES
Any investments that the International Equity, Strategic Income and
Emerging Markets Series make in either closed-end or open-end (in the case of
Emerging Markets Series) investment companies will be limited by the 1940 Act,
and would involve an indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies. The limitations under the
1940 Act also apply to Emerging Markets Series' investments in unregistered
investment companies.

CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
In addition to the Convertible Securities Series, the Delaware, Devon and
Quantum Series may invest in convertible and debt securities of issuers in any
industry. A convertible security is a security which may be converted at a
stated price within a specified period of time into a certain quantity of the
common stock of the same or a different issuer. Convertible and debt securities
are senior to common stocks in a corporation's capital structure, although
convertible securities are usually subordinated to similar nonconvertible
securities. Convertible and debt securities provide a fixed-income stream and
the opportunity, through its conversion feature, to participate in the capital
appreciation resulting from a market price advance in the convertible security's
underlying common stock. Just as with debt securities, convertible securities
tend to increase in market value when interest rates decline and tend to
decrease in value when interest rates rise. However, the price of a convertible
security is also influenced by the market value of the security's underlying
common stock and tends to increase as the market value of the underlying stock
rises, whereas it tends to decrease as the market value of the underlying stock
declines.

These Series may invest in convertible preferred stocks that offer
enhanced yield features, such as Preferred Equity Redemption Cumulative Stock
("PERCS"), which provide an investor with the opportunity to earn higher
dividend income than is available on a company's common stock. A PERCS is a
preferred stock which generally features a mandatory conversion date, as well as
a capital appreciation limit which is usually expressed in terms of a stated
price. Upon the conversion date, most PERCS convert into common stock of the
issuer (PERCS are generally not convertible into cash at maturity). Under a
typical arrangement, if after a predetermined number of years the issuer's
common stock is trading at a price below that set by the capital appreciation
limit, each PERCS would convert to one share of common stock. If, however, the
issuer's common stock is trading at a price above that set by the capital
appreciation limit, the holder of the PERCS would receive less than one full
share of common stock. The amount of that fractional share of common stock
received by the PERCS holder is determined by dividing the price set by the
capital appreciation limit of the PERCS by the market price of the issuer's
common stock. PERCS can be called at any time prior to maturity, and hence do
not provide call protection. However, if called early, the issuer may pay a call
premium over the market price to the investor. This call premium declines at a
preset rate daily, up to the maturity date of the PERCS.

The Series may also invest in other enhanced convertible securities. These
include but are not limited to ACES (Automatically Convertible Equity
Securities), PEPS (Participating Equity Preferred Stock), PRIDES (Preferred
Redeemable Increased Dividend Equity Securities), SAILS (Stock Appreciation
Income Linked Securities), TECONS (Term Convertible Notes), QICS (Quarterly
Income Cumulative Securities) and DECS (Dividend Enhanced Convertible
Securities). ACES, PEPS, PRIDES, SAILS, TECONS, QICS and DECS all

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<PAGE> 74

have the following features: they are company-issued convertible preferred
stock; unlike PERCS, they do not have capital appreciation limits; they seek to
provide the investor with high current income, with some prospect of future
capital appreciation; they are typically issued with three to four-year
maturities; they typically have some built-in call protection for the first two
to three years; investors have the right to convert them into shares of common
stock at a preset conversion ratio or hold them until maturity; and upon
maturity, they will automatically convert to either cash or a specified number
of shares of common stock.

ZERO COUPON BONDS AND PAY-IN-KIND BONDS
The Global Bond and Strategic Income Series may invest in zero coupon
bonds. The market prices of zero coupon securities are generally more volatile
than the market prices of securities that pay interest periodically and are
likely to respond to changes in interest rates to a greater degree than do
non-zero coupon securities having similar maturities and credit quality. Current
federal income tax law requires that a holder of a taxable zero coupon security
report as income each year the portion of the original issue discount of such
security that accrues that year, even though the holder receives no cash
payments of interest during the year. The Series have qualified as regulated
investment companies under the Code. Accordingly, during periods when the Series
receive no interest payments on their zero coupon securities, they will be
required, in order to maintain their desired tax treatment, to distribute cash
approximating the income attributable to such securities. Such distribution may
require the sale of portfolio securities to meet the distribution requirements
and such sales may be subject to the risk factor discussed above.

The Strategic Income Series may invest in PIK bonds. PIK bonds pay
interest through the issuance to holders of additional securities. PIK bonds are
generally considered to be more interest-sensitive than income bearing bonds, to
be more speculative than interest-bearing bonds, and to have certain tax
consequences similar to zero coupon bonds which could, under certain
circumstances, be adverse to the Fund.

SPECIAL RISK CONSIDERATIONS
Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in a Series, nor
can there be any assurance that the Series' investment objective will be
attained.

The use of interest rate swaps by the Global Bond Series involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If Delaware International is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of the Series will be less favorable than it would have
been if this investment technique were never used. Interest rate swaps do not
involve the delivery of securities or other underlying assets or principal.
Thus, if the other party to an interest rate swap defaults, the Series' risk of
loss consists of the net amount of interest payments that the Series is
contractually entitled to receive.

While the Global Bond and Emerging Markets Series intend to seek to
qualify as "diversified" investment companies under provisions of Subchapter M
of the Code, they will not be diversified for purposes of the 1940 Act. Thus,
while at least 50% of each Series' total assets will be represented by cash,
cash items, and other securities limited in respect of any one issuer to an
amount not greater than 5% of the Series' total assets, it will not satisfy the
1940 Act requirement in this respect, which applies that test to 75% of the
Series' assets. A nondiversified portfolio is believed to be subject to greater
risk because adverse effects on the portfolio's security holdings may affect a
larger portion of the overall assets.

* * *

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<PAGE> 75

Each Series' investment objective, the Fund's designation as an open-end
investment company, each Series' (other than the Global Bond and Emerging
Markets Series) designation as a diversified fund, and certain other policies of
the Series may not be changed unless authorized by the vote of a majority of the
Series' outstanding voting securities. A "majority vote of the outstanding
voting securities" is the vote by the holders of the lesser of (a) 67% or more
of a Series' voting securities present in person or represented by proxy if the
holders of more than 50% of the outstanding voting securities of such Series are
present or represented by proxy; or b) more than 50% of a Series' outstanding
voting securities. Part B lists other more specific investment restrictions of
the Series which may not be changed without a majority shareholder vote. A brief
discussion of those factors that materially affected the Series' performance
during its most recently completed fiscal year appears in the Series' Annual
Report. The remaining investment policies are not fundamental and may be changed
by the Board of Directors of the Fund without a shareholder vote.

DIVERSIFICATION
The Fund was established as the underlying investment for variable
contracts issued by life companies. Section 817(h) of the Internal Revenue Code
of 1986, as amended (the "Code"), imposes certain diversification standards on
the underlying assets of variable contracts held in the Portfolios of the Fund.
The Code provides that a variable contract shall not be treated as an annuity
contract or life insurance for any period (and any subsequent period) for which
the investments are not, in accordance with regulations prescribed by the United
States Treasury Department ("Treasury Department"), adequately diversified.
Disqualification of the variable contract would result in the imposition of
federal income tax to the contract owner with respect to earnings allocable to
the contract prior to distributions under the contract (e.g., withdrawals). The
Code contains a safe harbor provision which provides that variable contracts
meet the diversification requirements if, as of the close of each quarter, the
underlying assets meet the diversification standards for a regulated investment
company and no more than 55 percent of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.

Treasury Department Regulations (Treas. Reg. Section 1.817-5) provide that
a fund will be deemed to be considered adequately diversified if (i) no more
than 55 percent of the value of the total assets of the fund is represented by
any one investment; (ii) no more than 70 percent of such value is represented by
any two investments; (iii) no more than 80 percent of such value is represented
by any three investments; and (iv) no more than 90 percent of such value is
represented by any four investments.

The Technical and Miscellaneous Revenue Act of 1988 provides that for
purposes of determining whether or not the diversification standards imposed on
the underlying assets of variable contracts by Section 817(h) of the Code have
been met, "each United States government agency or instrumentality shall be
treated as a separate issuer."

Each Series of the Fund will be managed in such a manner as to comply with
these diversification requirements.

RATINGS
Appendix A of Part B describes the ratings of S&P, Moody's, Duff and
Phelps, Inc. and Fitch, four of the better-known statistical rating
organizations. Appendix A to this Prospectus includes additional information
concerning the ratings of high-yield, high-risk securities in which the Value,
Delchester and Convertible Securities Series may invest.

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<PAGE> 76

APPENDIX A--RATINGS

The Delchester Series' assets are invested primarily in bonds rated BBB or
lower by S&P or Baa or lower by Moody's and in unrated corporate bonds. These
credit ratings evaluate only the safety of principal and interest and do not
consider the market value risk associated with high-yield securities. The table
set forth below shows the percentage of the Series' securities included in each
of the specified rating categories and shows the percentage of the Series'
assets held in United States government securities. Certain securities may not
be rated because the rating agencies were either not asked to provide ratings
(e.g., many issuers of privately placed bonds do not seek ratings) or because
the rating agencies declined to provide a rating for some reason, such as
insufficient data. The table below shows the percentage of the Series'
securities which are not rated. The information contained in the table was
prepared based on a dollar weighted average of the Series' portfolio composition
based on month end data for the Series' year ended December 31, 1996. The
paragraphs following the table contain excerpts from Moody's and S&P's ratings
descriptions.

<TABLE>
<CAPTION>
Rating Moody's Average Weighted
and/or Percentage of
S&P Portfolio
-------------- ----------------
<S> <C> <C>
United States
Treasury Obligations 0.00% 0.00%
Aaa/AAA 0.00% 0.00%
Aa/AA 0.00% 0.00%
A/A 0.00% 0.00%
Baa/BBB 0.00% 0.00%
Ba/BB 00.00% 00.00%
B/B 00.00% 00.00%
Caa/CCC 0.00% 0.00%
Not Rated 00.00% 00.00%
</TABLE>

General Rating Information

BONDS
Excerpts from Moody's description of its bond ratings: Aaa--judged to be
the best quality. They carry the smallest degree of investment risk; Aa--judged
to be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.

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<PAGE> 77
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.

COMMERCIAL PAPER
Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength;
P-2--second highest grade possessing less relative strength than the highest
grade.

Excerpts from S&P's description of its two highest commercial paper
ratings: A-1--judged to be the highest investment grade category possessing the
highest relative strength; A-2--investment grade category possessing less
relative strength than the highest rating.

-72-
<PAGE> 78
(SAI-DGPF15/PART B)

- --------------------------------------------------------------------------------
PART B--STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1997

- --------------------------------------------------------------------------------

DELAWARE GROUP

- --------------------------------------------------------------------------------

PREMIUM FUND, INC.

- --------------------------------------------------------------------------------

1818 MARKET STREET
PHILADELPHIA, PA 19103

- --------------------------------------------------------------------------------

TABLE OF CONTENTS

- --------------------------------------------------------------------------------
COVER PAGE
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
ACCOUNTING AND TAX ISSUES
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
TRADING PRACTICES AND BROKERAGE
- --------------------------------------------------------------------------------
OFFERING PRICE
- --------------------------------------------------------------------------------
DIVIDENDS AND REALIZED SECURITIES
PROFITS DISTRIBUTIONS
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AGREEMENTS

AND SUB-ADVISORY AGREEMENTS

- --------------------------------------------------------------------------------
OFFICERS AND DIRECTORS
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
APPENDIX A--DESCRIPTION OF RATINGS
- --------------------------------------------------------------------------------
APPENDIX B
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

-1-
<PAGE> 79
(SAI-DGPF15/PART B)

Delaware Group Premium Fund, Inc. ("Premium Fund" or the "Fund") is a
diversified, open-end management investment company which is intended to meet a
wide range of investment objectives with its 15 separate Portfolios ("Series").
Each Series is in effect a separate fund issuing its own shares.

The shares of the Fund are sold only to separate accounts of life
insurance companies ("life companies"). The separate accounts are used in
conjunction with variable annuity contracts and variable life insurance
policies ("variable contracts"). The separate accounts invest in shares of the
various Series in accordance with allocation instructions received from
contract owners.

This Statement of Additional Information ("Part B" of the registration
statement) supplements the information contained in the current Prospectuses of
the Fund dated May 1, 1997, as they may be amended from time to time. It
should be read in conjunction with the prospectuses for the variable contracts
and the Fund. Part B is not itself a prospectus but is, in its entirety,
incorporated by reference into the Fund's Prospectuses. The Fund's
Prospectuses may be obtained by writing or calling your investment dealer or by
contacting the Series' national distributor, Delaware Distributors, L.P. (the
"Distributor"), 1818 Market Street, Philadelphia, PA 19103.

-2-
<PAGE> 80
(SAI-DGPF15/PART B)

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives of the Series are below. There can be no
assurance that the objectives of any Series will be realized.

Decatur Total Return Series (formerly known as Equity/Income
Series) seeks the highest possible total rate of return by
selecting issues that exhibit the potential for capital
appreciation while providing higher than average dividend
income. This Series has the same objective and investment
disciplines as Decatur Total Return Fund of Delaware Group
Equity Funds II, Inc., a separate Delaware Group fund, in
that it invests generally, but not exclusively, in common
stocks and income-producing securities convertible into common
stocks, consistent with the Series' objective.

Delchester Series (formerly known as High Yield Series) seeks
as high a current income as possible by investing in rated and
unrated corporate bonds (including high-yield bonds commonly
known as junk bonds), U.S. government securities and
commercial paper. This Series has the same objective and
investment disciplines as Delchester Fund of Delaware Group
Income Funds, Inc., a separate Delaware Group fund. An
investment in the Series may involve greater risks than an
investment in a portfolio comprised primarily of investment
grade bonds.

Capital Reserves Series seeks a high stable level of current
income while minimizing fluctuations in principal by investing
in a diversified portfolio of short- and intermediate-term
securities.

Cash Reserve Series (formerly known as Money Market Series)
seeks the highest level of income consistent with preservation
of capital and liquidity through investments in short-term
money market instruments. This Series has the same objective
and investment disciplines as Delaware Group Cash Reserve,
Inc., a separate Delaware Group fund.

Growth Series seeks long-term capital appreciation by
investing its assets in a diversified portfolio of securities
exhibiting the potential for significant growth. This Series
has the same objective and investment disciplines as DelCap
Fund of Delaware Group Equity Funds IV, Inc., a separate
Delaware Group fund, in that it invests in common stocks and
other securities including, but not limited to, convertible
securities, warrants, preferred stocks, bonds and foreign
securities, consistent with the Series' objective.

Delaware Series (formerly known as Multiple Strategy Series)
seeks a balance of capital appreciation, income and
preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established
companies that are believed to demonstrate potential for
income and capital growth. This Series has the same objective
and investment disciplines as Delaware Fund of Delaware Group
Equity Funds I, Inc., a separate Delaware Group fund, in that,
as a "balanced" fund, the Series, consistent with its
objective, invests at least 25% of its assets in fixed-income
securities and the remainder primarily in equity securities.

-3-
<PAGE> 81
(SAI-DGPF15/PART B)

International Equity Series seeks long-term growth without
undue risk to principal by investing primarily in equity
securities of foreign issuers providing the potential for
capital appreciation and income. This Series has the same
objective and investment disciplines as International Equity
Series of Delaware Group Global & International Funds, Inc., a
separate Delaware Group fund, in that it invests in a broad
range of equity securities of foreign issuers including common
stocks, preferred stocks, convertible securities and warrants,
consistent with the Series' objective.

Value Series seeks capital appreciation by investing in small-
to mid-cap common stocks whose market value appears low
relative to their underlying value or future earnings and
growth potential. Emphasis will also be placed on securities
of companies that may be temporarily out of favor or whose
value is not yet recognized by the market. This Series has
the same objective and investment disciplines as Value Fund of
Delaware Group Equity Funds V, Inc., a separate Delaware Group
fund.

Trend Series (formerly known as Emerging Growth Series) seeks
long-term capital appreciation by investing primarily in
small-cap common stocks and convertible securities of emerging
and other growth-oriented companies. These securities will
have been judged to be responsive to changes in the market
place and to have fundamental characteristics to support
growth. Income is not an objective. This Series has the same
objective and investment disciplines as Delaware Group Trend
Fund, Inc., a separate Delaware Group fund.

Global Bond Series seeks current income consistent with
preservation of principal by investing primarily in
fixed-income securities that may also provide the potential
for capital appreciation. This Series is a global fund, as
such, at least 65% of the Series' assets will be invested in
fixed-income securities of issuers organized or having a
majority of their assets in or deriving a majority of their
operating income in at least three different countries, one of
which may be the United States. This Series has the same
objective and investment disciplines as Global Bond Series of
Delaware Group Global & International Funds, Inc., a separate
Delaware Group fund.

Strategic Income Series seeks high current income and total
return. The Series seeks to achieve its objective by using a
multi-sector investment approach, investing primarily in three
sectors of the fixed-income securities markets: high yield,
higher risk securities; investment grade fixed-income
securities; and foreign government and other foreign
fixed-income securities. In addition, the Series may invest
in U.S. equity securities. This Series has the same objective
and investment disciplines as Strategic Income Fund of
Delaware Group Income Funds, Inc., a separate Delaware Group
fund.

Devon Series seeks current income and capital appreciation.
The Series will seek to achieve its objective by investing
primarily in income-producing common stocks, with a focus on
common stocks that the investment adviser believes have the
potential for above-average dividend increases over time.
Under normal circumstances, the Series will invest at least
65% of its total assets in dividend paying common stocks.
This Series has the same objective and investment disciplines
as Devon Fund of Delaware Group Equity Funds I, Inc., a
separate Delaware Group fund.

-4-
<PAGE> 82
(SAI-DGPF15/PART B)

Emerging Markets Series seeks to achieve long-term capital
appreciation. The Series seeks to achieve its objective by
investing primarily in equity series of issuers located in
emerging countries. The Series is an international fund. As
such, under normal market conditions, at least 65% of the
Series' assets will be invested in equity securities of
issuers organized or having a majority of their assets or
deriving a majority of their operating income in at least
three countries that are considered to be emerging or
developing. This Series has the same objective and investment
disciplines as Emerging Markets Fund of Delaware Group Global
& International Funds, Inc., a separate Delaware Group fund.

Convertible Securities Series seeks a high level of total
return on its assets through a combination of capital
appreciation and current income. The Series intends to pursue
its investment objective by investing primarily in convertible
securities. Under normal conditions, the Series intends to
invest at least 65% of its total assets in convertible
securities, which may include privately placed convertible
securities. In pursuit of its investment objective, the
Series may invest the balance of its assets in, among other
things, preferred and common stock, U.S. Government
securities, non-convertible fixed income securities and money
market securities.

Quantum Series seeks to achieve long-term capital
appreciation. The Series seeks to achieve its objective by
investing primarily in equity securities of medium to
large-sized companies expected to grow over time. This Series
has the same objective and investment disciplines as Quantum
Fund of Delaware Group Equity Funds II, Inc., a separate
Delaware Group fund.

INVESTMENT RESTRICTIONS

The Fund has the following restrictions for each Series (other than
Strategic Income, Devon, Emerging Markets, Convertible Securities and Quantum
Series) which may not be amended without approval of a majority of the
outstanding voting securities of the affected Series, which is the lesser of
more than 50% of the outstanding voting securities or 67% of the voting
securities of the affected Series present at a shareholder meeting if 50% or
more of the voting securities are present in person or represented by proxy.
The percentage limitations contained in the restrictions and policies set forth
herein apply at the time of purchase of securities. Each such Series will not:

1. Invest more than 5% of the value of its assets in securities
of any one issuer (other than obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities). This restriction shall apply
to only 75% of the assets of International Equity, Value and Trend Series and
to only 50% of the assets of Global Bond Series.

2. Purchase more than 10% of the voting securities of any
company, or invest in any company for the purpose of exercising control or
management.

3. Purchase or retain securities of a company which has an
officer or director who is an officer or director of the Fund, or an officer or
director of its investment manager if such persons, each owning beneficially
more than 1/2 of 1% of the shares of the company, own in the aggregate more
than 5% thereof.

-5-
<PAGE> 83
(SAI-DGPF15/PART B)

4. Purchase any security issued by any other investment company
(except in connection with a merger, consolidation or offer of exchange) if
after such purchase it would: (a) own more than 3% of the voting stock of such
company, (b) own securities of such company having a value in excess of 5% of a
Series' assets or (c) own securities of investment companies having an
aggregate value in excess of 10% of a Series' assets. Any such purchase shall
be at the customary brokerage commission. The limitations set forth in this
restriction do not apply to purchases by International Equity Series of
securities issued by closed-end investment companies, all of which must be at
the customary brokerage commission.

5. Make any investment in real estate unless necessary for office
space or the protection of investments already made. (This restriction does
not preclude a Series' purchase of securities secured by real estate or
interests therein, or securities issued by companies which invest in real
estate or interests therein, including real estate investment trusts.)

6. Purchase securities on margin, make short sales of securities
or maintain a net short position (except that a Series may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities). This restriction shall not prohibit the Series from
satisfying margin requirements with respect to futures transactions.

7. Invest in interests in oil, gas or other mineral exploration
or development programs, commodities or commodities contracts. This
restriction shall not prohibit International Equity, Value and Trend Series
from entering into futures contracts or options thereon, to the extent that not
more than 5% of its assets are required as futures contract margin deposits and
premiums on options and only to the extent that obligations under such
contracts and transactions represent not more than 20% of the Series' assets.

8. Borrow money in excess of one-third of the value of its net
assets and then only as a temporary measure for extraordinary purposes or to
facilitate redemptions. The Series have no intention of increasing their net
income through borrowing. Any borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value of a Series' assets, asset
coverage of at least 300% is required. In the event that such asset coverage
shall at any time fall below 300%, the Series shall, within three days
thereafter (not including Sunday and holidays) or such longer period as the
Securities and Exchange Commission may prescribe by rules and regulations,
reduce the amount of its borrowings to an extent that the asset coverage of
such borrowings shall be at least 300%. A Series will not pledge more than 15%
of its net assets. A Series shall not issue senior securities as defined in
the Investment Company Act of 1940 (the "1940 Act"), except for notes to
banks.

9. Make loans, except to the extent that purchases of debt
obligations (including repurchase agreements) in accordance with each Series'
investment objective and policies are considered loans and except that each
Series may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other security
transactions.

10. Invest more than 5% of the value of its total assets in
securities of companies less than three years old. Such three-year period
shall include the operation of any predecessor company or companies.

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<PAGE> 84
(SAI-DGPF15/PART B)

11. Invest more than 25% of its total assets in any particular
industry, except that a Series may invest more than 25% of the value of its
total assets in obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities, certificates of deposit and bankers' acceptances
of banks with over one billion dollars in assets or bank holding companies
whose securities are rated A-2 or better by Standard & Poor's Ratings Group
("S&P") or P-2 or better by Moody's Investors Service, Inc. ("Moody's").

12. Act as an underwriter of securities of other issuers, except
that a Series may acquire restricted or not readily-marketable securities under
circumstances where, if such securities are sold, a Series might be deemed to
be an underwriter for the purposes of the Securities Act of 1933.

Investment restrictions 2, 3, 7 and 10 above are nonfundamental
policies of Global Bond Series. In addition, although not considered a
fundamental policy, Global Bond Series will not invest more than 10% of its net
assets in repurchase agreements maturing in more than seven days and other
illiquid assets. Securities of foreign issuers which are not listed on a
recognized domestic or foreign exchange or for which a bona fide market does
not exist at the time of purchase or subsequent valuation are included in the
category of illiquid assets.

In addition, the following investment restrictions of such Series may
be changed by the Board of Directors:

(a) Each Series will not invest in warrants valued at lower of
cost or market exceeding 5% of a Series' net assets. Included within that
amount, but not to exceed 2% of a Series' net assets, may be warrants not
listed on the New York Stock Exchange or American Stock Exchange. This
restriction shall not apply to International Equity Series.

(b) The Money Market Series will not invest more than 25% of its
assets in foreign banks which are subject to the same regulation as United
States banks or to foreign branches of United States banks where such a bank is
liable for the obligations of the branch.

While such Series are permitted under certain circumstances to borrow
money, they do not normally do so. No investment securities will be purchased
while a Series has an outstanding borrowing. The Fund has undertaken, for so
long as required by California Regulatory Authority and so long as insurance
policy premiums or proceeds of contracts sold in California are used to
purchase Fund shares, each Series will not borrow money in excess of 25% of the
value of its net assets.

The following restrictions are fundamental policies of Strategic
Income, Devon, Emerging Markets, Convertible Securities and Quantum Series,
which may not be changed without the approval of the holders of a majority of
the affected Series' outstanding voting securities:

1. Each such Series, other than Emerging Markets Series, will not
with respect to 75% of its total assets, purchase the securities of any issuer
(other than those of other investment companies or of the U.S. Government or
its agencies or instrumentalities), if immediately thereafter the Series would
(a) have more than 5% of the value of its total assets in the securities of
such issuer or (b) own more than 10% of the outstanding voting securities of
such issuer.

2. Each such Series will not invest 25% or more of its total
assets in any one industry provided that there is no limitation with respect to
investments in obligations issued by the U.S. Government, its agencies or
instrumentalities.

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3. Each such Series will not make loans other than by the
purchase of all or a portion of a publicly or privately distributed issue of
bonds, debentures or other debt securities of the types commonly offered
publicly or privately and purchased by financial institutions (including
repurchase agreements), whether or not the purchase was made upon the original
issuance of the securities, and except that each Series may loan its assets to
qualified broker/dealers or institutional investors.

4. Each such Series will not engage in underwriting of securities
of other issuers, except that portfolio securities, including securities
purchased in private placements, may be acquired under circumstances where, if
sold, the Series might be deemed to be an underwriter under the Securities Act
of 1933. No limit is placed on the proportion of the Series' assets which may
be invested in such securities.

5. Each such Series will not borrow money or issue senior
securities, except to the extent permitted by the 1940 Act or any rule or order
thereunder. Subject to the foregoing, each Series may engage in short sales,
purchase securities on margin, and write put and call options.

6. Each such Series will not purchase or sell physical
commodities or physical commodity contracts, including physical commodity
option or futures contracts in a contract market or other futures market.

7. Purchase or sell real estate; provided that the Series may
invest in securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.

ADDITIONAL INFORMATION ON THE CASH RESERVE AND CAPITAL RESERVES SERIES

MONEY MARKET INSTRUMENTS

The Capital Reserves Series may, from time to time, invest all or part
of its available assets in money market instruments maturing in one year or
less. Cash Reserve Series will invest all of its available assets in
instruments which have a remaining maturity of 13 months or less at the time of
acquisition and which will otherwise meet the maturity, quality and
diversification conditions with which taxable money market funds must comply.
The types of instruments which these Series may purchase are described below:

1. U.S. Government Securities--Securities issued or guaranteed by
the U.S. government, including Treasury Bills, Notes and bonds.

2. U.S. Government Agency Securities--Obligations issued or
guaranteed by agencies or instrumentalities of the U.S. government whether
supported by the full faith and credit of the U.S. Treasury or the credit of a
particular agency or instrumentality.

3. Bank Obligations--Certificates of deposit, bankers'
acceptances and other short-term obligations of U.S. commercial banks and their
overseas branches and foreign banks of comparable quality, provided each such
bank combined with its branches has total assets of at least one billion
dollars, and certificates and issues of domestic savings and loan associations
of one billion dollars in assets whose deposits are insured by the Federal
Deposit Insurance Corporation. Any obligations of foreign banks shall be
denominated in U.S. dollars. Obligations of foreign banks and obligations of
overseas branches of U.S. banks are subject to somewhat different regulations
and risks than those of U.S. domestic banks. In particular, a foreign country
could impose exchange controls which might delay the release of proceeds from
that country. Such deposits are not covered by the Federal Deposit Insurance
Corporation. Because of conflicting laws and regulations, an issuing bank
could maintain that liability for an investment is solely that of the overseas
branch which could expose the Series to a greater risk of loss. The Series
will only buy short-term instruments in nations where these risks are minimal.
The Series

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(SAI-DGPF15/PART B)

will consider these factors along with other appropriate factors in making an
investment decision to acquire such obligations and will only acquire those
which, in the opinion of management, are of an investment quality comparable to
other debt securities bought by the Series. Either Series may invest more than
25% of its assets in foreign banks except that this limitation shall not apply
to United States branches of foreign banks which are subject to the same
regulations as United States banks or to foreign branches of United States
banks where such a bank is liable for the obligations of the branch. This
policy may be changed by the Board of Directors without shareholder approval.

Cash Reserve Series is subject to certain maturity, quality and
diversification conditions applicable to taxable money market funds. Thus, if
a bank obligation or, as relevant, its issuer is considered to be rated at the
time of the proposed purchase, it or, as relevant, its issuer must be so rated
in one of the two highest rating categories by at least two
nationally-recognized statistical rating organizations or, if such security or,
as relevant, its issuer is not so rated, the purchase of the security must be
approved or ratified by the Board of Directors in accordance with the maturity,
quality and diversification conditions with which taxable money market funds
must comply.

4. Commercial Paper--Short-term promissory notes issued by
corporations which at the time of purchase are rated A-2 or better by S&P or
P-2 or better by Moody's or which have received comparable ratings from a
nationally-recognized statistical rating organization approved by the Board of
Directors or, if not rated, issued or guaranteed by a corporation with
outstanding debt rated AA, Aa or better by S&P or Moody's. Cash Reserve Series
invests in commercial paper in accordance with the restrictions set forth in
the Prospectuses.

5. Short-term Corporate Debt--In addition to the other debt
securities described in the Prospectuses, corporate notes, bonds and debentures
which at the time of purchase are rated AA or better by S&P or Aa or better by
Moody's or which have received comparable ratings from a nationally-recognized
statistical rating organization approved by the Board of Directors, provided
such securities have one year or less remaining to maturity. Such securities
generally have greater liquidity and are subject to considerably less market
fluctuation than longer issues. Cash Reserve Series invests in corporate notes,
bonds and debentures in accordance with the restrictions set forth in the
Prospectuses.

The ratings of S&P, Moody's and other rating services represent their
opinions as to the quality of the money market instruments which they undertake
to rate. It should be emphasized, however, that ratings are general and are
not absolute standards of quality. These ratings are the initial criteria for
selection of portfolio investments, but the Series will further evaluate these
securities. See Appendix A--Description of Ratings.

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ADDITIONAL INFORMATION ON THE CAPITAL RESERVES, CASH RESERVE, DELAWARE AND
DEVON SERIES

ASSET-BACKED SECURITIES

The Capital Reserves, Cash Reserve, Delaware and Devon Series may
invest a portion of their assets in asset-backed securities. The rate of
principal payment on asset-backed securities generally depends on the rate of
principal payments received on the underlying assets. Such rate of payments
may be affected by economic and various other factors such as changes in
interest rates or the concentration of collateral in a particular geographic
area. Therefore, the yield may be difficult to predict and actual yield to
maturity may be more or less than the anticipated yield to maturity. The
credit quality of most asset-backed securities depends primarily on the credit
quality of the assets underlying such securities, how well the entities issuing
the securities are insulated from the credit risk of the originator or
affiliated entities, and the amount of credit support provided to the
securities.

Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, such
securities may contain elements of credit support. Such credit support falls
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
due on the underlying pool is timely. Protection against losses resulting from
ultimate default enhances the likelihood of payments of the obligations on at
least some of the assets in the pool. Such protection may be provided through
guarantees, insurance policies or letters of credit obtained by the issuer or
sponsor from third parties, through various means of structuring the
transaction or through a combination of such approaches. The Series will not
pay any additional fees for such credit support, although the existence of
credit support may increase the price of a security.

Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes subordinate to other classes as to the payment of
principal thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class),
creation of "reserve funds" (where cash or investments, sometimes funded from a
portion of the payments on the underlying assets, are held in reserve against
future losses) and "over collateralization" (where the scheduled payments on,
or the principal amount of, the underlying assets exceeds that required to make
payments of the securities and pay any servicing or other fees). The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit risk associated with the underlying
assets. Delinquencies or losses in excess of those anticipated could adversely
affect the return on an investment in such issue.

ADDITIONAL INFORMATION ON THE CAPITAL RESERVES SERIES

AVERAGE WEIGHTED MATURITY
The Capital Reserves Series ordinarily maintains its average dollar
weighted portfolio maturity within the five to seven year range, but not in
excess of ten years. However, many of the securities in which the Series
invests will have remaining maturities in excess of seven years. The Series
may purchase individual securities with a remaining maturity of up to 15 years.

Some of the securities in the Series' portfolio may have periodic
interest rate adjustments based upon an index such as the 91-day Treasury Bill
rate. This periodic interest rate adjustment tends to lessen the volatility of
the security's price. With respect to securities with an interest rate
adjustment period of one year or less, the Series will,

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(SAI-DGPF15/PART B)

when determining average weighted maturity, treat such a security's maturity as
the amount of time remaining until the next interest rate adjustment.

Instruments such as GNMA, FNMA and FHLMC securities and similar
securities backed by amortizing loans generally have shorter effective
maturities than their stated maturities. This is due to changes in
amortization caused by demographic and economic forces such as interest rate
movements. These effective maturities are calculated based upon historical
payment patterns. For purposes of determining the Series' average weighted
maturity, the maturities of such securities will be calculated based upon the
issuing agency's payment factors using industry-accepted valuation models.

ADDITIONAL INFORMATION ON THE CASH RESERVE SERIES

The Series intends to achieve its objective by investing at least 80%
of its assets in a diversified portfolio of money market instruments. See
Money Market Instruments below and Appendix A--Description of Ratings.

The Series maintains its net asset value at $10 per share by valuing
its securities on an amortized cost basis. See Offering Price. The Series
maintains a dollar weighted average portfolio maturity of not more than 90 days
and does not purchase any issue having a remaining maturity of more than 13
months. In addition, the Series limits its investments, including repurchase
agreements, to those instruments which the Board of Directors determines
present minimal credit risks and which are of high quality. The Series may
sell portfolio securities prior to maturity in order to realize gains or losses
or to shorten the average maturity if it deems such actions appropriate to
maintain a stable net asset value. While the Series will make every effort to
maintain a fixed net asset value of $10 per share, there can be no assurance
that this objective will be achieved.

While the Series intends to hold its investments until maturity when
they will be redeemable at their full principal value plus accrued interest, it
may attempt, from time to time, to increase its yield by trading to take
advantage of market variations. Also, revised evaluations of the issuer or
redemptions may cause sales of portfolio investments prior to maturity or at
times when such sales might otherwise not be desirable. The Series' right to
borrow to facilitate redemptions may reduce but does not guarantee a reduction
in the need for such sales. The Series will not purchase new securities while
any borrowings are outstanding. See Dividends and Realized Securities Profits
Distributions and Taxes for effect of any capital gains distributions.

A shareholder's rate of return will vary with the general interest
rate levels applicable to the money market instruments in which the Series
invests. In the event of an increase in current interest rates, a national
credit crisis or if one or more of the issuers became insolvent prior to the
maturity of the instruments, principal values could be adversely affected.
Investments in obligations of foreign banks and of overseas branches of U.S.
banks may be subject to less stringent regulations and different risks than
those of U.S. domestic banks. The rate of return and the net asset value will
be affected by such other factors as sales of portfolio securities prior to
maturity and the Series' operating expenses.

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(SAI-DGPF15/PART B)

ADDITIONAL INFORMATION ON THE INTERNATIONAL EQUITY, VALUE, TREND, GLOBAL BOND,
STRATEGIC INCOME, DEVON, EMERGING MARKETS, CONVERTIBLE SECURITIES AND QUANTUM
SERIES

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

FUTURES CONTRACTS--As noted in the Prospectus, each of International Equity,
Value, Trend, Global Bond, Strategic Income, Devon, Emerging Markets,
Convertible Securities and Quantum Series may enter into futures contracts
relating to securities, securities indices or interest rates. In addition,
International Equity, Global Bond, Strategic Income, Emerging Markets and
Convertible Securities Series may enter into foreign currency futures
contracts. (Unless otherwise specified, interest rate futures contracts,
securities and securities index futures contracts and foreign currency futures
contracts are collectively referred to as "futures contracts.") Such
investment strategies will be used as a hedge and not for speculation.

Purchases or sales of stock or bond index futures contracts are used
for hedging purposes to attempt to protect a Series' current or intended
investments from broad fluctuations in stock or bond prices. For example, a
Series may sell stock or bond index futures contracts in anticipation of or
during a market decline to attempt to offset the decrease in market value of
the Series' securities portfolio that might otherwise result. If such decline
occurs, the loss in value of portfolio securities may be offset, in whole or
part, by gains on the futures position. When a Series is not fully invested in
the securities market and anticipates a significant market advance, it may
purchase stock or bond index futures contracts in order to gain rapid market
exposure that may, in part or entirely, offset increases in the cost of
securities that the Series intends to purchase. As such purchases are made,
the corresponding positions in stock or bond index futures contracts will be
closed out.

Interest rate futures contracts are purchased or sold for hedging
purposes to attempt to protect against the effects of interest rate changes on
a Series' current or intended investments in fixed-income securities. For
example, if a Series owned long-term bonds and interest rates were expected to
increase, that Series might sell interest rate futures contracts. Such a sale
would have much the same effect as selling some of the long-term bonds in that
Series' portfolio. However, since the futures market is more liquid than the
cash market, the use of interest rate futures contracts as a hedging technique
allows a Series to hedge its interest rate risk without having to sell its
portfolio securities. If interest rates did increase, the value of the debt
securities in the portfolio would decline, but the value of that Series'
interest rate futures contracts would be expected to increase at approximately
the same rate, thereby keeping the net asset value of that Series from
declining as much as it otherwise would have. On the other hand, if interest
rates were expected to decline, interest rate futures contracts could be
purchased to hedge in anticipation of subsequent purchases of long-term bonds
at higher prices. Because the fluctuations in the value of the interest rate
futures contracts should be similar to those of long-term bonds, a Series could
protect itself against the effects of the anticipated rise in the value of
long-term bonds without actually buying them until the necessary cash became
available or the market had stabilized. At that time, the interest rate
futures contracts could be liquidated and that Series' cash reserve could then
be used to buy long-term bonds on the cash market.

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(SAI-DGPF15/PART B)

As noted in the Prospectus, International Equity, Global Bond,
Strategic Income, Emerging Markets and Convertible Securities Series may each
purchase and sell foreign currency futures contracts for hedging purposes to
attempt to protect its current or intended investments from fluctuations in
currency exchange rates. Such fluctuations could reduce the dollar value of
portfolio securities denominated in foreign currencies, or increase the cost of
foreign-denominated securities to be acquired, even if the value of such
securities in the currencies in which they are denominated remains constant.
Each of International Equity, Global Bond, Strategic Income, Emerging Markets
and Convertible Securities Series may sell futures contracts on a foreign
currency, for example, when a Series holds securities denominated in such
currency and it anticipates a decline in the value of such currency relative to
the dollar. In the event such decline occurs, the resulting adverse effect on
the value of foreign-denominated securities may be offset, in whole or in part,
by gains on the futures contracts. However, if the value of the foreign
currency increases relative to the dollar, the Series' loss on the foreign
currency futures contract may or may not be offset by an increase in the value
of the securities because a decline in the price of the security stated in
terms of the foreign currency may be greater than the increase in value as a
result of the change in exchange rates.

Conversely, each of International Equity, Global Bond, Strategic
Income, Emerging Markets and Convertible Securities Series could protect
against a rise in the dollar cost of foreign-denominated securities to be
acquired by purchasing futures contracts on the relevant currency, which could
offset, in whole or in part, the increased cost of such securities resulting
from a rise in the dollar value of the underlying currencies. When a Series
purchases futures contracts under such circumstances, however, and the price of
securities to be acquired instead declines as a result of appreciation of the
dollar, the Series will sustain losses on its futures position which could
reduce or eliminate the benefits of the reduced cost of portfolio securities to
be acquired.

The Series may also engage in currency "cross hedging" when, in the
opinion of the Series' investment manager Delaware Management Company, Inc.
("Delaware Management") or Delaware International Advisers Ltd. ("Delaware
International"), as applicable, the historical relationship among foreign
currencies suggests that a Series may achieve protection against fluctuations
in currency exchange rates similar to that described above at a reduced cost
through the use of a futures contract relating to a currency other than the
U.S. dollar or the currency in which the foreign security is denominated. Such
"cross hedging" is subject to the same risks as those described above with
respect to an unanticipated increase or decline in the value of the subject
currency relative to the dollar.

OPTIONS ON FUTURES CONTRACTS--As noted in the Prospectus, each of International
Equity, Value, Trend, Global Bond, Strategic Income, Emerging Markets and
Convertible Securities Series may purchase and write options on the types of
futures contracts that Series could invest in.

The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the securities in the Series'
portfolio. If the futures price at expiration of the option is below the
exercise price, a Series will retain the full amount of the option premium,
which provides a partial hedge against any decline that may have occurred in
the Series' portfolio holdings. The writing of a put option on a futures
contract constitutes a partial hedge against increasing prices of the
securities or other instruments required to be delivered under the terms of the
futures contract. If the futures price at expiration of the put option is
higher than the exercise price, a Series will retain the full amount of the
option premium, which provides a partial hedge against any increase in the
price of securities which the Series intends to purchase. If a put or call
option a Series has written is exercised, the Series will incur a loss which
will be reduced by the amount of the premium it receives. Depending on the
degree of correlation between changes in the value of its portfolio securities
and changes in the value of its options on futures positions, a Series' losses
from exercised options on futures may to some extent be reduced or increased by
changes in the value of portfolio securities.

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(SAI-DGPF15/PART B)

The Series may purchase options on futures contracts for hedging
purposes instead of purchasing or selling the underlying futures contracts.
For example, where a decrease in the value of portfolio securities is
anticipated as a result of a projected marketwide decline or changes in
interest or exchange rates, a Series could, in lieu of selling futures
contracts, purchase put options thereon. In the event that such decrease
occurs, it may be offset, in whole or in part, by a profit on the option. If
the market decline does not occur, the Series will suffer a loss equal to the
price of the put. Where it is projected that the value of securities to be
acquired by a Series will increase prior to acquisition, due to a market
advance or changes in interest or exchange rates, a Series could purchase call
options on futures contracts, rather than purchasing the underlying futures
contracts. If the market advances, the increased cost of securities to be
purchased may be offset by a profit on the call. However, if the market
declines, the Series will suffer a loss equal to the price of the call, but the
securities which the Series intends to purchase may be less expensive.

OPTIONS ON FOREIGN CURRENCIES

International Equity, Global Bond, Strategic Income, Emerging Markets
and Convertible Securities Series may purchase and write options on foreign
currencies for hedging purposes in a manner similar to that in which futures
contracts on foreign currencies, or forward contracts, will be utilized. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such securities,
even if their value in the foreign currency remains constant. In order to
protect against such diminutions in the value of portfolio securities, the
Series may purchase put options on the foreign currency. If the value of the
currency does decline, the Series will have the right to sell such currency for
a fixed amount in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have resulted.

Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Series may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movement in exchange rates. As in the case of other types of options,
however, the benefit to the Series deriving from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent anticipated, the Series could sustain losses on transactions
in foreign currency options which would require it to forego a portion or all
of the benefits of advantageous changes in such rates.

The Series may write options on foreign currencies for the same types
of hedging purposes. For example, where the Series anticipate a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates, they could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected decline occurs,
the option will most likely not be exercised, and the diminution in the value
of portfolio securities will be offset by the amount of the premium received.

Similarly, instead of purchasing a call option to hedge against the
anticipated increase in the dollar cost of securities to be acquired, the
Series could write a put option on the relevant currency which, if rates move
in the manner projected, will expire unexercised and allow the Series to hedge
such increased costs up to the value of the premium. As in the case of other
types of options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may
be exercised and the Series would be required to purchase or sell the
underlying currency at a loss which may not be offset by the amount of the
premium. Through the writing of options on foreign currencies, the Series also
may be required to forego all or a portion of the benefit which might otherwise
have been obtained from favorable movements in exchange rates.

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(SAI-DGPF15/PART B)

Each Series intends to write covered call options on foreign
currencies. A call option written on a foreign currency by a Series is
"covered" if the Series owns the underlying foreign currency covered by the
call or has an absolute and immediate right to acquire that foreign currency
without additional cash consideration (or for additional cash consideration
held in a segregated account by the Series' custodian bank) upon conversion or
exchange of other foreign currency held in its portfolio. A call option is
also covered if the Series has a call on the same foreign currency and in the
same principle amount as the call written where the exercise price of the call
held (a) is equal to less than the exercise price of the call written, or (b)
is greater than the exercise price of the call written if the difference is
maintained by the Series in cash, U.S. government securities or other
high-grade liquid debt securities in a segregated account with its custodian
bank.

With respect to writing put options, at the time the put is written, a
Series will establish a segregated account with its custodian bank consisting
of cash, U.S. government securities or other high-grade liquid debt securities
in an amount equal in value to the amount the Series will be required to pay
upon exercise of the put. The account will be maintained until the put is
exercised, has expired, or the Series has purchased a closing put of the same
series as the one previously written.

ADDITIONAL INFORMATION ON THE DEVON SERIES

MORTGAGE-BACKED SECURITIES--In addition to mortgage-backed securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities
or government sponsored corporations, Devon Series may also invest its assets
in securities issued by certain private, nongovernment corporations, such as
financial institutions. Certain of these private-backed securities are fully
collateralized at the time of issuance by securities or certificates issued or
guaranteed by the U.S. government, its agencies or instrumentalities. Two
principal types of mortgage-backed securities are collateralized mortgage
obligations (CMOs) and real estate mortgage investment conduits (REMICs).

CMOs are debt securities issued by U.S. government agencies or by
financial institutions and other mortgage lenders and collateralized by a pool
of mortgages held under an indenture. CMOs are issued in a number of classes
or series with different maturities. The classes or series are retired in
sequence as the underlying mortgages are repaid. Prepayment may shorten the
stated maturity of the obligation and can result in a loss of premium, if any
has been paid. Certain of these securities may have variable or floating
interest rates and others may be stripped (securities which provide only the
principal or interest feature of the underlying security).

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(SAI-DGPF15/PART B)

CONVERTIBLE SECURITIES--The Series may invest in convertible
securities, including corporate debentures, bonds, notes and preferred stocks
that may be converted into or exchanged for common stock. While providing a
fixed-income stream (generally higher in yield than the income derivable from a
common stock but lower than that afforded by a non-convertible debt security),
a convertible security also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. As the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis and so may not experience market declines to the same extent as the
underlying common stock. When the market price of the underlying common stock
increases, the price of a convertible security tends to rise as a reflection of
the value of the underlying common stock. To obtain such a higher yield, the
Series may be required to pay for a convertible security an amount in excess of
the value of the underlying common stock. Common stock acquired by the Series
upon conversion of a convertible security will generally be held for so long as
Delaware Management anticipates such stock will provide the Series with
opportunities which are consistent with the Series' investment objectives and
policies.

The Series may invest not more than 5% of its assets in convertible
debentures that are rated below investment grade or are unrated but are
determined by Delaware Management to be of comparable quality. Investing in
convertible debentures that are rated below investment grade or unrated but of
comparable quality entails certain risks, including the risk of loss of
principal, which may be greater than the risks involved in investing in
investment grade convertible debentures. Under rating agency guidelines, lower
rated securities and comparable unrated securities will likely have some
quality and protective characteristics that are outweighed by large
uncertainties or major risk exposures to adverse conditions.

The Series may have difficulty disposing of such lower rated
convertible debentures because the trading market for such securities may be
thinner than the market for higher rated convertible debentures. To the extent
a secondary trading market for these securities does exist, it generally is not
as liquid as the secondary trading market for higher rated securities. The
lack of a liquid secondary market as well as adverse publicity with respect to
these securities, may have an adverse impact on market price and the Series'
ability to dispose of particular issues in response to a specific economic
event such as a deterioration in the creditworthiness of the issuer. The lack
of a liquid secondary market for certain securities also may make it more
difficult for the Series to obtain accurate market quotations for purposes of
pricing the Series' portfolio and calculating its net asset value. The market
behavior of convertible securities in lower rating categories is often more
volatile than that of higher quality securities. Lower quality convertible
securities are judged by Moody's and S&P to have speculative elements or
characteristics; their future cannot be considered as well assured and earnings
and asset protection may be moderate or poor in comparison to investment grade
securities.

In addition, such lower quality securities face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions, which could lead to inadequate capacity to meet timely payments.
The market values of securities rated below investment grade tend to be more
sensitive to company specific developments and changes in economic conditions
than higher rated securities. Issuers of these securities are often highly
leveraged, so that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest rates may be
impaired. In addition, such issuers may not have more traditional methods of
financing available to them, and may be unable to repay debt at maturity by
refinancing.

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(SAI-DGPF15/PART B)

ADDITIONAL INFORMATION ON THE STRATEGIC INCOME, EMERGING MARKETS AND
CONVERTIBLE SECURITIES SERIES

WHEN-ISSUED, "WHEN, AS AND IF ISSUED" AND DELAYED DELIVERY SECURITIES
AND FORWARD COMMITMENTS -- The Series may purchase securities on a when-issued
or delayed delivery basis or may purchase or sell securities on a forward
commitment basis. The Series may also purchase securities on a "when, as and
if issued" basis under which the issuance of the security depends upon the
occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. When such transactions are negotiated,
the price is fixed at the time of commitment, but delivery and payment can take
place a month or more after the date of the commitment. The Series will
establish a segregated account with its custodian bank in which it will
continually maintain cash or cash equivalents or other portfolio securities
equal in value to commitments to purchase securities on a when-issued, "when,
as and if issued," delayed delivery or forward commitment basis.

While Strategic Income, Emerging Markets and Convertible Bond Series
will only purchase securities on a when-issued, "when, as and if issued,"
delayed delivery or forward commitment basis with the intention of acquiring
the securities, the Series may sell the securities before the settlement date
if it is deemed advisable. The securities so purchased or sold are subject to
market fluctuation and no interest accrues to the purchaser during this period.
At the time a Series makes the commitment to purchase or sell securities on a
when-issued, "when, as and if issued," delayed delivery or forward commitment
basis, it will record the transaction and thereafter reflect the value, each
day, of the security purchased or, if a sale, the proceeds to be received, in
determining its net asset value. At the time of delivery of the securities,
their value may be more or less than the purchase or sale price.

ENHANCED CONVERTIBLE SECURITIES -- Most PERCS expire three years from
the date of issue, at which time they are convertible into common stock of the
issuer (PERCS are generally not convertible into cash at maturity). Under a
typical arrangement, if after three years the issuer's common stock is trading
at a price below that set by the capital appreciation limit, the PERCS would
convert into one share of common stock. If, however, the issuer's common stock
is trading at a price above that set by the capital appreciation limit, the
holder of the PERCS would receive less than one full share of common stock. The
amount of that fractional share of common stock received by the PERCS holder is
determined by dividing the price set by the capital appreciation limit of the
PERCS by the market price of the issuer's common stock. PERCS can be called at
any time prior to maturity, and thus do not provide call protection. However,
if called early, the issuer must pay a premium over the market price to the
investor. This call premium declines at a preset rate daily, up to the maturity
date of the PERCS.

Strategic Income and Emerging Markets Series may also invest in other
enhanced convertible securities. See Enhanced Convertible Securities under
Convertible Securities Series in the Prospectus.

RESTRICTED SECURITIES

The Series may purchase privately-placed debt and other securities
whose resale is restricted under applicable securities laws. Such restricted
securities generally offer a higher return than comparable registered
securities but involve some additional risk since they can be resold only in
privately-negotiated transactions or after registration under applicable
securities laws. The registration process may involve delays which could
result in the Series obtaining a less favorable price on a resale. Strategic
Income and Convertible Securities Series will not purchase illiquid assets if
more than 15% of its respective net assets would then consist of such illiquid
securities.

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(SAI-DGPF15/PART B)

ADDITIONAL INFORMATION ON THE QUANTUM SERIES

INVESTMENT COMPANY SECURITIES--Any investments that Quantum Series
makes in either closed-end or open-end investment companies will be limited by
the 1940 Act, and would involve an indirect payment of a portion of the
expenses, including advisory fees, of such other investment companies. Under
the 1940 Act's current limitations, the Series may not (1) own more than 3% of
the voting stock of another investment company; (2) invest more than 5% of the
Series' total assets in the shares of any one investment company; nor (3)
invest more than 10% of the Series' total assets in shares of other investment
companies. If a Series elects to limit its investment in other investment
companies to closed-end investment companies, the 3% limitation described above
is increased to 10%. These percentage limitations also apply to the Series'
investments in unregistered investment companies.

UNSEASONED COMPANIES--Quantum Series may invest in relatively new or
unseasoned companies which are in their early stages of development, or small
companies positioned in new and emerging industries where the opportunity for
rapid growth is expected to be above average. Securities of unseasoned
companies present greater risks than securities of larger, more established
companies. The companies in which the Series may invest may have relatively
small revenues, limited product lines, and may have a small share of the market
for their products or services. Small companies may lack depth of management,
they may be unable to internally generate funds necessary for growth or
potential development or to generate such funds through external financing or
favorable terms, or they may be developing or marketing new products or
services for which markets are not yet established and may never become
established. Due these and other factors, small companies may suffer
significant losses as well as realize substantial growth, and investments in
such companies tend to be volatile and are therefore speculative.

In addition, as a matter of non-fundamental policy, Quantum Series
will adhere to a Social Criteria strategy:

Vantage will utilize the Social Investment Database published by KLD
in determining whether a company is engaged in any activity precluded by the
Series' Social Criteria. The Social Investment Database reflects KLD's
determination of the extent to which a company's involvement in the activities
prohibited by the Social Criteria is significant enough to merit a concern or a
major concern. Significance may be determined on the basis of percentage of
revenue generated by, or the size of the operations attributable to, activities
related to such Social Criteria, or other factors selected by KLD. The social
screening undergoes continual refinement and modification.

Pursuant to the Social Criteria presently in effect, the Series will
not knowingly invest in or hold securities of companies which engage in:

1. Activities which result or are likely to result in damage to
the natural environment;

2. The production of nuclear power, the design or construction of
nuclear power plants, or the manufacture or equipment for the
production of nuclear power;

3. The manufacture of, or contracting for, military weapons; or

4. The liquor, tobacco or gambling industries.

Because of its Social Criteria, the Series may not be able to take the
same advantage of certain investment opportunities as do funds which do not
have Social Criteria. Only securities of companies not excluded by any of the
Social Criteria will be eligible for consideration for purchase by the Series
according to its objective and policies described in the Prospectus.

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<PAGE> 96
(SAI-DGPF15/PART B)

The Series will commence the orderly sale of securities of a company
when it is determined by Vantage that such company no longer adheres to the
Social Criteria. The Series will sell such securities in a manner so as to
minimize any adverse affect on the Series' assets. Typically, such sales will
be made within 90 days from the date of Vantage's determination, unless a sale
within the 90 day period would produce a significant loss to the overall value
of the Series' assets.

REPURCHASE AGREEMENTS

Each of the Fund's 15 Series may, from time to time, enter into
repurchase transactions. Repurchase agreements are instruments under which
securities are purchased from a bank or securities dealer with an agreement by
the seller to repurchase the securities. Under a repurchase agreement, the
purchaser acquires ownership of the security but the seller agrees, at the time
of sale, to repurchase it at a mutually agreed-upon time and price. The Series
will take custody of the collateral under repurchase agreements. Repurchase
agreements may be construed to be collateralized loans by the purchaser to the
seller secured by the securities transferred. The resale price is in excess of
the purchase price and reflects an agreed-upon market rate unrelated to the
coupon rate or maturity of the purchase security. Such transactions afford an
opportunity for the Series to invest temporarily available cash. The Series'
risk is limited to the seller's ability to buy the security back at the
agreed-upon sum at the agreed-upon time, since the repurchase agreement is
secured by the underlying obligation. Should such an issuer default, the
investment managers believe that, barring extraordinary circumstances, the
Series will be entitled to sell the underlying securities or otherwise receive
adequate protection for its interest in such securities, although there could
be a delay in recovery. The Series consider the creditworthiness of the bank
or dealer from whom it purchases repurchase agreements. The Series will
monitor such transactions to assure that the value of the underlying securities
subject to repurchase agreements is at least equal to the repurchase price.
The underlying securities will be limited to those described above.

The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the Investment Company Act
of 1940 to allow the Delaware Group funds jointly to invest cash balances.
Each Series of the Fund may invest cash balances in a joint repurchase
agreement in accordance with the terms of the Order and subject generally to
the conditions described above.

PORTFOLIO LOAN TRANSACTIONS

Each of the Fund's 15 Series, except for Cash Reserve Series, may loan
up to 25% of its assets to qualified broker/dealers or institutional investors
for their use relating to short sales or other security transactions.

It is the understanding of the Series' respective investment manager
that the staff of the Securities and Exchange Commission permits portfolio
lending by registered investment companies if certain conditions are met. These
conditions are as follows: 1) each transaction must have 100% collateral in
the form of cash, short-term U.S. government securities, or irrevocable letters
of credit payable by banks acceptable to the Fund from the borrower; 2) this
collateral must be valued daily and should the market value of the loaned
securities increase, the borrower must furnish additional collateral to the
Series; 3) the Series must be able to terminate the loan after notice, at any
time; 4) the Series must receive reasonable interest on any loan, and any
dividends, interest or other distributions on the lent securities, and any
increase in the market value of such securities; 5) the Series may pay
reasonable custodian fees in connection with the loan; 6) the voting rights on
the lent securities may pass to the borrower; however, if the directors of the
Fund know that a material event will occur affecting an investment loan, they
must either terminate the loan in order to vote the proxy or enter into an
alternative arrangement with the borrower to enable the directors to vote the
proxy.

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(SAI-DGPF15/PART B)

The major risk to which a Series would be exposed on a loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, a Series will only enter into loan
arrangements after a review of all pertinent facts by the Series' respective
investment manager, under the supervision of the Board of Directors, including
the creditworthiness of the borrowing broker, dealer or institution and then
only if the consideration to be received from such loans would justify the
risk. Creditworthiness will be monitored on an ongoing basis by the Series'
respective investment manager.

FOREIGN SECURITIES

To the extent the Fund's 15 Series are authorized and intend to invest
in foreign securities, investors should recognize that investing in securities
of foreign issuers involves certain considerations, including those set forth
in the Prospectuses, which are not typically associated with investing in
United States issuers. Since the stocks of foreign companies are frequently
denominated in foreign currencies, and since the Series may temporarily hold
uninvested reserves in bank deposits in foreign currencies, the Series will be
affected favorably or unfavorably by changes in currency rates and in exchange
control regulations, and may incur costs in connection with conversions between
various currencies. The investment policies of certain of the Series permit
them to enter into forward foreign currency exchange contracts and various
related currency transactions in order to hedge the Series' holdings and
commitments against changes in the level of future currency rates. Such
contracts involve an obligation to purchase or sell a specific currency at a
future date at a price set at the time of the contract.

There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by a Series. Payment of
such interest equalization tax, if imposed, would reduce such Series' rate of
return on its investment. Dividends paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to dividends paid to the Series by United States
corporations. Special rules govern the federal income tax treatment of certain
transactions denominated in terms of a currency other than the U.S. dollar or
determined by reference to the value of one or more currencies other than the
U.S. dollar. The types of transactions covered by the special rules generally
include the following: (i) the acquisition of, or becoming the obligor under,
a bond or other debt instrument (including, to the extent provided in Treasury
Regulations, preferred stock); (ii) the accruing of certain trade receivables
and payables; and (iii) the entering into or acquisition of any forward
contract, futures contract, option and similar financial instruments other than
any "regulated futures contract" or "nonequity option" marked to market. The
disposition of a currency other than the U.S. dollar by a U.S. taxpayer is also
treated as a transaction subject to the special currency rules. However,
foreign currency-related regulated futures contracts and non-equity options are
generally not subject to the special currency rules, if they are or would be
treated as sold for their fair market value at year-end under the marking to
market rules applicable to other futures contracts, unless an election is made
to have such currency rules apply. With respect to transactions covered by the
special rules, foreign currency gain or loss is calculated separately from any
gain or loss on the underlying transaction and is normally taxable as ordinary
gain or loss. A taxpayer may elect to treat as capital gain or loss foreign
currency gain or loss arising from certain identified forward contracts,
futures contracts and options that are capital assets in the hands of the
taxpayer and which are not part of a straddle. Certain transactions subject to
the special currency rules that are part of a "section 988 hedging transaction"
(as defined in the Internal Revenue Code of 1986 (the "Code"), as amended, and
the Treasury Regulations) will be integrated and treated as a single
transaction or otherwise treated consistently for purposes of the Code. The
income tax effects of integrating and treating a transaction as a single
transaction are generally to create a synthetic debt instrument that is subject
to the original discount provisions. It is anticipated that some of the
non-U.S. dollar denominated investments and foreign currency contracts a Series
may make or enter into will be subject to the special currency rules described
above.

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<PAGE> 98
(SAI-DGPF15/PART B)

FOREIGN CURRENCY TRANSACTIONS
In connection with a Series' investment in foreign securities, a
Series may purchase or sell currencies and/or engage in forward foreign
currency transactions in order to expedite settlement of portfolio transactions
and to minimize currency value fluctuations.

Forward foreign currency contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for trades. A Series will account
for forward contracts by marking to market each day at daily exchange rates.

When a Series enters into a forward contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of that Series' assets
denominated in such foreign currency, the Series' custodian bank or
subcustodian will place cash or liquid high grade debt securities in a separate
account of the Series in an amount not less than the value of such Series'
total assets committed to the consummation of such forward contracts. If the
additional cash or securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily basis so
that the value of the account will equal the amount of the Series' commitments
with respect to such contracts.

OPTIONS

Each of the Fund's 15 Series, except for Cash Reserve Series, may
write call options and purchase put options on a covered basis only.
International Equity, Global Bond, Emerging Markets and Convertible Securities
Series may also purchase call options. The Series also may enter into closing
transactions with respect to such options transactions. No Series will engage
in option transactions for speculative purposes.

To the extent authorized to engage in option transactions, the Series
may invest in options that are Exchange listed and International Equity, Global
Bond, Emerging Markets and Convertible Securities Series may also invest in
options that are traded over-the-counter. The other Series reserve the right
to invest in over-the-counter options upon written notice to their
shareholders. The Series will enter into an option position only if there
appears to be a liquid market for such options. However, there can be no
assurance that a liquid secondary market will be maintained. Thus, it may not
be possible to close option positions and this may have an adverse impact on a
Series' ability to effectively hedge its securities.

A. COVERED CALL WRITING--A Series may write covered call options
from time to time on such portion of its portfolio, without limit, as the
respective investment manager determines is appropriate in seeking to obtain
the Series' investment objective. A call option gives the purchaser of such
option the right to buy, and the writer, in this case the Series, has the
obligation to sell the underlying security at the exercise price during the
option period. The advantage to a Series of writing covered calls is that the
Series receives a premium which is additional income. However, if the security
rises in value, the Series may not fully participate in the market
appreciation.

During the option period, a covered call option writer may be assigned
an exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the
option period or at such earlier time in which the writer effects a closing
purchase transaction. A closing purchase transaction cannot be effected with
respect to an option once the option writer has received an exercise notice for
such option.

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<PAGE> 99
(SAI-DGPF15/PART B)

With respect to such options, the Series may enter into closing
purchase transactions. A closing purchase transaction is one in which the
Series, when obligated as a writer of an option, terminates its obligation by
purchasing an option of the same series as the option previously written.

Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
Series to write another call option on the underlying security with either a
different exercise price or expiration date or both. The Series may realize a
net gain or loss from a closing purchase transaction depending upon whether the
net amount of the original premium received on the call option is more or less
than the cost of effecting the closing purchase transaction. Any loss incurred
in a closing purchase transaction may be partially or entirely offset by the
premium received from a sale of a different call option on the same underlying
security. Such a loss may also be wholly or partially offset by unrealized
appreciation in the market value of the underlying security. Conversely, a
gain resulting from a closing purchase transaction could be offset in whole or
in part by a decline in the market value of the underlying security.

If a call option expires unexercised, the Series will realize a
short-term capital gain in the amount of the premium on the option less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, the Series will realize a gain or loss from the sale of
the underlying security equal to the difference between the cost of the
underlying security and the proceeds of the sale of the security plus the
amount of the premium on the option less the commission paid.

The market value of a call option generally reflects the market price
of an underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.

A Series will write call options only on a covered basis, which means
that the Series will own the underlying security subject to a call option at
all times during the option period. Unless a closing purchase transaction is
effected, the Series would be required to continue to hold a security which it
might otherwise wish to sell or deliver a security it would want to hold.
Options written by the Series will normally have expiration dates between one
and nine months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.

B. PURCHASING PUT OPTIONS--A Series may invest up to 2% of its
total assets in the purchase of put options. The Series will, at all times
during which it holds a put option, own the security covered by such option.

A put option purchased by the Series gives it the right to sell one of
its securities for an agreed price up to an agreed date. The Series intend to
purchase put options in order to protect against a decline in market value of
the underlying security below the exercise price less the premium paid for the
option ("protective puts"). The ability to purchase put options will allow a
Series to protect unrealized gain in an appreciated security in its portfolio
without actually selling the security. If the security does not drop in value,
the Series will lose the value of the premium paid. A Series may sell a put
option which it has previously purchased prior to the sale of the securities
underlying such option. Such sales will result in a net gain or loss depending
on whether the amount received on the sale is more or less than the premium and
other transaction costs paid on the put option which is sold.

The Series may sell a put option purchased on individual portfolio
securities. Additionally, the Series may enter into closing sale transactions.
A closing sale transaction is one in which a Series, when it is the holder of
an outstanding option, liquidates its position by selling an option of the same
series as the option previously purchased.

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<PAGE> 100
(SAI-DGPF15/PART B)

C. PURCHASING CALL OPTIONS--International Equity, Global Bond,
Emerging Markets and Convertible Securities Series may purchase call options to
the extent that premiums paid by the Series do not aggregate more than 2% of
the Series' total assets. When the Series purchases a call option, in return
for a premium paid by the Series to the writer of the option, the Series
obtains the right to buy the security underlying the option at a specified
exercise price at any time during the term of the option. The writer of the
call option, who receives the premium upon writing the option, has the
obligation, upon exercise of the option, to deliver the underlying security
against payment of the exercise price. The advantage of purchasing call
options is that the Series may alter portfolio characteristics and modify
portfolio maturities without incurring the cost associated with portfolio
transactions.

The Series may, following the purchase of a call option, liquidate its
position by effecting a closing sale transaction. This is accomplished by
selling an option of the same series as the option previously purchased. The
Series will realize a profit from a closing sale transaction if the price
received on the transaction is more than the premium paid to purchase the
original call option; the Series will realize a loss from a closing sale
transaction if the price received on the transaction is less than the premium
paid to purchase the original call option.

Although the Series will generally purchase only those call options
for which there appears to be an active secondary market, there is no assurance
that a liquid secondary market on an Exchange will exist for any particular
option, or at any particular time, and for some options no secondary market on
an Exchange may exist. In such event, it may not be possible to effect closing
transactions in particular options, with the result that the Series would have
to exercise its options in order to realize any profit and would incur
brokerage commissions upon the exercise of such options and upon the subsequent
disposition of the underlying securities acquired through the exercise of such
options. Further, unless the price of the underlying security changes
sufficiently, a call option purchased by the Series may expire without any
value to the Series.

D. OPTIONS ON STOCK INDICES--The Growth, International Equity,
Value, Trend, Global Bond, Emerging Markets and Convertible Securities Series
also may write call options and purchase put options on certain stock indices
and enter into closing transactions in connection therewith. A stock index
assigns relative values to the common stocks included in the index with the
index fluctuating with changes in the market values of the underlying common
stock.

Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or
make delivery of the underlying stock at a specified price. A stock index
option gives the holder the right to receive a cash "exercise settlement
amount" equal to (i) the amount by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by
(ii) a fixed "index multiplier." Receipt of this cash amount will depend upon
the closing level of the stock index upon which the option is based being
greater than (in the case of a call) or less than (in the case of a put) the
exercise price of the option. The amount of cash received will be equal to
such difference between the closing price of the index and exercise price of
the option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount. Gain or loss to the Series on transactions in stock index options
will depend on price movements in the stock market generally (or in a
particular industry or segment of the market) rather than price movements of
individual securities.

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<PAGE> 101
(SAI-DGPF15/PART B)

As with stock options, Growth, International Equity, Value, Trend,
Global Bond, Emerging Markets and Convertible Securities Series may offset
positions in stock index options prior to expiration by entering into a closing
transaction on an Exchange or may let the option expire unexercised.

A stock index fluctuates with changes in the market values of the
stock so included. Some stock index options are based on a broad market index
such as the Standard & Poor's 500 or the New York Stock Exchange Composite
Index, or a narrower market index such as the Standard & Poor's 100. Indices
are also based on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on stock indices
are currently traded on the following Exchanges among others: The Chicago Board
Options Exchange, New York Stock Exchange and American Stock Exchange.

The Series' ability to hedge effectively all or a portion of its
securities through transactions in options on stock indices depends on the
degree to which price movements in the underlying index correlate with price
movements in the Series' portfolio securities. Since the Series' portfolio
will not duplicate the components of an index, the correlation will not be
exact. Consequently, the Series bear the risk that the prices of the
securities being hedged will not move in the same amount as the hedging
instrument. It is also possible that there may be a negative correlation
between the index or other securities underlying the hedging instrument and the
hedged securities which would result in a loss on both such securities and the
hedging instrument.

Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it
may not be possible to close such an option. The inability to close options
positions could have an adverse impact on the Series' ability to effectively
hedge its securities. The Series will enter into an option position only if
there appears to be a liquid secondary market for such options.

Growth, International Equity, Value, Trend, Global Bond, Emerging
Markets and Convertible Securities Series will not engage in transactions in
options on stock indices for speculative purposes but only to protect
appreciation attained, to offset capital losses and to take advantage of the
liquidity available in the option markets.

E. WRITING COVERED PUTS--Convertible Securities Series may
purchase or sell (write) put options on securities as a means of achieving
additional return or of hedging the value of the Series' portfolio. A put
option is a contract that gives the holder of the option the right to sell to
the writer (seller), in return for a premium, the underlying security at a
specified price during the term of the option. The writer of the put, who
receives the premium, has the obligation to buy the underlying security upon
exercise, at the exercise price during the option period. The Series will
write only "covered" options. In the case of a put option written (sold) by
the Series, the Series will, through its custodian, deposit and maintain cash
and short-term U.S. Treasury obligations with a securities depository or the
custodian having a value equal to or greater than the exercise price of the
underlying security.

F. CLOSING TRANSACTIONS-- If a Series has written an option, it
may terminate its obligation by effecting a closing purchase transaction. This
is accomplished by purchasing an option of the same series as the option
previously written. There can be no assurance that either a closing purchase
or sale transaction can be effected when a Series so desires. An option
position may be closed out only on an exchange which provides a secondary
market for an option of the same series. Although the Series will generally
purchase or write only those options for which there appears to be an active
secondary market, there is no assurance that a liquid secondary market on an
exchange will exist for any particular option.

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<PAGE> 102
(SAI-DGPF15/PART B)

A Series will realize a profit from a closing transaction if the price
of the transaction is less than the premium received from writing the option or
is more than the premium paid to purchase the option; a Series will realize a
loss from a closing transaction if the price of the transaction is more than
the premium received from writing the option or is less than the premium paid
to purchase the option. Because increases in the market price of a call option
will generally reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option is likely to
be offset in whole or in part by appreciation of the underlying security owned
by the Series. If a Series purchases a put option, the loss to the Series is
limited to the premium paid for, and transaction costs in connection with, the
put plus the initial excess, if any, of the market price of the underlying
security over the exercise price. However, if the market price of the security
underlying the put rises, the profit a Series realizes on the sale of the
security will be reduced by the premium paid for the put option less any amount
(net of transaction costs) for which the put may be sold.

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(SAI-DGPF15/PART B)

ACCOUNTING AND TAX ISSUES

When a Series writes a call, or purchases a put option, an amount
equal to the premium received or paid by it is included in the Series' assets
and liabilities as an asset and as an equivalent liability.

In writing a call, the amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the
principal Exchange on which such option is traded or, in the absence of a sale,
the mean between the last bid and asked prices. If an option which a Series has
written expires on its stipulated expiration date, a Series recognizes a
capital gain. If a Series enters into a closing purchase transaction with
respect to an option which a Series has written, a Series realizes a gain (or
loss if the cost of the closing transaction exceeds the premium received when
the option was sold) without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is extinguished.
If a call option which a Series has written is exercised, a Series realizes a
capital gain or loss from the sale of the underlying security and the proceeds
from such sale are increased by the premium originally received.

The premium paid by a Series for the purchase of a put option is
recorded in the Series' assets and liabilities as an investment and
subsequently adjusted daily to the current market value of the option. For
example, if the current market value of the option exceeds the premium paid,
the excess would be unrealized appreciation and, conversely, if the premium
exceeds the current market value, such excess would be unrealized depreciation.
The current market value of a purchased option is the last sale price on the
principal Exchange on which such option is traded or, in the absence of a sale,
the mean between the last bid and asked prices. If an option which a Series
has purchased expires on the stipulated expiration date, a Series realizes a
short-term or long-term capital loss for federal income tax purposes in the
amount of the cost of the option. If a Series exercises a put option, it
realizes a capital gain or loss (long-term or short-term, depending on the
holding period of the underlying security) from the sale of the underlying
security and the proceeds from such sale will be decreased by the premium
originally paid.

OPTIONS ON CERTAIN STOCK INDICES--Accounting for options on certain
stock indices will be in accordance with generally accepted accounting
principles. The amount of any realized gain or loss on closing out such a
position will result in a realized gain or loss for tax purposes. Such options
held by the Growth, International Equity, Value, Trend, Global Bond, Emerging
Markets and Convertible Securities Series at the end of each fiscal year will
be required to be "marked to market" for federal income tax purposes. Sixty
percent of any net gain or loss recognized on such deemed sales or on any
actual sales will be treated as long-term capital gain or loss, and the
remainder will be treated as short-term capital gain or loss.

OTHER TAX REQUIREMENTS--Each Series has qualified (or intends to
qualify), and intends to continue to qualify, as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. A Series
must meet several requirements to achieve or maintain its status as a regulated
investment company. Among these requirements are that at least 90% of each
Series' investment company taxable income be derived from dividends, interest,
payment with respect to securities loans and gains from the sale or disposition
of securities; that at the close of each quarter of its taxable year at least
50% of the value of each Series' assets consist of cash and cash items,
government securities, securities of other regulated investment companies and,
subject to certain diversification requirements, other securities; and that
less than 30% of each Series' gross income be derived from sales of securities
held for less than three months.

-26-
<PAGE> 104
(SAI-DGPF15/PART B)

The requirement that not more than 30% of each Series' gross income be
derived from gains from the sale or other disposition of securities held for
less than three months may restrict a Series in its ability to write covered
call options on securities which it has held less than three months, to write
options which expire in less than three months, to sell securities which have
been held less than three months and to effect closing purchase transactions
with respect to options which have been written less than three months prior to
such transactions. Consequently, in order to avoid realizing a gain within the
three-month period, a Series may be required to defer the closing out of a
contract beyond the time when it might otherwise be advantageous to do so. A
Series may also be restricted in the sale of purchased put options and the
purchase of put options for the purpose of hedging underlying securities
because of the application of the short sale holding period rules with respect
to such underlying securities.

The straddle rules of Section 1092 may apply. Generally, the straddle
rules provide that a loss on a position of a straddle may be recognized only to
the extent it exceeds the unrecognized gain at year-end in other positions of
the straddle. Losses which are deferred to the extent of unrecognized gains
will be carried over to the succeeding taxable year subject to the same general
limitations.

-27-
<PAGE> 105
(SAI-DGPF15/PART B)

PERFORMANCE INFORMATION

Contract owners and prospective investors will be interested in
learning from time to time the current yield of Delchester, Capital Reserves,
Global Bond and Strategic Income Series and, in addition, the effective
compounded yield of Cash Reserve Series. Advertisements of performance of the
underlying Series, if any, will be accompanied by a statement of performance of
the separate account. As explained under Dividends and Realized Securities
Profits Distributions, dividends for Delchester, Capital Reserves, Strategic
Income and Cash Reserve Series are declared daily from net investment income
and dividends for Global Bond Series are declared monthly. Yield will
fluctuate as income earned fluctuates.

From time to time, the Fund may state each Series' total return in
advertisements and other types of literature. Any statements of total return
performance data will be accompanied by information on the Series' average
annual total rate of return over the most recent one-, five- and ten-year
periods. Each Series may also advertise aggregate and average total return
information over additional periods of time.

Each Series' average annual total rate of return is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:
n
P(1+T) = ERV

Where: P = a hypothetical initial purchase
order of $1,000;

T = average annual total return;

n = number of years;

ERV = redeemable value of the
hypothetical $1,000 purchase at
the end of the period.

Aggregate total return is calculated in a similar manner, except that
the results are not annualized. Each calculation assumes all distributions are
reinvested at net asset value.

The performance of each Series, other than Global Bond, Strategic
Income, Devon, Emerging Markets, Convertible Securities and Quantum Series, as
shown below, is the average annual total return quotations through December 31,
1996. As of the date of this Part B, Strategic Income, Devon, Emerging
Markets, Convertible Securities and Quantum Series had not yet begun investment
operations. Global Bond Series commenced operations on May 2, 1996.
Securities prices fluctuated during the periods covered and past results should
not be considered as representative of future performance.

-28-
<PAGE> 106
(SAI-DGPF15/PART B)

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
DECATUR
TOTAL CAPITAL CASH
RETURN DELCHESTER RESERVES RESERVE DELAWARE GROWTH
<S> <C> <C> <C> <C> <C> <C> <C>
1 year ended 1 year ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

3 years ended 3 years ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

5 years ended 5 years ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

Period 7/28/88** Period 7/12/91**
through 12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% through 12/31/96 00.00%
</TABLE>

<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY VALUE TREND
<S> <C> <C> <C> <C>
1 year ended 1 year ended
12/31/96 00.00% 12/31/96 00.00% 00.00%

3 years ended 3 years ended
12/31/96 00.00% 12/31/96 00.00% 00.00%

Period 10/29/92** Period 12/27/93**
through 12/31/96 00.00% through 12/31/96 00.00% 00.00%
</TABLE>

* The respective investment manager elected to waive voluntarily the portion
of its annual compensation under its Investment Management Agreement with
each Series to limit operating expenses of the Series to 0.80%. In the
absence of such voluntary waiver, performance would have been affected
negatively.

** Date of initial public offering.

-29-
<PAGE> 107
(SAI-DGPF15/PART B)

Delchester, Capital Reserves, Global Bond and Strategic Income Series may
also quote its current yield, calculated as described below, in advertisements
and investor communications.

The yield computation for Delchester, Capital Reserves, Global Bond and
Strategic Income Series is determined by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period and annualizing the resulting figure, according to the
following formula:

a--b 6
YIELD = 2[(-------- + 1) -- 1]
cd

Where: a = dividends and interest earned during the
period;

b = expenses accrued for the period (net of
reimbursements);

c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends;

d = the maximum offering price per share on
the last day of the period.

The above formula will be used in calculating quotations of yield, based
on specific 30-day periods identified in advertising by the Series. The yields
of Delchester and Capital Reserves Series as of December 31, 1996 using this
formula were 0.00% and 0.00%, respectively.

Yield quotations are based on the offering price determined by the Series'
net asset value on the last day of the period and will fluctuate depending on
the period covered.

Cash Reserve Series may also quote its current yield in advertisements and
investor communications.

Yield calculation for Cash Reserve Series begins with the value of a
hypothetical account of one share at the beginning of a seven-day period; this
is compared with the value of that same account at the end of the same period
(including shares purchased for the account with dividends earned during the
period). The net change in the account value is generally the net income
earned per share during the period, which consists of accrued interest income
plus or minus amortized purchase discount or premium, less all accrued expenses
(excluding expenses reimbursed by the investment manager) but does not include
realized gains or losses or unrealized appreciation or depreciation.

The current yield of Cash Reserve Series represents the net change in this
hypothetical account annualized over 365 days. In addition, a shareholder may
achieve a compounding effect through reinvestment of dividends which is
reflected in the effective yield shown below.

-30-
<PAGE> 108
(SAI-DGPF15/PART B)

The following is an example, for purposes of illustration only, of the
current and effective yield calculations for Cash Reserve Series for the
seven-day period ended December 31, 1996.

<TABLE>
<S> <C>
Value of a hypothetical account with one
share at the beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.00000000

Value of the same account at the
end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00.00000000

Net change in account value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .00000000*

Base period return = net change in account
value / beginning account value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .000000000

Current yield [base period return x (365 / 7)] . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%**

365/7
Effective yield (1 + base period) - 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%***

</TABLE>

Weighted average life to maturity of the portfolio on December 31, 1996 was 00
days.

* This represents the net income per share for the seven calendar days ended
December 31, 1996.

** This represents the average of annualized net investment income per share
for the seven calendar days ended December 31, 1996.

*** This represents the current yield for the seven calendar days ended
December 31, 1996 compounded daily.

The yield quoted at any time represents the amount being earned on a
current basis and is a function of the types of instruments in Cash Reserve
Series' portfolio, their quality and length of maturity and the Series'
operating expenses. The length of maturity for the portfolio is the average
dollar weighted maturity of the portfolio. This means that the portfolio has
an average maturity of a stated number of days for its issues. The calculation
is weighted by the relative value of the investment.

The yield will fluctuate daily as the income earned on the investments of
Cash Reserve Series fluctuates. Accordingly, there is no assurance that the
yield quoted on any given occasion will remain in effect for any period of
time. It should also be emphasized that the Fund is an open-end investment
company and that there is no guarantee that the net asset value or any stated
rate of return will remain constant. Investment performance is not insured.
Investors comparing results of Cash Reserve Series with investment results and
yields from other sources such as banks or savings and loan associations should
understand these distinctions. Historical and comparative yield information
may, from time to time, be presented by Cash Reserve Series. Although Cash
Reserve Series determines the yield on the basis of a seven-calendar-day
period, it may, from time to time, use a different time span.

Other funds of the money market type may calculate their yield on a
different basis and the yield quoted by the Series could vary upward or
downward if another method of calculation or base period were used.

-31-
<PAGE> 109
(SAI-DGPF15/PART B)

Investors should note that income earned and dividends paid by Delchester,
Capital Reserves, Global Bond and Strategic Income Series will also vary
depending upon fluctuations in interest rates and performance of each Series'
portfolio. The net asset value of each Series may change. Unlike Cash Reserve
Series, Delchester, Capital Reserves, Global Bond and Strategic Income Series
invest in longer-term securities that fluctuate in value and do so in a manner
inversely correlated with changing interest rates. The Series' net asset
values will tend to rise when interest rates fall. Conversely, the Series' net
asset values will tend to fall as interest rates rise. Normally, fluctuations
in interest rates have a greater effect on the prices of longer-term bonds.
The value of the securities held in the Series will vary from day to day and
investors should consider the volatility of the Series' net asset values as
well as their yields before making a decision to invest.

COMPARATIVE INFORMATION
From time to time, performance of each Series in the Fund may be compared
to various industry indices.

The Fund may quote actual total return performance, dividend results and
other performance information in advertising and other types of literature of
those Series that invest primarily in equity securities and may compare that
information to, or may separately illustrate similar information reported by
the Standard and Poor's 500 Stock Index and the Dow Jones Industrial Average
and other unmanaged indices. The Standard & Poor's 500 Stock Index and the Dow
Jones Industrial Average are industry accepted unmanaged indices of
generally-conservative securities used for measuring general market
performance. The total return performance reported will reflect the
reinvestment of all distributions on a quarterly basis and market price
fluctuations. The indices do not take into account any sales charges or other
fees. In seeking a particular investment objective, a Series' portfolio may
include common stocks considered by the respective investment manager to be
more aggressive than those tracked by these indices.

Each Series' total return performance will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the offering price
at the beginning of the period. It will also reflect the maximum sales charge
paid, if any, for the illustrated investment amount, but not any income taxes
payable by shareholders on the reinvested distributions included in the
calculation. Because security prices fluctuate, past performance should not be
considered as a representation of the results which may be realized from an
investment in the Series in the future.

Each Series may also state total return performance in the form of an
average annual return. The average annual return figure will be computed by
taking the sum of the particular Series' annual return, then dividing that
figure by the number of years in the overall period indicated. The computation
will reflect the impact of the maximum sales charge paid, if any, on the
illustrated investment amount against the first year's return.

-32-
<PAGE> 110
(SAI-DGPF15/PART B)

From time to time, the Fund may quote actual total return and/or yield
performance for the Series in advertising and other types of literature
compared to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include
the average return of various bank instruments, some of which may carry certain
return guarantees offered by leading banks and thrifts as monitored by Bank
Rate Monitor, and those of generally-accepted corporate bond and government
security price indices of various durations prepared by Lehman Brothers and
Salomon Brothers, Inc. These indices are not managed for any investment goal.

Comparative information on the Consumer Price Index and representative
mutual fund indices maintained by CDA Technologies, Inc. may also be used.
The Consumer Price Index, as prepared by the U.S. Bureau of Labor Statistics,
is the most commonly used measure of inflation. It indicates the cost
fluctuations of a representative group of consumer goods. It does not
represent a return from an investment. CDA Technologies, Inc. is a performance
evaluation service that maintains a statistical database of performance, as
reported by a diverse universe of independently-managed mutual funds.

Statistical and performance information and various indices compiled and
maintained by organizations such as the following may also be used in preparing
exhibits comparing certain industry trends and competitive mutual fund
performance to comparable Series activity and performance and in illustrating
general financial planning principles. From time to time, certain mutual fund
performance ranking information, calculated and provided by these
organizations, may also be used in the promotion of sales in the Fund. Any
indices used are not managed for any investment goal.

CDA Technologies, Inc., Lipper Analytical Services, Inc. and Morningstar,
Inc. are performance evaluation services that maintain statistical
performance databases, as reported by a diverse universe of independently-
managed mutual funds.

Ibbotson Associates, Inc. is a consulting firm that provides a variety of
historical data including total return, capital appreciation and income on
the stock market as well as other investment asset classes, and inflation.
With their permission, this information will be used primarily for
comparative purposes and to illustrate general financial planning
principles.

Interactive Data Corporation is a statistical access service that
maintains a database of various international industry indicators, such as
historical and current price/earning information, individual equity and
fixed-income price and return information.

Compustat Industrial Databases, a service of Standard & Poor's, may also
be used in preparing performance and historical stock and bond market
exhibits. This firm maintains fundamental databases that provide
financial, statistical and market information covering more than 7,000
industrial and non-industrial companies.

-33-
<PAGE> 111
(SAI-DGPF15/PART B)

Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the
business fundamentals of those firms issuing the security.

Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as
well as unmanaged indices compiled and maintained by these firms, will be
used in preparing comparative illustrations. In addition, the performance
of multiple indices compiled and maintained by these firms may be combined
to create a blended performance result for comparative performances.
Generally, the indices selected will be representative of the types of
securities in which the Funds may invest and the assumptions that were
used in calculating the blended performance will be described.

Morgan Stanley Capital International is a statistical and research firm
that maintains a statistical database of international securities. This
firm also compiles and maintains a number of unmanaged indices of
international securities. These indices are designed to measure the
performance of the stock markets of the USA, Europe, Canada, Mexico,
Australia and the Far East, and that of international industry groups.

FT-Actuaries World Indices are jointly compiled by The Financial Times,
Ltd.; Goldman, Sachs & Co.; and Wood Mackenzie & Co., Ltd. in conjunction
with the Institute of Actuaries and the Faculty of Actuaries. Indices
maintained by this group primarily focus on compiling statistical
information on international financial markets and industry sectors, stock
and bond issues and certain fundamental information about the companies
issuing the securities. Statistical information on international
currencies is also maintained.

Current interest rate and yield information on government debt obligations
of various durations, as reported weekly by the Federal Reserve (Bulletin
H.15), may also be used. As well, current industry rate and yield information
on all industry available fixed-income securities, as reported weekly by The
Bond Buyer, may be used in preparing comparative illustrations.

-34-
<PAGE> 112
(SAI-DGPF15/PART B)

The following table is an example, for purposes of illustration only, of
cumulative total return performance for the each Series, other than Strategic
Income, Devon, Emerging Markets, Convertible Securities and Quantum Series,
through December 31, 1996. For these purposes, the calculations assume the
reinvestment of any realized securities profits distributions and income
dividends paid during the indicated periods.

<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN*
DECATUR
TOTAL CAPITAL CASH
RETURN DELCHESTER RESERVES RESERVE DELAWARE GROWTH
<S> <C> <C> <C> <C> <C> <C> <C>
3 months ended 3 months ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

6 months ended 6 months ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

9 months ended 9 months ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

1 year ended 1 year ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

3 years ended 3 years ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

5 years ended 5 years ended
12/31/96 00.00% 00.00% 00.00% 00.00% 00.00% 12/31/96 00.00%

Period 7/28/88** Period 7/12/91**
through 12/31/96 000.00% 000.00% 000.00% 000 .00% 000.00% through 12/31/96 000 .00%
</TABLE>

** Date of initial public offering.

-35-
<PAGE> 113
(SAI-DGPF15/PART B)

<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN*
INTERNATIONAL GLOBAL
EQUITY VALUE TREND BOND
<S> <C> <C> <C> <C> <C> <C>
3 months ended 3 months ended 3 months ended
12/31/96 0.00% 12/31/96 0.00% 0.00% 12/31/96 0.00%

6 months ended 6 months ended 6 months ended
12/31/96 00.00% 12/31/96 00.00% 00.00% 12/31/96 00.00%

9 months ended 9 months ended Period 5/2/96***
12/31/96 00.00% 12/31/96 00.00% 00.00% through 12/31/96 00.00%

1 year ended 1 year ended
12/31/96 00.00% 12/31/96 00.00% 00.00%

3 years ended 3 years ended
12/31/96 00.00% 12/31/96 00.00% 00.00%

Period 10/29/92** Period 12/27/93**
through 12/31/96 00.00% through 12/31/96 00.00% 00.00%
</TABLE>

** Date of initial public offering.

*** Date of initial public offering; total return for this short of a time
period may not be representative of longer term results.

Because every investor's goals and risk threshold are different, certain
advertising and other related literature may provide general information about
investment alternatives and scenarios that will allow investors to assess their
personal goals. This information will include general material about investing
as well as materials reinforcing various industry-accepted principles of
prudent and responsible personal financial planning. One typical way of
addressing these issues is to compare an individual's goals and the length of
time the individual has to attain these goals to his or her risk threshold. In
addition, information may be provided discussing the respective investment
manager's overriding investment philosophy and how that philosophy affects the
Series', and other Delaware Group funds', investment disciplines employed in
meeting their objectives.

-36-
<PAGE> 114
(SAI-DGPF15/PART B)

DOLLAR-COST AVERAGING
For many people, deciding when to invest can be a difficult decision.
Prices of securities such as stocks and bonds tend to move up and down over
various market cycles and are generally intended for longer term investing.
Money market funds, which typically maintain stable prices, are generally
intended for your short-term investment needs and can often be used as a basis
for building a long-term investment plan.

Though logic says to invest when prices are low, even experts can't always
pick the highs and the lows. By using a strategy known as dollar-cost
averaging, you schedule your investments ahead of time. If you invest a set
amount on a regular basis, that money will always buy more shares when the
price is low and fewer when the price is high. You can choose to invest at any
regular interval--for example, monthly or quarterly--as long as you stick to
your regular schedule.

Dollar-cost averaging looks simple and it is, but there are important
things to remember. Dollar-cost averaging works best over longer time periods,
and it doesn't guarantee a profit or protect against losses in declining
markets. If you need to sell your investment when prices are low, you may not
realize a profit no matter what investment strategy you utilize. That's why
dollar-cost averaging can make sense for long-term goals. Since the potential
success of a dollar-cost averaging program depends on continuous investing,
even through periods of fluctuating prices, you should consider your
dollar-cost averaging program a long-term commitment and invest an amount you
can afford and probably won't need to withdraw.

The example below illustrates how dollar-cost averaging can work. In a
fluctuating market, the average cost per share over a period of time will be
lower than the average price per share for the same time period.

<TABLE>
<CAPTION>
NUMBER
INVESTMENT PRICE PER OF SHARES
AMOUNT SHARE PURCHASED
<S> <C> <C> <C>
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $5.00 20
Month 4 $100 $10.00 10

----------------------------------------------------------------------
$400 $37.50 48
</TABLE>

Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)

This example is for illustration purposes only. It is not intended to
represent the actual performance of a Series.

-37-
<PAGE> 115
(SAI-DGPF15/PART B)

THE POWER OF COMPOUNDING
As part of your VARIABLE ANNUITY contract, any earnings from your
investment selection are automatically reinvested to purchase additional shares
of a Series. This gives your investment yet another opportunity to grow. It's
called the Power of Compounding and the following charts illustrate just how
powerful that can be.

COMPOUNDED RETURNS
Results of various assumed fixed rates of return on a $10,000 investment
compounded monthly for 10 years:

<TABLE>
<CAPTION>
6% 8% 10% 12%
Rate of Rate of Rate of Rate of
Return Return Return Return
------ ------ ------ ------
<S> <C> <C> <C> <C>
1 Year $10,617 $10,830 $11,047 $11,268
2 Years $11,272 $11,729 $12,204 $12,697
3 Years $11,967 $12,702 $13,482 $14,308
4 Years $12,705 $13,757 $14,894 $16,122
5 Years $13,488 $14,898 $16,453 $18,167
6 Years $14,320 $16,135 $18,176 $20,471
7 Years $15,203 $17,474 $20,079 $23,067
8 Years $16,141 $18,924 $22,182 $25,993
9 Years $17,137 $20,495 $24,504 $29,290
10 Years $18,194 $22,196 $27,070 $33,004
</TABLE>

Results of various assumed fixed rates of return on a $10,000 investment
compounded quarterly for 10 years:

<TABLE>
<CAPTION>
6% 8% 10% 12%
Rate of Rate of Rate of Rate of
Return Return Return Return
------ ------ ------ ------
<S> <C> <C> <C> <C>
1 Year $10,614 $10,824 $11,038 $11,255
2 Years $11,265 $11,717 $12,184 $12,668
3 Years $11,956 $12,682 $13,449 $14,258
4 Years $12,690 $13,728 $14,845 $16,047
5 Years $13,468 $14,859 $16,386 $18,061
6 Years $14,295 $16,084 $18,087 $20,328
7 Years $15,172 $17,410 $19,965 $22,879
8 Years $16,103 $18,845 $22,038 $25,751
9 Years $17,091 $20,399 $24,326 $28,983
10 Years $18,140 $22,080 $26,851 $32,620
</TABLE>

These figures are calculated assuming a fixed constant investment return
and assume no fluctuation in the value of principal. These figures, which do
not reflect payment of applicable taxes, are not intended to be a projection of
investment results and do not reflect the actual performance results of any of
the Series.

-38-
<PAGE> 116
(SAI-DGPF15/PART B)

TRADING PRACTICES AND BROKERAGE

The Fund or, in the case of International Equity, Global Bond and Emerging
Markets Series, Delaware International, selects banks, brokers or dealers to
execute transactions on behalf of the Series for the purchase or sale of
portfolio securities on the basis of its judgment of their professional
capability to provide the service. The primary consideration is to have banks,
brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or
received for a security, the commission charged, the promptness and reliability
of execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Fund pays reasonably competitive brokerage commission rates
based upon the professional knowledge of its trading department or, in the case
of International Equity, Global Bond and Emerging Markets Series, Delaware
International, as to rates paid and charged for similar transactions throughout
the securities industry. In some instances, the Fund pays a minimal share
transaction cost when the transaction presents no difficulty. Some trades are
made on a net basis where the Fund either buys the securities directly from the
dealer or sells them to the dealer. In these instances, there is no direct
commission charged, but there is a spread (the difference between the buy and
sell price) which is in the equivalent of a commission.

During the years ended December 31, 1994, 1995 and 1996, the aggregate
dollar amounts of brokerage commissions were paid by the Series noted below:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Decatur Total Return Series $217,957 $255,600 $000,000
Delaware Series $81,947 $85,124 $00,000
Growth Series $34,086 $53,072 $00,000
International Equity Series $167,836 $86,131 $00,000
Value Series $3,179 $25,600 $00,000
Trend Series $4,127 $18,776 $00,000
</TABLE>

The respective investment manager may allocate out of all commission
business generated by all of the funds and accounts under management by the
respective investment manager, brokerage business to brokers or dealers who
provide brokerage and research services. These services include advice, either
directly or through publications or writings, as to the value of securities,
the advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing
of analyses and reports concerning issuers; securities or industries; providing
information on economic factors and trends; assisting in determining portfolio
strategy; providing computer software and hardware used in security analyses;
and providing portfolio performance evaluation and technical market analyses.
Such services are used by the respective investment manager in connection with
its investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used, or used exclusively, with respect
to the fund or account generating the brokerage.

-39-
<PAGE> 117
(SAI-DGPF15/PART B)

During the fiscal year ended December 31, 1996, portfolio transactions of
the following Series in the amounts listed below, resulting in brokerage
commissions in the amounts listed below were directed to brokers for brokerage
and research services provided:

<TABLE>
<CAPTION>
PORTFOLIO BROKERAGE
TRANSACTIONS COMMISSIONS
AMOUNTS AMOUNTS
------- -------
<S> <C> <C>
Decatur Total Return Series $00,000 $00,000
Delaware Series $00,000 $00,000
Growth Series $00,000 $00,000
International Equity Series $00,000 $00,000
Value Series $00,000 $00,000
Trend Series $00,000 $00,000
</TABLE>

As provided in the Securities Exchange Act of 1934 and the Investment
Management Agreements, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services, if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, the Fund believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services
and that such commissions are reasonable in relation to the value of the
brokerage and research services provided. In some instances, services may be
provided to the respective investment manager which constitute in some part
brokerage and research services used by the respective investment manager in
connection with its investment decision-making process and constitute in some
part services used by the respective investment manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the respective investment manager will make a good
faith allocation of brokerage and research services and will pay out of its own
resources for services used by the respective investment manager in connection
with administrative or other functions not related to its investment
decision-making process. In addition, so long as no fund is disadvantaged,
portfolio transactions which generate commissions or their equivalent are
allocated to broker/dealers who provide daily portfolio pricing services to the
Fund and to other funds in the Delaware Group. Subject to best price and
execution, commissions allocated to brokers providing such pricing services may
or may not be generated by the funds receiving the pricing service.

The respective investment manager may place a combined order for two or
more accounts or funds engaged in the purchase or sale of the same security if,
in its judgment, joint execution is in the best interest of each participant
and will result in best price and execution. Transactions involving commingled
orders are allocated in a manner deemed equitable to each account or fund.
When a combined order is executed in a series of transactions at different
prices, each account participating in the order may be allocated an average
price obtained from the executing broker. It is believed that the ability of
the accounts to participate in volume transactions will generally be beneficial
to the accounts and funds. Although it is recognized that, in some cases, the
joint execution of orders could adversely affect the price or volume of the
security that a particular account or fund may obtain, it is the opinion of the
respective investment manager and the Fund's Board of Directors that the
advantages of combined orders outweigh the possible disadvantages of separate
transactions.

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, the
Fund may place orders with broker/dealers which have agreed to defray certain

-40-
<PAGE> 118
(SAI-DGPF15/PART B)

Series expenses such as custodian fees, and may, at the request of the
Distributor, give consideration to sales of the variable contracts as a factor
in the selection of brokers and dealers to execute Series portfolio
transactions.

PORTFOLIO TURNOVER

The rate of portfolio turnover will not be a limiting factor when
portfolio changes are deemed appropriate for each Series. Given the respective
Series' investment objectives, the Fund anticipates that the annual rates of
portfolio turnover will not generally exceed 100% for Decatur Total Return,
Delchester, Growth, International Equity, Global Bond, Strategic Income,
Emerging Markets, Devon and Quantum Series, 200% for Capital Reserves, Delaware
and Convertible Securities Series and may exceed 100% for Value and Trend
Series. It is possible that in any particular year market conditions or other
factors might result in portfolio activity at a greater rate than anticipated.
The portfolio turnover rate of each Series is calculated by dividing the lesser
of purchases or sales of portfolio securities for the particular fiscal year by
the monthly average of the value of the portfolio securities owned by the
Series during the particular fiscal year, exclusive of securities whose
maturities at the time of acquisition are one year or less.

The degree of portfolio activity may affect brokerage costs incurred by
each Series. A turnover rate of 100% would occur, for example, if all the
investments in a Series' portfolio at the beginning of the year were replaced
by the end of the year. In investing to achieve their respective objective, a
Series may hold securities for any period of time. Portfolio turnover will
also be increased if a Series writes a large number of call options which are
subsequently exercised. The turnover rate also may be affected by cash
requirements from redemptions and repurchases of Series' shares.

The portfolio turnover rates for the Series noted below for the past two
years were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SERIES DECEMBER 31, 1995 DECEMBER 31, 1996
------ ----------------- -----------------
<S> <C> <C>
Decatur Total Return Series 85% 00%
Delchester Series 74% 00%
Capital Reserves Series 145% 00%
Delaware Series 106% 00%
Growth Series 73% 00%
International Equity Series 19% 00%
Value Series 71% 00%
Trend Series 76% 00%
Global Bond Series N/A 00%*
</TABLE>

*Annualized. Date of initial public offering was May 2, 1996.

-41-
<PAGE> 119
(SAI-DGPF15/PART B)

OFFERING PRICE

The offering price of shares is the net asset value per share next to
be determined after an order is received. The purchase of shares becomes
effective at the close of business on the day on which the investment is
received from the life company and after any dividend is declared. Dividends,
if any, begin to accrue on the next business day. There is no sales charge.

The purchase will be effected at the net asset value next computed
after the receipt of Federal Funds provided they are received by the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when such exchange is open. The New York Stock Exchange is
scheduled to be open Monday through Friday throughout the year except for New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas. When the New York Stock Exchange is closed,
the Fund will generally be closed, pricing calculations will not be made and
purchase and redemption orders will not be processed. In the event of changes
in Securities and Exchange Commission requirements or the Fund's change in time
of closing, the Fund reserves the right to price at a different time, to price
more often than once daily or to make the offering price effective at a
different time.

An example showing how to calculate the net asset value per share is
included in the Series' financial statements which are incorporated by
reference into this Part B.

The net asset value per share is computed by adding the value of all
securities and other assets in a Series' portfolio, deducting any liabilities
of that Series and dividing by the number of that Series' shares outstanding.
Expenses and fees are accrued daily. The Prospectus describes how securities
are valued.

In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result
of which disposal by a Series of securities owned by it is not reasonably
practical, or it is not reasonably practical for a Series fairly to value its
assets, or in the event that the Securities and Exchange Commission has
provided for such suspension for the protection of shareholders, the Fund may
postpone payment or suspend the right of redemption or repurchase. In such
case, the shareholder may withdraw a request for redemption or leave it
standing as a request for redemption at the net asset value next determined
after the suspension has been terminated.

MONEY MARKET SERIES
The Board of Directors has adopted certain procedures to monitor and
stabilize the price per share of Cash Reserve Series. Calculations are made
each day to compare part of the Series' value with the market value of
instruments of similar character. At regular intervals all issues in the
portfolio are valued at market value. Securities maturing in more than 60 days
are valued more frequently by obtaining market quotations from market makers.
The portfolio will also be valued by market makers at such other times as is
felt appropriate. In the event that a deviation of more than 1/2 1% exists
between the Series' $10 per share offering and redemption prices and the net
asset value calculated by reference to market quotations, or if there is any
other deviation which the Board of Directors believes would result in a
material dilution to shareholders or purchasers, the Board of Directors will
promptly consider what action, if any, should be initiated, such as changing
the price to more or less than $10 per share.

-42-
<PAGE> 120
(SAI-DGPF15/PART B)

DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS

Dividends for Delchester, Capital Reserves and Strategic Income Series
are declared daily and paid monthly on the first business day following the end
of the month. Dividends for Global Bond Series are declared and paid monthly
on the first business day following the end of the month. Short-term capital
gains distributions, if any, may be paid with the dividend; otherwise, any
distributions from net realized securities profits normally will be distributed
following the close of the fiscal year. The Fund's fiscal year ends on
December 31.

For the Decatur Total Return, Delaware, Devon, Convertible Securities
and Quantum Series, the Fund will make payments from the Series' net investment
income quarterly. Distributions from the respective Series' net realized
securities profits, if any, normally will be made following the close of the
fiscal year.

For the Growth, International Equity, Value and Emerging Markets
Series, the Fund will make payments from the Series' net income and net
realized securities profits, if any, once a year.

For Trend Series, the Fund will make payments from the Series' net
investment income and net realized securities profits, if any, twice a year.

All dividends and distributions are automatically reinvested in
additional Series shares.

CASH RESERVE SERIES

The Fund declares a dividend of this Series' net investment income on
a daily basis, to shareholders of record at the time of the previous
calculation of the Series' net asset value, each day that the Fund is open for
business. Payment of dividends will be made monthly on the first business day
following the end of the month. The amount of net investment income will be
determined at the time the offering price and net asset value are determined
(see Offering Price), and shall include investment income accrued, less the
estimated expenses of the Series incurred since the last determination of net
asset value. Gross investment income consists principally of interest accrued
and, where applicable, net pro-rata amortization of premiums and discounts
since the last determination. The dividend declared at the time the offering
price and net asset value are determined, as noted above, will be deducted
immediately before the net asset value calculation is made. See Offering
Price. Net investment income earned on days when the Fund is not open will be
declared as a dividend on the next business day. An investor begins earning
dividends when payments for shares purchased are converted into Federal Funds
and are available for investment.

To the extent necessary to maintain a $10 per share net asset value,
the Board of Directors will consider temporarily reducing or suspending payment
of daily dividends, or making a distribution of realized securities profits or
other distributions at the time the net asset value per share has changed.

-43-
<PAGE> 121
(SAI-DGPF15/PART B)

TAXES

Each Series has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. As such, the Fund will not be subject to federal income tax
to the extent its earnings are distributed.

Each Series of the Fund is treated as a single tax entity, and any
capital gains and losses for each Series are calculated separately. It is each
Series' policy to pay out substantially all net investment income and net
realized gains to relieve the Fund of federal income tax liability on that
portion of its income paid to shareholders under the Internal Revenue Code.

Each Series has no fixed policy with regard to distributions of
realized securities profits when such realized securities profits may be offset
by capital losses carried forward. Presently, however, each Series intends to
offset realized securities profits to the extent of the capital losses carried
forward.

-44-
<PAGE> 122
(SAI-DGPF15/PART B)

INVESTMENT MANAGEMENT AGREEMENTS AND SUB-ADVISORY AGREEMENTS

Delaware Management Company, Inc. ("Delaware Management"), located at
One Commerce Square, 2005 Market Street, Philadelphia, PA 19103, furnishes
investment management services to Decaur Total Return, Delchester, Capital
Reserves, Cash Reserve, Growth, Delaware, Value, Trend, Strategic Income,
Devon, Convertible Securities and Quantum Series. Delaware International
Advisers Ltd. ("Delaware International"), located at Veritas House, 125
Finsbury Pavement, London, England EC2A 1NQ, furnishes investment management
services to International Equity, Global Bond and Emerging Markets Series.
Such services are provided subject to the supervision and direction of the
Fund's Board of Directors. Delaware International is affiliated with Delaware
Management.

The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On December 31, 1996, the Manager and its affiliates
within the Delaware Group, including Delaware International Advisers Ltd., were
managing in the aggregate more than $00 billion in assets in the various
institutional or separately managed (approximately $00,000,000,000) and
investment company (approximately $00,000,000,000) accounts.

The Investment Management Agreements for Decatur Total Return,
Delchester, Capital Reserves, Cash Reserve, Growth, Delaware, International
Equity, Value and Trend Series are dated April 3, 1995 and were approved by
shareholders on March 29, 1995. The Investment Management Agreement for Global
Bond Series is dated May 1, 1996 and was approved by the initial shareholder on
May 1, 1996 and will remain in effect for an initial period of two years. The
Investment Management Agreements for Strategic Income, Devon, Emerging Markets,
Convertible Securities and Quantum Series are dated May 1, 1997 and were
approved by the initial shareholder May 1, 1997 and will remain in effect for
an initial period of two years. The Agreements may be renewed only if such
renewal and continuance are specifically approved at least annually by the
Board of Directors or by vote of a majority of the outstanding voting
securities of the Series, and only if the terms and the renewal thereof have
been approved by the vote of a majority of the directors of the Fund who are
not parties thereto or interested persons of any such party, cast in person at
a meeting called for the purpose of voting on such approval. The Agreements
are terminable without penalty on 60 days' notice by the directors of the Fund
or by the respective investment manager. The Agreements will terminate
automatically in the event of their assignments.

Delaware Management is paid an annual fee equal to the following
percentage rates of the average daily net assets of the Series noted below,
less, in the case of Decatur Total Return, Delchester, Capital Reserves, Money
Market, Growth and Delaware Series, a proportionate share of all directors'
fees paid to the unaffiliated directors of the Fund:

<TABLE>
<S> <C>
Decatur Total Return Series 0.60%
Delchester Series 0.60%
Capital Reserves Series 0.60%
Cash Reserve Series 0.50%
Growth Series 0.75%
Delaware Series 0.60%
Value Series 0.75%
Trend Series 0.75%
Strategic Income Series 0.65%
Devon Series 0.60%
Convertible Securities Series 0.75%
</TABLE>

-45-
<PAGE> 123
(SAI-DGPF15/PART B)

Delaware International is paid an annual fee equal to the following
percentage rates of the average daily net assets of the Series, less, in the
case of International Equity Series, a proportionate share of all directors'
fees paid to the unaffiliated directors of the Fund:

<TABLE>
<S> <C>
International Equity Series 0.75%
Global Bond Series 0.75%
Emerging Markets Series 1.25%
</TABLE>

The respective investment manager administers the affairs of and is
ultimately responsible for the investment management of each of the Series to
which it provides investment management services. In addition, Delaware
Management pays the salaries of all directors, officers and employees who are
affiliated with both it and the Fund.

Pursuant to the terms of Sub-Advisory Agreements with Delaware
Management, Lynch & Mayer, Inc. ("Lynch & Mayer") and Vantage Global Advisors,
Inc. ("Vantage") participate in the management of, respectively, Convertible
Securities Series' and Quantum Series' assets. Each Sub-Adviser is responsible
for day-to-day investment management of the Series, makes investment decisions
for the Series in accordance with the Series' investment objectives and stated
policies and places orders on behalf of the Series to effect the investment
decisions made. Delaware Management continues to have ultimate responsibility
for all investment advisory services in connection with the management of the
Series pursuant to the Investment Management Agreements and supervises the
Sub-Advisers' performance of such services For the services provided to
Delaware Management, Delaware Management pays Lynch & Mayer a fee equal to 00%
of the fee paid to Delaware Management under Convertible Securities Series'
Investment Management Agreement and Delaware Management pays Vantage a fee
equal to 00% of the fee paid to Delaware Management under Quantum Series'
Investment Management Agreement. Lynch & Mayer's address is 520 Madison
Avenue, New York, New York 10022. Vantage's address is 630 Fifth Avenue, New
York, NY 10111

On December 31, 1996, the total net assets of the Fund were
$000,000,000, broken down as follows:

<TABLE>
<S> <C>
Decatur Total Return Series $00,000,000
Delchester Series $00,000,000
Capital Reserves Series $00,000,000
Cash Reserve Series $00,000,000
Growth Series $00,000,000
Delaware Series $00,000,000
International Equity Series $00,000,000
Value Series $00,000,000
Trend Series $00,000,000
Global Bond Series $00,000,000
</TABLE>

-46-
<PAGE> 124
(SAI-DGPF15/PART B)

Strategic Income, Devon, Emerging Markets, Convertible Securities and
Quantum Series did not publicly offer shares prior to May 1, 1997.

Investment management fees were incurred with respect to the Series
noted below for the last three fiscal years.

<TABLE>
<CAPTION>
FUND DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
- ---- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Decatur Total Return Series $000,000 paid $528,481 paid $422,361 paid

Delchester Series $00,000 paid $311,242 paid $241,993 paid

Capital Reserves Series $000,000 paid $157,204 paid $150,708 paid

Cash Reserve Series $00,000 paid $93,257 paid $81,666 paid

Growth Series $00,000 earned $357,930 earned $274,800 earned
$00,000 paid $336,345 paid $244,127 paid
$00,000 waived $21,585 waived $30,673 waived

Delaware Series $000,000 paid $329,278 paid $262,703 paid

International Equity Series $000,000 earned $525,376 earned $294,997 earned
$000,000 paid $457,751 paid $209,618 paid
$000,000 waived $67,625 waived $85,379 waived

Value Series $000,000 earned $65,528 earned $25,775 earned
$000,000 paid $51,016 paid $4,738 paid
$000,000 waived $14,512 waived $21,037 waived

Trend Series $000,000 earned $92,985 earned $25,229 earned
$000,000 paid $72,359 paid $2,545 paid
$000,000 waived $20,626 waived $22,684 waived

Global Bond Series* $000,000 earned N/A N/A
$000,000 paid
$000,000 waived
</TABLE>

*Commenced operations on May 2, 1996.

-47-
<PAGE> 125
(SAI-DGPF15/PART B)

Except for those expenses borne by the respective investment manager
under the Investment Management Agreements and the Distributor under the
Distribution Agreements, each Series is responsible for all of its own
expenses. Among others, these include the Series' proportionate share of rent
and certain other administrative expenses; the investment management fees;
transfer and dividend disbursing agent fees and costs; custodian expenses;
federal securities registration fees; proxy costs; and the costs of preparing
prospectuses and reports sent to shareholders. For the year ended December 31,
1996, the ratios of expenses to average daily net assets for the Series noted
below were as follows:

<TABLE>
<S> <C>
Decatur Total Return Series 0.00%
Delchester Series 0.00%
Capital Reserves Series 0.00%
Cash Reserve Series 0.00%
Growth Series 0.00%
Delaware Series 0.00%
International Equity Series 0.00%
Value Series 0.00%
Trend Series 0.00%
Global Boned Series 0.00%*
</TABLE>

*Annualized.

The expense ratio of Growth, International Equity, Value and Trend and
Global Bond Series reflect the waiver of fees described below.

With respect to Delchester, Capital Reserves and Cash Reserve Series,
Delaware Management elected voluntarily to waive its fee and reimburse those
Series to limit certain expenses of those Series to 0.80% of average daily net
assets for six months following their initial public offering. This waiver has
been extended through June 30, 1997.

In connection with Value and Trend Series, Delaware Management had
elected voluntarily to waive its fee and to reimburse the Series to the extent
necessary to limit certain expenses to 0.80% of average daily net assets for
the period from commencement of the public offering for the Series through June
30, 1994. This waiver has been extended through June 30, 1997.

With respect to Strategic Income, Devon, Convertible Securities and
Quantum Series, Delaware Management had elected voluntarily to waive its fee
and reimburse those Series to the extent necessary to limit certain expenses of
each Series to 0.80% of each Series' average daily net assets for the from
commencement of the public offering through June 30, 1997.

-48-
<PAGE> 126
(SAI-DGPF15/PART B)

With respect to International Equity and Global Bond Series, Delaware
International has elected voluntarily to waive its fee and to reimburse the
Series to the extent necessary to limit certain expenses to 0.80% of average
daily net assets for the period from commencement of the public offering
through June 30, 1993 for International Equity Series and through June 30, 1996
for Global Bond Series. These waivers have been extended through June 30,
1997.

With respect to Emerging Markets Series, Delaware International has
elected voluntarily to waive its fee and to reimburse the Series to the extent
necessary to limit certain expenses to 1.50% of average daily net assets for
the period from commencement of the public offering through June 30, 1997.

DISTRIBUTION AND SERVICE

Delaware Distributors, L.P. (which formerly conducted business as
Delaware Distributors, Inc.), located at 1818 Market Street, Philadelphia, PA
19103, serves as the Fund's national distributor under Distribution Agreements
dated April 3, 1995 for all Series other than Global Bond, Strategic Income,
Devon, Emerging Markets, Convertible Securities and Quantum Series. Global
Bond Series' Distribution Agreement is dated as of May 1, 1996. Strategic
Income, Devon, Emerging Markets, Convertible Securities and Quantum Series'
Distribution Agreements are dated as of May 1, 1997. The Distributor is an
affiliate of Delaware Management and Delaware International and bears all of
the costs of promotion and distribution. Prior to January 3, 1995, Delaware
Distributors, Inc. ("DDI") served as the national distributor of the Series'
shares. On that date Delaware Distributors, L.P., a newly formed limited
partnership, succeeded to the business of DDI. All officers and employees of
DDI became officers and employees of Delaware Distributors, L.P. DDI is the
corporate general partner of Delaware Distributors, L.P. and both DDI and
Delaware Distributors, L.P. are indirect, wholly owned subsidiaries of
Delaware Management Holdings, Inc.

Delaware Service Company, Inc., another affiliate of Delaware
Management and Delaware International, is the Fund's shareholder servicing,
dividend disbursing and transfer agent for the Decatur Total Return,
Delchester, Capital Reserves, Delaware, Growth, International Equity, Value,
Trend, Global Bond, Strategic Income, Devon, Emerging Markets, Convertible
Securities and Quantum Series pursuant to the Amended and Restated Shareholders
Services Agreement dated May 1, 1997 and for Cash Reserve Series pursuant to
the Shareholders Services Agreement dated June 29, 1988. The Transfer Agent
also provides accounting services to the Series pursuant to the terms of a
separate Fund Accounting Agreement. Delaware Service Company, Inc. is also an
indirect, wholly owned subsidiary of Delaware Management Holdings, Inc.

-49-
<PAGE> 127
(SAI-DGPF15/PART B)

OFFICERS AND DIRECTORS

The business and affairs of the Fund are managed under the direction
of its Board of Directors.

Certain officers and directors of the Fund hold identical positions in
each of the other funds in the Delaware Group.

DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., Delaware Capital
Management, Inc. and Delaware Investment & Retirement Services, Inc. are direct
or indirect, wholly owned subsidiaries of Delaware Management Holdings, Inc.
("DMH"). On April 3, 1995, a merger between DMH and a wholly owned subsidiary
of Lincoln National Corporation ("Lincoln National") was completed. In
connection with the merger, new Investment Management Agreements between the
Fund on behalf of all of the Series, except Global Bond, Strategic Income,
Devon, Emerging Markets, Convertible Securities and Quantum Series, and, as
relevant, Delaware Management and Delaware International, were executed
following shareholder approval. DMH, Delaware Management and Delaware
International are now indirect, wholly owned subsidiaries, and subject to the
ultimate control, of Lincoln National. Lincoln National, with headquarters in
Fort Wayne, Indiana, is a diversified organization with operations in many
aspects of the financial services industry, including insurance and investment
management.

Directors and principal officers of the Fund are noted below along
with their ages and their business experience for the past five years. Unless
otherwise noted, the address of each officer and director is One Commerce
Square, Philadelphia, PA 19103.

-50-
<PAGE> 128
(SAI-DGPF15/PART B)

*WAYNE A. STORK (59)

Chairman, President, Chief Executive Officer, Director and/or Trustee
of the Fund, 16 other investment companies in the Delaware
Group (which excludes Delaware Pooled Trust, Inc.), Delaware
Management Holdings, Inc., DMH Corp., Delaware International
Holdings Ltd. and Founders Holdings, Inc.

Chairman and Director of Delaware Pooled Trust, Inc., Delaware
Distributors, Inc. and Delaware Capital Management, Inc.

Chairman, President, Chief Executive Officer, Chief Investment Officer
and Director of Delaware Management Company, Inc.

Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd.

Director of Delaware Service Company, Inc. and Delaware Investment &
Retirement Services, Inc.

During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware
organization.

WINTHROP S. JESSUP (51)

Executive Vice President of the Fund, 16 other investment companies in
the Delaware Group (which excludes Delaware Pooled Trust,
Inc.) and Delaware Management Holdings, Inc.

President and Chief Executive Officer of Delaware Pooled Trust, Inc.

President and Director of Delaware Capital Management, Inc.

Executive Vice President and Director of DMH Corp., Delaware
Management Company, Inc., Delaware International Holdings Ltd.
and Founders Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.

.Director of Delaware Service Company, Inc., Delaware International
Advisers Ltd., Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.

During the past five years, Mr. Jessup has served in various executive
capacities at different times within the Delaware
organization.

RICHARD G. UNRUH, JR. (57)

Executive Vice President of the Fund and each of the other 17
investment companies in the Delaware Group.

Executive Vice President and Director of Delaware Management Company,
Inc.

Senior Vice President of Delaware Management Holdings, Inc. and
Delaware Capital Management, Inc.

Director of Delaware International Advisers Ltd.

During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware
organization.

- -----------------------------

*Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.

-51-
<PAGE> 129
(SAI-DGPF15/PART B)

PAUL E. SUCKOW (49)

Executive Vice President/Chief Investment Officer, Fixed Income of the
Fund, each of the other 17 investment companies in the
Delaware Group and Delaware Management Company, Inc.

Executive Vice President/Chief Investment Officer/Fixed Income and
Director of Founders Holdings, Inc.

Senior Vice President/Chief Investment Officer, Fixed Income of
Delaware Management Holdings, Inc.

Director of Founders CBO Corporation.

Senior Vice President of Delaware Capital Management, Inc.

Director, HYPPCO Finance Company Ltd.

Before returning to the Delaware Group in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York, NY from 1985 to
1992. Prior to that, Mr. Suckow was a fixed-income portfolio
manager for the Delaware Group.

WALTER P. BABICH (69)

Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.

460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.

ANTHONY D. KNERR (58)

Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.

500 Fifth Avenue, New York, NY 10110.
Founder and Managing Director, Anthony Knerr & Associates.

From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to
1989, he was also a lecturer in English at the University. In
addition, Mr. Knerr was Chairman of The Publishing Group,
Inc., New York, from 1988 to 1990. Mr. Knerr founded The
Publishing Group, Inc. in 1988.

ANN R. LEVEN (56)

Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.

785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of
the Smithsonian Institution, Washington, DC, and from 1975 to
1992, she was Adjunct Professor of Columbia Business School.

W. THACHER LONGSTRETH (76)

Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.

City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.

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(SAI-DGPF15/PART B)

CHARLES E. PECK (71)

Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.

P.O. Box 1102, Columbia, MD 21044.
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer
of The Ryland Group, Inc., Columbia, MD.

DAVID K. DOWNES (57)

Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of the Fund and each of the other 17 investment
companies in the Delaware Group.

Chairman and Director of Delaware Management Trust Company and
Delaware Investment & Retirement Services, Inc.

President/Chief Executive Officer/Chief Financial Officer and Director
of Delaware Service Company, Inc.

Executive Vice President/Chief Operating Officer/Chief Financial
Officer and Director of DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, Inc., Founders Holdings,
Inc. and Delaware International Holdings Ltd.

Executive Vice President/Chief Operating Officer/Chief Financial
Officer of Delaware Management Holdings, Inc. and Delaware
Capital Management, Inc.

Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of Delaware Distributors, L.P.

Director of Delaware International Advisers Ltd.

Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer
of Equitable Capital Management Corporation, New York, from
1985 to 1992, Executive Vice President from 1985 to 1992 and
Vice Chairman from March 1992 to August 1992.

GEORGE M. CHAMBERLAIN, JR. (50)

Senior Vice President and Secretary of the Fund, each of the other 17
investment companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Distributors, L.P.

Executive Vice President, Secretary and Director of Delaware
Management Trust Company.

Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Founders Holdings, Inc.,
Delaware Investment & Retirement Services, Inc. and Delaware
Capital Management, Inc.

Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware
organization.

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(SAI-DGPF15/PART B)

EDWARD N. ANTOIAN (41)

Vice President/Senior Portfolio Manager of the Fund, of seven other
investment companies in the Delaware Group, Delaware
Management Company, Inc. and Delaware Capital Management, Inc.

During the past five years, Mr. Antoian has served in various
capacities within the Delaware organization.

GERALD S. FREY (50)

Vice President/Senior Portfolio Manager of the Fund, of seven other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.

Before joining the Delaware Group in 1996, Mr. Frey was a Senior
Director with Morgan Grenfell Capital Management, New York, NY
from 1986 to 1995.

DAVID C. DALRYMPLE (39)

Vice President/Senior Portfolio Manager of the Fund and seven other
equity funds in the Delaware Group.
Before joining the Delaware Group in 1991, Mr. Dalrymple was an
Assistant Portfolio Manager for Lord Abbett and Company, New
York, N.Y. from 1986 to 1991.

JOHN B. FIELDS (51)

Vice President/Senior Portfolio Manager of the Fund, of seven other
equity investment companies in the Delaware Group, Delaware
Management Company, Inc. and Delaware Capital Management, Inc.

Before joining the Delaware Group in 1992, Mr. Fields served as a
director of domestic equity risk management for DuPont,
Wilmington, DE.

GEORGE H. BURWELL (35)

Vice President/Senior Portfolio Manager of the Fund, of seven other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.

Before joining the Delaware Group in 1992, Mr. Burwell was a portfolio
manager for Midlantic Bank, New Jersey. In addition, he was a
security analyst for Balis & Zorn, New York and for First
Fidelity Bank, New Jersey.

GARY A. REED (42)

Vice President/Senior Portfolio Manager of the Fund, of nine other
investment companies in the Delaware Group, of Delaware
Management Company, Inc. and Delaware Capital Management, Inc.

During the past five years, Mr. Reed has served in such capacities
within the Delaware organization.

GERALD T. NICHOLS (39)

Vice President/Senior Portfolio Manager of the Fund, of nine other
income funds in the Delaware Group, the closed-end funds in
the Delaware Group and Delaware Management Company, Inc.
Vice President of Founders Holdings, Inc.
Treasurer and Director of Founders CBO Corporation.
During the past five years, Mr. Nichols has served in various
capacities at different times within the Delaware
organization.

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(SAI-DGPF15/PART B)

PAUL A. MATLACK (37)

Vice President/Senior Portfolio Manager of the Fund, of 11 other
investment companies in the Delaware Group and of Delaware
Management Company, Inc.

Vice President of Founders Holdings, Inc.

President and Director of Founders CBO Corporation.

During the past five years, Mr. Matlack has served in various
capacities at different times within the Delaware
organization.

JOSEPH H. HASTINGS (47)

Vice President/Corporate Controller of the Fund, each of the other 17
investment companies in the Delaware Group, Delaware
Distributors, L.P., Delaware Service Company, Inc. and
Delaware International Holdings Ltd.

Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp. and Delaware Management
Company, Inc.

Senior Vice President/Corporate Controller of Delaware Distributors,
Inc. and Founders Holdings, Inc.

Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.

Vice President/Treasurer of Delaware Capital Management, Inc.

Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P.,
New York, NY from 1989 to 1992. Prior to that, Mr. Hastings
served as Controller and Treasurer for Fine Homes
International, L.P., Stamford, CT from 1987 to 1989.

MICHAEL P. BISHOF (34)

Vice President/Treasurer of the Fund, each of the other 17 investment
companies in the Delaware Group, Delaware Distributors, L.P.
and Delaware Service Company, Inc.

Senior Vice President and Treasurer of Delaware Distributors, Inc. and
Founders Holdings, Inc.

Senior Vice President of Delaware Management Company, Inc.

Vice President/Manager of Investment Accounting of Delaware
International Holdings Ltd.

Assistant Treasurer of Founders CBO Corporation.

Before joining the Delaware Group in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a
Vice President for CS First Boston Investment Management, New
York, NY from 1993 to 1994 and an Assistant Vice President for
Equitable Capital Management Corporation, New York, NY from
1987 to 1993.

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(SAI-DGPF15/PART B)

The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received from the
Fund and the total compensation received from all Delaware Group funds for the
year ended December 31, 1996 and an estimate of annual benefits to be received
upon retirement under the Delaware Group Retirement Plan for Directors/Trustees
as of December 31, 1996.

<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
BENEFITS ANNUAL COMPENSATION
AGGREGATE ACCRUED BENEFITS FROM ALL 18
COMPENSATION AS PART OF UPON DELAWARE
NAME FROM FUND FUND EXPENSES RETIREMENT* GROUP FUNDS
<S> <C> <C> <C> <C>
W. Thacher Longstreth $0,000 None $30,000 $00,000
Ann R. Leven $0,000 None $30,000 $00,000
Walter P. Babich $0,000 None $30,000 $00,000
Anthony D. Knerr $0,000 None $30,000 $00,000
Charles E. Peck $0,000 None $30,000 $00,000
</TABLE>

* Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director who, at the time of his or
her retirement from the Board, has attained the age of 70 years and served
on the Board for at least five continuous years, is entitled to receive
payments from each fund in the Delaware Group for a period equal to the
lesser of the number of years that such person served as a director or the
remainder of such person's life. The amount of such payments will be
equal, on an annual basis, to the amount of the annual retainer that is
paid to directors of each fund at the time of such person's retirement.
If an eligible director retired as of December 31, 1996, he or she would
be entitled to annual payments totaling $30,000, in the aggregate, from
all of the funds in the Delaware Group, based on the number of funds in
the Delaware Group as of that date.

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(SAI-DGPF15/PART B)

GENERAL INFORMATION

Delaware Management is the investment manager of each Series of the Fund
other than International Equity, Global Bond and Emerging Markets Series.
Delaware International is the investment manager of International Equity,
Global Bond and Emerging Markets Series. Delaware Management or its affiliate,
Delaware International, manages the other funds in the Delaware Group.
Delaware Management, through a separate division, also manages private
investment accounts. While investment decisions for each Series are made
independently from those of the other funds and accounts, investment decisions
for such other funds and accounts may be made at the same time as investment
decisions for the Series.

Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to Delaware Management, Delaware International or their affiliates,
are permitted to engage in personal securities transactions subject to the
exceptions set forth in Rule 17j-1 and the following general restrictions and
procedures: (1) certain blackout periods apply to personal securities
transactions of those persons; (2) transactions must receive advance clearance
and must be completed on the same day as the clearance is received; (3) certain
persons are prohibited from investing in initial public offerings of securities
and other restrictions apply to investments in private placements of
securities; (4) opening positions may only be closed- out at a profit after a
60-day holding period has elapsed; and (5) the Compliance Officer must be
informed periodically of all securities transactions and duplicate copies of
brokerage confirmations and account statements must be supplied to the
Compliance Officer.

Delaware Distributors, L.P. acts as national distributor for the Fund and
for the other mutual funds in the Delaware Group.

In addition, Delaware Service Company, Inc., an affiliate of Delaware
Management, acts as shareholder servicing, dividend disbursing and transfer
agent for the Fund and for the other mutual funds in the Delaware Group.
Compensation is fixed each year and approved by the Board of Directors,
including a majority of the disinterested directors. The Transfer Agent also
provides accounting services to the Series. Those services include performing
all functions related to calculating each Series' net asset value and providing
all financial reporting services, regulatory compliance testing and other
related accounting services. For its services, the Transfer Agent is paid a
fee based on total assets of all funds in the Delaware Group for which it
provides such accounting services. Such fee is equal to 0.25% multiplied by
the total amount of assets in the complex for which the Transfer Agent
furnishes accounting services, where such aggregate complex assets are $10
billion or less, and 0.20% of assets if such aggregate complex assets exceed
$10 billion. The fees are charged to each fund, including the Series, on an
aggregate pro-rata basis. The asset-based fee payable to the Transfer Agent is
subject to a minimum fee calculated by determining the total number of
investment portfolios and associated classes.

Delaware Management and its affiliates own the name "Delaware Group."
Under certain circumstances, including the termination of the Fund's advisory
relationship with Delaware Management or its distribution relationship with
Delaware Distributors, L.P., Delaware Management and its affiliates could cause
the Fund to delete the words "Delaware Group" from the Fund's name.

The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the 1940 Act, has been passed upon for the Fund by
Messrs. Stradley, Ronon, Stevens & Young, LLP, Philadelphia, Pennsylvania.

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(SAI-DGPF15/PART B)

The initial public offering date for the Decatur Total Return, Delchester,
Capital Reserves, Cash Reserve and Delaware Series was July 28, 1988. The
initial public offering date for Growth Series was July 2, 1991. International
Equity Series commenced operations on October 29, 1992. Value and Trend Series
commenced operations on December 27, 1993. The initial public offering date
for Global Bond Series was May 1, 1996 and for Strategic Income, Devon,
Emerging Markets, Convertible Securities and Quantum Series was May 1, 1997.

CAPITALIZATION
The Fund has a present authorized capitalization of five hundred million
shares of capital stock with a $.01 par value per share. The Board of
Directors has allocated fifty million shares to each Series. While all shares
have equal voting rights on matters affecting the entire Fund, each Series
would vote separately on any matter which affects only that Series, such as
investment objective and policy or action to dissolve the Series, and as
otherwise prescribed by the 1940 Act. Shares of each Series have a priority in
that Series' assets, and in gains on and income from the portfolio of that
Series. Shares have no preemptive rights, are fully transferable and, when
issued, are fully paid and nonassessable. All shares participate equally in
dividends, and upon liquidation would share equally.

NONCUMULATIVE VOTING
SERIES SHARES HAVE NONCUMULATIVE VOTING RIGHTS WHICH MEANS THAT THE
HOLDERS OF MORE THAN 50% OF THE SHARES OF THE FUND VOTING FOR THE ELECTION OF
DIRECTORS CAN ELECT ALL THE DIRECTORS IF THEY CHOOSE TO DO SO, AND, IN SUCH
EVENT, THE HOLDERS OF THE REMAINING SHARES WILL NOT BE ABLE TO ELECT ANY
DIRECTORS.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the Securities and Exchange
Commission ("SEC"). Shareholders may obtain a copy of the Registration
Statement by contacting the SEC in Washington, DC.

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(SAI-DGPF15/PART B)

APPENDIX A--DESCRIPTION OF RATINGS

COMMERCIAL PAPER
Excerpts from S&P's description of its two highest commercial paper
ratings: A-1--judged to be the highest investment grade category possessing
the highest relative strength; A-2--investment grade category possessing less
relative strength than the highest rating.

Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength;
P-2--second highest grade possessing less relative strength than the highest
grade.

Excerpts from Duff and Phelps, Inc.'s description of its two highest
ratings: CATEGORY 1--TOP GRADE: Duff 1-Plus--Highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or
ready access to alternative sources of funds, is clearly outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations. Duff
1--Very high certainty of timely payment. Liquidity factors are excellent and
supported by good fundamental protection factors. Risk factors are minor.
Duff 1-Minus--High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are very
small. CATEGORY 2--GOOD GRADE: Duff 2--Good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing
internal funds' needs may enlarge total financing requirements, access to
capital markets is good. Risk factors are small.

Excerpts from Fitch Investors Service, Inc.'s description of its two
highest ratings: F-1--Highest grade commercial paper assigned this rating is
regarded as having the strongest degree of assurance for timely payment.
F-2--Very good grade issues assigned this rating reflect an assurance of timely
payment only slightly less in degree than the strongest issues.

BONDS
Excerpts from Moody's description of its bond ratings: Aaa--judged to be
the best quality. They carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards; A--possess favorable
attributes and are considered "upper medium" grade obligations; Baa--considered
as medium grade obligations. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time; Ba--judged to
have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the contract over any
long period of time may be small; Caa--are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest; Ca-- represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings; C--the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.

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(SAI-DGPF15/PART B)

Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal
and interest; AA--also qualify as high grade obligations, and in the majority
of instances differ from AAA issues only in a small degree; A--strong ability
to pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions;
C--reserved for income bonds on which no interest is being paid; D--in default,
and payment of interest and/or repayment of principal is in arrears.

-60-
<PAGE> 138
(SAI-DGPF15/PART B)

APPENDIX B

THE COMPANY LIFE CYCLE
Traditional business theory contends that a typical company progresses
through basically four stages of development, keyed closely to a firm's sales.

1. EMERGING GROWTH--a period of experimentation in which the company
builds awareness of a new product or firm.

2. ACCELERATED DEVELOPMENT--a period of rapid growth with potentially
high profitability and acceptance of the product.

3. MATURING PHASE--a period of diminished real growth due to dependence
on replacement or sustained product demand.

4. CYCLICAL STAGE--a period in which a company faces a potential
saturation of demand for its product. At this point, a firm either diversifies
or becomes obsolete.

Growth Series concentrates on seeking and actively managing the potentials
held by firms entering phase 2 of this development cycle. The following
illustration of a firm's hypothetical development is intended to graphically
depict the full development cycle.

HYPOTHETICAL CORPORATE LIFE CYCLE

Hypothetical Corporate Life Cycle Chart shows in a line illustration, the
stages that a typical company would go through, beginning with the emerging
state where sales growth continues at a steep pace to the mature phase where
growth levels off to the cyclical stage where sales show more definitive highs
and lows.

The above chart illustrates the path traditionally followed by companies
that successfully survive the growth sequence.

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<PAGE> 139
(SAI-DGPF15/PART B)

FINANCIAL STATEMENTS

Ernst & Young LLP serves as the independent auditor for each Series of the
Fund and, in its capacity as such, audits the financial statements of each
Series contained in the Fund's Annual Report. The Series' Statements of Net
Assets, Statements of Operations, Statements of Changes in Net Assets and Notes
to Financial Statements, as well as the report of Ernst & Young LLP,
independent auditor, for the year ended December 31, 1996 are included in the
Fund's Annual Report to shareholders. The financial statements and the report
of Ernst & Young LLP listed above are incorporated by reference from the Annual
Report into this Part B.

-62-

<PAGE> 140
PART C

Other Information

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Part A - Financial Highlights

*Part B - Statements of Net Assets
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Accountant's Report

* The financial statements and Accountant's Report
listed above for each Series of the Registrant,
other than Strategic Income, Devon, Emerging
Markets, Convertible Securities and Quantum Series,
for the fiscal year ended December 31, 1997 to be
filed by Post-Effective Amendment. Strategic Income,
Devon, Emerging Markets, Convertible Securities and
Quantum Series are expected to commence operations
on or about May 1, 1997.

(b) Exhibits:

(1) Articles of Incorporation.

(a) Articles of Incorporation, as
amended and supplemented through
January 22, 1996, incorporated
into this filing by reference to
Post-Effective Amendment No. 16
filed January 22, 1996.

(b) Executed Articles Supplementary to
Articles of Incorporation (April
23, 1996) incorporated into this
filing by reference to
Post-Effective Amendment No. 18
filed October 29, 1996.

(d) Form of Articles of Amendment to
Articles of Incorporation (April
1997) to be filed by Amendment.

(2) By-Laws. By-Laws, as amended through April
27, 1995, incorporated into this filing by
reference to Post-Effective Amendment No.
15 filed April 27, 1995.

(3) Voting Trust Agreement. Inapplicable.

<PAGE> 141

PART C - Other Information
(Continued)

(4) Copies of All Instruments Defining the Rights of Holders.

(a) Articles of Incorporation, Articles of Amendment and Articles
Supplementary.

(i) Article Fifth, Article Seventh, Article Eighth and
Article Tenth of Articles of Incorporation (February
17, 1987), Article Second of Articles Supplementary
(January 29, 1988), Article One of Articles of
Amendment (July 27, 1989), Article Second of Articles
Supplementary (April 25, 1991), Article Second of
Articles Supplementary (July 28, 1992), Article
Second of Articles Supplementary (October 11, 1993)
and Article Second of Articles Supplementary (April
23, 1996) incorporated into this filing by reference
to Post-Effective Amendment No. 16 filed January 22,
1996.

(ii) Executed Article Fourth to Articles Supplementary
(April 23, 1996) incorporated into this filing by
reference to Post-Effective Amendment No. 18 filed
October 29, 1996.

(iii) Form of Articles Supplementary (April 1997) to be
filed by Amendment.

(b) By-Laws. Article II, Article III, as amended, and Article
XIII, which was subsequently designated as Article XIV,
incorporated into this filing by reference to Post-Effective
Amendment No. 15 filed April 27, 1995.

(5) Investment Management Agreements.

(a) Executed Investment Management Agreement (April 3, 1995)
between Delaware Management Company, Inc. and the Registrant
on behalf of Emerging Growth Series (to be renamed Trend
Series) incorporated into this filing by reference to
Post-Effective Amendment No. 15 filed April 27, 1995.

(b) Executed Investment Management Agreement (April 3, 1995)
between Delaware Management Company, Inc. and the Registrant
on behalf of Growth Series incorporated into this filing by
reference to Post-Effective Amendment No. 15 filed April 27,
1995.

(c) Executed Investment Management Agreement (April 3, 1995)
between Delaware International Advisers Ltd. and the
Registrant on behalf of International Equity Series
incorporated into this filing by reference to Post- Effective
Amendment No. 15 filed April 27, 1995.

(d) Executed Investment Management Agreement (April 3, 1995)
between Delaware Management Company, Inc. and the Registrant
on behalf of the Money Market Series (to be renamed Cash
Reserve Series) incorporated into this filing by reference to
Post-Effective Amendment No. 15 filed April 27, 1995.

<PAGE> 142

PART C - Other Information
(Continued)

(e) Executed Investment Management Agreement
(April 3, 1995) between Delaware Management
Company, Inc. and the Registrant on behalf
of the Equity/Income (to be renamed Decatur
Total Return), High Yield (to be renamed
Delchester), Capital Reserves and Multiple
Strategy (to be renamed Delaware) Series
incorporated into this filing by reference
to Post-Effective Amendment No. 15 filed
April 27, 1995.

(f) Executed Investment Management Agreement
(April 3, 1995) between Delaware Management
Company, Inc. and the Registrant on behalf
of Value Series incorporated into this
filing by reference to Post-Effective
Amendment No. 15 filed April 27, 1995.

(g) Executed Investment Management Agreement
(May 1, 1996) between Delaware
International Advisers Ltd. and the
Registrant on behalf of Global Bond Series
incorporated into this filing by reference
to Post-Effective Amendment No. 18 filed
October 29, 1996.

(h) Proposed Investment Management Agreement
(May 1997) between Delaware Management
Company, Inc. and the Registrant on behalf
of Strategic Income Series to be filed by
Amendment.

(i) Proposed Investment Management Agreement
(May 1997) between Delaware Management
Company, Inc. and the Registrant on behalf
of Devon Series to be filed by Amendment.

(j) Proposed Investment Management Agreement
(May 1997) between Delaware International
Advisers Ltd. and the Registrant on behalf
of Emerging Markets Series to be filed by
Amendment.

(k) Proposed Investment Management Agreement
(May 1997) between Delaware Management
Company, Inc. and the Registrant on behalf
of Convertible Securities Series to be
filed by Amendment.

(l) Proposed Investment Management Agreement
(May 1997) between Delaware Management
Company, Inc. and the Registrant on behalf
of Quantum Series to be filed by Amendment.

(m) Proposed Sub-Advisory Agreement (May 1997)
between Delaware Management Company, Inc.
and Delaware International Advisers Ltd. on
behalf of Strategic Income Series to be
filed by Amendment.

(n) Proposed Sub-Advisory Agreement (May 1997)
between Delaware Management Company, Inc.
and Lynch & Mayer, Inc. on behalf of
Convertible Securities Series to be filed
by Amendment.

<PAGE> 143

PART C - Other Information
(Continued)

(o) Proposed Sub-Advisory Agreement (May 1997)
between Delaware Management Company, Inc.
and Vantage Global Advisors, Inc. on behalf
of Quantum Series to be filed by Amendment.

(6) Distribution Agreements.

(a) Executed Distribution Agreement
(April 3, 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of
Equity/Income (to be renamed
Decatur Total Return), High Yield
(to be renamed Delchester), Capital
Reserves and Multiple Strategy (to
be renamed Delaware) Series
incorporated into this filing by
reference to Post-Effective
Amendment No. 16 filed January 22,
1996.

(b) Executed Distribution Agreement
(April 3, 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of Money
Market Series (to be renamed Cash
Reserve Series) incorporated into
this filing by reference to
Post-Effective Amendment No. 16
filed January 22, 1996.

(c) Executed Distribution Agreement
(April 3, 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of Growth
Series incorporated into this
filing by reference to
Post-Effective Amendment No. 16
filed January 22, 1996.

(d) Executed Distribution Agreement
(April 3, 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of
International Equity Series
incorporated into this filing by
reference to Post-Effective
Amendment No. 16 filed January 22,
1996.

(e) Executed Distribution Agreement
(April 3, 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of Value
Series incorporated into this
filing by reference to
Post-Effective Amendment No. 16
filed January 22, 1996.

(f) Executed Distribution Agreement
(April 3, 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of Emerging
Growth Series (to be renamed Trend
Series) incorporated into this
filing by reference to Post-
Effective Amendment No. 16 filed
January 22, 1996.

<PAGE> 144

PART C - Other Information
(Continued)

(g) Executed Distribution Agreement
(May 1, 1996) between Delaware
Distributors, L.P. and the
Registrant on behalf of Global Bond
Series incorporated into this
filing by reference to
Post-Effective Amendment No. 18
filed October 29, 1996.

(h) Proposed Distribution Agreement
(May 1997) between Delaware
Distributors, L.P. and the
Registrant on behalf of Strategic
Income Series to be filed by
Amendment.

(i) Proposed Distribution Agreement
(May 1997) between Delaware
Distributors, L.P. and the
Registrant on behalf of Devon
Series to be filed by Amendment.

(j) Proposed Distribution Agreement
(May 1997) between Delaware
Distributors, L.P. and the
Registrant on behalf of Emerging
Markets Series to be filed by
Amendment.

(k) Proposed Distribution Agreement
(May 1997) between Delaware
Distributors, L.P. and the
Registrant on behalf of Convertible
Securities Series to be filed by
Amendment.

(l) Proposed Distribution Agreement
(May 1997) between Delaware
Distributors, L.P. and the
Registrant on behalf of Quantum
Series to be filed by Amendment.

(7) Bonus, Profit Sharing, Pension Contracts.

(a) Amended and Restated Profit Sharing
Plan (November 17, 1994)
incorporated into this filing by
reference to Post-Effective
Amendment No. 15 filed April 27,
1995.

(b) Amendment to Profit Sharing Plan
(December 21, 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 16
filed January 22, 1996.

(8) Custodian Agreements.

(a) Executed Custodian Agreement (1996)
(Module) between The Chase
Manhattan Bank and the Registrant
incorporated into this filing by
reference to Post-Effective
Amendment No. 18 filed October 29,
1996.

(b) Form of Securities Lending
Agreement (1996) between The Chase
Manhattan Bank and the Registrant
incorporated into this filing by
reference to Post- Effective
Amendment No. 18 filed October 29,
1996.

<PAGE> 145

PART C - Other Information
(Continued)

(9) Other Material Contracts.

(a) Executed Shareholders Services
Agreement (June 29, 1988) between
Delaware Service Company, Inc. and
the Registrant on behalf of Money
Market Series (to be renamed Cash
Reserve Series) incorporated into
this filing by reference to
Post-Effective Amendment No. 18
filed October 29,1996.

(b) Executed Amended and Restated
Shareholders Services Agreement
(May 1, 1996) between Delaware
Service Company, Inc. and the
Registrant on behalf of High Yield
(to be renamed Delchester), Capital
Reserves, Equity/Income (to be
renamed Decatur Total Return),
Multiple Strategy (to be renamed
Delaware), Growth, International
Equity, Value, Emerging Growth
(to be renamed Trend) and Global
Bond Series incorporated into this
filing by reference to
Post-Effective Amendment No. 18
filed October 29, 1996.

(c) Proposed Amended and Restated
Shareholders Services Agreement
(May 1997) between Delaware Service
Company, Inc. and the Registrant on
behalf of High Yield (to be renamed
Delchester), Capital Reserves,
Equity/Income (to be renamed
Decatur Total Return), Multiple
Strategy (to be renamed Delaware),
Growth (to be renamed DelCap),
International Equity, Value,
Emerging Growth (to be renamed
Trend), Global Bond, Strategic
Income, Devon, Emerging Markets,
Convertible Securities and Quantum
Series to be filed by Amendment.

(c) Executed Delaware Group of Funds
Fund Accounting Agreement (August
19, 1996) (Module) between Delaware
Service Company, Inc. and the
Registrant incorporated into this
filing by reference to
Post-Effective Amendment No. 18
filed October 29, 1996.

(i) Executed Amendment No. 1
(September 30, 1996) to
Delaware Group of Funds
Fund Accounting Agreement
attached as Exhibit.

(ii) Executed Amendment No. 2
(November 29, 1996) to
Delaware Group of Funds
Fund Accounting Agreement
attached as Exhibit.

(iii) Proposed Amendment to
Delaware Group of Funds
Fund Accounting Agreement
included as Module.

(10) Opinion of Counsel. To Be filed with letter relating
to Rule 24f-2 on or about February 28, 1997.

(11) Consent of Auditors. To be filed by Amendment.

<PAGE> 146

PART C - Other Information
(Continued)

(12) Inapplicable.

(13) Subscription Agreement. Incorporated into this filing
by reference to Pre-Effective Amendment No. 1 filed
October 13, 1987.

(14-15) Inapplicable.

(16) Schedules of Computation for each Performance
Quotation.

(a) Incorporated into this filing by reference
to Post-Effective Amendment No. 15 filed
April 27, 1995, Post-Effective Amendment No.
17 filed March 29, 1996 and Post-Effective
Amendment No. 18 filed October 29, 1997.

(b) Schedules of Computation for each
Performance Quotation for periods not
previously electronically filed to be filed
by Amendment.

(17) Financial Data Schedules. To be filed by Amendment.

(18) Inapplicable.

(19) Other: Directors' Power of Attorney. Incorporated
into this filing by reference to Post-Effective
Amendment No. 15 filed April 27, 1995.

Item 25. Persons Controlled by or under Common Control with Registrant. None.

<PAGE> 147

PART C - Other Information
(Continued)

Item 26. Number of Holders of Securities.

(1) (2)

Number of
Title of Class Record Holders
- -------------- --------------
Delaware Group Premium Fund, Inc.
High Yield Series
(to be renamed Delchester Series)
Common Stock Par Value 6 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Capital Reserves Series
Common Stock Par Value 6 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Equity/Income Series
(to be renamed Decatur Total Return Series)
Common Stock Par Value 8 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Multiple Strategy Series
(to be renamed Delaware Series)
Common Stock Par Value 6 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Money Market Series
(to be renamed Cash Reserve Series)
Common Stock Par Value 6 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Growth Series
Common Stock Par Value 5 Accounts as of
$.01 Per Share January 31, 1997

<PAGE> 148

PART C - Other Information
(Continued)

Number of
Title of Class Record Holders
-------------- --------------

Delaware Group Premium Fund, Inc.
International Equity Series
Common Stock Par Value 2 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Value Series
Common Stock Par Value 3 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Emerging Growth Series
(to be renamed Trend Series)
Common Stock Par Value 5 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Global Bond Series
Common Stock Par Value 4 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Strategic Income Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Devon Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Emerging Markets Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Convertible Securities Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share January 31, 1997

Delaware Group Premium Fund, Inc.
Quantum Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share January 31, 1997

* Shares of the Series were not offered prior to the effective date of
this Registration Statement.

<PAGE> 149

PART C - Other Information
(Continued)

Item 27. Indemnification. Incorporated into this filing by reference to
initial Registration Statement filed May 14, 1987 and Article VII of
the Amendment to By-Laws (February 16, 1989) incorporated into this
filing by reference to Post-Effective Amendment No. 15 filed April 27,
1995.

Item 28. Business and Other Connections of Investment Adviser.

Delaware Management Company, Inc. ("DMC") serves as investment manager
to the Equity/Income (to be renamed Decatur Total Return), High Yield (to be
renamed Delchester), Capital Reserves, Money Market (to be renamed Cash Reserve
Series), Growth, Multiple Strategy (to be renamed Delaware), Emerging Growth (to
be renamed Trend), Value, Strategic Income, Devon, Convertible Securities and
Quantum Series. In addition, DMC also serves as investment manager or
sub-adviser to certain other funds in the Delaware Group (Delaware Group Equity
Funds I, Inc., Delaware Group Trend Fund, Inc., Delaware Group Equity Funds II,
Inc., Delaware Group Equity Funds IV, Inc., Delaware Group Equity Funds V, Inc.,
Delaware Group Income Funds, Inc., Delaware Group Government Fund, Inc.,
Delaware Group Limited-Term Government Funds, Inc., Delaware Group Cash Reserve,
Inc., Delaware Group Tax-Free Fund, Inc., DMC Tax-Free Income
Trust-Pennsylvania, Delaware Group Tax-Free Money Fund, Inc., Delaware Group
Global & International Funds, Inc., Delaware Pooled Trust, Inc., Delaware Group
Adviser Funds, Inc., Delaware Group Dividend and Income Fund, Inc., and Delaware
Group Global Dividend and Income Fund, Inc.) and provides investment advisory
services to institutional accounts, primarily retirement plans and endowment
funds. In addition, certain directors of DMC also serve as directors/trustees of
the other Delaware Group funds, and certain officers are also officers of these
other funds. A company indirectly owned by the Manager's parent company acts as
principal underwriter to the mutual funds in the Delaware Group (see Item 29
below) and another such company acts as the shareholder servicing, dividend
disbursing, accounting services and transfer agent for all of the mutual funds
in the Delaware Group.

The following persons serving as directors or officers of DMC have
held the following positions with the Registrant during the past two years:

Name and Principal Positions and Offices with DMC and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------

Wayne A. Stork Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer and Director of
Delaware Management Company, Inc.; President, Chief
Executive Officer, Chairman of the Board and
Director of the Registrant and, with the exception
of Delaware Pooled Trust, Inc., each of the other
funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware International
Holdings Ltd. and Founders Holdings, Inc.; Chairman
of the Board and Director of Delaware Pooled Trust,
Inc., Delaware Distributors, Inc. and Delaware
Capital Management, Inc.; Chairman, Chief Executive
Officer and Director of Delaware International
Advisers Ltd.; and Director of Delaware Service
Company, Inc. and Delaware Investment & Retirement
Services, Inc.

* Business address is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 150

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
<S> <C>
Winthrop S. Jessup Executive Vice President and Director of Delaware Management Company, Inc.,
DMH Corp., Delaware International Holdings Ltd. and Founders Holdings, Inc.;
Executive Vice President of the Registrant and, with the exception of Delaware
Pooled Trust, Inc., each of the other funds in the Delaware Group and Delaware
Management Holdings, Inc.; President and Chief Executive Officer of Delaware
Pooled Trust, Inc.; Vice Chairman of Delaware Distributors, L.P.; Vice
Chairman and Director of Delaware Distributors, Inc.; Director of Delaware
Service Company, Inc., Delaware Management Trust Company, Delaware
International Advisers Ltd. and Delaware Investment & Retirement Services,
Inc.; and President and Director of Delaware Capital Management, Inc.

David K. Downes Executive Vice President, Chief Operating Officer and Chief Financial Officer of
Delaware Management Company, Inc.; Senior Vice President, Chief
Administrative Officer and Chief Financial Officer of the Registrant and each of
the other funds in the Delaware Group; Chairman and Director of Delaware
Management Trust Company; Executive Vice President and Chief Operating
Officer and Chief Financial Officer of Delaware Management Holdings, Inc.;
Executive Vice President, Chief Operating Officer, Chief Financial Officer and
Director of DMH Corp., Delaware Distributors, Inc. and Founders Holdings,
Inc.; Senior Vice President, Chief Administrative Officer and Chief Financial
Officer of Delaware Distributors, L.P.; President, Chief Executive Officer, Chief
Financial Officer and Director of Delaware Service Company, Inc.; Executive
Vice President, Chief Operating Officer, Chief Financial Officer and Director of
Delaware International Holdings Ltd.; Executive Vice President, Chief Financial
Officer and Chief Operating Officer of Delaware Capital Management, Inc.;
Chief Executive Officer and Director of Delaware Investment & Retirement
Services, Inc.; and Director of Delaware International Advisers Ltd.

Chief Executive Officer, Chief Financial Officer and Treasurer of Forewarn, Inc.
since 1992, 8 Clayton Place, Newtown Square, PA

Richard G. Unruh, Jr. Executive Vice President and Director of Delaware Management Company, Inc.;
Executive Vice President of the Registrant and each of the other funds in the
Delaware Group; Senior Vice President of Delaware Management Holdings, Inc.
and Delaware Capital Management, Inc.; and Director of Delaware International
Advisers Ltd.

Board of Directors, Chairman of Finance Committee, Keystone Insurance Company
since 1989, 2040 Market Street, Philadelphia, PA; Board of Directors, Chairman
of Finance Committee, Mid Atlantic, Inc. since 1989, 2040 Market Street,
Philadelphia, PA

</TABLE>

* Business address is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 151

PART C - Other Information
(Continued)

George M. Senior Vice President, Secretary and Director of Delaware Management Company, Inc., DMH
Chamberlain, Jr. Corp., Delaware Distributors, Inc., Delaware Service Company, Inc., Founders Holdings,
Inc., Delaware Capital Management, Inc. and Delaware Investment & Retirement Services,
Inc.; Senior Vice President and Secretary of the Registrant, each of the other funds in
the Delaware Group, Delaware Distributors, L.P. and Delaware Management Holdings, Inc.;
Executive Vice President, Secretary and Director of Delaware Management Trust Company;
Secretary and Director of Delaware International Holdings Ltd.; and Director of Delaware
International Advisers Ltd.

Richard J. Flannery Senior Vice President/Corporate & International Affairs of Delaware
Management Company, Inc., Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware Management
Trust Company, Founders CBO Corporation and Delaware Capital Management,
Inc.; Vice President of the Registrant and each of the other funds in the Delaware
Group; Senior Vice President/Corporate & International Affairs and Director of
Founders Holdings, Inc. and Delaware International Holdings Ltd.; Managing
Director/Corporate & Tax Affairs of Delaware Service Company, Inc. and
Delaware Investment & Retirement Services, Inc.; and Director of Delaware
International Advisers Ltd.

Director of HYPPCO Finance Company, Ltd.

Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverton,
PA; Director and Member of Executive Committee of Stonewall Links, Inc. since
1991, Bulltown Rd., Elverton, PA

Michael P. Bishof(1) Senior Vice President of Delaware Management Company, Inc.; Vice President
and Treasurer of the Registrant, each of the other funds in the Delaware Group,
Delaware Distributors, L.P. and Delaware Service Company, Inc.; Senior Vice
President/Treasurer of Delaware Distributors, Inc. and Founders Holdings, Inc.;
Assistant Treasurer of Founders CBO Corporation; and Vice President and
Manager of Investment Accounting of Delaware International Holdings Ltd.
</TABLE>

* Business address is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 152

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
<S> <C>
Joseph H. Hastings Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Company, Inc., Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc.; Vice
President/Corporate Controller of the Registrant, each of the other funds in the
Delaware Group, Delaware Distributors, L.P., Delaware Service Company, Inc.
and Delaware International Holdings Ltd.; Vice President/Treasurer of Delaware
Capital Management, Inc.; Executive Vice President, Chief Financial Officer and
Treasurer of Delaware Management Trust Company; Chief Financial Officer and
Treasurer of Delaware Investment & Retirement Services, Inc.; and Assistant
Treasurer of Founders CBO Corporation

Eric E. Miller Vice President and Assistant Secretary of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors Inc., Delaware Service Company, Inc., Delaware Management Trust
Company, Founders Holdings, Inc., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.

Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., DMH Corp., Delaware Management
Trust Company, Delaware Capital Management, Inc., Delaware Investment &
Retirement Services, Inc. and Founders Holdings, Inc.; Secretary of Founders
CBO Corporation; and Assistant Secretary of Delaware International Holdings
Ltd.

General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Ln.,
Philadelphia, PA

Richard Salus(2) Vice President/Assistant Controller of Delaware Management Company, Inc. and
Vice President of Delaware Management Trust Company

Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp. and Delaware Management Trust
Company; and Vice President/Internal Audit of Delaware Investment &
Retirement Services, Inc.
</TABLE>

* Business address is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 153

PART C - Other Information
(Continued)

Steven T. Lampe(3) Vice President/Taxation of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Management Trust
Company, Founders Holdings, Inc., Founders CBO Corporation, Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services, Inc.

Lisa O. Brinkley Vice President/Compliance of Delaware Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Delaware Capital Management, Inc. and Delaware Investment & Retirement Services, Inc.

Rosemary E. Milner Vice President/Legal of Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group, Delaware Distributors, L.P. and
Delaware Distributors, Inc.

Douglas L. Anderson Senior Vice President/Operations of Delaware Management Company, Inc.; Vice
President/Operations of Delaware Investment & Retirement Services, Inc. and
Delaware Service Company, Inc.; and Vice President/Operations and Director of
Delaware Management Trust Company

Michael T. Taggart Senior Vice President/Facilities Management and Administrative Services of
Delaware Management Company, Inc.

Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant, each of the tax-exempt funds, the fixed income funds and the closed-end
funds in the Delaware Group; Vice President of Founders Holdings, Inc.; and Treasurer,
Assistant Secretary and Director of Founders CBO Corporation

Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant, each of the tax-exempt funds and the fixed income funds in the Delaware
Group and Delaware Capital Management Counselors, Inc.

Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant, each of the tax-exempt funds, the fixed income funds and the closed-end
funds in the Delaware Group; Vice President of Founders Holdings, Inc.; and Secretary
and Director of Founders CBO Corporation
</TABLE>

* Business address is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 154

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
<S> <C>
Babak Zenouzi Vice President/Portfolio Manager of Fund, the Registrant, each of the
equity funds and the closed-end funds in the Delaware Group

Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant, each of the tax-exempt funds and the fixed income funds in the Delaware
Group and Delaware Capital Management, Inc.

Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant, each of the tax-exempt funds and the fixed income funds in the Delaware
Group

Mitchell L. Conery(4) Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant and the tax-exempt and the fixed-income funds in the
Delaware Group

Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant, each of the equity funds in the Delaware Group and Delaware Capital
Management, Inc.

General Partner of Zeke Investment Partners since 1991, 569 Canterbury
Lane, Berwyn, PA

George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant and each of the equity funds in the Delaware Group

John B. Fields Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., the
Registrant, each of the equity funds in the Delaware Group and Delaware Capital
Management, Inc.

David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant and each of the equity funds in the Delaware Group

Gerald S. Frey(5) Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant and each of the equity funds in the Delaware Group
</TABLE>

* Business address is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 155

PART C - Other Information
(Continued)

(1) VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust
and VICE PRESIDENT, CS First Boston Investment Management prior to
June 1995.

(2) SENIOR MANAGER, Ernst & Young LLP prior to December 1996.

(3) TAX MANAGER, Price Waterhouse prior to October 1995.

(4) INVESTMENT OFFICER, Travelers Insurance prior to January 1997 and
RESEARCH ANALYST, CS First Boston prior to March 1995.

(5) SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June
1996.

(6) VICE PRESIDENT/HUMAN RESOURCES, Nova Care prior to September 1995.

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

Delaware International Advisers Ltd. ("Delaware International") serves
as investment manager to the International Equity, Global Bond and Emerging
Markets Series of the Registrant. Delaware International serves as sub-adviser
to Strategic Income Series. In addition, Delaware International also serves as
investment manager or sub-adviser to certain other funds in the Delaware Group
(Delaware Pooled Trust, Inc., Delaware Group Income Funds, Inc., Delaware Group
Global & International Funds, Inc. and Delaware Group Global Dividend and Income
Fund, Inc.) and other institutional accounts. Information regarding the officers
and directors of Delaware International and the positions they have held with
the Registrant during the past two fiscal years is provided below.

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ---------------- -------------------------------------------------------
<S> <C>
*Wayne A. Stork Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd.; Chairman of the Board, President, Chief Executive Officer,
Chief Investment Officer and Director of Delaware Management Company,
Inc.; President, Chief Executive Officer, Chairman of the Board and Director
of the Registrant and, with the exception of Delaware Pooled Trust, Inc., each
of the other funds in the Delaware Group, Delaware Management Holdings,
Inc., DMH Corp., Delaware International Holdings Ltd. and Founders
Holdings, Inc.; Chairman of the Board and Director of Delaware Pooled
Trust, Inc., Delaware Distributors, Inc. and Delaware Capital Management,
Inc.; and Director of Delaware Service Company, Inc. and Delaware
Investment & Retirement Services, Inc.

**G. Roger H. Kitson Vice Chairman and Director of Delaware International Advisers Ltd.
</TABLE>

* Business address is 1818 Market Street, Philadelphia, PA 19103.

** Business address is Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.

<PAGE> 156

PART C - Other Information
(Continued)

**John Emberson Secretary/Compliance Officer/Finance Director and Director of Delaware
International Advisers Ltd.

*David K. Downes Director of Delaware International Advisers Ltd.; Executive Vice President,
Chief Operating Officer and Chief Financial Officer of Delaware
Management Company, Inc.; Senior Vice President, Chief Administrative
Officer and Chief Financial Officer of the Registrant and each of the other
funds in the Delaware Group; Chairman and Director of Delaware
Management Trust Company; Executive Vice President and Chief Operating
Officer and Chief Financial Officer of Delaware Management Holdings, Inc.;
Executive Vice President, Chief Operating Officer, Chief Financial Officer
and Director of DMH Corp., Delaware Distributors, Inc. and Founders
Holdings, Inc.; Senior Vice President, Chief Administrative Officer and
Chief Financial Officer of Delaware Distributors, L.P.; President, Chief
Executive Officer, Chief Financial Officer and Director of Delaware Service
Company, Inc.; Executive Vice President, Chief Operating Officer, Chief
Financial Officer and Director of Delaware International Holdings Ltd.;
Executive Vice President, Chief Financial Officer and Chief Operating
Officer of Delaware Capital Management, Inc.; and Chief Executive Officer
and Director of Delaware Investment & Retirement Services, Inc.

Chief Executive Officer, Chief Financial Officer and Treasurer of Forewarn,
Inc. since 1992, 8 Clayton Place, Newtown Square, PA

*Winthrop S. Jessup Director of Delaware International Advisers Ltd., Delaware Service
Company, Inc., Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.; Executive Vice President of the
Registrant and, with the exception of Delaware Pooled Trust, Inc., each of the
other funds in the Delaware Group and Delaware Management Holdings,
Inc.; President and Chief Executive Officer of Delaware Pooled Trust, Inc.;
Executive Vice President and Director of DMH Corp., Delaware
Management Company, Inc., Delaware International Holdings Ltd. and
Founders Holdings, Inc.; Vice Chairman of Delaware Distributors, L.P.; Vice
Chairman and Director of Delaware Distributors, Inc.; and President and
Director of Delaware Capital Management, Inc.
</TABLE>

* Business address is 1818 Market Street, Philadelphia, PA 19103.

** Business address is Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.

<PAGE> 157

PART C - Other Information
(Continued)

Board of Directors, Chairman of Finance Committee, Keystone Insurance Company since
1989, 2040 Market Street, Philadelphia, PA; Board of Directors, Chairman of Finance
Committee, Mid Atlantic, Inc. since 1989, 2040 Market Street, Philadelphia, PA

*Richard J. Flannery Director of Delaware International Advisers Ltd.; Senior Vice
President/Corporate & International Affairs of Delaware Management
Company, Inc., Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Management Trust Company, Founders CBO Corporation and Delaware
Capital Management, Inc.; Vice President of the Registrant and each of the
other funds in the Delaware Group; Senior Vice President/Corporate &
International Affairs and Director of Founders Holdings, Inc. and Delaware
International Holdings Ltd.; Managing Director/Corporate & Tax Affairs of
Delaware Service Company, Inc. and Delaware Investment & Retirement
Services, Inc.

Director of HYPPCO Finance Company, Ltd.

Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverton,
PA; Director and Member of Executive Committee of Stonewall Links, Inc.
since 1991, Bulltown Rd., Elverton, PA

*John C. E. Campbell Director of Delaware International Advisers Ltd.

*George M. Chamberlain, Jr. Director of Delaware International Advisers Ltd.; Senior Vice President and
Secretary of the Registrant, each of the other funds in the Delaware Group,
Delaware Distributors, L.P. and Delaware Management Holdings, Inc.;
Senior Vice President, Secretary and Director of Delaware Management
Company, Inc., DMH Corp., Delaware Distributors, Inc., Delaware Service
Company, Inc., Founders Holdings, Inc., Delaware Capital Management, Inc.
and Delaware Investment & Retirement Services, Inc.; Executive Vice
President, Secretary and Director of Delaware Management Trust Company;
and Secretary and Director of Delaware International Holdings Ltd.

*George E. Deming Director of Delaware International Advisers Ltd.
</TABLE>

* Business address is 1818 Market Street, Philadelphia, PA 19103.

** Business address is Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.

<PAGE> 158

PART C - Other Information
(Continued)

**Timothy W. Sanderson Senior Portfolio Manager, Deputy Compliance Officer, Director Equity
Research and Director of Delaware International Advisers Ltd.

**Clive A. Gillmore Senior Portfolio Manager, Director U.S. Mutual Fund Liaison and Director of
Delaware International Advisers Ltd.

**Hamish O. Parker Senior Portfolio Manager, Director U.S. Marketing Liaison and Director of
Delaware International Advisers Ltd.

**Ian G. Sims Senior Portfolio Manager, Deputy Managing Director and Director of
Delaware International Advisers Ltd.

**Elizabeth A. Desmond Senior Portfolio Manager and Director of Delaware International Advisers
Ltd.

**Gavin A. Hall Senior Portfolio Manager of Delaware International Advisers Ltd.

**Robert Akester Senior Portfolio Manager of Delaware International Advisers Ltd.

**Nigel G. May Senior Portfolio Manager of Delaware International Advisers Ltd.

**Hywel Morgan Senior Portfolio Manager of Delaware International Advisers Ltd.
</TABLE>

** Business address is Veritas House, 125 Finsbury Pavement, London,
England EC2A 1NQ.

Lynch & Mayer, Inc. ("Lynch & Mayer") is an indirect, wholly owned
subsidiary of Lincoln National Corporation and an affiliate of Delaware
Management Company, Inc. Lynch & Mayer, Inc. serves as sub-adviser to
Convertible Securities Series. Lynch & Mayer also serves as sub-adviser to
Delaware Group Adviser Funds, Inc. The directors and officers of Lynch & Mayer
are listed below. Unless otherwise indicated, the address of each person is 520
Madison Avenue, New York, NY 10022.

<TABLE>
<CAPTION>
Name Positions and Offices with Lynch & Mayer, Inc.
- ---- ----------------------------------------------
<S> <C>
Dennis P. Lynch Chairman and Co-Chief Executive Officer

Eldon C. Mayer, Jr. Vice Chairman

Edward J. Petner President and Co-Chief Executive Officer
</TABLE>

<PAGE> 159

PART C - Other Information
(Continued)

Vantage Global Advisors, Inc. ("Vantage"), 630 Fifth Avenue, New
York, NY 10111, is an indirect, wholly owned subsidiary of Lincoln National
Corporation and an affiliate of Delaware Management Company, Inc. Vantage
provides investment advice to pension plans, endowments, insurance and
commingled products. Vantage serves as sub-adviser to Quantum Series. Vantage
also serves as sub-adviser to Delaware Group Equity Funds II, Inc. The directors
and officers of Vantage are listed below. Unless otherwise indicated, the
principal business address of each person is 630 Fifth Avenue, New York, NY
10111.

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Vantage Global Advisors, Inc. and its
Business Address Affiliates and Other Positions and Offices Held
- ---------------- -----------------------------------------------
<S> <C>
T. Scott Wittman President, Chief Investment Officer and Director of Vantage Global
Advisors, Inc.
Elliot M. Gartner Senior Vice President of Vantage Global Advisors, Inc.

John B. Guerard Senior Vice President of Vantage Global Advisors, Inc.

Marc C. Viani Vice President of Vantage Global Advisors, Inc.

Florence P. Leong Vice President of Vantage Global Advisors, Inc.

Evelyn M. Poy Vice President of Vantage Global Advisors, Inc.

*Dennis A. Blume Director of Vantage Global Advisors, Inc.

Senior Vice President and Director of Lincoln Investment Management, Inc.
since 1982, 200 East Berry Street, Fort Wayne, IN; Director of Lynch &
Mayer, Inc. since 1996, 520 Madison Avenue, New York, NY

*H. Thomas McMeekin Director of Vantage Global Advisors, Inc.

President and Director of Lincoln Investment Management, Inc., Lincoln National
Convertible Securities Fund, Inc., Lincoln National Income Fund, Inc. since 1994;
Executive Vice President and Chief Investment Officer of Lincoln National Corporation
since 1994; President, Chief Executive Officer and Director of Lincoln National
Mezzanine Corporation, 200 East Berry Street, Fort Wayne, IN; Director of Lynch
& Mayer, Inc., 520 Madison Avenue, New York, NY

**Bruce D. Barton(1) Director of Vantage Global Advisors, Inc.

President and Chief Executive Officer of Delaware Distributors, L.P. since
1996, 1818 Market Street, Philadelphia, PA;
</TABLE>

(1) SENIOR VICE PRESIDENT AND DIRECTOR, Lincoln National Investment
Companies February 1996 to October 1996; VICE PRESIDENT, Lincoln
National Corporation May 1992 to October 1996.

* Business address is 200 East Berry Street, Fort Wayne, IN 46802.

** Business address is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 160

PART C - Other Information
(Continued)

Item 29. Principal Underwriters.

(a) Delaware Distributors, L.P. serves as principal
underwriter for all the mutual funds in the Delaware
Group.

(b) Information with respect to each director, officer or
partner of principal underwriter:

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------- ---------------- ---------------
<S> <C> <C>

Delaware Distributors, Inc. General Partner None

Delaware Management Investment Manager to
Company, Inc. Limited Partner Equity/Income, High Yield
Capital Reserves, Money Market,
Growth, Multiple Strategy,
Emerging Growth and
Value Series

Delaware Capital
Management, Inc. Limited Partner None

Winthrop S. Jessup Vice Chairman Executive Vice President

Bruce Barton President and Chief None
Executive Officer

David K. Downes Senior Vice President and Senior Vice President/Chief
Chief Administrative Officer Administrative Officer/Chief
Financial Officer

George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary

J. Lee Cook Senior Vice President/ None
Eastern Sales Division

Thomas E. Sawyer Senior Vice President/ None
Western Sales Division

Stephen H. Slack Senior Vice President/ None
Wholesaler

William F. Hostler Senior Vice President/ None
Marketing Services

Dana B. Hall Senior Vice President/ None
Key Accounts
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 161

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------- ---------------- ---------------
<S> <C> <C>

J. Chris Meyer Senior Vice President/ None
Product Development

Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs

Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Michael P. Bishof Vice President/Treasurer Vice President/Treasurer

Steven T. Lampe Vice President/Taxation Vice President/Taxation

Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller

Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance

Rosemary E. Milner Vice President/Legal Vice President/Legal

Susan J. Black Vice President/ None
Manager Key Accounts

Thomas Kennett Vice President/Marketing None

Daniel H. Carlson Vice President/ None
Marketing Manager

Diane M. Anderson Vice President/ None
Retirement Services

Denise F. Guerriere Vice President/Client Services None

Julia R. Vander Els Vice President/ None
Client Services
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 162

PART C - Other Information
(Continued)

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------- ---------------- ---------------
<S> <C> <C>
Jerome J. Alrutz Vice President/ None
Client Services

Joanne A. Mettenheimer Vice President/ None
National Accounts

Christopher H. Price Vice President/Annuity None
Marketing & Administration

Steven J. DeAngelis Vice President/ None
Product Development

Susan T. Friestedt Vice President/ None
Customer Service

Dinah J. Huntoon Vice President/ None
Product Management

Soohee Lee Vice President/Fixed Income None
Product Management

Ellen M. Krott Vice President/ None
Communications

Holly W. Riemel Vice President/ None
Telemarketing

Frank Albanese Vice President/Wholesaler None

Terrence L. Bussard Vice President/Wholesaler None

William S. Carroll Vice President/Wholesaler None

William S. Castetter Vice President/Wholesaler None

Thomas J. Chadie Vice President/Wholesaler None

Thomas C. Gallagher Vice President/Wholesaler None

Douglas R. Glennon Vice President/Wholesaler None

Christopher L. Johnston Vice President/Wholesaler None

William M. Kimbrough Vice President/Wholesaler None
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE> 163

PART C - Other Information
(Continued)

Patrick L. Murphy Vice President/Wholesaler None

Henry W. Orvin Vice President/Wholesaler None

Philip G. Rickards Vice President/Wholesaler None

Elizabeth Roman Vice President/Wholesaler None

Michael W. Rose Vice President/Wholesaler None

Edward B. Sheridan Vice President/Wholesaler None

Robert E. Stansbury Vice President/Wholesaler None

Larry D. Stone Vice President/Wholesaler None

Faye P. Staples Vice President/Human Resources None

John Wells Vice President/Marketing None
Technology
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.

Item 30. Location of Accounts and Records.

All accounts and records are maintained in Philadelphia at 1818
Market Street, Philadelphia, PA 19103 or One Commerce Square,
Philadelphia, PA 19103, in London at Veritas House, 125 Finsbury
Pavement, London, England EC2A 1NQ, in New York at 520 Madison
Avenue, New York, NY 10022, or in New York at 630 Fifth Avenue, New
York, NY 10111.

Item 31. Management Services. None.

Item 32. Undertakings.

(a) Not Applicable.

(b) The Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the public
offering of shares of Strategic Income Series.

The Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the public
offering of shares of Devon Series.

<PAGE> 164

PART C - Other Information
(Continued)

(c) The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.

(d) The Registrant hereby undertakes to promptly call a
meeting of shareholders for the purpose of voting upon the
question of removal of any director when requested in
writing to do so by the record holders of not less than
10% of the outstanding shares.

<PAGE> 165

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
this City of Philadelphia and Commonwealth of Pennsylvania on this 12th day of
February, 1997.

DELAWARE GROUP PREMIUM FUND, INC.

By /s/Wayne A. Stork
--------------------------
Wayne A. Stork
Chairman of the Board, President,
Chief Executive Officer and Director

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- -----
<S> <C> <C>

/s/ Wayne A. Stork Chairman of the Board, President,
- --------------------------------------- Chief Executive Officer and Director February 12, 1997
Wayne A. Stork

/s/David K. Downes Senior Vice President/Chief Administrative
- --------------------------------------- Officer/Chief Financial Officer (Principal
David K. Downes Financial Officer and Principal Accounting
Officer) February 12, 1997

/s/Walter P. Babich Director February 12, 1997
- ---------------------------------------
Walter P. Babich

/s/W. Thacher Longstreth Director February 12, 1997
- ---------------------------------------
W. Thacher Longstreth

/s/Charles E. Peck Director February 12, 1997
- ---------------------------------------
Charles E. Peck

/s/Anthony D. Knerr Director February 12, 1997
- ---------------------------------------
Anthony D. Knerr

/s/Ann R. Leven Director February 12, 1997
- ---------------------------------------
Ann R. Leven
</TABLE>

<PAGE> 166

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Exhibits

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

<PAGE> 167

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
EX-99.B9C(i) Executed Amendment No. 1 (September 30, 1996) to Delaware Group of Funds Fund
Accounting Agreement

EX-99.B9C(ii) Executed Amendment No. 2 (November 29, 1996) to Delaware Group of Funds Fund
Accounting Agreement

EX-99.B9C(iii) Proposed Amendment to Delaware Group of Funds Fund Accounting Agreement
(Module Name
ACCT_AGT_SCHD_A)
</TABLE>

<PAGE> 1
Ex-99.B9C(i)

AMENDMENT NO.1 TO
SCHEDULE A
TO DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT

Delaware Group Cash Reserve, Inc.

Delaware Group Decatur Fund, Inc.

Decatur Income Fund
Decatur Total Return Fund

Delaware Group Delaware Fund, Inc.

Delaware Fund
Devon Fund

Delaware Group Tax-Free Money Fund, Inc.

Delaware Group Tax-Free Fund, Inc.

Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund

Delaware Group Limited-Term Government Funds, Inc.

Limited-Term Government Fund
U.S. Government Money Fund

Delaware Group Trend Fund, Inc.

Delaware Group Income Funds, Inc.
Delchester Fund
Strategic Income Fund (New)

*Except as otherwise noted, all Portfolios included on this Schedule A
are Existing Portfolios for purposes of the compensation described on Schedule B
to that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of August 19, 1996 ("Agreement"). All
portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.

1
<PAGE> 2
DMC Tax-Free Income Trust - Pennsylvania

Delaware Group Value Fund, Inc.

Delaware Group Global & International Funds, Inc.

International Equity Fund
Global Bond Fund
Global Assets Fund
Emerging Markets Fund (New)

Delaware Group Delcap Fund, Inc.

Delaware Pooled Trust, Inc.

The Defensive Equity Portfolio
The Aggressive Growth Portfolio
The International Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (New)
The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio
The Fixed Income Portfolio
The Limited-Term Maturity Portfolio (New)
The Global Fixed Income Portfolio
The International Fixed Income Portfolio (New)
The High-Yield Bond Portfolio (New)

Delaware Group Premium Fund, Inc.

Equity/Income Series
High Yield Series
Capital Reserves Series
Money Market Series
Growth Series
Multiple Strategy Series
International Equity Series
Value Series
Emerging Growth Series
Global Bond Series (New)

Delaware Group Government Fund, Inc.

2
<PAGE> 3
Delaware Group Adviser Funds, Inc.

Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Federal Bond Fund
Corporate Income Fund

Dated as of: September 30, 1996

DELAWARE SERVICE COMPANY, INC.

By:/s/David K. Downes
------------------
David K. Downes
Senior Vice President/Chief
Administrative Officer/Chief
Financial Officer
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP DECATUR FUND, INC.
DELAWARE GROUP DELAWARE FUND, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND,INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT
FUNDS, INC.
DELAWARE GROUP TREND FUND, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DMC TAX-FREE INCOME TRUST - PENNSYLVANIA
DELAWARE GROUP VALUE FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL
FUNDS, INC.
DELAWARE GROUP DELCAP FUND, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP ADVISER FUNDS, INC.

By:/s/ Wayne A. Stork
------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer

DELAWARE POOLED TRUST, INC.

By:/s/ Wayne A. Stork
------------------
Wayne A. Stork
Chairman

<PAGE> 1
Ex-99.B9C(ii)

AMENDMENT NO. 2 TO
SCHEDULE A
TO DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT

Delaware Group Adviser Funds, Inc.
Corporate Income Fund
Enterprise Fund
Federal Bond Fund
New Pacific Fund
U.S. Growth Fund
World Growth Fund

Delaware Group Cash Reserve, Inc.

Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Total Return Fund

Delaware Group Delaware Fund, Inc.
Delaware Fund
Devon Fund

Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund (New)
DelCap Fund

Delaware Group Equity Funds V, Inc.
Retirement Income Fund (New)
Value Fund

1
<PAGE> 2
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund

Delaware Group Government Fund, Inc.

Delaware Group Income Funds, Inc.
Delchester Fund
Strategic Income Fund (New)

Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund

Delaware Group Premium Fund, Inc.
Capital Reserves Series
Emerging Growth Series
Equity/Income Series
Global Bond Series (New)
Growth Series
High Yield Series
International Equity Series
Money Market Series
Multiple Strategy Series
Value Series

Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund

Delaware Group Tax-Free Money Fund, Inc.

Delaware Group Trend Fund, Inc.

2
<PAGE> 3
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Fixed Income Portfolio
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio

DMC Tax-Free Income Trust - Pennsylvania

3
<PAGE> 4
Dated as of: November 29, 1996

DELAWARE SERVICE COMPANY, INC.

By: /s/David K. Downes
--------------------
David K. Downes
Senior Vice President/
Chief Administrative Officer/
Chief Financial Officer

DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP DECATUR FUND, INC.
DELAWARE GROUP DELAWARE FUND, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL
FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT
FUNDS, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP TREND FUND, INC.
DMC TAX-FREE INCOME TRUST-PENNSYLVANIA

By: /s/ Wayne A. Stork
-------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer

DELAWARE POOLED TRUST, INC.

By: /s/ Wayne A. Stork
-------------------
Wayne A. Stork
Chairman

<PAGE> 1

<PAGE>

SCHEDULE A

COMPANIES AND PORTFOLIOS COMPRISING THE DELAWARE GROUP*

[NAME OF INVESTMENT COMPANIES]

- --------
* Except as otherwise noted, all Portfolios included on this Schedule A are
Existing Portfolios for purposes of the compensation described on Schedule B to
that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of _________ __, 199_ ("Agreement"). All
Portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.

Dated as of: __________ __, 199_