DELAWARE GROUP PREMIUM FUND INC, 485BPOS, 1997-04-29

DELAWARE GROUP PREMIUM FUND INC
485BPOS, 1997-04-29

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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. 20 /X/
----

AND

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

Amendment No. 20
----

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)
---
X on May 1, 1997 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)
---
on (date) 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 was filed on February 27, 1997.

<PAGE> 2
--- C O N T E N T S ---

This Post-Effective Amendment No. 20 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.

-1-

<PAGE> 7

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 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.

DELCAP SERIES--seeks long-term capital appreciation by investing its
assets in a diversified portfolio of securities exhibiting the potential for
significant growth. This Series, formerly known as Growth 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

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<PAGE> 8

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.

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.

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<PAGE> 9

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.

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...............................................
DelCap 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 one billion 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, DelCap, 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, DelCap 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%
DelCap 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>

Delaware Management has elected voluntarily to waive its management fee
and to pay the expenses of 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:

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

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

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<PAGE> 11

on 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

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<PAGE> 12

involving futures contracts and options on such contracts, and in connection
with such activities will maintain certain collateral in special accounts
established with or on behalf of 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
commodities trading advisers 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 (FORMERLY KNOWN AS EQUITY/INCOME 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 ............... $ 14.8300 $ 11.4800 $ 12.5100 $ 11.2200 $ 10.7500
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.3771 0.4155 0.4121 0.4341 0.4155
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 2.3979 3.5745 (0.4221) 1.2659 0.5045
----------- ----------- ----------- ----------- -----------
Total From Investment Operations ............... 2.7750 3.9900 (0.0100) 1.7000 0.9200
----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.4200) (0.4300) (0.4200) (0.4100) (0.4500)
Distributions (from capital gains) ................. (1.2050) (0.2100) (0.6000) none none
Returns of Capital ................................. none none none none none
----------- ----------- ----------- ----------- -----------
Total Distributions ............................ (1.6250) (0.6400) (1.0200) (0.4100) (0.4500)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ..................... $ 15.9800 $ 14.8300 $ 11.4800 $ 12.5100 $ 11.2200
- ------------------------- =========== =========== =========== =========== ===========
TOTAL RETURN(2) .................................... 20.72% 36.12% (0.20%) 15.45%(3) 8.82%(3)
- ----------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .......... $ 166,647 $ 109,003 $ 72,725 $ 65,519 $ 38,278
Ratio of Expenses to Average Net Assets ............ 0.67% 0.69% 0.71% 0.75% 0.79%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.67% 0.69% 0.71% 0.76% 0.81%
Ratio of Net Investment Income to Average Net Assets 2.66% 3.24% 3.63% 3.95% 3.86%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 2.66% 3.24% 3.63% 3.94% 3.84%
Portfolio Turnover Rate ............................ 81% 85% 91% 67% 72%
Average Commission Rate Paid ....................... $ 0.06 N/A N/A N/A N/A
=========== =========== =========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
DECATUR TOTAL RETURN SERIES (FORMERLY KNOWN AS EQUITY/INCOME SERIES)
7/28/88(1)
YEAR ENDED THROUGH
12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $ 9.2400 $ 11.4000 $ 10.1600 $ 10.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.4502 0.4489 0.2813 0.0934
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 1.5498 (1.9189) 1.0337 0.0666
----------- ----------- ----------- -----------
Total From Investment Operations ............... 2.0000 (1.4700) 1.3150 0.1600
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.4900) (0.5600) (0.0750) none
Distributions (from capital gains) ................. none (0.1300) none none
Returns of Capital ................................. none none none none
----------- ----------- ----------- -----------
Total Distributions ............................ (0.4900) (0.6900) (0.0750) none
----------- ----------- ----------- -----------
Net Asset Value, End of Period ..................... $ 10.7500 $ 9.2400 $ 11.4000 $ 10.1600
- ------------------------- =========== =========== =========== ===========
TOTAL RETURN(2) .................................... 22.32% (13.31%) 13.04% 3.77%
- ----------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .......... $ 34,840 $ 29,598 $ 12,959 $ 1,873
Ratio of Expenses to Average Net Assets ............ 0.85% 0.96% 1.31% 2.00%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.85% 0.96% 1.31% 2.00%
Ratio of Net Investment Income to Average Net Assets 4.46% 5.80% 5.06% 6.40%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 4.46% 5.80% 5.06% 6.40%
Portfolio Turnover Rate ............................ 79% 34% 26% --
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. 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.

<PAGE> 15

<TABLE>
<CAPTION>
DELCHESTER SERIES (FORMERLY KNOWN AS HIGH YIELD 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 ............... $ 8.9400 $ 8.5400 $ 9.7700 $ 9.2900 $ 9.1300
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.8532 0.8715 0.9621 0.9758 1.0224
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 0.2300 0.4000 (1.2300) 0.4800 0.1600
----------- ----------- ----------- ----------- -----------
Total From Investment Operations ............... 1.0832 1.2715 (0.2679) 1.4558 1.1824
----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.8532) (0.8715) (0.9621) (0.9758) (1.0224)
Distributions (from capital gains) ................. none none none none none
Returns of Capital ................................. none none none none none
----------- ----------- ----------- ----------- -----------
Total Distributions ............................ (0.8532) (0.8715) (0.9621) (0.9758) (1.0224)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ..................... $ 9.1700 $ 8.9400 $ 8.5400 $ 9.7700 $ 9.2900
- ------------------------- =========== =========== =========== =========== ===========
TOTAL RETURN(2) .................................... 12.79% 15.50% (2.87%) 16.36%(3) 13.44%(3)
- ----------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .......... $ 67,665 $ 56,605 $ 43,686 $ 34,915 $ 11,311
Ratio of Expenses to Average Net Assets ............ 0.70% 0.69% 0.72% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.70% 0.69% 0.72% 0.82% 0.94%
Ratio of Net Investment Income to Average Net Assets 9.54% 9.87% 10.56% 10.05% 10.93%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 9.54% 9.87% 10.56% 10.03% 10.79%
Portfolio Turnover Rate ............................ 93% 74% 47% 43% 73%
Average Commission Rate Paid ....................... N/A N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
DELCHESTER SERIES (FORMERLY KNOWN AS HIGH YIELD SERIES)
7/28/88(1)
YEAR ENDED THROUGH
12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $ 7.4800 $ 9.2000 $ 9.8600 $ 10.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 1.0316 1.1135 1.0846 0.4754
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 1.6500 (1.7200) (0.6350) (0.1400)
----------- ----------- ----------- -----------
Total From Investment Operations ............... 2.6816 (0.6065) 0.4496 0.3354
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (1.0316) (1.1135) (1.0846) (0.4754)
Distributions (from capital gains) ................. none none (0.0250) none
Returns of Capital ................................. none none none none
----------- ----------- ----------- -----------
Total Distributions ............................ (1.0316) (1.1135) (1.1096) (0.4754)
----------- ----------- ----------- -----------
Net Asset Value, End of Period ..................... $ 9.1300 $ 7.4800 $ 9.2000 $ 9.8600
- ------------------------- =========== =========== =========== ===========
TOTAL RETURN(2) .................................... 37.53%(3) (7.13%)(3) 4.62%(3) 8.15%(3)
- ----------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .......... $ 5,918 $ 5,092 $ 4,427 $ 2,425
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 .................... 1.06% 1.17% 1.50% 1.21%
Ratio of Net Investment Income to Average Net Assets 12.05% 13.30% 11.21% 11.00%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 11.80% 12.93% 10.50% 10.58%
Portfolio Turnover Rate ............................ 70% 115% 19% 31%
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. 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.

<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 ............... $ 9.9300 $ 9.3000 $ 10.2600 $ 10.2000 $ 10.2300
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.6229 0.6431 0.6355 0.6357 0.6474
Net Gains (Losses) on Securities
(both realized and unrealized) ........... (0.2400) 0.6300 (0.9050) 0.1450 0.0600
----------- ----------- ----------- ----------- -----------
Total From Investment Operations ............... 0.3829 1.2731 (0.2695) 0.7807 0.7074
----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.6229) (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 ............................ (0.6229) (0.6431) (0.6905) (0.7207) (0.7374)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ..................... $ 9.6900 $ 9.9300 $ 9.3000 $ 10.2600 $ 10.2000
- ------------------------- =========== =========== =========== =========== ===========
TOTAL RETURN(2) .................................... 4.05% 14.08% (2.68%) 7.85%(3) 7.20%(3)
- ----------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .......... $ 27,768 $ 27,935 $ 25,975 $ 24,173 $ 9,790
Ratio of Expenses to Average Net Assets ............ 0.72% 0.71% 0.74% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.72% 0.71% 0.74% 0.85% 0.98%
Ratio of Net Investment Income to Average Net Assets 6.43% 6.64% 6.57% 6.20% 6.39%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 6.43% 6.64% 6.57% 6.15% 6.21%
Portfolio Turnover Rate ............................ 122% 145% 219% 198% 241%
Average Commission Rate Paid ....................... N/A N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
CAPITAL RESERVES SERIES
7/28/88(1)
YEAR ENDED 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% -- 0.43%
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. 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.

<PAGE> 17

<TABLE>
<CAPTION>
CASH RESERVE SERIES (FORMERLY KNOWN AS MONEY MARKET 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 ............... $ 10.0000 $ 10.0000 $ 10.0000 $ 10.0000 $ 10.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.4824 0.5349 0.3614 0.2451 0.3202
Net Gains (Losses) on Securities
(both realized and unrealized) ........... none none none none none
----------- ----------- ----------- ----------- -----------
Total From Investment Operations ............... 0.4824 0.5349 0.3614 0.2451 0.3202
----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.4824) (0.5349) (0.3614) (0.2451) (0.3202)
Distributions (from capital gains) ................. none none none none none
Returns of Capital ................................. none none none none none
----------- ----------- ----------- ----------- -----------
Total Distributions ............................ (0.4824) (0.5349) (0.3614) (0.2451) (0.3202)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ..................... $ 10.0000 $ 10.0000 $ 10.0000 $ 10.0000 $ 10.0000
- ------------------------- =========== =========== =========== =========== ===========
TOTAL RETURN(2) .................................... 4.93% 5.48% 3.68% 2.48%(3) 3.25%(3)
- ----------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .......... $ 26,479 $ 16,338 $ 20,125 $ 10,245 $ 7,774
Ratio of Expenses to Average Net Assets ............ 0.61% 0.62% 0.66% 0.80% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.61% 0.62% 0.66% 0.86% 0.85%
Ratio of Net Investment Income to Average Net Assets 4.82% 5.35% 3.79% 2.44% 3.21%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 4.82% 5.35% 3.79% 2.38% 3.16%
Portfolio Turnover Rate ............................ -- -- -- -- --
Average Commission Rate Paid ....................... N/A N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
CASH RESERVE SERIES (FORMERLY KNOWN AS MONEY MARKET SERIES)
7/28/88(1)
YEAR ENDED THROUGH
12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $ 10.0000 $ 10.0000 $ 10.0000 $ 10.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.5443 0.7306 0.8288 0.3195
Net Gains (Losses) on Securities
(both realized and unrealized) ........... none none none none
----------- ----------- ----------- -----------
Total From Investment Operations ............... 0.5443 0.7306 0.8288 0.3195
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.5443) (0.7306) (0.8288) (0.3195)
Distributions (from capital gains) ................. none none none none
Returns of Capital ................................. none none none none
----------- ----------- ----------- -----------
Total Distributions ............................ (0.5443) (0.7306) (0.8288) (0.3195)
----------- ----------- ----------- -----------
Net Asset Value, End of Period ..................... $ 10.0000 $ 10.0000 $ 10.0000 $ 10.0000
- ------------------------- =========== =========== =========== ===========
TOTAL RETURN(2) .................................... 5.58%(3) 7.56%(3) 8.61%(3) 7.70%(3)
- ----------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .......... $ 7,768 $ 8,174 $ 2,109 $ 932
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 .................... 0.99% 0.99% 2.01% 2.11%
Ratio of Net Investment Income to Average Net Assets 5.45% 7.25% 8.26% 7.50%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 5.26% 7.05% 7.05% 6.19%
Portfolio Turnover Rate ............................ -- -- -- --
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. 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.

<PAGE> 18

<TABLE>
<CAPTION>
DELCAP SERIES (FORMERLY KNOWN AS GROWTH SERIES)
7/12/91(1)
YEAR ENDED THROUGH
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 ............... $15.1300 $11.7500 $12.2400 $11.1200 $11.0300 $10.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. (0.0145) 0.0720 0.0694 0.0558 0.0225 0.0098
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 2.0295 3.3780 (0.4994) 1.2142 0.1975 1.0202
-------- -------- -------- -------- -------- --------
Total From Investment Operations ............... 2.0150 3.4500 (0.4300) 1.2700 0.2200 1.0300
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.0700) (0.0700) (0.0600) (0.0200) (0.0100) none
Distributions (from capital gains) ................. (1.1850) none none (0.1300) (0.1200) none
Returns of Capital ................................. none none none none none none
-------- -------- -------- -------- -------- --------
Total Distributions ............................ (1.2550) (0.0700) (0.0600) (0.1500) (0.1300) none
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period ..................... $15.8900 $15.1300 $11.7500 $12.2400 $11.1200 $11.0300
======== ======== ======== ======== ======== ========
- -------------------------
TOTAL RETURN(2) .................................... 14.46%(3) 29.53%(3) (3.54%)(3) 11.56%(3) 1.99%(3) 21.60%
- ----------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) .......... $ 79,900 $ 58,123 $ 39,344 $ 33,180 $ 14,251 $ 6,950
Ratio of Expenses to Average Net Assets ............ 0.80% 0.80% 0.80% 0.80% 0.98% 1.94%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.82% 0.85% 0.88% 1.00% 1.25% 1.94%
Ratio of Net Investment Income to Average Net Assets (0.11%) 0.61% 0.64% 0.67% 0.28% 0.33%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... (0.13%) 0.56% 0.56% 0.47% 0.01% 0.33%
Portfolio Turnover Rate ............................ 85% 73% 43% 57% 52% 40%
Average Commission Rate Paid ....................... $ 0.06 N/A N/A N/A N/A N/A
</TABLE>

- ----------

(1) Date of initial public offering; ratios and total return have 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.
<PAGE> 19

<TABLE>
<CAPTION>
DELAWARE SERIES (FORMERLY KNOWN AS MULTIPLE STRATEGY SERIES)
------------------------------------------------------------

12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $ 15.5000 $ 12.6800 $ 13.3300 $ 13.5500

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.5303 0.5088 0.4373 0.3280
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 1.7647 2.7612 (0.4473) 0.6920
----------- ----------- ----------- -----------
Total From Investment Operations ............... 2.2950 3.2700 (0.0100) 1.0200
----------- ----------- ----------- -----------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (0.5000) (0.4500) (0.3400) (0.4600)
Distributions (from capital gains) ................. (0.6550) none (0.3000) (0.7800)
Returns of Capital ................................. none none none none
----------- ----------- ----------- -----------
Total Distributions ............................ (1.1550) (0.4500) (0.6400) (1.2400)
----------- ----------- ----------- -----------

Net Asset Value, End of Period ..................... $ 16.6400 $ 15.5000 $ 12.6800 $ 13.3300
=========== =========== =========== ===========

- -------------------------
TOTAL RETURN(2) .................................... 15.91% 26.58% (0.15%) 8.18%(3)
- ----------------------------------

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) .......... $ 75,402 $ 63,215 $ 47,731 $ 37,235
Ratio of Expenses to Average Net Assets ............ 0.68% 0.69% 0.70% 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.68% 0.69% 0.70% 0.89%

Ratio of Net Investment Income to Average Net Assets 3.56% 3.75% 3.71% 3.33%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 3.56% 3.75% 3.71% 3.24%
Portfolio Turnover Rate ............................ 92% 106% 140% 162%
Average Commission Rate Paid ....................... $ 0.06 N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
DELAWARE SERIES (FORMERLY KNOWN AS MULTIPLE STRATEGY 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 ............... $ 12.9800 $ 10.8400 $ 11.8000 $ 10.1600 $ 10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .............................. 0.4572 1.0824 0.3411 0.1302 0.0638
Net Gains (Losses) on Securities
(both realized and unrealized) ........... 1.2328 1.6676 (0.3911) 1.5498 0.0962
----------- ----------- ----------- ----------- ----------
Total From Investment Operations ............... 1.6900 2.7500 (0.0500) 1.6800 0.1600
----------- ----------- ----------- ----------- ----------

LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (1.0600) (0.3500) (0.2700) (0.0400) none
Distributions (from capital gains) ................. (0.0600) (0.2600) (0.6400) none none
Returns of Capital ................................. none none none none none
----------- ----------- ----------- ----------- ----------
Total Distributions ............................ (1.1200) (0.6100) (0.9100) (0.0400) none
----------- ----------- ----------- ----------- ----------

Net Asset Value, End of Period ..................... $ 13.5500 $ 12.9800 $ 10.8400 $ 11.8000 $ 10.1600
=========== =========== =========== =========== ==========

- -------------------------
TOTAL RETURN(2) .................................... 13.85%(3) 26.58% (0.18%) 16.60% 3.77%
- ----------------------------------

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) .......... $ 15,150 $ 12,138 $ 6,137 $ 3,182 $ 151
Ratio of Expenses to Average Net Assets ............ 0.86% 1.03% 1.35% 1.99% (4)
Ratio of Expenses to Average Net Assets
prior to Expense Limitation .................... 0.94% 1.03% 1.35% 1.99% (4)

Ratio of Net Investment Income to Average Net Assets 3.60% 11.35% 3.84% 2.22% (4)
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation .................... 3.52% 11.35% 3.84% 2.22% (4)
Portfolio Turnover Rate ............................ 202% 1,010% 210% 132% (4)
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. 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.

(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.
<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..................... $13.1200 $11.8400 $11.6200 $10.0300 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................................... 0.5572 0.4194 0.2198 0.0523 0.0153
Net Gains (Losses) on Securities
(both realized and unrealized)................. 1.9658 1.1906 0.0802 1.5477 0.0147
-------- -------- -------- -------- --------
Total From Investment Operations..................... 2.5230 1.6100 0.3000 1.6000 0.0300
-------- -------- -------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income)................... (0.4200) (0.2400) (0.0700) (0.0100) none
Distributions (from capital gains)....................... (0.1130) (0.0900) (0.0100) none none
Returns of Capital....................................... none none none none none
-------- -------- -------- -------- --------
Total Distributions.................................. (0.5330) (0.3300) (0.0800) (0.0100) none
-------- -------- -------- -------- --------

Net Asset Value, End of Period........................... $15.1100 $13.1200 $11.8400 $11.6200 $10.0300
======== ======== ======== ======== ========

- -------------------------
TOTAL RETURN(2).......................................... 20.03%(3) 13.98%(3) 2.57%(3) 15.97%(3) 1.73%(3)
- --------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted)................ $131,428 $ 81,548 $ 57,649 $ 16,664 $ 177
Ratio of Expenses to Average Net Assets.................. 0.80% 0.80% 0.80% 0.80% (4)
Ratio of Expenses to Average Net Assets
prior to Expense Limitation.......................... 0.91% 0.89% 1.01% 1.85% (4)
Ratio of Net Investment Income to Average Net Assets 4.71% 3.69% 2.63% 1.85% (4)
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation.......................... 4.60% 3.60% 2.42% 0.80% (4)
Portfolio Turnover Rate.................................. 8% 19% 13% 9% (4)
Average Commission Rate Paid............................. $ 0.01 N/A N/A N/A N/A
</TABLE>

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

(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.
(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.

<PAGE> 21

<TABLE>
<CAPTION>
TREND SERIES (FORMERLY KNOWN AS EMERGING GROWTH 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..................... $14.0200 $10.1600 $10.2000 $10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................................... 0.0500 0.0976 0.0791 none
Net Gains (Losses) on Securities
(both realized and unrealized)................. 1.3800 3.8524 (0.1191) 0.2000
-------- -------- -------- --------
Total From Investment Operations..................... 1.4300 3.9500 (0.0400) 0.2000
-------- -------- -------- --------

LESS DISTRIBUTIONS
Dividends (from net investment income)................... (0.0900) (0.0900) none none
Distributions (from capital gains)....................... (0.8000) none none none
Returns of Capital....................................... none none none none
-------- -------- -------- --------
Total Distributions.................................. (0.8900) (0.0900) none none
-------- -------- -------- --------

Net Asset Value, End of Period........................... $14.5600 $14.0200 $10.1600 $10.2000
======== ======== ======== ========

- -------------------------
TOTAL RETURN(2).......................................... 11.00%(3) 39.21%(3) (0.39%)(3) 2.00%(3)
- -----------------------------------------

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted)................ $ 56,423 20,510 $ 7,087 $ 204
Ratio of Expenses to Average Net Assets.................. 0.80% 0.80% 0.80% (4)
Ratio of Expenses to Average Net Assets
prior to Expense Limitation.......................... 0.92% 0.96% 1.47% (4)
Ratio of Net Investment Income to Average Net Assets 0.56% 1.03% 1.63% (4)
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation.......................... 0.44% 0.87% 0.96% (4)
Portfolio Turnover Rate.................................. 112% 76% 59% (4)
Average Commission Rate Paid............................. $ 0.06 N/A N/A N/A
</TABLE>

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

(1) Date of initial public offering; total return has not 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.

<PAGE> 22

DGPF15-CHT

<TABLE>
<CAPTION>
VALUE SERIES
-------------------------------------------------------

YEAR ENDED 12/27/93(1)
--------------------------------- THROUGH
12/31/96 12/31/95 12/31/94 12/31/93
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 12.4700 $ 10.2900 $ 10.2100 $ 10.0000

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.1120 0.1918 0.1481 none
Net Gains (Losses) on Securities
(both realized and unrealized) 2.5480 2.2082 (0.0681) 0.2100
--------- --------- --------- ---------
Total From Investment Operations 2.6600 2.4000 0.0800 0.2100
--------- --------- --------- ---------

LESS DISTRIBUTIONS
Dividends (from net investment income) (0.1800) (0.1500) none none
Distributions (from capital gains) (0.4500) (0.0700) none none
Returns of Capital none none none none
--------- --------- --------- ---------
Total Distributions (0.6300) (0.2200) none none
--------- --------- --------- ---------

Net Asset Value, End of Period $ 14.5000 $ 12.4700 $ 10.2900 $ 10.2100
========= ========= ========= =========

TOTAL RETURN(2) 22.55%(3) 23.85%(3) 0.78%(3) 2.10%(3)
- ---------------------------------- ========= ========= ========= =========

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) $ 23,683 $ 11,929 $ 6,291 $ 210
Ratio of Expenses to Average Net Assets 0.80% 0.80% 0.80% (4)
Ratio of Expenses to Average Net Assets
prior to Expense Limitation 0.99% 0.96% 1.41% (4)
Ratio of Net Investment Income to Average Net Assets 1.28% 2.13% 2.62% (4)
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation 1.09% 1.97% 2.01% (4)
Portfolio Turnover Rate 84% 71% 26% (4)
Average Commission Rate Paid $ 0.06 N/A N/A N/A
</TABLE>

- ----------

(1) Date of initial public offering; total return has not 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.

-72-

<PAGE> 23

DGPF15-CHT

<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 0.3390
Net Gains (Losses) on Securities
(both realized and unrealized) 0.8310
----------------
Total From Investment Operations 1.1700
----------------

LESS DISTRIBUTIONS
Dividends (from net investment income) (0.2100)
Distributions (from capital gains) --
Returns of Capital none
Total Distributions (0.2100)
----------------

Net Asset Value, End of Period $ 10.9600
================

TOTAL RETURN(2) 11.79%(3)
- ------------------------- ----------------

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

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period (000's omitted) $ 9,471
Ratio of Expenses to Average Net Assets 0.80%
Ratio of Expenses to Average Net Assets
prior to Expense Limitation 1.19%
Ratio of Net Investment Income to Average Net Assets 6.51%
Ratio of Net Investment Income to Average Net Assets
prior to Expense Limitation 6.12%
Portfolio Turnover Rate 56%
Average Commission Rate Paid N/A

</TABLE>

- ----------

(1) Date of initial public offering; ratios have been annualized but total
return has not 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.

-73-

<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 DelCap 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

-9-

<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

-10-

<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.

-11-

<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

-12-

<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.

-13-

<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.

DELCAP 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.

-14-

<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.

-15-

<PAGE> 31

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 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.

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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
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

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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 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.

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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.

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.

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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.

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

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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.

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.

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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.

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.

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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.

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

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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.

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, higher risk,
lower-rated or unrated fixed-income securities (commonly
known as "junk bonds") 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. The so-called "junk" bonds in which the
domestic high-yield sector will invest entail certain risks, including the risk
of loss of principal and interest. It is possible that a protracted economic
downturn could severely disrupt the market for high-yield/high risk bonds, and
adversely affect the value of outstanding bonds and the ability of
high-yield/high risk bond issuers to repay principal and interest. Volatility in
the high-yield/high risk market could result in volatility in the Series' net
asset value. The zero coupon and pay-in-kind ("PIK") bonds in which the
high-yield sector may invest are generally considered to be more interest rate
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. See Risk Factors under
Delchester Series for a more detailed description of the risks associated with
investing in high-yield/high risk debt securities.

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

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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 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. 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.

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.

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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 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.

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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 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

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emerging market countries. 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 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

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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 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

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<PAGE> 45

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. It is possible that a protracted economic downturn could severely
disrupt the market for high-yield/high risk bonds, and adversely affect the
value of outstanding bonds. Volatility in the high-yield/high risk market could
result in volatility in the Series' net asset value. The zero coupon and
pay-in-kind ("PIK") bonds in which the Series may invest are generally
considered to be more interest rate 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 a discussion of the risks associated with investments in high-yield/ high
risk debt securities, 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 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.

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<PAGE> 46

The Series may invest in Eurodollar convertible securities. Eurodollar
convertible securities are fixed 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.

Equity-Linked 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 typically 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 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)

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<PAGE> 47

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 equity-linked security may involve additional risks
to the Series. Unlike conventional convertible securities, equity-linked
securities do not usually have a fixed maturity (par) value. Rather,
equity-linked 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 equity-linked security.
Equity-linked securities may be more or less liquid than conventional
convertible securities or non-convertible debt securities. Any purchases of
illiquid equity-linked 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
equity-linked 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 in substantially all of the assets of the Series 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> 48

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

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<PAGE> 49

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 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 of 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.

When Vantage determines that a company no longer adheres to the Social
Criteria, it will cause the Series to commence an orderly sale of the company's
securities, that is, a selling program which, in Vantage's judgment, will
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> 50
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> 51
DIVIDENDS AND DISTRIBUTIONS

Dividends for the Delchester, Capital Reserves, Cash Reserve and
Strategic Income Series are declared daily and paid monthly on the last business
day of every month. Dividends for the Global Bond Series are declared and paid
monthly on the last business day of every 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 DelCap, 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> 52
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> 53
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 and, in
some cases, convertible securities) 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> 54
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 affiliates within the Delaware Group, including Delaware International, were
supervising in the aggregate more than $31 billion in assets in the various
institutional or separately managed (approximately $20,047,798,000) and
investment company (approximately $11,881,459,000) 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> 55

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, DelCap and Delaware Series, a proportionate share of all directors' fees
paid to the unaffiliated directors of the Fund:

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 December 31, 1996 was as follows:

<TABLE>
<CAPTION>
BEFORE VOLUNTARY WAIVER AFTER VOLUNTARY WAIVER
----------------------- ----------------------
<S> <C> <C>
Decatur Total Return Series 0.60% 0.60%
Delchester Series 0.60% 0.60%
Capital Reserves Series 0.60% 0.60%
Cash Reserve Series 0.49% 0.49%
DelCap Series 0.75% 0.73%
Delaware Series 0.60% 0.60%
Value Series 0.75% 0.56%
Trend Series 0.75% 0.62%
</TABLE>

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 portion of the fee paid to Delaware Management under the terms of
Convertible Securities Series' Investment Management Agreement. For the services
provided to Delaware Management, Delaware Management pays Vantage a fee equal to
(i) 0.20% of the fee paid to Delaware Management under Quantum Series'
Investment Management Agreement for the

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<PAGE> 56

period May 1, 1997 through May 1, 1998; (ii) 0.25% of the fee paid to Delaware
Management under Quantum Series' Investment Management Agreement for the period
May 2, 1998 through May 2, 1999; and (iii) 0.40% of the fee paid to the Manager
under Quantum Series' Investment Management Agreement thereafter. 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 of the below Series for
the fiscal year ended December 31, 1996 was as follows:

<TABLE>
<CAPTION>
BEFORE VOLUNTARY WAIVER AFTER VOLUNTARY WAIVER
----------------------- ----------------------
<S> <C> <C>
International Equity Series 0.75% 0.63%
Global Bond Series 0.75%* 0.36%*
</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 one-third 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 26 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 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

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<PAGE> 57

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.

Gerald S. Frey has primary responsibility for making day-to-day
investment decisions for the DelCap and Trend Series. Mr. Frey has been Vice
President/Senior Portfolio Manager of the Series since March 1997 and was
Co-Manager from June 1996 to March 1997. Mr. Frey has 20 years' experience in
the money management business and holds a BA in Economics from Bloomsburg
University and attended Wilkes College and New York University. 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. Frey regularly
consults with Wayne A. Stork, Marshall T. Bassett, William H. Miller, Judith R.
Finger, John A. Heffern and Lori Wachs. Marshall T. Bassett, Vice President,
joined Delaware in 1997. In his most recent position, he served as Vice
President in Morgan Stanley Asset Management's Emerging Growth Group, where he
analyzed small growth companies. Prior to that, he was a trust officer at Sovran
Bank and Trust Company. He received his bachelor's degree and MBA from Duke
University. Mr. Miller is a Vice President/Assistant Portfolio

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<PAGE> 58

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. John A.
Heffern, Vice President, holds a bachelor's degree and an MBA from the
University of North Carolina at Chapel Hill. He joined Delaware in 1997.
Previously, he was a Senior Vice President, Equity Research at NatWest
Securities Corporation's Specialty Finance Services unit. Prior to that, he was
a Principal and Senior Regional Bank Analyst at Alex. Brown & Sons. 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.

Beginning March, 1997, George H. Burwell assumed primary responsibility
for making day-to-day investment decisions for the Value Series.

In making investment decisions for Value Series, Mr. Burwell 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 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

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<PAGE> 59

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 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

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<PAGE> 60

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 had assets under management,
as of February 28, 1997, of approximately $5 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, DelCap, 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 activity may affect brokerage costs of the Series and taxes payable
by shareholders that are subject to federal income taxes.

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<PAGE> 61

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

<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
<S> <C> <C>
Decatur Total Return Series 81% 85%
Delchester Series 93% 74%
Capital Reserves Series 122% 145%
Delaware Series 92% 106%
DelCap Series 85% 73%
International Equity Series 8% 19%
Value Series 84% 71%
Trend Series 112% 76%
Global Bond Series 56%* 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 shares of funds in the Delaware Group of
funds in placing portfolio orders, and may place orders with broker/dealers that
have agreed to defray certain expenses of such funds, such as custodian fees.

PERFORMANCE INFORMATION

DECATUR TOTAL RETURN, DELCHESTER, CAPITAL RESERVES, DELCAP, 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.

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<PAGE> 62

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 Series 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.

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<PAGE> 63

Delaware Management elected voluntarily to waive its fee and pay the
expenses of a Series to the extent that a Series' annual operating expenses,
exclusive of taxes, interest, brokerage commissions and extraordinary expenses,
do not exceed 0.80% of average daily net assets from the commencement of
operations through June 30, 1997 for the Delchester, Capital Reserves, Cash
Reserve, Value, Trend, Strategic Income, Devon, Convertible Securities and
Quantum Series. For the fiscal year ended December 31, 1996, the Delchester,
Capital Reserves, Cash Reserve, Value and Trend Series' ratio of expenses to
average daily net assets was as follows:

<TABLE>
<CAPTION>
<S> <C>
Delchester Series 0.70%
Capital Reserves Series 0.72%
Cash Reserve Series 0.61%
Value Series 0.80%*
Trend Series 0.80%*
</TABLE>

*Reflects the waiver and payment noted above.

Delaware Management elected voluntarily to waive its fee and pay the
expenses of Decatur Total Return, Delaware and DelCap Series to the extent that
a Series' annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, do not exceed 0.80% of average daily net
assets for the period July 1, 1992 through June 30, 1997. For the fiscal year
ended December 31, 1996, the Decatur Total Return, Delaware and DelCap Series'
ratio of expenses to average daily net assets was as follows:

<TABLE>
<CAPTION>
<S> <C>
Decatur Total Return Series 0.67%
Delaware Series 0.68%
DelCap Series 0.80%*
</TABLE>

*Reflects the waiver and payment noted above.

Delaware International elected voluntarily to waive its fee and pay the
expenses of International Equity and Global Bond Series to the extent that a
Series' annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, do not exceed 0.80% of average daily net
assets from the commencement of operations through June 30, 1997. For the fiscal
year ended December 31, 1996, the International Equity Series' ratio of expenses
to average daily net assets was 0.80%, reflecting the waiver and payment
described in this paragraph. Global Bond Series' ratio of expenses to average
daily net assets is expected to equal 0.80%, reflecting the waiver and payment
described in this paragraph.

Delaware International elected voluntarily to waive its fee and pay the
expenses of Emerging Markets Series to the extent that the Series' annual
operating expenses, exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, do not exceed 1.50% of average daily net assets from the
commencement of operations 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

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<PAGE> 64
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 one billion 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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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

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of interest and principal because they are not collateralized by securities
issued or guaranteed by the U.S. government. In addition, timely 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 Mortgage-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

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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 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

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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
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

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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 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.

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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 or stock prices rise.

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 DelCap, 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.

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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.

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 or on behalf of 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.

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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 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

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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
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

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("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).

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.

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<PAGE> 75

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 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, Strategic Income and Convertible Securities 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

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<PAGE> 76

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.

* * *

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"),

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<PAGE> 77

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> 78

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>
United States
Treasury Obligations 0.59%
Aaa/AAA 2.92%
Aa/AA 0.00%
A/A 0.00%
Baa/BBB 0.00%
Ba/BB 17.37%
B/B 75.63%
Caa/CCC 0.82%
Not Rated 2.67%
</TABLE>

The Series tends to invest primarily in bonds rated Ba or B by Moody's or
similarly rated by S&P or another rating agency. During the fiscal year ended
December 31, 1996, the Series increased its exposure to bonds rated B from
49.52% to 75.63% and reduced its exposure to bonds rated Ba from 38.05% to
17.37%. The Series tends to emphasize B-rated bonds during periods of economic
expansion. During periods of economic slowdown, the Series tends to emphasize
bonds rated Ba, which are generally considered to be of higher quality but lower
yielding than bonds rated B. In response to signs of economic growth in the
spring of 1996, the Series' managers increased the Series' holdings of B-rated
bonds in an effort to increase investment income while maintaining a prudent
risk profile, consistent with their view of economic and market conditions at
that time.

General Rating Information

BONDS

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<PAGE> 79
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.

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.

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<PAGE> 80
ONE COMMERCE SQUARE
PHILADELPHIA, PA 19103

DELAWARE GROUP OF FUNDS
- ----------------------- DELAWARE
GROUP
--------

1933 Act Rule 485(b)
1933 Act File No. 33-14363
1940 Act File No. 811-5162

April 29, 1997

Filed via EDGAR (CIK #0000814230)
- ---------------------------------

Securities and Exchange Commission
Document Control
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: File No. 33-14363
DELAWARE GROUP PREMIUM FUND, INC. - FORM N-1A
---------------------------------------------

Ladies and Gentlemen:

Pursuant to Rule 485(b) of the Securities Act of 1933, submitted electronically
via the EDGAR system, please find Post-Effective Amendment No. 20 (the
"Amendment") on behalf of Delaware Group Premium Fund, Inc. (the "Registrant").
The Amendment is marked to show changes from Registrant's most recent filing of
its Prospectus and Statement of Additional Information filed with the Commission
on February 13, 1997 under Rule 485(a).

The Amendment responds to certain comments given by Mr. Peter V. Bonanno. The
Amendment also brings up to date the Registrant's financial statements and adds
certain non-material disclosure of a general updating nature.

The financial statements incorporated into Registrant's Statement of Additional
Information appear in Registrant's Annual Report, which has previously been
distributed to shareholders and will accompany any response to requests for
Registrant's Statement of Additional Information. The Registrant's Statement of
Additional Information and Annual Report will be furnished to shareholders upon
request and without charge.

<PAGE> 81

Securities and Exchange Commission
April 29, 1997
Page 2

The undersigned counsel has reviewed the enclosed Amendment and represents that
it does not contain any disclosure which would render it ineligible to become
effective pursuant to paragraph (b) of Rule 485.

If there are any questions or comments about the enclosed filing, please call
the undersigned at (215) 255-2905 or George M. Chamberlain, Jr., Esquire
at (215) 255-2923.

Very truly yours,

/s/ Michael D. Mabry

Michael D. Mabry
Assistant Vice President/
Assistant Secretary

Enclosure

cc: Mr. Peter V. Bonanno
<PAGE> 82

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

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

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<PAGE> 83
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.

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<PAGE> 84
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.

DelCap Series (formerly known as 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.

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<PAGE> 85
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.

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<PAGE> 86

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 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.

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.

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

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<PAGE> 87
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.

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.

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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 or guaranteed as to principal or interest by
the U.S. Government, its agencies or instrumentalities.

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.

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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
or interpretation thereof. 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 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

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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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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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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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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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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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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).

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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 in convertible debentures without regard to
rating categories. 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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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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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 of equipment for the
production of nuclear power;

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

4. The liquor, tobacco or gambling industries.

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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

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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.

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

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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.

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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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> 104

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 DelCap, 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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As with stock options, DelCap, 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.

DelCap, 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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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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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 DelCap, 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> 108
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> 109
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> 110
AVERAGE ANNUAL TOTAL RETURN*

<TABLE>
<CAPTION>
DECATUR
TOTAL CAPITAL CASH
RETURN DELCHESTER RESERVES RESERVE DELAWARE DELCAP
<S> <C> <C> <C> <C> <C> <C> <C>

1 year ended 1 year ended
12/31/96 20.72% 12.79% 4.05% 4.93% 15.91% 12/31/96 14.46%

3 years ended 3 years ended
12/31/96 17.93% 8.16% 4.92% 4.69% 13.58% 12/31/96 12.67%

5 years ended 5 years ended
12/31/96 15.55% 10.80% 5.96% 3.96% 12.53% 12/31/96 10.23%

Period 7/28/88** Period 7/12/91**
through 12/31/96 11.53% 10.43% 6.97% 5.30% 12.51% through 12/31/96 11.28%
</TABLE>

<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY VALUE TREND
<S> <C> <C> <C> <C>
1 year ended 1 year ended
12/31/96 20.03% 12/31/96 22.55% 11.00%

3 years ended 3 years ended
12/31/96 11.96% 12/31/96 15.22% 15.46%

Period 10/29/92** Period 12/27/93**
through 12/31/96 12.45% through 12/31/96 15.94% 16.14%
</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> 111

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 9.36% and 6.23%, 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> 112

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..................................................................... 10.00927468
===========

Net change in account value.................................................................... .00927468*

Base period return = net change in account
value / beginning account value....................................................... .000927468

Current yield [base period return x (365 / 7)]................................................. 4.84%**
=====

Effective yield (1 + base period) (365/7) - 1.................................................. 4.95%***
=====
</TABLE>

Weighted average life to maturity of the portfolio on December 31, 1996 was 45
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> 113

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.

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

-32-
<PAGE> 114
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.

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 Series 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

-33-
<PAGE> 115
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> 116

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.

CUMULATIVE TOTAL RETURN*

<TABLE>
<CAPTION>
DECATUR
TOTAL CAPITAL CASH
RETURN DELCHESTER RESERVES RESERVE DELAWARE DELCAP
------ ---------- -------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
3 months ended 3 months ended
12/31/96 7.81% 4.00% 2.38% 1.21% 6.87% 12/31/96 (3.76%)

6 months ended 6 months ended
12/31/96 12.67% 9.06% 4.26% 2.46% 9.54% 12/31/96 (0.31%)

9 months ended 9 months ended
12/31/96 14.90% 10.72% 4.64% 3.68% 14.42% 12/31/96 6.57%

1 year ended 1 year ended
12/31/96 20.72% 12.79% 4.05% 4.93% 15.91% 12/31/96 14.46%

3 years ended 3 years ended
12/31/96 63.99% 26.53% 15.51% 14.75% 46.50% 12/31/96 43.01%

5 years ended 5 years ended
12/31/96 106.04% 67.02% 33.54% 21.42% 80.43% 12/31/96 62.72%

Period 7/28/88** Period 7/12/91**
through 12/31/96 150.90% 130.81% 76.44% 54.59% 170.07% through 12/31/96 79.48%
</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.

-35-
<PAGE> 117

CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
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 6.94% 12/31/96 11.45% (2.09%) 12/31/96 4.75%

6 months ended 6 months ended 6 months ended
12/31/96 9.81% 12/31/96 12.67% (3.96%) 12/31/96 9.92%

9 months ended 9 months ended Period 5/2/96***
12/31/96 13.87% 12/31/96 17.50% 8.34% through 12/31/96 11.79%

1 year ended 1 year ended
12/31/96 20.03% 12/31/96 22.55% 11.00%

3 years ended 3 years ended
12/31/96 40.32% 12/31/96 52.96% 53.91%

Period 10/29/92** Period 12/27/93**
through 12/31/96 63.22% through 12/31/96 56.17% 56.99%
</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.

*** 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> 118
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>
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> 119
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
------ ------ ------ ------

1 Year $10,614 $10,824 $11,038 $11,255
<S> <C> <C> <C> <C>
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> 120
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 fiscal 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 $302,434
Delaware Series $81,947 $85,124 $83,262
DelCap Series $34,086 $53,072 $101,211
International Equity Series $167,836 $86,131 $110,181
Value Series $3,179 $25,600 $53,113
Trend Series $4,127 $18,776 $80,172
</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.

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<PAGE> 121

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 $58,489,274 $76,723
Delaware Series $36,236,535 $51,466
DelCap Series $30,514,148 $68,319
International Equity Series $ 5,670,720 $16,327
Value Series $ 6,874,210 $19,416
Trend Series $ 8,190,096 $23,697
</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

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<PAGE> 122

expenses of the funds in the Delaware Group of funds, such as custodian fees,
and may, at the request of the Distributor, give consideration to sales of such
funds shares 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,
DelCap, 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
fiscal 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% 81%
Delchester Series 74% 93%
Capital Reserves Series 145% 122%
Delaware Series 106% 92%
DelCap Series 73% 85%
International Equity Series 19% 8%
Value Series 71% 84%
Trend Series 76% 112%
Global Bond Series N/A 56%*
</TABLE>

*Annualized. Date of initial public offering was May 2, 1996.

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<PAGE> 123
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 of 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.

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<PAGE> 124
DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS

Dividends for Delchester, Capital Reserves and Strategic Income Series are
declared daily and paid monthly on the last business day of every month.
Dividends for Global Bond Series are declared and paid monthly on the last
business day of every 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 DelCap, 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.

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<PAGE> 125
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.

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<PAGE> 126

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 Decatur Total Return, Delchester, Capital
Reserves, Cash Reserve, DelCap, 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.

Delaware Management and its predecessors have been managing the funds in
the Delaware Group since 1938. On December 31, 1996, Delaware Management and its
affiliates within the Delaware Group, including Delaware International, were
managing in the aggregate more than $31 billion in assets in the various
institutional or separately managed (approximately $20,047,798,000) and
investment company (approximately $11,881,459,000) accounts.

The Investment Management Agreements for Decatur Total Return, Delchester,
Capital Reserves, Cash Reserve, DelCap, 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, Cash
Reserve, DelCap 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%
DelCap 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>

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<PAGE> 127

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 portion of the fee paid to
Delaware Management under the terms of Convertible Securities Series' Investment
Management Agreement. For the services provided to Delaware Management, Delaware
Management pays Vantage a fee equal to (i) 0.20% of the fee paid to Delaware
Management under Quantum Series' Investment Management Agreement for the period
May 1, 1997 though May 1, 1998; (ii) 0.25% of the fee paid to Delaware
Management under Quantum Series' Investment Agreement for the period May 2, 1988
through May 2, 1999; and (iii) 0.40% of the fee paid to the Manager under
Quantum Series' Investment Management Agreement thereafter. 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 $664,864,772,
broken down as follows:

<TABLE>
<S> <C>
Decatur Total Return Series $166,646,577
Delchester Series $ 67,664,677
Capital Reserves Series $ 27,767,613
Cash Reserve Series $ 26,478,554
DelCap Series $ 79,900,476
Delaware Series $ 75,402,107
International Equity Series $131,427,717
Value Series $ 23,682,740
</TABLE>

-46-
<PAGE> 128

<TABLE>
<S> <C>
Trend Series $56,423,493
Global Bond Series $ 9,470,818
</TABLE>

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>
SERIES DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
- ------ ----------------- ----------------- -----------------

<S> <C> <C> <C>
Decatur Total Return Series $765,301 paid $528,481 paid $422,361 paid

Delchester Series $348,693 paid $311,242 paid $241,993 paid

Capital Reserves Series $164,296 paid $157,204 paid $150,708 paid

Cash Reserve Series $110,155 paid $ 93,257 paid $ 81,666 paid

DelCap Series $505,739 earned $357,930 earned $274,800 earned
$491,404 paid $336,345 paid $244,127 paid
$ 14,335 waived $ 21,585 waived $ 30,673 waived

Delaware Series $402,509 paid $329,278 paid $262,703 paid

International Equity Series $768,150 earned $525,376 earned $294,997 earned
$650,392 paid $457,751 paid $209,618 paid
$117,758 waived $ 67,625 waived $ 85,379 waived

Value Series $117,000 earned $ 65,528 earned $ 25,775 earned
$ 87,687 paid $ 51,016 paid $ 4,738 paid
$ 29,313 waived $ 14,512 waived $ 21,037 waived

Trend Series $247,520 earned $ 92,985 earned $ 25,229 earned
$205,501 paid $ 72,359 paid $ 2,545 paid
$ 42,019 waived $ 20,626 waived $ 22,684 waived

Global Bond Series* $ 26,503 earned N/A N/A
$ 12,597 paid
$ 13,906 waived
</TABLE>

*Commenced operations on May 2, 1996.

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

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<PAGE> 129

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 0.67%
Delchester Series 0.70%
Capital Reserves Series 0.72%
Cash Reserve Series 0.61%
DelCap Series 0.80%
Delaware Series 0.68%
International Equity Series 0.80%
Value Series 0.80%
Trend Series 0.80%
</TABLE>

The ratio of expenses to average daily net assets for Global Bond Series
is expected to be 0.80%, reflecting the waiver of fees described below.

The expense ratio of DelCap, International Equity, Value and Trend 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 pay the expenses
those Series to the extent that a Series' annual operating expenses, exclusive
of taxes, interest, brokerage commissions and extraordinary expenses, do not
exceed 0.80% of average daily net assets for six months following their initial
public offering. This waiver has been extended through June 30, 1997.

With respect to the Decatur Total Return, Delaware and DelCap Series,
Delaware Management elected voluntarily to waive its fee and pay the expenses of
those Series to the extent that a Series' annual operating expenses, exclusive
of taxes, interest, brokerage commissions and extraordinary expenses, do not
exceed 0.80% of average daily net assets for the period July 1, 1992 through
June 30, 1993. This waiver has been extended through June 30, 1997.

In connection with Value and Trend Series, Delaware Management elected
voluntarily to waive its fee and pay the expenses of the Series to the extent
that a Series' annual operating expenses, exclusive of taxes, interest,
brokerage commissions and extraordinary expenses, do not exceed 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 elected voluntarily to waive its fee and pay
the expenses of those Series to the extent that a Series' annual operating
expenses, exclusive of taxes, interest, brokerage commissions and extraordinary
expenses, do not exceed 0.80% of average daily net assets for the period from
commencement of the public offering through June 30, 1997.

With respect to International Equity and Global Bond Series, Delaware
International elected voluntarily to waive its fee and pay the expenses of the
Series to the extent that a Series' annual operating

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<PAGE> 130

expenses, exclusive of taxes, interest, brokerage commissions and extraordinary
expenses, do not exceed 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 elected
voluntarily to waive its fee and pay the expenses of the Series to the extent
that the Series' annual operating expenses, exclusive of taxes, interest,
brokerage commissions and extraordinary expenses, do not exceed 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 as
of 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 Decatur Total Return,
Delchester, Capital Reserves, Cash Reserve, DelCap, Delaware, International
Equity, Value and Trend 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, DelCap, 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.

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<PAGE> 131
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.

*WAYNE A. STORK (59)

Chairman, President, Chief Executive Officer, Director and/or Trustee of
the Fund, 32 other investment companies in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings, Inc.

Chairman and Director of 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.

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

*Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.

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<PAGE> 132

RICHARD G. UNRUH, JR. (57)

Executive Vice President of the Fund and each of the other 32 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.

PAUL E. SUCKOW (49)

Executive Vice President/Chief Investment Officer, Fixed Income of the
Fund, each of the other 32 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.

Senior Vice President of Delaware Capital Management, Inc.

Director of Founders CBO Corporation.

Director of 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 32 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 32 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.

-51-
<PAGE> 133

ANN R. LEVEN (56)

Director and/or Trustee of the Fund and each of the other 32 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.

THOMAS F. MADISON (61)

Director and/or Trustee of the Fund and 32 other investment companies in
the Delaware Group.
President and CEO, MLM Partners, Inc.
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402.

Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996. From February to September 1994,
Mr. Madison served as Vice Chairman--Office of the CEO of
The Minnesota Mutual Life Insurance Company and from 1988 to
1993, he was President of U.S. WEST Communications--Markets.

*JEFFREY J. NICK (44)

Director and/or Trustee of the Fund and 32 other investment companies in
the Delaware Group.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln
National UK plc and from 1989 to 1992, he was Senior Vice President
responsible for corporate planning and development for Lincoln
National Corporation.

W. THACHER LONGSTRETH (76)

Director and/or Trustee of the Fund and each of the other 32 investment
companies in the Delaware Group.

City Hall, Philadelphia, PA 19107.

Philadelphia City Councilman.

CHARLES E. PECK (71)

Director and/or Trustee of the Fund and each of the other 32 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)

Executive Vice President/Chief Operating Officer/Chief Financial Officer
of the Fund, each of the other 32 investment companies in the
Delaware Group

Executive Vice President, Chief Operating Officer and Chief Financial
Officer of Delaware Management Company, Inc.

Chairman and Director of Delaware Management Trust Company.

Chairman and Director of Delaware Investment & Retirement Services, Inc.

Executive Vice President/Chief Operating Officer/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.

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/Chief Operating Officer
of 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 December
1985 through August 1992, Executive Vice President from December
1985 through March 1992, and Vice Chairman from March 1992 through
August 1992.

- ----------------------
* Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.

-52-
<PAGE> 134
GEORGE M. CHAMBERLAIN, JR. (50)

Senior Vice President and Secretary of the Fund, each of the other 32
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.

GERALD S. FREY (51)

Vice President/Senior Portfolio Manager of the Fund, of eight 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.

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 11 other
investment companies in the Delaware Group and of 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.

-53-
<PAGE> 135

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 32
investment companies in the Delaware Group, Delaware Management
Company, Inc., Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Capital Management, Inc., Founders
Holdings, Inc. and Delaware International Holdings Ltd.

Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.

Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, 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 32 investment
companies in the Delaware Group, Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Distributors, L.P., Delaware
Service Company, Inc. and Founders Holdings, 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.

-54-
<PAGE> 136

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 fiscal
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 $2,150 None $30,000 $43,948
Ann R. Leven $2,514 None $30,000 $52,033
Walter P. Babich $2,475 None $30,000 $51,075
Anthony D. Knerr $2,475 None $30,000 $51,075
Charles E. Peck $2,317 None $30,000 $47,243
</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.

-55-
<PAGE> 137
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.

-56-
<PAGE> 138

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 DelCap 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 one billion 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.

-57-

<PAGE> 139

APPENDIX A--DESCRIPTION OF RATINGS

COMMERCIAL PAPER

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.

-58-
<PAGE> 140
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.

-59-
<PAGE> 141

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.

DelCap 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.

-60-
<PAGE> 142

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 Assets and Liabilities, 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.

-61-
<PAGE> 143
INVESTMENT MANAGERS
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
Delaware International Advisers Ltd.
Veritas House
125 Finsbury Pavement
London, England EC2A 1NQ

SUB-ADVISERS
Lynch & Mayer, Inc.
520 Madison Avenue
New York, NY 10022

Vantage Global Advisors, Inc.
630 Fifth Avenue
New York, NY 10111

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103

SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,

ACCOUNTING SERVICES

AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103

LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103

INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103

CUSTODIAN

The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245

- ---------------------------------------------------------
DELAWARE GROUP
- ---------------------------------------------------------
PREMIUM FUND, INC.
- ---------------------------------------------------------

PART B

STATEMENT OF
ADDITIONAL INFORMATION
- ---------------------------------------------------------

MAY 1, 1997

DELAWARE
GROUP

<PAGE> 144
PART C

Other Information

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Part A - Financial Highlights

*Part B - Statements of Net Assets
Statement of Assets and Liabilities
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, are incorporated
by reference into Part B from the Registrant's Annual Report for the
fiscal year ended December 31, 1996. 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) attached as Exhibit.

(e) Form of Articles Supplementary to Articles of
Incorporation (April 1997) attached as Exhibit.
<PAGE> 145
PART C - Other Information
(continued)

(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.

(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)
attached as Exhibit 24(b)(1)(c) and 24(b)(1)(e).

(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.
<PAGE> 146
PART C - Other Information
(continued)

(b) Executed Investment Management Agreement (April 3, 1995)
between Delaware Management Company, Inc. and the
Registrant on behalf of Growth Series (to be renamed
DelCap 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.

(e) Executed Investment Management Agreement (April 3, 1995)
between Delaware Management Company, Inc. and the
Registrant on behalf of the Equity/Income Series (to be
renamed Decatur Total Return Series), High Yield Series
(to be renamed Delchester Series), Capital Reserves
Series and Multiple Strategy Series (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) Form of Investment Management Agreement (May 1997)
between Delaware Management Company, Inc. and the
Registrant on behalf of Strategic Income Series attached
as Exhibit.

<PAGE> 147
PART C- Other Information
(continued)

(i) Form of Investment Management Agreement (May 1997)
between Delaware Management Company, Inc. and the
Registrant on behalf of Devon Series attached as Exhibit.

(j) Form of Investment Management Agreement (May 1997)
between Delaware International Advisers Ltd. and the
Registrant on behalf of Emerging Markets Series attached
as Exhibit.

(k) Form of Investment Management Agreement (May 1997)
between Delaware Management Company, Inc. and the
Registrant on behalf of Convertible Securities Series
attached as Exhibit.

(l) Form of Investment Management Agreement (May 1997)
between Delaware Management Company, Inc. and the
Registrant on behalf of Quantum Series attached as
Exhibit.

(m) Form of Sub-Advisory Agreement (May 1997) between
Delaware Management Company, Inc. and Delaware
International Advisers Ltd. on behalf of Strategic Income
Series attached as Exhibit.

(n) Form of Sub-Advisory Agreement (May 1997) between
Delaware Management Company, Inc. and Lynch & Mayer, Inc.
on behalf of Convertible Securities Series attached as
Exhibit.

(o) Form of Sub-Advisory Agreement (May 1997) between
Delaware Management Company, Inc. and Vantage Global
Advisors, Inc. on behalf of Quantum Series attached as
Exhibit.

(6) Distribution Agreements.

(a) Executed Distribution Agreement (April 3, 1995) between
Delaware Distributors, L.P. and the Registrant on behalf
of Equity/Income Series (to be renamed Decatur Total
Return Series), High Yield Series (to be renamed
Delchester Series), Capital Reserves Series and Multiple
Strategy Series (to be renamed Delaware Series)
incorporated into this filing by reference to
Post-Effective Amendment No. 16 filed January 22, 1996.
<PAGE> 148
PART C - Other Information
(continued)

(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 (to be renamed DelCap 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.

(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) Form of Distribution Agreement (May 1997) between
Delaware Distributors, L.P. and the Registrant on behalf
of Convertible Securities Series, Devon Series, Emerging
Markets Series, Quantum Series and Strategic Income
Series attached as Exhibit.

<PAGE> 149
PART C - Other Information
(continued)

(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.

(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 Series
(to be renamed Delchester Series), Capital Reserves
Series, Equity/Income Series (to be renamed Decatur Total
Return Series), Multiple Strategy Series (to be renamed
Delaware Series), Growth Series (to be renamed DelCap
Series), International Equity Series, Value Series,
Emerging Growth Series (to be renamed Trend Series) and
Global Bond Series incorporated into this filing by
reference to Post-Effective Amendment No. 18 filed
October 29, 1996.
<PAGE> 150
PART C - Other Information
(continued)

(c) Form of Amended and Restated Shareholders Services
Agreement (May 1997) between Delaware Service Company,
Inc. and the Registrant on behalf of High Yield Series
(to be renamed Delchester Series), Capital Reserves
Series, Equity/Income Series (to be renamed Decatur Total
Return Series), Multiple Strategy Series (to be renamed
Delaware Series), Growth Series (to be renamed DelCap
Series), International Equity Series, Value Series,
Emerging Growth Series (to be renamed Trend Series),
Global Bond Series, Strategic Income Series, Devon
Series, Emerging Markets Series, Convertible Securities
Series and Quantum Series attached as Exhibit.

(d) 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. 3 (December 27, 1996) to
Delaware Group of Funds Fund Accounting Agreement
attached as Exhibit.

(ii) Executed Amendment No. 4 (February 24, 1997) to
Delaware Group of Funds Fund Accounting Agreement
attached as Exhibit.

(iii) Executed Amendment No. 5 (May 1, 1997) to Delaware
Group Funds Fund Accounting Agreement attached as
Exhibit.

(10) Opinion of Counsel. Filed with letter relating to Rule 24f-2 on
February 27, 1997.

(11) Consent of Auditors. Attached as Exhibit.

(12) Inapplicable.

(13) Subscription Agreement. Incorporated into this filing by
reference to Pre- Effective Amendment No. 1 filed October 13,
1987.

(14-15) Inapplicable.
<PAGE> 151
PART C - Other Information
(continued)

(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, 1996.

(b) Schedules of Computation for each Performance Quotation
for periods not previously electronically filed attached
as Exhibit.

(17) Financial Data Schedules. Attached as Exhibit.

(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.

Item 26. Number of Holders of Securities.

<TABLE>
<CAPTION>
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------

<S> <C>
Delaware Group Premium Fund, Inc.
High Yield Series
(to be renamed Delchester Series)
Common Stock Par Value 6 Accounts as of
$.01 Per Share March 31, 1997

Delaware Group Premium Fund, Inc.
Capital Reserves Series
Common Stock Par Value 6 Accounts as of
$.01 Per Share March 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 March 31, 1997
</TABLE>
<PAGE> 152
PART C - Other Information
(continued)

<TABLE>
<CAPTION>
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------

<S> <C>
Delaware Group Premium Fund, Inc.
Multiple Strategy Series
(to be renamed Delaware Series )
Common Stock Par Value 6 Accounts as of
$.01 Per Share March 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 March 31, 1997

Delaware Group Premium Fund, Inc.
Growth Series
(to be renamed DelCap Series)
Common Stock Par Value 5 Accounts as of
$.01 Per Share March 31, 1997

Delaware Group Premium Fund, Inc.
International Equity Series
Common Stock Par Value 2 Accounts as of
$.01 Per Share March 31, 1997

Delaware Group Premium Fund, Inc.
Value Series
Common Stock Par Value 3 Accounts as of
$.01 Per Share March 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 March 31, 1997
</TABLE>

<PAGE> 153
PART C - Other Information
(continued)

<TABLE>
<CAPTION>
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------

<S> <C>
Delaware Group Premium Fund, Inc.
Global Bond Series
Common Stock Par Value 5 Accounts as of
$.01 Per Share March 31, 1997

Delaware Group Premium Fund, Inc.
Strategic Income Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share March 31, 1997

Delaware Group Premium Fund, Inc.
Devon Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share March 31, 1997

Delaware Group Premium Fund, Inc.
Emerging Markets Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share March 31, 1997

Delaware Group Premium Fund, Inc.
Convertible Securities Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share March 31, 1997

Delaware Group Premium Fund, Inc.
Quantum Series*
Common Stock Par Value 0 Accounts as of
$.01 Per Share March 31, 1997
</TABLE>

* Shares of the Series were not offered prior to the effective date of this
Registration Statement.

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.
<PAGE> 154
PART C - Other Information
(continued)

Item 28. Business and Other Connections of Investment Adviser.

Delaware Management Company, Inc. ("DMC" or the "Manager") serves as
investment manager to the Equity/Income Series (to be renamed Decatur Total
Return Series), High Yield Series (to be renamed Delchester Series), Capital
Reserves Series, Money Market Series (to be renamed Cash Reserve Series), Growth
Series (to be renamed DelCap Series), Multiple Strategy Series (to be renamed
Delaware Series), Emerging Growth Series (to be renamed Trend Series), Value
Series, Strategic Income Series, Devon Series, Convertible Securities Series 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, and to certain other investment companies. 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.

<PAGE> 155
PART C - Other Information
(continued)

The following persons serving as directors or officers of the Manager
have held the following positions during the past two years:

Name and Principal Positions and Offices with the Manager 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, 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 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.

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, AAA Mid Atlantic, Inc. since 1989,
2040 Market Street, Philadelphia, PA; Board of
Directors, Metron, Inc. since 1995, 11911 Freedom Drive,
Reston, VA

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE> 156
PART C - Other Information
(continued)

Paul E. Suckow Executive Vice President/Chief Investment Officer, Fixed
Income of Delaware Management Company, Inc., the
Registrant and each of the other funds in the Delaware
Group; Executive Vice President/Chief Investment Officer
and Director of Founders Holdings, Inc.; Senior Vice
President/Chief Investment Officer, Fixed Income of
Delaware Management Holdings, Inc.; Senior Vice
President of Delaware Capital Management, Inc.; and
Director of Founders CBO Corporation

Director, HYPPCO Finance Company Ltd.

David K. Downes Executive Vice President, Chief Operating Officer and
Chief Financial Officer of Delaware Management Company,
Inc.; Executive Vice President, Chief Operating 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, 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.;
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.; Chairman and Director of Delaware
Investment & Retirement Services, Inc.; Director of
Delaware International Advisers Ltd.; and Senior Vice
President, Chief Administrative Officer and Chief
Financial Officer of Delaware Distributors, L.P.

Chief Executive Officer and Director of Forewarn, Inc.
since 1993, 8 Clayton Place, Newtown Square, PA

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE> 157
PART C - Other Information
(continued)

George M. Senior Vice President, Secretary and Director of
Chamberlain, Jr. 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.; 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 Managing Director/Corporate Tax & Affairs of Delaware
Management Company, Inc., Delaware Management Holdings,
Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Founders CBO
Corporation, Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.; Vice
President of the Registrant and each of the other funds
in the Delaware Group; Managing Director/Corporate Tax &
Affairs and Director of Founders Holdings, Inc.;
Managing Director and Director of Delaware International
Holdings Ltd.; and Director of Delaware International
Advisers Ltd.

Director, 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) Vice President and Treasurer of Delaware Management
Company, Inc., the Registrant, each of the other funds
in the Delaware Group, Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company,
Inc. and Founders Holdings, Inc.; Assistant Treasurer of
Founders CBO Corporation; and Vice President and Manager
of Investment Accounting of Delaware International
Holdings Ltd.

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE> 158
PART C- Other Information
(continued)

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.

Partner of Tri-R Associates since 1989, 10001 Sandmeyer
Lane, Philadelphia, PA

Joseph H. Hastings Vice President/Corporate Controller 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 Capital Management, Inc., Founders
Holdings, Inc. and Delaware International Holdings Ltd.;
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

Richard Salus(2) Vice President/Assistant Controller of Delaware
Management Company, Inc.

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE> 159
PART C - Other Information
(continued)

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.

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 Vice President/Operations of Delaware Management
Company, Inc., Delaware Investment and Retirement
Services, Inc. and Delaware Service Company, Inc.; and
Vice President/Operations and Director of Delaware
Management Trust Company

Michael T. Taggart 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

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE> 160
PART C - Other Information
(continued)

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, 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 President and Director
of Founders CBO Corporation.

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 each of
the fixed income funds in the Delaware Group

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.

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

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE> 161
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 Investment Management prior to
March 1995.
(5) SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June
1996.

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, 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
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.

**David G.Tilles Managing Director, Chief Investment Officer 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> 162
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.; Executive Vice President, Chief Operating 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, 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.;
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.; Chairman and Director of Delaware
Investment & Retirement Services, Inc.; and Senior Vice
President, Chief Administrative Officer and Chief
Financial Officer of Delaware Distributors, L.P.

Chief Executive Officer and Director of Forewarn, Inc.
since 1993, 8 Clayton Place, Newtown Square, PA

*Richard G. Unruh, Director of Delaware International Advisers Ltd.;
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; and Senior Vice President of Delaware
Management Holdings, Inc. and Delaware Capital
Management, Inc.

* Business address is 1818 Market Street, Philadelphia, PA 19103.
**Business address is Veritas House, 125 Finsbury Pavement, London, England EC2A
1NQ.
<PAGE> 163
PART C - Other Information
(continued)

*Richard J. Flannery Director of Delaware International Advisers Ltd.;
Managing Director/Corporate Tax & Affairs of Delaware
Management Company, Inc., Delaware Management Holdings,
Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Founders CBO
Corporation, Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.; Vice
President of the Registrant and each of the other funds
in the Delaware Group; Managing Director/Corporate Tax &
Affairs and Director of Founders Holdings, Inc.; and
Managing Director and Director of Delaware International
Holdings Ltd.

Director, 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. Director of Delaware International Advisers Ltd.; Senior
Chamberlain, Jr. 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.; 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; and Secretary and Director of Delaware
International Holdings Ltd.

*George E. Deming Director of Delaware International Advisers Ltd.

**Timothy W. Senior Portfolio Manager, Deputy Compliance Officer,
Sanderson Director Equity Research and Director of Delaware
International Advisers Ltd.

* Business address is 1818 Market Street, Philadelphia, PA 19103.
**Business address Veritas House, 125 Finsbury Pavement, London, England EC2A
1NQ.
<PAGE> 164
PART C - Other Information
(continued)

**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. Senior Portfolio Manager and Director of Delaware
Desmond 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.

* Business address is 1818 Market Street, Philadelphia, PA 19103.
**Business address 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.

Name Positions and Offices with Lynch & Mayer, Inc.
- ---- ----------------------------------------------

Dennis P. Lynch Chairman and Co-Chief Executive Officer and Director

Eldon C. Mayer, Jr. Vice Chairman and Director

Edward J. Petner President and Co-Chief Executive Officer and Director

Dennis A. Blume Director
<PAGE> 165
PART C - Other Information
(continued)

Name Positions and Offices with Lynch & Mayer, Inc.
- ---- ----------------------------------------------

*H. Thomas McMeekin Director

*Laurence E. Ach Senior Vice President

Robert R. Coby Senior Vice President

Dallas L. Corser Senior Vice President

Kevin P. Ferguson Senior Vice President

Francis J. Houghton, Jr. Senior Vice President

Howard M. Kaufman Senior Vice President
Treasurer & Secretary

William A. Kissell Senior Vice President

John C. Levinson Senior Vice President

Bradley A. Roberts Senior Vice President

Michael F. Sassi Senior Vice President

Anthony A. Segalas Senior Vice President

W. Denman Zirkle Senior Vice President

Paul R. Ainslie Vice President

Philip C. Coburn Vice President

Billie Cook Vice President

Katherine D. Elliott Vice President

Aiman N. Labib Vice President

Enrique Lopez-Balboa Vice President

*Business address is 200 East Berry Street, Fort Wayne, IN 46802.
<PAGE> 166
PART C - Other Information
(continued)

Name Positions and Offices with Lynch & Mayer, Inc.
- ---- ----------------------------------------------

Thomas E. McGowan Vice President

Ron M. Panzier Vice President

Kevin W. Putt Vice President

Charles Rose Vice President

Robert D. Schwartz Vice President

Rufus R. Winton Vice President

Armi D. Viti Vice President

Brian S. Becher Assistant Secretary

James N. Westafer Assistant Secretary

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.
</TABLE>
<PAGE> 167
PART C - Other Information
(continued)

<S> <C>
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> 168
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
Company, Inc. Limited Partner Investment Manager

Delaware Capital
Management, Inc. Limited Partner None

Bruce D. Barton President and Chief Executive None
Officer

David K. Downes Senior Vice President, Executive Vice
Chief Administrative Officer President/Chief
and Chief Financial Officer Operating Officer/
Chief Financial Officer

George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary

Thomas Sawyer Senior Vice President/ None
Western Sales Division

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> 169
PART C - Other Information
(continued)

<S> <C> <C>
J. Chris Meyer Senior Vice President/ None
Product Development

Stephen H. Slack Senior Vice President/Wholesaler None

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

Daniel H. Carlson Vice President/Marketing None

Joseph M. Barrett Vice President/ Media Relations None

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> 170
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

Gregory J. McMillan Vice President/ None
National Accounts

Christopher H. Price Vice President/Annuity None
Marketing & Administration

Stephen J. DeAngelis Vice President/Product None
Development

Susan T. Friestedt Vice President/Customer None
Service

Dinah J. Huntoon Vice President/Product None
Management

Soohee Lee Vice President/Fixed Income None
Product Management

Ellen M. Krott Vice President/Communications None

Holly W. Reimel Vice President/Telemarketing None

Terrence L. Bussard Vice President/Wholesaler None

William S. Carroll Vice President/Wholesaler None

William L. Castetter Vice President/Wholesaler None

Thomas J. Chadie Vice President/Wholesaler None

Thomas C. Gallagher Vice President/Wholesaler None
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE> 171
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>
Douglas R. Glennon Vice President/Wholesaler None

Christopher L. Johnston Vice President/Wholesaler None

Thomas P. Kennett Vice President/ Wholesaler None

William M. Kimbrough Vice President/Wholesaler None

Debra Afra Marler Vice President/Wholesaler None

Mac McAuliffe Vice President/Wholesaler None

Patrick L. Murphy Vice President/Wholesaler None

Henry W. Orvin Vice President/Wholesaler None

Philip G. Rickards Vice President/Wholesaler None

Laura E. Roman Vice President/Wholesaler None

Michael W. Rose Vice President/Wholesaler None

Thomas E. Sawyer Vice President/Wholesaler None

Linda Schulz 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

John A. Wells Vice President/ Marketing None
Technology
</TABLE>

*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE> 172
PART C- Other Information
(continued)

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.

Vantage Global Advisors, Inc.
630 Fifth Avenue
New York, NY 10111

Lynch & Mayer, Inc.
520 Madison Avenue
New York, NY 10022

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.

(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> 174
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meet all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and 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 29th day of April, 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>
Chairman of the Board, President,
/s/ Wayne A. Stork Chief Executive Officer and Director April 29, 1997
- -----------------------------
Wayne A. Stork
Executive Vice President/Chief Operating
Officer/Chief Financial Officer (Principal
Financial Officer and Principal Accounting
/s/David K. Downes Officer) April 29, 1997
- -----------------------------
David K. Downes

/s/Walter P. Babich Director April 29, 1997
- -----------------------------
Walter P. Babich

/s/W. Thacher Longstreth Director April 29, 1997
- -----------------------------
W. Thacher Longstreth

/s/Charles E. Peck Director April 29, 1997
- -----------------------------
Charles E. Peck

/s/Anthony D. Knerr Director April 29, 1997
- -----------------------------
Anthony D. Knerr

/s/Ann R. Leven Director April 29, 1997
- -----------------------------
Ann R. Leven
</TABLE>

*By /s/ Wayne A. Stork
---------------------------
Wayne A. Stork
as Attorney-in-Fact

for each of the persons indicated

<PAGE> 175
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Exhibits

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE> 176
INDEX TO EXHIBITS

Exhibit No. Exhibit
- ----------- -------

EX-99.B1C Form of Articles Supplementary to Articles of Incorporation
(April 1997)

EX-99.B1D Form of Articles of Amendment to Articles of Incorporation
(April 1997)

EX-99.B1E Form of Articles Supplementary to Articles of Incorporation
(April 1997)

EX-99.B5H Form of Investment Management Agreement (May 1997) between
Delaware Management Company, Inc. and the Registrant on behalf
of Strategic Income Series

EX-99.B5I Form of Investment Management Agreement (May 1997) between
Delaware Management Company, Inc. and the Registrant on behalf
of Devon Series

EX-99.B5J Form of Investment Management Agreement (May 1997) between
Delaware International Advisers, Ltd. and Registrant on behalf
of Emerging Markets Series

EX-99.B5K Form of Investment Management Agreement (May 1997) between
Delaware Management Company, Inc. and the Registrant on behalf
of Convertible Securities Series

EX-99.B5L Form of Investment Management Agreement (May 1997) between
Delaware Management Company, Inc. and the Registrant on behalf
of Quantum Series

EX-99.B5M Form of Sub-Advisory Agreement (May 1997) between Delaware
Management Company, Inc. and Delaware International Advisers
Ltd. on behalf of Strategic Income Series

EX-99.B5N Form of Sub-Advisory Agreement (May 1997) between Delaware
Management Company, Inc. and Lynch & Mayer, Inc. on behalf of
Convertible Securities Series

EX-99.B5O Form of Sub-Advisory Agreement (May 1997) between Delaware
Management Company, Inc. and Vantage Global Advisers, Inc. on
behalf of Quantum Series

EX-99.B6H Form of Distribution Agreement (May 1997) between Delaware
Distributors, L.P. and the Registrant on behalf of Convertible
Securities Series, Devon Series, Emerging Markets Series,
Quantum Series and Strategic Income Series

<PAGE> 177
INDEX TO EXHIBITS (Continued)

Exhibit No. Exhibit
- ----------- -------

EX-99.B9C Form of Amended and Restated Shareholder Services Agreement
(May 1997) between Delaware Service Company, Inc. and the
Registrant

EX-99.B9DI Executed Amendment No. 3 (December 27, 1996) to Delaware Group
of Funds Fund Accounting Agreement

EX-99.B9DII Executed Amendment No. 4 (February 24, 1997) to Delaware Group
of Funds Fund Accounting Agreement

EX-99.B9DIII Executed Amendment No. 5 (May 1, 1997) to Delaware Group of
Funds Fund Accounting Agreement

EX-99.B11 Consent and Report of Auditor

EX-99.B16B Schedules of Computation

EX-27 Financial Data Schedules
(Exhibit 17)

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION

Delaware Group Premium Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Section 2-208.1 of the Maryland General Corporation Law, to
the State Department of Assessments and Taxation of Maryland that:

FIRST: The Board of Directors of the Corporation, at a meeting held on
April 17, 1997, adopted resolutions in accordance with section 2-105(c) of the
Maryland General Corporation Law increasing the total number of shares of
capital stock that the Corporation has authority to issue from five hundred
million (500,000,000) to one billion (1,000,000,000).

SECOND: Immediately prior to the increase:

(i) The Corporation had authority to issue a total number of
five hundred million (500,000,000) shares of stock of all classes, with a par
value of One Cent ($.01) per share and an aggregate par value of all the shares
of all the classes of Five Million Dollars ($5,000,000).

(ii) Each Class had the following number of shares of stock
and par value:

<TABLE>
<CAPTION>
CLASS NO. OF SHARES PAR VALUE
- ----- ------------- ---------
<S> <C> <C>
High Yield Series 50,000,000 $.01 per share
Equity/Income Series 50,000,000 $.01 per share
Capital Reserve Series 50,000,000 $.01 per share
Multiple Strategy Series 50,000,000 $.01 per share
Money Market Series 50,000,000 $.01 per share
Growth Series 50,000,000 $.01 per share
International Equity Series 50,000,000 $.01 per share
Value Series 50,000,000 $.01 per share
Emerging Growth Series 50,000,000 $.01 per share
Global Bond Series 50,000,000 $.01 per share
</TABLE>

<PAGE> 2

THIRD: As increased:

(i) The Corporation has authority to issue a total number of
one billion (1,000,000,000) shares of stock of all classes, with a par value of
One Cent ($.01) per share and an aggregate par value of all the shares of all
the classes of Ten Million Dollars ($10,000,000).

(ii) Each Class has the following number of shares of stock
and par value:

(iii) The Corporation has five hundred million (500,000,000)
shares unallocated.

FOURTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.

-2-
<PAGE> 3

IN WITNESS WHEREOF, Delaware Group Premium Fund, Inc. has
caused these Articles Supplementary to be signed in its name and on its behalf
this day of April, 1997.

DELAWARE GROUP PREMIUM FUND, INC.

By:_____________________________________
George M. Chamberlain, Jr.
Senior Vice President and
Secretary

Attest:

___________________________________
Michael D. Mabry
Vice President and
Assistant Secretary

THE UNDERSIGNED, Senior Vice President and Secretary of
DELAWARE GROUP PREMIUM FUND, INC., who executed on behalf of said Corporation
the foregoing Articles Supplementary, of which this instrument is made a part,
hereby acknowledges, in the name of and on behalf of said Corporation, said
Articles Supplementary to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects, under the penalties of
perjury.

________________________________________
George M. Chamberlain, Jr.

-3-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION

Delaware Group Premium Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Sections 2-605 and 2-607 of the Maryland General Corporation
Law, to the State Department of Assessments and Taxation of Maryland that:

FIRST: The Board of Directors of the Corporation, at a meeting held on
April 17, 1997, adopted resolutions in accordance with Section 2-605(a)(4) of
the Maryland General Corporation Law changing the names of certain series of
stock of the Corporation set forth in Article Fifth of the Corporation's
Charter, as supplemented from time to time, as follows:

(i) the name of the Equity/Income Series is changed to Decatur Total
Return Series;

(ii) the name of the High Yield Series is changed to Delchester Series;

(iii) the name of the Money Market Series is changed to Cash Reserve
Series;

(iv) the name of the Growth Series is changed to DelCap Series;

(v) the name of the Multiple Strategy Series is changed to Delaware
Series;

(vi) the name of the Emerging Growth Series is changed to Trend Series.

SECOND: The Amendment was approved by a majority of the entire Board of
Directors and is limited to a change expressly permitted by Section 2-605(a)(4)
of the Maryland General Corporation Law to be made without action by
stockholders, and the Corporation is registered as an open-end company under the
Investment Company Act of 1940.

<PAGE> 2

IN WITNESS WHEREOF, Delaware Group Premium Fund, Inc. has
caused these Articles of Amendment to be signed in its name and on its behalf
this day of April, 1997.

DELAWARE GROUP PREMIUM FUND, INC.

By:_____________________________________
George M. Chamberlain, Jr.
Senior Vice President and
Secretary

Attest:

___________________________________
Michael D. Mabry
Vice President and
Assistant Secretary

THE UNDERSIGNED, Senior Vice President and Secretary of
DELAWARE GROUP PREMIUM FUND, INC., who executed on behalf of said Corporation
the foregoing Articles of Amendment, of which this instrument is made a part,
hereby acknowledges, in the name of and on behalf of said Corporation, said
Articles of Amendment to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects, under the penalties of
perjury.

________________________________________
George M. Chamberlain, Jr.

-2-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION

Delaware Group Premium Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Section 2-208 of the Maryland General Corporation Law, to the
State Department of Assessments and Taxation of Maryland that:

FIRST: The Board of Directors of the Corporation, at a meeting held on
April 17, 1997, adopted resolutions classifying and allocating unallocated and
unissued common stock of the Corporation as follows:

Fifty Million (50,000,000) shares of common stock with a par value of One Cent
($.01) per share to a new series of shares designated as the Convertible
Securities Series;

Fifty Million (50,000,000) shares of common stock with a par value of One Cent
($.01) per share to a new series of shares designated as the Devon Series;

Fifty Million (50,000,000) shares of common stock with a par value of One Cent
($.01) per share to a new series of shares designated as the Emerging Markets
Series;

Fifty Million (50,000,000) shares of common stock with a par value of One Cent
($.01) per share to a new series of shares designated as the Quantum Series;

Fifty Million (50,000,000) shares of common stock with a par value of One Cent
($.01) per share to a new series of shares designated as the Strategic Income
Series.

SECOND: The shares of each of the Convertible Securities, Devon,
Emerging Markets, Quantum and Strategic Income Series shall have the rights and
privileges, and shall be subject to the limitations and priorities, set forth in
the Articles of Incorporation of the Corporation.

THIRD: The shares of the Convertible Securities, Devon,
Emerging Markets, Quantum and Strategic Income Series have been classified by
the Board of Directors pursuant to authority contained in the Articles of
Incorporation of the Corporation.

<PAGE> 2

IN WITNESS WHEREOF, Delaware Group Premium Fund, Inc. has
caused these Articles Supplementary to be signed in its name and on its behalf
this ____ day of April, 1997.

DELAWARE GROUP PREMIUM FUND, INC.

By:_____________________________________
George M. Chamberlain, Jr.
Senior Vice President and
Secretary

Attest:

___________________________________
Michael D. Mabry
Vice President and
Assistant Secretary

________________________________________
George M. Chamberlain, Jr.

-2-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

STRATEGIC INCOME SERIES

INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP PREMIUM FUND, INC.,
Maryland corporation ("Fund") on behalf of the STRATEGIC INCOME SERIES
("Series"), and DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation
("Investment Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and is currently
comprised of fifteen series, including the Series, as a separate series of the
Fund, each series engages in the business of investing and reinvesting its
assets in securities; and

WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Fund's Board of Directors and officers of the
Fund for the period and on the terms hereinafter set forth. The Investment
Manager hereby accepts such employment and agrees during such period to render
the services and assume the obligations herein set forth for the compensation
herein provided. The Investment Manager shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized, have no authority to act for or represent the Fund in
any way, or in any way be deemed an agent of the Fund. The Investment Manager
shall regularly make decisions as to what securities and other instruments to
purchase and sell on behalf of the Series, and shall give written instructions
to the Trading Department maintained by the Fund for implementation of such
decisions and shall furnish the Board of Directors of the Fund with such
information and reports regarding the Series' investments as the Investment
Manager deems appropriate or as the Directors of the Fund may reasonably
request.

<PAGE> 2

and procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; taxes; and federal and
state registration fees.

Directors, officers and employees of the Investment Manager may be
directors, officers and employees of any of the funds (including the Fund) of
which Delaware Management Company, Inc. is investment manager. Directors,
officers and employees of the Investment Manager who are directors, officers
and/or employees of these funds shall not receive any compensation from the
funds for acting in such dual capacity.

In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Fund and Investment Manager may share
facilities common to each, with appropriate proration of expenses between them.

3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager will place orders for the purchase
and sale of portfolio securities and other instruments with such broker/dealers
selected who provide statistical, factual and financial information and services
to the Fund, to the Investment Manager, to any Sub-Adviser, as defined in
Paragraph 5 hereof, or to any other fund for which the Investment Manager or any
such Sub-Adviser provides investment advisory services and/or with
broker/dealers who sell shares of the Fund or who sell shares of any other fund
for which the Investment Manager or any such Sub-Adviser provides investment
advisory services. Broker/dealers who sell shares of the funds of which Delaware
Management Company, Inc. is investment manager, shall only receive orders for
the purchase or sale of portfolio securities to the extent that the placing of
such orders is in compliance with the Rules of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.

(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund and
the Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where the Fund and the
Investment Manager have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds and other advisory accounts for which the
Investment Manager or any SubAdviser, as defined in Paragraph 5 hereof,
exercises investment discretion.

4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from

-2-
<PAGE> 3

the Series' assets, a fee (at an annual rate) equal to .65% of the average daily
net assets of the Series during the month.

If this Agreement is terminated prior to the end of any calendar month,
the management fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of calendar
days, during which the Agreement is in effect, bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.

5. The Investment Manager may, at its expense, select and contract with
one or more investment advisers registered under the Investment Advisers Act of
1940 (the "Sub-Adviser") to perform some or all of the services for the Series
for which it is responsible under this Agreement. The Investment Manager will
compensate any Sub-Adviser for its services to the Series. The Investment
Manager may terminate the services of any Sub-Adviser at any time in its sole
discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Series' shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.

6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

7. The Investment Manager, its directors, officers, employees, agents
and shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.

8. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of its duties as the Investment
Manager to the Fund, the Investment Manager shall not be subject to liability to
the Fund or to any shareholder of the Fund for any action or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security, or
otherwise.

-3-
<PAGE> 4

Fund at any time, without the payment of a penalty, on sixty days' written
notice to the Investment Manager of the Fund's intention to do so, pursuant to
action by the Board of Directors of the Fund or pursuant to the vote of a
majority of the outstanding voting securities of the Series. The Investment
Manager may terminate this Agreement at any time, without the payment of a
penalty, on sixty days' written notice to the Fund of its intention to do so.
Upon termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Fund to pay to the Investment
Manager the fee provided in Paragraph 4 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment.

10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.

11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.

-4-
<PAGE> 5

IN WITNESS WHEREOF, the parties hereto have caused their corporate
seals to be affixed and duly attested and their presents to be signed by their
duly authorized officers as of the ___th day of April, 1997.

Attest: DELAWARE GROUP PREMIUM FUND, INC., for
the STRATEGIC INCOME SERIES

___________________________ By:______________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

___________________________ By:______________________________________

-5-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

DEVON SERIES

INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP PREMIUM FUND, INC.,
Maryland corporation ("Fund") on behalf of the DEVON SERIES ("Series"), and
DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation ("Investment
Manager").

W I T N E S S E T H:

WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,

<PAGE> 2

including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees.

4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Series' assets, a fee (at an annual
rate) equal to .60% of the average daily net assets of the Series during the
month.

-2-
<PAGE> 3

-3-
<PAGE> 4

or pursuant to the vote of a majority of the outstanding voting securities of
the Series. The Investment Manager may terminate this Agreement at any time,
without the payment of a penalty, on sixty days' written notice to the Fund of
its intention to do so. Upon termination of this Agreement, the obligations of
all the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this Agreement
committed prior to such termination, and except for the obligation of the Fund
to pay to the Investment Manager the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.

10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.

-4-
<PAGE> 5

Attest: DELAWARE GROUP PREMIUM FUND, INC., for
the DEVON SERIES

___________________________ By:_____________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

___________________________ By:_____________________________________

-5-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

EMERGING MARKETS SERIES

INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP PREMIUM FUND, INC., a
Maryland corporation (the "Fund") for the EMERGING MARKETS SERIES (the "Series")
and DELAWARE INTERNATIONAL ADVISERS LTD., a U.K. company (the "Investment
Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and engages in the
business of investing and reinvesting its assets in securities; and

WHEREAS, the Investment Manager is a registered Investment Adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and

WHEREAS, Fund desires to retain the Investment Adviser to provide
investment management services to the Series and the Investment Manager desires
to provide such services.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Board

<PAGE> 2

and officers of the Fund for the period and on the terms hereinafter set forth.
The Investment Manager hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth for
the compensation herein provided. The Investment Manager shall for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Fund in any way, or in any way be deemed an agent of the Fund. The Investment
Manager shall regularly make decisions as to what securities to purchase and
sell on behalf of the Series, shall effect the purchase and sale of investments
in furtherance of the Series' objectives and policies and shall furnish the
Board of Directors of the Fund with such information and reports regarding the
Series' investments as the Investment Manager deems appropriate or as the
Directors of the Fund may reasonably request.

2
<PAGE> 3

and notices to shareholders; calling and holding of shareholders' meetings;
miscellaneous office expenses; brokerage commissions; custodian fees; legal and
accounting fees; taxes; and federal and state registration fees.

3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities with such broker/dealers who provide
statistical, factual and financial information and services to the Fund, to the
Investment Manager or to any other fund for which the Investment Manager
provides investment advisory services and/or with broker/dealers who sell shares
of the Fund or who sell shares of any other fund for which the Investment
Manager provides investment advisory services. Broker/dealers who sell shares of
the funds of which Delaware International Advisers Ltd. is Investment Manager,
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.

3
<PAGE> 4

the Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Investment
Manager have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds and other advisory accounts for which the
Investment Manager exercises investment discretion.

4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Series' assets a fee (at an annual rate)
equal to 1.25% of the average daily net assets of the Series during the month.

4
<PAGE> 5

5. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

6. The Investment Manager, its directors, officers, employees, agents
and shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.

7. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the Investment Manager
to the Fund, the Investment Manager shall not be subject to liabilities to the
Fund or to any shareholder of the Fund for any action or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security, or otherwise.

8. This Agreement shall be executed and become effective as of the date
written below. It shall continue in effect for a period of two years and may be
renewed thereafter

5
<PAGE> 6

only so long as such renewal and continuance is 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 hereof
have been approved by the vote of a majority of the Directors of the Fund, who
are not parties hereto or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. Notwithstanding
the foregoing, this Agreement may be terminated by the Fund at any time, without
the payment of a penalty, on sixty days' written notice to the Investment
Manager of the Fund's intention to do so, pursuant to action by the Board of
Directors of the Fund or pursuant to vote of a majority of the outstanding
voting securities of the Series. The Investment Manager may terminate this
Agreement at any time, without the payment of a penalty on sixty days' written
notice to the Fund of its intention to do so. Upon termination of this
Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such termination, and
except for the obligation of the Fund to pay to the Investment Manager the fee
provided in Paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.

6
<PAGE> 7

9. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.

10. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meanings defined in the Investment Company Act of 1940.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
having it signed by their duly authorized officers as of the 1st day of May,
1996.

DELAWARE GROUP PREMIUM FUND, INC.
FOR THE EMERGING MARKETS SERIES

Attest:_______________________ By:__________________________________________

DELAWARE INTERNATIONAL ADVISERS LTD.

Attest:_______________________ By:___________________________________________

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

CONVERTIBLE SECURITIES SERIES

INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP PREMIUM FUND, INC.,
Maryland corporation ("Fund") on behalf of the CONVERTIBLE SECURITIES SERIES
("Series"), and DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation
("Investment Manager").

W I T N E S S E T H:

WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

<PAGE> 2

4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from

-2-
<PAGE> 3

the Series' assets, a fee (at an annual rate) equal to .75% of the average daily
net assets of the Series during the month.

-3-
<PAGE> 4

10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.

-4-
<PAGE> 5

Attest: DELAWARE GROUP PREMIUM FUND, INC., for
the CONVERTIBLE SECURITIES SERIES

___________________________ By:______________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

___________________________ By:______________________________________

-5-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

QUANTUM SERIES

INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP PREMIUM FUND, INC.,
Maryland corporation ("Fund") on behalf of the QUANTUM SERIES ("Series"), and
DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation ("Investment
Manager").

W I T N E S S E T H:

WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

<PAGE> 2

4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Series' assets, a fee (at an annual
rate) equal to .75% of the average daily net assets of the Series during the
month.

-2-
<PAGE> 3

-3-
<PAGE> 4

10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.

-4-
<PAGE> 5

Attest: DELAWARE GROUP PREMIUM FUND, INC., for
the QUANTUM SERIES

___________________________ By:______________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

___________________________ By:______________________________________

-5-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

SUB-ADVISORY AGREEMENT

AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and DELAWARE INTERNATIONAL ADVISERS
LTD., a U.K. company ("Sub-Adviser").

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP PREMIUM FUND, INC., a Maryland corporation
("Fund"), on behalf of the STRATEGIC INCOME SERIES ("Series"), has been
organized and operates as an investment company registered under the Investment
Company Act of 1940 ("1940 Act") and engages in the business of investing and
reinvesting its assets in securities, and

WHEREAS, the Investment Manager and the Fund have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Series; and

WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Series; and

WHEREAS, the Investment Manager and the Sub-Adviser are registered
investment advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

1. The Investment Manager hereby employs the Sub-Adviser to manage the
investment and reinvestment of the Series' assets, subject to the direction of
the Fund's Board of Directors and officers of the Fund for the period and on the
terms hereinafter set forth. The Sub-Adviser hereby accepts such employment and
agrees during such period to render the services and assume the obligations
herein set forth for the compensation herein provided. The Sub-Adviser shall for
all purposes herein be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized, have no authority to act for or
represent the Fund in any way, or in any way be deemed an agent of the Fund. The
Sub-Adviser shall regularly make decisions as to what securities and other
instruments to purchase and sell on behalf of the Series, shall effect the
purchase and sale of such investments, as agent of the Fund on behalf of the
Series, in furtherance of the Series' objectives and policies and shall furnish
the Board of Directors of the Fund with such information and reports regarding
its activities as the Investment Manager deems appropriate or as the Directors
of the Fund may reasonably request consistent with the provisions of Section
15(c) of the 1940 Act.

<PAGE> 2

In the performance of its duties and obligations under this Agreement,
the Sub-Adviser shall act in conformity with the Articles of Incorporation,
By-Laws and Prospectus of the Fund and with the instructions and directions of
the Investment Manager and of the Board of Directors of the Fund and will
conform to and comply with the requirements of the 1940 Act, the Internal
Revenue Code of 1986 and all other applicable federal and state laws and
regulations.

2. Under the terms of the Investment Management Agreement, the Fund
shall conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of stock,
including issuance and repurchase of shares; preparation of share certificates;
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian fees;
legal and accounting fees; taxes; and federal and state registration fees.

Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser as
sub-adviser or investment manager.

In the conduct of the respective business of the parties hereto and in
the performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.

3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Sub-Adviser will place orders for the purchase and
sale of portfolio securities and other instruments with such broker/dealers who
provide statistical, factual and financial information and services to the Fund,
to the Investment Manager, to the Sub-Adviser or to any other fund for which the
Investment Manager or Sub-Adviser provides investment advisory services and/or
with broker/dealers who sell shares of the Fund or who sell shares of any other
fund for which the Investment Manager or Sub-Adviser provides investment
advisory services. Broker/dealers who sell shares of the funds for which the
Investment Manager or Sub-Adviser provides advisory services shall only receive
orders for the purchase or sale of portfolio securities to the extent that the
placing of such orders is in compliance with the Rules of the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.

(b) Notwithstanding the provisions of subparagraph (a) above and
subject to the policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Sub-Adviser may ask the Fund and the
Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Sub-Adviser
have determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or

-2-
<PAGE> 3

the Sub-Adviser's overall responsibilities with respect to the Fund and to other
funds and other advisory accounts for which the Investment Manager or the
Sub-Adviser exercises investment discretion.

4. The Sub-Adviser shall maintain all books and records with respect to
the Series' portfolio transactions required by subparagraphs (b) (5), (6), (7),
(9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall
render to the Fund's Board of Directors such periodic and special reports as the
Board may reasonably request.

The Sub-Adviser shall keep the Series' books and records required to be
maintained by the Sub-Adviser pursuant to this Paragraph 4 and shall timely
furnish to the Investment Manager all information relating to the Sub-Adviser's
services hereunder needed by the Investment Manager to keep the other books and
records of the Series required by Rule 31a-1 under the 1940 Act. The Sub-Adviser
agrees that all records which it maintains for the Series are the property of
the Fund and the Sub-Adviser will surrender promptly to the Fund any of such
records upon the Fund's request, provided however that the Sub-Adviser may
retain a copy of such records. The Sub-Adviser further agrees to preserve for
the periods prescribed by Rule 31a-2 of the Securities and Exchange Commission
under the 1940 Act any such records as are required to be maintained by it
pursuant to this Paragraph 4.

The fee shall be computed quarterly and will be paid to the
Sub-Adviser, quarterly, in arrears.

6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Series under the provisions of this Agreement are not to be
deemed to be exclusive, and the SubAdviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment management (or similar services) to
another registered investment company (or portfolio thereof) which the
Investment Manager reasonably determines would be in competition with and which
has investment policies similar to those of the Series.

7. The Investment Manager agrees that it shall not use the
Sub-Adviser's name or otherwise refer to the Sub-Adviser in any materials
distributed to third parties, including the Series' shareholders, without the
prior written consent of the Sub-Adviser.

-3-
<PAGE> 4

8. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of its duties as Sub-Adviser to the
Fund, the Sub-Adviser shall not be subject to liability to the Fund, to the
Investment Manager or to any shareholder of the Fund for any action or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security,
or otherwise.

9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Series. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Directors or by the vote
of a majority of the outstanding voting securities of the Series and only if the
terms and the renewal hereof have been approved by the vote of a majority of the
Directors of the Fund who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be terminated by the
Investment Manager or the Fund at any time, without the payment of a penalty, on
sixty days' written notice to the Sub-Adviser, of the Investment Manager's or
the Fund's intention to do so, in the case of the Fund, pursuant to action by
the Board of Directors of the Fund or pursuant to the vote of a majority of the
outstanding voting securities of the Series. The Sub-Adviser may terminate this
Agreement at any time, without the payment of a penalty on sixty days' written
notice to the Investment Manager and the Fund of its intention to do so. Upon
termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Investment Manager to pay to
the SubAdviser the fee provided in Paragraph 5 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment. This Agreement shall automatically terminate upon the termination of
the Investment Management Agreement.

10. This Agreement shall extend to and bind the successors of the
parties hereto. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. This Agreement shall become effective
when one or more counterparts have been signed and delivered by each of the
parties hereto.

11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.

-4-
<PAGE> 5

DELAWARE MANAGEMENT COMPANY, INC.

By:________________________________

Attest:____________________________

DELAWARE INTERNATIONAL ADVISERS LTD.

By:________________________________

Attest:____________________________

Agreed to and accepted as of the
day and year first above written:

DELAWARE GROUP PREMIUM FUND, INC.
on behalf of the STRATEGIC INCOME SERIES

By:________________________________

Attest:____________________________

-5-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

SUB-ADVISORY AGREEMENT

AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and LYNCH & MAYER, INC., an
[________] corporation ("Sub-Adviser").

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP PREMIUM FUND, INC., a Maryland corporation
("Fund"), on behalf of the CONVERTIBLE SECURITIES SERIES ("Series"), has been
organized and operates as an investment company registered under the Investment
Company Act of 1940 ("1940 Act") and engages in the business of investing and
reinvesting its assets in securities, and

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

<PAGE> 2

Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser as
sub-adviser or investment manager.

-2-
<PAGE> 3

the Sub-Adviser's overall responsibilities with respect to the Fund and to other
funds and other advisory accounts for which the Investment Manager or the
Sub-Adviser exercises investment discretion.

The Sub-Adviser shall keep the Series' books and records
required to be maintained by the Sub-Adviser pursuant to this Paragraph 4 and
shall timely furnish to the Investment Manager all information relating to the
Sub-Adviser's services hereunder needed by the Investment Manager to keep the
other books and records of the Series required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser agrees that all records which it maintains for the Series are
the property of the Fund and the Sub-Adviser will surrender promptly to the Fund
any of such records upon the Fund's request, provided however that the
Sub-Adviser may retain a copy of such records. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 of the Securities and Exchange
Commission under the 1940 Act any such records as are required to be maintained
by it pursuant to this Paragraph 4.

5. As compensation for the services to be rendered to the Fund for the
benefit of the Series by the Sub-Adviser under the provisions of this Agreement,
the Investment Manager shall pay to the Sub-Adviser a fee equal to (at an annual
rate): (i) 0.15% of the average daily net assets of the Series for the period
May 1, 1997 through April 30, 1998; (ii) 0.20% of the average daily net assets
of the Series for the period May 1, 1998 through April 30, 1999; and (iii) 0.35%
of the average daily net assets of the Series thereafter.

The fee shall be computed quarterly and will be paid to the
Sub-Adviser, quarterly, in arrears.

6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Series under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub- Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment management (or similar services) to
another registered investment company (or portfolio thereof) which the
Investment Manager reasonably determines would be in competition with and which
has investment policies similar to those of the Series.

-3-
<PAGE> 4

9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Series. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Directors or by the vote
of a majority of the outstanding voting securities of the Series and only if the
terms and the renewal hereof have been approved by the vote of a majority of the
Directors of the Fund who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be terminated by the
Investment Manager or the Fund at any time, without the payment of a penalty, on
sixty days' written notice to the Sub-Adviser, of the Investment Manager's or
the Fund's intention to do so, in the case of the Fund, pursuant to action by
the Board of Directors of the Fund or pursuant to the vote of a majority of the
outstanding voting securities of the Series. The Sub-Adviser may terminate this
Agreement at any time, without the payment of a penalty on sixty days' written
notice to the Investment Manager and the Fund of its intention to do so. Upon
termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Investment Manager to pay to
the Sub- Adviser the fee provided in Paragraph 5 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment. This Agreement shall automatically terminate upon the termination of
the Investment Management Agreement.

11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.

-4-
<PAGE> 5

DELAWARE MANAGEMENT COMPANY, INC.

By:________________________________

Attest:____________________________

LYNCH & MAYER, INC.

By:________________________________

Attest:____________________________

Agreed to and accepted as of the
day and year first above written:

DELAWARE GROUP PREMIUM FUND, INC.
on behalf of the CONVERTIBLE SECURITIES SERIES

By:________________________________

Attest:____________________________

-5-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

SUB-ADVISORY AGREEMENT

AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and VANTAGE GLOBAL ADVISORS, INC.,
an [________] corporation ("Sub-Adviser").

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP PREMIUM FUND, INC., a Maryland corporation
("Fund"), on behalf of the QUANTUM SERIES ("Series"), has been organized and
operates as an investment company registered under the Investment Company Act of
1940 ("1940 Act") and engages in the business of investing and reinvesting its
assets in securities, and

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:

<PAGE> 2

Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser as
sub-adviser or investment manager.

-2-
<PAGE> 3

the Sub-Adviser's overall responsibilities with respect to the Fund and to other
funds and other advisory accounts for which the Investment Manager or the
Sub-Adviser exercises investment discretion.

The Sub-Adviser shall keep the Series' books and records
required to be maintained by the Sub-Adviser pursuant to this Paragraph 4 and
shall timely furnish to the Investment Manager all information relating to the
Sub-Adviser's services hereunder needed by the Investment Manager to keep the
other books and records of the Series required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser agrees that all records which it maintains for the Series are
the property of the Fund and the Sub-Adviser will surrender promptly to the Fund
any of such records upon the Fund's request, provided however that the
Sub-Adviser may retain a copy of such records. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 of the Securities and Exchange
Commission under the 1940 Act any such records as are required to be maintained
by it pursuant to this Paragraph 4.

5. As compensation for the services to be rendered to the Fund for the
benefit of the Series by the Sub-Adviser under the provisions of this Agreement,
the Investment Manager shall pay to the Sub-Adviser a fee equal to (at an annual
rate): (i) 0.20% of the average daily net assets of the Series for the period
May 1, 1997 through April 30, 1998; (ii) 0.25% of the average daily net assets
of the Series for the period May 1, 1998 through April 30, 1999; and (iii) 0.40%
of the average daily net assets of the Series thereafter.

The fee shall be computed quarterly and will be paid to the
Sub-Adviser, quarterly, in arrears.

-3-
<PAGE> 4

9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Series. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Directors or by the vote
of a majority of the outstanding voting securities of the Series and only if the
terms and the renewal hereof have been approved by the vote of a majority of the
Directors of the Fund who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be terminated by the
Investment Manager or the Fund at any time, without the payment of a penalty, on
sixty days' written notice to the Sub-Adviser, of the Investment Manager's or
the Fund's intention to do so, in the case of the Fund, pursuant to action by
the Board of Directors of the Fund or pursuant to the vote of a majority of the
outstanding voting securities of the Series. The Sub-Adviser may terminate this
Agreement at any time, without the payment of a penalty on sixty days' written
notice to the Investment Manager and the Fund of its intention to do so. Upon
termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Investment Manager to pay to
the Sub- Adviser the fee provided in Paragraph 5 hereof, prorated to the date of
termination. This Agreement shall automatically terminate in the event of its
assignment. This Agreement shall automatically terminate upon the termination of
the Investment Management Agreement.

11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.

-4-
<PAGE> 5

DELAWARE MANAGEMENT COMPANY, INC.

By:________________________________

Attest:____________________________

VANTAGE GLOBAL ADVISORS, INC.

By:________________________________

Attest:____________________________

Agreed to and accepted as of the
day and year first above written:

DELAWARE GROUP PREMIUM FUND, INC.
on behalf of the QUANTUM SERIES

By:________________________________

Attest:____________________________

-5-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.

CONVERTIBLE SECURITIES SERIES
DEVON SERIES
EMERGING MARKETS SERIES
QUANTUM SERIES
STRATEGIC INCOME SERIES

DISTRIBUTION AGREEMENT

Distribution Agreement made as of this 1st day of May, 1997 by and
between DELAWARE GROUP PREMIUM FUND, INC., a Maryland corporation (the "Fund"),
on behalf of its CONVERTIBLE SECURITIES SERIES, DEVON SERIES, EMERGING MARKETS
SERIES, QUANTUM SERIES, and STRATEGIC INCOME SERIES (the "Series") and DELAWARE
DISTRIBUTORS, L.P. (the "Distributor"), a Delaware limited partnership.

W I T N E S S E T H:

WHEREAS, the Fund is an investment company regulated by Federal and
State regulatory bodies; and

WHEREAS, the Distributor is engaged in the business of promoting the
distribution of the securities of investment companies and, in connection
therewith and acting solely as agent for such investment companies and not as
principal, advertising, promoting, offering and selling their securities to the
public; and

WHEREAS, the Fund desires to appoint the Distributor as distributor for
the shares of the Series and the Distributor wishes to accept such appointment
on the terms and conditions set forth below.
<PAGE> 2
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:

1. The Fund hereby engages the Distributor to promote the
distribution of the Series' shares and, in connection
therewith and as agent for the Fund and not as principal, to
advertise, promote, offer and sell the Series' shares to the
public.

2. The Distributor agrees to serve as distributor of the Series'
shares and, as agent for the Fund and not as principal, to
advertise, promote and use its best efforts to sell the
Series' shares wherever their sale is legal, either through
dealers or otherwise, in such places and in such manner, not
inconsistent with the law and the provisions of this Agreement
and the Fund's Registration Statement under the Securities Act
of 1933 including the Prospectus contained therein and the
Statement of Additional Information contained therein, as may
be mutually determined by the Fund and the Distributor from
time to time. The Distributor will bear all costs of financing
any activity which is primarily intended to result in the sale
of the Series' shares, including, but not necessarily limited
to, advertising, compensation of underwriters, dealers and
sales personnel, the printing and mailing of sales literature
and distribution of the Series' shares.

-2-
<PAGE> 3
3. (a) The Fund agrees to make available for sale by the Fund
through the Distributor all or such part of the authorized but
unissued Series' shares as the Distributor shall require from
time to time, all subject to the further provisions of this
contract, and except with the Distributor's written consent or
as provided in Paragraph 3(b) hereof, the Fund will not sell
Series shares other than through the efforts of the
Distributor.

(b) The Fund reserves the right from time to time (l) to sell and
issue shares other than for cash; (2) to issue shares in
exchange for substantially all of the assets of any
corporation or trust, or in exchange for shares of any
corporation or trust; (3) to pay stock dividends to its
shareholder, or to pay dividends in cash or stock at the
option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to
time in cash, or to split up or combine its outstanding shares
of Common Stock; (4) to offer shares for cash to its
stockholders as a whole, by the use of transferable rights or
otherwise, and to sell and issue shares pursuant to such
offers; and (5) to act as its own distributor

-3-
<PAGE> 4
in any jurisdiction where the Distributor is not registered as
a broker dealer.

4. The Fund warrants the following:

(a) The Fund is, or will be, a properly registered investment
company, and any and all shares which it will sell through the
Distributor are, or will be, properly registered with the
Securities and Exchange Commission.

(b) The provisions of this contract do not violate the terms of
any instrument by which the Fund is bound, nor do they violate
any law or regulation of any body having jurisdiction over the
Fund or its property.

5. (a) The Fund will supply to the Distributor a conformed copy
of the Registration Statement, all amendments thereto, all
exhibits, and each Prospectus and Statement of Additional
Information.

(b) The Fund will register or qualify the Series' shares for sale
in such states as is deemed desirable.

(1) will give and continue to give such financial
statements and other information as may be required
by the SEC or the proper public bodies of the states
in which the shares may be qualified;

-4-
<PAGE> 5
(2) from time to time, will furnish the Distributor as
soon as reasonably practicable the following
information: (a) true copies of its periodic reports
to stockholders, and unaudited quarterly balance
sheets and income statements for the period from the
beginning of the then current fiscal year to such
balance sheet dates; and (b) a profit and loss
statement and a balance sheet at the end of each
fiscal half year accompanied by a copy of the
certificate or report thereon of an independent
public accountant (who may be the regular accountant
for the Fund), provided that in lieu of furnishing at
the end of any fiscal half year a statement of profit
and loss and a balance sheet certified by an
independent public accountant as above required, the
Fund may furnish a true copy of its detailed
semi-annual report to its stockholders;

(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such
advice in writing, (a) when any amendment or
supplement to the Registration Statement becomes
effective, (b)of any request by the SEC for
amendments or supplements to the Registration
Statement or the Prospectus or for additional
information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose;

(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to
obtain the lifting of such order at the earliest
possible moment;

(5) will from time to time, use its best effort to keep a
sufficient supply of shares authorized, any increases
being subject to approval of the Fund's shareholders
as may be required;

(6) before filing any further amendment to the
Registration Statement or to the Prospectus, will
furnish the Distributor copies of the proposed
amendment and will not, at any time,

-5-
<PAGE> 6
whether before or after the effective date of the
Registration Statement, file any amendment to the
Registration Statement or supplement to the
Prospectus of which the Distributor shall not
previously have been advised or to which the
Distributor shall reasonably object (based upon the
accuracy or completeness thereof) in writing;

(7) will continue to make available to its stockholders
(and forward copies to the Distributor) of such
periodic, interim and any other reports as are now,
or as hereafter may be, required by the provisions of
the Investment Company Act of 1940; and

(8) will, for the purpose of computing the offering price
of its Series' shares, advise the Distributor within
one hour after the close of regular trading on the
New York Stock Exchange (or as soon as practicable
thereafter) on each business day upon which the New
York Stock Exchange may be open of the net asset
value per share of the Series' shares of common stock
outstanding, determined in accordance with any
applicable provisions of law and the provisions of
the Articles of Incorporation, as amended, of the
Company as of the close of business on such business
day. In the event that prices are to be calculated
more than once daily, the Fund will promptly advise
the Distributor of the time of each calculation and
the price computed at each such time.

6. The Distributor agrees to submit to the Fund, prior to its use, the
form of all sales literature proposed to be generally disseminated by
or for the Distributor on behalf of the Fund all advertisements
proposed to be used by the Distributor, and all sales literature or
advertisements prepared by or for the Distributor for such
dissemination or for use by others in connection

-6-
<PAGE> 7
with the sale of the Series' shares. The Distributor also agrees that
the Distributor will submit such sales literature and advertisements to
the NASD, SEC or other regulatory agency as from time to time may be
appropriate, considering practices then current in the industry. The
Distributor agrees not to use or to permit others to use such sales
literature or advertisements without the written consent of the Fund if
any regulatory agency expresses objection thereto or if the Fund
delivers to the Distributor a written objection thereto.

7. The purchase price of each share sold hereunder shall be the offering
price per share mutually agreed upon by the parties hereto, and as
described in the Fund's prospectus, as amended from time to time,
determined in accordance with applicable provisions of law, the
provisions of its Articles of Incorporation and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.

8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Series' shares. The Distributor shall undertake
to promote such sales solely as agent of the Fund, and shall not
purchase or sell such shares as principal. Orders for Series' shares
and payment for such orders shall be directed to the Fund's agent,
Delaware Service Company, for acceptance on behalf

-7-
<PAGE> 8
of the Fund. The Distributor is not empowered to approve orders for
sales of Series' shares or accept payment for such orders. Sales of
Series' shares shall be deemed to be made when and where accepted by
Delaware Service Company.

9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following
will apply:

(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectus, and all amendments,
supplements and replacements thereto. The Fund will pay all
costs incurred in the preparation of the Fund's registration
statement, including typesetting, the costs incurred in
printing and mailing prospectuses to its own shareholders and
fees and expenses of counsel and accountants.

(b) The Distributor will pay the costs incurred in printing and
mailing copies of prospectuses to prospective investors.

(c) The Distributor will pay advertising and promotional expenses,
including the costs of literature sent to prospective
investors.

(d) The Fund will pay the costs and fees incurred in registering
the Series' shares with the various

-8-
<PAGE> 9
states and with the Securities and Exchange Commission.

(e) The Distributor will pay the costs of any additional copies of
the Fund reports and other Fund literature supplied to the
Distributor by the Fund for sales promotion purposes.

10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of
its obligations under this Agreement.

11. The Fund agrees to indemnify, defend and hold harmless from the assets
of the Series, the Distributor and each person, if any, who controls
the Distributor within the meaning of Section 15 of the Securities Act
of 1933, from and against any and all losses, damages, or liabilities
to which, jointly or severally, the Distributor or such controlling
person may become subject, insofar as the losses, damages or
liabilities arise out of the performance of its duties hereunder except
that the Fund shall not be liable for indemnification of the
Distributor or any controlling person thereof for any liability to the
Fund or its security holders to which they would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of their duties hereunder or by reason of

-9-
<PAGE> 10
their reckless disregard of their obligations and duties under this
Agreement.

12. Copies of financial reports, registration statements and prospectuses,
as well as demands, notices, requests, consents, waivers, and other
communications in writing which it may be necessary or desirable for
either party to deliver or furnish to the other will be duly delivered
or furnished, if delivered to such party at its address shown below
during regular business hours, or if sent to that party by registered
mail or by prepaid telegram filed with an office or with an agent of
Western Union, in all cases within the time or times herein prescribed,
addressed to the recipient at 1818 Market Street, Philadelphia,
Pennsylvania 19103, or at such other address as the Fund or the
Distributor may designate in writing and furnish to the other.

13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the
Distributor. This Agreement shall not be assigned by the Fund without
the written consent of the Distributor signed by its duly authorized
officers and delivered to the Fund. Except as specifically provided in
the indemnification provisions contained in Paragraph 11 hereof, this
contract and all

-10-
<PAGE> 11
conditions and provisions hereof are for the sole and exclusive benefit
of the parties hereto and their legal successors and no express or
implied provisions of this Agreement are intended or shall be construed
to give any person other than the parties hereto and their legal
successors any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. The
Distributor shall look only to the assets of the Fund to meet the
obligations of, or claims against, the Fund under this Agreement and
not to the holder of any share of the Fund.

14. (a) This contract shall remain in force for a period of two
years from the date of execution of this Agreement and from
year to year thereafter, but only so long as such continuance
is 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 hereto or
interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.

-11-
<PAGE> 12
(b) The Distributor may terminate this contract on written notice
to the Fund at any time in case the effectiveness of the
Registration Statement shall be suspended, or in case Stop
Order proceedings are initiated by the U. S. Securities and
Exchange Commission in respect of the Registration Statement
and such proceedings are not withdrawn or terminated within
thirty days. The Distributor may also terminate this contract
at any time by giving the Fund written notice of its intention
to terminate the contract at the expiration of three months
from the date of delivery of such written notice of intention
to the Fund.

(c) The Fund may terminate this contract at any time on at least
thirty days prior written notice to the Distributor (1) if
proceedings are commenced by the Distributor or any of its
stockholders for the Distributor's liquidation or dissolution
or the winding up of the Distributor's affairs; (2) if a
receiver or trustee of the Distributor or any of its property
is appointed and such appointment is not vacated within thirty
days thereafter; (3) if, due to any action by or before any
court or any federal or state commission, regulatory body, or
administrative agency or other governmental body,

-12-
<PAGE> 13
the Distributor shall be prevented from selling securities in
the United States or because of any action or conduct on the
Distributor's part, sales of the shares are not qualified for
sale. The Fund may also terminate this contract at any time
upon prior written notice to the Distributor of its intention
to so terminate at the expiration of three months from the
date of the delivery of such written notice to the
Distributor.

15. The validity, interpretation and construction of this contract, and of
each part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.

16. In the event any provision of this contract is determined to be void or
unenforceable, such determination shall, not affect the remainder of
the contract, which shall continue to be in force.

-13-
<PAGE> 14
DELAWARE DISTRIBUTORS, L.P.

By: DELAWARE DISTRIBUTORS, INC.,
Attest: General Partner

___________________________ By:___________________________
Name: Name:
Title: Title:

DELAWARE GROUP PREMIUM FUND, INC.
Attest: for the CONVERTIBLE SECURITIES
SERIES, DEVON SERIES, EMERGING
MARKETS SERIES, QUANTUM SERIES, and
STRATEGIC INCOME SERIES

___________________________ By:________________________________
Name: Name:
Title: Title:

-14-

<PAGE> 1
DELAWARE GROUP PREMIUM FUND, INC.
AMENDED AND RESTATED SHAREHOLDERS SERVICES AGREEMENT

THIS AGREEMENT, made as of this 1st day of May, 1997 by and between
DELAWARE GROUP PREMIUM FUND, INC. (the "Fund"), a Maryland Corporation, for the
EQUITY INCOME SERIES, the HIGH YIELD SERIES, the CAPITAL RESERVES SERIES, the
MULTIPLE STRATEGY SERIES, the GROWTH SERIES, the INTERNATIONAL EQUITY SERIES,
the VALUE SERIES, the EMERGING GROWTH SERIES, the GLOBAL BOND SERIES, the
CONVERTIBLE SECURITIES SERIES, the DEVON SERIES, the EMERGING MARKETS SERIES,
the QUANTUM SERIES, and the STRATEGIC INCOME SERIES (collectively "the Series"),
and DELAWARE SERVICE COMPANY, INC. ("DSC"), a Delaware Corporation, each having
its principal office and place of business at 1818 Market Street, Philadelphia,
Pennsylvania 19103.

W I T N E S S E T H:

WHEREAS, the Investment Management Agreements between the Fund and
Delaware Management Company, Inc. provide that the Fund shall conduct its own
business and affairs and shall bear the expenses and salaries necessary and
incidental thereto including, but not in limitation of the foregoing, the costs
incurred in: the maintenance of its corporate existence; the maintenance of its
own books, records and procedures; dealing with its own shareholders; the
payment of dividends; transfers of stock, including issuance and redemption of
shares; reports
<PAGE> 2
and notices to stockholders; calling and holding of stockholder meetings;
miscellaneous office expenses; brokerage commissions; legal and accounting fees;
taxes; and federal and state registration fees; and

WHEREAS, the Fund and DSC desire to have a written agreement concerning
the performance of the foregoing services and providing compensation therefor;
and

WHEREAS, the Fund and DSC previously entered into an Amended and
Restated Shareholder Services Agreement dated October 7, 1992; and

WHEREAS, the Fund and DSC desire to amend and restate their Amended and
Restated Shareholder Services Agreement dated as of October 7, 1992 to include
the Fund's new series.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and intending legally to be bound, it is agreed:

I. APPOINTMENT AS AGENT

1.1 The Fund hereby appoints DSC Shareholder Services Agent for the
Series to provide as agent for the Fund services as Transfer Agent, Dividend
Disbursing Agent and Shareholder Servicing Agent and DSC hereby accepts such
appointment and agrees to provide the Fund, as its agent, the services described
herein.

1.2 The Fund shall pay DSC and DSC shall accept, for the services
provided hereunder, the compensation provided for in Section VIII hereof. The
Fund also shall reimburse DSC for expenses incurred or advanced by it for the
Fund in connection with its services hereunder.

2
<PAGE> 3
II. DOCUMENTATION

2.1 The Fund represents that it has provided or made available to DSC
(or has given DSC an opportunity to examine) copies of, and DSC represents that
it has received from the Fund (or is otherwise familiar with), the following
documents:

(a) The Articles of Incorporation or other documents evidencing the
Fund's form of organization and any current amendments or supplements thereto.

(b) The By-Laws of the Fund;

(c) Any resolution or other action of the Fund or the Board of
Directors of the Fund establishing or affecting the rights, privileges or other
status of each class or series of shares of the Fund, including those relating
to the Series or altering or abolishing each such class or series;

(d) A certified copy of a resolution of the Board of Directors of
the Fund appointing DSC as Shareholder Services Agent for the Series and
authorizing the execution of this Agreement;

(e) The forms of share certificates of the Series in the forms
approved by the Board of Directors of the Fund;

(f) A copy of the Fund's currently effective Prospectuses and
Statement of Additional Information under the Securities Act of 1933, if
effective;

(g) Copies of all account application forms and other documents
relating to stockholder accounts in the Series;

3
<PAGE> 4
(h) Copies of documents relating to Plans of the Fund for the
purchase, sale or repurchase of its shares, including periodic payment or
withdrawal plans, reinvestment plans or retirement plans;

(i) Any opinion of counsel to the Fund relating to the
authorization and validity of the shares of the Series issued or proposed to be
issued under the law of the State of the Fund's organization, including the
status thereof under any applicable securities laws;

(j) A certified copy of any resolution of the Board of Directors of
the Fund authorizing any person to give instructions to DSC under this Agreement
(with a specimen signature of such person if not already provided), setting
forth the scope of such authority; and

(k) Any amendment, revocation or other documents altering, adding,
qualifying or repealing any document or authority called for under this Section
2.1.

2.2 The Fund and DSC may consult as to forms or documents that may be
required in performing services hereunder.

2.3 The Fund shall provide or make available to DSC a certified copy of
any resolution of the stockholders or the Board of Directors of the Fund
providing for a dividend, capital gains distribution, distribution of capital,
stock dividend, stock split or other similar action affecting the authorization
or issuance of shares of the Series or the payment of dividends.

2.4 In the case of any recapitalization or other capital adjustment
requiring a change in the form of stock certificates or the books recording the
same, the Fund shall deliver or make available to DSC:

(a) A certified copy of any document authorizing or effecting such
change;

4
<PAGE> 5
(b) Written instructions from an authorized officer implementing
such change; and

2.5 The Fund warrants the following:

(a) The Fund is, or will be, a properly registered investment
company under the Investment Company Act of 1940 and any and all Series' shares
which it issues will be properly registered and lawfully issued under applicable
federal and state laws.

(b) The provisions of this contract do not violate the terms of any
instrument by which the Fund is bound; nor do they violate any law or regulation
of any body having jurisdiction over the Fund or its property.

2.6 DSC warrants the following:

(a) DSC is and will be properly registered as a transfer agent
under the Securities Exchange Act of 1934 and is duly authorized to serve, and
may lawfully serve as such.

(b) The provisions of this contract do not violate the terms of any
instrument by which DSC is bound; nor do they violate any law or regulation of
any body having jurisdiction over DSC or its property.

III. STOCK CERTIFICATES

3.1 The Fund shall furnish or authorize DSC to obtain, at the Fund's
expense, a sufficient supply of blank stock certificates for the Series, and
from time to time will replenish such supply upon the request of DSC. The Fund
agrees to indemnify and exonerate, save and hold DSC harmless, from and against
any and all claims or demands that may be asserted against

5
<PAGE> 6
DSC concerning the genuineness of any stock certificate supplied to DSC pursuant
to this Section.

3.2 DSC shall safeguard, and shall account to the Fund, upon its demand
for, all such stock certificates: (a) as issued, showing to whom issued, or (b)
as unissued, establishing the safekeeping, cancellation or destruction thereof.

3.3 The Fund shall promptly inform DSC in writing of any change in the
officers authorized to sign stock certificates or in the form thereof. If an
officer whose manual or facsimile signature is affixed to any blank share
certificate shall die, resign or be removed prior to the issuance of such
certificate, DSC may nevertheless issue such certificate notwithstanding such
death, resignation or removal, and the Fund shall with respect thereto promptly
provide to DSC any approval, adoption or ratification as may be required by DSC.

IV. TRANSFER AGENT

4.1 As Transfer Agent for the Fund, DSC shall issue, redeem and
transfer shares of the Series, and, in connection therewith but not in
limitation thereof, it shall:

(a) Upon receipt of authority to issue shares, determine the total
shares to be issued and issue such shares by crediting shares to accounts
created and maintained in the registration forms provided; as applicable,
prepare, issue and deliver stock certificates.

(b) Upon proper transfer authorization, transfer shares by debiting
transferor- stockholder accounts and crediting such shares to accounts created
and/or maintained for transferee-stockholders; if applicable, issue and/or
cancel stock certificates.

(c) Upon proper redemption authorization, determine the total
shares redeemed and to be redeemed; determine the total redemption payments made
and to be made;

6
<PAGE> 7
redeem shares by debiting stockholder accounts; as applicable receive and cancel
stock certificates for shares redeemed; and remit or cause to be remitted the
redemption proceeds to stockholders.

(d) Create and maintain accounts; reconcile and control cash due
and paid, shares issued and to be issued, cash remitted and to be remitted and
shares debited and credited to accounts; provide such notices, instructions or
authorizations as the Fund may require.

4.2 DSC shall not be required to issue, transfer or redeem Series'
shares upon receipt of DSC from the Fund, or from any federal or state
regulatory agency or authority, written notice that the issuance, transfer or
redemption of Series' shares has been suspended or discontinued.

V. DIVIDEND DISBURSING AGENT

5.1 As Dividend Disbursing Agent for the Fund, DSC shall disburse and
cause to be disbursed to stockholders of each Series dividends, capital gains
distributions or any payments from other sources as directed by the Fund. In
connection therewith, but not in the limitation thereof, DSC shall:

(a) Calculate the total disbursement due and payable and the
disbursement to each stockholder as to shares owned, in accordance with the
Fund's authorization.

(b) Calculate the total disbursements for each stockholder, as
aforesaid, to be disbursed in cash; prepare and mail checks therefor.

(c) Calculate the total disbursement for each stockholder of each
Series, as aforesaid, for which Series' shares are to be issued and authorized
and instruct the issuance of Series' shares therefor in accordance with Section
IV hereof.

7
<PAGE> 8
(d) Prepare and mail or deliver such forms and notices pertaining
to disbursements as required by federal or state authority.

(e) Create and maintain records, reconcile and control
disbursements to be made and made, both as to cash and shares, as aforesaid;
provide such notices, instruction or authorization as the Fund may require.

5.2 DSC shall not be required to make any disbursement upon the receipt
of DSC from the Fund, or from any federal or state agency or authority, written
notice that such disbursement shall not be made.

VI. SHAREHOLDER SERVICING AGENT

6.1 As Shareholder Servicing Agent for the Fund, DSC shall provide
those services ancillary to, but in implementation of, the services provided
under Sections I through V hereof, and those generally defined and accepted as
shareholder services. In connection therewith, but not in limitation thereof,
DSC shall:

(a) Except where instructed in writing by the Fund not to do so,
and where in compliance with applicable law, accept orders on behalf of the
Fund; receive and process investments and applications; remit to the Fund or its
custodian payments for shares acquired and to be issued; and direct the issuance
of shares in accordance with Section IV hereof.

(b) Receive, record and respond to communications of stockholders
and their agents.

(c) As instructed by the Fund, prepare and mail stockholder account
information, mail Series stockholder reports and Series prospectuses.

8
<PAGE> 9
(d) Prepare and mail proxies and material for Fund stockholder
meetings, receive and process proxies from stockholders, and deliver such
proxies as directed by the Fund.

(e) Administer investment plans offered by the Fund to investors
and stockholders of each Series, including retirement plans, including
activities not otherwise provided in Sections I through V of this Agreement.

VII. PERFORMANCE OF DUTIES

7.1 The parties hereto intend that Series stockholders and their
stockholdings shall be confidential, and any information relating thereto shall
be released by DSC only to those persons or authorities who DSC has reason to
believe are authorized to receive such information; or, as instructed by the
Fund.

7.2 DSC may, in performing this Agreement, require the Fund or the
Fund's distributor to provide it with an adequate number of copies of
prospectuses, reports or other documents required to be furnished to investors
or stockholders.

7.3 DSC may request or receive instructions from the Fund and may, at
the Fund's expense, consult with counsel for the Fund or its own counsel with
respect to any matter arising in connection with the performance of its duties
hereunder, and shall not be liable for any action taken or omitted by it in good
faith in accordance with such instructions or opinions of counsel.

7.4 DSC shall maintain reasonable insurance coverage for errors and
omissions and reasonable bond coverage for fraud.

7.5 Upon notice thereof to the Fund, DSC may employ others to provide
services to DSC in its performance of this Agreement.

9
<PAGE> 10
7.6 Personnel and facilities of DSC used to perform services hereunder
may be used to perform similar services to other funds of the Delaware Group and
to others, and may be used to perform other services for the Fund, the other
funds of the Delaware Group and others.

7.7 DSC shall provide its services as transfer agent hereunder in
accordance with Section 17 of the Securities Exchange Act of 1934, and the rules
and regulations thereunder. Further, the parties intend that the processes,
procedures, safeguards and controls employed should be those generally applied
and accepted for the type services provided hereunder by other institutions
providing the same or similar services, and, those which should provide
efficient, safe and economical services so as to promote promptness and accuracy
and to maintain the integrity of the Fund's records.

7.8 The Fund and DSC may, from time to time, set forth in writing
Guidelines For Selective Procedures to be applicable to the services hereunder.

VIII. COMPENSATION

8.1 The Fund and DSC acknowledge that because DSC has common ownership
and close management ties with the Fund's investment advisor and the Fund's
distributor and serves the other funds of the Delaware Group (DSC having been
originally established to provide the services hereunder for the funds of the
Delaware Group), advantages and benefits to the Fund in the employment of DSC
hereunder can be available which may not generally be available to it from
others providing similar services.

8.2 The Fund and DSC further acknowledge that the compensation by the
Fund to DSC is intended to induce DSC to provide services under this Agreement
of a nature and quality which the Board of Directors of the Fund, including a
majority who are not parties to this

10
<PAGE> 11
Agreement or interested persons of the parties hereto, has determined after due
consideration to be necessary for the conduct of the business of the Fund, in
the best interests of the Fund, the Series and their stockholders.

8.3 Compensation by the Fund to DSC hereunder shall be determined in
accordance with Schedule A hereto as it shall be amended from time to time as
provided for herein and which is incorporated herein as a part hereof.

8.4 Compensation as provided in Schedule A shall be reviewed and
approved in the manner set forth in Section 10.1 hereof by the Board of
Directors of the Fund at least annually and may be reviewed and approved more
frequently at the request of either party. The Board may request, and DSC shall
provide, such information as the Board may reasonably require to evaluate the
basis of and approve the compensation.

IX. STANDARD OF CARE

9.1 The Fund acknowledges that DSC shall not be liable for, and in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of the performance of its duties under this Agreement, agrees to
indemnify DSC against, any claim or deficiency arising from the performance of
DSC's duties hereunder, including DSC's costs, counsel fees and expenses
incurred in investigating or defending any such claim or any administrative or
other proceeding, and acknowledges that any risk of loss or damage arising from
the conduct of the Fund's affairs in accordance herewith or in accordance with
Guidelines or instructions given hereunder, shall be borne by the Fund.

11
<PAGE> 12
X. CONTRACTUAL STATUS

10.1 This Agreement shall be executed and become effective on the date
first written above if approved by a vote of the Board of Directors of the Fund,
including an affirmative vote of a majority of the non-interested members of the
Board, cast in person at a meeting called for the purpose of voting on such
approval. It shall continue in effect for an indeterminate period, and is
subject to termination on sixty (60) days notice by either party unless earlier
terminated or amended by agreement among the parties. Compensation under this
Agreement shall require approval by a majority vote of the Board of Directors of
the Fund, including an affirmative vote of the majority of the non-interested
members of the Board cast in person at a meeting called for the purpose of
voting on such approval.

10.2 This Agreement may not be assigned without the approval of the
Fund.

10.3 This Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania.

12
<PAGE> 13
DELAWARE SERVICE COMPANY, INC.

ATTEST:________________________ By:__________________________
Eric E. Miller David K. Downes
Vice President/ Senior Vice President,
Assistant Secretary Chief Administrative Officer, and
Chief Financial Officer

DELAWARE GROUP PREMIUM FUND, INC.

for its EQUITY INCOME SERIES, HIGH YIELD
SERIES, CAPITAL RESERVES SERIES,
MULTIPLE STRATEGY SERIES, GROWTH
SERIES, INTERNATIONAL EQUITY SERIES,
VALUE SERIES, EMERGING GROWTH
SERIES, GLOBAL BOND SERIES,
CONVERTIBLE SECURITIES SERIES, DEVON
SERIES, EMERGING MARKETS SERIES,
QUANTUM SERIES, and STRATEGIC INCOME
SERIES

ATTEST:_________________________ By:_________________________
Michael D. Mabry Wayne A. Stork
Assistant Vice President/ Chairman, President and
Assistant Secretary Chief Executive Officer

<PAGE> 1
EX-99.B9DI

AMENDMENT NO.3 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.
<PAGE> 2
DMC Tax-Free Income Trust - Pennsylvania

Delaware Group Value Fund, Inc.

Value Fund
Retirement Income Fund (New)

Delaware Group Global & International Funds, Inc.

International Equity Fund
Global Bond Fund
Global Assets Fund
Emerging Markets Fund (New)

Delaware Group Equity Funds IV, Inc.

DelCap Fund
Multi-Cap Equity Fund (New)

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.
<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: December 27, 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.B9DII

AMENDMENT NO. 4 TO
SCHEDULE A

TO DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT

Delaware Group Cash Reserve, Inc.

Delaware Group Equity Funds II, Inc.

Decatur Income Fund
Decatur Total Return Fund
Blue Chip Fund (New)
Quantum Fund (New)

Delaware Group Equity Funds I, 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
High-Yield Opportunities 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 Equity Funds V, Inc.

Value Fund
Retirement Income Fund

Delaware Group Global & International Funds, Inc.

International Equity Fund
Global Bond Fund
Global Assets Fund
Emerging Markets Fund

Delaware Group Equity Funds IV, Inc.

DelCap Fund
Capital Appreciation Fund

Delaware Pooled Trust, Inc.

The Defensive Equity Portfolio
The Aggressive Growth Portfolio
The International Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio
The Defensive Equity Utility Portfolio
The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio
The Fixed Income Portfolio
The Limited-Term Maturity Portfolio
The Global Fixed Income Portfolio
The International Fixed Income Portfolio
The High-Yield Bond Portfolio

Delaware Group Premium Fund, Inc.

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: FEBRUARY 24, 1997
--------------------------

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 EQUITY FUNDS II,
INC.
DELAWARE GROUP EQUITY FUNDS I, 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 EQUITY FUNDS V, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL
FUNDS, INC.
DELAWARE GROUP EQUITY FUNDS IV, 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.B9DIII
AMENDMENT NO. 5
TO
SCHEDULE A
OF
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 Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund

Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)

Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund

Delaware Group Equity Funds V, Inc. (formerly Value)
Value Fund
Retirement Income Fund(New)

Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund )

- --------
* 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.
<PAGE> 2
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund

Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund

High-Yield Opportunities Fund (New)

Strategic Income Fund (New)

Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund

Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (New)
The Emerging Markets 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

Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)

DelCap Series

Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
Trend Series
Value Series

2
<PAGE> 3
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.

DMC Tax-Free Income Trust-Pennsylvania
(doing business as Tax-Free Pennsylvania Fund)

Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)

Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)

Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)

Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)

Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)

3
<PAGE> 4
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)

Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)

Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)

Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)

4
<PAGE> 5
Dated as of May 1, 1997

DELAWARE SERVICE COMPANY, INC.

By: /s/ David K. Downes
----------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer

DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, 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
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.

By: /s/ Wayne A. Stork
---------------------------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer

<PAGE> 1
EX-99.B11

Consent of Ernst & Young LLP, Independent Auditors

We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statements of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 20 to the Registration Statement (Form N-1A) (No.
33-14363) of Delaware Group Premium Fund, Inc. of our report dated February 12,
1997, included in the 1996 Annual Report to Shareholders.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
April 24, 1997
<PAGE> 2
EX-99.B11

[Letterhead of Ernst & Young LLP]

To the Shareholders and Board of Directors
Delaware Group Premium Fund, Inc.

We have audited the accompanying statements of net assets and statements of
assets and liabilities of Delaware Group Premium Fund, Inc. (comprising,
respectively, the Equity/Income Series, the High Yield Series, the Capital
Reserves Series, the Multiple Strategy Series, the Money Market Series, the
Growth Series, the International Equity Series, the Emerging Growth Series, the
Value Series and the Global Bond Series) (the "Fund") as of December 31, 1996,
and the related statements of operations, the statements of changes in net
assets, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1996, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Series of Delaware Group Premium Fund, Inc. at December 31,
1996, the results of their operations, the changes in their net assets, and the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.

/s/ Ernst & Young LLP

February 12, 1997

<PAGE> 1
DELAWARE GROUP PREMIUM GROWTH SERIES
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1996
- --------------------------------------------------------------------------------

Average Annual Compounded Rate of Return:

n
P(1 + T) = ERV

FIVE
YEARS
-----

$1000(1 - T) = $1,627.17

T = 10.23%

<PAGE> 2

DELAWARE GROUP PREMIUM VALUE SERIES
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1996
- --------------------------------------------------------------------------------

Average Annual Compounded Rate of Return:

n
P(1 + T) = ERV

THREE
YEARS
-----

$1000(1 - T) = $1,529.56

T = 15.22%

<PAGE> 3

DELAWARE GROUP PREMIUM TREND SERIES
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1996
- --------------------------------------------------------------------------------

Average Annual Compounded Rate of Return:

n
P(1 + T) = ERV

THREE
YEARS
-----

$1000(1 - T) = $1,539.14

T = 15.46%

<PAGE> 4

DELAWARE GROUP PREMIUM GROWTH SERIES
TOTAL RETURN PERFORMANCE
FIVE YEARS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
Initial Investment $ 1,000.00
Beginning OFFER $ 11.03
Initial Shares 90.662
</TABLE>

Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1992 90.662 $ 0.130 1.056 91.718
- ---- ------ ---------- ----- -------
1993 91.718 $ 0.150 1.239 92.957
- ---- ------ ---------- ----- -------
1994 92.957 $ 0.060 0.449 93.406
- ---- ------ ---------- ----- -------
1995 93.406 $ 0.070 0.555 93.961
- ---- ------ ---------- ----- -------
1996 93.961 $ 1.255 8.441 102.402
- ---- ------ ---------- ----- -------
</TABLE>

<S> <C>
Ending Shares 102.402
Ending NAV x $15.89
----------
Investment Return $1,627.17
</TABLE>

Total Return Performance
- ------------------------
<S> <C>
Investment Return $1,627.17
Less Initial Investment $1,000.00
-----------
$627.17 / $1,000.00 x 100

Total Return: 62.72%

</TABLE>

<PAGE> 5

DELAWARE GROUP PREMIUM VALUE SERIES
TOTAL RETURN PERFORMANCE
THREE YEARS
- --------------------------------------------------------------------------------

<S> <C>
Initial Investment $1,000.00
Beginning OFFER $10.21
Initial Shares 97.943
</TABLE>

Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1994 97.943 $ 0.000 0.000 97.943
- ---- ------- ---------- ----- -------
1995 97.943 $ 0.220 2.150 100.093
- ---- ------- ---------- ----- -------
1996 100.093 $ 0.630 5.394 105.487
- ---- ------- ---------- ----- -------

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Ending Shares 105.487
Ending NAV x $ 14.50
----------
Investment Return $1,529.56
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Total Return Performance
- ------------------------
Investment Return $1,529.56
Less Initial Investment $1,000.00
----------
$529.56 / $1,000.00 x 100

Total Return: 52.96%

</TABLE>

<PAGE> 6

DELAWARE GROUP PREMIUM TREND SERIES
TOTAL RETURN PERFORMANCE
THREE YEARS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $10.20
Initial Shares 98.039
</TABLE>

<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1994 98.039 $ 0.000 0.000 98.039
- ---- ------ ---------- ----- -------
1995 98.039 $ 0.090 0.867 98.906
- ---- ------ ---------- ----- -------
1996 98.906 $ 0.890 6.877 105.783
- ---- ------ ---------- ----- -------

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Ending Shares 105.783
Ending NAV x $14.55
---------
Investment Return $1,539.14
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Total Return Performance
- ------------------------
Investment Return $1,539.14
Less Initial Investment $1,000.00
----------
$539.14 / $1,000.00 x 100

Total Return: 53.91%
</TABLE>

<PAGE> 7

DELAWARE GROUP PREMIUM GLOBAL BOND SERIES
TOTAL RETURN PERFORMANCE
THREE MONTHS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $10.55
Initial Shares 94.787
</TABLE>

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Ending Shares 95.570
Ending NAV x $10.96
---------
Investment Return $1,047.45

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Total Return Performance
- ------------------------
Investment Return $1,047.45
Less Initial Investment $1,000.00
----------
$47.45 / $1,000.00 x 100

Total Return: 4.75%
</TABLE>

<PAGE> 8

DELAWARE GROUP PREMIUM GLOBAL BOND SERIES
TOTAL RETURN PERFORMANCE
SIX MONTHS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $10.14
Initial Shares 98.619
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Ending Shares 100.295
Ending NAV x $10.96
----------
Investment Return $1,099.23
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Total Return Performance
- ------------------------
Investment Return $1,099.23
Less Initial Investment $1,000.00
----------
$99.23 / $1,000.00 x 100

Total Return: 9.92%
</TABLE>

<PAGE> 9

DELAWARE GROUP PREMIUM GLOBAL BOND SERIES
TOTAL RETURN PERFORMANCE
INCEPTION
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $10.00
Initial Shares 100.000
</TABLE>

Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1996 100.000 $ 0.210 2.000 102.000
- ---- ------- ---------- ----- -------

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Ending Shares 102.000
Ending NAV x $10.96
----------
Investment Return $1,117.92
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
Total Return Performance
- ------------------------
Investment Return $1,117.92
Less Initial Investment $1,000.00
---------
$117.92 / $1,000.00 x 100

Total Return: 11.79%
</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELEWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> EQUITY INCOME SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 150,070,287
<INVESTMENTS-AT-VALUE> 171,547,771
<RECEIVABLES> 592,084
<ASSETS-OTHER> 1,950
<OTHER-ITEMS-ASSETS> 15,710
<TOTAL-ASSETS> 172,157,515
<PAYABLE-FOR-SECURITIES> 5,355,926
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 155,012
<TOTAL-LIABILITIES> 5,510,938
<SENIOR-EQUITY> 104,268
<PAID-IN-CAPITAL-COMMON> 129,692,088
<SHARES-COMMON-STOCK> 10,426,800
<SHARES-COMMON-PRIOR> 7,348,563
<ACCUMULATED-NII-CURRENT> 761,574
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14,611,163
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,477,484
<NET-ASSETS> 166,646,577
<DIVIDEND-INCOME> 4,094,834
<INTEREST-INCOME> 169,527
<OTHER-INCOME> 0
<EXPENSES-NET> 858,560
<NET-INVESTMENT-INCOME> 3,405,801
<REALIZED-GAINS-CURRENT> 14,743,863
<APPREC-INCREASE-CURRENT> 6,445,954
<NET-CHANGE-FROM-OPS> 24,595,618
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,496,319
<DISTRIBUTIONS-OF-GAINS> 8,895,014
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,486,920
<NUMBER-OF-SHARES-REDEEMED> 1,307,916
<SHARES-REINVESTED> 899,233
<NET-CHANGE-IN-ASSETS> 57,643,121
<ACCUMULATED-NII-PRIOR> 852,092
<ACCUMULATED-GAINS-PRIOR> 8,762,314
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 765,301
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 858,560
<AVERAGE-NET-ASSETS> 127,657,350
<PER-SHARE-NAV-BEGIN> 14.830
<PER-SHARE-NII> 0.377
<PER-SHARE-GAIN-APPREC> 2.398
<PER-SHARE-DIVIDEND> 0.420
<PER-SHARE-DISTRIBUTIONS> 1.205
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.980
<EXPENSE-RATIO> 0.670
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELEWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> HIGH YIELD SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 63,457,059
<INVESTMENTS-AT-VALUE> 66,048,735
<RECEIVABLES> 1,757,156
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 10,684
<TOTAL-ASSETS> 67,816,575
<PAYABLE-FOR-SECURITIES> 104,188
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 47,710
<TOTAL-LIABILITIES> 151,898
<SENIOR-EQUITY> 73,798
<PAID-IN-CAPITAL-COMMON> 68,096,252
<SHARES-COMMON-STOCK> 7,379,775
<SHARES-COMMON-PRIOR> 6,330,569
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,097,048)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,591,675
<NET-ASSETS> 67,664,677
<DIVIDEND-INCOME> 45,043
<INTEREST-INCOME> 5,930,021
<OTHER-INCOME> 0
<EXPENSES-NET> 405,907
<NET-INVESTMENT-INCOME> 5,569,157
<REALIZED-GAINS-CURRENT> 684,792
<APPREC-INCREASE-CURRENT> 953,156
<NET-CHANGE-FROM-OPS> 7,207,105
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,569,157
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,940,624
<NUMBER-OF-SHARES-REDEEMED> 1,513,036
<SHARES-REINVESTED> 621,618
<NET-CHANGE-IN-ASSETS> 11,059,723
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3,781,840)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 348,693
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 405,907
<AVERAGE-NET-ASSETS> 58,378,070
<PER-SHARE-NAV-BEGIN> 8.940
<PER-SHARE-NII> 0.853
<PER-SHARE-GAIN-APPREC> 0.230
<PER-SHARE-DIVIDEND> 0.853
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.170
<EXPENSE-RATIO> 0.700
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELEWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 003
<NAME>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 27,818,334
<INVESTMENTS-AT-VALUE> 28,033,036
<RECEIVABLES> 289,562
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,322,598
<PAYABLE-FOR-SECURITIES> 326,122
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 228,863
<TOTAL-LIABILITIES> 554,985
<SENIOR-EQUITY> 28,647
<PAID-IN-CAPITAL-COMMON> 29,146,515
<SHARES-COMMON-STOCK> 2,864,716
<SHARES-COMMON-PRIOR> 2,812,927
<ACCUMULATED-NII-CURRENT> 468
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,622,719)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 214,702
<NET-ASSETS> 27,767,613
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,968,128
<OTHER-INCOME> 2,167
<EXPENSES-NET> 197,471
<NET-INVESTMENT-INCOME> 1,772,824
<REALIZED-GAINS-CURRENT> (292,042)
<APPREC-INCREASE-CURRENT> (383,633)
<NET-CHANGE-FROM-OPS> 1,097,149
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,772,356
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 526,966
<NUMBER-OF-SHARES-REDEEMED> 658,016
<SHARES-REINVESTED> 182,839
<NET-CHANGE-IN-ASSETS> (167,126)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,330,677)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 164,296
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 197,471
<AVERAGE-NET-ASSETS> 27,589,658
<PER-SHARE-NAV-BEGIN> 9.930
<PER-SHARE-NII> 0.622
<PER-SHARE-GAIN-APPREC> (0.240)
<PER-SHARE-DIVIDEND> 0.622
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.690
<EXPENSE-RATIO> 0.720
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 004
<NAME> MULTIPLE STRATEGY SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 66,072,170
<INVESTMENTS-AT-VALUE> 76,712,170
<RECEIVABLES> 343,372
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 7,942
<TOTAL-ASSETS> 77,064,055
<PAYABLE-FOR-SECURITIES> 1,554,286
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 107,662
<TOTAL-LIABILITIES> 1,661,948
<SENIOR-EQUITY> 45,326
<PAID-IN-CAPITAL-COMMON> 57,984,270
<SHARES-COMMON-STOCK> 4,532,563
<SHARES-COMMON-PRIOR> 4,079,570
<ACCUMULATED-NII-CURRENT> 1,854,573
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,877,368
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,640,570
<NET-ASSETS> 75,402,107
<DIVIDEND-INCOME> 1,087,267
<INTEREST-INCOME> 1,763,714
<OTHER-INCOME> 0
<EXPENSES-NET> 454,691
<NET-INVESTMENT-INCOME> 2,396,290
<REALIZED-GAINS-CURRENT> 4,893,415
<APPREC-INCREASE-CURRENT> 2,885,535
<NET-CHANGE-FROM-OPS> 10,175,240
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,087,278
<DISTRIBUTIONS-OF-GAINS> 2,685,289
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 650,944
<NUMBER-OF-SHARES-REDEEMED> 524,572
<SHARES-REINVESTED> 326,621
<NET-CHANGE-IN-ASSETS> 12,186,931
<ACCUMULATED-NII-PRIOR> 1,545,561
<ACCUMULATED-GAINS-PRIOR> 2,669,241
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 402,509
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 454,691
<AVERAGE-NET-ASSETS> 67,360,332
<PER-SHARE-NAV-BEGIN> 15.500
<PER-SHARE-NII> 0.530
<PER-SHARE-GAIN-APPREC> 1.765
<PER-SHARE-DIVIDEND> 0.500
<PER-SHARE-DISTRIBUTIONS> 0.655
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.640
<EXPENSE-RATIO> 0.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 005
<NAME> MONEY MARKET SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 26,611,388
<INVESTMENTS-AT-VALUE> 26,611,388
<RECEIVABLES> 67,942
<ASSETS-OTHER> 245
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,679,575
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 201,021
<TOTAL-LIABILITIES> 201,021
<SENIOR-EQUITY> 26,479
<PAID-IN-CAPITAL-COMMON> 26,452,075
<SHARES-COMMON-STOCK> 2,647,855
<SHARES-COMMON-PRIOR> 1,633,818
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 26,478,554
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,210,520
<OTHER-INCOME> 0
<EXPENSES-NET> 136,553
<NET-INVESTMENT-INCOME> 1,073,967
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,073,967
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,073,967
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,752,644
<NUMBER-OF-SHARES-REDEEMED> 4,846,004
<SHARES-REINVESTED> 107,397
<NET-CHANGE-IN-ASSETS> 10,140,372
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 110,155
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 136,553
<AVERAGE-NET-ASSETS> 22,271,443
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.482
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.482
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 006
<NAME> GROWTH SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 65,917,902
<INVESTMENTS-AT-VALUE> 79,369,197
<RECEIVABLES> 826,747
<ASSETS-OTHER> 1,368
<OTHER-ITEMS-ASSETS> 164,017
<TOTAL-ASSETS> 80,361,329
<PAYABLE-FOR-SECURITIES> 367,822
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,031
<TOTAL-LIABILITIES> 460,853
<SENIOR-EQUITY> 50,296
<PAID-IN-CAPITAL-COMMON> 61,940,675
<SHARES-COMMON-STOCK> 5,029,575
<SHARES-COMMON-PRIOR> 3,840,882
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,458,210
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,451,295
<NET-ASSETS> 79,900,476
<DIVIDEND-INCOME> 132,136
<INTEREST-INCOME> 335,492
<OTHER-INCOME> 0
<EXPENSES-NET> 539,390
<NET-INVESTMENT-INCOME> (71,762)
<REALIZED-GAINS-CURRENT> 4,627,563
<APPREC-INCREASE-CURRENT> 3,704,225
<NET-CHANGE-FROM-OPS> 8,260,026
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 270,847
<DISTRIBUTIONS-OF-GAINS> 4,585,059
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,535,822
<NUMBER-OF-SHARES-REDEEMED> 694,724
<SHARES-REINVESTED> 347,595
<NET-CHANGE-IN-ASSETS> 21,777,887
<ACCUMULATED-NII-PRIOR> 266,670
<ACCUMULATED-GAINS-PRIOR> 4,491,645
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 505,739
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 553,725
<AVERAGE-NET-ASSETS> 67,658,882
<PER-SHARE-NAV-BEGIN> 15.130
<PER-SHARE-NII> (0.015)
<PER-SHARE-GAIN-APPREC> 2.030
<PER-SHARE-DIVIDEND> 0.070
<PER-SHARE-DISTRIBUTIONS> 1.185
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.890
<EXPENSE-RATIO> 0.800
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 007
<NAME> INTERNATIONAL EQUITY SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 111,149,841
<INVESTMENTS-AT-VALUE> 130,758,688
<RECEIVABLES> 642,742
<ASSETS-OTHER> 535,137
<OTHER-ITEMS-ASSETS> 1,130,427
<TOTAL-ASSETS> 133,066,944
<PAYABLE-FOR-SECURITIES> 1,330,815
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 308,462
<TOTAL-LIABILITIES> 1,639,277
<SENIOR-EQUITY> 86,968
<PAID-IN-CAPITAL-COMMON> 107,217,309
<SHARES-COMMON-STOCK> 8,696,840
<SHARES-COMMON-PRIOR> 6,217,817
<ACCUMULATED-NII-CURRENT> 4,557,033
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (546,213)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,112,620
<NET-ASSETS> 131,427,717
<DIVIDEND-INCOME> 3,190,237
<INTEREST-INCOME> 391,569
<OTHER-INCOME> 0
<EXPENSES-NET> 818,276
<NET-INVESTMENT-INCOME> 2,763,530
<REALIZED-GAINS-CURRENT> 1,560,830
<APPREC-INCREASE-CURRENT> 14,667,391
<NET-CHANGE-FROM-OPS> 18,991,751
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,695,399
<DISTRIBUTIONS-OF-GAINS> 725,191
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,717,039
<NUMBER-OF-SHARES-REDEEMED> 503,590
<SHARES-REINVESTED> 265,574
<NET-CHANGE-IN-ASSETS> 49,879,678
<ACCUMULATED-NII-PRIOR> 2,405,240
<ACCUMULATED-GAINS-PRIOR> 701,810
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 768,150
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 936,034
<AVERAGE-NET-ASSETS> 102,724,572
<PER-SHARE-NAV-BEGIN> 13.120
<PER-SHARE-NII> 0.557
<PER-SHARE-GAIN-APPREC> 1.966
<PER-SHARE-DIVIDEND> 0.420
<PER-SHARE-DISTRIBUTIONS> 0.113
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.110
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 008
<NAME> VALUE SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 20,700,491
<INVESTMENTS-AT-VALUE> 23,656,151
<RECEIVABLES> 41,897
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 14,511
<TOTAL-ASSETS> 23,712,559
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,819
<TOTAL-LIABILITIES> 29,819
<SENIOR-EQUITY> 16,335
<PAID-IN-CAPITAL-COMMON> 18,843,714
<SHARES-COMMON-STOCK> 7,633,488
<SHARES-COMMON-PRIOR> 956,504
<ACCUMULATED-NII-CURRENT> 200,162
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,666,869
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,955,660
<NET-ASSETS> 23,682,740
<DIVIDEND-INCOME> 255,415
<INTEREST-INCOME> 69,542
<OTHER-INCOME> 0
<EXPENSES-NET> 124,433
<NET-INVESTMENT-INCOME> 200,524
<REALIZED-GAINS-CURRENT> 1,671,243
<APPREC-INCREASE-CURRENT> 1,737,511
<NET-CHANGE-FROM-OPS> 3,609,278
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 182,035
<DISTRIBUTIONS-OF-GAINS> 455,088
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 795,391
<NUMBER-OF-SHARES-REDEEMED> 172,909
<SHARES-REINVESTED> 54,502
<NET-CHANGE-IN-ASSETS> 11,753,430
<ACCUMULATED-NII-PRIOR> 181,687
<ACCUMULATED-GAINS-PRIOR> 450,700
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 009
<NAME> EMERGING GROWTH SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
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<SHARES-COMMON-PRIOR> 1,462,978
<ACCUMULATED-NII-CURRENT> 180,621
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<ACCUMULATED-NET-GAINS> 655,476
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<NET-ASSETS> 56,423,493
<DIVIDEND-INCOME> 134,603
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<NET-INVESTMENT-INCOME> 185,659
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<SHARES-REINVESTED> 101,808
<NET-CHANGE-IN-ASSETS> 35,913,829
<ACCUMULATED-NII-PRIOR> 126,741
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<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 010
<NAME> GLOBAL BOND SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 8,516,272
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<TOTAL-LIABILITIES> 40,166
<SENIOR-EQUITY> 8,644
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<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 9,470,818
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 259,357
<OTHER-INCOME> 0
<EXPENSES-NET> 28,171
<NET-INVESTMENT-INCOME> 231,186
<REALIZED-GAINS-CURRENT> 83,530
<APPREC-INCREASE-CURRENT> 264,767
<NET-CHANGE-FROM-OPS> 579,483
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 119,481
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 876,461
<NUMBER-OF-SHARES-REDEEMED> 23,197
<SHARES-REINVESTED> 11,197
<NET-CHANGE-IN-ASSETS> 9,470,818
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.339
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<PER-SHARE-NAV-END> 10.960
<EXPENSE-RATIO> 0.800
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>