<PAGE>
DELAWARE INVESTMENTS
PREMIUM FUND
SEMI-ANNUAL REPORT
JUNE 30, 1998
FOR GROWTH OF CAPITAL
DELCAP SERIES
FOR TOTAL RETURN
DECATUR TOTAL RETURN SERIES
DELAWARE SERIES
FOR INCOME
DELCHESTER SERIES
CAPITAL RESERVES SERIES
CASH RESERVE SERIES
(899)
SA-AIG [6/98] 8/98
<PAGE>
July 6, 1998
Dear Policy Holder:
Stocks of large U.S. companies enjoyed a period of substantial price
appreciation during the first half of 1998, outpacing the returns of smaller
company stocks. Continuing financial problems in Asia prompted many foreign
investors to seek a safe haven in U.S. Treasuries - bolstering domestic bonds
between January and June.
CUMULATIVE TOTAL RETURN SIX MONTHS ENDED JUNE 30, 1998
- ----------------------- ------------------------------
Standard & Poor's 500 Index +16.84%
Russell 2000 Index +4.66%
Lehman Brothers Government/Corporate Bond Index +4.17%
Past performance does not guarantee future results. Performance quoted
above is at net asset value and assumes reinvestment of distributions.
A fortuitous fusion of robust growth, tame inflation and low unemployment
in the U.S. lifted the Dow Jones Industrial Average above the 9000 point mark
for the first time. Except for some internet-related equities, investors
seemed to prefer stocks of large, multinational industrial corporations with
consistent earnings. During the first half of 1998, the return of the Standard
& Poor's 500 Index, a barometer of large company stocks, was nearly four times
that of the Russell 2000 Index, a measure of small company stock performance,
as shown above.
Low interest rates and federal budget restraint powered a U.S. bond market
rally this past spring. Treasury prices rose to historic highs. Thirty-year
Treasury bond yields fell to 5.65% as of June 30, 1998.
At mid-year, the U.S. economy was affected by opposing forces. Domestic
demand for U.S. goods and services remains strong but exports have dropped
due to recession along the Pacific Rim. We believe the Asian situation could
have a moderating effect on U.S. companies' profit growth for the remainder
of 1998.
Each of the professionals who manage the investments that underlie your
AIG annuity employ a consistent discipline designed to help you achieve your
long-term goals. Over time, the tax-deferral features of your annuity have the
potential to help your investment dollars grow faster than they could in a
taxable account.
Thank you for your confidence in Delaware Investments.
Sincerely,
/s/ Wayne A. Stork /s/ Jeffrey J. Nick
- ---------------------------- --------------------------------
Wayne A. Stork Jeffrey J. Nick
Chairman President and Chief Executive
1
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.-DELCAP SERIES
STATEMENT OF NET ASSETS
June 30, 1998 (Unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK - 92.37%
BANKING, FINANCE, & INSURANCE - 13.91%
ACE Limited .............................. 39,100 $ 1,524,900
Ambac Financial Group .................... 26,200 1,532,700
Bank of Boston ........................... 12,400 689,750
Blanch(E.W.)Holdings ..................... 54,500 2,002,875
FINOVA Group ............................. 21,100 1,194,788
FIRST AMERICAN (TENNESSEE) ............... 73,500 3,539,484
*Heller Financial ......................... 44,100 1,323,000
+Household International .................. 34,700 1,726,325
National City ............................ 12,300 873,300
PartnerRe ................................ 18,000 918,000
Peoples Heritage Financial Group ......... 75,700 1,790,778
-----------
17,115,900
-----------
BUILDINGS & MATERIALS - 0.34%
*Dal-Tile International ................... 6,300 61,819
*J. Ray McDermott, S.A .................... 8,700 361,050
-----------
422,869
-----------
CABLE, MEDIA, & PUBLISHING - 6.75%
*Chancellor Media Class A ................. 34,600 1,718,106
+*Jacor Communications ..................... 23,200 1,370,250
Lamar Advertising ........................ 31,100 1,109,881
*Snyder Communications .................... 62,900 2,767,600
*World Color Press ........................ 38,300 1,340,500
-----------
8,306,337
-----------
COMPUTERS & TECHNOLOGY - 19.57%
+12 Technologies .......................... 40,800 1,435,650
+*Acxiom ................................... 63,200 1,581,975
+BMC SOFTWARE ............................. 59,500 3,092,141
Citrix Systems ........................... 12,400 848,238
*COMPUWARE ................................ 62,100 3,172,922
*DST Systems .............................. 12,200 683,200
*Fore Systems ............................. 60,900 1,611,947
+*J.D. Edwards ............................. 40,300 1,730,381
Linear Technology ........................ 24,900 1,501,781
- ----------
Top 10 stock holdings, representing 29.0% of net assets, are printed in
boldface.
<PAGE>
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
COMPUTERS & TECHNOLOGY (CONTINUED)
*Network Appliance ........................ 15,700 $ 610,828
+Network Associates ....................... 24,850 1,188,917
*PLATINUM Technology ...................... 83,700 2,393,297
*PMC - Sierra ............................. 14,600 683,463
*Sterling Commerce ........................ 46,319 2,246,451
*SunGuard Data Systems .................... 33,600 1,289,400
-----------
24,070,591
-----------
CONSUMER PRODUCTS - 3.12%
*Gemstar International Group Limited....... 58,600 2,184,681
*Henry Schein ............................. 36,000 1,653,750
-----------
3,838,431
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 2.67%
+*Analog Devices ........................... 45,700 1,122,506
+*MMC Networks ............................. 40,800 1,299,225
*Xilinx ................................... 25,200 857,587
-----------
3,279,318
-----------
ENVIRONMENTAL SERVICES - 2.20%
*Republic Services Class A ................ 12,900 309,600
+*USA Waste Services ....................... 48,548 2,397,033
-----------
2,706,633
-----------
FOOD, BEVERAGE, & TOBACCO - 2.43%
*Aurora Foods ............................. 22,000 464,750
Food Lion ................................ 42,800 433,350
Food Lion Class A ........................ 69,300 734,147
+*Starbucks ................................ 25,400 1,356,519
-----------
2,988,766
-----------
HEALTHCARE & PHARMACEUTICALS - 6.82%
*HEALTH MANAGEMENT ASSOCIATES
CLASS A ................................. 128,418 4,293,960
+*Healthsouth .............................. 59,400 1,585,238
+*Phycor ................................... 67,600 1,117,512
*Quorum Health Group ...................... 52,500 1,389,609
-----------
8,386,319
-----------
2
<PAGE>
DELCAP SERIES
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
LEISURE, LODGING & ENTERTAINMENT - 5.98%
*OUTBACK STEAKHOUSE ................... 80,600 $ 3,140,881
+*Papa John's International ............ 59,300 2,340,497
+*Prime Hospitality .................... 55,300 964,294
Royal Caribbean Cruises .............. 11,500 914,250
-----------
7,359,922
-----------
RETAIL - 10.38%
BED BATH & BEYOND .................... 80,300 4,163,053
*CompUSA .............................. 37,100 670,119
+Fastenal ............................. 23,900 1,110,603
*Guitar Center ........................ 10,500 316,969
KOHL'S ............................... 56,000 2,905,000
+STAPLES .............................. 124,200 3,597,919
-----------
12,763,663
-----------
REAL ESTATE - 0.62%
*Catellus Development ................. 43,200 764,100
-----------
764,100
-----------
TELECOMMUNICATIONS - 9.79%
+*ASCEND COMMUNICATIONS ................ 79,900 3,957,547
+Clear Channel Communications ......... 23,700 2,586,263
*Heftel Broadcasting .................. 19,900 888,659
<PAGE>
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
*Pacific Gateway Exchange ................. 18,300 $ 733,716
+Star Telecommunications .................. 75,900 1,695,891
+*Tellabs .................................. 30,500 2,183,609
-----------
12,045,685
-----------
TEXTILES, APPAREL & FURNITURE - 1.09%
*Jones Apparel Group ...................... 36,700 1,341,844
-----------
1,341,844
-----------
TRANSPORTATION & SHIPPING - 1.65%
+Gatx ..................................... 29,600 1,298,700
Knight Transportation .................... 37,800 730,012
-----------
2,028,712
-----------
UTILITIES - 3.11%
*AES ...................................... 72,794 3,826,235
-----------
3,826,235
-----------
MISCELLANEOUS - 1.94%
*Cendant .................................. 59,650 1,245,194
*Cornell Corrections ...................... 39,500 829,500
+Personnel Group of America ............... 15,500 310,000
-----------
2,384,694
-----------
TOTAL COMMON STOCK
(COST $87,409,360) ....................... 113,630,019
-----------
3
<PAGE>
DELCAP SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS - 8.21%
With Chase Manhattan 5.85%
07/01/98 (dated 06/30/98,
collateralized by $3,764,000
U.S. Treasury Notes
5.375% due 06/30/03,
market value $3,782,221) .............. $3,689,000 $3,689,000
With JP Morgan Securities 5.75%
07/01/98 (dated 06/30/98,
collateralized by $3,006,000
U.S. Treasury Notes
6.25% due 02/15/03,
market value $3,159,108
and $118,000
U.S.Treasury Notes
5.50% due 03/31/03,
market value $119,277) ................ 3,208,000 3,208,000
With PaineWebber 5.75%
07/01/98 (dated 06/30/98,
collateralized by $1,077,000
U.S. Treasury Notes 5.875%
due 01/31/99, market value
$1,105,547 and $2,110,000
U.S. Treasury Notes 6.00%
due 08/31/99,
market value $2,167,492) .............. $ 3,208,000 $ 3,208,000
-----------
TOTAL REPURCHASE AGREEMENTS
(COST $10,105,000) .................... 10,105,000
-----------
<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES - 100.58% (COST $97,514,360)...................................... $123,735,019
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.58%).......................................... (714,042)
------------
NET ASSETS APPLICABLE TO 6,936,780 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $17.73 PER SHARE - 100.00%......................................................... $123,020,977
============
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock $0.01 par value, 1,000,000,000 shares authorized to the Fund with
50,000,000 shares allocated to the Series........................................................ $91,670,009
Undistributed net investment loss.................................................................. (133,927)
Accumulated net realized gain on investments....................................................... 5,264,236
Net unrealized appreciation on investments......................................................... 26,220,659
------------
Total net assets................................................................................... $123,020,977
============
</TABLE>
- ----------
*Non-income producing security.
+Security is partially or fully on loan.
See accompanying notes
4
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.-DECATUR TOTAL RETURN SERIES
STATEMENT OF NET ASSETS
June 30, 1998 (Unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK - 97.23%
AUTOMOBILES & AUTOMOTIVE PARTS - 5.51%
Cooper Industries .................... 72,900 $ 4,004,944
Ford Motor ........................... 143,900 8,490,100
General Motors ....................... 121,100 8,090,994
Tenneco .............................. 234,400 8,921,850
-----------
29,507,888
-----------
BANKING, FINANCE
& INSURANCE - 22.24%
+AMERICAN GENERAL ..................... 158,700 11,297,456
Aon .................................. 138,625 9,738,406
BANK OF BOSTON ....................... 197,200 10,969,250
BankAmerica .......................... 97,900 8,462,231
Crestar Financial .................... 146,600 7,998,863
First Chicago NBD .................... 101,800 9,022,025
+First Union .......................... 170,826 9,950,615
Fleet Financial Group ................ 72,500 6,053,750
Mellon Bank .......................... 100,700 7,011,238
+Mercantile Bancorporation ............ 120,100 6,050,038
National City ........................ 83,500 5,928,500
PNC Financial Group .................. 15,400 828,713
SAFECO ............................... 124,100 5,634,916
+St. Paul ............................. 184,600 7,764,738
Summit Bancorp ....................... 124,575 5,917,313
+U.S. Bancorp ......................... 151,500 6,514,500
-----------
119,142,552
-----------
CABLE, MEDIA & PUBLISHING - 3.02%
MCGRAW-HILL .......................... 198,300 16,173,844
-----------
16,173,844
-----------
CHEMICALS - 5.72%
duPont(E.I.)deNemours ................ 82,100 6,126,713
+Hercules ............................. 41,200 1,694,350
HOECHST ADR .......................... 250,100 12,411,213
+Imperial Chemical ADR ................ 156,600 10,100,700
PPG Industries ....................... 4,500 313,031
-----------
30,646,007
-----------
CONSUMER PRODUCTS - 3.38%
Kimberly-Clark ....................... 153,800 7,055,575
+MINNESOTA MINING &
MANUFACTURING ....................... 134,700 11,070,656
-----------
18,126,231
-----------
- ---------
Top 10 stock holdings, representing 23.6% of net assets, are printed in
boldface.
<PAGE>
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
ELECTRONICS & ELECTRICAL
EQUIPMENT - 4.85%
+AMP .................................... 169,500 $ 5,826,563
Eaton .................................. 46,800 3,638,700
Emerson Electric ....................... 170,700 10,295,344
+Thomas & Betts ......................... 126,400 6,225,200
-----------
25,985,807
-----------
ENERGY - 11.20%
Atlantic Richfield ..................... 129,900 10,148,438
British Petroleum ADR .................. 81,342 7,178,467
+Chevron ................................ 126,500 10,507,406
Consolidated Natural Gas ............... 134,500 7,918,688
+Enron .................................. 126,700 6,849,719
USX-Marathon Group ..................... 237,100 8,135,494
+Williams ............................... 274,900 9,277,875
-----------
60,016,087
-----------
ENVIROMENTAL SERVICES - 1.52%
+Browning Ferris ........................ 233,980 8,130,805
-----------
8,130,805
-----------
FOOD, BEVERAGE & TOBACCO - 9.51%
BESTFOODS .............................. 238,800 13,865,325
ConAgra ................................ 302,800 9,594,975
Fortune Brands ......................... 273,900 10,528,031
Heinz (H.J.) ........................... 134,800 7,565,650
Philip Morris .......................... 239,200 9,418,500
-----------
50,972,481
-----------
HEALTHCARE & PHARMACEUTICALS - 9.67%
AMERICAN HOME PRODUCTS ................. 275,200 14,241,600
BAXTER INTERNATIONAL ................... 209,600 11,279,100
+Glaxo Wellcome ADR ..................... 126,000 7,536,375
Merck & Company ........................ 58,500 7,824,375
Pharmacia & Upjohn ..................... 237,400 10,950,075
-----------
51,831,525
-----------
METALS & MINING - 2.32%
+Allegheny Teledyne ..................... 295,500 6,759,563
+Aluminum Company of America ............ 86,300 5,690,406
-----------
12,449,969
-----------
PAPER & FOREST PRODUCTS - 1.97%
+Union Camp ............................. 105,700 5,245,363
Weyerhaeuser ........................... 114,300 5,279,231
-----------
10,524,594
-----------
5
<PAGE>
DECATUR TOTAL RETURN SERIES
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
RETAIL - 4.18%
MAY DEPARTMENT STORES ................ 176,200 $ 11,541,100
+Penney (J.C.) ........................ 149,900 10,839,644
-----------
22,380,744
-----------
TELECOMMUNICATIONS - 7.55%
AT&T ................................. 70,400 4,021,600
Bell Atlantic ........................ 167,700 7,651,313
+Cable & Wireless ADR ................. 159,100 5,866,813
Frontier ............................. 265,300 8,356,950
GTE .................................. 145,800 8,110,125
+SBC Communications ................... 161,400 6,456,000
-----------
40,462,801
-----------
TRANSPORTATION & SHIPPING - 0.78%
+British Airways ADR .................. 34,100 3,667,881
Norfolk Southern ..................... 17,100 509,794
-----------
4,177,675
-----------
UTILITIES - 1.30%
+Southern ............................. 252,200 6,982,788
-----------
6,982,788
-----------
MISCELLANEOUS - 2.51%
PITNEY BOWES ......................... 278,900 13,422,063
-----------
13,422,063
-----------
TOTAL COMMON STOCK
(COST $451,552,825) ................. $520,933,861
-----------
- ----------
+Security is partially or fully on loan.
ADR - American Depository Receipt
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS - 2.62%
With Chase Manhattan 5.85%
07/01/98 (dated 06/30/98,
collateralized by $5,260,000
U.S. Treasury Notes
5.375% due 06/30/03,
market value $5,234,897) .............. $ 5,131,000 $ 5,131,000
With J.P. Morgan Securities 5.75%
07/01/98 (dated 06/30/98,
collateralized by $4,181,000
U.S. Treasury Notes
6.25% due 02/15/03,
market value $4,393,052, and
$164,000 U.S. Treasury Notes
5.50% due 03/31/03,
market value $165,866) ................ 4,460,000 4,460,000
With PaineWebber 5.75%
07/01/98 (dated 06/30/98,
collateralized by $1,498,000
U.S. Treasury Notes
5.875% due 01/31/99,
market value $1,537,372, and
$2,935,000 U.S. Treasury Notes
6.00% due 08/31/99,
market value $3,014,112) .............. 4,461,000 4,461,000
-----------
TOTAL REPURCHASE AGREEMENTS
(COST $14,052,000) .................... 14,052,000
-----------
<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES - 99.85% (COST $465,604,825)...................................... $534,985,861
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.15%............................................ 803,734
------------
NET ASSETS APPLICABLE TO 27,704,927 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $19.34 PER SHARE - 100.00%........................................................... $535,789,595
============
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock, $0.01 par value, 1,000,000,000 shares authorized to the Fund with
50,000,000 shares allocated to the Series........................................................ $ 435,529,293
Undistributed net investment income................................................................ 1,914,174
Accumulated net realized gain on investments....................................................... 28,965,092
Net unrealized appreciation of investments......................................................... 69,381,036
------------
Total net assets................................................................................... $535,789,595
============
</TABLE>
See accompanying notes
6
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.-DELAWARE SERIES
STATEMENT OF NET ASSETS
June 30, 1998 (Unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK - 71.24%
AEROSPACE & DEFENSE - 0.50%
GenCorp .................................. 32,900 $ 830,725
-----------
830,725
-----------
AUTOMOBILES & AUTOMOTIVE PARTS - 1.59%
+Danaher .................................. 72,000 2,641,500
-----------
2,641,500
-----------
BANKING, FINANCE, & INSURANCE - 15.40%
AFLAC .................................... 97,400 2,952,438
American International Group ............. 13,950 2,036,700
Chubb .................................... 13,800 1,109,175
+EQUIFAX .................................. 127,300 4,622,581
FEDERAL HOME LOAN ........................ 107,100 5,040,394
Federal National Mortgage ................ 32,800 1,992,600
Nationwide Financial Services
Class A ................................. 36,800 1,876,800
+PMI Group ................................ 29,900 2,193,913
SAFECO ................................... 31,400 1,425,756
+UNUM ..................................... 40,700 2,258,850
-----------
25,509,207
-----------
BUILDINGS & MATERIALS - 3.11%
MASCO .................................... 85,300 5,160,650
-----------
5,160,650
-----------
CHEMICALS - 1.28%
Valspar .................................. 53,500 2,119,938
-----------
2,119,938
-----------
COMPUTERS & TECHNOLOGY - 3.23%
Hewlett-Packard .......................... 48,900 2,927,888
SunGuard Data Systems .................... 15,500 594,813
Wallace Computer Services ................ 76,700 1,821,625
-----------
5,344,326
-----------
CONSUMER PRODUCTS - 0.54%
General Electric ......................... 9,900 900,900
-----------
900,900
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 4.87%
Intel .................................... 25,000 1,852,344
SYMBOL TECHNOLOGIES ...................... 130,300 4,918,825
Teleflex ................................. 34,000 1,292,000
-----------
8,063,169
-----------
- ----------
Top 10 stock holdings, representing 27.0% of net assets, are printed in
boldface.
<PAGE>
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
ENERGY - 2.82%
Compagnie Francaise de
Petroleum Total ......................... 29,558 $ 1,932,354
Kerr-McGee ............................... 24,400 1,412,150
+Royal Dutch Petroleum .................... 24,300 1,331,944
-----------
4,676,448
-----------
ENVIRONMENTAL SERVICES - 2.97%
ECOLAB ................................... 158,300 4,907,300
-----------
4,907,300
-----------
FOOD, BEVERAGE & TOBACCO - 5.01%
+ConAgra .................................. 55,900 1,771,331
Hannaford Brothers ....................... 26,100 1,148,400
Philip Morris ............................ 61,000 2,401,875
Ralston-Purina Group ..................... 12,100 1,413,431
Universal Foods .......................... 70,400 1,562,000
-----------
8,297,037
-----------
HEALTHCARE & PHARMACEUTICALS - 7.67%
AMERICAN HOME PRODUCTS ................... 100,200 5,185,350
Johnson & Johnson ........................ 39,600 2,920,500
Stewart Enterprises ...................... 81,000 2,169,281
+Tyco International ....................... 38,600 2,431,800
-----------
12,706,931
-----------
PACKAGING & CONTAINERS - 0.32%
+Sealed Air ............................... 14,526 533,816
-----------
533,816
-----------
REAL ESTATE - 2.19%
Developers Diversified Realty............. 18,700 732,806
Highwoods Properties ..................... 17,500 565,469
Nationwide Health Properties ............. 33,900 809,363
+Storage USA .............................. 20,800 728,000
Sun Communities .......................... 23,600 781,750
-----------
3,617,388
-----------
RETAIL - 7.34%
+INTIMATE BRANDS .......................... 108,600 2,993,288
May Department Stores .................... 15,900 1,041,450
+RITE AID ................................. 159,100 5,976,194
Sherwin-Williams ......................... 64,600 2,139,875
-----------
12,150,807
-----------
7
<PAGE>
DELAWARE SERIES
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
TELECOMMUNICATIONS - 3.76%
+ALLTEL .............................. 40,400 $ 1,878,600
Ericsson (LM) Telefonaktiebolaget
ADR ................................ 49,000 1,405,688
+SBC COMMUNICATIONS .................. 73,600 2,944,000
------------
6,228,288
------------
TEXTILES, APPAREL & FURNITURE - 3.95%
HON Industries ...................... 72,000 2,443,500
Hillenbrand Industries .............. 38,400 2,304,000
Miller (Herman) ..................... 37,000 898,406
Newell .............................. 18,100 901,606
------------
6,547,512
------------
UTILITIES - 1.14%
CMS Energy .......................... 32,000 1,408,000
+Edison International ................ 16,000 473,000
------------
1,881,000
------------
MISCELLANEOUS - 3.55%
Federal Signal ...................... 112,100 2,725,431
Pentair ............................. 27,600 1,173,000
+Service International ............... 46,200 1,980,825
------------
5,879,256
------------
TOTAL COMMON STOCK
(COST $93,463,181) ................. 117,996,198
------------
CONVERTIBLE PREFERRED STOCK - 0.44%
METALS & MINING - 0.44%
Freeport-McMoRan Copper & Gold ...... 37,600 733,200
------------
TOTAL CONVERTIBLE PREFERRED STOCK
(COST $898,510) .................... 733,200
------------
WARRANTS - 0.33%
Sealed Air .......................... 12,873 540,645
------------
TOTAL WARRANTS (COST $575,221) ...... 540,645
------------
PRINCIPAL
AMOUNT
ASSET BACKED SECURITIES - 4.82%
American Finance Home Equity
Series 94-2A1 6.95% 6/25/24 ........ $ 34,591 34,654
Series 92-5A 7.20% 2/15/08 ......... 70,508 71,269
Series 91-1A 8.00% 7/25/06 ......... 7,450 7,593
California Infrastructure PG&E
Series 97-1A4 6.16% 6/25/03 ........ 640,000 643,072
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
ASSET BACKED SECURITIES (CONTINUED)
Chase Manhattan RV Owner Trust
Series 1997-A A9 6.32% 12/15/08 ........... $ 145,000 $ 146,392
CIT RV Trust
Series 97-A A5 6.25% 11/17/08 ............. 570,000 573,078
Series 98-A A5 6.12% 7/15/14 .............. 535,000 541,520
EQCC Series 1998-2 A3F
6.23% 3/15/13 ............................. 500,000 500,156
First Plus Home Loan Trust Series
98-3 A3 6.27% 5/10/13 ..................... 650,000 651,828
First Union Residential Securitization
Tax Series 96-A2 6.46% 9/25/11 ............ 555,000 555,167
First USA Credit Card Master Trust
Series 97-10 A 5.75% 9/17/03 .............. 125,000 125,038
MetLife Capital Equipment
Loan Trust Series 97-AA
6.85% 5/20/08 ............................. 420,000 431,634
NationsCredit Grantor Trust
Series 96-1 A 5.85% 9/15/11 ............... 181,597 180,307
Series 97-2 A1 6.35% 4/15/14 .............. 327,228 329,989
Neiman Marcus Group Series 95-1 A
7.60% 6/15/03 ............................. 180,000 185,953
Oakwood Mortgage Investors
Series 97C A3 6.65% 11/15/27 .............. 560,000 568,872
Standard Credit Card Master
Trust Series 94-4A 8.25% 11/7/03 .......... 600,000 641,311
The Money Store Home Equity Trust
Series 97-C AH5 6.59% 2/15/15 ............. 500,000 504,700
Series 97-AA9 7.235% 4/15/27 .............. 330,000 338,844
UCFC Home Equity Loan
Series 96-B1 A3 7.30% 4/15/14 ............. 460,000 462,760
World Omni Automobile Lease
Securitization Series 97-BA4
6.20% 11/25/03 ............................ 490,000 492,842
----------
TOTAL ASSET-BACKED SECURITIES
(COST $7,931,230) .......................... 7,986,979
----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.00%
Asset Securitization Corporation
Series 97-D5 A2 6.81% 2/14/4 .............. 480,000 497,025
Series 97-D5 A3 6.864% 2/14/41 ............ 375,000 386,602
Series 96-D2 A1 6.92% 2/14/29 ............. 364,452 379,428
Series 96-D3 A1B 7.21% 10/13/26 ........... 360,000 378,394
8
<PAGE>
DELAWARE SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
COLLATERALIZED MORTAGE
OBLIGATIONS (CONTINUED)
Series 97-D4 A1A 7.35% 4/14/29 .............. $ 221,796 $ 229,316
Series 97-MD7 A3 7.57% 1/13/30 .............. 400,000 432,563
Chase Commercial Mortgage Securities
Series 96-2 C 6.90% 11/19/06 ................ 250,000 253,438
GE Capital Mortgage Services
Series 94-2 A3 5.40% 1/25/09 ................ 69,776 69,518
Series 98-6 1A6 6.75% 4/25/28 ............... 380,000 379,763
LB Commercial Conduit Mortgage
Trust Series 98-Cl C 6.68% 2/18/08 .......... 470,000 473,819
Lehman Large Loan
Series 97-LLI A1 6.79% 6/12/04 .............. 438,444 450,022
Mortgage Capital Funding Conti Series
96-MC2 C 7.224% 9/20/06 ..................... 245,000 254,341
Series 96-MCI-D 7.80% 4/15/06 ............... 300,000 321,094
Nomura Asset Securities
Series 93-1 A1 6.68% 12/15/01 ............... 341,846 347,081
Series 96-MD5 A3 7.64% 4/13/36 .............. 340,000 368,156
Series 95-MD3 A1A 8.17% 8/4/20 .............. 319,686 332,224
Residential Accredit Loans
Series 98-QS9 A3 6.75% 8/25/28 .............. 400,000 401,938
Series 96-QS3 A13 7.29% 6/25/26 ............. 147,970 148,295
Series 96-QS2 A6 7.45% 4/25/23 .............. 445,000 453,135
Series 97-AS3 A3 7.50% 4/25/27 .............. 445,000 451,119
Series 97-QS6 A5 7.50% 6/25/12 .............. 356,458 372,526
Residential Funding Mortgage
Security I Series 98-S6 A6
6.75% 3/25/28 ............................... 510,000 509,283
Series 96-S9 7.25% 4/25/26 .................. 378,022 389,854
----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (COST $8,091,057) ............... 8,278,934
----------
CORPORATE BONDS - 4.50%
ABN-AMRO Bank NV 8.25% 8/1/09................. 80,000 90,000
Banco Santiago S.A. 7.00% 7/18/07 ............ 280,000 258,300
Commercial Credit 6.50% 8/1/04 ............... 450,000 455,625
Consumers Energy 6.38% 2/1/08 ................ 380,000 375,250
Continental Airlines pass thru
certificates 6.80% 1/2/09 ................... 395,000 401,419
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
CORPORATE BONDS (CONTINUED)
Credit Foncier de France
8.00% 1/14/02 ........................... $ 370,000 $ 392,663
Federal Express pass thru certificates
7.65% 1/15/14 ........................... 443,421 468,364
Firstar Capital Trust I
8.32% 12/15/26 .......................... 260,000 287,625
General Electric Capital
5.89% 5/11/01 ........................... 670,000 671,675
Health and Retirement Properties
6.75% 12/18/02 .......................... 400,000 402,500
MCI Communications 6.13% 4/15/02 ......... 350,000 349,563
Raytheon 5.95% 3/15/01 ................... 350,000 350,000
+Sony 6.13% 3/4/03 ........................ 660,000 664,125
Southern Investments United Kingdom
unsec sr nts 6.38% 11/15/01 ............. 250,000 251,563
Summit Bank 6.75% 6/15/03 ................ 320,000 326,800
+Travelers Property Casualty
6.75% 4/15/01 ........................... 775,000 790,500
U.S. Bancorp sub nts 8.13% 5/15/02 ....... 430,000 458,488
U.S. Bank N.A. 6.50% 2/1/08 .............. 450,000 457,875
----------
TOTAL CORPORATE BONDS
(COST $7,325,277) ....................... 7,452,335
----------
MORTGAGE-BACKED SECURITIES - 4.59%
Federal National Mortage Association
6.00% 3/1/11 to 4/1/13 .................. 937,170 929,117
Federal National Mortage Association
6.50% 4/1/13 to 6/1/28 .................. 4,525,084 4,529,060
Federal National Mortgage Association
7.00% 5/1/12 ............................ 496,000 506,385
Federal National Mortgage Association
7.50% 6/1/98 ............................ 404,139 415,253
Federal National Mortgage Association
9.50% 6/1/19 ............................ 197,203 212,610
Goverment National Mortgage
Association 6.50% 12/15/23
to 1/15/24 .............................. 86,755 87,108
Government National Mortgage
Association 7.00% 5/15/28 ............... 914,965 930,119
----------
TOTAL MORTGAGE-BACKED SECURITIES
(COST $7,563,531) ....................... 7,609,652
----------
9
<PAGE>
DELAWARE SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
MUNICIPAL BONDS - 0.23%
Philadelphia Pennsylvania Industrial
Development Authority Revenue
Series 97 6.49% 6/15/04 ................. $ 371,716 $ 375,201
----------
TOTAL MUNICIPAL BONDS
(COST $371,716) ......................... 375,201
----------
U.S. TREASURY OBLIGATIONS - 5.25%
+U.S. Treasury Bond 7.50% 11/15/16 ........ 925,000 1,110,620
U.S. Treasury Note 5.38% 2/15/01 ......... 3,080,000 3,069,743
U.S. Treasury Note 5.50% 3/31/00 ......... 220,000 220,015
+U.S. Treasury Note 5.50% 2/15/08 ......... 2,195,000 2,193,222
+U.S. Treasury Note 5.75% 8/15/03 ......... 430,000 434,708
U.S. Treasury Note 6.26% 4/30/01 ......... 250,000 254,698
+U.S. Treasury Note 6.38% 8/15/27 ......... 1,285,000 1,413,309
----------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $8,559,305) ....................... 8,696,315
----------
REPURCHASE AGREEMENTS - 3.85%
With Chase Manhattan 5.85% 7/01/98
(dated 6/30/98 collateralized by
$2,388,000 U.S. Treasury Notes
5.375% due 06/30/03,
market value $2,376,417) ............... 2,329,000 2,329,000
- ----------
+Security is partially or fully on loan.
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS (CONTINUED)
With J.P. Morgan Securties 5.75%
7/01/98 (dated 6/30/98 collateralized
by $1,898,000 U.S. Treasury Notes
6.25% due 2/15/03, market value
$1,994,256 and $74,000 U.S. Treasury
Notes 5.50% due 3/31/03, market
value $75,296) ............................ $2,025,000 $2,025,000
With PaineWebber 5.75% 7/01/98
(dated 6/30/98 collateralized by
$1,332,000 U.S. Treasury Notes
6.00% due 8/15/99, market value
$1,368,276 and $680,000 U.S. Treasury
Notes 5.875% due 1/31/99, market
value $697,900) ........................... 2,025,000 2,025,000
----------
TOTAL REPURCHASE AGREEMENTS
(COST $6,379,000) ......................... 6,379,000
----------
<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES - 100.25% (COST $141,158,028)..................................... $166,048,459
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.25%).......................................... (413,407)
------------
NET ASSETS APPLICABLE TO 8,873,738 SHARES ($0.01 PAR VALUE) OUTSTANDING; EQUIVALENT TO
$18.67 PER SHARE - 100.00%......................................................................... $165,635,052
============
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock, $ 0.01 par value, 1,000,000,000 shares authorized to the Fund
with 50,000,000 shares allocated
to the Series...................................................................................... $133,339,812
Undistributed net investment income................................................................ 1,355,893
Accumulated net realized gain on investments....................................................... 6,048,916
Net unrealized appreciation of investments......................................................... 24,890,431
------------
Total net assets................................................................................... $165,635,052
============
</TABLE>
See accompanying notes
10
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.-DELCHESTER SERIES
STATEMENT OF NET ASSETS
June 30, 1998 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS - 91.24%
AEROSPACE & DEFENSE - 0.46%
Federal Data sr sub nts
10.125% 8/1/05 ............................ $ 550,000 $ 568,563
----------
568,563
----------
AUTOMOBILES & AUTOMOTIVE PARTS - 2.95%
ADV Accessory/AAS Capital sr sub nts
9.75% 10/1/07 ............................. 650,000 658,125
CSK Auto sr sub nts 11.00% 11/1/06 ......... 130,000 143,000
Federal Mogul nts 7.875% 7/1/10 ............ 225,000 226,125
Motors and Gears sr nts
10.75% 11/15/06 ........................... 700,000 754,250
Newcor sr sub nts 9.875% 3/1/08 ............ 300,000 303,750
Ryder Transportation sr sub nts
10.00% 12/1/06 ............................ 275,000 319,688
Stanadyne Automotive sr sub nts
10.25% 12/15/07 ........................... 800,000 820,000
Talon Automotive sr sub nts
9.625% 5/1/08 ............................. 400,000 405,000
----------
3,629,938
----------
BANKING, FINANCE & INSURANCE - 1.31%
American Banknote unsec sr sub nts
11.25% 12/1/07 ............................ 1,500,000 1,522,500
Western Financial Bank-FSB sub debs
8.875% 8/1/07 ............................. 100,000 94,875
----------
1,617,375
----------
BUILDINGS & MATERIALS - 3.50%
American Builders and Contractors
sr unsec sub nts 10.625% 5/15/07 .......... 225,000 233,156
Atrium sr sub nts 10.50% 11/15/06 .......... 400,000 425,000
Clark Materials Handling unsec sr nts
10.75% 11/15/06 ........................... 500,000 541,250
Collins & Aikman Floorcovers
sr sub nts 10.00% 1/15/07 ................. 250,000 261,250
Nortek sr nts 9.25% 3/15/07 ................ 500,000 516,250
Reliant Building Products sr sub nts
10.875% 5/1/04 ............................ 100,000 100,750
Safelite Glass sr sub nts
9.875% 12/15/06 ........................... 500,000 530,000
Wesco Distribution sr sub nts
9.125% 6/1/08 ............................. 750,000 743,438
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
BUILDINGS & MATERIALS (CONTINUED)
Wesco International sr disc nts
0.00%/11.125% 6/1/08 ........................ $ 750,000 $ 440,625
Williams Scotsman sr nts
9.875% 6/1/07 ............................... 500,000 522,500
----------
4,314,219
----------
CABLE, MEDIA & PUBLISHING - 4.66%
Falcon Holdings debs
0.00%/9.285% 4/15/10 ........................ 1,500,000 969,370
Marcus Cable sr disc nts
0.00%/14.25% 12/15/05 ....................... 400,000 373,500
Marsulex sr sub nts 9.625% 7/1/08 ............ 150,000 153,000
Northland Cable Television sr sub nts
10.25% 11/15/07 ............................. 750,000 802,500
PSI Net sr nts 10.00% 2/15/05................. 400,000 410,000
PX Escrow sr disc nts
0.00%/9.625% 2/1/06 ......................... 1,250,000 903,125
Pathnet units 12.25% 4/15/08 ................. 300,000 325,500
Pegasus Communications sr nts
9.625% 10/15/05 ............................. 250,000 258,125
RH Donnelly sr sub nts
9.125% 6/1/08 ............................... 25,000 25,500
Sullivan Graphics sr sub nts
12.75% 8/1/05 ............................... 250,000 264,688
Trump Atlantic City Association II 1st
mtg nts 11.25% 5/1/06 ....................... 400,000 398,000
United International Holdings sr disc
nts 0.00%/10.75% 2/15/08 ................... 1,400,000 864,500
----------
5,747,808
----------
CHEMICALS - 3.58%
Aqua Chem sr sub nts 11.25% 7/1/08 ........... 800,000 812,000
Huntsman sr sub nts 9.50% 7/1/07 ............. 400,000 410,000
Koppers unsec sr sub nts
9.875% 12/1/07 .............................. 500,000 520,000
LaRoche Industries sr sub nts
9.50% 9/15/07 ............................... 1,500,000 1,477,500
PCI Chemical Canada company
guaranteed sub nts 9.25% 10/15/07 ........... 50,000 48,750
Philipp Brothers sr sub nts
9.875% 6/1/08 ............................... 400,000 404,000
Sterling Chemical Holdings sr disc nts
0.00%/13.50% 8/15/08 ........................ 1,275,000 742,688
----------
4,414,938
----------
11
<PAGE>
DELCHESTER SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
COMPUTERS & TECHNOLOGY - 0.68%
Cellnet Data Systems sr disc nts
0.00%/14.00% 10/1/07 ..................... $1,000,000 $ 573,750
Statia Terminals mtg nts
11.75% 11/15/03 .......................... 250,000 263,125
----------
836,875
----------
CONSUMER PRODUCTS - 4.57%
Calmar sr sub nts 11.50% 8/15/05 .......... 500,000 576,250
Desa International sr sub nts
9.875% 12/15/07 .......................... 615,000 616,538
Drypers sr nts 10.25% 6/15/07 500,000 516,875
French Fragrance sr nts
10.375% 5/15/07 .......................... 1,000,000 1,070,000
Iron Age sr sub nts 9.875% 5/1/08 ......... 500,000 501,250
Prime Succession Acquisition sr sub nts
10.75% 8/15/04 ........................... 200,000 219,500
Revlon Consumer Products sr sub nts
8.625% 2/1/08 ............................ 100,000 100,500
**Revlon Worldwide sr disc nts
9.57% 3/15/01 ............................ 600,000 465,750
Riddell Sports sr unsec sub nts
10.50% 7/15/07 ........................... 400,000 419,000
Spin Cycle units 0.00%/12.75%
5/1/05 ................................... 500,000 357,500
Zeta Consumer Products sr nts
11.25% 11/30/07 .......................... 800,000 796,000
----------
5,639,163
----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 1.86%
Elgar Holdings sr nts 9.875% 2/1/08 ....... 400,000 371,000
Phase Metrics sr nts 10.75% 2/1/05 ........ 1,700,000 1,241,000
Rhythms Netconnections
0.00/13.50% 5/15/08 ...................... 1,400,000 686,000
----------
2,298,000
----------
ENERGY - 6.03%
First Wave Marine sr nts
11.00% 2/1/08 ............................ 1,100,000 1,174,250
Michael Petroleum 11.50% 4/1/05 ........... 400,000 403,000
P & L Coal Holdings sr sub nts
9.625% 5/15/08 ........................... 550,000 566,500
Panaco unsec sr sub nts
10.625% 10/1/04 .......................... 925,000 925,000
Rutherford-Moran Oil sr sub nts
10.75% 10/1/04 ........................... 750,000 802,500
Tesoro Petroleum sr sub nts
9.00% 7/1/08 ............................. 500,000 501,250
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
ENERGY (CONTINUED)
Transamerican Energy sr disc nts
0.00%/13.00% 6/15/02 ................. $1,000,000 $ 820,000
Transamerican Energy sr nts
11.50% 6/15/02 ....................... 250,000 237,500
Transamerican Refining units
16.00% 6/30/03 ....................... 1,000,000 1,065,000
Uiversal Compression sr disc nts
0.00%/9.875% 2/15/08 ................. 1,000,000 640,000
Universal Compression Holdings sr
disc nts 11.375% 2/15/09 ............ 500,000 302,500
----------
7,437,500
----------
ENVIRONMENTAL SERVICES - 0.23%
Hydrochem Industrial Services
sr sub nts 10.375% 8/1/07 ............ 275,000 281,188
----------
281,188
----------
FOOD, BEVERAGE & TOBACCO - 4.75%
Ameriserve Food Distributors sr sub nts
10.125% 7/15/07 ...................... 750,000 783,750
B and G Foods unsec sr sub nts
9.625% 8/1/07 ........................ 500,000 508,750
Core-Mark International sr sub nts
11.375% 9/15/03 ...................... 200,000 213,250
Del Monte Foods sr disc nts
0.00%/12.50% 12/15/07 ................ 1,750,000 1,146,250
DiGiorgio sr nts 10.00% 6/15/07 ....... 775,000 771,125
Electronic Retailing Systems
sr disc nts 0.00%/13.25% 2/1/04 ...... 500,000 232,500
Favorite Brands sr nts
10.75% 5/15/06 ....................... 800,000 809,000
Fresh Foods sr nts 10.75% 6/1/06 ...... 750,000 751,875
Windy Hill Pet Food sr sub nts
9.75% 5/15/07 ........................ 600,000 636,000
----------
5,852,500
----------
HEALTHCARE & PHARMACEUTICALS - 2.16%
Alliance Imaging sr sub nts
9.625% 12/15/05 ...................... 400,000 409,000
Dynacare sr nts 10.75% 1/15/06 ........ 500,000 536,250
Insight Health Services sr sub nts
9.625% 6/15/08 ....................... 700,000 700,000
Kinetic Concepts sr sub nts
9.625% 11/1/07 ....................... 1,000,000 1,012,500
----------
2,657,750
----------
12
<PAGE>
DELCHESTER SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
INDUSTRIAL MACHINERY - 3.95%
AEP Industries sr sub nts
9.875% 11/15/07 ....................... $ 200,000 $ 208,500
Burke Industries unsec sr nts
10.00% 5/15/07 ........................ 500,000 507,500
Cambridge Industries sr sub nts
10.25% 7/15/07 ........................ 800,000 828,000
Outboard Marine sr nts
10.75% 6/1/08 ......................... 400,000 413,000
Rental Service sr sub nts
9.00% 5/15/08 ......................... 500,000 500,000
Safety Components International
sr sub nts 10.125% 7/15/07 ............ 600,000 624,000
Spinnaker Industries sr nts
10.75% 10/15/06 ....................... 500,000 520,000
Trench Electric 10.25% 12/15/07 ........ 1,250,000 1,271,875
---------
4,872,875
---------
LEISURE, LODGING & ENTERTAINMENT - 3.16%
Aladdin Gaming units
0.00%/13.50% 3/1/10 ................... 1,250,000 603,125
Premier Parks sr disc nts
0.00%/10.00% 4/1/08 ................... 1,200,000 798,000
Regal Cinemas sr sub nts
9.50% 6/1/08 .......................... 700,000 708,750
Silver Cinemas sr sub nts
10.50% 4/15/05 ........................ 600,000 614,250
United Artists sr sub nts
9.75% 4/15/08 ......................... 1,175,000 1,172,063
---------
3,896,188
---------
METALS & MINING - 3.70%
Commonwealth Aluminum sr sub nts
10.75% 10/1/06 ........................ 200,000 213,000
Doe Run Resources sr nts
11.25% 3/15/05 ........................ 1,200,000 1,240,500
Great Lakes Carb sr sub nts
10.25% 5/15/08 ........................ 500,000 510,000
Jorgensen Earle M. sr sub nts
9.50% 4/1/05 .......................... 800,000 784,000
Metallurg sr nts 11.00% 12/1/07 ........ 1,250,000 1,309,375
Renco Steel Holding sr nts
10.875% 2/1/05 ........................ 500,000 505,000
---------
4,561,875
---------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
PACKAGING & CONTAINERS - 4.54%
Gaylord Container sr nts
9.75% 6/15/07 ...................... $ 550,000 $ 547,250
Gaylord Container sr sub nts
9.875% 2/15/08 ..................... 1,500,000 1,462,500
Graham Packaging/GPC Capital
sr disc nts 0.00%/10.75% 1/15/09 ... 1,000,000 626,250
Graham Packaging/GPC Capital
sr sub nts 8.75% 1/15/08 .......... 500,000 501,250
Riverwood International unsec
sr sub nts 10.875% 4/1/08 .......... 1,800,000 1,827,000
**Silgan Holdings pik debs
12.13% 7/15/06 ..................... 561,000 634,631
----------
5,598,881
----------
PAPER & FOREST PRODUCTS - 2.40%
Fibermark sr nts 9.375% 10/15/06 .... 400,000 421,000
Four M sr nts 12.00% 6/1/06 ......... 1,000,000 1,072,500
MAXXAM Group sr sec nts
12.00% 8/1/03 ...................... 600,000 672,000
MAXXAM Group sr sec nts
11.25% 8/1/03 ...................... 750,000 795,000
----------
2,960,500
----------
RETAIL - 6.06%
Advance Stores sr sub nts
10.25% 4/15/08 ..................... 800,000 831,000
Chief Auto Parts sr nts
10.50% 5/15/05 ..................... 900,000 1,014,750
Fleming sr sub nts 10.50% 12/1/04 ... 1,750,000 1,811,250
Frank's Nursery and Crafts sr sub nts
10.25% 3/1/08 ...................... 500,000 506,250
Jitney-Jungle Stores unsec sr sub nts
10.375% 9/15/07 .................... 1,300,000 1,391,000
Leslie's Poolmart sr nts
10.375% 7/15/04 .................... 500,000 530,000
Petro Stopping Centers sr nts
10.50% 2/1/07 ...................... 350,000 375,375
Shoppers Food Warehouse sr nts
9.75% 6/15/04 ...................... 100,000 111,500
US Office Products 9.75% 6/15/08 .... 900,000 902,250
----------
7,473,375
----------
13
<PAGE>
DELCHESTER SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
TELECOMMUNICATIONS - 21.52%
Adelphia Communications sr nts
9.50% 2/15/04 .................... $ 40,437 $ 42,964
Advanstar Communications sr sub nts
9.25% 5/1/08 ..................... 450,000 454,500
American Mobile/AMSC Acquisition
units 12.25% 4/1/08 .............. 700,000 665,000
Arch Communications sr nts
12.75% 7/1/07 .................... 500,000 505,000
Arch Communications sr disc nts
0.00%/10.875% 3/15/08 ............ 1,500,000 847,500
BTI Telecom sr nts 10.50% 9/15/07 . 1,500,000 1,515,000
Convergent Communication units
13.00% 4/1/08 .................... 500,000 500,000
DTI Holdings units
0.00%/12.50% 3/1/08 .............. 1,250,000 665,625
ECONOPHONE sr disc nts
0.00%/11.00% 2/15/08 ............. 800,000 458,000
FirstWorld Communication units
0.00%/13.00% 4/15/08 ............. 1,500,000 675,000
GST USA sr disc nts 0.00% 12/15/05 1,000,000 810,000
Global Crossing Holdings Limited
sr nts 9.625% 5/15/08 ............ 900,000 939,375
Iridium LLC/Capital sr unsec nts
11.25% 7/15/05 ................... 1,400,000 1,407,000
JACOR Communications unsec
sr sub nts 9.75% 12/15/06 ........ 500,000 546,250
KMC Telecom Holdings units
0.00%/12.50% 2/15/08 ............. 1,500,000 903,750
McCaw International sr disc nts
0.00%/13.00% 4/15/07 ............. 600,000 396,000
Metrocall unsec sr sub nts
10.375% 10/1/07 .................. 1,475,000 1,530,313
Metronet Communications sr disc nts
9.95% 6/15/08 .................... 1,300,000 802,750
Nextel Communications sr disc nts
0.00%/10.65% 9/15/07 ............. 1,650,000 1,117,875
Nextel Communications sr disc nts
0.00%/9.95% 2/15/08 .............. 2,500,000 1,600,000
Nextlink Communications sr disc nts
0.00%/9.45% 4/15/08 .............. 700,000 430,500
Nextlink Communications sr nts
9.625% 10/1/07 ................... 500,000 516,250
Paging Network sr sub nts
10.125% 8/1/07 ................... 450,000 470,250
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
RCN sr nts 10.00% 10/15/07 .......... $ 200,000 $ 206,000
RCN sr disc nts
0.00%/11.125% 10/15/07 ............. 2,750,000 1,760,000
RCN sr disc nts 0.00%/9.80% 2/15/08 . 1,900,000 1,159,000
TELEX Communications sr sub nts
10.50% 5/1/07 ...................... 750,000 690,000
Teligent sr disc nts
0.00%/11.50% 3/1/08 ................ 3,750,000 2,071,875
Teligent sr nts 11.50% 12/1/07 ...... 1,000,000 1,017,500
Twenty First Century
Telecommunications Group sr disc nts
0.00%/12.25% 2/15/08 ............... 900,000 508,500
USA Mobile Communication sr nts
14.00% 11/1/04 ..................... 500,000 550,000
Viatel units 0.00%/12.50% 4/15/08 ... 775,000 461,125
Viatel units 11.25% 4/15/08 ......... 300,000 315,000
-----------
26,537,902
-----------
TEXTILES, APPAREL & FURNITURE - 0.60%
CMI Industries sr sub nts
9.50% 10/1/03 ...................... 410,000 430,500
Scovill Fasteners sr unsec nts
11.25% 11/30/07 .................... 300,000 313,500
-----------
744,000
-----------
TRANSPORTATION & SHIPPING - 1.10%
Ameriking sr nts 10.75% 12/1/06 ..... 450,000 486,000
Navigator Gas Transport nts
10.50% 6/30/07 ..................... 400,000 417,000
Navigator Gas Transport unit
12.00% 6/30/07 ..................... 400,000 458,000
-----------
1,361,000
-----------
MISCELLANEOUS - 7.47%
ATC Group Services sr sub nts
12.00% 1/15/08 ..................... 550,000 517,000
Accuride sr sub nts 9.25% 2/1/08 .... 1,000,000 1,005,000
Comforce Operating sr nts
12.00% 12/1/07 ..................... 450,000 487,125
Derby Cycle/Lyon sr nts
10.00% 5/15/08 ..................... 1,300,000 1,300,000
EV International sr sub nts
11.00% 3/15/07 ..................... 1,000,000 943,750
Eagle-Picher Industries sr sub nts
9.375% 3/1/08 ...................... 1,000,000 1,018,750
14
<PAGE>
DELCHESTER SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
MISCELLANEOUS (CONTINUED)
Grove Worldwide sr sub nts
9.25% 5/1/08 ..................... $ 1,050,000 $ 1,050,000
Highwaymaster Communications
sr nts 13.75% 9/15/05 ............ 400,000 300,000
Home Interiors and Gifts sr sub nts
10.125% 6/1/08 ................... 800,000 818,000
Indesco International sr sub nts
9.75% 4/15/08 .................... 500,000 493,750
Iron Age Holdings sr disc nts
0.00%/12.125% 5/1/09 ............. 500,000 287,500
Paragon Corporate Holdings sr nts
9.625% 4/1/08 .................... 200,000 184,000
Perry-Judd sr sub nts
10.625% 12/15/07 ................. 500,000 527,500
Thermadyne Holdings debs
0.00%/12.50% 6/1/08 .............. 500,000 277,500
------------
9,209,875
------------
TOTAL CORPORATE BONDS
(COST $111,849,416) .............. 112,512,288
------------
NUMBER
OF SHARES
--------------
PREFERRED STOCKS - 2.43%
CABLE, MEDIA & PUBLISHING - 0.23%
PEGASUS Communications unit pik
12.75% 1/1/02 .................... 2,500 289,375
------------
289,375
------------
TELECOMMUNICATIONS - 0.90%
Dobson Communications ............. 250 272,500
Echostar Communications ........... 3,642 400,653
Nextel Communications ............. 412 431,171
------------
1,104,324
------------
<PAGE>
NUMBER MARKET
OF SHARES VALUE
PREFERRED STOCKS (CONTINUED)
UTILITIES - 0.53%
El Paso Electric pik ............... 6,250 $ 657,812
----------
657,812
----------
MISCELLANEOUS - 0.77%
Eagle-Picher Holdings .............. 9,000 524,250
Nebco Evans Holding pik pfd ........ 4,106 424,988
----------
949,238
----------
TOTAL PREFERRED STOCK
(COST $2,839,463) ................. 3,000,749
----------
CONVERTIBLE PREFERRED STOCKS - 0.61%
E.Spire Communications ............. 6,910 754,918
----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $706,812) ................... 754,918
----------
WARRANTS - 0.05%
*American Banknote .................. 18,723 15,000
*Cellnet Data Systems ............... 13,671 40,000
*Electronic Retailing System......... 500 5,000
*Gothic Energy ...................... 1,400 1,400
*Highway Master ..................... 600 1,200
*McCaw International ................ 31 150
----------
TOTAL WARRANTS (COST $44,190)....... 62,750
----------
RIGHTS - 0.01%
*Terex-Appreciation Rights .......... 800 17,600
----------
TOTAL RIGHTS (COST $2,000) ......... 17,600
----------
15
<PAGE>
DELCHESTER SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS - 5.05%
With Chase Manhattan 5.85% 7/01/98
(dated 6/30/98 collateralized by
$2,330,000 U.S. Treasury Notes
5.375% due 06/30/03,
market value $2,318,674) ............ $2,272,000 $2,272,000
With J.P. Morgan Securties 5.75%
7/01/98 (dated 6/30/98 collateralized
by $1,852,000 U.S. Treasury Notes
6.25% due 2/15/03, market value
$1,945,798 and $73,000 U.S.
Treasury Notes 5.50% due 3/31/03,
market value $73,466) ............... 1,976,000 1,976,000
With PaineWebber 5.75% 7/01/98
(dated 6/30/98 collateralized by
$1,300,000 U.S. Treasury Notes
6.00% due 8/31/99, market value
$1,335,029 and $663,000 U.S.
Treasury Notes 5.875% due 1/31/99,
market value $680,943) .............. $1,976,000 $1,976,000
----------
TOTAL REPURCHASE AGREEMENTS
(COST $6,224,000) ................... 6,224,000
----------
<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES - 99.39% (COST $121,665,881)...................................... $122,572,305
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.61%............................................ 746,079
------------
NET ASSETS APPLICABLE TO 12,938,149 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $9.53 PER SHARE - 100.00%............................................................ $123,318,384
============
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock, $0.01 par value, 1,000,000,000 shares authorized to the Fund
with 50,000,000 shares
allocated to the Series............................................................................ $120,950,204
Undistributed net investment income................................................................ 131,239
Accumulated net realized gain on investments....................................................... 1,330,517
Net unrealized appreciation on investments......................................................... 906,424
------------
Total net assets................................................................................... $123,318,384
============
</TABLE>
- ----------
* Non-income producing security.
** The interest rate shown for this security is the effective yield.
Summary of Abbreviations:
cv--convertible mtg--mortgage sec--secured
debs--debentures nts--notes sr--senior
def--deferred pfd--preferred sub--subordinated
disc--discount pik--pay-in-kind unsec--unsecured
See accompanying notes
16
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.-CAPITAL RESERVES SERIES
STATEMENT OF NET ASSETS
June 30, 1998 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
ASSET-BACKED SECURITIES - 19.69%
American Finance Home Equity
Series 94-2A 6.950% 6/25/24 ............... $ 122,223 $ 122,443
Series 91-1A 8.00% 7/25/06 ................ 21,036 21,440
California Infrastructure PG&E
Series 97-1 A4 6.16% 6/25/03 .............. 555,000 557,664
Chase Manhattan RV Owner Trust
Series 1997-A A9 6.320% 12/15/08 .......... 170,000 171,632
CIT RV Trust
Series 97-A A5 6.25% 11/17/02.............. 510,000 512,754
Series 98-A A5 6.12% 7/15/14 .............. 440,000 445,363
EQCC Home Equity Loan Trust
Series 1998-2 A3F 6.230% 3/15/13 .......... 410,000 410,128
First Plus Home Loan Trust
6.27% 5/10/13 ............................. 550,000 551,547
First Union Residential Securitization
Trust Series 96-2 A2 6.46% 9/25/11 ........ 615,000 615,185
First USA Credit Card Master Trust
5.746% 9/17/03 ............................ 125,000 125,038
MetLife Capital Equipment Loan
Trust Series 97-A A 6.85% 5/20/08 ......... 410,000 421,357
NationsCredit Grantor Trust
Series 96-1 A 5.85% 9/15/11 ............... 171,508 170,290
Series 97-2 A1 6.35% 4/15/14 .............. 290,415 292,865
The Money Store Home Equity Trust
Series 97-C AH5 6.59% 2/15/15.............. 500,000 504,700
Series 97-A A9 7.235% 4/15/27.............. 385,000 395,318
UCFC Home Equity Loan
Series 96-B1 A3 7.30% 4/15/14.............. 625,000 628,750
World Omni Automobile Lease
Securitization Series 97-B A4
6.20% 11/25/03 ............................ 440,000 442,552
----------
TOTAL ASSET-BACKED SECURTIES
(COST $6,341,311) ......................... 6,389,026
----------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
COLLATERALIZED MORTGAGE
OBLIGATION - 24.74%
Asset Securitization Corporation
Series 97-D5 A2 6.814% 2/14/41 ........ $ 430,000 $ 445,252
Series 97-D5 A3 6.864% 2/14/41 ........ 320,000 329,900
Series 96-D2 A1 6.92% 2/14/29 ......... 623,404 649,022
Series 96-D3 A1B 7.21% 10/13/26 ....... 400,000 420,438
Series 97-D4 A1A 7.35% 4/14/29 ........ 341,225 352,794
GE Capital Mortgage Services
Series 94-2 A3 5.40% 1/25/09 .......... 61,148 60,922
Series 98-6 1A6 6.75% 4/25/28 ......... 335,000 334,791
LB Commercial Conduit Mortgage
Trust 1998-Cl C 6.68% 2/18/08 ......... 420,000 423,413
Lehman Large Loan
Series 97-LLI A1 6.79% 6/12/04 ........ 428,591 439,909
Mortgage Capital Funding
Series 96-MC2 C 7.224% 9/20/06 ........ 275,000 285,484
Conti Series 96-MCI D 7.80% 4/15/06 ... 360,000 385,313
Nomura Asset Securities
Series 93-1 A1 6.68% 12/15/01 ......... 341,846 347,081
Series 95-MD3 A1A 8.17% 3/4/20 ........ 447,561 465,114
Series 96-MD5 A3 7.64% 4/13/36 ........ 460,000 498,094
Residential Accredit Loans
Series 98-QS9 A5 6.75% 8/25/28 ........ 400,000 401,938
Series 96-QS3 AI3 7.29% 6/25/26 ....... 166,466 166,832
Series 96-QS2 A6 7.45% 4/25/23 ........ 540,000 549,872
Series 97-QS6 A5 7.50% 6/25/12 ........ 529,870 553,755
Series 97-QS3 A3 7.50% 4/25/27 ........ 540,000 547,425
Residential Funding Mortgage
Securities Series 96-S9
A10 7.25% 4/25/26 ..................... 358,637 369,862
----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (COST $7,833,430) ......... 8,027,211
----------
17
<PAGE>
CAPITAL RESERVES SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
MORTGAGE BACKED SECURITIES - 17.13%
Federal National Mortgage Association
6.00% 4/1/13 ............................ $ 447,655 $ 443,179
Federal National Mortgage Association
6.50% 4/1/13 ............................ 1,440,000 1,449,240
Federal National Mortgage Association
6.50% 6/1/28 ............................ 1,534,000 1,528,746
Federal National Mortgage Association
7.00% 5/1/12 ............................ 411,680 420,299
Federal National Mortgage Association
7.50% 6/1/28 ............................ 315,000 323,663
Federal National Mortgage Association
9.50% 11/1/21 to 5/1/22 ................. 121,847 132,508
Government National Mortgage
Association 6.50%
12/15/23 to 1/15/24 ..................... 360,430 361,895
Government National Mortgage
Association 7.00% 5/15/28 ............... 756,701 769,234
Government National Mortgage
Association 12.00%
6/20/14 to 2/20/16 ...................... 111,350 127,424
----------
TOTAL MORTGAGE BACKED SECURITIES
(COST $5,527,060) ....................... 5,556,188
----------
CORPORATE BONDS - 16.94%
Banco Santiago S.A. 7.00% 7/18/07 ........ 270,000 249,075
Consumers Energy 6.375% 2/1/08 ........... 335,000 330,813
Continental Airlines 6.80% 1/2/09 ........ 450,000 457,313
Credit Foncier de France
8.00% 1/14/02 ........................... 340,000 360,825
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS (CONTINUED)
Firstar Capital 8.32% 12/15/26 ......... $ 315,000 $ 348,461
General Electric Capital
5.89% 5/11/01 ......................... 675,000 676,688
Great Western Financial
8.206% 2/1/27 ......................... 500,000 546,875
Health and Retirement Properties
6.75% 12/18/02 ........................ 360,000 362,250
Raytheon 5.95% 3/15/01 ................. 570,000 570,000
Sony 6.125% 3/4/03 ..................... 700,000 704,375
Southern Investments
UK 6.375% 11/15/01 .................... 320,000 322,000
Summit Bank 6.75% 6/15/03 .............. 430,000 439,138
U.S. Bancorp 8.125% 5/15/02 ............ 120,000 127,950
----------
TOTAL CORPORATE BONDS
(COST $5,389,932) ..................... 5,495,763
----------
U.S. TREASURY OBLIGATIONS - 17.76%
U.S. Treasury Notes 5.375% 2/15/01 ..... 220,000 219,267
U.S. Treasury Notes 5.500% 3/31/00 ..... 3,000,000 3,000,210
U.S. Treasury Notes 6.25% 4/30/01 ...... 45,000 45,846
U.S. Treasury Notes 6.375% 1/15/00 ..... 2,465,000 2,496,330
----------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $5,765,832) ..................... 5,761,653
----------
MUNICIPAL BONDS - 1.13%
Philadelphia, Pennsylvania Authority
For Industrial Development
Series 97 A 6.488% 6/15/04 ............ 362,423 365,822
----------
TOTAL MUNICIPAL BONDS
(COST $362,423) ....................... 365,822
----------
18
<PAGE>
CAPITAL RESERVES SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS - 3.19%
With Chase Manhattan 5.85%
7/01/98 (dated 6/30/98
collateralized by $384,000
U.S. Treasury Notes
5.375% due 06/30/03,
market value $385,949) .................... $378,000 $378,000
With J.P. Morgan Securties 5.75%
7/01/98 (dated 6/30/98
collateralized by $308,000
U.S. Treasury Notes
6.25% due 2/15/03,
market value $323,883 and $12,000
U.S. Treasury Notes
5.50% due 3/31/03,
market value $12,229) ..................... 329,000 329,000
With PaineWebber 5.75% 7/01/98
(dated 6/30/98 collateralized by
$216,000 U.S. Treasury Notes
6.00% due 8/15/99,
market value $222,219 and
$110,000 U.S. Treasury Notes
5.875% due 1/31/99,
market value $113,345) .................... $ 329,000 $ 329,000
----------
TOTAL REPURCHASE AGREEMENTS
(COST $1,036,000) ......................... 1,036,000
----------
<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES (COST $32,255,988) - 100.58%...................................... $32,631,663
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.58%).......................................... (188,519)
-----------
NET ASSETS APPLICABLE TO 3,307,902 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $9.81 PER SHARE - 100.00%............................................................ $32,443,144
===========
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock, $0.01 par value, 1,0000,000,000 shares authorized to the Fund with
50,000,000 shares allocated to the Series......................................................... $33,527,108
Accumulated net realized loss on investments....................................................... (1,459,639)
Net unrealized appreciation of investments......................................................... 375,675
-----------
Total net assets................................................................................... $32,443,144
===========
</TABLE>
See accompanying notes
19
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.-CASH RESERVE SERIES
STATEMENT OF NET ASSETS
June 30, 1998 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
COMMERCIAL PAPER - 77.53%
FINANCIAL SERVICES - 50.05%
ABN-AMRO North AmericanFinance
5.52% 07/13/98 ........................ $ 1,000,000 $ 998,160
ABN-AMRO North American Finance
5.44% 08/25/98 ........................ 500,000 495,844
Allianz Of America Financial
5.51% 08/27/98 ........................ 2,000,000 1,982,553
Banc One Funding 5.52% 07/06/98 ........ 1,000,000 999,233
Bankers Trust New York
5.50% 09/08/98 ........................ 1,000,000 989,458
Bankers Trust New York
5.51% 10/15/98 ........................ 500,000 491,888
Ciesco L.P. 5.50% 07/28/98 ............. 1,500,000 1,493,813
Commonwealth Bank of Australia
5.37% 07/29/98 ........................ 1,000,000 995,823
Corporate Asset Funding
5.52% 07/24/98 ........................ 500,000 498,237
Corporate Asset Funding
5.53% 08/19/98 ........................ 1,500,000 1,488,710
Fleet Funding 5.52% 07/14/98 ........... 1,721,000 1,717,569
General Re 5.50% 09/03/98 .............. 880,000 871,396
General Electric Capital
5.35% 08/17/98 ........................ 1,000,000 993,015
ING America Insurance Holdings
5.47% 07/30/98 ........................ 1,000,000 995,594
ING America Insurance Holdings
5.50% 08/28/98 ........................ 500,000 495,569
MetLife Funding 5.51% 07/10/98 ......... 1,500,000 1,497,934
MetLife Funding 5.54% 08/24/98 ......... 500,000 495,845
Rabobank USA Financial
5.48% 10/20/98 ........................ 1,000,000 983,103
Swiss Re Financial Products
5.48% 07/14/98 ........................ 1,000,000 998,021
Swiss Re Financial Products
5.52% 07/27/98 ........................ 500,000 498,010
Teco Finance 5.47% 07/10/98 ............ 1,000,000 998,633
USAA Capital 5.52% 08/17/98 ............ 2,000,000 1,985,587
-----------
TOTAL FINANCIAL SERVICES ............... 22,963,995
-----------
INDUSTRIAL - 9.17%
Golden Peanut 5.50% 10/22/98 ........... 1,000,000 982,736
Henkel 5.46% 07/23/98 .................. 250,000 249,166
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
COMMERCIAL PAPER (CONTINUED)
INDUSTRIAL (CONTINUED)
Henkel 5.48% 11/17/98 .................... $ 1,000,000 $ 978,841
Unilever NV 5.50% 07/29/98 ............... 1,000,000 995,722
Zeneca Wilmington 5.53% 07/07/98 ......... 1,000,000 999,078
-----------
TOTAL INDUSTRIAL ......................... 4,205,543
-----------
MORTGAGE BANKERS & BROKERS - 18.31%
Bear Stearns 5.51% 10/20/98 .............. 2,000,000 1,966,022
CS First Boston 5.50% 10/21/98 ........... 1,500,000 1,474,333
Goldman Sachs Group
5.62% 08/04/98 .......................... 1,000,000 994,692
Goldman Sachs Group
5.48% 10/07/98 .......................... 1,000,000 985,082
Merrill Lynch 5.48% 07/07/98 ............. 1,000,000 999,087
Merrill Lynch 5.53% 09/10/98 ............. 1,000,000 989,094
Morgan Stanley Group
5.51% 08/19/98 .......................... 1,000,000 992,500
-----------
TOTAL MORTGAGE
BANKERS & BROKERS ........................ 8,400,810
-----------
TOTAL COMMERCIAL PAPER ................... 35,570,348
-----------
CERTIFICATES OF DEPOSIT - 6.54%
DOMESTIC - 4.36%
Harris Trust & Savings Bank
5.55% 07/07/98 .......................... 1,000,000 1,000,000
Wilmington Trust 5.58% 07/06/98 .......... 1,000,000 1,000,000
-----------
2,000,000
-----------
YANKEE - 2.18%
Canada Imperial Bank Commerce
5.82% 09/30/98 .......................... 1,000,000 999,981
-----------
999,981
-----------
TOTAL CERTIFICATES OF DEPOSIT ............ 2,999,981
-----------
FLOATING RATE NOTES* - 6.54%
Federal Home Loan Bank
5.601% 10/23/98 ......................... 500,000 500,000
Federal Home Loan Bank
5.481% 02/26/99 ......................... 500,000 499,839
Key Bank, New York 5.86% 10/02/98 ........ 1,000,000 1,000,139
Student Loan Marketing Association
5.621% 11/12/98 ......................... 1,000,000 1,000,000
-----------
TOTAL FLOATING RATE NOTES ................ 2,999,978
-----------
20
<PAGE>
CASH RESERVE SERIES
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS - 9.16%
With Chase Manhattan 5.85%
07/01/98 (dated 06/30/98,
collateralized by $1,574,000
U.S. Treasury Notes
5.375% due 06/30/03,
market value $1,566,520) ................ $1,535,000 $1,535,000
With J.P. Morgan Securities 5.75%
07/01/98 (dated 06/30/98,
collateralized by $49,000
U.S. Treasury Notes 5.50%
due 03/31/03, market value
$49,635 and $1,251,000
U.S. Treasury Notes
6.25% due 02/15/03,
market value $1,314,602) ................ 1,335,000 1,335,000
With PaineWebber 5.75%
07/01/98 (dated 06/30/98
collateralized by $448,000
U.S. Treasury Notes 5.875%
due 01/31/99, market value
$460,052 and $878,000
U.S. Treasury Notes
6.00% due 08/15/99,
market value $901,960) .................. $1,335,000 $1,335,000
----------
TOTAL REPURCHASE AGREEMENTS .............. 4,205,000
----------
<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES - 99.77% (COST $45,775,307)....................................... $45,775,307
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.23%............................................ 104,520
-----------
NET ASSETS APPLICABLE TO 4,587,983 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $10.00 PER SHARE - 100.00%........................................................... $45,879,827
===========
</TABLE>
- --------------
*Floating Rate Notes - The interest rate shown is the rate as of June 30, 1998
and the maturity shown is the longer of the next interest readjustment date or
the date the principal amount shown can be recovered through demand.
See accompanying notes
21
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.
STATEMENTS OF OPERATIONS
Six Months Ended 6/30/98 (Unaudited)
<TABLE>
<CAPTION>
DECATUR
TOTAL
DELCAP RETURN DELAWARE
SERIES SERIES SERIES
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ......................................... $ 219,169 $ 363,596 $ 1,377,955
Dividends ........................................ 111,392 5,847,831 890,225
------------ ------------ ------------
330,561 6,211,427 2,268,180
------------ ------------ ------------
EXPENSES:
Management fees .................................. 426,987 1,435,536 450,530
Custodian fees ................................... 10,080 6,654 12,004
Dividend disbursing and transfer
agent fees and expenses ......................... 6,300 4,000 3,056
Registration fees ................................ 5,820 33,200 2,350
Reports and statements to shareholders ........... 7,740 31,923 4,811
Accounting and administration .................... 29,532 115,837 39,236
Professional fees ................................ 8,250 26,625 10,050
Directors' fees .................................. 1,020 3,510 1,275
Taxes (other than taxes on income) ............... 5,187 22,186 6,250
Other ............................................ 26,363 8,792 5,390
------------ ------------ ------------
527,279 1,688,263 534,952
Less expenses absorbed by Delaware Management
Company ......................................... (62,791) -- --
------------ ------------ ------------
Total Expenses ................................... 464,488 1,688,263 534,952
------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ..................... (133,927) 4,523,164 1,733,228
------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on
investment transactions ......................... 5,330,095 29,122,870 6,086,111
Net change in unrealized appreciation/depreciation
on investments .................................. 9,160,639 7,686,692 4,900,177
------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS ...................... 14,490,734 36,809,562 10,986,288
------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $ 14,356,807 $ 41,332,726 $ 12,719,516
============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL CASH
DELCHESTER RESERVES RESERVE
SERIES SERIES SERIES
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ......................................... $ 5,472,921 $ 1,032,335 $ 1,043,667
Dividends ........................................ 134,909 -- --
------------ ------------ ------------
5,607,830 1,032,335 1,043,667
------------ ------------ ------------
EXPENSES:
Management fees .................................. 336,278 93,189 92,746
Custodian fees ................................... 7,000 5,600 1,344
Dividend disbursing and transfer
agent fees and expenses ......................... 2,066 2,083 720
Registration fees ................................ 600 1,400 1,062
Reports and statements to shareholders ........... 4,112 5,879 1,400
Accounting and administration .................... 27,168 7,575 9,050
Professional fees ................................ 3,950 1,577 997
Directors' fees .................................. 1,021 431 447
Taxes (other than taxes on income) ............... 4,599 2,924 2,908
Other ............................................ 2,825 1,240 2,080
------------ ------------ ------------
389,619 121,898 112,754
Less expenses absorbed by Delaware Management
Company ......................................... -- -- --
------------ ------------ ------------
Total Expenses ................................... 389,619 121,898 112,754
------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ..................... 5,218,211 910,437 930,913
------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on
investment transactions ......................... 1,328,770 116,016 --
Net change in unrealized appreciation/depreciation
on investments .................................. (1,516,476) (76,426) --
------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS ...................... (187,706) 39,590 --
------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $ 5,030,505 $ 950,027 $ 930,913
============ ============ ============
</TABLE>
See accompanying notes
22
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED 6/30/98
6/30/98 ENDED DECATUR TOTAL
DELCAP 12/31/97 RETURN
SERIES DELCAP SERIES
(UNAUDITED) SERIES (UNAUDITED)
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ..................... ($ 133,927) ($ 59,352) $ 4,523,164
Net realized gain on investments ................. 5,330,095 9,871,869 29,122,870
Net change in unrealized appreciation/depreciation
on investments .................................. 9,160,639 3,608,725 7,686,692
------------- ------------- -------------
Net increase in net assets
resulting from operations ....................... 14,356,807 13,421,242 41,332,726
------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................ -- -- (3,187,258)
Net realized gain on investment transactions ..... (9,882,425) (4,513,513) (23,162,228)
------------- ------------- -------------
(9,882,425) (4,513,513) (26,349,486)
------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ........................ 7,878,048 28,573,142 108,534,796
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on investment transactions ........ 9,882,425 4,513,513 26,349,486
------------- ------------- -------------
17,760,473 33,086,655 134,884,282
Cost of shares repurchased ....................... (9,668,383) (11,440,355) (15,479,897)
------------- ------------- -------------
Increase in net assets derived
from capital share transactions ................. 8,092,090 21,646,300 119,404,385
------------- ------------- -------------
NET INCREASE IN NET ASSETS ....................... 12,566,472 30,554,029 134,387,625
------------- ------------- -------------
NET ASSETS:
Beginning of period .............................. 110,454,505 79,900,476 401,401,970
------------- ------------- -------------
End of period .................................... $ 123,020,977 $ 110,454,505 $ 535,789,595
============= ============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YEAR SIX MONTHS
ENDED ENDED YEAR
12/31/97 6/30/98 ENDED
DECATUR TOTAL DELAWARE 12/31/97
RETURN SERIES DELAWARE
SERIES (UNAUDITED) SERIES
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ..................... $ 5,543,484 $ 1,733,228 $ 2,840,175
Net realized gain on investments ................. 23,181,744 6,086,111 11,425,156
Net change in unrealized appreciation/depreciation
on investments .................................. 40,216,861 4,900,177 9,349,683
------------- ------------- -------------
Net increase in net assets
resulting from operations ....................... 68,942,089 12,719,516 23,615,014
------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................ (5,726,790) (2,481,307) (2,590,776)
Net realized gain on investment transactions ..... (14,788,457) (11,439,840) (4,899,878)
------------- ------------- -------------
(20,515,247) (13,921,147) (7,490,654)
------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ........................ 187,531,270 27,549,804 36,224,621
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on investment transactions ........ 20,515,247 13,921,147 7,490,655
------------- ------------- -------------
208,046,517 41,470,951 43,715,276
Cost of shares repurchased ....................... (21,717,966) (2,309,612) (7,566,399)
------------- ------------- -------------
Increase in net assets derived
from capital share transactions ................. 186,328,551 39,161,339 36,148,877
------------- ------------- -------------
NET INCREASE IN NET ASSETS ....................... 234,755,393 37,959,708 52,273,237
------------- ------------- -------------
NET ASSETS:
Beginning of period .............................. 166,646,577 127,675,344 75,402,107
------------- ------------- -------------
End of period .................................... $ 401,401,970 $ 165,635,052 $ 127,675,344
============= ============= =============
</TABLE>
See accompanying notes
23
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED 6/30/98
6/30/98 ENDED CAPITAL
DELCHESTER 12/31/97 RESERVES
SERIES DELCHESTER SERIES
(UNAUDITED) SERIES (UNAUDITED)
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income ............................ $ 5,218,211 $ 7,487,122 $ 910,437
Net realized gain on investments ................. 1,328,770 3,130,833 116,016
Net change in unrealized appreciation/depreciation
on investments .............................. (1,516,476) (168,776) (76,426)
------------- ------------- -------------
Net increase in net assets
resulting from operations ....................... 5,030,505 10,449,179 950,027
------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................ (5,162,840) (7,411,254) (910,437)
Net realized gain on investment transactions ..... (32,038) -- --
------------- ------------- -------------
(5,194,878) (7,411,254) (910,437)
------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ........................ 24,912,059 32,766,122 7,745,303
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on investment transactions ........ 4,939,518 7,413,795 869,331
------------- ------------- -------------
29,851,577 40,179,917 8,614,634
Cost of shares repurchased ....................... (5,243,702) (12,007,637) (5,387,912)
------------- ------------- -------------
Increase in net assets derived
from capital share transactions ................. 24,607,875 28,172,280 3,226,722
------------- ------------- -------------
NET INCREASE IN NET ASSETS ....................... 24,443,502 31,210,205 3,266,312
------------- ------------- -------------
NET ASSETS:
Beginning of period .............................. 98,874,882 67,664,677 29,176,832
------------- ------------- -------------
End of period .................................... $ 123,318,384 $ 98,874,882 $ 32,443,144
============= ============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED 6/30/98 YEAR ENDED
12/31/97 CASH 12/31/97
CAPITAL RESERVE CASH
RESERVE SERIES RESERVE
SERIES (UNAUDITED) SERIES
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income ............................ $ 1,760,693 $ 930,913 $ 1,496,752
Net realized gain on investments ................. 47,064 -- --
Net change in unrealized appreciation/depreciation
on investments .............................. 237,399 -- --
------------- ------------- -------------
Net increase in net assets
resulting from operations ....................... 2,045,156 $ 930,913 $ 1,496,752
------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................ (1,761,161) (930,913) (1,496,752)
Net realized gain on investment transactions ..... -- -- --
------------- ------------- -------------
(1,761,161) (930,913) (1,496,752)
------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ........................ 6,092,500 46,811,501 83,437,024
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on investment transactions ........ 1,762,129 879,750 1,497,151
------------- ------------- -------------
7,854,629 47,691,251 84,934,175
Cost of shares repurchased ....................... (6,729,405) (32,522,600) (80,701,553)
------------- ------------- -------------
Increase in net assets derived
from capital share transactions ................. 1,125,224 15,168,651 4,232,622
------------- ------------- -------------
NET INCREASE IN NET ASSETS ....................... 1,409,219 15,168,651 4,232,622
------------- ------------- -------------
NET ASSETS:
Beginning of period .............................. 27,767,613 30,711,176 26,478,554
------------- ------------- -------------
End of period .................................... $ 29,176,832 $ 45,879,827 $ 30,711,176
============= ============= =============
</TABLE>
See accompanying notes
24
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.
FINANCIAL HIGHLIGHTS
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DELCAP SERIES
---------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/98(1) 1997 1996 1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 17.270 $ 15.890 $15.130 $11.750 $12.240 $11.120
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(2) ................ (0.019) (0.010) (0.015) 0.072 0.069 0.056
Net realized and unrealized
gain (loss) on investments .................... 1.944 2.260 2.030 3.378 (0.499) 1.214
------- ------- ------- ------- ------- -------
Total from investment operations ............... 1.925 2.250 2.015 3.450 (0.430) 1.270
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income ........... none none (0.070) (0.070) (0.060) (0.020)
Distributions from net realized gain
on investment transactions .................... (1.465) (0.870) (1.185) none none (0.130)
------- ------- ------- ------- ------- -------
Total dividends and distributions ............... (1.465) (0.870) (1.255) (0.070) (0.060) (0.150)
------- ------- ------- ------- ------- -------
Net asset value, end of period .................. $ 17.730 $ 17.270 $15.890 $15.130 $11.750 $12.240
======= ======= ======= ======= ======= =======
Total return .................................... 13.62% 14.90% 14.46% 29.53% (3.54%) 11.56%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) ........ $123,021 $110,455 $79,900 $58,123 $39,344 $33,180
Ratio of expenses to average net assets ........ 0.82% 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of expenses to average net
assets prior to expense limitation ............ 0.93% 0.87% 0.82% 0.85% 0.88% 1.00%
Ratio of net investment income to
average net assets ............................ (0.24%) (0.06%) (0.11%) 0.61% 0.64% 0.67%
Ratio of net investment income to
average net assets prior to expense limitation (0.35%) (0.13%) (0.13%) 0.56% 0.56% 0.47%
Portfolio turnover ............................. 137% 134% 85% 73% 43% 57%
Average commission rate paid(3) ................ $ 0.0600 $ 0.0600 $0.0600 N/A N/A N/A
</TABLE>
- ---------
(1)Ratios have been annualized and total return has not been annualized.
(2)Per share information for the period ended December 31, 1997 was based on the
average shares outstanding method.
(3)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.
See accompanying notes
25
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DECATUR TOTAL RETURN SERIES
---------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/98(1) 1997 1996 1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 18.800 $ 15.980 $ 14.830 $ 11.480 $ 12.510 $ 11.220
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................... 0.169 0.324 0.377 0.416 0.412 0.434
Net realized and unrealized
gain (loss) on investments .................... 1.548 4.216 2.398 3.574 (0.422) 1.266
-------- -------- -------- -------- -------- --------
Total from investment operations ................ 1.717 4.540 2.775 3.990 (0.010) 1.700
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income ........... (0.127) (0.370) (0.420) (0.430) (0.420) (0.410)
Distributions from net realized gain
on investment transactions .................... (1.050) (1.350) (1.205) (0.210) (0.600) none
-------- -------- -------- -------- -------- --------
Total dividends and distributions ............... (1.177) (1.720) (1.625) (0.640) (1.020) (0.410)
-------- -------- -------- -------- -------- --------
Net asset value, end of period .................. $ 19.340 $ 18.800 $ 15.980 $ 14.830 $ 11.480 $ 12.510
======== ======== ======== ======== ======== ========
Total return .................................... 9.71% 31.00% 20.72% 36.12% (0.20%) 15.45%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) ....... $535,790 $401,402 $166,647 $109,003 $ 72,725 $ 65,519
Ratio of expenses to average net assets ........ 0.71% 0.71% 0.67% 0.69% 0.71% 0.75%
Ratio of expenses to average net
assets prior to expense limitation ............ 0.71% 0.71% 0.67% 0.69% 0.71% 0.76%
Ratio of net investment income to
average net assets ............................ 1.90% 2.02% 2.66% 3.24% 3.63% 3.95%
Ratio of net investment income to
average net assets prior to expense limitation 1.90% 2.02% 2.66% 3.24% 3.63%
3.94%
Portfolio turnover .............................. 70% 54% 81% 85% 91% 67%
Average commission rate paid(2) ................. $ 0.0600 $ 0.0600 $ 0.0600 N/A N/A N/A
</TABLE>
- -----------
(1)Ratios have been annualized and total return has not been annualized.
(2)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.
See accompanying notes
26
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DELAWARE SERIES
-------------------------------------------------------------------=
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/98(1) 1997 1996 1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 19.050 $ 16.640 $ 15.500 $ 12.680 $ 13.330 $ 13.550
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.179 0.435 0.530 0.509 0.437 0.328
Net realized and unrealized
gain (loss) on investments ................... 1.381 3.575 1.765 2.761 (0.447) 0.692
-------- -------- -------- -------- -------- --------
Total from investment operations .............. 1.560 4.010 2.295 3.270 (0.010) 1.020
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income .......... (0.340) (0.530) (0.500) (0.450) (0.340) (0.460)
Distributions from net realized gain
on investment transactions ................... (1.600) (1.070) (0.655) none (0.300) (0.780)
-------- -------- -------- -------- -------- --------
Total dividends and distributions ............. (1.940) (1.600) (1.155) (0.450) (0.640) (1.240)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 18.670 $ 19.050 $ 16.640 $ 15.500 $ 12.680 $ 13.330
======== ======== ======== ======== ======== ========
Total return ................................... 9.04% 26.40% 15.91% 26.58% (0.15%) 8.18%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) ...... $165,635 $127,675 $ 75,402 $ 63,215 $ 47,731 $ 37,235
Ratio of expenses to average net assets ....... 0.72% 0.67% 0.68% 0.69% 0.70% 0.80%
Ratio of expenses to average net
assets prior to expense limitation ........... 0.72% 0.67% 0.68% 0.69% 0.70% 0.89%
Ratio of net investment income to
average net assets ........................... 2.32% 2.85% 3.56% 3.75% 3.71% 3.33%
Ratio of net investment income to
average net assets prior to expense limitation 2.32% 2.85% 3.56% 3.75% 3.71% 3.24%
Portfolio turnover ............................ 127% 67% 92% 106% 140% 162%
Average commission rate paid(2) ............... $ 0.0600 $ 0.0600 $ 0.0600 N/A N/A N/A
</TABLE>
- --------------
(1)Ratios have been annualized and total return has not been annualized.
(2)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.
See accompanying notes
27
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DELCHESTER SERIES
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/98(1) 1997 1996 1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 9.510 $ 9.170 $ 8.940 $ 8.540 $ 9.770 $ 9.290
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.446 0.863 0.853 0.872 0.962 0.976
Net realized and unrealized
gain (loss) on investments ................... 0.020 0.332 0.230 0.400 (1.230) 0.480
-------- -------- -------- -------- -------- ---------
Total from investment operations .............. 0.466 1.195 1.083 1.272 (0.268) 1.456
-------- -------- -------- -------- -------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income .......... (0.443) (0.855) (0.853) (0.872) (0.962) (0.976)
Distributions from net realized gain
on investment transactions ................... (0.003) none none none none none
-------- -------- -------- -------- -------- ---------
Total dividends and distributions ............. (0.446) (0.855) (0.853) (0.872) (0.962) (0.976)
-------- -------- -------- -------- -------- ---------
Net asset value, end of period ................. $ 9.530 $ 9.510 $ 9.170 $ 8.940 $ 8.540 $ 9.770
======== ======== ======== ======== ======== =========
Total return ................................... 4.93% 13.63% 12.79% 15.50% (2.87%) 16.36%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) ...... $123,318 $ 98,875 $ 67,665 $ 56,605 $ 43,686 $ 34,915
Ratio of expenses to average net assets ....... 0.70% 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% 0.70% 0.69% 0.72% 0.82%
Ratio of net investment income to
average net assets ........................... 9.36% 9.24% 9.54% 9.87% 10.56% 10.05%
Ratio of net investment income to
average net assets prior to expense limitation 9.36% 9.24% 9.54% 9.87% 10.56% 10.03%
Portfolio turnover ............................ 112% 121% 93% 74% 47% 43%
</TABLE>
- -----------
(1)Ratios have been annualized and total return has not been annualized.
See accompanying notes
28
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
CAPITAL RESERVES SERIES
-------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/98(1) 1997 1996 1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 9.790 $ 9.690 $ 9.930 $ 9.300 $10.260 $10.200
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.286 0.613 0.623 0.643 0.636 0.636
Net realized and unrealized
gain (loss) on investments ................... 0.020 0.100 (0.240) 0.630 (0.905) 0.145
------- ------- ------- ------- ------- -------
Total from investment operations .............. 0.306 0.713 0.383 1.273 (0.269) 0.781
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income .......... (0.286) (0.613) (0.623) (0.643) (0.636) (0.636)
Distributions from net realized gain
on investment transactions ................... none none none none (0.055) (0.085)
------- ------- ------- ------- ------- -------
Total dividends and distributions ............ (0.286) (0.613) (0.623) (0.643) (0.691) (0.721)
------- ------- ------- ------- ------- -------
Net asset value, end of period ................. $ 9.810 $ 9.790 $ 9.690 $ 9.930 $ 9.300 $10.260
======= ======= ======= ======= ======= =======
Total return ................................... 3.17% 7.60% 4.05% 14.08% (2.68%) 7.85%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) ...... $32,443 $29,177 $27,768 $27,935 $25,975 $24,173
Ratio of expenses to average net assets ....... 0.79% 0.75% 0.72% 0.71% 0.74% 0.80%
Ratio of expenses to average net
assets prior to expense limitation ........... 0.79% 0.75% 0.72% 0.71% 0.74% 0.85%
Ratio of net investment income to
average net assets ........................... 5.88% 6.31% 6.43% 6.64% 6.57% 6.20%
Ratio of net investment income to
average net assets prior to expense limitation 5.88% 6.31% 6.43% 6.64% 6.57% 6.15%
Portfolio turnover ............................ 162% 120% 122% 145% 219% 198%
</TABLE>
- -------------
(1)Ratios have been annualized and total return has not been annualized.
See accompanying notes
29
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
CASH RESERVE SERIES
---------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/98(1) 1997 1996 1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $10.000 $10.000 $10.000 $10.000 $10.000 $10.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.250 0.497 0.482 0.535 0.361 0.245
Net realized and unrealized
gain (loss) on investments ................... none none none none none none
------- ------- ------- ------- ------- -------
Total from investment operations .............. 0.250 0.497 0.482 0.535 0.361 0.245
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income .......... (0.250) (0.497) (0.482) (0.535) (0.361) (0.245)
Distributions from net realized gain
on investment transactions ................... none none none none none none
------- ------- ------- ------- ------- -------
Total dividends and distributions ............. (0.250) (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 $10.000
======= ======= ======= ======= ======= =======
Total return ................................... 2.52% 5.10% 4.93% 5.48% 3.68% 2.48%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) ...... $45,880 $30,711 $26,479 $16,338 $20,125 $10,245
Ratio of expenses to average net assets ....... 0.61% 0.64% 0.61% 0.62% 0.66% 0.80%
Ratio of expenses to average net
assets prior to expense limitation ........... 0.61% 0.64% 0.61% 0.62% 0.66% 0.86%
Ratio of net investment income to
average net assets ........................... 5.03% 4.98% 4.82% 5.35% 3.79% 2.44%
Ratio of net investment income to
average net assets prior to expense limitation 5.03% 4.98% 4.82% 5.35% 3.79% 2.38%
</TABLE>
- ------------
(1)Ratios have been annualized and total return has not been annualized.
See accompanying notes
30
<PAGE>
DELAWARE GROUP PREMIUM FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
Delaware Group Premium Fund, Inc. (The "Fund"), is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as
amended. The Fund is organized as a Maryland Corporation and offers 16 series:
the Trend Series, the DelCap Series, the Small Cap Value Series (formerly the
Value Series), the Social Awareness Series (formerly the Quantum Series), the
Devon Series, the Decatur Total Return Series, the REIT Series, the Delaware
Series, the Convertible Securities Series, the Emerging Markets Series, the
International Equity Series, the Global Bond Series, the Delchester Series,
the Strategic Income Series, the Capital Reserves Series, and the Cash Reserve
Series. These financial statements and the related notes pertain to the DelCap
Series, the Decatur Total Return Series, the Delaware Series, the Delchester
Series, the Capital Reserves Series, and the Cash Reserve Series (the
"Series"). The shares of the Fund are sold only to separate accounts of life
insurance companies.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Series:
Security Valuation--Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date.
Securities not traded or securities not listed on an exchange are valued at
the mean of the last quoted bid and asked prices. Securities listed on a
foreign exchange are valued at the last quoted sales price before the Series
is valued. Long-term debt securities are valued by an independent pricing
service and such prices are believed to reflect the fair value of such
securities. Money market instruments having less than 60 days to maturity are
valued at amortized cost which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of the Fund's
Board of Directors.
Federal Income Taxes--Each series intends to qualify or continue to qualify as
a regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has been made
in the financial statements. Income and capital gain distributions are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles.
Repurchase Agreements--Each Series may invest in a pooled cash account along
with other members of the Delaware Investments Family of Funds. The aggregate
daily balance of the pooled cash account is invested in repurchase agreements
secured by obligations of the U.S. government. The respective collateral is
held by the Series' custodian bank until the maturity of the respective
repurchase agreements. Each repurchase agreement is at least 100%
collateralized. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization of the collateral may be subject to
legal proceedings.
Other--Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Foreign dividends are also recorded on the
ex-dividend date or as soon after the ex-dividend date that the Series are
aware of such dividends, net of all non-rebatable tax withholdings. Original
issue discounts are accreted to interest income over the lives of the
respective securities. Withholding taxes on foreign dividends have been
provided for in accordance with the Series' understanding of the applicable
country's tax rules and rates.
The Delchester Series, the Capital Reserves Series and the Cash Reserve Series
declare dividends daily from net investment income and pay such dividends
monthly. Distributions from net realized gain on investment transactions, if
any, normally will be distributed following the close of the fiscal year.
The Decatur Total Return Series and the Delaware Series will make payments
from the Series' net investment income quarterly and distributions from net
realized gain on investment transactions, if any, following the close of the
fiscal year.
The DelCap Series will make payments from net income and net realized gain on
investment transactions, if any, once a year.
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Certain Fund expenses are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of each Series'
average daily net assets.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. INVESTMENT MANAGEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
In accordance with the terms of the Investment Management Agreement, each
Series pays Delaware Management Company ("DMC") the investment manager of each
Series, an annual fee which is calculated daily based on the net assets of
each Series, less the fees paid to the unaffiliated directors for the DelCap
Series, the Decatur Total Return Series, the Delaware Series, the Delchester
Series, the Capital Reserves Series, and the Cash Reserve Series.
DMC has elected to waive their fees and reimburse each Series to the extent
that annual operating expenses exclusive of taxes, interest, brokerage
commissions and extraordinary expenses do not exceed the following percentages
of net assets through October 31, 1998.
The management fee rates, waiver rates and total expenses absorbed by DMC for
the period ended June 30, 1998 are as follows:
<TABLE>
<CAPTION>
MANAGEMENT FEE WAIVER AS
AS A PERCENTAGE A PERCENTAGE
OF AVERAGE DAILY OF AVERAGE DAILY EXPENSES
NET ASSETS NET ASSETS ABSORBED
(PER ANNUM) (PER ANNUM) BY DMC
----------- ----------- ------
<S> <C> <C> <C>
DelCap Series..................... 0.75% 0.85%* $62,791
Decatur Total Return Series....... 0.60% 0.80% --
Delaware Series................... 0.60% 0.80% --
Delchester Series................. 0.60% 0.80% --
Capital Reserves Series........... 0.60% 0.80% --
Cash Reserve Series............... 0.50% 0.80% --
</TABLE>
- ---------
*Prior to May 1, 1998 the expense limitation was 0.80%.
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to serve as dividend disbursing agent, transfer agent and accounting
services agent for each Series.
The amounts expensed for each Series were as follows:
DIVIDEND DISBURSING,
TRANSFER AGENT FEES ACCOUNTING
AND OTHER EXPENSES FEES
------------------- ----------
DelCap Series.................. $6,300 $16,932
Decatur Total Return Series.... 4,000 94,466
Delaware Series................ 3,056 31,672
Delchester Series.............. 2,066 22,157
Capital Reserves Series........ 2,083 6,153
Cash Reserve Series............ 720 7,341
On June 30, 1998, the Series had payables to affiliates as follows:
<TABLE>
<CAPTION>
OTHER
INVESTMENT DIVIDEND DISBURSING, EXPENSES
MANAGEMENT TRANSFER AGENT FEES, PAYABLE
FEE PAYABLE TO ACCOUNTING FEES, AND OTHER TO DMC
DMC EXPENSES PAYABLE TO DSC AND AFFILIATES
-------------- -------------------------- --------------
<S> <C> <C> <C>
DelCap Series.................. $310,176 $4,869 $2,153
Decatur Total Return Series.... 162,687 18,940 8,447
Delaware Series................ 70,603 5,459 2,665
Delchester Series.............. 45,924 4,034 2,061
Capital Reserves Series........ 16,199 893 589
Cash Reserve Series............ 18,796 1,494 787
</TABLE>
Certain officers of DMC and DSC are officers, directors and/or employees of
the Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. INVESTMENTS
During the period ended June 30, 1998, the Series made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments for each Series as follows:
PURCHASES SALES
------------ ------------
DelCap Series ............. $ 72,316,424 $ 76,482,792
Decatur Total Return Series 254,854,815 161,768,361
Delaware Series ........... 66,832,022 44,759,696
Delchester Series ......... 87,594,950 59,525,635
Capital Reserves Series ... 13,817,261 12,055,177
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the period ended June 30, 1998 the Series made purchases and sales of
U.S. government securities for each Series as follows:
PURCHASES SALES
----------- -----------
Delaware Series ....... $47,615,070 $43,985,269
Capital Reserves Series 14,596,459 12,151,613
At June 30, 1998, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes for each Series were as
follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
COST OF UNREALIZED UNREALIZED NET UNREALIZED
INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
DelCap Series ............. $ 97,555,822 $ 28,382,752 ($ 2,203,555) $ 26,179,197
Decatur Total Return Series 466,343,728 78,205,354 (9,563,221) 68,642,133
Delaware Series ........... 141,230,371 25,951,288 (1,133,200) 24,818,088
Delchester Series ......... 121,686,875 3,057,461 (2,172,031) 885,430
Capital Reserves Series ... 32,255,988 421,965 (46,290) 375,675
Cash Reserve Series ....... 45,775,307 -- -- --
</TABLE>
For federal income tax purposes, the Fund had accumulated capital losses at
December 31, 1997 for each Series as follows:
YEAR OF YEAR OF
EXPIRATION EXPIRATION
2002 2004
---------- --------
Capital Reserves Series........ $1,281,450 $292,208
4. CAPITAL STOCK
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
SHARES ISSUED UPON
REINVESTMENT OF DIVIDENDS
FROM NET INVESTMENT
INCOME AND NET
REALIZED GAINS ON SHARES NET
SHARES SOLD INVESTMENT TRANSACTIONS REPURCHASED INCREASE
----------- ----------------------- ----------- --------
<S> <C> <C> <C> <C>
Period ended June 30, 1998:
DelCap Series ............. 462,443 657,513 (578,160) 541,796
Decatur Total Return Series 5,669,424 1,479,672 (797,039) 6,352,057
Delaware Series ........... 1,490,366 806,301 (125,064) 2,171,603
Delchester Series ......... 2,576,607 510,804 (543,861) 2,543,550
Capital Reserves Series ... 789,410 88,687 (549,784) 328,313
Cash Reserve Series ....... 4,681,150 87,975 (3,252,260) 1,516,865
</TABLE>
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SHARES ISSUED UPON
REINVESTMENT OF DIVIDENDS
FROM NET INVESTMENT
INCOME AND NET
REALIZED GAINS ON SHARES NET
SHARES SOLD INVESTMENT TRANSACTIONS REPURCHASED INCREASE
----------- ----------------------- ----------- --------
<S> <C> <C> <C> <C>
Year ended December 31, 1997:
DelCap Series ............... 1,806,689 296,551 (737,831) 1,365,409
Decatur Total Return Series . 10,893,570 1,321,652 (1,289,152) 10,926,070
Delaware Series ............. 2,134,206 483,216 (447,850) 2,169,572
Delchester Series ........... 3,508,373 793,870 (1,287,419) 3,014,824
Capital Reserves Series ..... 627,274 181,652 (694,053) 114,873
Cash Reserve Series ......... 8,343,717 149,715 (8,070,169) 423,263
</TABLE>
5. CREDIT AND MARKET RISK
The Delchester Series may invest in high-yield fixed income securities which
carry ratings of BB or lower by S&P and/or Ba or lower by Moody's. Investments
in these higher yielding securities may be accompanied by a greater degree of
credit risk than higher rated securities. Additionally, lower rated securities
may be more susceptible to adverse economic and competitive industry
conditions than investment grade securities.
The Capital Reserves Series and the Delaware Series may invest in securities
whose value is derived from an underlying pool of mortgages or consumer loans.
Prepayment of these loans may shorten the stated maturity of the respective
obligation and may result in a loss of premium, if any has been paid.
Each Series may invest up to 10% of its total assets in illiquid securities
which may include securities with contractual restrictions on resale,
securities exempt from registration under Rule 144A of the Securities Act of
1933, as amended, and other securities which may not be readily marketable.
The relative illiquidity of some of these securities may adversely affect the
Series' ability to dispose of such securities in a timely manner and at a fair
price when it is necessary to liquidate such securities.
6. SECURITIES LENDING
Securities on loan are required at all times to be secured by collateral at
least equal to 102% of the market value of securities issued in the U.S. and
105% of the market value of securities issued outside of the U.S. However, in
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings. In the event that the borrower fails to return loaned securities,
and cash collateral being maintained by the borrower is insufficient to cover
the value of loaned securities and provided such collateral insufficiency is
not the result of investment losses, the lending agent has agreed to pay the
amount of the shortfall to the Series or, at the option of the lending agent,
replace the loaned securities. The market value of securities on loan to
brokers and the related collateral received at June 30, 1998 for each Series
was as follows:
MARKET VALUE OF
SECURITIES ON LOAN COLLATERAL
------------------ ----------
DelCap Series.................. $23,917,109 $25,151,650
Decatur Total Return Series.... 52,843,000 53,906,220
Delaware Series................ 25,837,661 30,699,605
35
