DELAWARE GROUP PREMIUM FUND INC, 485BPOS, 1998-04-27

DELAWARE GROUP PREMIUM FUND INC
485BPOS, 1998-04-27

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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. 24 [X]
--
AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 24 [X]
--

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

1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (215) 751-2923
--------------

George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)

Approximate Date of Public Offering: May 1, 1998
It is proposed that this filing will become effective: -----------

___ immediately upon filing pursuant to paragraph (b)
_X_ on May 1, 1998 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

If appropriate:

___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment

Title of Securities Being Registered
------------------------------------
Decatur Total Return Series, Delchester Series, Capital Reserves Series,
Cash Reserve Series, DelCap Series, Delaware Series,
International Equity Series, Small Cap Value Series, Trend Series,
Global Bond Series, Strategic Income Series, Devon Series,
Emerging Markets Series, Convertible Securities Series,
Social Awareness Series, REIT Series

<PAGE>

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

This Post-Effective Amendment No. 24 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

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CROSS-REFERENCE SHEET

PART A
<TABLE>
<CAPTION>

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

2 Synopsis ........................................................... Synopsis

3 Condensed Financial Information .................................... N/A

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>

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 Objective
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
Agreement; Officers and
Directors; General
Information

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
Agreement

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

23 Financial Statements ............................................... N/A

</TABLE>

<PAGE>

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>

PROSPECTUS
MAY 1, 1998

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 16 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, 1998 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 ("SEC"). 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 SEC
also maintains a Web site (http://www.sec.gov) that contains Part B, material
incorporated by reference into the Fund's registration statement, and other
information regarding registrants that electronically file with the SEC. 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 SERIES 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 THE PRINCIPAL AMOUNT INVESTED. SHARES OF
THE SERIES ARE NOT BANK OR CREDIT UNION DEPOSITS.

-1-

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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
has the same objective and investment disciplines as Decatur Total Return
Fund of Delaware Group Equity Funds II, Inc., a separate fund in the Delaware
Investments family, 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 has the same objective and investment disciplines as Delchester Fund
of Delaware Group Income Funds, Inc., a separate fund in the Delaware
Investments family. 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 has the same
objective and investment disciplines as Delaware Group Cash Reserve, Inc., a
separate fund in the Delaware Investments family. 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 has the same objective and investment
disciplines as DelCap Fund of Delaware Group Equity Funds IV, Inc., a
separate fund in the Delaware Investments family, 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 has the same
objective and investment disciplines as Delaware Fund of Delaware Group
Equity Funds I, Inc., a separate fund in the Delaware Investments family, 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 fund in the
Delaware Investments family, 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.

Small Cap Value Series-seeks capital appreciation by investing primarily
in small cap common stocks whose market value appears low relative to their
underlying value or future earnings and growth

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<PAGE>

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, formerly known as Value Series, has the same objective and
investment disciplines as Small Cap Value Fund of Delaware Group Equity Funds V,
Inc., a separate fund in the Delaware Investments family.

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
has the same objective and investment disciplines as Trend Fund of Delaware
Group Equity Funds III, Inc., a separate fund in the Delaware Investments
family.

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 fund in the Delaware
Investments family.

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 fund in the Delaware Investments
family.

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 fund in the Delaware Investments family.

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 fund in the Delaware Investments
family.

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

-3-

<PAGE>
common stock, U.S. government securities, non-convertible fixed-income
securities and money market securities.

Social Awareness 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, formerly known as
Quantum Series, has the same objective and investment disciplines as Social
Awareness Fund of Delaware Group Equity Funds II, Inc., a separate fund in
the Delaware Investments family.

REIT Series-seeks to achieve maximum long-term total return. Capital
appreciation is a secondary objective. It seeks to achieve its objectives by
investing in securities of companies primarily engaged in the real estate
industry. This Series has the same objective and investment discipline as The
Real Estate Investment Trust Portfolio and The Real Estate Investment Trust
Portfolio II of Delaware Pooled Trust, Inc., separate funds in the Delaware
Investments family, which also invest in securities of companies primarily
engaged in the real estate industry.

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<PAGE>

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 Series..................................................
DelCap Series........................................................
Delaware Series......................................................
International Equity Series..........................................
Small Cap Value Series...............................................
Trend Series.........................................................
Global Bond Series...................................................
Strategic Income Series..............................................
Devon Series.........................................................
Emerging Markets Series..............................................
Convertible Securities Series........................................
Social Awareness Series..............................................
REIT 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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SUMMARY INFORMATION

Investment Objectives and Policies
Each of the Fund's 16 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.

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 13 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 risk and opportunity considerations 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, Small Cap Value, Trend, Global Bond,
Strategic Income, Devon, Emerging Markets, Convertible Securities and Social
Awareness and REIT Series also may engage in certain hedging transactions
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
Emerging Markets Series may invest up to 35% of its net assets in high-yield,
high risk fixed income securities, and greater risks may be involved in an
investment in

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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, Emerging Markets and REIT 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, U.S. government
securities 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.

9. The REIT Series concentrates its investments in the real estate
industry, so its net asset value can be expected to fluctuate in light of
factors affecting that industry and may fluctuate more widely than a
portfolio that invests in a broader range of industries. By investing
primarily in securities of REITs, the Series is also subject to interest rate
risk.

Investment Managers and Sub-Advisers
Delaware Management Company ("Delaware Management") furnishes investment
management services to the Decatur Total Return, Delchester, Capital
Reserves, Cash Reserve, DelCap, Delaware, Small Cap Value, Trend, Strategic
Income, Devon, Convertible Securities, Social Awareness and REIT Series,
subject to the supervision and direction of the Fund's Board of Directors.
See Management of the Fund for information about Delaware Management and the
fees payable under each Series' Investment Management Agreement.

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. See Management of the Fund for information about
Delaware International and the fees payable under each Series' Investment
Management Agreement.

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<PAGE>

Delaware International also serves as Sub-Adviser to a portion of the
Strategic Income Series' portfolio. Vantage Global Advisors, Inc. ("Vantage")
serves as Sub-Adviser to Social Awareness Series. Lincoln Investment
Management, Inc. ("Lincoln") serves as Sub-Adviser to REIT Series. See
Management of the Fund for information about the Sub-Advisers and the fees
payable under the Sub-Advisory Agreements.

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.

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, Emerging Markets and REIT Series, each Series operates as a
diversified fund as defined by the Investment Company Act of 1940 (the "1940
Act"). Global Bond, Emerging Markets and REIT Series operate as
nondiversified funds as defined by the 1940 Act.

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<PAGE>
________________________________________________________________________________

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, 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 REIT Series were sold to investors prior to the date of this Prospectus;
consequently, no financial highlights are presented for this Series.

________________________________________________________________________________

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Decatur Total Return Series
---------------------------------------------------------------------------------------------
7/28/88(1)
Year Ended through
2/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $15.980 $14.830 $11.480 $12.510 $11.220 $10.750 $9.240 $11.400 $10.160 $10.000

INCOME FROM INVESTMENT OPERATIONS:
Net investment income................. 0.324 0.377 0.416 0.412 0.434 0.416 0.450 0.449 0.281 0.093
Net realized and unrealized gain (loss)
on investments...................... 4.216 2.398 3.574 (0.422) 1.266 0.504 1.550 (1.919) 1.034 0.067

Total from investment operations...... 4.540 2.775 3.990 (0.010) 1.700 0.920 2.000 (1.470) 1.315 0.160

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income.. (0.370) (0.420) (0.430) (0.420) (0.410) (0.450) (0.490) (0.560) (0.075) none
Distributions from net realized gain
on investment transaction........... (1.350) (1.205) (0.210) (0.600) none none none (0.130) none none
Total dividends and distributions..... (1.720) (1.625) (0.640) (1.020) (0.410) (0.450) (0.490) (0.690) (0.075) none
Net asset value, end of period........ $18.800 $15.980 $14.830 $11.480 $12.510 $11.220 $10.750 $ 9.240 $11.400 $10.160
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return(2)....................... 31.00% 20.72% 36.12% (0.20%) 15.45%(3) 8.82%(3)22.32% (13.31%) 13.04% 3.77%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted)....................... $401,402 $166,647 $109,003 $72,725 $65,519 $38,278 $34,840 $29,598 $12,959 $1,873
Ratio of expenses to average net
assets.............................. 0.71% 0.67% 0.69% 0.71% 0.75% 0.79% 0.85% 0.96% 1.31% 2.00%
Ratio of expenses to average net assets
prior to expense limitation......... 0.71% 0.67% 0.69% 0.71% 0.76% 0.81% 0.85% 0.96% 1.31% 2.00%
Ratio of net investment income to
average net assets.................. 2.02% 2.66% 3.24% 3.63% 3.95% 3.86% 4.46% 5.80% 5.06% 6.40%
Ratio of net investment income to average
net assets prior to expense
limitation.......................... 2.02% 2.66% 3.24% 3.63% 3.94% 3.84% 4.46% 5.80% 5.06% 6.40%
Portfolio turnover.................... 54% 81% 85% 91% 67% 72% 79% 34% 26% --

Average commission rate paid(4)....... $0.0600 $0.0600 N/A N/A N/A N/A N/A N/A N/A N/A

</TABLE>

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(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.
(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) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

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<TABLE>
<CAPTION>
Delchester Series
-------------------------------------------------------------
Year Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ................................ $9.170 $8.940 $8.540 $9.770 $9.290

INCOME FROM INVESTMENT OPERATIONS
Net investment income ................... 0.863 0.853 0.872 0.962 0.976
Net realized and unrealized gain
(loss) on investments ................. 0.332 0.230 0.400 (1.230) 0.480
Total from investment
operations ........................... 1.195 1.083 1.272 (0.268) 1.456

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income ................................ (0.855) (0.853) (0.872) (0.962) (0.976)
Distributions from net realized
gain on investment transactions ....... none none none none none
Total dividends and distributions ....... (0.855) (0.853) (0.872) (0.962) (0.976)
Net asset value, end of period .......... $9.510 $9.170 $8.940 $8.540 $9.770
====== ====== ====== ====== ======
Total return(2) ......................... 3.63% 12.79% 15.50% (2.87%) 16.36%(3)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) . $98,875 $67,665 $56,605 $43,686 $34,915
Ratio of expenses to average net assets . 0.70% 0.70% 0.69% 0.72% 0.80%
Ratio of expenses to average net assets
prior to expense limitation ........... 0.70% 0.70% 0.69% 0.72% 0.82%
Ratio of net investment income to
average net assets .................... 9.24% 9.54% 9.87% 10.56% 10.05%
Ratio of net investment income to average
net assets prior to expense limitation 9.24% 9.54% 9.87% 10.56% 10.03%
Portfolio turnover ...................... 121% 93% 74% 47% 43%
</TABLE>
[RESTUBBED FROM TABLE ABOVE]
<TABLE>
<CAPTION>
Delchester 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 ................................ $9.130 $7.480 $9.200 $9.860 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income ................... 1.022 1.032 1.114 1.085 0.475
Net realized and unrealized gain
(loss) on investments ................. 0.160 1.650 (1.720) (0.635) (0.140)
Total from investment
operations ........................... 1.182 2.682 (0.606) 0.450 0.335

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment
income ................................ (1.022) (1.032) (1.114) (1.085) (0.475)
Distributions from net realized
gain on investment transactions ....... none none none (0.025) none
Total dividends and distributions ....... (1.022) (1.032) (1.114) (1.110) (0.475)
Net asset value, end of period .......... $9.290 $9.130 $7.480 $9.200 $9.860
====== ====== ====== ====== ======

Total return(2) ......................... 13.44%(3) 37.53%(3) (7.13%)(3) 4.62%(3) 8.15%(3)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) . $$11,311 $5,918 $5,092 $4,427 $2,425
Ratio of expenses to average net assets . 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation ........... 0.94% 1.06% 1.17% 1.50% 1.21%
Ratio of net investment income to
average net assets .................... 10.93% 12.05% 13.30% 11.21% 11.00%
Ratio of net investment income to average
net assets prior to expense limitation 10.79% 11.80% 12.93% 10.50% 10.58%
Portfolio turnover ...................... 73% 70% 115% 19% 31%
</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.
(2) Total return does not reflect expenses that apply to the Separate Accounts
or to the related insurance policies and inclusion of these charges would
reduce total return figures for all periods shown.
(3) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.

-11-
<PAGE>

<TABLE>
<CAPTION>
Capital Reserves Series
----------------------------------------------------------------

Year Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $9.690 $9.930 $9.300 $10.260 $10.200

INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................ 0.613 0.623 0.643 0.636 0.636
Net realized and unrealized gain (loss) on investments 0.100 (0.240) 0.630 (0.905) 0.145
Total from investment operations ..................... 0.713 0.383 1.273 (0.269) 0.781

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income ................. (0.613) (0.623) (0.643) (0.636) (0.636)
Distributions from net realized gain
on investment transactions ......................... none none none (0.055) (0.085)
Total dividends and distributions .................... (0.613) (0.623) (0.643) (0.691) (0.721)
Net asset value, end of period ....................... $9.790 $9.690 $9.930 $9.300 $10.260
====== ====== ====== ====== =======

Total return(2) ...................................... 7.60% 4.05% 14.08% (2.68%) 7.85%(3)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) .............. $29,177 $27,768 $27,935 $25,975 $24,173
Ratio of expenses to average net assets .............. 0.75% 0.72% 0.71% 0.74% 0.80%
Ratio of expenses to average net assets
prior to expense limitation ........................ 0.75% 0.72% 0.71% 0.74% 0.85%
Ratio of net investment income to
average net assets ................................. 6.31% 6.43% 6.64% 6.57% 6.20%
Ratio of net investment income to average
net assets prior to expense limitation ............. 6.31% 6.43% 6.64% 6.57% 6.15%
Portfolio turnover ................................... 120% 122% 145% 219% 198%
</TABLE>
[RESTUBBED FORM TABLE ABOVE]
<TABLE>
<CAPTION>
Capital Reserves Series
-------------------------------------------------------------------
7/28/88(1)
Year Ended through
12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $10.230 $10.040 $9.980 $9.970 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................ 0.647 0.669 0.733 0.840 0.329
Net realized and unrealized gain (loss) on investments 0.060 0.190 0.060 0.010 (0.030)
Total from investment operations ..................... 0.707 0.859 0.793 0.850 0.299

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income ................. (0.647) (0.669) (0.733) (0.840) (0.329)
Distributions from net realized gain
on investment transactions ......................... (0.090) none none none none
Total dividends and distributions .................... (0.737) (0.669) (0.733) (0.840) (0.329)
Net asset value, end of period ....................... $10.200 $10.230 $10.040 $9.980 $9.970
======= ======= ======= ====== ======

Total return(2) ...................................... 7.20%(3) 8.85%(3) 8.23%(3) 8.86%(3) 7.20%(3)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) .............. $9,790 $4,392 $4,093 $2,575 $1,784
Ratio of expenses to average net assets .............. 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation ........................ 0.98% 1.15% 1.49% 1.80% 1.26%
Ratio of net investment income to
average net assets ................................. 6.39% 6.62% 7.32% 8.41% 7.63%
Ratio of net investment income to average
net assets prior to expense limitation ............. 6.21% 6.27% 6.62% 7.41% 7.16%
Portfolio turnover ................................... 241% 95% 38% -- 0.43%
</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.
(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.

-12-

<PAGE>

<TABLE>
<CAPTION>
Cash Reserve Series
--------------------------------------------------------------

INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................ 0.497 0.482 0.535 0.361 0.245
Net realized and unrealized gain (loss) on investments none none none none none
Total from investment operations ..................... 0.497 0.482 0.535 0.361 0.245

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income ................. (0.497) (0.535) (0.361) (0.245) (0.320)
Distributions from net realized gain
on investment transactions ......................... none none none none none
Total dividends and distributions .................... (0.497 (0.482) (0.535) (0.361) (0.245)
Net asset value, end of period ....................... $10.000 $10.000 $10.000 $10.000 $10.000
======= ======= ======= ======= =======

Total return(2) ...................................... 5.10% 4.93% 5.48% 3.68% 2.48%(3)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) .............. $30,711 $26,479 $16,338 $20,125 $10,245
Ratio of expenses to average net assets .............. 0.64% 0.61% 0.62% 0.66% 0.80%
Ratio of expenses to average net assets
prior to expense limitation ........................ 0.64% 0.61% 0.62% 0.66% 0.86%
Ratio of net investment income to
average net assets ................................. 4.98% 4.82% 5.35% 3.79% 2.44%
Ratio of net investment income to average
net assets prior to expense limitation ............. 4.98% 4.82% 5.35% 3.79% 2.38%
</TABLE>
[RESTUBBED FROM TABLE ABOVE]
<TABLE>
<CAPTION>
Cash Reserve Series
-------------------------------------------------------------------
7/28/88(1)
Year Ended through
12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $10.000 $10.000 $10.000 $10.000 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................ 0.320 0.544 0.731 0.829 0.320
Net realized and unrealized gain (loss) on investments none none none none none
Total from investment operations ..................... 0.320 0.544 0.731 0.829 0.320

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income ................. (0.544) (0.731) (0.829) (0.320)
Distributions from net realized gain
on investment transactions ......................... none none none none none
Total dividends and distributions .................... (0.320) (0.544) (0.731) (0.829) (0.320)
Net asset value, end of period ....................... $10.000 $10.000 $10.000 $10.000 $10.000
======= ======= ======= ======= =======

Total return(2) ...................................... 3.25%(3) 5.58%(3) 7.56%(3) 8.61%(3) 7.70%(3)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) .............. $7,774 $7,768 $8,174 $2,109 $932
Ratio of expenses to average net assets .............. 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation ........................ 0.85% 0.99% 0.99% 2.01% 2.11%
Ratio of net investment income to
average net assets ................................. 3.21% 5.45% 7.25% 8.26% 7.50%
Ratio of net investment income to average
net assets prior to expense limitation ............. 3.16% 5.26% 7.05% 7.05% 6.19%
</TABLE>

-13-
<PAGE>

<TABLE>
<CAPTION>
DelCap Series
----------------------------------------------------------
Year Ended
12/31/97 12/31/96 12/31/95 12/31/94
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ................. $15.890 $15.130 $11.750 $12.240

INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(2) ...................... (0.010) (0.015) 0.072 0.069
Net realized and unrealized gain (loss) on investments 2.260 2.030 3.378 (0.499)
Total from investment operations ..................... 2.250 2.015 3.450 (0.430)

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income ................. none (0.070) (0.070) (0.060)
Distributions from net realized gain
on investment transactions ......................... (0.870) (1.185) none none
Total dividends and distributions .................... (0.870) (1.255) (0.070) (0.060)
Net asset value, end of period ....................... $17.270 $15.890 $15.130 $11.750
======= ======= ======= =======

Total return(3) ...................................... 14.90%(4) 14.46%(4) 29.53%(4) (3.54%)(4)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) .............. $110,455 $79,900 $58,123 $39,344
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 ........................ 0.87% 0.82% 0.85% 0.88%
Ratio of net investment income (loss) to
average net assets ................................. (0.06%) (0.11%) 0.61% 0.64%
Ratio of net investment income (loss) to average
net assets prior to expense limitation ............. (0.13%) (0.13%) 0.56% 0.56%
Portfolio turnover ................................... 134% 85% 73% 43%
Average commission rate paid(5) ...................... $0.0600 $0.0600 N/A N/A
</TABLE>
[RESTUBBED FROM TABLRE ABOVE]
<TABLE>
<CAPTION>
DelCap Series
---------------------------------------------
7/12/91(1)
Year Ended through
12/31/93 12/31/92 12/31/91
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period ................. $11.120 $11.030 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(2) ...................... 0.056 0.023 0.010
Net realized and unrealized gain (loss) on investments 1.214 0.197 1.020
Total from investment operations ..................... 1.270 0.220 1.030

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income ................. (0.020) (0.010) none
Distributions from net realized gain
on investment transactions ......................... (0.130) (0.120) none
Total dividends and distributions .................... (0.150) (0.130) none
Net asset value, end of period ....................... $12.240 $11.120 $11.030
======= ======= =======

Total return(3) ...................................... 11.56%(4) 1.99%(4) 21.60%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) .............. $33,180 $14,251 $6,950
Ratio of expenses to average net assets .............. 0.80% 0.98% 1.94%
Ratio of expenses to average net assets
prior to expense limitation ........................ 1.00% 1.25% 1.94%
Ratio of net investment income (loss) to
average net assets ................................. 0.67% 0.28% 0.33%
Ratio of net investment income (loss) to average
net assets prior to expense limitation ............. 0.47% 0.01% 0.33%
Portfolio turnover ................................... 57% 52% 40%
Average commission rate paid(5) ...................... 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.
(2) Per share information for the period ended December 31, 1997 was based on
the average shares outstanding method.
(3) 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.
(4) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.
(5) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

-14-
<PAGE>

<TABLE>
<CAPTION>
Delaware Series
-----------------------------------------------------------------
Year Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $16.640 $15.500 $12.680 $13.330 $13.550

INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................ 0.435 0.530 0.509 0.437 0.328
Net realized and unrealized gain (loss) on investments 3.575 1.765 2.761 (0.447) 0.692
Total from investment operations ..................... 4.010 2.295 3.270 (0.010) 1.020

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income ................. (0.530) (0.500) (0.450) (0.340) (0.460)
Distributions from net realized gain
on investment transactions ......................... (1.070) (0.655) none (0.300) (0.780)
Total dividends and distributions .................... (1.600) (1.155) (0.450) (0.640) (1.240)
Net asset value, end of period ....................... $19.050 $16.640 $15.500 $12.680 $13.330
======= ======= ======= ======= =======

Total return(2) ...................................... 26.40% 15.91% 26.58% (0.15%) 8.18%(3)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) .............. $127,675 $75,402 $63,215 $47,731 $37,235
Ratio of expenses to average net assets .............. 0.67% 0.68% 0.69% 0.70% 0.80%
Ratio of expenses to average net assets
prior to expense limitation ........................ 0.67% 0.68% 0.69% 0.70% 0.89%
Ratio of net investment income to
average net assets ................................. 2.85% 3.56% 3.75% 3.71% 3.33%
Ratio of net investment income to average
net assets prior to expense limitation ............. 2.85% 3.56% 3.75% 3.71% 3.24%
Portfolio turnover ................................... 67% 92% 106% 140% 162%
Average commission rate paid5 ........................ $0.0600 $0.0600 N/A N/A N/A
</TABLE>
[RESTUBBED FROM TABLE ABOVE]
<TABLE>
<CAPTION>
Delaware 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 ................. $12.980 $10.840 $11.800 $10.160 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................ 0.457 1.082 0.341 0.130 0.064
Net realized and unrealized gain (loss) on investments 1.233 1.668 (0.391) 1.550 0.096
Total from investment operations ..................... 1.690 2.750 (0.050) 1.680 0.160

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income ................. (1.060) (0.350) (0.270) (0.040) none
Distributions from net realized gain
on investment transactions ......................... (0.060) (0.260) (0.640) none none
Total dividends and distributions .................... (1.120) (0.610) (0.910) (0.040) none
Net asset value, end of period ....................... $13.550 $12.980 $10.840 $11.800 $10.160
======= ======= ======= ======= =======

Total return(2) ...................................... 13.85%(3) 26.58% (0.18%) 16.60% 3.77%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 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 ................................... 202% 1,010% 210% 132% (4)
Average commission rate paid5 ........................ 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.
(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.
(5) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

-15-
<PAGE>

<TABLE>
<CAPTION>
International Equity Series
-----------------------------------------------------------------------
10/29/92(1)
Year Ended through
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
-------- -------- -------- -------- -------- --------

<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $15.110 $13.120 $11.840 $11.620 $10.030 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income(2)..................... 0.359 0.557 0.419 0.220 0.052 0.015
Net realized and unrealized gain (loss)
on investments and foreign currencies..... 0.596 1.966 1.191 0.080 1.548 0.015

Total from investment operations............. 0.955 2.523 1.610 0.300 1.600 0.030

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income......... (0.545) (0.420) (0.240) (0.070) (0.010) none
Distributions from net realized gain
on investment transactions................. none (0.113) (0.090) (0.010) none none
Total dividends and distributions............ (0.545) (0.533) (0.330) (0.080) (0.010) none
Net asset value, end of period............... $15.520 $15.110 $13.120 $11.840 $11.620 $10.030
======= ======= ======= ======= ======= =======

Total return(3).............................. 6.60%(4) 20.03%(4) 13.98%(4) 2.57%(4) 15.97%(4) 1.73%(4)

RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted)...... $198,863 $131,428 $81,548 $57,649 $16,664 $ 177
Ratio of expenses to average net assets...... 0.85% 0.80% 0.80% 0.80% 0.80% (5)
Ratio of expenses to average net assets
prior to expense limitation................ 0.90% 0.91% 0.89% 1.01% 1.85% (5)
Ratio of net investment income to
average net assets......................... 2.28% 4.71% 3.69% 2.63% 1.85% (5)
Ratio of net investment income to average
net assets prior to expense limitation..... 2.23% 4.60% 3.60% 2.42% 0.80% (5)
Portfolio turnover........................... 7% 8% 19% 13% 9% (5)

Average commission rate paid(6).............. $0.0150 $0.0100 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) Per share information for the period ended December 31, 1997 was based on
the average shares outstanding method.
(3) 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.
(4) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.
(5) 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.
(6) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

-16-

<PAGE>

<TABLE>
<CAPTION>
Trend Series
-----------------------------------------------------
Year Ended 7/23/93(1)
----------------------------------------------------- through
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $14.560 $14.020 $10.160 $10.200 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income........................ 0.019 0.050 0.098 0.079 none
Net realized and unrealized gain
(loss) on investments ...................... 3.031 1.380 3.852 (0.119) 0.200

Total from investment operations............. 3.050 1.430 3.950 (0.040) 0.200

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income......... (0.050) (0.090) (0.090) none none
Distributions from net realized gain
on investment transactions................. (0.180) (0.800) none none none

Total dividends and distributions............ (0.230) (0.890) (0.090) none none

Net asset value, end of period............... $17.380 $14.560 $14.020 $10.160 $10.200
======= ======= ======= ======= =======

Total return(2).............................. 21.37%(3) 11.00%(3) 39.21%(3) (0.39%)(3) 2.00%(3)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)...... $118,276 $56,423 $20,510 $7,087 $204
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................ 0.88% 0.92% 0.96% 1.47% (4)
Ratio of net investment income to
average net assets......................... 0.16% 0.56% 1.03% 1.63% (4)
Ratio of net investment income to average
net assets prior to expense limitation..... 0.08% 0.44% 0.87% 0.96% (4)
Portfolio turnover........................... 125% 112% 76% 59% (4)
Average commission rate paid(5).............. $ 0.0599 $0.0600 N/A N/A N/A

-17-
<PAGE>

<TABLE>
<CAPTION>
Small Cap Value Series (formerly Value Series)
-------------------------------------------------------------------------
Year Ended 12/27/93(1)
------------------------------------------------------ through
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- -------- --------

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $14.500 $12.470 $10.290 $10.210 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income........................ 0.122 0.112 0.192 0.148 none
Net realized and unrealized gain
(loss) on investments ..................... 4.338 2.548 2.208 (0.068) 0.210
Total from investment operations........... 4.460 2.660 2.400 0.080 0.210

LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income......... (0.110) (0.180) (0.150) none none
Distributions from net realized gain
on investment transactions................. (0.930) (0.450) (0.070) none none

Total dividends and distributions............ (1.040) (0.630) (0.220) none none

Net asset value, end of period............... $17.920 $14.500 $12.470 $10.290 $10.210
======= ======= ======= ======= =======

Total return(2)................................ 32.91%(3) 22.55%(3) 23.85%(3) 0.78%(3) 2.10%(3)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)...... $84,071 $23,683 $11,929 $6,291 $210
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................ 0.90% 0.99% 0.96% 1.41% (4)
Ratio of net investment income to
average net assets......................... 1.24% 1.28% 2.13% 2.62% (4)
Ratio of net investment income to average
net assets prior to expense limitation..... 1.14% 1.09% 1.97% 2.01% (4)
Portfolio turnover........................... 41% 84% 71% 26% (4)
Average commission rate paid5................ $0.0600 $0.0600 N/A N/A N/A

-18-
<PAGE>

<TABLE>
<CAPTION>
Social Awareness
Series
(formerly Convertible Emerging Strategic
Quantum Devon Securities Markets Income
Global Bond Series Series) Series Series Series Series
Year 5/2/96(1) 5/1/97(1) 5/1/97(1) 5/1/97(1) 5/1/97(1) 5/1/97(1)
Ended through through through through through through
12/31/97 12/31/96 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $10.960 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000

INCOME FROM INVESTMENT OPERATIONS
Net investment income.............................. 0.636(2) 0.339 0.051 0.080 0.318 0.060(2) 0.523(2)
Net realized and unrealized gain (loss)
on investments and foreign currencies............ (0.551) 0.831 2.789 2.650 1.342 (1.180) 0.097
Total from investment operations................... 0.085 1.170 2.840 2.730 1.660 (1.120) 0.620
less dividends and distributions
Dividends from net investment income............... (0.460) (0.210) none none none none none
Distributions from net realized gain
on investment transactions....................... (0.085) none none none none none none
Total dividends and distributions.................. (0.545) (0.210) none none none none none
Net asset value, end of period..................... $10.500 $10.960 $12.840 $12.730 $11.660 $8.880 $10.620
======= ======= ======= ======= ======= ======= =======

Total return(3).................................... 0.88%(4) 11.79%(4) 28.40%(4) 27.30%(4) 16.60%(4)(11.20%)(4) 6.20%(4)

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)............ $16,876 $9,471 $7,800 $16,653 $3,921 $5,776 $8,606
Ratio of expenses to average net assets............ 0.80% 0.80% 0.80% 0.80% 0.80% 1.50% 0.80%
Ratio of expenses to average net assets
prior to expense limitation...................... 1.08% 1.19% 1.40% 0.91% 2.30% 2.45% 1.23%
Ratio of net investment income to
average net assets............................... 6.03% 6.51% 1.13% 2.01% 5.68% 0.89% 7.44%
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... 5.75% 6.12% 0.53% 1.90% 4.18% (0.06%) 7.01%
Portfolio turnover................................. 97% 56% 52% 80% 209% 48% 70%
Average commission rate paid5...................... N/A N/A $0.0334 $0.0568 $0.0597 $0.0036 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.
(2) Per share information for the period ended December 31, 1997 was based on
the average shares outstanding method.
(3) 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.
(4) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.
(5) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

-19-
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

INTRODUCTION

The Fund, a corporation organized in Maryland on February 19, 1987, is an
open-end management investment company offering 16 Series of shares.

The investment objective of each Series, other than the REIT Series, 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 strive to achieve its objective of
long- term growth through both income and capital appreciation without undue
risk to principal.

-20-
<PAGE>

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

(3) Commercial Paper. 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 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.

-21-
<PAGE>

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.

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.

-22-
<PAGE>

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

(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.

-23-
<PAGE>

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.

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 its assets in a diversified portfolio of money market securities and
managing the portfolio to maintain a constant net asset value of $10 per share.
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.

-24-
<PAGE>

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, at the time of purchase,
such a security or, as relevant, its issuer, is 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. The Series will not invest more than 5% of its total assets in
securities rated in the second highest category by a ratings organization.

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.

-25-

<PAGE>

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.

-26-
<PAGE>

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 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 equity and fixed-income securities.

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.

<PAGE>

INTERNATIONAL EQUITY SERIES

The objective of the International Equity Series is to seek 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. The Series may also invest in sponsored
or unsponsored American Depositary Receipts, European Depositary Receipts or
Global Depositary Receipts. 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.

While the Series may purchase securities in any foreign country,
developed and developing, 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, New Zealand, Philippines, Belgium, Spain, Switzerland, Japan,
Australia, Hong Kong, and Singapore and Malaysia. In certain countries,
investments may only be made by purchasing shares of closed-end investment com
panies that in turn are authorized to invest in the securities of such
countries. Any investment the Series may make in other investment companies
is limited in amount by the 1940 Act and would involve the indirect payment
of a portion of the expenses, including advisory fees, of such other
investment companies.

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

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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.

SMALL CAP 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.

While not a fundamental policy, under normal market conditions the Fund
intends to invest 65% of its net assets in securities issued by small cap
companies, defined as those currently having a market capitalization generally
of less than $1.5 billion at the time of purchase. As a general matter, small
cap companies may have more limited product lines, markets and financial
resources than large cap companies. In addition, securities of small cap
companies, generally, may trade less frequently (and with a lesser volume),
may be more volatile and may be somewhat less liquid than securities issued
by larger capitalization companies.

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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, the Series may
invest in fixed-income obligations. The objective of the Series may not be
changed without shareholder approval.

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

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.

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The Series may enter into futures contracts and buy and sell options on
futures contracts relating to securities, securities indices or interest rates.
See OTHER CONSIDERATIONS-FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS,
below.

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

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

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

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.

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

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

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

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

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

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

For hedging purposes, the Series may engage in options activity and enter
into futures contracts and options on futures contracts. For a discussion on
these instruments, see OPTIONS and FUTURES CONTRACTS AND OPTIONS ON FUTURES
CONTRACTS under OTHER CONSIDERATIONS.

GLOBAL BOND SERIES

The objective of the Global Bond Series is to seek 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.
However, the Series may also invest in securities of issuers in emerging
markets countries, including Brady Bonds, which tend to be of lower quality
and more speculative than securities of developed country issuers. See
FOREIGN SECURITIES AND FOREIGN CURRENCY TRANSACTIONS under OTHER
CONSIDERATIONS. Such securities may be rated lower than BBB by S&P or Baa by
Moody's, or if unrated, are deemed to be of equivalent quality by Delaware
International. See RISK FACTORS under DELCHESTER SERIES. 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.

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The Series may also invest in zero coupon bonds and in the debt securities
of supranational entities denominated in any currency. 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 Bank for Reconstruction and Development, the European Investment Bank,
the Inter-American Development Bank, the Export-Import Banks, the Nordic
Investment Bank and the Asian Development Bank. For increased safety, the Series
currently anticipates that a large percentage of its assets will be invested in
U.S. and foreign government securities and securities of supranational entities.

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

With respect to securities issued by foreign governments, their agencies,
instrumentalities or political subdivisions, the Series will generally invest
in such securities if they have been rated AAA or AA by S&P or Aaa or Aa by
Moody's or, if unrated, have been determined by Delaware International to be
of comparable quality. However, a portion of the Fund's assets may also be
invested in such foreign governmental securities issued by emerging or
developing countries, which may be lower rated, including securities rated
below investment grade.

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.

While the Series may purchase securities of issuers in any foreign
country, developed and developing, 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,
Sweden, Ireland, Italy, Mexico, Poland, Brazil, New Zealand, Portugal,
Norway, Greece and Malaysia, as well as Indonesia, Korea and South Africa. In
certain countries, investments may only be made by purchasing shares of
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.

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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.

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 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 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.

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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.

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.

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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. 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 COU-PON 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.

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.

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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 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 seek 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 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 or the principal securities trading market for which is
in an emerging country.

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.

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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, Botswana,
Brazil, Chile, China, Colombia, Czech Republic, Egypt, Estonia, Ghana, Greece,
Hong Kong, Hungary, India, Indonesia, Israel, Ivory Coast, Jamaica, Jordan,
Kenya, Korea, Latvia, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Nigeria,
Pakistan, Peru, the Philippines, Poland, Portugal, Russia, Slovenia, South
Africa, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela and Zimbabwe. As markets
in other emerging countries develop, Delaware International expects to expand
and further diversify the countries in which the Series invests.

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

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

The Series may invest up to 35% of its net assets in fixed-income securities
issued by emerging country companies, and foreign governments, their agencies,
instrumentalities or political subdivisions, all of which may be high yield,
high risk fixed-income securities rated lower than BBB by S&P and Baa by Moody's
or, if unrated, are considered by Delaware International to be of equivalent
quality and which present special investment risks. See RISK FACTORS under
DELCHESTER SERIES. The Series may also invest in Brady Bonds and zero coupon
securities. See FOREIGN SECURITIES AND FOREIGN CURRENCY TRANSACTIONS under OTHER
CONSIDERATIONS. The Series' investments in such securities generally did not
exceed 5% of its assets during the past fiscal year, although the percentage of
the Series' assets allocated to such investments may vary from year to year.

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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

Delaware Management'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 Delaware Management's opinion, market
conditions dictate), the Series reserves the right to maintain all or a
substantial portion of its assets in cash, money market securities, U.S.
government securities and investment grade corporate debt securities.
Securities or assets obtained upon the conversion of convertible securities
may be retained, subject to the Series' investment objective. The Series may
not invest more than 25% of its total assets in any one industry, provided
that there is no limitation on investments in U.S. government securities.
There are no size limitations on corporations in whose securities the Series
may invest.

CONVERTIBLE SECURITIES. Convertible securities rank senior to common
stock in a corporation's capital structure and therefore entail less risk
than the corporation's common stock. However, convertible securities are
typically subordinated to non-convertible securities of the same issuer.
Convertible securities may be rated below investment grade, that is, not rated
within the four highest categories by S&P and Moody's. Debt securities rated
below investment grade are often referred to as "high-yield bonds" or "junk
bonds," although these terms are not generally used in reference to convertible
debt securities. The Series will invest in convertible securities without regard
to rating categories. To the extent that securities acquired by the Series are
not of investment grade or are not rated, there may be a greater risk as to the

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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.

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.

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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) 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 onventional
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.

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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 Delaware Management'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.

SOCIAL AWARENESS SERIES
The objective of Social Awareness 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.

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.

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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

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

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 alcoholic beverage, 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.

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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.

REIT SERIES
The objective of the Series is to seek to achieve maximum long-term total
return. Capital appreciation is a secondary objective. It seeks to achieve
its objectives by investing in securities of companies primarily engaged in
the real estate industry. The Series is considered a nondiversified
investment company under the 1940 Act and may be subject to greater risks
than if the Series were diversified. A nondiversified portfolio of securities
is believed to be subject to greater risk because adverse effects on the
portfolio's security holdings may affect a larger portion of its overall
assets.

The Series may be suitable for the patient investor interested in long-term
capital appreciation with the potential for current income. Investors should be
willing to accept the risks associated with investments in a portfolio of equity
securities and convertible securities issued by domestic and foreign issuers
concentrated in the real estate industry. Because current income is a secondary
objective of the Series, the Series is not suitable as an investment vehicle for
investors whose primary investment goal is current income.

The risks associated with an investment in the Series are discussed below
under SPECIAL RISK FACTORS.

The investment objective of the Series is described below, together with
the policies the Series employs in its efforts to achieve its objective.
There is no assurance that the Series will attain its objective. The
investment objective of the Series is nonfundamental and may be changed
without approval of shareholders. Unless otherwise noted, the investment
policies described below are not fundamental policies and may be changed
without shareholder approval. PART B provides more information on the Series'
investment policies and restrictions.

Investment Strategy
The investment objective of the Series is to achieve maximum long-term
total return. Capital appreciation is a secondary objective. The Series seeks
to achieve its objectives by investing in securities of companies principally
engaged in the real estate industry. Under normal circumstances, at least 65%
of the Series' total assets will be invested in equity securities of real
estate investment trusts ("REITs"). The Series will operate as a nondiversified
fund as defined by the 1940 Act.

As a fundamental policy, the Series will concentrate its investments in the
real estate industry. The Series invests in equity securities of REITs and
other real estate industry operating companies ("REOCs"). For purposes of the
Series' investments, a REOC is a company that derives at least 50% of its
gross revenues or net profits from either (1) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate, or (2) products or services related to the real
estate industry, such as building supplies or mortgage servicing. The Series'

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investments in equity securities of REITs and REOCs may include, from time to
time, sponsored or unsponsored American Depositary Receipts ("ADRs") actively
traded in the United States. Equity securities for this purpose include
common stocks, securities convertible into common stocks and securities
having common stock characteristics, such as rights and warrants to purchase
common stocks. The Series may also purchase preferred stock. The Series may
invest up to 10% of its assets in foreign securities (not including ADRs), and
in convertible securities. See FOREIGN SECURITIES AND FOREIGN CURRENCY
TRANSACTIONS and CONVERTIBLE, DEBT AND NON-TRADITIONAL EQUITY SECURITIES
under OTHER CONSIDERATIONS for further discussion of these investment
policies. The Series may also invest in mortgage-backed securities. See
MORTGAGE-BACKED SECURITIES under OTHER CONSIDERATIONS for more detailed
information about this investment policy.

The Series may hold cash or invest in short-term debt securities and other
money market instruments when, in Delaware Management's opinion, such holdings
are prudent given then prevailing market conditions. Except when Delaware
Management believes a temporary defensive approach is appropriate, the Series
will not hold more than 5% of its total assets in cash or such short-term
investments. All these short-term investments will be of the highest quality as
determined by a nationally-recognized statistical rating organization (e.g. AAA
by S&P or Aaa by Moody's) or be of comparable quality as determined by Delaware
Management. See OTHER CONSIDERATIONS for further details concerning these and
other investment policies.

Although as a fundamental policy the Series does not invest directly in
real estate, the Series does invest primarily in REITs, and may purchase
equity securities of REOCs, as well as own real estate directly as a result
of a default on securities the Series owns. Thus, because the Series
concentrates its investments in the real estate industry, an investment in
the Series may be subject to certain risks associated with direct ownership
of real estate and with the real estate industry in general. These risks
include, among others: possible declines in the value of real estate; risks
related to general and local economic conditions; possible lack of
availability of mortgage funds; overbuilding; extended vacancies of
properties; increases in competition; property taxes and operating expenses;
changes in zoning laws; costs resulting from the clean-up of, and liability
to third parties resulting from, environmental problems; casualty for
condemnation losses, uninsured damages from floods, earthquakes or other
natural disasters; limitations on and variations in rents; and changes in
interest rates.

The Series may invest without limitation in shares of REITs. REITs are
pooled investment vehicles which invest primarily in income-producing real
estate or real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs or a combination of equity and
mortgage REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs invest the majority of their assets
in real estate mortgages and derive income from the collection of interest
payments. Like investment companies such as the Series, REITs are not taxed
on income distributed to shareholders provided they comply with several
requirements in the Internal Revenue Code of 1986, as amended (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. By investing in REITs indirectly through the Series, a shareholder
bears not only a proportionate share of the expenses of the Series, but also,
indirectly, similar expenses of the REITs. For a further discussion of the
risks presented by investing in REITs, see OTHER CONSIDERATIONS-REITS.

While the Series does not intend to invest directly in real estate, the
Series could, under certain circumstances, own real estate directly as a
result of a default on securities that it owns. In addition, if the Series
has rental income or income from the direct disposition of real property, the
receipt of such income may adversely affect the Series' ability to retain its
tax status as a regulated investment company.

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The Series may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to
those activities. However, these activities will not be entered into for
speculative purposes, but rather to hedge uninvested cash against movements
in the prices of securities in which the Series intends to invest. Such
positions will generally be eliminated when it becomes possible to invest in
such securities. See OTHER CONSIDERATIONS-FUTURES CONTRACTS AND OPTIONS ON
FUTURES CONTRACTS and OPTIONS for a further discussion of these investment
policies.

In connection with the Series' ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may present
risks if the Series holds international securities. Currency considerations
carry a special risk for a portfolio of international securities. In this
regard, the Series may actively carry on hedging activities, and may invest in
forward foreign currency exchange contracts to hedge currency risks associated
with the purchase of individual securities denominated in a particular currency.
See OTHER CONSIDERATIONS-FOREIGN SECURITIES AND FOREIGN CURRENCY TRANSACTIONS.

Delaware Management does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, Delaware Management may take advantage of short-term opportunities
that are consistent with the Series' investment objectives. It is anticipated
that the annual turnover rate of the Series, under normal circumstances, will
generally not exceed 100%. See PORTFOLIO TRADING PRACTICES under MANAGEMENT OF
THE FUND.

Special Risk Factors
An investment in the Series entails certain risks and considerations about
which an investor should be aware.

The Series may invest up to 10% of its total assets in securities of foreign
issuers which normally are denominated in foreign currencies, and may hold
foreign currency directly. Investments in securities of non-United States
issuers which are generally denominated in foreign currencies involve certain
risk and opportunity considerations not typically associated with investing in
United States companies. Consequently, the Series may be affected by changes in
currency rates and exchange control regulations and may incur costs in
connection with conversions between currencies. To hedge this currency risk
associated with investments in non-U.S. dollar denominated securities, the
Series may invest in forward foreign currency contracts. Those activities pose
special risks which do not typically arise in connection with investments in
U.S. securities. In addition, the Series may engage in foreign currency options
and futures transactions. For a discussion of the risks associated with foreign
securities see FOREIGN SECURITIES AND FOREIGN CURRENCY TRANSACTIONS and for
those concerning these hedging instruments see RISKS OF TRANSACTIONS IN OPTIONS,
FUTURES AND FORWARD CONTRACTS, both of which references appear under the heading
OTHER CONSIDERATIONS.

The Series may commit its assets eligible for foreign investment to
securities of issuers located in emerging markets. Investments in securities
of companies in emerging markets present a greater degree of risk than tends
to be the case for foreign investments in Western Europe and other developed
markets. Among other things, there is a greater possibility of expropriation,

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<PAGE>

nationalization, confiscatory taxation, income earned or other special
taxes, foreign exchange restrictions, limitations on the repatriation of income
and capital from investments, defaults in foreign government debt, and economic,
political or social instability. In addition, in many emerging markets, there is
substantially less publicly available information about issuers and the
information that is available tends to be of a lesser quality. Economic markets
and structures tend to be less mature and diverse and the securities markets
which are subject to less government regulation or supervision may also be
smaller, less liquid and subject to greater price volatility. See OTHER
CONSIDERATIONS-FOREIGN SECURITIES AND FOREIGN CURRENCY TRANSACTIONS for a more
extensive discussion of these and other factors.

The foreign securities in which the Series may invest from time to time 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 net asset value of
the Series may be significantly affected by such trading on days when
shareholders will have no access to the Series. See CALCULATION OF OFFERING
PRICE AND NET ASSET VALUE PER SHARE.

The Series also may, under certain circumstances, use certain futures
contracts and options on futures contracts, as well as options on stock. The
Series will only enter into these transactions for hedging purposes. See FUTURES
CONTRACTS AND OPTIONS ON FUTURES CONTRACTS and RISKS OF TRANSACTIONS IN
OPTIONS, FUTURES AND FORWARD CONTRACTS, both of which references appear under
the heading OTHER CONSIDERATIONS.

As a fundamental policy, the Series concentrates its investments in the
real estate industry. As a consequence, the net asset value of the Series can
be expected to fluctuate in light of the factors affecting that industry, and
may fluctuate more widely than a portfolio that invests in a broader range of
industries. The Series may be more susceptible to any single economic,
political or regulatory occurrence affecting the real estate industry.

The Series, by investing primarily in securities of real estate
investment trusts, is subject to interest rate risk, in that as interest
rates decline, the value of the Series' investments in REITs holding fixed
rate obligations can be expected to rise. Conversely, when interest rates
rise, the value of the Series' investments in REITs holding fixed rate
obligations can be expected to decline. See OTHER CONSIDERATIONS-REITS.

The Series may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.

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<PAGE>

While the Series intends to seek to qualify as a "diversified" investment
company under provisions of Subchapter M of the Code, it will not be diversified
under the 1940 Act. Thus, while at least 50% of the Series' total assets will be
represented by cash, cash items, certain qualifying securities 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 of the investment strategies identified above involves special risks
which are described under OTHER CONSIDERATIONS in this PROSPECTUS and INVESTMENT
OBJECTIVES AND POLICIES IN PART B.

* * *

PART B contains other more specific investment restrictions and APPENDIX
A to this PROSPECTUS contains descriptions of Moody's and S&P ratings.

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<PAGE>

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.

DIVIDENDS AND DISTRIBUTIONS

Dividends for the Delchester, Capital Reserves, Cash Reserve and
Strategic Income Series are declared daily and paid monthly. 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
Global Bond 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, Small Cap Value, Trend, Emerging
Markets, Social Awareness and REIT Series, the Fund will make payments from
the Series' net income and net realized securities profits, if any, once a
year.

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

TAXES

Each Series, other than Strategic Income, Devon, Emerging Markets,
Convertible Securities, Social Awareness and REIT Series, has qualified, and
intends to continue to qualify, as a regulated investment company under
Subchapter M of the Internal Revenue Code (the "Code"). Strategic Income,
Devon, Emerging Markets, Convertible Securities, Social Awareness and REIT
Series intend to qualify as regulated investment companies under the Code. As
such, a Series 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>

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 U.S. Holidays and Saturdays). 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>

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
Delaware Investments since 1938. On December 31, 1997, Delaware Management
and its affiliates within Delaware Investments, including Delaware
International, were supervising in the aggregate more than $40 billion in
assets in the various institutional or separately managed (approximately
$24,040,760,000) and investment company (approximately $16,482,523,000)
accounts.

Delaware Management is a series of Delaware Management Business Trust.
Delaware Management changed its form of organization from a corporation to a
business trust on March 1, 1998. 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,
Social Awareness and REIT 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 Third Floor, 80 Cheapside, London, England EC2V 6EE.

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<PAGE>

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:

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%
Small Cap Value Series 0.75%
Trend Series 0.75%
Strategic Income Series 0.65%
Devon Series 0.60%
Convertible Securities Series 0.75%
Social Awareness Series 0.75%
REIT Series 0.75%*

*Assets up to $500 million: 0.75% of average daily net assets
Assets over $500 million - $1,000 million: 0.70% of average daily net
assets
Assets over $1,000 million - $2,500 million: 0.65% of average daily net
assets
Assets over $2,500 million: 0.60% of average daily net assets

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 Series below
for the fiscal year ended December 31, 1997 was as follows:

Before After
Voluntary Waiver Voluntary Waiver
Decatur Total Return Series 0.60% 0.60%
Delchester Series 0.60% 0.60%
Capital Reserves Series 0.60% 0.60%
Cash Reserve Series 0.50% 0.50%
DelCap Series 0.75% 0.67%
Delaware Series 0.60% 0.60%
Small Cap Value Series 0.75% 0.65%
Trend Series 0.75% 0.67%
Strategic Income Series 0.65%* 0.22%*
Devon Series 0.60%* 0.32%*
Convertible Securities Series 0.75%* none
Social Awareness Series 0.75%* 0.14%*

*Annualized.

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<PAGE>

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 Delaware International a fee equal to one-third of
the fee paid to Delaware Management under the terms of Strategic Income
Series' Investment Management Agreement.

Pursuant to the terms of Sub-Advisory Agreements with Delaware Management,
Vantage participates in the management of Social Awareness Series' assets.
Vantage 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 Agreement and
supervises Vantage's performance of such services. For the services provided to
Delaware Management, Delaware Management pays Vantage an annual fee equal to (i)
0.25% of average daily net assets up to $20 million; (ii) 0.35% of average daily
net assets between $20 million and $50 million; and (iii) 0.40% of average daily
net assets over $50 million. Vantage's address is 630 Fifth Avenue, New York,
NY 10111.

Lincoln, a wholly owned subsidiary of Lincoln National Corporation ("Lincoln
National"), 200 E. Berry Street, Fort Wayne, Indiana 46802, acts as sub-adviser
to Delaware Management with respect to REIT Series. In its capacity as
sub-adviser, Lincoln furnishes Delaware Management with investment
recommendations, asset allocation advice, research, economic analysis and other
investment services with respect to the securities in which the Series may
invest. Lincoln receives 30% of the advisory fee paid to Delaware Management for
acting as sub-adviser to Delaware Management with respect to the Series.

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:

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

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, 1997 was as follows:

Before After
Voluntary Waiver Voluntary Waiver
International Equity Series 0.75% 0.69%
Global Bond Series 0.75% 0.47%
Emerging Markets Series 1.25%* 0.29%*

*Annualized.

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The directors of the Fund annually review fees paid to the investment
managers and sub-advisers.

John B. Fields, Vice President/Senior Portfolio Manager of the Fund, 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 27 years' experience in investment
management, earned a bachelor's degree and an MBA from Ohio State University.
Before joining Delaware Investments 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 Delaware
Investments in 1962 and has served in various executive capacities at different
times within the Delaware organization. Mr. Unruh is a graduate of Brown
University and received his MBA from the University of Pennsylvania's Wharton
School. He joined Delaware Investments 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, each a Vice President/Senior
Portfolio Manager of the Fund, 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 Delaware Investments, 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 Delaware Investments from 1981 to 1985. He returned to Delaware
Investments in 1993 after eight years with Oppenheimer Management Corporation,
where he served as Executive Vice President and Director of Fixed Income.

Gary A. Reed, Vice President/Senior Portfolio Manager of the Fund, has
primary responsibility for making investment decisions for the Capital Reserves
Series. He has been the 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 Delaware Investments 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 Series, Mr. Reed
regularly consults with Paul E. Suckow.

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Gerald S. Frey, Vice President/Senior Portfolio Manager of the Fund, has
primary responsibility for making day-to-day investment decisions for the DelCap
and Trend Series. Mr. Frey has been senior portfolio manager of the Series since
March 1997 and was Co-Manager from June 1996 to March 1997. Mr. Frey has 21
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 Delaware Investments 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, John A. Heffern and Lori Wachs. Mr. 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.
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 Delaware Investments 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, each a Vice President/Senior Portfolio
Manager of the Fund, 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 Delaware Investments 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 in May, 1997, Christopher S. Beck, Vice President/Senior Portfolio
Manager of the Fund, assumed primary responsibility for making day-to-day
investment decisions for the Small Cap Value Series. Mr. Beck has been in the
investment business for 17 years, starting with Wilmington Trust in 1981. Later,
he became Director of Research at Cypress Capital Management in Wilmington and
Chief Investment Officer of the University of Delaware Endowment Fund. Prior to
joining the Delaware Group in May 1997, he managed the Small Cap Value Fund from
October 1995 at Pitcairn Trust Company. He holds a B.S. from the University of
Delaware, an M.B.A. from Lehigh University and is a CFA charterholder. In making
investment decisions for the Small Cap Value Series, Mr. Beck regularly consults
with Wayne A. Stork, Richard G. Unruh, Jr. and Andrea Giles. Ms. Giles, Research
Analyst for the Fund, holds a BSAD from the Massachusetts Institute of
Technology and an MBA in Finance from Columbia University. Prior to joining the
Delaware Group in 1996, she was an account officer in the Leveraged Capital
Group with Citibank.

Clive A. Gillmore and Nigel A. May have primary responsibility for making
day-to-day investment decisions for the International Equity Series. Mr.
Gillmore has been the senior portfolio manager for the Series since its
inception, and Mr. May joined Mr. Gillmore as Co-Manager of the Series on
December 22, 1997. Mr. Gillmore is a graduate of the University of Warwick

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and began his career at Legal and General Investment Management, which is the
asset management division of Legal and General Assurance Society Ltd., a
large U.K. life and pension company. Mr. Gillmore joined Delaware International
in 1990 after eight years of investment experience. His most recent position
prior to joining Delaware International 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. Mr. May is a
graduate of Sidney Sussex College, Cambridge. He joined Delaware International
in 1991, assuming portfolio management responsibilities and sharing analytical
responsibilities for continental Europe. He previously had been with Hill Samuel
Investment Management Group for five years. In making investment decisions for
the Series, Mr. Gillmore and Mr. May regularly consult with an international
equity team of fourteen members. Mr. Gillmore and Mr. May also regularly consult
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 Delaware International in 1990, he was Chief
Investment Officer of Hill Samuel Investment Advisers Ltd. He is a member of the
Institute of Investment Management & Research and the Operational Research
Society.

Mr. Gillmore also has primary responsibility for making day-to-day
investment decisions for Emerging Markets Series. He has been the senior
portfolio manager for this Series since its inception. In making investment
decisions for Emerging Markets Series, Mr. Gillmore regularly consults with an
international equity team of fourteen members. Mr. Gillmore also regularly
consults with David G. Tilles, Robert Akester and Joshua A. Brooks. Prior to
joining Delaware International in 1996 as a Senior Portfolio Manager, Mr.
Akester, who began his investment career in 1969, was most recently a Director
of Hill Samuel Investment Advisers Ltd., 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 BS in Statistics and Economics from University College,
London and is an associate of the Institute of Actuaries, with a certificate in
Finance and Investment. Mr. Brooks holds a bachelor's degree from Yale
University and has undertaken graduate studies at The London Business School. He
began his investment career with Delaware Investments in 1991. Prior to joining
the emerging markets team in London, he was based in Philadelphia with
responsibilities that included equity market analysis and liaison with Delaware
International.

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 International 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.

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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 Delaware Investments 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 Boston College. Prior to joining Delaware Investments 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.

Babak Zenouzi, Vice President/Senior Portfolio of the Fund and Delaware
Management, also has had primary responsibility for making day-to-day
investment decisions for the Convertible Securities since July 1997 and REIT
Series since its inception. In making investment decisions for the Series,
Mr. Zenouzi regularly consults with Wayne A. Stork and Richard G. Unruh.

Vantage, the Sub-Adviser to Social Awareness 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 Social Aware
ness 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.

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

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Decatur Total Return, International Equity, Global Bond, Strategic Income,
Emerging Markets, Devon, Social Awareness and REIT Series, 200% for the Capital
Reserves, and Delaware Series, and may exceed 100% for the Delchester, Small Cap
Value and Trend Series and 200% for the Convertible Securities Series. Although
the DelCap Series' portfolio turnover exceeded 100% for the Series' previous
year, it is not expected to exceed 100% in the current fiscal year. 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.

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 Investments
family 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, Small Cap Value, Trend, Global Bond, Strategic Income,
Devon, Emerging Markets, Convertible Securities, Social Awareness and
REIT 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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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, Social Awareness and REIT Series. The Global Bond
Series' Distribution Agreement is dated as of May 1, 1996. The Strategic
Income, Devon, Emerging Markets, Convertible Securities and Social Awareness
Series' Distribution Agreements are dated as of May 1, 1997. The REIT Series'
Distribution Agreement is dated as of May 1, 1998. 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, 1998, 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.

* * *

As with other mutual funds, financial and business organizations and
individuals around the world, each Series could be adversely affected if the
computer systems used by its service providers do not properly process and
calculate date-related information from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Fund is taking steps to obtain
satisfactory assurances that the Series' major service providers are taking
steps reasonably designed to address the Year 2000 Problem with respect to the
computer systems that such service providers use. There can be no assurances
that these steps will be sufficient to avoid any adverse impact on the business
of any of the Series.

Several European countries are participating in the European Economic and
Monetary Union, which will establish a common European currency for
participating countries. This currency will commonly be known as the "Euro."
It is anticipated that each such participating country will replace its
existing currency with the Euro on January 1, 1999. Additional European

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countries may elect to participate after that date. Each Series investing in
securities of participating countries could be adversely affected if the
computer systems used by its major service providers are not properly
prepared to handle the implementation of this single currency or the adoption
of the Euro by additional countries in the future. The Fund is taking steps
to obtain satisfactory assurances that the major service providers of
affected Series are taking steps reasonably designed to address these matters
with respect to the computer systems that such service providers use. There
can be no assurances that these steps will be sufficient to avoid any adverse
impact on the business of any Series.

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.

Beginning May 1, 1998, Delaware Management elected voluntarily to waive its
fee and pay the expenses of a Series to the extent necessary to ensure that a
Series' annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, do not exceed the following percentages
of average daily net assets through October 31, 1998:

Decatur Total Return Series 0.80%
Delchester Series 0.80%
Capital Reserves Series 0.80%
Cash Reserve Series 0.80%
DelCap Series 0.85%
Delaware Series 0.80%
Small Cap Value Series 0.85%
Trend Series 0.85%
Strategic Income Series 0.80%
Devon Series 0.80%
Convertible Securities Series 0.85%
Social Awareness Series 0.85%
REIT Series 0.85%

Beginning May 1, 1998, Delaware International elected voluntarily to waive
its fee and pay the expenses of a Series to the extent necessary to ensure that
a Series' annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, do not exceed the following percentages
of average daily net assets through October 31, 1998:

International Equity Series 0.95%
Global Bond Series 0.85%
Emerging Markets Series 1.50%

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Prior to May 1, 1998, Delaware Management elected voluntarily to waive its
fee and pay the expenses of a Series to the extent necessary to ensure that a
Series' annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, did not exceed 0.80% of average daily
net assets from the commencement of operations through April 30, 1998 for the
Delchester, Capital Reserves, Cash Reserve, Small Cap Value, Trend, Strategic
Income, Devon, Convertible Securities and Social Awareness Series. For the
fiscal year ended December 31, 1997, the Delchester, Capital Reserves, Cash
Reserve, Small Cap Value, Trend, Strategic Income, Devon, Convertible Securities
and Social Awareness Series' ratios of expenses to average daily net assets were
as follows:

WITH VOLUNTARY WITHOUT VOLUNTARY
WAIVER WAIVER
Delchester Series 0.70% 0.70%
Capital Reserves Series 0.75% 0.75%
Cash Reserve Series 0.64% 0.64%
Small Cap Value Series 0.80% 0.90%
Trend Series 0.80% 0.88%
Strategic Income Series 0.80%* 1.23%*
Devon Series 0.80%* 0.91%*
Convertible Securities Series 0.80%* 2.30%*
Social Awareness Series 0.80%* 1.40%*

*Annualized

Prior to May 1, 1998, Delaware Management elected voluntarily to waive its
fee and pay the expenses of Decatur Total Return, Delaware and DelCap Series to
the extent necessary to ensure that a Series' annual operating expenses,
exclusive of taxes, interest, brokerage commissions and extraordinary expenses,
did not exceed 0.80% of average daily net assets for the period July 1, 1992
through April 30, 1998. For the fiscal year ended December 31, 1997, the Decatur
Total Return, Delaware and DelCap Series' ratios of expenses to average daily
net assets were as follows:

WITH VOLUNTARY WITHOUT VOLUNTARY
WAIVER WAIVER
Decatur Total Return Series 0.71% 0.71%
Delaware Series 0.67% 0.67%
DelCap Series 0.80% 0.87%

Prior to May 1, 1998, Delaware International elected voluntarily to waive
its fee and pay the expenses of International Equity and Global Bond Series to
the extent necessary to ensure that a Series' annual operating expenses,
exclusive of taxes, interest, brokerage commissions and extraordinary expenses,
did not exceed 0.80% of average daily net assets from the commencement of
operations through June 30, 1997. The waiver and payment commitment was extended
through April 30, 1998 for Global Bond Series. Beginning July 1, 1997, Delaware
International elected voluntarily to waive its fee and pay the expenses of
International Equity to the extent necessary

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to ensure that the Series' annual operating expenses, exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, did not exceed
0.95% of average daily net assets through April 30, 1998. For the fiscal year
ended December 31, 1997, the International Equity Series' ratio of expenses to
average daily net assets was 0.85%, reflecting the waiver and payment described
in this paragraph. Without the voluntary waivers and payments, the ratio of
expenses to average daily net assets for International Equity Series would
have been 0.90%. For the fiscal year ended December 31, 1997, the Global Bond
Series' ratio of expenses to average daily net assets was 0.80%, reflecting the
waiver and payment described in this paragraph. Without the voluntary waivers
and payments, the ratio of expenses to average daily net assets for Global Bond
Series would have been 1.08%.

Prior to May 1, 1998, Delaware International elected voluntarily to waive
its fee and pay the expenses of the Emerging Markets Series to the extent
necessary to ensure that the Series' annual operating expenses, exclusive of
taxes, interest, brokerage commissions and extraordinary expenses, did not
exceed 1.50% of average daily net assets from the commencement of operations
through April 30, 1998. For the fiscal year ended December 31, 1997, the
Emerging Markets Series' ratio of expenses to average daily net assets was
1.50%, annualized, reflecting the waiver and payment described in this
paragraph. Without the voluntary waivers and payments, the ratio of expenses to
average daily net assets would have been 2.45%, annualized.

DESCRIPTION OF FUND SHARES

Shares of the Fund are sold only to separate accounts of life companies.
Currently, the shares of the Fund are sold only to Variable Annuity Account C
and Flexible Premium Variable Life Account K of Lincoln National Life Insurance
Company, Variable Accounts A and B of American International Life Assurance
Company of New York, Variable Accounts I and II of AIG Life Insurance Company,
Separate Accounts VA-K, VEL II and Inheiritage of First Allmerica Life Insurance
Company and Separate Accounts VA-K, VEL, VEL II and Inheiritage of Allmerica
Life and Annuity Insurance 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 16 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 16 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 16 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.

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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, Devon and REIT 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. The Series may invest in
such private-backed securities, but the REIT Series will do so (i) only if
the securities are 100% collateralized at the time of issuance by securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities and (ii) currently, only if they are rated at the time of
purchase in the two highest grades by a nationally-recognized statistical
rating agency.

The Capital Reserves, Delaware, Strategic Income and Devon each may
invest up to 20% of its total assets in CMOs and REMICs issued by private
entities which are not collateralized by securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, so-called non-agency
mortgage-backed securities. Investments in these securities may be made only
if the securities (i) are 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 S&P or Baa or better by Moody's) and (ii) represent
interests in whole-loan mortgages, multi-family mortgages, commercial

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mortgages and 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, described above, to which other CMOs and
REMICs issued by private issuers are subject. Non-agency mortgage-backed
securities may also be subject to a greater risk of loss of interest and
principal because they are not collateralized by securities issued or
guaranteed by the U.S. government. In addition, timely information concerning
the loans underlying these securities may not be as readily available and the
market for these securities may be less liquid than 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 REIT Series invests in, and the Delaware, Strategic Income and Devon
Series may invest in, REITs. REITs are pooled investment vehicles which
invest primarily in income-producing real estate or real estate related loans
or interests. REITs are generally classified as equity REITs, mortgage REITs
or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can also realize capital
gains by selling properties that have appreciated in value. Mortgage REITs

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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.

The Series' investments in REITs present certain further risks that are
unique and in addition to the risks associated with investing in the real estate
industry in general. Equity REITs may be affected by changes in the value of the
underlying property owned by the REITs, while mortgage REITs may be affected by
the quality of any credit extended. REITs are dependent on management skills,
are not diversified, and are subject to the risks of financing projects. REITs
whose underlying assets include long-term health care properties, as nursing,
retirement and assisted living homes, may be impacted by federal regulations
concerning the health care industry.

REITs (especially mortgage REITs) are also subject to interest rate
risks - when interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.

REITs may have limited financial resources, may trade less frequently and
in a limited volume, and may be subject to more abrupt or erratic price
movements than other securities.

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 risks 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

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United States, and the information that is available is often of lesser quality
than information available on U.S. companies. Foreign companies are not subject
to uniform accounting, auditing and financial reporting standards, and auditing
practices and requirements may not be comparable to those applicable to
United States companies. Further, a Series may encounter difficulty or be
unable to pursue legal remedies and obtain judgments in foreign courts.
Commission rates on securities transactions in foreign countries, which are
sometimes fixed rather than subject to negotiation as in the United States,
are likely to be higher. Moreover, the settlement period of securities
transactions in foreign markets may be longer than in domestic markets. In
many foreign countries, there is less government supervision and regulation
of business and industry practices, stock exchanges, brokers and listed
companies than in the United States. The foreign securities markets of many
of the countries in which a Series may invest may also be smaller, less
liquid and subject to greater price volatility than those in the United
States.

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

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be requested to participate in the restructuring of such obligations and to
extend further loans to their issuers. There can be no assurance that the Brady
Bonds and other foreign government and government-related high yield securities
in which a Series may invest will not be subject to similar defaults or
restructuring arrangements which may adversely affect the value of such
investments. Furthermore, certain participants in the secondary market for such
debt may be directly involved in negotiating the terms of these arrangements
and may therefore have access to information not available to other market
participants.

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

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

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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,
Convertible Securities and REIT Series may also purchase call options and enter
into related closing transactions. In addition, the Convertible Securities
Series may write covered put options. In purchasing put and call options, the
premium paid by the Series, plus any transaction costs, will reduce any benefit
realized by the Series upon exercise of the option.

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

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

The DelCap, International Equity, Small Cap Value, Trend, Global Bond,
Devon, Emerging Markets, Convertible Securities, Social Awareness and REIT
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, Social
Awareness and REIT 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.

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Futures Contracts and Options on Futures Contracts

For hedging purposes, each of the International Equity, Small Cap Value,
Trend, Global Bond, Devon, Emerging Markets, Convertible Securities, Social
Awareness and REIT 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 Social
Awareness Series may enter into futures transactions relating to foreign
currency.

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

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.

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

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

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

Risks of Transactions in Options, Futures and Forward Contracts
The use of futures contracts, options on futures contracts, forward
contracts and certain options for hedging and other non-speculative purposes
as described above involves certain risks. For example, a lack of correlation
between price changes of an option or futures contract and the assets being
hedged could render the Series' hedging strategy unsuccessful and could

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result in losses. The same results could occur if movements of foreign
currencies do not correlate as expected by the investment adviser at a time when
the Series is using a hedging instrument denominated in one foreign currency to
protect the value of a security denominated in a second foreign currency against
changes caused by fluctuations in the exchange rate for the dollar and the
second currency. If the direction of securities prices, interest rates or
foreign currency prices is incorrectly predicted, the Series will be in a worse
position than if such transactions had not been entered into. In addition, since
there can be no assurance that a liquid secondary market will exist for any
contract purchased or sold, the Series may be required to maintain a position
(and in the case of written options may be required to continue to hold the
securities used as cover) until exercise or expiration, which could result in
losses. Further, options and futures contracts on foreign currencies and forward
contracts entail particular risks related to conditions affecting the underlying
currency. Over-the-counter transactions in options and forward contracts also
involve risks arising from the lack of an organized exchange trading
environment.

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

Repurchase Agreements

The Series may also use repurchase agreements which are at least 102%
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 Delaware Investments have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow the
funds in the Delaware Investments family 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.

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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.
Creditworthiness 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 and REIT Series, which may invest up to 15% of their net assets in
illiquid securities). For all Series, other than the International Equity, Small
Cap Value, Trend, Global Bond, Strategic Income, Emerging Markets and
Convertible Securities and REIT Series, this policy shall extend to all
restricted securities, including securities eligible for resale without
registration pursuant to Rule 144A ("Rule 144A Securities") (described below),
and repurchase agreements maturing in more than seven days. With respect to the
International Equity, Small Cap Value, Trend, Global Bond, Strategic Income,
Emerging Markets and Convertible Securities and REIT 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 and REIT 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 and REIT Series), the respective manager will determine what
action shall be taken to ensure that the Series continues to adhere to such
limitation.

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

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

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

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Zero Coupon Bonds and Pay-In-Kind Bonds

The Global Bond, Strategic Income, Convertible Securities and REIT 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 pay-in-kind ("PIK") bonds. PIK
bonds pay interest through the issuance to holders of additional securities. PIK
bonds are generally considered to be more interest-sensitive than income bearing
bonds, to be more speculative than interest-bearing bonds, and to have certain
tax consequences similar to zero coupon bonds which could, under certain
circumstances, be adverse to the Fund.

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

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

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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, Emerging Markets and REIT 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 (except REIT Series), the Fund's
designation as an open-end investment company, each Series' (other than the
Global Bond, Emerging Markets and REIT 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 yea r appears in the Series' ANNUAL REPORT. The remaining
investment policies are not fundamental and may be changed by the Board of
Directors of the Fund without a shareholder vote.

Diversification
The Fund was established as the underlying investment for variable
contracts issued by life companies. Section 817(h) of the Internal Revenue
Code of 1986, as amended (the "Code"), imposes certain diversification
standards on the underlying assets of variable contracts held in the
Portfolios of the Fund. The Code provides that a variable contract shall not
be treated as an annuity contract or life insurance for any period (and any
subsequent period) for which the investments are not, in accordance with
regulations prescribed by the United States Treasury Department ("Treasury
Department"), adequately diversified. Disqualification of the variable

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<PAGE>

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 certain Series may
invest.

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APPENDIX A-RATINGS

The Delchester, Strategic Income and Convertible Securities Series' assets
may be invested primarily in and the Small Cap Value Series may invest 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' fixed-income
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,
1997. The paragraphs following the table contain excerpts from Moody's and S&P's
ratings descriptions.

AVERAGE AVERAGE AVERAGE WEIGHTED
WEIGHTED WEIGHTED PERCENTAGE OF
RATING MOODY'S PERCENTAGE OF PERCENTAGE OF CONVERTIBLE
AND/OR DELCHESTER STRATEGIC INCOME SECURITIES
S&P PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------- ------------- ---------------- ----------------
United States
Treasury Obligations 12.50% 10.30% --
Aaa/AAA -- 32.50% --
Aa/AA -- 4.20% --
A/A -- 5.90% 11.92%
Baa/BBB -- 9.80% 2.18%
Ba/BB 3.73% 0.96% 5.48%
B/B 75.18% 33.50% 31.16%
Caa/CCC 1.51% -- % --
Not Rated 7.08% 0.84% 14.89%

*The remaining 34.37% of the portfolio consisted of common stock - 20.45%,
repurchase agreements - 13.08%, and receivables and other assets net of
liabilities 0.84%.

GENERAL RATING INFORMATION

Bonds
Excerpts from Moody's description of its bond ratings: AAA--judged to be
the best quality. They carry the smallest degree of investment risk; AA--judge
d 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.

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Often the protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class; B--generally
lack characteristics of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the contract over any
long period of time may be small; CAA--are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest; CA--represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings; C--the lowest rated class of bonds and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.

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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_____________________________

DELAWARE GROUP
_____________________________

PREMIUM FUND, INC.
_____________________________

PART B

STATEMENT OF
ADDITIONAL INFORMATION

_____________________________

MAY 1, 1998

INVESTMENT MANAGERS
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103

Delaware International Advisers Ltd.
Third Floor
80 Cheapside
London, England EC2V 6EE

SUB-ADVISERS
Lincoln Investment Management, Inc.
200 E. Berry Street
Fort Wayne, Indiana 46802

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

<PAGE>

- --------------------------------------------------------------------------------
PART B--STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998
- --------------------------------------------------------------------------------

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

Financial Statements
- --------------------------------------------------------------------------------

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<PAGE>

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 16 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, 1998, 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>

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 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 fund in the
Delaware Investments family, 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 has
the same objective and investment disciplines as Delchester
Fund of Delaware Group Income Funds, Inc., a separate fund in
the Delaware Investments family. 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 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 fund in the
Delaware Investments family.

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
has the same objective and investment disciplines as DelCap
Fund of Delaware Group Equity Funds IV, Inc., a separate fund
in the Delaware Investments family, 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 has the same objective and investment disciplines as
Delaware Fund of Delaware Group Equity Funds I, Inc., a
separate fund in the Delaware Investments family, 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>

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 fund in the Delaware Investments family, 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.

Small Cap Value Series (formerly Value Series) seeks capital
appreciation by investing primarily in small 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 Small Cap Value Fund of Delaware
Group Equity Funds V, Inc., a separate fund in the Delaware
Investments family.

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 has the same objective and investment disciplines
as Trend Fund of Delaware Group Trend Fund, Inc., a separate
fund in the Delaware Investments family.

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
fund in the Delaware Investments family.

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 fund in the Delaware
Investments family.

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
fund in the Delaware Investments family.

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<PAGE>

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 fund in the Delaware
Investments family.

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.

Social Awareness Series (formerly 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 Social Awareness Fund of Delaware Group Equity Funds II,
Inc., a separate fund in the Delaware Investments family.

REIT Series seeks to achieve maximum long-term total return.
Capital appreciation is a secondary objective. It seeks to
achieve its objectives by investing in securities of companies
primarily engaged in the real estate industry. This Series has
the same objective and investment discipline as The Real
Estate Investment Trust Portfolio and The Real Estate
Investment Trust Portfolio II of Delaware Pooled Trust, Inc.,
separate funds in the Delaware Investments family, which also
invest in securities of companies primarily engaged in the
real estate industry.

INVESTMENT RESTRICTIONS

The Fund has the following restrictions for each Series (other than
Strategic Income, Devon, Emerging Markets, Convertible Securities, Social
Awareness and REIT 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, Small Cap Value and Trend Series and to only
50% of the assets of Global Bond Series.

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<PAGE>

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 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, Small Cap 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.

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<PAGE>

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.

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 Social Awareness
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.

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<PAGE>

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.

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.

The Fund has adopted the following restrictions for the REIT Series
which may not be amended without approval of a majority of the outstanding
voting securities of the REIT Series, which is the lesser of more than 50% of
the outstanding voting securities or 67% of the voting securities of the REIT
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.

1. The Series will concentrate its investments in the real estate
industry. The Series will not invest more than 25% of its total assets in any
other single 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.

2. The 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 and loan
participations), whether or not the purchase was made upon the original issuance
of the securities, and except that the Series may loan its assets to qualified
broker/dealers or institutional investors.

3. The 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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<PAGE>

4. The 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, the Series may engage in short
sales, purchase securities on margin, and write put and call options.

5. The 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.

6. The Series will not 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; provided
further, that the Series may own real estate directly as a result of a default
on securities the Series owns.

In addition to the above fundamental investment restrictions, the
Series has the following investment restrictions which may be amended or changed
without approval of shareholders.

1. The Series will not invest for the purpose of acquiring control of
any company.

2. To the extent that the Series invests in securities of other
investment companies, it will only do so in accordance with the provisions of
the Investment Company Act in effect at the time of the investment.

3. The Series will not invest in interests in oil, gas and other
mineral leases or other mineral exploration or development programs.

4. The Series will not purchase securities on margin except short-term
credits that may be necessary for the clearance of purchases and sales of
securities. This restriction does not apply to the purchase of futures or
options contracts.

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

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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 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

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of the security's price. With respect to securities with an interest rate
adjustment period of one year or less, the Series will, 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 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,
SOCIAL AWARENESS AND REIT SERIES

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

Futures Contracts--As noted in the Prospectus, each of International Equity,
Small Cap Value, Trend, Global Bond, Strategic Income, Devon, Emerging Markets,
Convertible Securities, Social Awareness and REIT 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.

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

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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 ("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, Small Cap Value, Trend, Global Bond, Strategic Income, Emerging Markets
and Convertible Securities and REIT 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.

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

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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,
Convertible Securities and REIT 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.

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

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exchange of other foreign currency held in its portfolio. A call option is also
covered if the Series has a call on the same foreign currency and in the same
principle amount as the call written where the exercise price of the call held
(a) is equal to less than the exercise price of the call written, or (b) is
greater than the exercise price of the call written if the difference is
maintained by the Series in cash, U.S. government securities or other high-grade
liquid debt securities in a segregated account with its custodian bank.

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

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

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

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. Devon Series will
invest in such private-backed securities only if they are 100% collateralized at
the time of issuance by securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities. The Series currently invests in
privately-issued CMOs and REMICs only if they are rated at the time of purchase
in the four highest grades by a nationally-recognized rating agency.

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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,
CONVERTIBLE SECURITIES AND REIT 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 the 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,
Convertible Securities and REIT 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 SOCIAL AWARENESS SERIES
Investment Company Securities--Any investments that Social Awareness
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--Social Awareness 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, Social Awareness
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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Because of its Social Criteria, the Series may not be able to take the
same advantage of certain investment opportunities as do funds which do not have
Social Criteria. Only securities of companies not excluded by any of the Social
Criteria will be eligible for consideration for purchase by the Series according
to its objective and policies described in the Prospectus.

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 16 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 Investments family have obtained an exemption
from the joint-transaction prohibitions of Section 17(d) of the Investment
Company Act of 1940 to allow the funds in the Delaware Investments family
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 16 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,

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interest or other distributions on the lent securities, and any increase in the
market value of such securities; 5) the Series may pay reasonable custodian fees
in connection with the loan; 6) the voting rights on the lent securities may
pass to the borrower; however, if the directors of the Fund know that a material
event will occur affecting an investment loan, they must either terminate the
loan in order to vote the proxy or enter into an alternative arrangement with
the borrower to enable the directors to vote the proxy.

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. Credit
worthiness will be monitored on an ongoing basis by the Series' respective
investment manager.

FOREIGN SECURITIES

To the extent the Fund's 16 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

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part of a "section 988 hedging transaction" (as defined in the Internal Revenue
Code of 1986 (the "Code"), as amended, and the Treasury Regulations) will be
integrated and treated as a single transaction or otherwise treated consistently
for purposes of the Code. The income tax effects of integrating and treating a
transaction as a single transaction are generally to create a synthetic debt
instrument that is subject to the original discount provisions. It is
anticipated that some of the non-U.S. dollar denominated investments and foreign
currency contracts a Series may make or enter into will be subject to the
special currency rules described above.

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<PAGE>

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

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

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

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<PAGE>

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.

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<PAGE>

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.

C. Purchasing Call Options--International Equity, Global Bond, Emerging
Markets, Convertible Securities and REIT 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, Small
Cap Value, Trend, Global Bond, Emerging Markets, Convertible Securities and REIT
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

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<PAGE>

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.

As with stock options, DelCap, International Equity, Small Cap Value,
Trend, Global Bond, Emerging Markets, Convertible Securities and REIT 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, Small Cap Value, Trend, Global Bond,
Emerging Markets, Convertible Securities and REIT 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 and REIT 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

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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.

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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<PAGE>
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, Small Cap Value, Trend, Global Bond,
Emerging Markets, Convertible Securities and REIT 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. As such, a
Series will not be subject to federal income tax, or to any excise tax, to the
extent its earnings are distributed as provided in the Code and it satisfies
other requirements relating to the sources of its income and diversification of
its assets.

In order to qualify as a regulated investment company for federal
income tax purposes, a Series must meet certain specific requirements,
including:

(i) The Series must maintain a diversified portfolio of securities,
wherein no security (other than U.S. government securities and securities of
other regulated investment companies) can exceed 25%

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of the Series' total assets, and, with respect to 50% of the Series' total
assets, no investment (other than cash and cash items, U.S. government
securities and securities of other regulated investment companies) can exceed 5%
of the Series' total assets;

(ii) The Series must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or disposition of stock and securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies;

(iii) The Series must distribute to its shareholders at least 90% of
its net investment income and net tax-exempt income for each of its fiscal
years, and

(iv) The Series must realize less than 30% of its gross income for each
fiscal year from gains from the sale of securities and certain other assets that
have been held by the Series for less than three months ("short- short income").
The Taxpayer Relief Act of 1997 (the "1997 Act") repealed the 30% short-short
income test for tax years of regulated investment companies beginning after
August 5, 1997; however, this rule may have continuing effect in some states for
purposes of classifying the Series as a regulated investment company.

The Code requires the Series to distribute at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital gain net
income earned during the 12 month period ending October 31 (in addition to
amounts from the prior year that were neither distributed nor taxed to the
Series) to you by December 31 of each year in order to avoid federal excise
taxes. The Series intends as a matter of policy to declare and pay sufficient
dividends in December or January (which are treated by you as received in
December) but does not guarantee and can give no assurances that its
distributions will be sufficient to eliminate all such taxes.

The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the year that unrealized losses exceed unrealized gains.

The 1997 Act has also added new provisions for dealing with
transactions that are generally called "Constructive Sale Transactions." Under
these rules, a Series must recognize gain (but not loss) on any constructive
sale of an appreciated financial position in stock, a partnership interest or
certain debt instruments. The Series will generally be treated as making a
constructive sale when it: 1) enters into a short sale on the same or
substantially identical property; 2) enters into an offsetting notional
principal contract; or 3) enters into a futures or forward contract to deliver
the same or substantially identical property. Other transactions (including
certain financial instruments called collars) will be treated as constructive
sales as provided in Treasury regulations to be published. There are also
certain exceptions that apply for transactions that are closed before the end of
the 30th day after the close of the taxable year.

Investment in Foreign Currencies and Foreign Securities--A Series is
authorized to invest a limited amount in foreign securities. Such investments,
if made, will have the following additional tax consequences to a Series:

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<PAGE>

Under the Code, gains or losses attributable to fluctuations in foreign
currency exchange rates which occur between the time the Series accrues income
(including dividends), or accrues expenses which are denominated in a foreign
currency, and the time the Series actually collects such income or pays such
expenses generally are treated as ordinary income or loss. Similarly, on the
disposition of debt securities denominated in a foreign currency and on the
disposition of certain options, futures, forward contracts, gain or loss
attributable to fluctuations in the value of foreign currency between the date
of acquisition of the security or contract and the date of its disposition are
also treated as ordinary gain or loss. These gains or losses, referred to under
the Code as "Section 988" gains or losses, may increase or decrease the amount
of the Series' net investment company taxable income, which, in turn, will
affect the amount of income to be distributed to you by the Series.

If the Series' Section 988 losses exceed the Series' other net
investment company taxable income during a taxable year, the Series generally
will not be able to make ordinary dividend distributions to you for that year,
or distributions made before the losses were realized will be recharacterized as
return of capital distributions of federal income tax purposes, rather than as
an ordinary dividend or capital gain distribution. If a distribution is treated
as a return of capital, your tax basis in your Series shares will be reduced by
a like amount (to the extent of such basis), and any excess of the distribution
over your tax basis in your Series shares will be treated as capital gain to
you.

The 1997 Act generally requires that foreign income be translated into
U.S. dollars at the average exchange rate for the tax year in which the
transactions are conducted. Certain exceptions apply to taxes paid more than two
years after the taxable year to which they relate. This new law may require the
Series to track and record adjustments to foreign taxes paid on foreign
securities in which it invests. Under the Series' current reporting procedure,
foreign security transactions are recorded generally at the time of each
transaction using the foreign currency spot rate available for the date of each
transaction. Under the new law, the Series will be required to record a fiscal
year end (and at calendar year end for excise tax purposes) an adjustment that
reflects the difference between the spot rates recorded for each transaction and
the year-end average exchange rate for all of the Series' foreign securities
transactions. There is a possibility that the mutual fund industry will be given
relief from this new provision, in which case no year-end adjustments will be
required.

The Series may be subject to foreign withholding taxes on income from
certain of its foreign securities. If more than 50% of the total assets of the
Series at the end of its fiscal year are invested in securities of foreign
corporations, the Series may elect to pass-through to you your pro rata share of
foreign taxes paid by the Series. If this election is made, you will be: (i)
required to include in your gross income your pro rata share of foreign source
income (including any foreign taxes paid by the Series) and (ii) entitled to
either deduct your share of such foreign taxes in computing your taxable income
or to claim a credit for such taxes against your U.S. income tax, subject to
certain limitations under the Code. You will be informed by the Fund at the end
of each calendar year regarding the availability of any such foreign tax credits
and the amount of foreign source income (including any foreign taxes paid by the
Series). If the Series elects to pass-through to you the foreign income taxes
that it has paid, you will be informed at the end of the calendar year of the
amount of foreign taxes paid and foreign source income that must be included on
your federal income tax return. If the Series invests 50% or less of its total
assets in securities of foreign corporations, it will not be entitled to
pass-through to you your pro-rata shares of foreign taxes paid by the Series. In
this case, these taxes will be taken as a deduction by the Series, and the
income reported to you will be the net amount after these deductions. The 1997
Act also simplifies the procedures by which investors in funds that invest in
foreign securities can claim tax credits

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<PAGE>

on their individual income tax returns for the foreign taxes paid by the Series.
These provisions will allow investors who pay foreign taxes of $300 or less on a
single return or $600 or less on a joint return during any year (all of which
must be reported on IRS Form 1099-DIV from the Series to the investor) to claim
a tax credit against their U.S. federal income tax for the amount of foreign
taxes paid by the Series. This process will allow you, if you qualify, to bypass
the burdensome and detailed reporting requirements on the foreign tax credit
schedule (Form 1116) and report your foreign taxes paid directly on page 2 of
Form 1040. You should note that this simplified procedure will not be available
until calendar year 1998.

Investment in Passive Foreign Investment Company securities--The Series
may invest in shares of foreign corporations which may be classified under the
Code as passive foreign investment companies ("PFICs"). In general, a foreign
corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets or 75% or more of its gross income is
investment-type income. If a Series receives an "excess distribution" with
respect to PFIC stock, the Series itself may be subject to U.S. federal income
tax on a portion of the distribution, whether or not the corresponding income is
distributed by the Series to you. In general, under the PFIC rules, an excess
distribution is treated as having been realized ratably over the period during
which the Series held the PFIC shares. The Series itself will be subject to tax
on the portion, if any, of an excess distribution that is so allocated to prior
Series taxable years, and an interest factor will be added to the tax, as if the
tax had been payable in such prior taxable years. In this case, you would not be
permitted to claim a credit on your own tax return for the tax paid by the
Series. Certain distributions from a PFIC as well as gain from the sale of PFIC
shares are treated as excess distributions. Excess distributions are
characterized as ordinary income even though, absent application of the PFIC
rules, certain distribution might have been classified as capital gain. This may
have the effect of increasing Series distributions to you that are treated as
ordinary dividends rather than long-term capital gain dividends.

A Series may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under an election that currently is available in some
circumstances, the Series generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions are received from the PFIC during such period. If this
election were made, the special rules, discussed above, relating to the taxation
of excess distributions, would not apply. In addition, the 1997 Act provides for
another election that would involve marking-to-market the Series' PFIC shares at
the end of each taxable year (and on certain other dates as prescribed in the
Code), with the result that unrealized gains would be treated as though they
were realized. The Series would also be allowed an ordinary deduction for the
excess, if any, of the adjusted basis of its investment in the PFIC stock over
its fair market value at the end of the taxable year. This deduction would be
limited to the amount of any net mark-to-market gains previously included with
respect to that particular PFIC security. If the Series were to make this second
PFIC election, tax at the Series level under the PFIC rules would generally be
eliminated.

The application of the PFIC rules may affect, among other things, the
amount of tax payable by the Series (if any), the amounts distributable to you
by the Series, the time at which these distributions must be made, and whether
these distributions will be classified as ordinary income or capital gain
distributions to you.

You should be aware that it is not always possible at the time shares
of a foreign corporation are acquired to ascertain that the foreign corporation
is a PFIC, and that there is always a possibility that a foreign corporation
will become a PFIC after the Series acquires shares in that corporation. While
the

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<PAGE>

Series will generally seek to avoid investing in PFIC shares to avoid the
tax consequences detailed above, there are no guarantees that it will do so and
it reserves the right to make such investments as a matter of its fundamental
investment policy.

Most foreign exchange gains are classified as ordinary income which
will be taxable to you as such when distributed. Similarly, you should be aware
that any foreign exchange losses realized by the Series, including any losses
realized on the sale of foreign debt securities, are generally treated as
ordinary losses for federal income tax purposes. This treatment could increase
or reduce the Series' income available for distribution to you, and may cause
some or all of the Series' previously distributed income to be classified as a
return of capital.

-32-

<PAGE>

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 Strategic Income, Devon,
Emerging Markets, Convertible Securities, Social Awareness Series and REIT
Series, as shown below, is the average annual total return quotations through
December 31, 1997. As of the date of this Part B, REIT Series had not yet begun
investment operations. Strategic Income, Devon, Emerging Markets, Convertible
Securities and Social Awareness Series commenced operations on May 1, 1997.
Securities prices fluctuated during the periods covered and past results should
not be considered as representative of future performance.

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<PAGE>

<TABLE>
<CAPTION>
Average Annual Total Return*
Decatur
Total Capital Cash
Return Delchester Reserves Reserve Delaware DelCap
<S> <C> <C> <C> <C> <C> <C> <C>
1 year ended 1 year ended
12/31/97 31.00% 13.63% 7.60% 5.10% 26.40% 12/31/97 14.90%

3 years ended 3 years ended
12/31/97 29.12% 13.97% 8.50% 5.17% 22.86% 12/31/97 19.43%

5 years ended 5 years ended
12/31/97 19.92% 10.84% 6.03% 4.33% 14.91% 12/31/97 12.89%

Period 7/28/88** Period 7/12/91**
through 12/31/97 13.45% 10.77% 7.04% 5.28% 13.91% through 12/31/97 11.83%

International Small Cap
Equity Value Trend Global Bond
1 year ended 1 year ended 1 year ended
12/31/97 6.60% 12/31/97 32.91% 21.37% 12/31/97 0.88%

3 years ended 3 years ended Period 5/2/96**
12/31/97 13.40% 12/31/97 26.35% 23.32% through 12/31/97 7.48%

5 years ended Period 12/27/93**
12/31/97 11.65% through 12/31/97 19.96% 17.42%

Period 10/29/92**
through 12/31/97 11.30%
</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 the amounts noted
under Investment Management Agreements. In the absence of such voluntary
waiver, performance would have been affected negatively.

** Date of initial public offering.

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<PAGE>

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, Capital Reserves and Strategic Income Series as of December 31, 1997
using this formula were 9.05%, 5.92% and 7.31%, 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.

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<PAGE>

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, 1997.

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.................................... 10.00982291
===========

Net change in account value................................. .00982291*

Base period return = net change in account
value / beginning account value...................... .000982291

Current yield [base period return x (365 / 7)].............. 5.12%**
=====
365/7
Effective yield (1 + base period) - 1................... 5.25%***
=====
Weighted average life to maturity of the portfolio on December 31, 1997 was
49 days.

- ----------
* This represents the net income per share for the seven calendar days ended
December 31, 1997.

** This represents the average of annualized net investment income per share
for the seven calendar days ended December 31, 1997.

*** This represents the current yield for the seven calendar days ended
December 31, 1997 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.

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<PAGE>
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, each Series may also quote its actual total return
performance, dividend results and other performance information in advertising
and other types of literature. This information may be compared to that of other
mutual funds with similar investment objectives and to stock, bond and other
relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual funds.
For example, the performance of a Series may be compared to data prepared by
Lipper Analytical Services, Inc., Morningstar, Inc., or to the S&P 500 Index,
the Dow Jones Industrial Average, the Morgan Stanley Capital International
(MSCI), Europe, Australia and Far East (EAFE) Index, the MSCI Emerging Markets
Free Index, or the Salomon Brothers World Government Bond Index. Performance
also may be compared to data prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc. or the performance of unmanaged indices compiled or maintained
by statistical research firms such as Lehman Brothers or Salomon Brothers, Inc.

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 purposes. Generally, the indices
selected will be representative of the types of securities in which a Series may
invest and the assumptions that were used in calculating the blended performance
will be described.

Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed mutual
funds. Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare a Series'
performance to another fund in appropriate categories over specific time periods
also may be quoted in advertising and other types of literature. The S&P 500 and
the Dow Jones Industrial Average are industry-accepted unmanaged indices of
generally-conservative securities used for measuring general market performance.
Similarly, the MSCI EAFE Index, the MSCI Emerging Markets Free Index, and the
Salomon Brothers World Government Bond Index are industry-accepted unmanaged
indices of equity securities in developed countries and global debt securities,
respectively, used for measuring general market performance. The total return
performance reported for these indices 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. A direct investment in an
unmanaged index is not possible.

Comparative information on the Consumer Price Index may also be included in
advertisements or other literature. The Consumer Price Index, as prepared by the
U.S. Bureau of Labor Statistics, is the

-37-

<PAGE>

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.

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 also be used in preparing comparative illustrations.

Each Series may also promote its yield and/or total return performance and
use comparative performance information computed by and available from certain
industry and general market research and publications, such as Lipper Analytical
Services, Inc., IBC/Donoghue's Money Market Report and Morningstar, Inc.

The performance of multiple indices compiled and maintained by statistical
research firms, such as Morgan Stanley, Salomon Brothers and Lehman Brothers,
may be combined to create a blended performance result for comparative purposes.
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.

Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury bills,
the U.S. rate of inflation (based on the Consumer Price Index), and combinations
of various capital markets. The performance of these capital markets is based on
the returns of different indices. The Series may use the performance of these
capital markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to those
of the Series. The Series may also compare performance to that of other
compilations or indices that may be developed and made available in the future.

The Series may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that describe
general principles of investing, such as asset allocation, diversification, risk
tolerance, and goal setting, questionnaires designed to help create a personal
financial profile, worksheets used to project savings needs based on assumed
rates of inflation and hypothetical rates of return and action plans offering
investment alternatives), investment management techniques, policies or
investment suitability of a Series (such as value investing, market timing,
dollar cost averaging, asset allocation, constant ratio transfer, automatic
account rebalancing, the advantages and disadvantages of investing in
tax-deferred and taxable investments or global or international investments),
economic and political conditions, the relationship between sectors of the
economy and the economy as a whole, the effects of inflation and historical
performance of various asset classes, including but not limited to, stocks,
bonds and Treasury bills. From time to time advertisements, sales literature,
communications to shareholders or other materials may summarize the substance of
information contained in shareholder reports (including the investment
composition of a Series), as well as the views as to current market, economic,
trade and interest rate trends, legislative, regulatory and monetary
developments, investment strategies and related matters believed to be of
relevance to a Series. In addition, selected indices may be used to illustrate
historic performance of selected asset classes. The Series may also include in
advertisements, sales literature, communications to shareholders or other

-38-

<PAGE>

materials, charts, graphs or drawings which illustrate the potential risks and
rewards of investment in various investment vehicles, including but not limited
to, domestic and international stocks, and/or bonds, treasury bills and shares
of a Series. In addition, advertisements, sales literature, communications to
shareholders or other materials may include a discussion of certain attributes
or benefits to be derived by an investment in a Series and/or other mutual
funds, shareholder profiles and hypothetical investor scenarios, timely
information on financial management and tax planning and investment alternatives
to certificates of deposit and other financial instruments. Such sales
literature, communications to shareholders or other materials may include
symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein.

Materials may refer to the CUSIP numbers of the Series and may
illustrate how to find the listings of the Series in newspapers and periodicals.
Materials may also include discussions of other Series, products, and services.

The Series may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Series may compare these measures
to those of other funds. Measures of volatility seek to compare the historical
share price fluctuations or total returns to those of a benchmark. Measures of
benchmark correlation indicate how valid a comparative benchmark may be.
Measures of volatility and correlation may be calculated using averages of
historical data. A Series may advertise its current interest rate sensitivity,
duration, weighted average maturity or similar maturity characteristics.
Advertisements and sales materials relating to a Series may include information
regarding the background and experience of its portfolio managers.

-39-

<PAGE>

The following table is an example, for purposes of illustration only, of
cumulative total return performance for the each Series, other than REIT Series,
through December 31, 1997 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
12/31/97 2.23% 1.93% 1.85% 1.27% 4.73% 12/31/97 (2.10%)

6 months ended 6 months ended
12/31/97 10.77% 7.08% 4.53% 2.57% 13.16% 12/31/97 8.34%

9 months ended 9 months ended
12/31/97 27.71% 12.15% 7.44% 3.86% 25.38% 12/31/97 23.45%

1 year ended 1 year ended
12/31/97 31.00% 13.63% 7.60% 5.10% 26.40% 12/31/97 14.90%

3 years ended 3 years ended
12/31/97 115.27% 48.03% 27.72% 16.33% 85.45% 12/31/97 70.34%

5 years ended 5 years ended
12/31/97 148.02% 67.30% 34.04% 23.59% 100.33% 12/31/97 83.31%

Period 7/28/88** Period 7/12/91**
through 12/31/97 228.69% 162.28% 89.86% 62.48% 241.38% through 12/31/97 106.22%
</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 the amounts noted
under Investment Management Agreements. In the absence of such voluntary
waiver, performance would have been affected negatively.

** Date of initial public offering.

-40-

<PAGE>

Cumulative Total Return*

<TABLE>
<CAPTION>
International Global
Equity Small Cap Value Trend Bond
<S> <C> <C> <C> <C> <C> <C>
3 months ended 3 months ended 3 months ended
12/31/97 (6.95%) 12/31/97 (0.06%) (4.45%) 12/31/97 (0.86%)

6 months ended 6 months ended 6 months ended
12/31/97 (6.45%) 12/31/97 13.71% 15.32% 12/31/97 1.13%

9 months ended 9 months ended 9 months ended
12/31/97 2.85% 12/31/97 31.09% 29.01% 12/31/97 4.08%

1 year ended 1 year ended 1 year ended
12/31/97 6.60% 12/31/97 32.91% 21.37% 12/31/97 0.88%

3 years ended 3 years ended Period 5/2/96**
12/31/97 45.84% 12/31/97 101.72% 87.54% through 12/31/97 12.78%

5 years ended Period 12/27/93**
12/31/97 73.48% through 12/31/97 107.57% 90.54%

Period 10/29/92**
through 12/31/97 74.00%
</TABLE>
- -----------
* The respective investment manager elected to waive voluntarily the portion
of its annual compensation under its Investment Management Agreement with
each Series to limit operating expenses of the Series to to the amounts
noted under Investment Management Agreements. In the absence of such
voluntary waiver, performance would have been affected negatively.

** Date of initial public offering.

-41-

<PAGE>

Cumulative Total Return*

<TABLE>
<CAPTION>
Strategic Emerging Convertible Social
Income Devon Markets Securities Awareness
<S> <C> <C> <C> <C> <C>
3 months ended
12/31/97 0.47% 5.82% (16.31%) (2.59%) 4.48%

6 months ended
12/31/97 3.81% 16.79% (18.08%) 12.32% 19.00%

Period 5/1/97**
through 12/31/97 6.20% 27.30% (11.20%) 16.70% 28.40%
</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 the amounts noted
under Investment Management Agreements. In the absence of such voluntary
waiver, performance would have been affected negatively.

** 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 investment disciplines of
the Series and other funds in the Delaware Investments family employed in
meeting their objectives.

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

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<PAGE>

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.

Number
Investment Price Per of Shares
Amount Share Purchased

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

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.

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. Each Series may included illustrations showing the
Power of Compounding in advertisements and other types of literature.

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<PAGE>

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, 1995, 1996 and 1997, the
aggregate dollar amounts of brokerage commissions were paid by the Series noted
below:

1995 1996 1997

Decatur Total Return Series $255,600 $302,434 $518,762
Delaware Series $85,124 $83,262 $120,307
DelCap Series $53,072 $101,211 $270,393
International Equity Series $86,131 $110,181 $215,242
Small Cap Value Series $25,600 $53,113 $119,689
Trend Series $18,776 $80,172 $182,867
Devon Series* N/A N/A $21,022
Emerging Markets Series* N/A N/A $28,640
Convertible Securities Series* N/A N/A $5,517
Social Awareness Series* N/A N/A $7,416
- ----------
*Commenced operations on May 1, 1997.

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>

During the fiscal year ended December 31, 1997, 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:

Portfolio Brokerage
Transactions Commissions
Amounts Amounts

Decatur Total Return Series $62,428,498 $78,642
Delaware Series $60,528,614 $82,629
DelCap Series $56,536,147 $110,320
International Equity Series $25,179,824 $58,049
Small Cap Value Series $14,009,956 $33,658
Trend Series $16,770,285 $40,896
Devon Series* $4,820,695 $6,490
Emerging Markets Series* $10,052 $9
Convertible Securities Series* $774,905 $1,854
Social Awareness Series* $421,615 $260
- -----------
*Commenced operations on May 1, 1997.

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
Investments family. 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

-45-

<PAGE>

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
expenses of the funds in the Delaware Investments family, 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 portfolio turnover
rates are not expected to exceed 100% for the Decatur Total Return,
International Equity, Global Bond, Strategic Income, Emerging Markets, Devon,
Social Awareness and REIT Series, 200% for the Capital Reserves, and Delaware
Series, and may exceed 100% for the Delchester, Small Cap Value and Trend Series
and 200% for the Convertible Securities Series. Although the DelCap Series'
portfolio turnover exceeded 100% for the previous fiscal year, it is not
expected to exceed 100% in the current fiscal year. 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.

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<PAGE>

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

Year Ended Year Ended
Series December 31, 1997 December 31, 1996
------ ----------------- -----------------

Decatur Total Return Series 54% 81%
Delchester Series 121% 93%
Capital Reserves Series 120% 122%
Delaware Series 67% 92%
DelCap Series 134% 85%
International Equity Series 7% 8%
Small Cap Value Series 41% 84%
Trend Series 125% 112%
Global Bond Series 97% 56%*
Strategic Income Series 70%** N/A
Devon Series 80%** N/A
Emerging Markets Series 48%** N/A
Convertible Securities Series 209%** N/A
Social Awareness Series 52%** N/A
- --------
* Annualized. Commenced operations on May 2, 1996.
** Annualized. Commenced operations on May 1, 1997.

-47-

<PAGE>

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, Martin Luther King, Jr. 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. Each Series' net asset value per share is
computed by adding the value of all the securities and other assets in the
Series' portfolio, deducting any liabilities of the Series, and dividing by the
number of Fund shares outstanding. Expenses and fees are accrued daily. In
determining a Series' total net assets, portfolio securities primarily listed or
traded on a national or foreign securities exchange, except for bonds, are
valued at the last sale price on that exchange. Exchange traded options are
valued at the last reported sale price or, if no sales are reported, at the mean
between bid and asked prices. Non-exchange traded options are valued at fair
value using a mathematical model. Futures contracts are valued at their daily
quoted settlement price. For valuation purposes, foreign currencies and foreign
securities denominated in foreign currency values will be converted into U.S.
dollar values at the mean between the bid and offered quotations of such
currencies against U.S. dollars based on rates in effect that day. 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.
Money market instruments having a maturity of less than 60 days are valued at
amortized cost. Debt securities (other than short-term obligations) are valued
on the basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Foreign securities and
the prices of foreign securities denominated in foreign currencies are
translated to U.S. dollars based on rates in effect as of 12 p.m., Eastern time.
Use of a pricing service has been approved by the Board of Directors. Prices
provided by a pricing service take into account appropriate factors such as
institutional trading in similar groups of securities, yield, quality, coupon
rate, maturity, type of issue, trading characteristics and other market data.
Subject to the foregoing, securities for which market quotations are not readily
available and other assets are valued at fair value as determined in good faith
and in a method approved by the Board of Directors.

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

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<PAGE>

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>

DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS

Dividends for Delchester, Capital Reserves and Strategic Income Series
are declared daily and paid monthly. 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 Global Bond 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, Small Cap Value, Trend, Emerging
Markets, Social Awareness and REIT Series, the Fund will make payments from the
Series' net income and net realized securities profits, if any, once 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>

TAXES

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 the
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.

The Series does not have a 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, the Series intends to
offset realized securities profits to the extent of the capital losses carried
forward.

All dividends out of net investment income, together with distributions
from short-term capital gains, will be taxable to those shareholders who are
subject to income taxes as ordinary income. (These distributions may be eligible
for the dividends-received deductions for corporations.) Any net long-term
capital gains distributed to those shareholders who are subject to income tax
will be taxable as such, regardless of the length of time a shareholder has
owned their shares.

Under the Taxpayer Relief act of 1997 (the "1997 Act"), the Series is
required to track its sales of portfolio securities and to report its capital
gain distributions to you according to the following categories of holding
periods:

"Mid-term capital gains" or "28 percent rate gain": securities sold by
the Series after July 28, 1997 that were held more than one year but
not more than 18 months. These gains will be taxable to individual
investors at a maximum rate of 28%.

"1997 Act long-term capital gains" or "20 percent rate gain":
securities sold by the Series after July 28, 1997 that were held for
more than 18 months. These gains will be taxable to individual
investors at a maximum rate of 20% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 10% for investors
in the 15% federal income tax bracket.

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<PAGE>

"Qualified 5-year gains": For individuals in the 15% bracket, qualified
5-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individual who are subject
to tax at higher rate brackets, qualified 5-year gains are net gains on
securities which are purchased after December 31, 2000 and are held for
more than 5 years. Taxpayers subject to tax at higher rate brackets may
also make an election for shares held on January 1, 2001 to recognize
gain on their shares (any loss is disallowed) in order to qualify such
shares as qualified 5-year property as though purchased after December
31, 2000. These gains will be taxable to individual investors at a
maximum rate of 18% for investors in the 28% or higher federal income
tax brackets, and at a maximum rate of 8% for investors in the 15%
federal income tax bracket when sold after the 5 year holding period.

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<PAGE>

INVESTMENT MANAGEMENT AGREEMENTS AND SUB-ADVISORY AGREEMENTS

Delaware Management Company ("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, Small Cap Value, Trend, Strategic
Income, Devon, Convertible Securities, Social Awareness and REIT Series.
Delaware International Advisers Ltd. ("Delaware International"), located at
Third Floor, 80 Cheapside, London, England EC2V 6EE, 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 Delaware Investments since 1938. On December 31, 1997, Delaware Management
and its affiliates within Delaware Investments, including Delaware
International, were supervising in the aggregate more than $40 billion in assets
in the various institutional or separately managed (approximately
$24,040,760,000) and investment company (approximately $16,482,523,000)
accounts. Delaware Management is a series of Delaware Management Business Trust.
Delaware Management changed its form of organization from a corporation to a
business trust on March 1, 1998.

The Investment Management Agreements for Decatur Total Return,
Delchester, Capital Reserves, Cash Reserve, DelCap, Delaware, International
Equity, Small Cap 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 Social Awareness 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 Investment Management
Agreement for REIT Series is dated May 1, 1998 and was approved by the initial
shareholder on that date 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.

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<PAGE>

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:

*Assets up to $500 million: 0.75% of average daily net assets
Assets over $500 million - $1,000 million: 0.70% of average daily net assets
Assets over $1,000 million - $2,500 million: 0.65% of average daily net
assets
Assets over $2,500 million: 0.60% of average daily net assets

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:

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

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.

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.

Pursuant to the terms of Sub-Advisory Agreements with Delaware
Management, Vantage Global Advisors, Inc. ("Vantage") participates in the
management of Social Awareness Series' assets. Vantage 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 Agreement and supervises

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<PAGE>

Vantage's performance of such services For the services provided to Delaware
Management, Delaware Management pays Vantage a fee equal to (i) 0.25% of average
daily net assets up to $20 million; (ii) 0.35% of average daily net assets
between $20 million and $50 million; and (iii) 0.40% of average daily net assets
over $50 million. Vantage's address is 630 Fifth Avenue, New York, NY 10111.

Lincoln Investment Management, Inc. ("Lincoln"), a wholly owned
subsidiary of Lincoln National Corporation ("Lincoln National"), acts as
sub-adviser to Delaware Management with respect to REIT Series. In its capacity
as sub-adviser, Lincoln furnishes Delaware Management with investment
recommendations, asset allocation advice, research, economic analysis and other
investment services with respect to the securities in which the Series may
invest. Lincoln receives 30% of the advisory fee paid to Delaware Management for
acting as sub-adviser to Delaware Management with respect to the Series.
Lincoln's address is 200 E. Berry Street, Fort Wayne, Indiana 46802.

On December 31, 1997, the total net assets of the Fund were
$1,259,137,743, broken down as follows:

Decatur Total Return Series $401,401,970
Delchester Series $98,874,882
Capital Reserves Series $29,176,832
Cash Reserve Series $30,711,176
DelCap Series $110,454,505
Delaware Series $127,675,344
International Equity Series $198,863,261
Small Cap Value Series $84,071,143
Trend Series $118,276,090
Global Bond Series $16,875,596
Strategic Income Series $8,606,187
Devon Series $16,653,491
Convertible Securities Series $3,921,377
Social Awareness Series $7,800,105
Emerging Markets Series $5,775,784

REIT Series did not publicly offer shares prior to May 1, 1998.

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<PAGE>

Investment management fees were incurred with respect to the Series
noted below for the last three fiscal years.

<TABLE>
<CAPTION>
Series December 31, 1997 December 31, 1996 December 31, 1995
- ------ ----------------- ----------------- -----------------
<S> <C> <C> <C>
Decatur Total Return Series $1,640,377 paid $765,301 paid $528,481 paid

Delchester Series $483,877 paid $348,693 paid $311,242 paid

Capital Reserves Series $166,300 paid $164,296 paid $157,204 paid

Cash Reserve Series $149,023 paid $110,155 paid $93,257 paid

DelCap Series $716,228 earned $505,739 earned $357,930 earned
$646,908 paid $491,404 paid $336,345 paid
$69,320 waived $14,335 waived $21,585 waived

Delaware Series $595,126 paid $402,509 paid $329,278 paid

International Equity Series $1,304,340 earned $768,150 earned $525,376 earned
$1,207,677 paid $650,392 paid $457,751 paid
$96,663 waived $117,758 waived $67,625 waived

Small Cap Value Series $380,405 earned $117,000 earned $65,528 earned
$328,056 paid $87,687 paid $51,016 paid
$52,349 waived $29,313 waived $14,512 waived

Trend Series $622,149 earned $247,520 earned $92,985 earned
$558,331 paid $205,501 paid $72,359 paid
$63,818 waived $42,019 waived $20,626 waived

Global Bond Series* $109,310 earned $26,503 earned N/A
$68,076 paid $12,597 paid
$41,234 waived $13,906 waived

Strategic Income Series** $21,320 earned N/A N/A
$7,271 paid
$14,049 waived

Devon Series** $31,110 earned N/A N/A
$25,236 paid
$5,874 waived

Emerging Markets Series** $36,327 earned N/A N/A
$8,587 paid
$27,740 waived

</TABLE>

-56-

<PAGE>

<TABLE>
<CAPTION>
Series December 31, 1997 December 31, 1996 December 31, 1995
- ------ ----------------- ----------------- -----------------
<S> <C> <C> <C>

Convertible Securities Series** $14,026 earned N/A N/A
-0- paid
$14,026 waived

Social Awareness Series** $20,293 earned N/A N/A
$3,692 paid
$16,601 waived

</TABLE>
* Commenced operations on May 2, 1996.
** Commenced operations on May 1, 1997.

During the period May 1, 1997 (date of commencement of operations)
through December 31, 1997, Delaware International received $2,424 from Delaware
Management for serving as Sub-Adviser to the Strategic Income Series and Vantage
received $5,449 from Delaware Management for serving as Sub-Adviser to the
Social Awareness Series.

Except for those expenses borne by the respective investment manager
under the Investment Management Agreements and the Distributor under the
Distribution Agreements, each Series is responsible for all of its own expenses.
Among others, these include the Series' proportionate share of rent and certain
other administrative expenses; the investment management fees; transfer and
dividend disbursing agent fees and costs; custodian expenses; federal securities
registration fees; proxy costs; and the costs of preparing prospectuses and
reports sent to shareholders.

Beginning May 1, 1998, Delaware Management elected voluntarily to waive
its fee and pay the expenses of a Series to the extent necessary to ensure that
a Series' annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, do not exceed the following percentages
of average daily net assets through October 31, 1998:

-57-

<PAGE>

Beginning May 1, 1998, Delaware International elected voluntarily to
waive its fee and pay the expenses of a Series to the extent necessary to ensure
that a Series' annual operating expenses, exclusive of taxes, interest,
brokerage commissions and extraordinary expenses, do not exceed the following
percentages of average daily net assets through October 31, 1998:

International Equity Series 0.95%
Global Bond Series 0.85%
Emerging Markets Series 1.50%

Prior to May 1, 1998, Delaware Management elected voluntarily to waive
its fee and pay the expenses of Decatur Total Return, Delaware and DelCap Series
to the extent necessary to ensure that a Series' annual operating expenses,
exclusive of taxes, interest, brokerage commissions and extraordinary expenses,
did not exceed 0.80% of average daily net assets for the period July 1, 1992
through April 30, 1998.

Prior to May 1, 1998, Delaware International elected voluntarily to
waive its fee and pay the expenses of International Equity and Global Bond
Series to the extent necessary to ensure that a Series' annual operating
expenses, exclusive of taxes, interest, brokerage commissions and extraordinary
expenses, did not exceed 0.80% of average daily net assets from the commencement
of operations through June 30, 1997. The waiver and payment commitment was
extended through April 30, 1998 for Global Bond Series. Beginning July 1, 1997,
Delaware International elected voluntarily to waive its fee and pay the expenses
of International Equity to the extent necessary to ensure that the Series'
annual operating expenses, exclusive of taxes, interest, brokerage commissions
and extraordinary expenses, did not exceed 0.95% of average daily net assets
through April 30, 1998.

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, Social Awareness and
REIT Series. Global Bond Series' Distribution Agreement is dated as of May 1,
1996. Strategic Income, Devon, Emerging Markets, Convertible Securities and
Social Awareness Series' Distribution Agreements are dated as of May 1, 1997.
REIT Series Distribution Agreement is dated as of May 1, 1998. The Distributor
is an affiliate of Delaware Management and Delaware International and bears all
of the costs of promotion and distribution. Delaware Distributors, L.P. is an
indirect, wholly owned subsidiary of Delaware Management Holdings, Inc.

-58-

<PAGE>

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, Small Cap Value,
Trend, Global Bond, Strategic Income, Devon, Emerging Markets, Convertible
Securities, Social Awareness and REIT Series pursuant to the Amended and
Restated Shareholders Services Agreement dated May 1, 1998 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. The Transfer Agent is also an
indirect, wholly owned subsidiary of Delaware Management Holdings, Inc.

-59-

<PAGE>

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 Investments family.

DMH Corp., Delvoy, Inc., Delaware Management Company, Inc., Delaware
Management Business Trust, Delaware Management Company, Delaware Investment
Advisers, 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 Social Awareness
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.

<TABLE>
<CAPTION>
<S> <C>
*Wayne A. Stork (59)
Chairman and Director of the Fund, 33 other investment companies in the Delaware Investments
family, Delaware Management Holdings, Inc. and Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer, Director of DMH Corp., Delaware Distributors, Inc. and
Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer and Director of Delaware
Management Company, Inc.
Chairman, President, Chief Executive Officer and Chief Investment Officer of Delaware Management
Company.
Chairman, President, Chief Executive Officer and Chief Investment Officer and Trustee of Delaware
Management Business Trust.
Chairman, Chief Executive Officer, Chief Investment Officer of Delaware Investment Advisers.
Chairman, Chief Executive Officer and Director of Delaware International Advisers Ltd. and Delaware
International Holdings Ltd.
President and Chief Executive Officer of Delvoy, Inc.
Chairman of Delaware Distributors, L.P.
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.
</TABLE>

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

-60-

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
*Jeffrey J. Nick (45)
President, Chief Executive Officer and Director and/or Trustee of the Fund and 33 other
investment companies in the Delaware Investments family.
President, Chief Executive Officer and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National Investment Companies, Inc.
President of Lincoln Funds Corporation.
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.

Richard G. Unruh, Jr. (58)
Executive Vice President of the Fund, each of the other 33 investment companies in the Delaware Investments
family, Delaware Management Holdings, Inc., Delaware Management Company and Delaware Capital
Management, Inc.
Executive Vice President and Director of Delaware Management Company, Inc.
Executive Vice President and Trustee of Delaware Management Business Trust.
President of Delaware Investment Advisers.
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 (50)
Executive Vice President/Chief Investment Officer, Fixed Income of the Fund, each of the other 33
investment companies in the Delaware Investments family, Delaware Management Company, Inc.,
Delaware Management Company, Delaware Investment Advisers and Delaware Management Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc. and Delaware Management Business Trust.
Director of Founders CBO Corporation.
Director of HYPPCO Finance Company Ltd.
Before returning to Delaware Investments 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 Delaware Investments.
</TABLE>

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

-61-

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
David K. Downes (58)
Executive Vice President, Chief Operating Officer, Chief Financial Officer of the Fund, each of the other
33 investment companies in the Delaware Investments family, Delaware Management Holdings, Inc,
Founders CBO Corporation, Delaware Management Company, Delaware Investment Advisers, Delaware
Capital Management, Inc. and Delaware Distributors, L.P.
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Director of
Delaware Management Company, Inc., DMH Corp., Delaware Distributors, Inc., Founders Holdings,
Inc. and Delvoy, Inc.
President, Chief Executive Officer, Chief Financial Officer and Director of Delaware Service
Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director of Delaware
International Holdings Ltd.
Chairman, Chief Executive Officer and Director of Delaware Management Trust Company and Delaware Investment
& Retirement Services, Inc.
Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Trustee of Delaware
Management Business Trust.
Director of Delaware International Advisers Ltd. and Delaware Voyageur Holding, Inc.
Vice President of Lincoln Funds Corporation
During the past five years, Mr. Downes has served in various executive capacities at different times within
the Delaware organization.

Walter P. Babich (70)
Director and/or Trustee of the Fund and each of the other 33 investment companies in the Delaware Investments family.
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 (59)
Director and/or Trustee of the Fund and each of the other 33 investment companies in the Delaware Investments family.
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.

</TABLE>

62
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Ann R. Leven (57)
Director and/or Trustee of the Fund and each of the other 33 investment companies in the Delaware Investments family.
785 Park Avenue, New York, NY 10021. Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of the Smithsonian Institution,
Washington, DC, and from 1975 to 1992, she was Adjunct Professor of Columbia Business School.

W. Thacher Longstreth (77)
Director and/or Trustee of the Fund and each of the other 33 investment companies in the Delaware Investments family.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.

Thomas F. Madison (62)
Director and/or Trustee of the Fund and each of the other 33 investment companies in the Delaware Investments family.
President and Chief Executive Officer, 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.

Charles E. Peck (72)
Director and/or Trustee of the Fund and each of the other 33 investment companies in the Delaware Investments family.
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.
</TABLE>

-63-

<PAGE>

George M. Chamberlain, Jr. (51)
Senior Vice President, Secretary and General Counsel of the Fund, each of the other 33 investment
companies in the Delaware Investments family, Delaware Management Company, Delaware Investment
Advisers, Delaware Distributors, L.P. and Delaware Management Holdings, Inc.
Senior Vice President, Secretary, General Counsel and Director of DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, Inc., Delaware Service Company, Inc., Founders Holdings,
Inc., Delaware Investment & Retirement Services, Inc., Delaware Capital Management, Inc. and
Delvoy, Inc.
Senior Vice President, Secretary, General Counsel and Trustee of Delaware Management Business Trust.
Executive Vice President, Secretary, General Counsel and Director of Delaware Management Trust
Company.
Senior Vice President and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Secretary of Lincoln Funds Corporation Attorney.
During the past five years, Mr. Chamberlain has served in various capacities at different times within
the Delaware organization.

Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of the Fund, each of the other 33 investment companies in the
Delaware Investments family and Founders Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware Management Holdings, Inc., DMH
Corp., Delaware Management Company, Inc., Delaware Management Business Trust, Delaware Management
Company, Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company,
Inc., Delaware Capital Management, Inc., Delaware International Holdings Ltd. and Delvoy, Inc.
Chief Financial Officer/Treasurer of Delaware Investment & Retirement Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware Management Trust Company.
Senior Vice President/Assistant Treasurer of Founders CBO Corporation.
Treasurer of Lincoln Funds Corporation
1818 Market Street, Philadelphia, PA 19103.
During the past five years, Mr. Hastings has served in various capacities at different times within the
Delaware organization.

</TABLE>

-64-

<PAGE>

Michael P. Bishof (35)
Senior Vice President/Treasurer of the Fund, each of the other 33 investment companies in the Delaware
Investments family and Founders Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management Company, Inc., Delaware Management
Company and Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting of Delaware Distributors, L.P.
and Delaware Investment Advisers.
Senior Vice President and Manager of Investment Accounting of Delaware International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation.
Before joining Delaware Investments 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.

Gerald S. Frey (52)
Vice President/Senior Portfolio Manager of the Fund, of nine other investment companies in the
Delaware Investments family and of Delaware Management Company, Inc.
Before joining Delaware Investments in 1996, Mr. Frey was a Senior Director with Morgan Grenfell Capital
Management, New York, NY from 1986 to 1995.

John B. Fields (52)

Vice President/Senior Portfolio Manager of the Fund, of nine other investment companies in the
Delaware Investments family, Delaware Management Company, Inc., Delaware Investment Advisers,
Delaware Management Company and Delaware Capital Management, Inc.

During the past five years, Mr. Fields has served in various capacities within the Delaware
organization.
</TABLE>

-65-

<PAGE>

George H. Burwell (36)
Vice President/Senior Portfolio Manager of the Fund, of nine other investment companies in the
Delaware Investments family, Delaware Management Company, Inc. and Delaware Management
Company.
During the past five years, Mr. Burwell has served in various capacities at different times within the
Delaware organization.

Gary A. Reed (43)
Vice President/Senior Portfolio Manager of the Fund, of nine other investment companies in the
Delaware Investments family, of Delaware Management Company, Inc., Delaware Investment Advisers,
Delaware Management Company and Delaware Capital Management, Inc.
During the past five years, Mr. Reed has served in such capacities within the Delaware organization.

Gerald T. Nichols (40)
Vice President/Senior Portfolio Manager of the Fund, of 24 other investment companies in the Delaware
Investments family, Delaware Management Company, Inc., Delaware Investment Advisers and Delaware
Management Company.
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.

Paul A. Matlack (38)
Vice President/Senior Portfolio Manager of the Fund, of 24 other investment companies in the Delaware
Investments family, Delaware Management Company, Inc., Delaware Investment Advisers and Delaware
Management Company.
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.

Christopher S. Beck (40)
Vice President/Senior Portfolio Manager of the Fund, of nine other investment companies in
the Delaware Investments family, Delaware Management Company, Inc. and Delaware Management
Company.
Before joining Delaware Investments in 1997, Mr. Beck managed the small cap value fund for two years at
Pitcairn Trust Company. Prior to 1995, he was Director of Research at Cypress Capital Management
in Wilmington and Chief Investment Officer of the University of Delaware Endowment Fund.

Babak Zenouzi (35)
Vice President/Portfolio Manager of the Fund and 11 other investment companies in the Delaware
Investments family.
Vice President/Assistant Portfolio Manager of Delaware Investment Advisers.
During the past five years, Mr. Zenouzi has served in various capacities at different times within the
Delaware organization.
</TABLE>

-66-

<PAGE>

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 Investments funds for
the fiscal year ended December 31, 1997 and an estimate of annual benefits to be
received upon retirement under the Delaware Investments Retirement Plan for
Directors/Trustees as of December 31, 1997. Only the independent directors of
the Fund receive compensation from the Fund.
<TABLE>
<CAPTION>

Pension or Total
Retirement Estimated Compensation
Benefits Annual from all 34
Aggregate Accrued Benefits Delaware
Compensation as Part of Upon Investments
Name from Fund Fund Expenses Retirement* Funds**
<S> <C> <C> <C> <C>
W. Thacher Longstreth $3,097 None $38,500 $59,827
Ann R. Leven $3,433 None $38,500 $65,160
Walter P. Babich $3,370 None $38,500 $64,160
Anthony D. Knerr $3,370 None $38,500 $64,160
Charles E. Peck $3,002 None $38,500 $56,682
Thomas F. Madison*** $2,160 None $38,500 $43,537
</TABLE>

* Under the terms of the Delaware Investments 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 Delaware Investments 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,
1997, he or she would be entitled to annual payments totaling $38,500,
in the aggregate, from all of the funds in Delaware Investments, based
on the number of funds in Delaware Investments as of that date.

** Each independent director currently receives a total annual retainer
fee of $38,500 for serving as a director or trustee for all funds in
Delaware Investments, plus $3,145 for each Board Meeting attended. Ann
R. Leven, Walter P. Babich, and Anthony D. Knerr serve on the Fund's
audit committee; Ms. Leven is the chairperson. Members of the audit
committee currently receive additional annual compensation of $5,000
from all funds, with the exception of the chairperson, who receives
$6,000.

*** Mr. Madison joined the Board of Directors on April 30, 1997.

-67-

<PAGE>

As of April 7, 1998, management believes the following accounts held 5%
of record or more of the outstanding shares of each series of the Fund.
Management has no knowledge of beneficial ownership of the Fund's shares:
<TABLE>
<CAPTION>

Series Name and Address of Account Share Amount Percentage
- ------ --------------------------- ------------ ----------
<S> <C> <C> <C>
Decatur Total SMA Life Assurance Company
Return Series Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 17,238,651 67.68%

Lincoln National Life Company
Separate Account - C
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801 6,483,706 25.45%

Delchester Series SMA Life Assurance Company
Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 11,011,329 93.25%

Capital Reserves SMA Life Assurance Company
Series Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 3,001,523 91.74%

Delaware Series SMA Life Assurance Company
Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 7,744,687 93.45%

Cash Reserve SMA Life Assurance Company
Series Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 3,336,473 92.22%
</TABLE>

-68-

<PAGE>

Series Name and Address of Account Share Amount Percentage
- ------ --------------------------- ------------ ----------
<S> <C> <C> <C>
DelCap Series SMA Life Assurance Company
Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 6,479,602 95.32%

International Equity SMA Life Assurance Company
Series Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 13,296,990 96.91%

Trend Series SMA Life Assurance Company
Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 3,659,975 49.59%

Lincoln National Life Company
Separate Account - C
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801 3,619,110 49.04%

Small Cap Value Series SMA Life Assurance Company
Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 5,361,951 98.91%

Global Bond Series Lincoln National Life Company
Separate Account - C
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801 1,270,957 72.69%

SMA Life Assurance Company
Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 463,287 26.49%

</TABLE>

-69-

<PAGE>

Series Name and Address of Account Share Amount Percentage
- ------ --------------------------- ------------ ----------
<S> <C> <C> <C>
Strategic Income SMA Life Assurance Company
Series Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 1,020,922 75.93%

Lincoln National Life Company
Separate Account - C Seed Account
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801 257,050 19.11%

Devon Series SMA Life Assurance Company
Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 1,882,719 97.70%

Emerging Markets SMA Life Assurance Company
Series Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 501,617 70.57%

Lincoln National Life Company
Separate Account - C See Account
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801 206,393 29.04%

</TABLE>

-70-

<PAGE>

<TABLE>
<CAPTION>
Series Name and Address of Account Share Amount Percentage
- ------ --------------------------- ------------ ----------
<S> <C> <C> <C>
Convertible Securities Lincoln National Life Company
Series Separate Account - C Seed Account
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801 206,690 47.25%

SMA Life Assurance Company
Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 206,064 47.11%

Social Awareness SMA Life Assurance Company
Series Separate Account VA-K
440 Lincoln Street
Worcester, MA 01654 730,177 80.52%

Lincoln National Life Company
Separate Account - C Seed Account
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801 152,822 16.85%

</TABLE>

71
<PAGE>

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 Investments family. 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 Investments family
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 Investments family.

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 Investments
family. 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 Investments family 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 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. Small Cap
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 Social Awareness
Series was May 1, 1997. REIT Series did not commence operations prior to the
date of this Part B.

-72-

<PAGE>
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.

-73-

<PAGE>
APPENDIX A--DESCRIPTION OF RATINGS

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

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

Excerpts from Duff and Phelps, Inc.'s description of its two highest
ratings: Category 1--Top Grade: Duff 1- Plus--Highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or ready
access to alternative sources of funds, is clearly outstanding, and safety is
just below risk-free U.S. Treasury short-term obligations. Duff 1--Very high
certainty of timely payment. Liquidity factors are excellent and supported by
good fundamental protection factors. Risk factors are minor. Duff 1-Minus--High
certainty of timely payment. Liquidity factors are strong and supported by good
fundamental protection factors. Risk factors are very small. Category 2--Good
Grade: Duff 2--Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing internal funds' needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.

Excerpts from Fitch Investors Service, Inc.'s description of its two
highest ratings: F-1--Highest grade commercial paper assigned this rating is
regarded as having the strongest degree of assurance for timely payment.
F-2--Very good grade issues assigned this rating reflect an assurance of timely
payment only slightly less in degree than the strongest issues.

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

-74-

<PAGE>

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.

-75-

<PAGE>

FINANCIAL STATEMENTS

Ernst & Young LLP serves as the independent auditor for each Series of
the Fund and, in its capacity as such, audits the annual financial statements of
each Series. Each Series', other than REIT Series, Statement of Net Assets,
Statement of Operations, Statement of Changes in Net Assets, Financial
Highlights and Notes to Financial Statements, as well as the reports of Ernst &
Young LLP, independent auditors, for the fiscal year ended December 31, 1997 are
included in the Fund's Annual Reports to shareholders. The financial statements
and financial highlights, the notes relating thereto and the reports of Ernst &
Young LLP listed above are incorporated by reference from the Annual Reports
into this Part B. REIT Series did not commence operations prior to the date of
this Part B.

-76-

<PAGE>

PART C

Other Information

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Part A - Financial Highlights

*Part B - Statements of Net Assets
Statements of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Accountant's Report

* The financial statements and Accountant's Report listed above for
each Series of the Registrant, other than REIT Series, are
incorporated by reference into Part B from the Registrant's
Annual Report for the fiscal year ended December 31, 1997. REIT
Series is expected to commence operations on or about May 1,
1998.

(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) Executed Articles of Amendment to Articles of Incorporation
(April 24, 1997) attached as Exhibit.

(e) Executed Articles Supplementary to Articles of
Incorporation (April 24, 1997) attached as Exhibit.

(f) Executed Articles Supplementary to Articles of
Incorporation (March 3, 1998) attached as Exhibit.

(g) Executed Articles of Amendment to Articles of Incorporation
(April 16, 1998) attached as Exhibit.

<PAGE>

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) Executed Article Second to Articles Supplementary
(April 24, 1997) attached in Exhibit 24(b)(1)(e).

(iv) Form of Articles Supplementary (March 1998)
incorporated into this filing by reference to
Post-Effective Amendment No. 23 filed March 16,
1998.

(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 (renamed
Trend Series) incorporated into this filing by
reference to Post-Effective Amendment No. 15 filed
April 27, 1995.

(b) Executed Investment Management Agreement (April 3,
1995) between Delaware Management Company, Inc. and the
Registrant on behalf of Growth Series (renamed DelCap
Series) incorporated into this filing by reference to
Post-Effective Amendment No. 15 filed April 27, 1995.

<PAGE>

PART C - Other Information
(continued)

(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
(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
(renamed Decatur Total Return Series), High Yield
Series (renamed Delchester Series), Capital Reserves
Series and Multiple Strategy Series (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 (renamed Small Cap
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) Executed Investment Management Agreement (May 1, 1997)
between Delaware Management Company, Inc. and the
Registrant on behalf of Strategic Income Series
attached as Exhibit.

(i) Executed Investment Management Agreement (May 1, 1997)
between Delaware Management Company, Inc. and the
Registrant on behalf of Devon Series attached as
Exhibit.

<PAGE>

PART C - Other Information
(continued)

(j) Form of Investment Management Agreement (May 1997)
between Delaware International Advisers Ltd. and the
Registrant on behalf of Emerging Markets Series
incorporated into this filing by reference to
Post-Effective Amendment No. 20 filed April 29, 1997.

(k) Executed Investment Management Agreement (May 1, 1997)
between Delaware Management Company, Inc. and the
Registrant on behalf of Convertible Securities Series
attached as Exhibit.

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

(m) Form of Investment Management Agreement (May 1998)
between Delaware Management Company, Inc. and the
Registrant on behalf of REIT Series incorporated into
this filing by reference to Post-Effective Amendment
No. 22 filed January 15, 1998.

(n) Form of Sub-Advisory Agreement (May 1997) between
Delaware Management Company, Inc. and Delaware
International Advisers Ltd. on behalf of Strategic
Income Series incorporated into this filing by
reference to Post-Effective Amendment No. 20 filed
April 29, 1997.

(o) Executed Sub-Advisory Agreement (May 1, 1997) between
Delaware Management Company, Inc. and Vantage Global
Advisors, Inc. on behalf of Quantum Series (renamed
Social Awareness Series) attached as Exhibit.

(p) Form of Sub-Advisory Agreement (May 1998) between
Delaware Management Company, Inc. and Lincoln
Investment Management, Inc. on behalf of REIT Series
incorporated into this filing by reference to
Post-Effective Amendment No. 22 filed January 15, 1998.

<PAGE>

PART C - Other Information
(continued)

(6) Distribution Agreements.

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

(b) Executed Distribution Agreement (April 3, 1995) between
Delaware Distributors, L.P. and the Registrant on
behalf of Money Market Series (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 (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 (renamed Small Cap 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 (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.

<PAGE>

PART C - Other Information
(continued)

(h) Executed Distribution Agreement (May 1, 1997) between
Delaware Distributors, L.P. and the Registrant on
behalf of Convertible Securities Series, Devon Series,
Emerging Markets Series, Quantum Series (renamed Social
Awareness Series) and Strategic Income Series attached
as Exhibit.

(i) Form of Distribution Agreement (1998) between Delaware
Distributors, L.P. and the Registrant on behalf of REIT
Series incorporated into this filing by reference to
Post-Effective Amendment No. 22 filed January 15, 1998.

(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.

(i) Amendment (November 20, 1997) to Custodian
Agreement between The Chase Manhattan Bank and
the Registrant on behalf of each Series
incorporated into this filing by reference to
Post-Effective Amendment No. 22 filed January 15,
1998.

(ii) Letter of notice (May 1, 1997) to add Convertible
Securities Series, Devon Series, Emerging Markets
Series, Quantum Series (renamed Social Awareness
Series) and Strategic Income Series to Custodian
Agreement between The Chase Manhattan Bank and
the Registrant attached as Exhibit.

(b) Form of Securities Lending Agreement (1996) between The
Chase Manhattan Bank and the Registrant incorporated
into this filing by reference to Post-Effective
Amendment No. 18 filed October 29, 1996.

<PAGE>

PART C - Other Information
(continued)

(9) Other Material Contracts.

(a) Executed Shareholders Services Agreement (June 29,
1988) between Delaware Service Company, Inc. and the
Registrant on behalf of Money Market Series (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, 1997) between Delaware Service
Company, Inc. and the Registrant on behalf of High
Yield Series (renamed Delchester Series), Capital
Reserves Series, Equity/Income Series (renamed Decatur
Total Return Series), Multiple Strategy Series (renamed
Delaware Series), Growth Series (renamed DelCap
Series), International Equity Series, Value Series
(renamed Small Cap Value Series), Emerging Growth
Series (renamed Trend Series), Global Bond Series,
Strategic Income Series, Devon Series, Emerging Markets
Series, Convertible Securities Series and Quantum
Series (renamed Social Awareness Series) attached as
Exhibit.

(c) Form of Amended and Restated Shareholder Services
Agreement (1998) between Delaware Service Company, Inc.
and the Registrant on behalf of High Yield Series
(renamed Delchester Series), Capital Reserves Series,
Equity/Income Series (renamed Decatur Total Return
Series), Multiple Strategy Series (renamed Delaware
Series), Growth Series (renamed DelCap Series),
International Equity Series, Value Series (renamed
Small Cap Value Series), Emerging Growth Series
(renamed Trend Series), Global Bond Series, Strategic
Income Series, Devon Series, Emerging Markets Series,
Convertible Securities Series, Quantum Series (renamed
Social Awareness Series) and REIT Series incorporated
into this filing by reference to Post-Effective
Amendment No. 22 filed January 15, 1998.

<PAGE>

PART C - Other Information
(continued)

(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.

(ii) Executed Amendment No. 8 (December 18, 1997) to
Delaware Group of Funds Fund Accounting Agreement
incorporated into this filing by reference to
Post-Effective Amendment No. 23 filed March 16,
1998.

(i) Form of Amendment No. 9 to Delaware Group Funds
Fund Accounting Agreement (1998) incorporated
into this filing by reference to Post-Effective
Amendment No. 23 filed March 16, 1998.

(10) Opinion of Counsel. Incorporated into this filing by
reference to Post-Effective Amendment No. 23 filed March
16, 1998.

(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.

(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,
Post-Effective Amendment No. 18 filed October 29,
1996, Post-Effective Amendment No. 20 filed April 29,
1997 and Post-Effective Amendment No. 21 filed October
30, 1997.

(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.
23 filed March 16, 1998.

<PAGE>

PART C - Other Information
(continued)

Item 25. Persons Controlled by or under Common Control with Registrant. None.

Item 26. Number of Holders of Securities.

(1) (2)
Number of
Title of Class Record Holders

Delaware Group Premium Fund, Inc.
Delchester Series
Common Stock Par Value 6 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Capital Reserves Series
Common Stock Par Value 6 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Decatur Total Return Series
Common Stock Par Value 8 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Delaware Series
Common Stock Par Value 6 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Cash Reserve Series
Common Stock Par Value 6 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
DelCap Series
Common Stock Par Value 5 Accounts as of
$.01 Per Share April 7, 1998

<PAGE>

PART C - Other Information
(continued)

(1) (2)
Number of
Title of Class Record Holders

Delaware Group Premium Fund, Inc.
International Equity Series
Common Stock Par Value 2 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Small Cap Value Series
Common Stock Par Value 3 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Trend Series
Common Stock Par Value 5 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Global Bond Series
Common Stock Par Value 5 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Strategic Income Series
Common Stock Par Value 4 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Devon Series
Common Stock Par Value 3 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Emerging Markets Series
Common Stock Par Value 4 Accounts as of
$.01 Per Share April 7, 1998

<PAGE>

PART C - Other Information
(continued)

(1) (2)
Number of
Title of Class Record Holders

Delaware Group Premium Fund, Inc.
Convertible Securities Series
Common Stock Par Value 4 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
Social Awareness Series
Common Stock Par Value 4 Accounts as of
$.01 Per Share April 7, 1998

Delaware Group Premium Fund, Inc.
REIT Series
Common Stock Par Value 1 Account as of
$.01 Per Share April 7, 1998

Item 27. Indemnification. Incorporated into this filing by reference to
initial Registration Statement filed May 14, 1987 and Article VII of
the Amendment to By-Laws (February 16, 1989) incorporated into this
filing by reference to Post-Effective Amendment No. 15 filed April 27,
1995.

Item 28. Business and Other Connections of Investment Adviser.

Delaware Management Company (the "Manager"), a series of Delaware
Management Business Trust, serves as investment manager to the Registrant and
also serves as investment manager or sub-adviser to certain of the other funds
in the Delaware Investments family (Delaware Group Equity Funds I, Inc.,
Delaware Group Equity Funds II, Inc., Delaware Group Equity Funds III, Inc.,
Delaware Group Equity Funds IV, Inc., Delaware Group Equity Funds V, Inc.,
Delaware Group Government Fund, Inc., Delaware Group Income Funds, Inc.,
Delaware Group Limited-Term Government Funds, Inc., Delaware Group Cash Reserve,
Inc., Delaware Group Tax-Free Fund, Inc., Delaware Group State Tax-Free Income
Trust, 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., Delaware Group
Global Dividend and Income Fund, Inc., Delaware Group Foundation Funds, Voyageur
Tax-Free Funds, Inc., Voyageur Intermediate Tax-Free Funds, Inc., Voyageur
Insured Funds, Inc., Voyageur Funds, Inc., Voyageur Investment Trust, Voyageur
Investment Trust II, Voyageur Mutual Funds, Inc., Voyageur Mutual Funds II,
Inc., Voyageur Mutual Funds III, Inc., Voyageur Arizona Municipal Income Fund,
Inc., Voyageur Colorado Insured Municipal Income Fund, Inc., Voyageur Florida
Insured Municipal Income Fund, Voyageur Minnesota Municipal Fund, Inc., Voyageur
Minnesota Municipal Fund II, Inc. and Voyageur Minnesota Municipal Fund III,
Inc.). In addition, certain officers of the Manager also serve as
directors/trustees of the other Delaware Investments 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 Investments family (see Item 29 below) and another such company
acts as the shareholder services, dividend disbursing, accounting servicing and
transfer agent for all of the mutual funds in the Delaware Investments family.

<PAGE>

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
- ------------------ -----------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, President, Chief Executive Officer and Chief
Investment Officer of Delaware Management Company (a series of Delaware
Management Business Trust); Chairman of the Board, President, Chief
Executive Officer, Chief Investment Officer and Director of Delaware
Management Company, Inc.; Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer and Trustee of Delaware Management
Business Trust; Chairman of the Board, President, Chief Executive Officer
and Director of DMH Corp.; Chairman, Chief Executive Officer, Chief
Investment Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust), Delaware Distributors, Inc. and Founders
Holdings, Inc.; Chairman, Chief Executive Officer and Director of Delaware
International Holdings Ltd. and Delaware International Advisers Ltd.;
Chairman of the Board and Director of the Registrant, each of the other
funds in the Delaware Investments family, Delaware Management Holdings,
Inc., and Delaware Capital Management, Inc.; Chairman of Delaware
Distributors, L.P.; President and Chief Executive Officer of Delvoy, Inc.;
and Director of Delaware Service Company, Inc. and Delaware Investment &
Retirement Services, Inc.

Richard G. Unruh, Jr. Executive Vice President of Delaware Management Company (a series of
Delaware Management Business Trust); Executive Vice President and Director
of Delaware Management Company, Inc.; Executive Vice President and Trustee
of Delaware Management Business Trust; Executive Vice President of the
Registrant, each of the other funds in the Delaware Investments family,
Delaware Management Holdings, Inc. and Delaware Capital Management, Inc;
President of Delaware Investment Advisers (a series of Delaware Management
Business Trust) 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.

</TABLE>

<PAGE>

PART C - Other Information
(continued)

Director, HYPPCO Finance Company Ltd.

David K. Downes Executive Vice President, Chief Operating Officer and Chief Financial
Officer of Delaware Management Company (a series of Delaware Management
Business Trust) and Delaware Investment Advisers (a series of Delaware
Management Business Trust); Executive Vice President, Chief Administrative
Officer, Chief Financial Officer and Trustee of Delaware Management Business
Trust; Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware Management Company, Inc., DMH Corp,
Delaware Distributors, Inc., Founders Holdings, Inc. and Delvoy, Inc.;
Executive Vice President, Chief Operating Officer and Chief Financial
Officer of the Registrant and each of the other funds in the Delaware
Investments family, Delaware Management Holdings, Inc., Founders CBO
Corporation, Delaware Capital Management, Inc. and Delaware Distributors,
L.P.; President, Chief Executive Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.; President, Chief Operating
Officer, Chief Financial Officer and Director of Delaware International
Holdings Ltd.; Chairman, Chief Executive Officer and Director of Delaware
Investment & Retirement Services, Inc.; Chairman and Director of Delaware
Management Trust Company; Director of Delaware International Advisers Ltd.;
and Vice President of Lincoln Funds Corporation

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

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
George M. Chamberlain, Jr. Senior Vice President, General Counsel and Secretary of Delaware Management
Company (a series of Delaware Management Business Trust) and Delaware
Investment Advisers (a series of Delaware Management Business Trust); Senior
Vice President, General Counsel, Secretary and Trustee of Delaware
Management Business Trust; Senior Vice President, General Counsel, Secretary
and Director of Delaware Management Company, Inc., DMH Corp., Delaware
Distributors, Inc., Delaware Service Company, Inc., Founders Holdings, Inc.,
Delaware Capital Management, Inc., Delaware Investment & Retirement
Services, Inc. and Delvoy, Inc.; Senior Vice President, Secretary and
General Counsel of the Registrant, each of the other funds in the Delaware
Investments family, Delaware Distributors, L.P. and Delaware Management
Holdings, Inc.; Senior Vice President and Director of Delaware International
Holdings Ltd.; Executive Vice President, Secretary, General Counsel and
Director of Delaware Management Trust Company; Director of Delaware
International Advisers Ltd.; Secretary of Lincoln Funds Corporation

Richard J. Flannery Senior Vice President/Corporate and International Affairs of the Registrant,
each of the other funds in the Delaware Investments family, Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., Delaware Distributors, Inc., Delaware Distributors, L.P., Delaware
Management Trust Company, Delaware Capital Management, Inc., Delaware
Service Company, Inc. and Delaware Investment & Retirement Services, Inc.;
Executive Vice President/Corporate & International Affairs and Director of
Delaware International Holdings Ltd.; Senior Vice President/ Corporate and
International Affairs and Director of Founders Holdings, Inc. and Delvoy,
Inc.; Senior Vice President of Founders CBO Corporation; 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 Senior Vice President and Treasurer of the Registrant, each of the other
funds in the Delaware Investments family and Founders Holdings, Inc.; Senior
Vice President/Investment Accounting of Delaware Management Company (a
series of Delaware Management Business Trust); Delaware Management Company,
Inc. and Delaware Service Company, Inc.; Senior Vice President and
Treasurer/Manager, Investment Accounting of Delaware Distributors, L.P. and
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Assistant Treasurer of Founders CBO Corporation; and Senior Vice
President and Manager of Investment Accounting of Delaware International
Holdings Ltd.

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Joseph H. Hastings Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Business Trust,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Management Company, Inc., Delaware Distributors, Inc.,
Delaware Capital Management, Inc., Delaware Distributors, L.P., Delaware
Service Company, Inc., Delaware International Holdings Ltd. and Delvoy,
Inc.; Senior Vice President/Corporate Controller of the Registrant, each of
the other funds in the Delaware Investments family and Founders Holdings,
Inc.; Executive Vice President, Chief Financial Officer and Treasurer of
Delaware Management Trust Company; Chief Financial Officer and Treasurer of
Delaware Investment & Retirement Services, Inc.; Senior Vice
President/Assistant Treasurer of Founders CBO Corporation; and Treasurer of
Lincoln Funds Corporation.

Michael T. Taggart Senior Vice President/Facilities Management and Administrative Services of
Delaware Management Company (a series of Delaware Management Business Trust)
and Delaware Management Company, Inc.

Douglas L. Anderson Senior Vice President/Operations of Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Management Company, Inc.,
Delaware Investment and Retirement Services, Inc. and Delaware Service
Company, Inc.; Senior Vice President/ Operations and Director of Delaware
Management Trust Company

James L. Shields Senior Vice President/Chief Information Officer of Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Management Company, Inc., Delaware Service Company, Inc. and Delaware
Investment & Retirement Services, Inc.

Eric E. Miller Vice President, Assistant Secretary and Deputy General Counsel of the
Registrant and each of the other funds in the Delaware Investments family,
Delaware Management Company (a series of Delaware Management Business
Trust), 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
Holdings, Inc., Delaware Capital Management, Inc. and Delaware Investment &
Retirement Services, Inc.; Assistant Secretary of Delaware Management
Business Trust; and Vice President and Assistant Secretary of Delvoy, Inc.
and Delaware Investment Advisers (a series of Delaware Management Business
Trust).

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., Delaware Investment Advisers (a series of Delaware Management Business
Trust), the Registrant, each of the other funds in the Delaware Investments
family, 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., Founders Holdings, Inc. and
Delvoy, Inc.; Vice President and Secretary of Delaware International
Holdings Ltd.; and Secretary of Founders CBO Corporation;

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

Richard Salus(1) Vice President/Assistant Controller of Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Management Company, Inc.
and Delaware Management Trust Company

Bruce A. Ulmer Vice President/Director of LNC Internal Audit of Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Management
Company, Inc., the Registrant, each of the other funds in the Delaware
Investments family, Delaware Management Holdings, Inc., DMH Corp., Delaware
Management Trust Company and Delaware Investment & Retirement Services,
Inc.; Vice President/Director of Internal Audit of Delvoy, Inc.

Joel A. Ettinger(2) Vice President/Director of 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., Delaware Investment & Retirement Services, Inc.
and Delvoy, Inc.

Susan L. Hanson Vice President/Strategic Planning of Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Management Company, Inc.
and Delaware Service Company, Inc.

Christopher Adams Vice President/Strategic Planning of Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Management Company, Inc.
and Delaware Service Company, Inc.

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Dennis J. Mara(3) Vice President/Acquisitions of Delaware Management Company (a series of
Delaware Management Business Trust) and Delaware Management Company, Inc.

Scott Metzger Vice President/Business Development of Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Management Company, Inc.
and Delaware Service Company, Inc.

Lisa O. Brinkley Vice President/Compliance of Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Investments family,
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.; Vice President of Delvoy, Inc.

Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management
Company, Inc., Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, each of the tax-exempt funds, the
fixed income funds and the closed-end funds in the Delaware Investments
family; Vice President of Founders Holdings, Inc.; and Treasurer, Assistant
Secretary and Director of Founders CBO Corporation

Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management
Company, Inc., Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, each of the tax-exempt funds, the
fixed income funds and the closed-end funds in the Delaware Investments
family; Vice President of Founders Holdings, Inc.; and President and Director of
Founders CBO Corporation.

Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management
Company, Inc., Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, each of the tax-exempt funds and
the fixed income funds in the Delaware Investments family and Delaware
Capital Management, Inc.

Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management
Company, Inc., Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, each of the tax-exempt funds and
the fixed income funds in the Delaware Investments family and Delaware
Capital Management, Inc.

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., Delaware Investment Advisers (a series of Delaware Management Business
Trust), the Registrant, each of the tax-exempt funds and the fixed income
funds in the Delaware Investments family

Mitchell L. Conery(4) Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., Delaware Investment Advisers (a series of Delaware Management Business
Trust), the Registrant and each of the tax-exempt and fixed income funds in
the Delaware Investments family

George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., the Registrant and each of the equity funds in the Delaware
Investments family

John B. Fields Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., Delaware Investment Advisers (a series of Delaware Management Business
Trust), the Registrant and each of the equity funds in the Delaware
Investments family and Delaware Capital Management, Inc.

Gerald S. Frey(5) Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., the Registrant and each of the equity funds in the Delaware
Investments family

Christopher Beck(6) Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., Delaware Investment Advisers (a series of Delaware Management Business
Trust), the Registrant and each of the equity funds in the Delaware
Investments family

Elizabeth H. Howell(7) Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc. and the Delaware-Voyageur Tax-Free Minnesota Intermediate,
Delaware-Voyageur Minnesota Insured, Delaware-Voyageur Tax-Free Minnesota,
Delaware-Voyageur Tax-Free Idaho, Delaware-Voyageur Tax-Free Kansas,
Delaware-Voyageur Tax-Free Missouri, Delaware-Voyageur Tax-Free Oregon,
Delaware-Voyageur Tax-Free Washington, Delaware-Voyageur Tax-Free Iowa and
Delaware-Voyageur Tax-Free Wisconsin Funds.

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Andrew M. McCullagh(8) Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc. and the Delaware-Voyageur Tax-Free Arizona Insured, Delaware-Voyageur
Tax-Free Arizona, Delaware-Voyageur Tax-Free California Insured,
Delaware-Voyageur Tax-Free Colorado, Delaware-Voyageur Tax-Free New Mexico,
Delaware-Voyageur Tax-Free North Dakota and Delaware-Voyageur Tax-Free Utah
Funds.

Babak Zenouzi Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Management Company,
Inc., the Registrant and each of the equity funds and the closed-end funds
in the Delaware Investments family

Paul Grillo Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Management Company, Inc., the
Registrant, Delaware Investment Advisers (a series of Delaware Management
Business Trust) and each of the tax-exempt and fixed income funds in the
Delaware Investments family

Marshall T. Bassett Vice President/Portfolio Manager of Delaware Management Company, Delaware
Management Company (a series of Delaware Management Business Trust), Inc.,
Delaware Investment Advisers (a series of Delaware Management Business
Trust) and each of the equity funds in the Delaware Investments family.

John Heffern Vice President/Portfolio Manager of Delaware Management Company, Delaware
Management Company (a series of Delaware Management Business Trust), Inc.
and each of the equity funds in the Delaware Investments family.

Mary Ellen Carrozza Vice President/Client Services of Delaware Management Company, Delaware
Management Company (a series of Delaware Management Business Trust), Inc.,
Delaware Investment Advisers (a series of Delaware Management Business
Trust) and Delaware Pooled Trust, Inc.

</TABLE>

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

1 SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
2 TAX PRINCIPAL, Ernst & Young LLP prior to April 1998.
3 CORPORATE CONTROLLER, IIS prior to July 1997 and DIRECTOR, FINANCIAL PLANNING,
Decision One prior to March 1996.
4 INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
5 SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June 1996.
6 SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
7 SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to May 1997.
8 SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset Management LLC
prior to May 1997.

<PAGE>

PART C - Other Information
(continued)

Delaware International Advisers Ltd. ("Delaware International") serves
as investment manager to the International Equity, Global Bond and Emerging
Markets Series of the Registrant. In addition, Delaware International serves as
sub-adviser to Strategic Income Series. Delaware International also serves as
investment manager or sub-adviser to certain other funds in the Delaware
Investments family (Delaware Group Global Dividend and Income Fund, Inc.,
Delaware Group Global & International Funds, Inc., Delaware Pooled Trust, Inc.,
Delaware Group Adviser Funds, Inc. and Delaware Group Income Funds, 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.

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 of the Board, President, Chief Executive Officer, Chief Investment
Officer and Director of Delaware Management Company, Inc.; Chairman of the
Board, President, Chief Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman, Chief
Executive Officer and Director of Delaware International Holdings Ltd. and
Delaware International Advisers Ltd.; Chairman of the Board and Director of
the Registrant, each of the other funds in the Delaware Investments family,
Delaware Management Holdings, Inc. and Delaware Capital Management, Inc.;
President and Chief Executive Officer of Delvoy, Inc.; Chairman of Delaware
Distributors, L.P.; Director of Delaware Service Company, Inc. and Delaware
Investment & Retirement Services, Inc.; Chairman of the Board, President,
Chief Executive Officer and Chief Investment Officer of Delaware Management
Company (a series of Delaware Management Business Trust) and Delaware
Investment Advisers (a series of Delaware Management Business Trust); and
Chairman of the Board, President, Chief Executive Officer, Chief Investment
Officer and Trustee of Delaware Management Business Trust.

**G. Roger H. Kitson Vice Chairman and Director of Delaware International Advisers Ltd.

**Ian G. Sims Deputy Managing Director/ Chief Investment Officer/Global Fixed Income and
Director of Delaware International Advisers Ltd.

**David G. Tilles Managing Director, Chief Investment Officer and Director of Delaware
International Advisers Ltd. and Chief Investment Officer and Director of
Delaware International Holdings, Ltd.

**John Emberson Secretary, Compliance Officer, Finance Director and Director of Delaware
International Advisers Ltd.

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
** Business address of each is Third Floor, 80 Cheapside, London, England EC2V
6EE.

<PAGE>

PART C - Other Information
(continued)

**Elizabeth A. Desmond Director/Head of European Group and Director of Delaware International
Advisers Ltd.

*David K. Downes Director of Delaware International Advisers Ltd. and Delaware Voyageur
Holding, Inc.; Executive Vice President, Chief Operating Officer and Chief
Financial Officer of Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Investment Advisers (a series of
Delaware Management Business Trust); Executive Vice President, Chief
Administrative Officer, Chief Financial Officer and Trustee of Delaware
Management Business Trust; Executive Vice President, Chief Operating
Officer, Chief Financial Officer and Director of Delaware Management
Company, Inc., DMH Corp, Delaware Distributors, Inc., Founders Holdings,
Inc. and Delvoy, Inc.; Executive Vice President, Chief Operating Officer and
Chief Financial Officer of the Registrant and each of the other funds in the
Delaware Investments family, Delaware Management Holdings, Inc., Founders
CBO Corporation, Delaware Capital Management, Inc. and Delaware
Distributors, L.P.; President, Chief Executive Officer, Chief Financial Officer
and Director of Delaware Service Company, Inc.; President, Chief Operating
Officer, Chief Financial Officer and Director of Delaware International
Holdings Ltd.; Chairman, Chief Executive Officer and Director of Delaware
Investment & Retirement Services, Inc.; Chairman and Director of Delaware
Management Trust Company; and Vice President of Lincoln Funds Corporation

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

*Richard G. Unruh, Jr. Director of Delaware International Advisers Ltd.; Executive Vice President of
Delaware Management Company (a series of Delaware Management Business
Trust); Executive Vice President and Trustee of Delaware Management
Business Trust; Executive Vice President and Director of Delaware
Management Company, Inc.; Executive Vice President of the Registrant, each
of the other funds in the Delaware Investments family, Delaware Management
Holdings, Inc and Delaware Capital Management, Inc.; President of Delaware
Investment Advisers (a series of Delaware Management Business Trust).

Board of Directors, Chairman of Finance Committee, Keystone Insurance
Company since 1989, 2040 Market Street, Philadelphia, PA; Board of
Directors, Chairman of Finance Committee, Mid Atlantic, Inc. since 1989,
2040 Market Street, Philadelphia, PA; Board of Directors, Metron, Inc. since
1995, 11911 Freedom Drive, Reston, VA

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
** Business address of each is Third Floor, 80 Cheapside, London, England EC2V
6EE.

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with Delaware International Advisers Ltd.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ---------------------------------------------------------------
<S> <C>
*Richard J. Flannery Senior Vice President/Corporate and International Affairs of the Registrant,
each of the other funds in the Delaware Investments family, Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), Delaware Management
Company, Inc., Delaware Distributors, Inc., Delaware Distributors, L.P.,
Delaware Management Trust Company, Delaware Capital Management, Inc.,
Delaware Service Company, Inc. and Delaware Investment & Retirement
Services, Inc.; Executive Vice President/Corporate & International Affairs and
Director of Delaware International Holdings Ltd.; Senior Vice President/
Corporate and International Affairs and Director of Founders Holdings, Inc. and
Delvoy, Inc.; Senior Vice President of Founders CBO Corporation; and
Director of Delaware International Advisers Ltd.

Director, HYPPCO Finance Company Ltd.

*John C. E. Campbell Director of Delaware International Advisers Ltd.; and Executive Vice President
of Delaware Investment Advisers (a series of Delaware Management Business
Trust).

*George M. Chamberlain, Jr. Director of Delaware International Advisers Ltd. and Delaware Voyageur
Holding, Inc.; Senior Vice President, General Counsel and Secretary of
Delaware Management Company (a series of Delaware Management Business
Trust) and Delaware Investment Advisers (a series of Delaware Management
Business Trust); Senior Vice President, General Counsel, Secretary and Trustee
of Delaware Management Business Trust; Senior Vice President, General
Counsel, Secretary and Director of Delaware Management Company, Inc.,
DMH Corp., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Founders Holdings, Inc., Delaware Capital Management, Inc., Delaware
Investment & Retirement Services, Inc. and Delvoy, Inc.; Senior Vice President,
Secretary and General Counsel of the Registrant, each of the other funds in the
Delaware Investments family, Delaware Distributors, L.P. and Delaware
Management Holdings, Inc.; Senior Vice President and Director of Delaware
International Holdings Ltd.; Executive Vice President, Secretary, General
Counsel and Director of Delaware Management Trust Company; and Secretary
of Lincoln Funds Corporation

*George E. Deming Director of Delaware International Advisers Ltd. and Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust).
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
** Business address of each is Third Floor, 80 Cheapside, London, England EC2V
6EE.

<PAGE>

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.

**Gavin A. Hall Senior Portfolio Manager of Delaware International Advisers Ltd.

**Robert Akester Senior Portfolio Manager of Delaware International Advisers Ltd.

**Hywel Morgan Senior Portfolio Manager of Delaware International Advisers Ltd.

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
** Business address of each is Third Floor, 80 Cheapside, London, England EC2V
6EE.

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 (a series of
Delaware Management Business Trust). Vantage provides investment advice to
pension plans, endowments, insurance and commingled products. Vantage serves as
sub-adviser to Social Awareness 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.

Name and Principal Positions and Offices with Vantage Global Advisors, Inc.
Business Address and its 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.

</TABLE>

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with Vantage Global Advisors, Inc.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ --------------------------------------------------------
<S> <C>
Florence P. Leong Vice President of Vantage Global Advisors, Inc.

Evelyn M. Poy Vice President of Vantage Global Advisors, Inc.

Dennis A. Blume Director of Vantage Global Advisors, Inc.

Senior Vice President and Director of Lincoln Investment Management, Inc.
since 1982, 200 East Berry Street, Fort Wayne, IN; Director of Lynch & Mayer,
Inc. since 1996, 520 Madison Avenue, New York, NY

*H. Thomas McMeekin Director of Vantage Global Advisors, Inc.

President and Director of Lincoln Investment Management, Inc., Lincoln
National Convertible Securities Fund, Inc., Lincoln National Income Fund,
Inc. since 1994; Executive Vice President and Chief Investment Officer of
Lincoln National Corporation since 1994; President, Chief Executive Officer
and Director of Lincoln National Mezzanine Corporation, 200 East Berry
Street, Fort Wayne, IN; Director of Lynch & Mayer, Inc., 520 Madison Avenue,
New York, NY

**Bruce D. Barton Director of Vantage Global Advisors, Inc.

President and Chief Executive Officer of Delaware Distributors, L.P. since
1996, 1818 Market Street, Philadelphia, PA

</TABLE>

* Business address is 200 East Berry Street, Fort Wayne, IN 46802.
** Business address is 1818 Market Street, Philadelphia, PA 19103.

Lincoln Investment Management Company, Inc. serves as sub-adviser to
the REIT Series. Lincoln Investment Management Company, Inc. also serves as
sub-adviser to Delaware Pooled Trust, Inc. In addition, Lincoln Investment
Management Company, Inc. serves as investment manager to Lincoln National
Convertible Securities Fund, Inc., Lincoln National Income Fund, Inc., Lincoln
National Aggressive Growth Fund, Inc., Lincoln National Bond Fund, Inc., Lincoln
National Capital Appreciation Fund, Inc., Lincoln National Equity-Income Fund,
Inc., Lincoln National Global Asset Allocation Fund, Inc., Lincoln National
Growth and Income Fund, Inc., Lincoln National International Fund, Inc., Lincoln
National Managed Fund, Inc., Lincoln National Money Market Fund, Inc., Lincoln
National Social Awareness Fund, Inc., Lincoln National Special Opportunities
Fund, Inc. and to other clients. Lincoln Investment Management Company, Inc. is
registered with the Securities and Exchange Commission as an investment adviser
and has acted as an investment adviser to investment companies for over 40
years.

<PAGE>

PART C - Other Information
(continued)

Information regarding the officers and directors of Lincoln Investment
Management Company, Inc. and the positions they held during the past two years
follows:

*Dennis A. Blume Senior Vice President and Director of Lincoln Investment Management, Inc.
and Lincoln National Realty Corporation; and Director of Lynch & Mayer, Inc.
and Vantage Global Advisors, Inc.

*Steven R. Brody Director, Senior Vice President of Lincoln Investment Management, Inc.;
Director and Vice President of Lincoln National Mezzanine Corporation; Vice
President of The Lincoln National Life Insurance Company; Director of Lincoln
National Realty Corporation; Treasurer of Lincoln National Convertible
Securities Fund, Inc. and Lincoln National Income Fund, Inc.; and Assistant
Treasurer of Lincoln Financial Group, Inc., Lincoln National Aggressive
Growth Fund, Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital
Appreciation Fund, Inc., Lincoln National Equity-Income Fund, Inc., Lincoln
National Global Asset Allocation Fund, Inc., Lincoln National Growth and
Income Fund, Inc., Lincoln National Health & Casualty Insurance Company,
Lincoln National International Fund, Inc., Lincoln National Life Reinsurance
Company, Lincoln National Managed Fund, Inc., Lincoln National Money
Market Fund, Inc., Lincoln National Reassurance Company, Lincoln National
Social Awareness Fund, Inc. and Lincoln National Special Opportunities Fund,
Inc.

*Ann L. Warner Senior Vice President (previously Vice President) of Lincoln Investment
Management, Inc.; Second Vice President of Lincoln Life & Annuity Company of
New York; Director of Lincoln National Convertible Securities Fund, Inc.;
and Director and Vice President of Lincoln National Income Fund, Inc.

</TABLE>

*Business address is 200 East Berry Street, Fort Wayne, IN 46802.

<PAGE>

PART C - Other Information
(continued)

*David A. Berry Vice President of Lincoln Investment Management, Inc., Lincoln National
Convertible Securities Fund, Inc. and Lincoln National Income Fund, Inc.; and
Second Vice President of Lincoln Life & Annuity Company of New York

*Anne E. Bookwalter Vice President (previously Second Vice President) of Lincoln
Investment Management, Inc.; and Director of Professional Financial Planning,
Inc.

*Philip C. Byrde Vice President of Lincoln Investment Management, Inc.

*Patrick R. Chasey Vice President of Lincoln Investment Management, Inc.

*Garrett W. Cooper Vice President of Lincoln Investment Management, Inc.

*David C. Fischer Vice President of Lincoln Investment Management, Inc. and
Lincoln National Income Fund, Inc.

*Luc N. Girard Vice President of Lincoln Investment Management, Inc. and The Lincoln
National Life Insurance Company

*Donald P. Groover Vice President of Lincoln Investment Management, Inc.

Previously Senior Economist/Senior Consultant, Chalke, Inc., Chantilly, VA

*William N. Holm, Jr. Vice President of Lincoln Investment Management, Inc.; and Vice President and
Director of Lincoln National Mezzanine Corporation

*Jennifer C. Hom Vice President (previously Portfolio Manager) of Lincoln Investment
Management, Inc.

</TABLE>

*Business address is 200 East Berry Street, Fort Wayne, IN 46802.

<PAGE>

PART C - Other Information
(continued)

*Timothy H. Kilfoil Vice President of Lincoln Investment Management, Inc.

*Lawrence T. Kissko Vice President of Lincoln Investment Management, Inc.; Vice President and
Director Lincoln National Realty Corporation; and Vice President of The
Lincoln National Life Insurance Company

*Walter M. Korinke Vice President of Lincoln Investment Management, Inc.

*Lawrence M. Lee Vice President of Lincoln Investment Management, Inc. and Lincoln National
Realty Corporation

*John David Moore Vice President of Lincoln Investment Management, Inc.

*Oliver H. G. Nichols Vice President of Lincoln Investment Management, Inc., The Lincoln National
Life Insurance Company and Lincoln National Realty Corporation

*David C. Patch Vice President of Lincoln Investment Management, Inc.

*Joseph T. Pusateri Vice President of Lincoln Investment Management, Inc. and Lincoln National
Realty Corporation

*Gregory E. Reed Vice President of Lincoln Investment Management, Inc.

*Bill L. Sanders Vice President of Lincoln Investment Management, Inc.; and Sales Vice
President of The Lincoln National Life Insurance Company

*Milton W. Shuey Vice President of Lincoln Investment Management, Inc.

*Gerald M. Weiss Vice President of Lincoln Investment Management, Inc.

</TABLE>

*Business address is 200 East Berry Street, Fort Wayne, IN 46802.

<PAGE>

PART C - Other Information
(continued)

*Janet C. Whitney Vice President and Treasurer of Lincoln Investment Management, Inc., The
Financial Alternative, Inc., Financial Alternative Resources, Inc., Financial
Choices, Inc., Financial Investments, Inc., Financial Investment Services, Inc.,
The Financial Resources Department, Inc., Investment Alternatives, Inc., The
Investment Center, Inc., The Investment Group, Inc., LNC Administrative
Services Corporation, LNC Equity Sales Corporation, The Richard Leahy
Corporation, Lincoln National Aggressive Growth Fund, Inc., Lincoln National
Bond Fund, Inc., Lincoln National Capital Appreciation Fund, Inc., Lincoln
National Equity-Income Fund, Inc., Lincoln National Global Assets Allocation
Fund, Inc., Lincoln National Growth and Income Fund, Inc., Lincoln National
Health & Casualty Insurance Company, Lincoln National Intermediaries, Inc.,
Lincoln National International Fund, Inc., Lincoln National Managed Fund,
Inc., Lincoln National Management Services, Inc., Lincoln National Mezzanine
Corporation, Lincoln National Money Market Fund, Inc. Lincoln National
Realty Corporation, Lincoln National Risk Management, Inc., Lincoln National
Social Awareness Fund, Inc., Lincoln National Special Opportunities Fund, Inc.,
Lincoln National Structured Settlement, Inc., Personal Financial Resources, Inc.,
Personal Investment Services, Inc., Special Pooled Risk Administrators, Inc.,
Underwriters & Management Services, Inc.; Vice President and Treasurer
(previously Vice President and General Auditor) of Lincoln National
Corporation; and Assistant Treasurer of First Penn-Pacific Life Insurance
Company

</TABLE>

* Business address is 200 East Berry Street, Fort Wayne, IN 46802.
** Business address is 1300 S. Clinton Street, Fort Wayne, IN 46802.

<PAGE>

PART C - Other Information
(continued)

Name and Principal Positions and Offices with Lincoln Investment Management Company, Inc.
Business Address and its Affiliates and Other Positions and Offices Held
- ------------------ ----------------------------------------------------------------------
<S> <C>
*C. Suzanne Womack Secretary of Lincoln Investment Management, Inc., Corporate Benefit Systems
Services Corporation, The Financial Alternative, Inc., Financial Alternative
Resources, Inc., Financial Choices, Inc., The Financial Resources Department,
Inc., Financial Investment Services, Inc., Financial Investments, Inc., Insurance
Services, Inc., Investment Alternatives, Inc., The Investment Center, Inc. (TN),
The Investment Group, Inc., LNC Administrative Services Corporation, LNC
Equity Sales Corporation, The Richard Leahy Corporation, Lincoln Life
Improved Housing, Inc., Lincoln National (China) Inc., Lincoln National
Convertible Securities Fund, Inc., Lincoln National Health & Casualty
Insurance Company, Lincoln National Income Fund, Inc., Lincoln National
Intermediaries, Inc., Lincoln National Life Reinsurance Company, Lincoln
National Management Services, Inc., Lincoln National Mezzanine Corporation,
Lincoln National Realty Corporation, Lincoln National Reassurance Company,
Lincoln National Reinsurance Company (Barbados) Limited, Lincoln National
Reinsurance Company Limited, Lincoln National Risk Management, Inc.,
Lincoln National Structured Settlement, Inc., Old Fort Insurance Company, Ltd.,
Personal Financial Resources, Inc., Personal Investment Services, Inc.,
Professional Financial Planning, Inc., Reliance Life Insurance Company of
Pittsburgh, Special Pooled Risk Administrators, Inc. and Underwriters &
Management Services, Inc.; Vice President, Secretary and Director of Lincoln
National Foundation, Inc.; Secretary and Assistant Vice President of Lincoln
National Corporation and The National Life Insurance Company; and Assistant
Secretary of Lincoln National Aggressive Growth Fund, Inc., Lincoln National
Bond Fund, Inc., Lincoln National Capital Appreciation Fund, Inc., Lincoln
National Equity-Income Fund, Inc., Lincoln National Global Asset Allocation
Fund, Inc., Lincoln National Growth and Income Fund, Inc., Lincoln National
International Fund, Inc., Lincoln National Managed Fund, Inc., Lincoln
National Money Market Fund, Inc., Lincoln National Social Awareness Fund,
Inc., Lincoln National Special Opportunities Fund, Inc., Lincoln National
Variable Annuity Funds A & B and Lincoln Life & Annuity Company of New
York

</TABLE>

*Business address is 200 East Berry Street, Fort Wayne, IN 46802.

<PAGE>

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 officer or partner of
principal underwriter:

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 Investment Advisers
(a series of Delaware Management
Business Trust) Limited Partner None

Delaware Capital Management, Inc. Limited Partner None

Wayne A. Stork Chairman Chairman

Bruce D. Barton President and Chief Executive None
Officer

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

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

Richard J. Flannery Senior Vice President/Corporate Senior Vice President/
and International Affairs Corporate and International Affairs

Joseph H. Hastings Senior Vice President/Corporate Senior Vice President/
Controller & Treasurer Corporate Controller

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Thomas E. Sawyer Senior Vice President/ None
National Sales Director

Mac McAuliffe Senior Vice President/Sales None
Manager, Western Division

William F. Hostler Senior Vice President/ None
Marketing Services

J. Chris Meyer Senior Vice President/ None
Director Product Management

Stephen H. Slack Senior Vice President/Wholesaler None

William M. Kimbrough Senior Vice President/Wholesaler None

Daniel J. Brooks Senior Vice President/Wholesaler None

Bradley L. Kolstoe Senior Vice President/Western None
Division Sales Manager

Henry W. Orvin Senior Vice President/Eastern None
Division Sales Manager

Michael P. Bishof Senior Vice President and Treasurer/ Senior Vice
Manager, Investment Accounting President/Treasurer

Eric E. Miller Vice President/Assistant Secretary/ Vice President/Assistant Secretary/
Deputy General Counsel Deputy General Counsel

Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Lisa O. Brinkley Vice President/Compliance Vice President/Compliance

Daniel H. Carlson Vice President/Strategic Marketing None

Diane M. Anderson Vice President/Plan Record Keeping None
and Administration

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Courtney S. West Vice President/Defined Contribution None
Sales, NE Territory

Denise F. Guerriere Vice President/Client Services None

Gordon E. Searles Vice President/Client Services None

Lori M. Burgess Vice President/Client Services None

Julia R. Vander Els Vice President/Participant Services None

Jerome J. Alrutz Vice President/Retail Sales None

Scott Metzger Vice President/Business Development Vice President/Business
Development

Stephen C. Hall Vice President/Institutional Sales None

Gregory J. McMillan Vice President/ National Accounts None

Holly W. Reimel Vice President/Manager, National None
Accounts

Christopher H. Price Vice President/Manager, None
Insurance

Stephen J. DeAngelis Vice President/Product None
Development

Andrew W. Whitaker Vice President/Financial Institutions None

Jesse Emery Vice President/ Marketing None
Communications

Darryl S. Grayson Vice President, Broker/Dealer None
Internal Sales

Dinah J. Huntoon Vice President/Product None
Manager Equity

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Michael J. Woods Vice President/UIT Product None
Management

Ellen M. Krott Vice President/Marketing None

Dale L. Kurtz Vice President/Marketing Support None

David P. Anderson Vice President/Wholesaler None

Lee D. Beck Vice President/Wholesaler None

Gabriella Bercze Vice President/Wholesaler 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

Douglas R. Glennon Vice President/Wholesaler None

Ronald A. Haimowitz Vice President/Wholesaler None

Christopher L. Johnston Vice President/Wholesaler None

Michael P. Jordan Vice President/Wholesaler None

Jeffrey A. Keinert Vice President/Wholesaler None

Thomas P. Kennett Vice President/ Wholesaler None

Debbie A. Marler Vice President/Wholesaler None

Nathan W. Medin Vice President/Wholesaler None

Roger J. Miller Vice President/Wholesaler None

</TABLE>

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

<PAGE>

PART C - Other Information
(continued)

Stephen C. Nell Vice President/Wholesaler None

Julia A. Nye Vice President/Wholesaler None

Joseph T. Owczarek Vice President/Wholesaler None

Mary Ellen Pernice-Fadden Vice President/Wholesaler None

Mark A. Pletts Vice President/Wholesaler None

Philip G. Rickards Vice President/Wholesaler None

Laura E. Roman Vice President/Wholesaler None

Linda Schulz Vice President/Wholesaler None

Edward B. Sheridan Vice President/Wholesaler None

Robert E. Stansbury Vice President/Wholesaler None

Julia A. Stanton Vice President/Wholesaler None

Larry D. Stone Vice President/Wholesaler None

Edward J. Wagner Vice President/Wholesaler None

Wayne W. Wagner Vice President/Wholesaler None

John A. Wells Vice President/Marketing Technology None

Scott Whitehouse Vice President/Wholesaler None

</TABLE>

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

<PAGE>

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 Third Floor, 80 Cheapside,
London, England EC2V 6EE, in New York at 630 Fifth Avenue, New
York, NY 10111, or in Fort Wayne at 200 East Berry Street, Fort
Wayne, IN 46802 or 1300 S. Clinton Street, Fort Wayne, IN 46802.

Item 31. Management Services. None.

Item 32. Undertakings.

(a) Not Applicable.

(b) Not Applicable.

(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>

PART C - Other Information
(continued)

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 24th day of April, 1998.

DELAWARE GROUP PREMIUM FUND, INC.

By /s/Wayne A. Stork
-----------------
Wayne A. Stork
Chairman

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:

Signature Title Date
- ------------------------- ------------------------------------------ --------------
<S> <C> <C>

/s/ Wayne A. Stork Chairman of the Board and Director April 24, 1998
- -------------------------
Wayne A. Stork
Executive Vice President/Chief Operating
Officer/Chief Financial Officer (Principal
Financial Officer and Principal Accounting
/s/David K. Downes Officer) April 24, 1998
- -------------------------
David K. Downes

/s/Walter P. Babich Director April 24, 1998
- -------------------------
Walter P. Babich

/s/Anthony D. Knerr Director April 24, 1998
- -------------------------
Anthony D. Knerr

/s/Ann R. Leven Director April 24, 1998
- -------------------------
Ann R. Leven

/s/W. Thacher Longstreth Director April 24, 1998
- -------------------------
W. Thacher Longstreth

/s/ Thomas F. Madison Director April 24, 1998
- -------------------------
Thomas F. Madison

/s/ Jeffrey J. Nick Director April 24, 1998
- -------------------------
Jeffrey J. Nick

/s/Charles E. Peck Director April 24, 1998
- -------------------------
Charles E. Peck

</TABLE>
*By /s/Wayne A. Stork
-----------------
Wayne A. Stork
as Attorney-in-Fact
for each of the persons indicated

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Exhibits

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

<PAGE>

INDEX TO EXHIBITS

Exhibit No. Exhibit
- ----------- -------
<S> <C>
EX-99.B1C Executed Articles Supplementary to Articles of Incorporation (April 24, 1997)

EX-99.B1D Executed Articles of Amendment to Articles of Incorporation (April 24, 1997)

EX-99.B1E Executed Articles Supplementary to Articles of Incorporation (April 24, 1997)

EX-99.B1F Executed Articles Supplementary to Articles of Incorporation (March 3, 1998)

EX-99.B1G Executed Articles of Amendment to Articles of Incorporation (April 16, 1998)

EX-99.B5H Executed Investment Management Agreement (May 1, 1997) between Delaware Management
Company, Inc. and the Registrant on behalf of Strategic Income Series

EX-99.B5I Executed Investment Management Agreement (May 1, 1997) between Delaware Management
Company, Inc. and the Registrant on behalf of Devon Series

EX-99.B5K Executed Investment Management Agreement (May 1, 1997) between Delaware Management
Company, Inc. and the Registrant on behalf of Convertible Securities Series

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

EX-99.B5O Executed Sub-Advisory Agreement (May 1, 1997) between Delaware Management Company, Inc.
and Vantage Global Advisors, Inc. on behalf of Quantum Series (renamed Social Awareness
Series)

EX-99.B6H Executed Distribution Agreement (May 1, 1997) between Delaware Distributors, L.P. and the
Registrant on behalf of Convertible Securities Series, Devon Series, Emerging Markets Series,
Quantum Series (renamed Social Awareness Series) and Strategic Income Series

EX-99.B8AII Letter of notice (May 1, 1998) to add Convertible
Securities Series, Devon Series, Emerging Markets Series,
Quantum Series (renamed Social Awareness Series) and
Strategic Income Series to Custodian Agreement between The
Chase Manhattan Bank and the Registrant

EX-99.B9B Executed Amended and Restated Shareholders Services Agreement (May 1, 1997) between
Delaware Service Company, Inc. and the Registrant on behalf of High Yield Series (renamed
Delchester Series), Capital Reserves Series, Equity/Income Series (renamed Decatur Total Return
Series), Multiple Strategy Series (renamed Delaware Series), Growth Series (renamed DelCap
Series), International Equity Series, Value Series (renamed Small Cap Value Series), Emerging
Growth Series (renamed Trend Series), Global Bond Series, Strategic Income Series, Devon
Series, Emerging Markets Series, Convertible Securities Series and Quantum Series (renamed
Social Awareness Series)

EX-99.B11 Consent of Auditors

EX-27 Financial Data Schedules

</TABLE>

<PAGE>

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:

CLASS NO. OF SHARES PAR VALUE
- ------- ------------- ---------

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

<PAGE>

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:

CLASS NO. OF SHARES 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>

IN WITNESS WHEREOF, Delaware Group Premium Fund, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf this 22nd day
of April, 1997.

DELAWARE GROUP PREMIUM FUND, INC.

By: /s/ George M. Chamberlain, Jr.
------------------------------------
George M. Chamberlain, Jr.
Senior Vice President and
Secretary

Attest:

/s/ Michael D. Mabry
- -----------------------------------
Michael D. Mabry
Assistant 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.

/s/ George M. Chamberlain, Jr.
----------------------------------------
George M. Chamberlain, Jr.

-3-

<PAGE>

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>

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 23rd day
of April, 1997.

DELAWARE GROUP PREMIUM FUND, INC.

By: /s/ Eric E. Miller
------------------------------
Eric E. Miller
Vice President and
Assistant Secretary

Attest:

/s/Michael D. Mabry
- -----------------------------------
Michael D. Mabry
Assistant 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.

/s/ Eric E. Miller
----------------------------------------
Eric E. Miller

-2-

<PAGE>

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>

IN WITNESS WHEREOF, Delaware Group Premium Fund, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf this 22nd day
of April, 1997.

DELAWARE GROUP PREMIUM FUND, INC.

By: /s/ George M. Chamberlain, Jr.
----------------------------------
George M. Chamberlain, Jr.
Senior Vice President and
Secretary

Attest:

/s/Michael D. Mabry
- -----------------------------------
Michael D. Mabry
Assistant 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.

/s/ George M. Chamberlain, Jr.
----------------------------------------
George M. Chamberlain, Jr.

-2-

<PAGE>

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
February 19, 1998, 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 REIT
Series.

SECOND: The shares of the REIT Series shall have the rights and
privileges, and shall be subject to the limitations and priorities, set forth in
the Charter of the Corporation.

THIRD: The shares of the REIT Series have been classified by the Board
of Directors pursuant to authority contained in the Articles of Incorporation of
the Corporation.

IN WITNESS WHEREOF, Delaware Group Premium Fund, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf this 3rd day
of March, 1998.

DELAWARE GROUP PREMIUM FUND, INC.

By: /s/ George M. Chamberlain
-----------------------------------------
George M. Chamberlain, Jr.,
Senior Vice President, Secretary and
General Counsel
Attest:

/s/ Michael D. Mabry
- --------------------------------------
Michael D. Mabry
Assistant Vice President,
Assistant Secretary and Senior Counsel

<PAGE>

THE UNDERSIGNED, Senior Vice President, Secretary and General Counsel
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.

/s/ George M. Chamberlain, Jr.
------------------------------
George M. Chamberlain, Jr.

-2-

<PAGE>

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 16, 1998, 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 Value Series is changed to Small Cap Value Series;

(ii) the name of the Quantum Series is changed to Social Awareness
Series.

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 16th day of April, 1998.

DELAWARE GROUP PREMIUM FUND, INC.

By: /s/Michael D. Mabry
------------------------------
Michael D. Mabry
Assistant Vice President/
Assistant Secretary and
Senior Counsel
Attest:

/s/Paula Ehly
- -------------
Paula Ehly

<PAGE>

THE UNDERSIGNED, Vice President and Assistant 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.

/s/Michael D. Mabry
-------------------
Michael D. Mabry

-2-

<PAGE>
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.

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

-1-

<PAGE>

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 Sub-Adviser, 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>

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>

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>

IN WITNESS WHEREOF, the parties hereto have caused their presents to
be signed by their duly authorized officers as of the 1st day of May, 1997.
<TABLE>
<CAPTION>
<S> <C>
Attest: DELAWARE GROUP PREMIUM FUND, INC.
for the STRATEGIC INCOME SERIES

/s/Michael D. Mabry /s/David K. Downes
___________________________ By: ______________________________________
Michael D. Mabry David K. Downes
Assistant Vice President/ Senior Vice President/
Assistant Secretary Chief Administrative Officer/
Chief Financial Officer

Attest: DELAWARE MANAGEMENT COMPANY, INC.

/s/David P. O'Connor /s/Wayne A. Stork
___________________________ By: ______________________________________
David P. O'Connor Wayne A. Stork
Assistant Vice President/ Chairman, President, Chief Executive Officer,
Assistant Secretary Chief Investment Officer
</TABLE>

-5-

<PAGE>

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:

-1-

<PAGE>

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.

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.

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>

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.

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>

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>

IN WITNESS WHEREOF, the parties hereto have caused their presents to be
signed by their duly authorized officers as of the 1st day of May, 1997.

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

/s/Michael D. Mabry /s/David K. Downes
___________________________ By: ______________________________
Michael D. Mabry David K. Downes
Assistant Vice President/ Senior Vice President/
Assistant Secretary Chief Administrative Officer/
Chief Financial Officer

Attest: DELAWARE MANAGEMENT COMPANY, INC.

/s/David P. O'Connor /s/Wayne A. Stork
___________________________ By: ______________________________
David P. O'Connor Wayne A. Stork
Assistant Vice President/ Chairman, President,
Assistant Secretary Chief Executive Officer,
Chief Investment Officer

-5-

<PAGE>
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:

-1-

<PAGE>

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>

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>

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

-4-

<PAGE>

Attest: DELAWARE MANAGEMENT COMPANY, INC.

-5-

<PAGE>

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 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.

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,

-1-

<PAGE>

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 Sub-Adviser, 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 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>

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>

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>

IN WITNESS WHEREOF, the parties hereto have caused their presents to be
signed by their duly authorized officers as of the 1st day of May, 1997.

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

/s/Michael D. Mabry /s/David K. Downes
__________________________ By: ____________________________________________
Michael D. Mabry David K. Downes
Assistant Vice President/ Senior Vice President/
Assistant Secretary Chief Administrative Officer/
Chief Financial Officer

Attest: DELAWARE MANAGEMENT COMPANY, INC.

/s/David P. O'Connor /s/Wayne A. Stork
__________________________ By: ____________________________________________
David P. O'Connor Wayne A. Stork
Assistant Vice President/ Chairman, President, Chief Executive Officer,
Assistant Secretary Chief Investment Officer

-5-

<PAGE>

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

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.

-1-

<PAGE>

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>

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.

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) 0.25% of the average daily net assets of the Series for the first $20
million in assets; (ii) 0.35% of the average daily net assets of the Series for
assets above $20 million up to $50 million; and (iii) 0.40% of the average daily
net assets of the Series in excess of $50 million.

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>

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.

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 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.

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>

IN WITNESS WHEREOF, the parties hereto have caused their presents to be
signed by their duly authorized officers as of the 1st day of May, 1997.

DELAWARE MANAGEMENT COMPANY, INC.

/s/Wayne A. Stork
By: _______________________________________
Wayne A. Stork
Chairman, President,
Chief Executive Officer,
Chief Investment Officer

/s/David P. O'Connor
Attest: _______________________________________
David P. O'Connor
Assistant Vice President/
Assistant Secretary

VANTAGE GLOBAL ADVISORS, INC.

/s/T. Scott Wittman
By: _______________________________________
T. Scott Wittman

/s/Kevin Lee
Attest: _______________________________________
Kevin Lee, Vice President

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

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

/s/David K. Downes
By: _______________________________________
David K. Downes
Senior Vice President/Chief Administrative Officer/
Chief Financial Officer

/s/Michael D. Mabry
Attest: _______________________________________
Michael D. Mabry
Assistant Vice President/Assistant Secretary

-5-

<PAGE>

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.

-1-

<PAGE>

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. (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>

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>

(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>

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>

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>

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>

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>

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>

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>

(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>

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>

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized officers as of the 1st day of May, 1997.

DELAWARE DISTRIBUTORS, L.P.

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

/s/Michael D. Mabry /s/David K. Downes
___________________________ By: ______________________________
Michael D. Mabry David K. Downes
Assistant Vice President/ Executive Vice President/
Assistant Secretary Chief Operating Officer/
Chief Financial Officer

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

-14-

<PAGE>

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>

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.

<PAGE>

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;

<PAGE>

(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;

<PAGE>

(b) Written instructions from an authorized officer implementing
such change; and
(c) An opinion of counsel to the Fund as to the validity of such
action, if requested by DSC.
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

<PAGE>

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;

<PAGE>

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.

<PAGE>

(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.

<PAGE>

(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.

<PAGE>

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

<PAGE>

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.

<PAGE>

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.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the 1st day of
May, 1997.
<TABLE>
<CAPTION>
<S> <C>
DELAWARE SERVICE COMPANY, INC.

/s/Michael D. Mabry /s/David K. Downes
ATTEST: ___________________________ By: ___________________________
Michael D. Mabry David K. Downes
Assistant Vice President/ President, Chief Executive Officer,
Assistant Secretary 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

/s/David P. O'Connor /s/Wayne A. Stork
ATTEST: _____________________________ By: _____________________________

David P. O'Connor Wayne A. Stork
Assistant Vice President/ Chairman, President and
Assistant Secretary Chief Executive Officer
</TABLE>

<PAGE>

Consent of Ernst & Young LLP, Independent Auditors

We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 24 to the Registration Statement (Form N-1A) (No.
33-14363) of Delaware Group Premium Fund, Inc. of our report dated February 4,
1998, included in the 1997 Annual Report to shareholders.

Philadelphia, Pennsylvania
April 21, 1998

/s/Ernst & Young LLP
- ------------------
Ernst & Young LLP

<PAGE>

Report of Independent Auditors

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

We have audited the accompanying statements of net assets of Delaware Group
Premium Fund, Inc. (comprised of, respectively, Trend Series, DelCap Series,
Value Series, Quantum Series, Devon Series, Decatur Total Return Series,
Delaware Series, Convertible Securities Series, Emerging Markets Series,
International Equity Series, Global Bond Series, Delchester Series, Strategic
Income Series, Capital Reserves Series, and Cash Reserve Series) as of December
31, 1997, and the related statements of operations for the period then ended,
and 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, 1997, 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,
1997, the results of their operations for the period then ended, and the changes
in their net assets and their financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting principles.

February 4, 1998
/s/Ernst & Young LLP
- ----------------
Ernst & Young LLP

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 02
<NAME> DELCHESTER SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 94,604,235
<INVESTMENTS-AT-VALUE> 97,027,135
<RECEIVABLES> 1,832,653
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 79,512
<TOTAL-ASSETS> 98,939,300
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 64,418
<TOTAL-LIABILITIES> 64,418
<SENIOR-EQUITY> 96,342
<PAID-IN-CAPITAL-COMMON> 96,245,986
<SHARES-COMMON-STOCK> 10,394,599
<SHARES-COMMON-PRIOR> 7,379,775
<ACCUMULATED-NII-CURRENT> 75,868
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 33,785
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,422,901
<NET-ASSETS> 98,874,882
<DIVIDEND-INCOME> 202,569
<INTEREST-INCOME> 7,850,954
<OTHER-INCOME> 0
<EXPENSES-NET> 566,401
<NET-INVESTMENT-INCOME> 7,487,122
<REALIZED-GAINS-CURRENT> 3,130,833
<APPREC-INCREASE-CURRENT> (168,775)
<NET-CHANGE-FROM-OPS> 10,449,180
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,411,254
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,508,373
<NUMBER-OF-SHARES-REDEEMED> 1,287,419
<SHARES-REINVESTED> 793,870
<NET-CHANGE-IN-ASSETS> 31,210,205
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3,097,048)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 483,877
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 566,401
<AVERAGE-NET-ASSETS> 81,012,738
<PER-SHARE-NAV-BEGIN> 9.170
<PER-SHARE-NII> 0.863
<PER-SHARE-GAIN-APPREC> 0.332
<PER-SHARE-DIVIDEND> 0.855
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.510
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 06
<NAME> DELCAP SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 92,996,632
<INVESTMENTS-AT-VALUE> 110,056,652
<RECEIVABLES> 1,066,333
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,966
<TOTAL-ASSETS> 111,124,951
<PAYABLE-FOR-SECURITIES> 598,609
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 71,837
<TOTAL-LIABILITIES> 670,446
<SENIOR-EQUITY> 63,950
<PAID-IN-CAPITAL-COMMON> 83,513,969
<SHARES-COMMON-STOCK> 6,394,984
<SHARES-COMMON-PRIOR> 5,029,575
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,816,566
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,060,020
<NET-ASSETS> 110,454,505
<DIVIDEND-INCOME> 135,462
<INTEREST-INCOME> 565,933
<OTHER-INCOME> 0
<EXPENSES-NET> 760,747
<NET-INVESTMENT-INCOME> (59,352)
<REALIZED-GAINS-CURRENT> 9,871,869
<APPREC-INCREASE-CURRENT> 3,608,725
<NET-CHANGE-FROM-OPS> 13,421,242
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 4,513,513
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,806,689
<NUMBER-OF-SHARES-REDEEMED> 737,831
<SHARES-REINVESTED> 296,551
<NET-CHANGE-IN-ASSETS> 30,554,029
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,458,210
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 716,228
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 830,067
<AVERAGE-NET-ASSETS> 95,801,004
<PER-SHARE-NAV-BEGIN> 15.890
<PER-SHARE-NII> (0.010)
<PER-SHARE-GAIN-APPREC> 2.260
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.870
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.270
<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> 01
<NAME> DECATUR TOTAL RETURN SERIES

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 342,836,500
<INVESTMENTS-AT-VALUE> 404,530,844
<RECEIVABLES> 3,438,319
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 407,969,163
<PAYABLE-FOR-SECURITIES> 6,298,256
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 268,937
<TOTAL-LIABILITIES> 6,567,193
<SENIOR-EQUITY> 213,529
<PAID-IN-CAPITAL-COMMON> 315,911,379
<SHARES-COMMON-STOCK> 21,352,870
<SHARES-COMMON-PRIOR> 10,426,800
<ACCUMULATED-NII-CURRENT> 578,268
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,004,450
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,694,344
<NET-ASSETS> 401,401,970
<DIVIDEND-INCOME> 6,964,542
<INTEREST-INCOME> 521,945
<OTHER-INCOME> 0
<EXPENSES-NET> 1,943,003
<NET-INVESTMENT-INCOME> 5,543,484
<REALIZED-GAINS-CURRENT> 23,181,744
<APPREC-INCREASE-CURRENT> 40,216,861
<NET-CHANGE-FROM-OPS> 68,942,089
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,726,790
<DISTRIBUTIONS-OF-GAINS> 14,788,457
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,893,570
<NUMBER-OF-SHARES-REDEEMED> 1,289,152
<SHARES-REINVESTED> 1,321,652
<NET-CHANGE-IN-ASSETS> 234,755,393
<ACCUMULATED-NII-PRIOR> 761,574
<ACCUMULATED-GAINS-PRIOR> 14,611,163
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,640,377
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,943,003
<AVERAGE-NET-ASSETS> 274,683,702
<PER-SHARE-NAV-BEGIN> 15.980
<PER-SHARE-NII> 0.324
<PER-SHARE-GAIN-APPREC> 4.216
<PER-SHARE-DIVIDEND> 0.370
<PER-SHARE-DISTRIBUTIONS> 1.350
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 18.800
<EXPENSE-RATIO> 0.710
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 07
<NAME> INTERNATIONAL EQUITY SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 176,730,064
<INVESTMENTS-AT-VALUE> 198,331,239
<RECEIVABLES> 711,557
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 6,872
<TOTAL-ASSETS> 199,049,668
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 186,407
<TOTAL-LIABILITIES> 186,407
<SENIOR-EQUITY> 128,159
<PAID-IN-CAPITAL-COMMON> 171,524,264
<SHARES-COMMON-STOCK> 12,815,894
<SHARES-COMMON-PRIOR> 8,696,840
<ACCUMULATED-NII-CURRENT> 7,156,052
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,517,754)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,572,540
<NET-ASSETS> 198,863,261
<DIVIDEND-INCOME> 4,734,437
<INTEREST-INCOME> 719,010
<OTHER-INCOME> 0
<EXPENSES-NET> 1,476,363
<NET-INVESTMENT-INCOME> 3,977,084
<REALIZED-GAINS-CURRENT> 2,577,473
<APPREC-INCREASE-CURRENT> 1,459,920
<NET-CHANGE-FROM-OPS> 8,014,477
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,927,079
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,451,284
<NUMBER-OF-SHARES-REDEEMED> 674,626
<SHARES-REINVESTED> 342,396
<NET-CHANGE-IN-ASSETS> 67,435,544
<ACCUMULATED-NII-PRIOR> 4,557,033
<ACCUMULATED-GAINS-PRIOR> (546,213)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,304,340
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,573,026
<AVERAGE-NET-ASSETS> 174,553,133
<PER-SHARE-NAV-BEGIN> 15.110
<PER-SHARE-NII> 0.359
<PER-SHARE-GAIN-APPREC> 0.596
<PER-SHARE-DIVIDEND> 0.545
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.520
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 03
<NAME> CAPITAL RESERVES SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 28,932,111
<INVESTMENTS-AT-VALUE> 29,384,213
<RECEIVABLES> 278,190
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 2,267
<TOTAL-ASSETS> 29,664,670
<PAYABLE-FOR-SECURITIES> 451,522
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36,316
<TOTAL-LIABILITIES> 487,838
<SENIOR-EQUITY> 2,980
<PAID-IN-CAPITAL-COMMON> 30,297,406
<SHARES-COMMON-STOCK> 2,979,589
<SHARES-COMMON-PRIOR> 2,864,716
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,575,655)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 452,101
<NET-ASSETS> 29,176,832
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,968,780
<OTHER-INCOME> 0
<EXPENSES-NET> 208,087
<NET-INVESTMENT-INCOME> 1,760,693
<REALIZED-GAINS-CURRENT> 47,064
<APPREC-INCREASE-CURRENT> 237,399
<NET-CHANGE-FROM-OPS> 2,045,156
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,761,161
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 627,274
<NUMBER-OF-SHARES-REDEEMED> 694,053
<SHARES-REINVESTED> 181,652
<NET-CHANGE-IN-ASSETS> 1,409,219
<ACCUMULATED-NII-PRIOR> 468
<ACCUMULATED-GAINS-PRIOR> (1,622,719)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 166,300
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 208,087
<AVERAGE-NET-ASSETS> 27,882,289
<PER-SHARE-NAV-BEGIN> 9.69
<PER-SHARE-NII> 0.613
<PER-SHARE-GAIN-APPREC> 0.100
<PER-SHARE-DIVIDEND> 0.613
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.790
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 04
<NAME> DELAWARE SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 108,605,240
<INVESTMENTS-AT-VALUE> 128,595,494
<RECEIVABLES> 442,834
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 129,038,328
<PAYABLE-FOR-SECURITIES> 1,324,713
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,271
<TOTAL-LIABILITIES> 1,362,984
<SENIOR-EQUITY> 94,179
<PAID-IN-CAPITAL-COMMON> 94,084,293
<SHARES-COMMON-STOCK> 6,702,134
<SHARES-COMMON-PRIOR> 4,532,563
<ACCUMULATED-NII-CURRENT> 2,103,972
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,402,645
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19,990,255
<NET-ASSETS> 127,675,344
<DIVIDEND-INCOME> 1,214,892
<INTEREST-INCOME> 2,288,127
<OTHER-INCOME> 0
<EXPENSES-NET> 662,844
<NET-INVESTMENT-INCOME> 2,840,175
<REALIZED-GAINS-CURRENT> 11,425,156
<APPREC-INCREASE-CURRENT> 9,349,683
<NET-CHANGE-FROM-OPS> 23,615,014
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,590,776
<DISTRIBUTIONS-OF-GAINS> 4,899,878
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,134,206
<NUMBER-OF-SHARES-REDEEMED> 447,850
<SHARES-REINVESTED> 483,216
<NET-CHANGE-IN-ASSETS> 52,273,237
<ACCUMULATED-NII-PRIOR> 1,854,573
<ACCUMULATED-GAINS-PRIOR> 4,877,368
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 595,126
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 662,844
<AVERAGE-NET-ASSETS> 99,644,171
<PER-SHARE-NAV-BEGIN> 16.64
<PER-SHARE-NII> 0.435
<PER-SHARE-GAIN-APPREC> 3.575
<PER-SHARE-DIVIDEND> 0.530
<PER-SHARE-DISTRIBUTIONS> 1.070
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.05
<EXPENSE-RATIO> 0.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 05
<NAME> CASH RESERVE SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 30,688,044
<INVESTMENTS-AT-VALUE> 30,688,044
<RECEIVABLES> 88,991
<ASSETS-OTHER> 0
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<NUMBER-OF-SHARES-SOLD> 8,343,717
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<AVERAGE-NET-ASSETS> 30,034,289
<PER-SHARE-NAV-BEGIN> 10.000
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</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 09
<NAME> TREND SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 99,965,645
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<RECEIVABLES> 2,548,591
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<OTHER-ITEMS-ASSETS> 35,959
<TOTAL-ASSETS> 120,269,768
<PAYABLE-FOR-SECURITIES> 1,906,555
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<SENIOR-EQUITY> 68,033
<PAID-IN-CAPITAL-COMMON> 98,372,031
<SHARES-COMMON-STOCK> 6,803,342
<SHARES-COMMON-PRIOR> 3,874,180
<ACCUMULATED-NII-CURRENT> 108,517
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,719,433
<NET-ASSETS> 118,276,090
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<NET-INVESTMENT-INCOME> 132,509
<REALIZED-GAINS-CURRENT> 2,089,208
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<NUMBER-OF-SHARES-SOLD> 3,548,538
<NUMBER-OF-SHARES-REDEEMED> 682,630
<SHARES-REINVESTED> 63,254
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<ACCUMULATED-NII-PRIOR> 180,621
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</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 08
<NAME> VALUE SERIES

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 70,110,759
<INVESTMENTS-AT-VALUE> 83,962,077
<RECEIVABLES> 188,201
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84,150,278
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<OTHER-ITEMS-LIABILITIES> 79,135
<TOTAL-LIABILITIES> 79,135
<SENIOR-EQUITY> 46,924
<PAID-IN-CAPITAL-COMMON> 67,219,813
<SHARES-COMMON-STOCK> 4,692,384
<SHARES-COMMON-PRIOR> 1,633,487
<ACCUMULATED-NII-CURRENT> 632,083
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,321,005
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,851,318
<NET-ASSETS> 84,071,143
<DIVIDEND-INCOME> 779,514
<INTEREST-INCOME> 254,644
<OTHER-INCOME> 0
<EXPENSES-NET> 404,443
<NET-INVESTMENT-INCOME> 629,715
<REALIZED-GAINS-CURRENT> 2,326,391
<APPREC-INCREASE-CURRENT> 10,895,658
<NET-CHANGE-FROM-OPS> 13,851,764
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<DISTRIBUTIONS-OF-INCOME> 197,794
<DISTRIBUTIONS-OF-GAINS> 1,672,255
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<NUMBER-OF-SHARES-SOLD> 3,108,967
<NUMBER-OF-SHARES-REDEEMED> 185,778
<SHARES-REINVESTED> 135,708
<NET-CHANGE-IN-ASSETS> 60,388,403
<ACCUMULATED-NII-PRIOR> 200,162
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 456,792
<AVERAGE-NET-ASSETS> 50,854,236
<PER-SHARE-NAV-BEGIN> 14.500
<PER-SHARE-NII> 0.122
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<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 10
<NAME> GLOBAL BOND SERIES

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 16,732,553
<INVESTMENTS-AT-VALUE> 16,460,382
<RECEIVABLES> 445,566
<ASSETS-OTHER> 0
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<TOTAL-ASSETS> 16,906,257
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<OTHER-ITEMS-LIABILITIES> 30,661
<TOTAL-LIABILITIES> 30,661
<SENIOR-EQUITY> 16,798
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<SHARES-COMMON-STOCK> 1,607,408
<SHARES-COMMON-PRIOR> 864,446
<ACCUMULATED-NII-CURRENT> 340,021
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (278,630)
<NET-ASSETS> 16,875,596
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<INTEREST-INCOME> 996,767
<OTHER-INCOME> 0
<EXPENSES-NET> 116,444
<NET-INVESTMENT-INCOME> 880,323
<REALIZED-GAINS-CURRENT> (30,733)
<APPREC-INCREASE-CURRENT> (543,397)
<NET-CHANGE-FROM-OPS> 306,193
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<DISTRIBUTIONS-OF-GAINS> 83,855
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<NUMBER-OF-SHARES-SOLD> 1,188,335
<NUMBER-OF-SHARES-REDEEMED> 510,926
<SHARES-REINVESTED> 65,554
<NET-CHANGE-IN-ASSETS> 9,470,818
<ACCUMULATED-NII-PRIOR> 111,705
<ACCUMULATED-GAINS-PRIOR> 83,530
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 109,310
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 116,444
<AVERAGE-NET-ASSETS> 14,593,186
<PER-SHARE-NAV-BEGIN> 10.96
<PER-SHARE-NII> 0.776
<PER-SHARE-GAIN-APPREC> (0.691)
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.50
<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> 13
<NAME> EMERGING MARKETS SERIES

<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 6,791,231
<INVESTMENTS-AT-VALUE> 5,768,066
<RECEIVABLES> 36,266
<ASSETS-OTHER> 0
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<TOTAL-ASSETS> 5,804,332
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<TOTAL-LIABILITIES> 28,548
<SENIOR-EQUITY> 6,504
<PAID-IN-CAPITAL-COMMON> 6,637,708
<SHARES-COMMON-STOCK> 650,377
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 16,386
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,023,671)
<NET-ASSETS> 5,775,784
<DIVIDEND-INCOME> 45,276
<INTEREST-INCOME> 24,558
<OTHER-INCOME> 0
<EXPENSES-NET> 43,578
<NET-INVESTMENT-INCOME> 26,256
<REALIZED-GAINS-CURRENT> 128,987
<APPREC-INCREASE-CURRENT> (1,023,671)
<NET-CHANGE-FROM-OPS> (868,428)
<EQUALIZATION> 0
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<NUMBER-OF-SHARES-SOLD> 727,021
<NUMBER-OF-SHARES-REDEEMED> 76,644
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,775,784
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 71,318
<AVERAGE-NET-ASSETS> 4,358,263
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.060
<PER-SHARE-GAIN-APPREC> (1.180)
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<PER-SHARE-NAV-END> 8.880
<EXPENSE-RATIO> 1.500
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 14
<NAME> STRATEGIC INCOME SERIES

<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 8,617,184
<INVESTMENTS-AT-VALUE> 8,592,198
<RECEIVABLES> 234,948
<ASSETS-OTHER> 0
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<TOTAL-ASSETS> 8,827,146
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<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 220,959
<SENIOR-EQUITY> 8,106
<PAID-IN-CAPITAL-COMMON> 8,359,255
<SHARES-COMMON-STOCK> 810,536
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 242,381
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 22,888
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (26,443)
<NET-ASSETS> 8,606,187
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 272,170
<OTHER-INCOME> 0
<EXPENSES-NET> 26,194
<NET-INVESTMENT-INCOME> 245,976
<REALIZED-GAINS-CURRENT> 19,293
<APPREC-INCREASE-CURRENT> (26,443)
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 909,478
<NUMBER-OF-SHARES-REDEEMED> 98,942
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,606,187
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 21,320
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40,243
<AVERAGE-NET-ASSETS> 4,918,336
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.523
<PER-SHARE-GAIN-APPREC> 0.097
<PER-SHARE-DIVIDEND> 0.000
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<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.620
<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> 11
<NAME> DEVON SERIES

<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 15,471,503
<INVESTMENTS-AT-VALUE> 16,632,319
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<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,382
<TOTAL-ASSETS> 16,683,161
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<OTHER-ITEMS-LIABILITIES> 29,670
<TOTAL-LIABILITIES> 29,670
<SENIOR-EQUITY> 13,082
<PAID-IN-CAPITAL-COMMON> 15,100,545
<SHARES-COMMON-STOCK> 1,308,239
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 105,114
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 273,934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,160,816
<NET-ASSETS> 16,653,491
<DIVIDEND-INCOME> 114,144
<INTEREST-INCOME> 32,725
<OTHER-INCOME> 0
<EXPENSES-NET> 41,755
<NET-INVESTMENT-INCOME> 105,114
<REALIZED-GAINS-CURRENT> 273,934
<APPREC-INCREASE-CURRENT> 1,160,816
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<EQUALIZATION> 0
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<NUMBER-OF-SHARES-SOLD> 1,418,088
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 16,653,491
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.080
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<PER-SHARE-NAV-END> 12.730
<EXPENSE-RATIO> 0.80
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</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 12
<NAME> CONVERTIBLE SECURITIES SERIES

<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 3,636,785
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<TOTAL-LIABILITIES> 168,559
<SENIOR-EQUITY> 3,538
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<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 251,809
<NET-ASSETS> 3,921,377
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<INTEREST-INCOME> 58,555
<OTHER-INCOME> 0
<EXPENSES-NET> 14,719
<NET-INVESTMENT-INCOME> 106,880
<REALIZED-GAINS-CURRENT> 24,638
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<NUMBER-OF-SHARES-REDEEMED> 8,699
<SHARES-REINVESTED> 0
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<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 10.00
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<PER-SHARE-NAV-END> 11.66
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</TABLE>

<ARTICLE> 6
<CIK> 0000814230
<NAME> DELAWARE GROUP PREMIUM FUND, INC.
<SERIES>
<NUMBER> 15
<NAME> QUANTUM SERIES

<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 7,258,835
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<TOTAL-LIABILITIES> 122,447
<SENIOR-EQUITY> 6,073
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<SHARES-COMMON-STOCK> 607,345
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 30,982
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 637,990
<NET-ASSETS> 7,800,105
<DIVIDEND-INCOME> 37,338
<INTEREST-INCOME> 15,100
<OTHER-INCOME> 0
<EXPENSES-NET> 21,456
<NET-INVESTMENT-INCOME> 30,982
<REALIZED-GAINS-CURRENT> 119,612
<APPREC-INCREASE-CURRENT> 637,990
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<NUMBER-OF-SHARES-SOLD> 695,631
<NUMBER-OF-SHARES-REDEEMED> 88,286
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<NET-CHANGE-IN-ASSETS> 7,800,105
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<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>