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Delaware Group Premium Fund, Inc.
Capital Reserves Series
Supplement to the current prospectus
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The following supplements the section of the prospectus entitled "The securities we typically invest in":
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Securities | How we use them
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| Capital Reserves Series
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Interest rate swap agreements: In an interest rate |Interest rate swaps may be used to adjust the Series'
swap, a series receives payments from another party |sensitivity to interest rates by changing its duration. We may
based on a floating interest rate in return for |also use interest rate swaps to hedge against changes in
making payments based on a fixed interest rate. An |interest rates.
interest rate swap can also work in reverse, with a |
series receiving payments based on a fixed interest |Interest rate swaps will be considered illiquid securities.
rate and making payments based on a floating interest |
rate. |
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The following supplements the section of the prospectus entitled "The risks of
investing in the Series":
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Risks | How we strive to manage them
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| Capital Reserves Series
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Interest rate risk: Swaps may be particularly |The Series will not invest in interest rate swaps with maturities
sensitive to interest rate changes. Depending on the |of more than two years. Each business day we will calculate the
actual movements of interest rates and how well the |amount the Series must pay for any swaps it holds and will
portfolio manager anticipates them, a series could |segregate enough cash or other liquid securities to cover that
experience a higher or lower return than |amount.
anticipated. For example, if a series holds interest |
rate swaps and is required to make payments based on |
variable interest rates, it will have to make |
increased payments if interest rates rise, which will |
not necessarily be offset by the fixed-rate payments |
it is entitled to receive under the swap agreement. |
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Credit risk (see prospectus for discussion of this |When selecting dealers with whom we would make interest rate or
risk) |index swap agreements, we focus on those with high quality
|ratings and do careful credit analysis before investing.
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Liquidity risk (see prospectus for discussion of this |Swap agreements will be treated as illiquid securities, but most
risk) |swap dealers will be willing to repurchase interest rate swaps.
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