DELAWARE GROUP PREMIUM FUND INC, N-30D, 1999-09-07

DELAWARE GROUP PREMIUM FUND INC
N-30D, 1999-09-07

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<PAGE>
DELAWARE-LINCOLN
Choice Plus
VARIABLE ANNUITY(SM)

(Photo of Illustration Choice Plus Brochure)

1999
Delaware-Lincoln ChoicePlus(SM)
Variable Annuity
Semi-Annual Report

<PAGE>
July 20, 1999

Dear Policy Holder:

During the first half of 1999, investors started paying closer attention to
less-expensive international stocks. As countries like Brazil and Japan showed
signs of turning the corner, the dominance of growth investments began to wane,
benefiting many value stocks. Regardless, international and global equity
investments delivered positive returns for the first six months of fiscal 1999.

Six-Month Returns
Ended June 30, 1999
Standard & Poor's 500 Index +12.38%
Morgan Stanley Europe, Australia, Far East (EAFE) Index +4.11%
Morgan Stanley World Index +8.69%

Performance quoted above assumes reinvestment of dividends. It is not intended
to represent the performance of any Premium Fund Series. Past performance does
not guarantee future results. The indexes are unmanaged and assume no management
fees or expenses. The Standard & Poor's 500 Index is composed of 500 large U.S.
company stocks, while the Morgan Stanley EAFE Index consists of international
equity stocks. The unmanaged Morgan Stanley World Index includes U.S. market
performance as well as international equity performance. All returns stated in
U.S. dollars. A direct investment in an unmanaged index is not possible.

The United States' Dow Jones Industrial Average closed above both the 10,000
and 11,000 marks for the first time during the first six months of our fiscal
year. While many on Wall Street heralded these milestones, it is important to
recognize that large "blue chip" companies primarily drove the run-up of these
indexes, while medium size and smaller stocks have remained on the sidelines.
Key factors, however, that led to the narrow market of the last three to four
years appeared to be changing. We believe this change has been spurred by
improved international economic growth. Anecdotal evidence and official
government statistics from virtually all corners of the globe point to economic
recovery.

Growing investor confidence in the recovery of many worldwide economies
boosted the performance of foreign commodity issues, including oil, utility and
paper companies. Rising demand from recovering world markets and the
intervention of OPEC, an intergovernmental organization working to bring
stability to the petroleum market, contributed to higher oil prices.

During the first quarter of '99, Japan's economy, the world's second largest,
grew 1.9%, reversing a trend of five consecutive quarters of contraction
(source: Bloomberg). Despite this encouraging news, we still believe the road to
economic recovery in Japan will be long and difficult. We will continue to
monitor the progress of economic recovery in Japan, while searching for select
companies that we think offer reasonably priced stocks.

In the coming months, we believe the international market will be relatively
more stable. The United Kingdom, in our opinion, offers significant promise for
investors, although we believe that the Sterling, the country's currency, is
slightly overvalued. We also continue to see value in Australia and New Zealand,
which have benefited from growing investor interest in commodity-based stocks.

After a tumultuous period like we have encountered recently, it is important
to remember that your annuity is a long-term investment that requires patience
and a long-term perspective. If your annuity is well diversified among a variety
of asset classes, you should be well positioned for whatever opportunities the
international market brings for the remainder of the year. We thank you for your
confidence in Delaware Investments.

Sincerely,

/s/ Wayne A. Stork /s/ David K. Downes
- --------------------------- ------------------------------------
Wayne A. Stork David K. Downes
Director of the Fund President and Chief Executive Officer
Chairman, Delaware Investments Delaware Investments Family of Funds
Family of Funds

<PAGE>

Delaware Group Premium Fund, Inc.-Delchester Series
Statement of Net Assets
June 30, 1999 (Unaudited)

Principal Market
Amount Value
CORPORATE BONDS-72.17%
Aerospace & Defense-0.44%
Federal Data sr sub nts 10.125% 8/1/05 .......... $ 550,000 $ 533,500
----------
533,500
----------
Automobiles & Automotive Parts-1.64%
ADV Accessory/AAS Capital sr sub nts
9.75% 10/1/07 ................................. 650,000 611,000
Federal Mogul nts 7.50% 1/15/09 ................. 225,000 208,406
Hayes Lemmerz International
co guarantee 8.25% 12/15/08 ................... 500,000 472,500
Stanadyne Automotive sr sub nts
10.25% 12/15/07 ............................... 800,000 696,000
----------
1,987,906
----------
Banking, Finance & Insurance-0.64%
Willis Corroon sr sub nts 9.00% 2/1/09 .......... 800,000 776,000
----------
776,000
----------
Buildings & Materials-3.83%
Clark Materials Handling unsec sr nts
10.75% 11/15/06 ............................... 500,000 445,000
Collins & Aikman Floorcovers sr sub nts
10.00% 1/15/07 ................................ 200,000 202,000
Falcon Products sr sub nts
11.375% 6/15/09 ............................... 400,000 402,000
Formica sr sub nts 10.875% 3/1/09 ............... 800,000 784,000
K Hovnanian Entrprises co guarantee
9.125% 5/1/09 ................................. 700,000 689,500
Nortek sr nts 9.25% 3/15/07 ..................... 500,000 502,500
Standard Pacific sr notes 8.50% 4/15/09 ......... 900,000 888,750
WESCO Distribution co guarantee
9.125% 6/1/08 ................................. 750,000 729,375
----------
4,643,125
----------
Cable Media & Publishing-6.28%
+21st Century Telecom Group sr disc notes
12.25% 2/15/08 .................................. 700,000 295,750
Adelphia Communications sr nts
7.875% 5/1/09 ................................. 1,000,000 930,000
Charter Communications sr nts
8.625% 4/1/09 ................................. 1,000,000 962,500
Echostar DBS sr nts 9.25% 1/2/06 ................ 925,000 943,500
Mail-Well sr sub nts 8.75% 12/15/08 ............. 1,000,000 975,000
Pegasus Communications sr nts
9.625% 10/15/05 ............................... 250,000 245,625
PREMIER GRAPHICS sr nts
11.50% 12/1/05 ................................ 400,000 390,000
+PX Escrow sr disc nts 9.625% 2/1/06 ............. 750,000 469,688
Sinclair Broadcasting Group sr sub nts
8.75% 12/15/07 ................................ 1,200,000 1,179,000
Sullivan Graphics sr sub nts
12.75% 8/1/05 ................................. 250,000 258,750
+United International Holdings sr disc nts
10.75% 2/15/08 ................................ 700,000 465,500
Young Broadcasting co guarantee
8.75% 6/15/07 ................................. 500,000 488,750
----------
7,604,063
----------

<PAGE>

Principal Market
Amount Value
CORPORATE BONDS-(Continued)
Chemicals-3.44%
Aqua Chemical sr sub nts 11.25% 7/1/08 .......... $ 800,000 $ 592,000
Brunner Mond Group sr sub nts
11.00% 7/15/08 ................................ 400,000 254,000
Geo Specialty Chemicals sr sub nts
10.125% 8/1/08 ................................ 200,000 192,000
Huntsman sr sub nts 9.50% 7/1/07 ................ 400,000 388,000
Koppers Industries unsec sr sub nts
9.875% 12/1/07 ................................ 500,000 510,625
LaRoche Industries sr sub nts
9.50% 9/15/07 ................................. 1,500,000 1,200,000
Lyondell Chemical sr sub nts
10.875% 5/1/09 ................................ 500,000 521,250
ZSC Specialty Chemicals sr nts
11.00% 7/1/09 ................................. 500,000 505,000
----------
4,162,875
----------
Computers & Technology-1.68%
+Cellnet Data Systems sr disc nts
14.00% 10/1/07 ................................ 1,000,000 420,000
PSINet sr nts 10.00% 2/15/05 .................... 1,340,000 1,343,350
Statia Terminals mtg nts
11.75% 11/15/03 ............................... 250,000 273,750
----------
2,037,100
----------
Consumer Products-5.19%
Albecca sr sub nts 10.75% 8/15/08 ............... 500,000 420,000
Derby Cycle sr unsec nts
10.00% 5/15/08 ................................ 1,300,000 1,053,000
Desa International sr sub nts
9.875% 12/15/07 ............................... 1,115,000 858,550
Drypers sr nts 10.25% 6/15/07 ................... 500,000 402,500
Home Interiors and Gifts sr sub nts
10.125% 6/1/08 ................................ 1,450,000 1,450,000
Iron Age co guarantee 9.875% 5/1/08 ............. 1,000,000 760,000
+Iron Age sr disc nts 12.125% 5/1/09 ............. 500,000 170,000
Outboard Marine co guarantee
10.75% 6/1/08 ................................. 850,000 586,500
Riddell Sports sr unsec sub nts
10.50% 7/15/07 ................................ 400,000 364,000
Spinnaker Industries sr nts
10.75% 10/15/06 ............................... 300,000 225,000
----------
6,289,550
----------
Electronics & Electrical Equipment-0.94%
Amkor Technologies sr nts 9.25% 5/1/06 .......... 1,000,000 973,750
+Electronic Retailing Systems
sr disc nts 13.25% 2/1/04 ...................... 500,000 162,500
----------
1,136,250
----------
Energy-1.38%
Michael Petroleum sr nts 11.50% 4/1/05 .......... 225,000 119,250
RBF Finance co guarantee
11.375% 3/15/09 ............................... 875,000 905,625
+Universal Compression sr disc nts
9.875% 2/15/08 ................................ 1,000,000 650,000
----------
1,674,875
----------

Delchester-1
<PAGE>

Delchester Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
CORPORATE BONDS (Continued)
Food, Beverage & Tobacco-4.40%
Ameriking sr nts 10.75% 12/1/06 ............... $ 200,000 $ 212,000
Ameriserve Food sr sub nts
10.125% 7/15/07 ............................. 1,000,000 850,000
Canandaigua Brands co guarantee
8.50% 3/1/09 ................................ 1,000,000 972,500
Carrols sr sub nts 9.50% 12/1/08 .............. 800,000 766,000
CKE Restuarants sr sub nts
9.125% 5/1/09 ............................... 500,000 465,000
Core-Mark International sr sub nts
11.375% 9/15/03 ............................. 200,000 196,000
+Del Monte Foods 12.50% 12/15/07 ............... 581,000 435,750
DiGiorgio sr nts 10.00% 6/15/07 ............... 650,000 628,875
Fresh Foods co guarantee
10.75% 6/1/06 ............................... 800,000 802,000
----------
5,328,125
----------
Healthcare & Pharmaceuticals-2.87%
+Alaris Medical sr disc nts
11.125% 8/1/08 .............................. 1,435,000 789,250
Alliance Imaging sr sub nts
9.625% 12/15/05 ............................. 500,000 496,875
Dynacare sr nts 10.75% 1/15/06 ................ 300,000 306,000
Insight Health Services co guarantee
9.625% 6/15/08 .............................. 1,000,000 960,000
Kinetic Concepts sr sub nts
9.625% 11/1/07 .............................. 1,000,000 922,500
----------
3,474,625
----------
Industrial Machinery-2.12%
Burke Industries unsec sr nts
10.00% 8/15/07 .............................. 500,000 380,000
Safety Components International
sr sub nts 10.125% 7/15/07 .................. 600,000 540,000
Tokheim sr sub nts 11.375% 8/1/08 ............. 700,000 658,000
United Rentals nts 9.00% 4/1/09 ............... 1,000,000 990,000
----------
2,568,000
----------
Leisure, Lodging & Entertainment-5.37%
+Aladdin Gaming units 13.50% 3/1/10 ............ 1,250,000 575,000
Florida Panthers sr sub nts
9.875% 4/15/09 .............................. 1,250,000 1,200,000
HMH Properties sr nts 8.45% 12/1/08 ........... 825,000 783,750
Harrahs Operating co guarantee
7.875% 12/15/05 ............................. 400,000 388,000
Horseshoe Gaming sr sub nts
8.625% 5/15/09 .............................. 1,000,000 970,000
Hollywood Park 9.250% 2/15/07 ................. 400,000 396,000
Mohegan Tribal Gaming unsec
sr sub nts 8.75% 1/1/09 ..................... 750,000 742,500
Park Place Entertainment unsec
sr sub nts 7.875% 12/15/05 .................. 600,000 571,500
United Artists Theatre sr sub nts
9.75% 4/15/08 ............................... 1,175,000 881,250
----------
6,508,000
----------
<PAGE>

Principal Market
Amount Value
CORPORATE BONDS (Continued)
Metals & Mining-4.69%
AK Steel sr nts 7.875% 2/15/09 ................ $ 700,000 $ 679,000
Algoma Steel mtg nts 12.375% 7/15/05 .......... 950,000 931,000
Doe Run Resources co guarantee
11.25% 3/15/05 .............................. 1,200,000 1,092,000
Great Lakes Carbon co guarantee
10.25% 5/15/08 .............................. 750,000 765,000
Jorgensen Earle sr nts 9.50% 4/1/05 ........... 800,000 760,000
Metallurg co guarantee 11.00% 12/7/07 ......... 1,000,000 980,000
Republic Engineered Steel mtg nts
9.875% 12/15/01 ............................. 450,000 469,125
----------
5,676,125
----------
Paper & Forest Products-0.85%
Fibermark sr nts 9.375% 10/15/06 .............. 400,000 407,500
MAXXAM Group sr sec nts
12.000% 8/1/03 .............................. 600,000 621,000
----------
1,028,500
----------
Retail-3.12%
Advance Stores sr sub nts
10.25% 4/15/08 .............................. 800,000 770,000
Fleming sr sub nts 10.50% 12/1/04 ............. 500,000 475,000
Frank's Nursery & Crafts sr sub nts
10.25% 3/1/08 ............................... 800,000 799,000
Jitney-Jungle Stores unsec sr sub nts
10.375% 9/15/07 ............................. 1,300,000 598,000
Just for Feet sr sub nts 11.00% 5/1/09 ........ 500,000 330,000
Leslie's Poolmart sr nts
10.375% 7/15/04 ............................. 500,000 520,000
St John Knits sr sub nts 12.50% 7/1/09 ........ 300,000 295,848
----------
3,787,848
----------
Telecommunications-17.16%
AMSC Acquisition sr nts 12.25% 4/1/08 ......... 650,000 507,000
Arch Communications sr nts
12.75% 7/1/07 ............................... 800,000 688,000
Arch Escrow sr nts 13.75% 4/15/08 ............. 500,000 450,000
BTI Telecom sr nts 10.50% 9/15/07 ............. 600,000 540,000
+Call-Net Enterprises sr disc nts
10.80% 5/15/09 .............................. 1,250,000 693,750
Covad Communications Group sr nts
12.50% 2/15/09 .............................. 250,000 241,250
+Econophone sr disc nts 11.00% 2/15/08 ......... 1,300,000 728,000
+GST USA sr disc nts 13.875% 12/15/05 .......... 1,000,000 825,000
Hyperion Telecommunications sr nts
12.25% 9/1/04 ............................... 750,000 793,125
Intermedia Communications sr nts
9.50% 3/1/09 ................................ 800,000 776,000
+KMC Telecom Holdings sr disc nts
12.50% 2/15/08 .............................. 2,500,000 1,337,500
Level 3 Communications sr nts
9.125% 5/1/08 ............................... 1,300,000 1,283,750
McLeodUSA sr nts 8.125% 2/15/09 ............... 1,000,000 940,000
Metrocall unsec sr sub nts
10.375% 10/1/07 ............................. 1,275,000 930,750

Delchester-2
<PAGE>

Delchester Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
CORPORATE BONDS (Continued)
Telecommunications (Continued)
Metromedia Fiber sr nts
10.00% 11/15/08 ............................. $ 350,000 $ 360,500
+Microcell Telecommunications
sr disc nts 14.00% 6/1/06 ................... 1,260,000 1,017,450
+NEXTEL Communications
sr disc nts 9.95% 2/15/08 ................... 2,000,000 1,385,000
Nextlink Communications
sr nts 9.625% 10/1/07 ....................... 800,000 780,000
Pathnet sr nts 12.25% 4/15/08 ................. 300,000 174,000
+RCN sr disc nts 9.80% 2/15/08 ................. 900,000 571,500
+RCN sr disc nts 11.125% 10/15/07 .............. 1,000,000 672,500
RCN sr nts 10.00% 10/15/07 .................... 200,000 202,000
+Rhythms Netconnections Units
13.50% 5/15/08 .............................. 450,000 234,000
Rhythms Netconnections
12.75% 4/15/09 .............................. 250,000 235,625
+Telecorp PCS sr disc nts
11.625% 4/15/09 ............................. 1,500,000 840,000
+Teligent sr disc nts 11.50% 3/1/08 ............ 1,750,000 1,080,625
Teligent sr nts 11.50% 12/1/07 ................ 1,300,000 1,335,750
USA Mobile Communication sr nts
14.00% 11/1/04 .............................. 500,000 485,000
+Viatel units 12.50% 4/15/08 ................... 1,050,000 674,625
-----------
20,782,700
-----------
Textiles, Apparel & Furniture-0.77%
Globe Manufacturing sr sub nts
10.00% 8/1/08 ............................... 550,000 418,000
Grove Worldwide sr sub nts
9.25% 5/1/08 ................................ 600,000 516,000
-----------
934,000
-----------
Transportation & Shipping-2.09%
ATLAS AIR sr nts 9.25% 4/15/08 ................ 750,000 721,875
Continental Airlines nts
8.00% 12/15/05 .............................. 500,000 475,000
First Wave Marine sr nts 11.00% 2/1/08 ........ 900,000 851,625
Millenium Seacarriers units
12.00% 7/15/05 .............................. 200,000 146,000
Navigator Gas Transport nts
10.50% 6/30/07 .............................. 400,000 200,000
Navigator Gas Transport units
12.00% 6/30/07 .............................. 400,000 132,000
-----------
2,526,500
-----------
Utilities-1.00%
Trench Electric & Trench co guarantee
10.25% 12/15/07 ............................. 1,250,000 1,212,500
-----------
1,212,500
-----------
<PAGE>

Principal Market
Amount Value
CORPORATE BONDS (Continued)
Miscellaneous-2.27%
Building One Services sr sub nts
10.50% 5/1/09 ............................... $ 200,000 $ 190,000
Group Maintenance sr sub nts
9.750% 1/15/09 .............................. 525,000 519,750
Indesco International sr sub nts
9.75% 4/15/08 ............................... 500,000 330,000
Lear Corp sr nts 8.11% 5/15/09 ................ 1,500,000 1,436,250
Protection One sr sub nts
8.125% 1/15/09 .............................. 200,000 190,000
+Spin Cycle units 12.75% 5/1/05 ................ 500,000 90,000
-----------
2,756,000
-----------
Total Corporate Bonds
(cost $96,403,117) .......................... 87,428,167
-----------
Number
of Shares
PREFERRED STOCK-1.12%
Dobson Communications ......................... 299 302,071
Eagle-Picher Holdings ......................... 9,000 477,000
Nebco Evans Holding pik ....................... 4,586 183,458
Pegasus Communications pik .................... 1,046 110,889
PEGASUS Communications Unit ................... 2,500 280,000
TCR Holdings Class B .......................... 3,802 228
TCR Holdings Class C .......................... 2,091 117
TCR Holdings Class D .......................... 5,512 292
TCR Holdings Class E .......................... 11,405 719
-----------
Total Preferred Stock
(cost $1,608,286) ............................. 1,354,774
-----------

CONVERTIBLE PREFERRED STOCK-0.35%
E.Spire Communications pik .................... 8,071 422,516
-----------
Total Convertible Preferred Stock
(cost $788,504) ............................. 422,516
-----------
RIGHTS & WARRANTS-0.88%
*Aladdin Gaming ................................ 12,500 13
*American Banknote ............................. 18,723 15,000
*American Mobile Satellite ..................... 3,569 38,000
*Cellnet Data Systems .......................... 13,671 10,500
*Electronic Retailing System ................... 500 63
*Gothic Energy ................................. 1,400 1,400
*KMC Telecom Holdings .......................... 1,500 37,500
*Nextel International .......................... 31 750
*Pathnet ....................................... 300 3,000
*Rhythms Netconnections ........................ 22,848 934,626
*Terex Appreciation ............................ 800 19,200
-----------
Total Rights & Warrants
(cost $113,816) ............................. 1,060,052
-----------

Delchester-3
<PAGE>

Delchester Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
REPURCHASE AGREEMENTS-23.54%
With Chase Manhattan 4.65% 7/1/99
(dated 6/30/99, collateralized by
$4,950,000 U.S. Treasury Notes
5.375% due 2/15/01, market value
$5,025,019 and $2,475,000
U.S. Treasury Notes 6.375% due
9/30/01, market value $2,543,506
and $2,121,000 U.S. Treasury Notes
6.125% due 12/31/01, market
value $2,135,561) ........................... $ 9,464,000 $ 9,464,000
With J.P. Morgan Securities 4.70%
7/1/99 (dated 6/30/99, collateralized
by $2,733,000 U.S. Treasury Notes
6.375% due 8/15/02, market value
$2,836,001 and $2,475,000 U.S.
Treasury Notes 6.25% due 8/31/02,
market value $2,551,304 and
$1,712,000 U.S. Treasury Notes
5.75% due 11/30/02, market
value $1,712,162 and $2,475,000
U.S. Treaury Notes 5.50% due
1/31/03, market value $2,499,582) ........... 9,406,000 9,406,000

Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 4.80% 7/1/99
(dated 6/30/99, collateralized by
$2,336,000 U.S. Treasury Notes
7.125% due 2/29/00, market
value $2,418,237 and $2,475,000
U.S. Treasury Notes 5.625% due
11/30/00, market value $2,485,526
and $4,950,000 U.S. Treasury
Notes 5.75% due 11/30/02, market
value $4,951,450) ........................... $ 9,652,000 $ 9,652,000
-------------
Total Repurchase Agreements
(cost $28,522,000) .......................... 28,522,000
-------------

TOTAL MARKET VALUE OF SECURITIES-98.06% (cost $127,435,723) ...... $118,787,509

RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-1.94% ............ 2,356,130
------------
NET ASSETS APPLICABLE TO 15,016,018 SHARES ($0.01 Par Value)
OUTSTANDING; EQUIVALENT TO $8.07 PER SHARE-100.00% ............ $121,143,639
============
COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common stock, $0.01 par value, 1,000,000,000 shares authorized
to the Fund with 50,000,000 shares allocated to the Series ..... $138,518,550
Undistributed net investment income .............................. 48,090
Accumulated net realized loss on investments ..................... (8,774,787)
Net unrealized depreciation on investments ....................... (8,648,214)
------------
Total net assets ................................................. $121,143,639
============
- ----------
* Non-income producing security for the period ended June 30, 1999
+ Zero coupon security as of June 30, 1999. The coupon shown is the step up
rate.

Summary of Abbreviations:
co guarantee - company guaranteed
disc - discount
mtg - mortgage
nts - notes
pik - pay-in-kind
sr - senior
sub - subordinated
unsec - unsecured

See accompanying notes

Delchester-4
<PAGE>

Delaware Group Premium Fund, Inc.-
Delchester Series
Statement of Operations
Six months ended June 30, 1999 (Unaudited)

INVESTMENT INCOME:
Interest ................................................... $ 6,013,251
Dividends .................................................. 138,951
-----------
6,152,202
-----------

EXPENSES:
Management fees ............................................ 380,793
Accounting and administration .............................. 27,908
Professional fees .......................................... 6,099
Taxes (other than taxes on income) ......................... 4,100
Registration fees .......................................... 1,738
Reports and statements to shareholders ..................... 1,442
Directors' fees ............................................ 1,207
Dividend disbursing and transfer agent fees
and expenses ............................................ 711
Other ...................................................... 3,991
-----------
427,989
-----------
Less expenses paid in directly ............................. (1,422)
Total expenses ............................................. 426,567
-----------

NET INVESTMENT INCOME ...................................... 5,725,635
-----------

NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investments ........................... (7,469,976)
Net change in unrealized appreciation /
depreciation of investments ............................. 2,397,026
-----------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS ..................................... (5,072,950)
-----------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 652,685
===========

See accompanying notes
<PAGE>

Delaware Group Premium Fund, Inc.-
Delchester Series
Statements of Changes in Net Assets

Six Months Year
Ended 6/30/99 Ended
(Unaudited) 12/31/98
------------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ........................ $ 5,725,635 $ 11,358,280
Net realized loss on investments ............. (7,469,976) (577,975)
Net change in unrealized appreciation /
depreciation of investments ............... 2,397,026 (13,468,140)
----------- -------------
Net increase (decrease) in net assets
resulting from operations ................. 652,685 (2,687,835)
----------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........................ (5,795,668) (11,317,743)
Net realized gain on investments ............. (726,836) (32,038)
----------- -------------
(6,522,504) (11,349,781)
----------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .................... 17,048,061 45,702,613
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized
gain on investments ....................... 6,593,911 11,048,248
----------- -------------
23,641,972 56,750,861
Cost of shares repurchased ................... (17,336,786) (20,879,855)
----------- -------------
Increase in net assets derived from
capital share transactions ................ 6,305,186 35,871,006
----------- -------------

NET INCREASE IN NET ASSETS ................... 435,367 21,833,390
----------- -------------

NET ASSETS:
Beginning of period .......................... 120,708,272 98,874,882
----------- -------------
End of period ................................ $121,143,639 $120,708,272
============ =============

See accompanying notes

Delchester-5
<PAGE>

Delaware Group Premium Fund, Inc.-Delchester Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Six Months
Ended 6/30/99 Year Ended December 31,
(Unaudited)(1) 1998 1997 1996 1995 1994
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $8.460 $9.510 $9.170 $8.940 $8.540 $9.770

Income (loss) from investment operations:
Net investment income .................................... 0.386 0.906 0.863 0.853 0.872 0.962
Net realized and unrealized gain (loss) on investments ... (0.335) (1.048) 0.332 0.230 0.400 (1.230)
------ ------- ------ ------ ------ ------
Total from investment operations ......................... 0.051 (0.142) 1.195 1.083 1.272 (0.268)
------ ------- ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income ..................... (0.391) (0.905) (0.855) (0.853) (0.872) (0.962)
Distributions from net realized gain on investments ...... (0.050) (0.003) none none none none
------ ------- ------ ------ ------ ------
Total dividends and distributions ........................ (0.441) (0.908) (0.855) (0.853) (0.872) (0.962)
------ ------- ------ ------ ------ ------

Net asset value, end of period ........................... $8.070 $8.460 $9.510 $9.170 $8.940 $8.540
====== ====== ====== ====== ====== ======
Total return ............................................. 0.57% (1.83%) 13.63% 12.79% 15.50% (2.87%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $121,144 $120,708 $98,875 $67,665 $56,605 $43,686
Ratio of expenses to average net assets .................. 0.70% 0.70% 0.70% 0.70% 0.69% 0.72%
Ratio of net investment income to average net assets ..... 9.34% 9.85% 9.24% 9.54% 9.87% 10.56%
Portfolio turnover ....................................... 92% 86% 121% 93% 74% 47%
</TABLE>
- ----------
(1)Ratios have been annualized and total return has not been annualized.

See accompanying notes

Delchester-6
<PAGE>

Delaware Group Premium Fund, Inc.-Delchester Series
Notes to Financial Statements
June 30, 1999 (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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the Delchester 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 lasted
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. 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--The Series intends to 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--The 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.

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.

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. Original issue discounts are accreted to interest
income over the lives of the respective securities.

The Delchester Series declares dividends daily from net investment income and
pays such dividends monthly. Distributions from net realized gain on
investments, if any, normally will be distributed following the close of the
fiscal year.

Certain expenses of the Series are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $1,422 for the period ended June 30,
1999. The Series may receive earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. There were
no credits for the period ended June 30, 1999. The expenses paid under the above
arrangements are included in their respective expense captions on the Statement
of Operations with the corresponding expense offset shown as "Expenses paid
indirectly".

<PAGE>

DMC has elected to waive that portion, if any, of the annual management fee
payable to the extent necessary to ensure that annual operating expenses
exclusive of taxes, interest, brokerage commissions and extraordinary expenses
do not exceed 0.80% of average daily net assets of the Series through October
31, 1999. No reimbursement was due for the period ended June 30, 1999.

The Series has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services. The
Series pays DSC a monthly fee based on the number of shareholder accounts,
shareholder transactions and average net assets, subject to certain minimums.

Delchester-7
<PAGE>

Delchester Series
Notes to Financial Statements (Continued)

On June 30, 1999, the Series had liabilities payable to affiliates as follows:
<TABLE>
<CAPTION>
Dividend disbursing Other
Investment transfer agent, expenses
management accounting fees payable
fee payable to and other expenses to DMC
DMC payable to DSC and affiliates
-------------- ------------------- --------------
<S> <C> <C> <C>
$51,047 $3,447 $12,073
</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 six months ended June 30, 1999, the Series made purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments as follows:

Purchases ..................... $45,433,225
Sales ......................... $56,598,457

The cost of investments for federal income tax purposes approximates cost for
book purposes.

At June 30, 1999, the aggregate cost of securities and unrealized appreciation
(depreciation) for the Series were as follows:
<TABLE>
<CAPTION>
Aggregate Aggregate
Cost of unrealized unrealized Net unrealized
investments appreciation depreciation depreciation
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
$127,445,974 $1,445,005 ($10,103,470) ($8,658,465)
</TABLE>
For federal income tax purposes, the Series had accumulated capital losses at
December 31, 1998 as follows:

Year of
expiration
2006
----------
$567,724

4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
Shares issued upon
reinvestment of
distributions from net
investment income
and net realized gain Shares Net
Shares sold on investments repurchased increase
----------- ---------------------- ----------- --------
<S> <C> <C> <C> <C>
Period ended June 30, 1999....... 2,043,285 791,313 (2,083,107) 751,491
Year ended December 31, 1998..... 4,940,859 1,206,292 (2,277,223) 3,869,928
</TABLE>
5. Credit and Market Risk
The 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 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.

Delchester-8

<PAGE>

Delaware Group Premium Fund, Inc.-Delchester Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund, Inc. - Delchester
Series shareholders voted on the following proposals at the annual meeting of
shareholders on March 17, 1999 or as adjourned. The description of each proposal
and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority
------ ------------
Jeffrey J. Nick .................................. 13,843,382 216,809
Walter P. Babich ................................. 13,843,382 216,809
John H. Durham ................................... 13,843,382 216,809
Anthony D. Knerr ................................. 13,795,552 264,638
Ann R. Leven ..................................... 13,792,268 267,923
Thomas F. Madison ................................ 13,843,382 216,809
Charles E. Peck .................................. 13,842,462 217,729
Wayne A. Stork ................................... 13,842,462 217,729
Jan L. Yeomans ................................... 13,755,213 304,978

2. To approve the reclassification of the investment objective from fundamental
to non-fundamental.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,568,488 414,390 1,077,313

3. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).

3A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,812,366 276,683 971,142

3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,628,205 437,516 994,470

3C. To adopt a new fundamental investment restriction concerning underwriting.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,791,271 271,690 997,230
<PAGE>

3D. To adopt a new fundamental investment restriction concerning investments in
real estate.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,656,587 421,617 981,987

3E. To adopt a new fundamental investment restriction concerning investments in
commodities.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,618,875 447,765 993,551

3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,675,902 384,037 1,000,252

3G. To reclassify all current fundamental investment restrictions as
non-fundamental.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,742,128 304,671 1,013,392

4. To approve a new investment management agreement with Delaware Management
Company.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,800,995 265,777 993,419

5. To ratify the selection of Ernst & Young LLP, as the independent auditors for
Delaware Group Premium Fund, Inc.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
13,247,456 51,640 761,095

6. To approve the restructuring of Delaware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
12,764,725 200,384 1,095,082

Delchester-9

<PAGE>
Delaware Group Premium Fund, Inc.-Devon Series
Statement of Net Assets
June 30, 1999 (Unaudited)

Number Market
of Shares Value
COMMON STOCK-92.94%
Automobiles & Automotive Parts-2.94%
Danaher ........................................ 19,100 $ 1,110,188
Federal Signal ................................. 77,900 1,650,506
-----------
2,760,694
-----------
Banking, Finance & Insurance-14.60%
AFLAC .......................................... 30,300 1,450,613
American International Group ................... 10,725 1,255,495
Bank One ....................................... 29,600 1,763,050
Compass Bancshares ............................. 31,100 848,447
Equifax ........................................ 67,800 2,419,613
Federal Home Loan Mortgage ..................... 36,500 2,117,000
Nationwide Financial Services-Class A .......... 31,000 1,402,750
Protective Life ................................ 22,300 735,900
Unionbancal Corporation ........................ 25,500 921,188
*Unum ........................................... 14,600 799,350
-----------
13,713,406
-----------
Buildings & Materials-4.47%
Masco .......................................... 105,600 3,049,200
Premark International .......................... 30,600 1,147,500
-----------
4,196,700
-----------
Cable, Media & Publishing-0.48%
Wallace Computer Services ...................... 18,000 450,000
-----------
450,000
-----------
Chemicals-1.18%
Valspar ........................................ 29,200 1,109,600
----------
1,109,600
----------
Computers & Technology-8.45%
Computer Associates International .............. 32,200 1,771,000
Hewlett-Packard ................................ 31,200 3,135,600
International Business Machines ................ 14,800 1,912,900
*SunGard Data Systems ........................... 32,500 1,121,250
----------
7,940,750
----------
Consumer Products-3.23%
Dial ........................................... 81,600 3,034,500
----------
3,034,500
----------
Electronics & Electrical Equipment-8.13%
Honeywell ...................................... 16,000 1,854,000
Intel .......................................... 20,400 1,213,163
Pittston Brink's Group ......................... 24,300 650,025
Symbol Technologies ............................ 81,825 3,017,297
Teleflex ....................................... 20,700 899,156
----------
7,633,641
----------
Energy-4.96%
Anadarko Petroleum ............................. 12,000 441,750
BP Amoco plc - ADR ............................. 10,118 1,097,803
*Compagnie Francaise de Petroleum ............... 20,000 1,288,750
Schlumberger Limited ........................... 14,300 910,731
Unocal ......................................... 23,100 915,338
----------
4,654,372
----------
Environmental Services-3.64%
Ecolab ......................................... 78,300 3,415,838
-----------
3,415,838
-----------
Food, Beverage & Tobacco-3.51%
Bestfoods ...................................... 17,700 876,150
Suiza Foods .................................... 28,600 1,197,625
Universal Foods ................................ 58,000 1,225,250
----------
3,299,025
----------

- ----------
Top 10 stocks representing 33.33% of net assets, are in bold

<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Healthcare & Pharmaceuticals-11.06%
Astrazeneca - ADR ............................. 18,500 $ 724,969
American Home Products ........................ 49,300 2,834,750
*Biomet ........................................ 29,500 1,170,781
Johnson & Johnson ............................. 14,000 1,372,000
Mylan Laboratories ............................ 115,700 3,066,050
*Watson Pharmaceutical ......................... 34,700 1,216,669
----------
10,385,219
----------
Leisure, Lodging & Entertainment-1.25%
Viad .......................................... 38,100 1,178,719
----------
1,178,719
----------
Real Estate-1.87%
CarrAmerica Realty ............................ 17,400 435,000
Developers Diversified Realty ................. 38,300 636,738
Nationwide Health Properties .................. 12,800 244,000
Sun Communities ............................... 12,500 443,750
----------
1,759,488
----------
Retail-4.97%
Food Lion-Class A ............................. 75,500 898,922
Intimate Brands ............................... 34,125 1,616,672
Rite Aid ...................................... 37,600 925,900
Sherwin-Williams .............................. 36,000 999,000
Storage USA ................................... 7,100 226,313
----------
4,666,807
----------
Telecommunications-7.75%
Alltel ........................................ 16,500 1,179,750
Cincinnati Bell ............................... 40,000 997,500
GTE ........................................... 13,500 1,021,781
Nortel Networks ............................... 6,400 555,600
SBC Communications ............................ 60,800 3,526,400
----------
7,281,031
----------
Textiles, Apparel & Furniture-2.55%
HON Industries ................................ 48,000 1,401,000
Hillenbrand Industries ........................ 23,000 994,750
----------
2,395,750
----------
Utilities-0.63%
CMS Energy .................................... 14,200 594,647
----------
594,647
----------
Miscellaneous-7.27%
Pentair ....................................... 18,700 855,525
Stewart Enterprises ........................... 148,800 2,162,250
Tyco International ............................ 40,200 3,808,950
----------
6,826,725
----------
Total Common Stock
(cost $77,012,177) ........................... 87,296,912
----------

CONVERTIBLE PREFERRED STOCK-1.31%
Freeport McMoRan Copper & Gold ................ 21,800 408,750
Sealed Air .................................... 13,090 818,125
----------
Total Convertible Preferred Stock
(cost $1,226,875) ............................ 1,226,875
----------

Devon-1
<PAGE>

Devon Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
REPURCHASE AGREEMENTS-7.22%
With Chase Manhatten 4.65% 7/1/99
(dated 6/30/99, collateralized by
$1,177,000 U.S. Treasury Notes
5.375% due 2/15/01, market value
$1,195,246 and $504,000
U.S. Treasury Notes 6.125% due
12/31/01, market value $507,962
and $589,000 U.S. Treasury Notes
6.375% due 9/30/01, market
value $604,996).................................. $2,251,000 $2,251,000
With J.P. Morgan Securities 4.70% 7/1/99
(dated 6/30/99, collateralized by
$589,000 U.S. Treasury Notes 5.50%
due 1/31/03, market value $594,548
and $407,000 U.S. Treasury Notes
5.75% due 11/30/02, market value
$407,253 and $589,000
U.S. Treasury Notes 6.25% due
8/31/02, market value $606,850 and
$650,000 U.S. Treasury Notes 6.375%
due 8/15/02, market value $674,568).............. 2,237,000 2,237,000

Principal Market
Amount Value
With PaineWebber 4.80% 7/1/99 (dated 6/30/99,
collateralized by $589,000 U.S. Treasury
Notes 5.625% due 11/30/00, market value
$591,204 and $1,177,000 U.S. Treasury
Notes 5.75% due 11/30/02, market value
$1,177,746 and $556,000 U.S. Treasury
Notes 7.125% due 2/29/00, market value
$575,199)........................................ $2,296,000 $2,296,000
----------
Total Repurchase Agreements
(cost $6,784,000)................................ 6,784,000
----------

TOTAL MARKET VALUE OF SECURITIES-101.47% (cost $85,023,052)..... $95,307,787

LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS-(1.47%)......... (1,381,206)
-----------
NET ASSETS APPLICABLE TO 6,204,313 SHARES ($.01 PAR VALUE)
OUTSTANDING; EQUIVALENT TO $15.14 PER SHARE-100.00%.......... $93,926,581
===========

COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common stock, $.01 par value, 1,000,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to the Series...................................... $84,542,701
Undistributed net investment income............................. 368,025
Accumulated net realized loss on investments.................... (1,268,880)
Net unrealized appreciation of investments...................... 10,284,735
-----------
Total net assets................................................ $93,926,581
===========

- ----------
* Non-income producing security for the six months ended June 30, 1999.
ADR - American Depository Receipt

See accompanying notes

Devon-2
<PAGE>

Delaware Group Premium Fund, Inc.-
Devon Series
Statement of Operations
Six Months Ended June 30, 1999
(Unaudited)

INVESTMENT INCOME:
Dividends ............................. $ 514,875
Interest .............................. 179,884
-----------
694,759
-----------
EXPENSES:
Management fees ....................... 254,564
Accounting and administration ......... 15,802
Reports and statements to shareholders 10,022
Registration fees ..................... 6,786
Professional fees ..................... 6,450
Custodian fees ........................ 5,980
Dividend disbursing and transfer agent
fees and expenses .................. 3,747
Taxes (other than taxes on income) .... 2,607
Directors' fees ....................... 801
Other ................................. 4,244
-----------
311,003
-----------
Less expenses paid indirectly ......... (2,278)
-----------
Total expenses ........................ 308,725

NET INVESTMENT INCOME ................. 386,034
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized loss on investments ...... (1,261,275)
Net change in unrealized appreciation /
depreciation of investments ........ 1,842,702
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ..................... 581,427
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .......... $ 967,461
===========

See accompanying notes

<PAGE>

Delaware Group Premium Fund, Inc.-
Devon Series
Statements of Changes in Net Assets

Six Months Year
Ended 6/30/99 Ended
(Unaudited) 12/31/98
------------ ------------
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income ................... $ 386,034 $ 476,986
Net realized gain (loss) on investments . (1,261,275) 947,836
Net change in unrealized appreciation /
depreciation of investments .......... 1,842,702 7,281,217
------------ ------------
Net increase in net assets resulting
from operations ...................... 967,461 8,706,039
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................... (490,185) (109,925)
Net realized gain on investments ........ (947,691) (281,684)
------------ ------------
(1,437,876) (391,609)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ............... 30,003,201 48,520,957
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized
gain on investments .................. 1,437,876 391,609
------------ ------------
31,441,077 48,912,566
Cost of shares repurchased .............. (5,758,346) (5,166,222)
------------ ------------
Increase in net assets derived from
capital share transactions ........... 25,682,731 43,746,344
------------ ------------
NET INCREASE IN NET ASSETS .............. 25,212,316 52,060,774
------------ ------------
NET ASSETS:
Beginning of period ..................... 68,714,265 16,653,491
------------ ------------
End of period ........................... $ 93,926,581 $ 68,714,265
============ ============

See accompanying notes

Devon-3

<PAGE>

Delaware Group Premium Fund, Inc.-Devon Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:

<TABLE>
<CAPTION>
Six Months Year 5/1/97(1)
Ended 6/30/99(2) Ended to
(Unaudited) 12/31/98 12/31/97
------------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period ...................... $15.440 $ 12.730 $ 10.000

Income (loss) from investment operations:
Net investment income ..................................... 0.043 0.106 0.080
Net realized and unrealized gain (loss)
on investments ......................................... (0.079) 2.889 2.650
------- -------- --------
Total from investment operations .......................... (0.036) 2.995 2.730
------- -------- --------
Less dividends and distributions:
Dividends from net investment income ...................... (0.090) (0.080) none
Distributions from net realized gain
on investments ......................................... (0.174) (0.205) none
------- -------- --------
Total dividends and distributions ......................... (0.264) (0.285) none
------- -------- --------
Net asset value, end of period ............................ $15.140 $ 15.440 $ 12.730
======= ======== ========

Total return .............................................. (0.10%) 24.05% 27.30%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ................... $93,927 $ 68,714 $ 16,653
Ratio of expenses to average net assets ................... 0.76% 0.66% 0.80%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 0.77% 0.66% 0.91%
Ratio of net investment income to average net assets ...... 0.95% 1.30% 2.01%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 0.94% 1.30% 1.90%
Portfolio turnover ........................................ 43% 34% 80%

</TABLE>
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) Ratios have been annualized and total return has not been annualized.

See accompanying notes

Devon-4

<PAGE>

Delaware Group Premium Fund, Inc.-Devon Series
Notes to Financial Statements
June 30, 1999
(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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the Devon 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. 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.

The Devon Series will make payments from net investment income and net realized
gain on investments, if any, following the close of the fiscal year.
<PAGE>

Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $946 for the period ended June 30,
1999. In addition, the Fund may receive earnings credit from its custodian when
positive cash balances are maintained, which are used to offset custody fees.
These credits were $1,332 for the six months ended June 30, 1999. The expenses
paid under the above arrangements are included in their respective expense
captions on the Statement of Operations with the corresponding expense offset
shown as "Expenses paid indirectly".

2. Investment Management and Other Transactions with Affiliates
Commencing May 1, 1999, and in accordance with the terms of the Investment
Management Agreement, the Series pays Delaware Management Company ("DMC"), the
Investment Manager of the Series, an annual fee which is calculated at the rate
of 0.65% on the first $500 million of average daily net assets of the series,
0.60% on the next $500 million, 0.55% on the next $1,500 million and 0.50% on
the average daily net assets in excess of $2,500 million. Prior to May 1, 1999,
the Series paid DMC an annual fee which was calculated at the rate of 0.60% on
the average daily net assets of the Series.

The Series has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting and
administration services. The Series pays DSC a monthly fee based on the number
of shareholder accounts, shareholder transactions and average net assets,
subject to certain minimums.

Devon-5

<PAGE>

Devon Series
Notes to Financial Statements (Continued)

On June 30, 1999, the Series had liabilities payable to affiliates as follows:

Dividend disbursing
Investment transfer agent,
management accounting fees
fee payable to and other expenses
DMC payable to DSC
-------------- -------------------
$49,803 $3,236

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 six months ended June 30, 1999, the Series made purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments as follows:

Purchases............ $41,773,973
Sales................ $16,069,821

At June 30, 1999, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes for the Series were as follows:

Aggregate Aggregate
Cost of unrealized unrealized Net unrealized
investments appreciation depreciation appreciation
----------- ------------ ------------ ------------
$85,023,052 $13,766,127 ($3,481,392) $10,284,735

4. Capital Stock
Transactions in capital stock shares were as follows:

<TABLE>
<CAPTION>
Shares issued upon
reinvestment of distributions
from net investment income
and net realized Shares Net
Shares sold gain on investments repurchased increase
----------- ---------------------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Period ended June 30, 1999....... 2,054,204 102,267 (403,337) 1,753,134
Year ended December 31, 1998..... 3,519,429 31,229 (407,718) 3,142,940
</TABLE>

Devon-6

<PAGE>

Delaware Group Premium Fund Inc.-Devon Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund, Inc. - Devon
Series shareholders voted on the following proposals at the annual meeting of
shareholders on March 17, 1999 or as adjourned. The description of each proposal
and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority Abstain
--------- ------------ -------
Jeffrey J. Nick ................ 4,342,099 72,125 0
Walter P. Babich ............... 4,337,182 77,045 0
John H. Durham ................. 4,343,952 70,272 0
Anthony D. Knerr ............... 4,342,041 72,183 0
Ann R. Leven ................... 4,343,827 70,396 0
Thomas F. Madison ............. 4,343,952 70,272 0
Charles E. Peck ................ 4,337,054 77,169 0
Wayne A. Stork.................. 4,341,974 72,250 0
Jan L. Yeomans ................. 4,343,952 70,272 0

3. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).

3A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,158,118 80,286 175,819

3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,149,435 91,920 172,868

3C. To adopt a new fundamental investment restriction concerning underwriting.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,150,771 82,114 181,339

3D. To adopt a new fundamental investment restriction concerning investments in
real estate.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,129,445 91,574 193,205

3E. To adopt a new fundamental investment restriction concerning investments in
commodities.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,130,101 105,934 178,188

3E. To adopt a new fundamental investment restriction concerning lending by the
Fund.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,134,517 101,519 178,188

<PAGE>

3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,128,156 92,181 193,887

4. To approve a new investment management agreement with Delaware Management
Company.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,125,312 113,628 175,283

5. To ratify the selection of Ernst & Young LLP, as the independent auditors for
Delaware Group Premium Fund, Inc.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,208,963 32,298 172,962

6. To approve the restructuring of Delware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
4,159,574 42,349 212,300

Devon-7

<PAGE>
Delaware Group Premium Fund, Inc.-Emerging Markets Series
Statement of Net Assets
June 30, 1999 (Unaudited)

Number Market
of Shares Value
(U.S.$)
COMMON STOCK-82.60%
Argentina-1.97%
Central Puerto Class B ..................... 41,000 $ 93,493
Transportadora de Gas del sur Class B ...... 44,500 82,781
----------
176,274
----------
Brazil-19.06%
Aracruz Celulose ........................... 8,100 178,200
Brasmotor .................................. 1,073,000 81,741
Centrais Electricas de Santa
Catarina GDR ............................ 600 22,674
Centrais Eletricas de Santa Catarina ....... 198,000 75,418
Companhia Energetica de Minas
Gerais ADR .............................. 2,700,000 56,794
Companhia Energetica de Minas
Gerais ADR .............................. 3,937 82,162
Companhia Paranaense de Energia ............ 22,092 185,021
Elevadores Atlas ........................... 7,500 107,447
Gerdau Metalurgica ......................... 8,000,000 241,046
Petroleo Brasileiro-Petrobras .............. 1,100,000 170,722
Renner Participacoes ....................... 870,000 940
Rossi Residential .......................... 4,500 5,330
Telecomunicacoes de Minas Gerais ........... 4,820,000 120,294
Telecomunicacoes do Parana ................. 900,000 160,659
Uniao de Bancos Brasileiros ................ 8,000,000 136,441
Usinas Siderurgicas de Minas Gerais ........ 20,500 69,926
Usinas Siderurgicas de Minas
Gerais ADR .............................. 3,734 12,637
----------
1,707,452
----------
Chile-3.27%
Administradora de Fondos de Pensiones
Provida ................................. 9,000 198,000
Empresa Nacional Electricidad S.A. ADR ..... 7,800 94,575
----------
292,575
----------
Croatia-1.08%
Zagrebacka Banka GDR ....................... 9,540 97,070
----------
97,070
----------
Egypt-0.93%
Paints & Chemical Industries GDR ........... 12,825 83,042
----------
83,042
----------
Estonia-1.36%
Eesti Uhispank ............................. 15,554 79,714
Eesti Telekom GDR .......................... 2,112 41,923
----------
121,637
----------
Hong Kong-7.40%
First Tractor .............................. 317,000 93,972
Guangdong Kelon Electric Holding ........... 168,000 195,961
Guangshen Railway .......................... 774,000 118,713
Hengan International Group ................. 210,000 106,236
Shenzhen Expressway ........................ 701,300 148,238
----------
663,120
----------
Hungary-1.95%
Gedeon Richter GDR ......................... 4,000 175,000
----------
175,000
----------
India-4.13%
India Fund, (The) .......................... 15,700 156,019
Larsen & Toubro GDR ........................ 7,750 119,350
Mahanagar Telephone GDR .................... 9,300 94,395
----------
369,764
----------

<PAGE>

Number Market
of Shares Value
(U.S.$)
COMMON STOCK (Continued)
Indonesia-0.08%
PT United Tractors ......................... 15,500 $ 6,863
----------
6,863
----------
Israel-3.57%
Bank Hapoalim .............................. 73,200 187,980
ECI Telecommunications ..................... 4,000 132,125
----------
320,105
----------
Malaysia-5.87%
Leader Universal Holdings .................. 139,000 58,161
Petronas Dagangan .......................... 136,000 148,884
Public Finance ............................. 17,000 17,895
Resorts World .............................. 72,000 169,579
Sime Darby ................................. 100,000 131,053
----------
525,572
----------
Mexico-5.45%
Alfa de C.V. Class A ....................... 34,800 145,201
Cemex de C.V. Class B ...................... 42,000 209,038
Grupo Minsa ADR ............................ 2,400 6,900
Grupo Minsa C Shares ....................... 103,096 31,864
Vitro ADR .................................. 18,600 95,325
----------
488,328
----------
Peru-1.28%
Banco de Credito del Peru .................. 64,101 42,330
Telefonica del Peru ADR .................... 4,800 72,600
----------
114,930
----------
Portugal-1.12%
Creditcorp Limited ......................... 9,100 100,100
----------
100,100
----------
Romania-0.41%
Banco Turco Romana GDR ..................... 6,700 36,683
----------
36,683
----------
Russia-1.82%
Gazprom ADR ................................ 1,900 21,375
Gazprom ADR ................................ 5,400 60,750
Lukoil Holding ADR ......................... 1,400 55,426
Mosenergo ADR .............................. 5,700 25,536
----------
163,087
----------
Slovenia-0.24%
Blagovno Trgovinski Center GDR ............. 1,925 12,272
SKB Banka GDR .............................. 800 9,800
----------
22,072
----------
South Africa-9.79%
Amalgamated Banks of South Africa .......... 28,479 161,656
Edgars Consolidated Stores ................. 3,778 29,452
Iscor ...................................... 699,000 219,590
Sanlam Limited ............................. 81,772 97,182
Sappi Limited .............................. 21,500 157,956
Sasol Limited .............................. 29,500 211,091
----------
876,927
----------
South Korea-2.46%
Pohang Iron & Steel ADR .................... 4,780 160,728
Pohang Iron & Steel ........................ 500 59,475
----------
220,203
----------
Taiwan-0.80%
Yageo GDR .................................. 14,760 71,955
----------
71,955
----------

Emerging Markets-1

<PAGE>

Emerging Markets Series
Statement of Net Assets (Continued)

Number Market
of Shares Value
(U.S.$)
COMMON STOCK (Continued)
Thailand-5.06%
Bangkok Bank .............................. 51,600 $ 193,264
Hana Microelectronics ..................... 48,300 145,510
Thai Reinsurance .......................... 60,000 113,991
----------
452,765
----------
Turkey-2.24%
Efes Sinai Yatirim ADR .................... 32,150 29,739
Efes Sinai Yatirim Holding ................ 10,228,660 94,544
Koc Holdings .............................. 1,211,200 76,069
----------
200,352
----------
United Kingdom-1.26%
Anglo American ............................ 2,400 112,495
----------
112,495
----------
Total Common Stock
(cost $8,783,686) ......................... 7,398,371
----------

WARRANTS
Hong Kong-0.00%
*Guangdong Investments 7/99 ................ 4,600 6
----------
Total Warrants (cost $0) .................. 6
----------

Principal Market
Amount Value

REPURCHASE AGREEMENTS-25.85%
With Chase Manhattan 4.65% 7/1/99
(dated 6/30/99, collateralized by
$172,000 U.S. Treasury Notes
5.375% due 2/15/01, market value
$173,339 and $200,000
U.S. Treasury Notes 6.375% due 9/30/01,
market value $206,882 and $401,000
U.S. Treasury Notes 6.125% due 12/31/01,
market value $407,871) ......................... $768,000 $768,000
With J.P. Morgan Securities 4.70% 7/1/99
(dated 6/30/99, collateralized by
$138,000 U.S. Treasury Notes
6.375% due 8/15/02, market value
$138,973 and $201,000 U. S. Treasury Notes
6.25% due 8/31/02, market value $202,886 and
$221,000 U.S. Treasury Notes 5.75%
due 11/30/02, market value $230,192 and
$200,000 U.S. Treasury Notes 5.50%
due 1/31/03, market value $207,084) ............ 764,000 764,000
With PaineWebber 4.80% 7/1/99
(dated 6/30/99, collateralized by
$189,000 U.S. Treasury Notes
7.125% due 2/29/00, market value
$196,283 and $201,000
U.S. Treasury Notes 5.625% due 11/30/00,
market value $201,745 and $402,000
U.S. Treasury Notes 5.75% due 11/30/02,
market value $401,899) ......................... 783,000 783,000
----------
Total Repurchase Agreements
(cost $2,315,000) .............................. $2,315,000
----------

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES-108.45% (cost $11,098,686) ................................ $ 9,713,377
-----------

LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS-(8.45%) .................................... (756,897)
-----------

NET ASSETS APPLICABLE TO 1,248,983 SHARES ($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $7.17 PER SHARE-100.00% ................................................... $ 8,956,480
===========

COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common stock, $0.01 par value, 1,000,000,000 shares authorized to the Fund with
50,000,000 shares allocated to the Series ................................................ $10,737,370
Undistributed net investment income** ...................................................... 24,895
Accumulated net realized loss on investments ............................................... (416,759)
Net unrealized depreciation of investments and foreign currencies .......................... (1,389,026)
-----------
Total net assets ............................................................... $ 8,956,480
===========
</TABLE>
- ----------------
* Non-income producing security for the period ended June 30, 1999.
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are
treated as net investment income in accordance with provisions.

ADR-American Depository Receipt
GDR-Global Depository Receipt

See accompanying notes

Emerging Markets-2

<PAGE>

Delaware Group Premium Fund, Inc.-
Emerging Markets Series
Statement of Operations
Six Months Ended June 30, 1999
(Unaudited)

INVESTMENT INCOME:
Dividends .................................................. $ 91,185
Interest ................................................... 27,163
Foreign tax withheld ....................................... (2,995)
-----------
115,353
-----------

Expenses:
Management fees ............................................ 39,460
Accounting and administration .............................. 1,231
Custodian fees ............................................. 4,560
Professional fees .......................................... 645
Reports and statements to shareholders ..................... 1,976
Registration fees .......................................... 800
Taxes (other than taxes on income) ......................... 128
Dividend disbursing and transfer agent
fees and expenses ....................................... 140
Directors' fees ............................................ 269
Other ...................................................... 2,291
-----------
51,500
-----------

Less expenses absorbed or waived ........................... (4,784)
Less expenses paid indirectly .............................. (85)
-----------
Total expenses ............................................. 46,631
-----------

NET INVESTMENT INCOME ...................................... 68,722
-----------

NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized loss on:
Investments transactions ................................ (189,159)
Foreign currencies ...................................... (28,143)
-----------
Net realized loss .......................................... (217,302)
-----------
Net change in unrealized appreciation /
depreciation of investments and foreign currencies ...... 1,796,236
-----------
Net realized and unrealized loss on investments
and foreign currencies .................................. 1,578,934
-----------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 1,647,656
===========

See accompanying notes

<PAGE>

Delaware Group Premium Fund, Inc.-
Emerging Markets Series
Statements of Changes in Net Assets

Six Months Year
Ended 6/30/99 Ended
(Unaudited) 12/31/98
----------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ...................... $ 68,722 $ 134,046
Net realized loss on investments
and foreign currencies .................. (217,302) (246,532)
Net change in unrealized appreciation /
depreciation of investments and
foreign currencies ...................... 1,796,236 (2,161,591)
----------- -----------
Net increase (decrease) in net assets
resulting from operations ............... 1,647,656 (2,274,077)
----------- -----------

DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income ...................... (127,668) (19,005)
Net realized gain (loss) on investments .... -- (139,368)
----------- -----------
(127,668) (158,373)
----------- -----------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .................. 2,579,815 2,966,309
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized
gain on investments ..................... 127,668 158,373
----------- -----------
2,707,483 3,124,682
Cost of shares repurchased ................. (627,059) (1,111,948)
----------- -----------
Increase in net assets derived from capital
share transactions ...................... 2,080,424 2,012,734
----------- -----------

NET INCREASE IN NET ASSETS ................. 3,600,412 (419,716)
----------- -----------

NET ASSETS:
Beginning of period ........................ 5,356,068 5,775,784
----------- -----------
End of period .............................. $ 8,956,480 $ 5,356,068
=========== ===========

See accompanying notes

Emerging Markets-3

<PAGE>

Delaware Group Premium Fund, Inc.-Emerging Markets Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:

<TABLE>
<CAPTION>
Six Months Year 5/1/97(2)
Ended 6/30/99 Ended to
(Unaudited)(1) 12/31/98 12/31/97
--------------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period .................... $5.810 $8.880 $10.000

Income (loss) from investment operations:
Net investment income(3)................................. 0.066 0.171 0.060
Net realized and unrealized gain (loss)
on investments and foreign currencies ................ 1.427 (2.991) (1.180)
------ ------ ------
Total from investment operations ........................ 1.493 (2.820) (1.120)
------ ------ ------

Less dividends and distributions:
Dividends from net investment income .................... (0.133) (0.030) none
Distributions from net realized gain on investments ..... none (0.220) none
------ ------ ------
Total dividends and distributions ....................... (0.133) (0.250) none
------ ------ ------

Net asset value, end of period .......................... $7.170 $5.810 $8.880
====== ====== ======

Total return ............................................ 26.56% (32.48%) (11.20%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $8,956 $5,356 $5,776
Ratio of expenses to average net assets ................. 1.49% 1.50% 1.50%
Ratio of expenses to average net assets
prior to expense limitation .......................... 1.64% 1.67% 2.45%
Ratio of net investment income to average net assets .... 2.19% 2.34% 0.89%
Ratio of net investment income to average net
assets prior to expense limitation ................... 2.04% 2.17% (0.06%)
Portfolio turnover ...................................... 19% 38% 48%
</TABLE>
- ----------
(1)Ratios have been annualized and total return has not been annualized.
(2)Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(3)Per share information was based on the average shares outstanding method.

See accompanying notes

Emerging Markets-4

<PAGE>

Delaware Group Premium Fund, Inc.-Emerging Markets Series
Notes to Financial Statements
June 30, 1999
(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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the Emerging Markets 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. 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.

Foreign Currency Transactions--Transactions denominated in foreign currencies
are recorded at the prevailing exchange rates on the valuation date. The value
of all assets and liabilities denominated in foreign currencies are translated
into U.S. dollars at the exchange rate of such currencies against the U.S.
dollar as of 3:00 PM EST. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the foreign
currency transaction are reported in operations for the current period. It is
not practical to isolate that portion of both realized and unrealized gains and
losses on investments in equity securities in the statement of operations that
result from fluctuations in foreign currency exchange rates. The Series reports
certain foreign currency related transactions as components of realized gains
(losses) for financial reporting purposes, whereas such components are treated
as ordinary income (loss) for federal income tax purposes.

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 became
aware of such dividends, net of all non-rebatable tax withholdings. Withholding
taxes on foreign dividends have been provided for in accordance with the Series'
understanding of the applicable country's tax rules and rates.
<PAGE>

The Emerging Markets Series will make payments from net investment income and
net realized gain on investments, if any, following the close of the fiscal
year.

Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $73 for the period ended June 30,
1999. The Fund may receive earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. These
credits were $12 for the period ended June 30, 1999. The expenses paid under the
above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense offset shown as "Expenses
paid indirectly".

2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Series
pays Delaware International Advisers Ltd. ("DIAL"), the Investment Manager of
the Series, an annual fee which is calculated at the following rates: 1.25% on
the first $500 million of average daily net assets of the Series, 1.20% on the
next $500 million, 1.15% on the next $1,500 million and 1.10% on the average
daily net assets over $2,500 million. These rates became effective May 1, 1999.
The old management fee was calculated at the rate of 1.25% on the average daily
net assets of the Series.

DIAL has elected to waive that portion, if any, of the annual management fee
payable to the extent necessary to ensure that annual operating expenses
exclusive of taxes, interest, brokerage commissions and extraordinary expenses
do not exceed 1.50% of average daily net assets of the Series through October
31, 1999.

Emerging Markets-5

<PAGE>

Emerging Markets Series
Notes to Financial Statements (Continued)

The Series has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
Delaware Management Company ("DMC"), to provide dividend disbursing, transfer
agent and accounting services. The Series pays DSC a monthly fee based on the
number of shareholder accounts, shareholder transactions and average net assets,
subject to certain minimums.

On June 30, 1999, the Series had liabilities payable to affiliates as follows:

Dividend disbursing Other
Investment transfer agent, expenses
management accounting fees payable
fee payable to and other expenses to DMC
DIAL payable to DSC and affiliates
-------------- ------------------- --------------
$8,324 $280 $722

Certain officers of DMC, DSC and DIAL 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, 1999, the Series made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:

Purchases ....................................... $1,713,589
Sales ........................................... $509,021

The cost of investments for federal income tax purposes approximates cost for
book purposes. At June 30, 1999, the aggregate cost of securities and unrealized
appreciation (depreciation) for the Series were as follows:

Aggregate Aggregate
Cost of unrealized unrealized Net unrealized
investments appreciation depreciation depreciation
----------- ------------ ------------ ------------
$11,098,686 $526,512 ($1,911,821) ($1,385,309)

For federal income tax purposes, the Series had accumulated capital losses at
December 31, 1998 as follows:

Year of
expiration
2006
----------
$227,600

5. Foreign Exchange Contracts
The Series will generally enter into forward foreign currency contracts as a way
of managing foreign exchange rate risk. These contracts may be entered into to
fix the U.S. dollar value of a security that it has agreed to buy or sell for
the period between the date the trade was entered into and the date the security
is delivered and paid for. They may also be used to hedge the U.S. dollar value
of securities it already owns denominated in foreign currencies.

Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-market daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not available. The change in market value is recorded
as an unrealized gain or loss. When the contract is closed, a realized gain or
loss is recorded equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.

Emerging Markets-6

<PAGE>

Emerging Markets Series
Notes to Financial Statements (Continued)

The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Series' securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. In addition, a Series could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.

There were no forward foreign currency contracts outstanding at June 30, 1999.

6. Credit and Market Risk
Some countries in which the Series may invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.

The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Series
may be inhibited. In addition, a significant proportion of the aggregate market
value of equity securities listed on the major securities exchanges in emerging
markets are held by a smaller number of investors. This may limit the number of
shares available for acquisition or disposition by the Series.

The Series may invest up to 10% of its total assets in illiquid securities which
may include securities with contractual restrictions on resale 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.

Emerging Markets-7

<PAGE>

Delaware Group Premium Fund, Inc.-Emerging Markets Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund, Inc. - Emerging
Markets Series shareholders voted on the following proposals at the annual
meeting of shareholders on March 17, 1999 or as adjourned. The description of
each proposal and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority Abstain
------- ------------- -------
Jeffrey J. Nick ............. 665,577 28,468 --
Walter P. Babich ............ 665,577 28,468 --
John H. Durham .............. 665,577 28,468 --
Anthony D. Knerr ............ 665,577 28,468 --
Ann R. Leven ................ 665,577 28,468 --
Thomas F. Madison ........... 665,577 28,468 --
Charles E. Peck ............. 665,577 28,468 --
Wayne A. Stork .............. 665,577 28,468 --
Jan L. Yeomans .............. 665,577 28,468 --

3. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).

3C. To adopt a new fundamental investment restriction concerning underwriting.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------- ------- -------
620,051 38,987 35,005

3D. To adopt a new fundamental investment restriction concerning investments in
real estate.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------- ------- -------
415,856 42,842 35,347

3E. To adopt a new fundamental investment restriction concerning investments in
commodities.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------- ------- -------
615,407 43,631 35,005

3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------- ------- -------
620,051 38,987 35,005

3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------- ------- -------
621,355 37,334 35,355

4. To approve a new investment management agreement with Delaware International
Advisers Ltd.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------- ------- -------
604,321 53,669 36,053

6. To approve the restructuring of Delware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
------- ------- -------
617,264 23,870 52,910

Emerging Markets-8

<PAGE>
Delaware Group Premium Fund, Inc.-Growth and Income Series
(Formerly Decatur Total Return Series)
Statement of Net Assets
June 30, 1999 (Unaudited)

Number of Market
Shares Value
COMMON STOCK-97.82%
Aerospace & Defense-2.51%
+General Dynamics ................................. 117,400 $8,041,900
Lockheed Martin .................................. 191,900 7,148,275
----------
15,190,175
----------
Automobiles & Automotive Parts-6.41%
Dana ............................................. 143,500 6,609,969
Ford Motor ....................................... 138,500 7,816,594
General Motors ................................... 141,400 9,332,400
Rockwell International ........................... 126,900 7,709,175
TRW .............................................. 131,800 7,232,525
----------
38,700,663
----------
Banking, Finance & Insurance-19.27%
American General ................................. 221,500 16,695,563
Aon .............................................. 241,987 9,981,964
Bank of America .................................. 305,311 22,383,113
Bank One ......................................... 219,194 13,055,743
Chase Manhattan .................................. 94,500 8,186,063
Fannie Mae ....................................... 183,100 12,519,463
Mellon Bank ...................................... 312,000 11,349,000
Summit Bancorp ................................... 184,375 7,709,180
U.S. Bancorp ..................................... 427,400 14,531,600
----------
116,411,689
----------
Cable, Media & Publishing-3.11%
McGraw-Hill ...................................... 348,400 18,791,825
----------
18,791,825
----------
Chemicals-4.26%
Dow Chemical ..................................... 60,200 7,637,875
E.I. duPont deNemours ............................ 129,400 8,839,638
Imperial Chemical ADR ............................ 232,200 9,229,950
----------
25,707,463
----------
Computers & Technology-3.39%
Pitney Bowes ..................................... 179,000 11,500,750
Xerox ............................................ 152,400 9,001,125
----------
20,501,875
----------
Electronics & Electrical Equipment-2.39%
Emerson Electric ................................. 134,500 8,456,688
+Thomas & Betts ................................... 126,400 5,972,400
----------
14,429,088
----------
Energy-14.34%
+BP Amoco ADR ..................................... 99,142 10,756,907
Chevron .......................................... 160,400 15,268,075
Duke Energy ...................................... 134,300 7,302,563
Mobil ............................................ 137,200 13,582,800
Royal Dutch Petroleum ............................ 278,000 16,749,500
Sonat ............................................ 333,400 11,043,875
Unocal ........................................... 301,000 11,927,125
----------
86,630,845
----------
- --------------
Top 10 stock holdings, representing 28.58% of net assets, are in bold.

<PAGE>

Number of Market
Shares Value
COMMON STOCK (Continued)
Food, Beverage & Tobacco-8.36%
Bestfoods ........................................ 309,600 $15,325,200
H.J. Heinz ....................................... 151,600 7,598,950
Nabisco Group Holdings ........................... 316,000 6,181,750
PepsiCo .......................................... 216,300 8,368,106
Philip Morris .................................... 257,000 10,328,188
R.J. Reynolds Tobacco Holdings ................... 85,566 2,695,329
----------
50,497,523
----------
Healthcare & Pharmaceuticals-4.77%
AstraZenca ADR ................................... 233,500 9,150,281
Baxter International ............................. 186,300 11,294,438
Glaxo Wellcome ADR ............................... 132,900 7,525,463
Pharmacia & Upjohn ............................... 14,600 829,463
----------
28,799,645
----------
Industrial Machinery-1.99%
Baker Hughes ..................................... 30,000 1,005,000
Deere & Co. ...................................... 278,800 11,047,450
----------
12,052,450
----------
Metals & Mining-3.58%
Alcoa ............................................ 221,500 13,705,313
Alcan Aluminum ................................... 247,300 7,898,144
----------
21,603,457
----------
Paper & Forest Products-6.78%
International Paper .............................. 328,667 16,597,684
Kimberly-Clark ................................... 210,000 11,970,000
Weyerhaeuser ..................................... 180,400 12,402,500
----------
40,970,184
----------
Retail-1.60%
Albertson's ...................................... 12,600 649,688
May Department Stores ............................ 220,900 9,029,288
----------
9,678,976
----------
Telecommunications-10.33%
AT&T ............................................. 183,000 10,213,688
ALLTEL ........................................... 133,500 9,545,250
Ameritech ........................................ 251,800 18,507,300
Cable & Wireless ADR ............................. 159,100 6,304,338
GTE .............................................. 235,300 17,809,269
----------
62,379,845
----------
Transportation & Shipping-2.97%
+British Airways ADR .............................. 149,700 10,694,194
Norfolk Southern ................................. 241,100 7,263,138
----------
17,957,332
----------
Utilities-0.71%
PG&E ............................................. 132,500 4,306,250
----------
4,306,250
----------
Miscellaneous-1.05%
+H&R Block ........................................ 126,800 6,340,000
----------
6,340,000
----------
Total Common Stock
(cost $526,109,584) ............................. 590,949,285
----------

Growth and Income-1

<PAGE>

Growth and Income Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
REPURCHASE AGREEMENTS-2.50%
With Chase Manhattan 4.65% 7/1/99
(dated 6/30/99, collateralized by
$2,616,000 U.S. Treasury Notes 6.375%
due 2/15/01, market value $2,655,651
and $1,308,000 U.S. Treasury Notes
6.375% due 9/30/01, market value
$1,344,207 and $1,121,000 U.S. Treasury
Notes 6.125% due 12/31/01 market
value $1,128,614) ............................. $5,002,000 $5,002,000
With J.P. Morgan Securities
4.70% 7/1/99 (dated 6/30/99,
collateralized by $1,444,000 U.S.
Treasury Notes 6.375% due 8/15/02,
market value $1,498,786 and $1,308,000
U.S. Treasury Notes 6.25% due 8/31/02,
market value $1,348,328 and $904,000
U.S. Treasury Notes 5.75% due 11/30/02,
market value $904,853 and $1,308,000
U.S Treasury Notes 5.50% due 1/31/03,
market value $1,320,993) ...................... 4,970,000 4,970,000

Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 4.80% 7/1/99
(dated 6/30/99, collateralized by
$1,234,000 U.S. Treasury Notes 7.125%
due 2/29/00, market value $1,278,004
and $1,308,000 U.S. Treasury Notes
5.625% due 11/30/00, market value
$1,313,565 and $2,616,000 U.S. Treasury
Notes 5.75% due 11/30/02, market
value $2,616,771) ............................. $5,101,000 $5,101,000
----------
Total Repurchase Agreements
(cost $15,073,000) ............................ 15,073,000
----------

TOTAL MARKET VALUE OF SECURITIES-100.32% (cost $541,182,584) $606,022,285

LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS-(0.32%) (1,908,683)
------------

NET ASSETS APPLICABLE TO 32,175,391 SHARES ($0.01 PAR VALUE)
OUTSTANDING; EQUIVALENT TO $18.78 PER SHARE-100.00% $604,113,602
============
COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common stock, $0.01 par value, 1,000,000,000 shares
authorized to the Fund with 50,000,000 shares allocated
to the Series $516,463,312
Undistributed net investment income 2,162,078
Accumulated net realized gain on investments 20,648,511
Net unrealized appreciation of investments 64,839,701
------------
Total net assets $604,113,602
============
- -------------------
+Security is partially or fully on loan.
ADR-American Depository Receipt

See accompanying notes

Growth and Income-2
<PAGE>

Delaware Group Premium Fund, Inc.-
Growth and Income Series
Statement of Operations
Six Months Ended June 30, 1999
(Unaudited)

INVESTMENT INCOME:
Dividends ......................................... $ 7,153,835
Interest .......................................... 290,508
-----------
7,444,343
-----------

EXPENSES:
Management fees ................................... 1,791,213
Accounting and administration ..................... 114,747
Reports and statements to shareholders ............ 39,000
Professional fees ................................. 26,200
Registration fees ................................. 23,734
Taxes (other than taxes on income) ................ 23,500
Dividend disbursing and transfer agent
fees and expenses .............................. 9,600
Custodian fees .................................... 6,300
Directors' fees ................................... 4,775
Other ............................................. 80,522
-----------
2,119,591
Less expenses absorbed or waived .................. (28,897)
Less expenses paid indirectly ..................... (6,768)
-----------
Total expenses .................................... 2,083,926
-----------
NET INVESTMENT INCOME ............................. 5,360,417

NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments .................. 20,985,958
Net change in unrealized appreciation /
depreciation of investments .................... 6,449,822
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ................................. 27,435,780
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................ $32,796,197
===========

See accompanying notes

<PAGE>

Delaware Group Premium Fund, Inc.-
Growth and Income Series
Statements of Changes in Net Assets

Six Months Year
Ended 6/30/99 Ended
(Unaudited) 12/31/98
----------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ........................... $ 5,360,417 $ 10,116,886
Net realized gain on investments ................ 20,985,958 43,739,574
Net change in unrealized appreciation /
depreciation of investments .................. 6,449,822 (3,304,465)
------------ ------------
Net increase in net assets
resulting from operations .................... 32,796,197 50,551,995
------------ ------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........................... (5,017,208) (8,876,285)
Net realized gain on investments ................ (43,919,243) (23,162,228)
------------ ------------
(48,936,451) (32,038,513)
------------ ------------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ....................... 36,338,254 180,559,930
Net asset value of shares issued upon
reinvestment of distributions from
net investment income and net
realized gain on investments ................. 48,936,451 32,038,513
------------ ------------
85,274,705 212,598,443
Cost of shares repurchased ...................... (44,927,546) (52,607,198)
------------ ------------
Increase in net assets derived from
capital share transactions ................... 40,347,159 159,991,245
------------ ------------

NET INCREASE IN NET ASSETS ...................... 24,206,905 178,504,727
------------ ------------
NET ASSETS:
Beginning of period ............................. 579,906,697 401,401,970
------------ ------------
End of period ................................... $604,113,602 $579,906,697
============ ============

See accompanying notes

Growth and Income-3

<PAGE>

Delaware Group Premium Fund, Inc.-Growth and Income Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:

<TABLE>
<CAPTION>
Six Months
Ended 6/30/99 Year Ended December 31,
(Unaudited)(1) 1998 1997 1996 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $19.420 $18.800 $15.980 $14.830 $11.480 $12.510

Income (loss) from investment operations:
Net investment income ................................. 0.167 0.361 0.324 0.377 0.416 0.412
Net realized and unrealized gain (loss) on investments. 0.834 1.636 4.216 2.398 3.574 (0.422)
------- ------- ------- ------- ------- -------
Total from investment operations ...................... 1.001 1.997 4.540 2.775 3.990 (0.010)
------- ------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income .................. (0.161) (0.327) (0.370) (0.420) (0.430) (0.420)
Distributions from net realized gain on investments ... (1.480) (1.050) (1.350) (1.205) (0.210) (0.600)
------- ------- ------- ------- ------- -------
Total dividends and distributions ..................... (1.641) (1.377) (1.720) (1.625) (0.640) (1.020)
------- ------- ------- ------- ------- -------

Net asset value, end of period ........................ $18.780 $19.420 $18.800 $15.980 $14.830 $11.480
======= ======= ======= ======= ======= =======

Total return .......................................... 5.79% 11.35% 31.00% 20.72% 36.12% (0.20%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $604,114 $579,907 $401,402 $166,647 $109,003 $72,725
Ratio of expenses to average net assets ............... 0.71% 0.71% 0.71% 0.67% 0.69% 0.71%
Ratio of expenses to average net assets prior to
expenses absorbed, waived or paid indirectly ....... 0.72% 0.71% 0.71% 0.67% 0.69% 0.71%
Ratio of net investment income to average net assets .. 1.84% 2.00% 2.02% 2.66% 3.24% 3.63%
Ratio of net investment income to average net assets
prior to expenses absorbed, waived or paid indirectly 1.83% 2.00% 2.02% 2.66% 3.24% 3.63%
Portfolio turnover .................................... 120% 81% 54% 81% 85% 91%
</TABLE>

- -------------------
(1) Ratios have been annualized and total return has not been annualized.

See accompanying notes

Growth and Income-4

<PAGE>

Delaware Group Premium Fund, Inc.-Growth and Income Series
Notes to Financial Statements
June 30, 1999
(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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the Growth and Income 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.

<PAGE>

The Growth and Income Series will make payments from net investment income
quarterly and distributions from net realized gain on investments, if any,
following the close of the fiscal year.

Certain expenses of the Series are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $6,768 for the period ended June 30,
1999. The Series may receive earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. These
credits were $0 for the period ended June 30, 1999. The expenses paid under the
above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense offset shown as "Expenses
paid indirectly".

2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Series
pays Delaware Management Company ("DMC"), the Investment Manager of the Series,
an annual fee which is calculated at the following rates: 0.65% on the first
$500 million of average daily net assets of the Series, 0.60% on the next $500
million, 0.55% on the next $1,500 million and 0.50% on the average daily net
assets over $2,500 million. These rates became effective May 1, 1999. The old
management fee was calculated at the rate of 0.60% on the average daily net
assets of the Series, less the fees paid to the unaffiliated directors. DMC has
elected to cap the management fee at 0.60% indefinitely.

Growth and Income-5

<PAGE>

Growth and Income Series
Notes to Financial Statements (Continued)

On June 30, 1999, the Series had liabilities payable to affiliates as follows:

Dividend disbursing Other
Investment transfer agent, expenses
management accounting fees payable
fee payable to and other expenses to DMC
DMC payable to DSC and affiliates
-------------- ------------------- --------------
$200,306 $19,261 $57,051

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 six months ended June 30, 1999, the Series made purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments as follows:

Purchases .................................... $341,972,354
Sales ........................................ $346,497,350

The cost of investments for federal income tax purposes approximates cost for
book purposes. The aggregate cost of securities and unrealized appreciation
(depreciation) for the Series were as follows:

Aggregate Aggregate
Cost of unrealized unrealized Net unrealized
investments appreciation depreciation appreciation
- ------------ ------------ ------------ --------------
$541,182,584 $74,957,622 ($10,117,921) $64,839,701

4. Capital Stock
Transactions in capital stock shares were as follows:

<TABLE>
<CAPTION>
Shares issued upon
reinvestment of
distributions from net
investment income
and net realized gain Shares Net
Shares sold on investments repurchased increase
----------- ---------------------- ----------- ---------
<S> <C> <C> <C> <C>
Six months ended June 30, 1999 ........ 1,920,960 2,786,378 (2,388,504) 2,318,834
Year ended December 31, 1998 .......... 9,550,511 1,783,160 (2,829,984) 8,503,687
</TABLE>

5. Securities Lending
The Series may participate, along with other funds in the Delaware Investments
Family of Funds, in a Securities Lending Agreement ("Lending Agreement").
Security loans made pursuant to the Lending Agreement are required at all times
to be secured by U.S. Treasury obligations and/or cash collateral at least equal
to 100% 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. Cash collateral received
is invested in fixed income securities, with a weighted average maturity not to
exceed 90 days, rated in one of the top two tiers by Standard & Poors Ratings
Group or Moody's Investors Service, Inc. or repurchase agreements collateralized
by such securities. However, in the event of default or bankruptcy by the
lending agent, 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 the collateral received is insufficient to cover the value of the
loaned securities and provided such collateral 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 discretion of the lending agent, replace the loaned
securities. The market value of the securities on loan and the related
collateral received at June 30, 1999 were as follows:

Market value
of securities Market value
on loan of collateral
------------- -------------
$15,813,294 $16,290,900

Net income from securities lending activities for the period ended June 30, 1999
was $14,137 and is included in interest income on the statement of operations.

Growth and Income-6

<PAGE>

Delaware Group Premium Fund Inc.-Growth and Income Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund, Inc.-Growth and
Income Series shareholders voted on the following proposals at the annual
meeting of shareholders on March 17, 1999 or as adjourned. The description of
each proposal and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority Abstain
---------- ------------ -------
Jeffrey J. Nick .............. 29,258,511 433,156 -
Walter P. Babich ............. 29,239,412 452,256 -
John H. Durham ............... 29,272,169 419,498 -
Anthony D. Knerr ............. 29,233,952 457,415 -
Ann R. Leven ................. 29,258,257 433,411 -
Thomas F. Madison ............ 29,273,791 417,577 -
Charles E. Peck .............. 29,247,498 444,169 -
Wayne A. Stork ............... 29,265,207 423,460 -
Jan L. Yeomans ............... 29,224,278 467,090 -

3. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).

3A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
27,042,308 751,387 1,897,973

3C. To adopt a new fundamental investment restriction concerning underwriting.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
26,939,607 825,401 1,926,660

<PAGE>

3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
26,965,530 906,394 1,819,743

3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
26,589,004 1,069,458 2,033,206

4. To approve a new investment management agreement with Delaware Management
Company.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
26,949,041 947,427 1,795,199

5. To ratify the selection of Ernst & Young LLP, as the independent auditors
for Delaware Group Premium Fund, Inc.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
27,888,166 329,662 1,473,840

6. To approve the restructuring of Delware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
27,129,907 663,967 1,897,795

Growth and Income-7
<PAGE>
Delaware Group Premium Fund, Inc.-International Equity Series
Statement of Net Assets
June 30, 1999 (Unaudited)

Market
Number Value
of Shares (U.S. $)
COMMON STOCK-95.80%
Australia-11.75%
Amcor Limited ................................ 1,415,000 $ 7,905,279
CSR Limited .................................. 1,904,966 5,474,644
Foster's Brewing Group ....................... 2,411,051 6,829,626
National Australia Bank ...................... 393,757 6,548,671
Orica ........................................ 599,900 3,292,838
-----------
30,051,058
-----------
Belgium-1.66%
Electrabel ................................... 13,115 4,248,670
-----------
4,248,670
-----------
France-8.63%
Alcatel Alsthom .............................. 38,015 5,370,664
Compagnie de Saint Gobain .................... 34,299 5,484,667
Elf Aquitaine ................................ 43,583 6,418,926
+Societe Generale ............................. 27,108 4,794,904
-----------
22,069,161
-----------
Germany-10.17%
+Bayer ........................................ 134,600 5,621,199
Bayerische Hypo-und Vereinsbank .............. 60,900 3,889,044
Continental .................................. 117,200 2,814,206
Rheinisch Westfaelisches Elek ................ 146,000 6,784,839
Siemens ...................................... 89,050 6,894,073
-----------
26,003,361
-----------
Hong Kong-3.34%
Hong Kong Electric ........................... 810,000 2,609,973
Wharf (Holdings) Limited ..................... 1,900,000 5,926,250
-----------
8,536,223
-----------
Japan-15.63%
Canon ........................................ 115,000 3,307,437
+Eisai Limited ................................ 250,000 4,927,684
Hitachi ...................................... 888,000 8,329,584
+Kinki Coca-Cola Bottling ..................... 177,000 3,071,900
Koito Manufacturing .......................... 596,000 2,699,239
Matsushita Electric Industrial ............... 371,000 7,205,369
Nichido Fire & Marine ........................ 783,000 4,031,478
West Japan Railway ........................... 1,669 6,400,130
-----------
39,972,821
-----------
Malaysia-0.74%
Oriental Holdings Berhad ..................... 510,720 1,397,760
Sime Darby Berhad ............................ 380,000 498,000
-----------
1,895,760
-----------
- -----------------
Top 10 holdings, representing 29.86% of net assets, are in bold.

<PAGE>

Market
Number Value
of Shares (U.S. $)

COMMON STOCK (Continued)
Netherlands-4.42%
Elsevier ..................................... 199,500 $ 2,322,928
Koninklijke Van Ommeren ...................... 60,100 1,816,342
Royal Dutch Petroleum ........................ 63,000 3,703,644
Unilever ..................................... 51,286 3,468,825
------------
11,311,739
------------
New Zealand-2.52%
Carter Holt Harvey Limited ................... 1,187,800 1,430,934
+Telecom Corporation of New Zealand ........... 1,164,193 5,026,642
------------
6,457,576
------------
Singapore-0.66%
Jardine Matheson Holdings Limited ............ 336,622 1,683,110
------------
1,683,110
------------
Spain-7.11%
Banco Santander Central
Hispano Americano ........................... 733,492 7,667,559
+Iberdrola .................................... 197,800 3,023,759
+Telefonica de Espana ......................... 154,924 7,489,778
------------
18,181,096
------------
United Kingdom-29.17%
Bass ......................................... 436,964 6,363,729
BG ........................................... 867,647 5,318,071
Blue Circle Industry ......................... 918,236 6,121,017
Boots ........................................ 433,200 5,177,069
British Airways .............................. 889,471 6,125,857
Cable & Wireless ............................. 556,000 7,087,889
*Centrica ..................................... 630,000 1,486,899
GKN .......................................... 482,000 8,263,737
Glaxo Wellcome ............................... 214,470 5,965,846
Great Universal Stores ....................... 438,000 4,905,984
Rio Tinto .................................... 522,100 8,703,967
Taylor Woodrow ............................... 1,365,000 3,943,514
Unigate ...................................... 808,000 5,140,626
------------
74,604,205
------------
Total Common Stock
(cost $195,761,726) ......................... 245,014,780
------------

International Equity-1

<PAGE>

International Equity Series
Statement of Net Assets (Continued)

Market
Principal Value
Amount (U.S.$)
REPURCHASE AGREEMENTS-2.67%
With Chase Manhattan 4.65% 7/1/99
(dated 6/30/99, collateralized by $1,186,000
U.S. Treasury Notes 5.375% due 2/15/01,
market value $1,204,017 and
$593,000 U.S. Treasury Notes 4.65%
due 9/30/01, market value $609,435 and
$508,000 U.S. Treasury Notes 6.125%
due 12/31/01, market value $511,690) ............. $2,268,000 $2,268,000
With J.P. Morgan Securities 4.70% 7/1/99
(dated 6/30/99, collateralized by
$655,000 U.S. Treasury Notes 6.375%
due 8/15/02, market value $679,519 and
$593,000 U. S. Treasury Notes 6.25%
due 8/31/02, market value $611,304 and
$410,000 U.S. Treasury Notes 5.75%
due 11/30/02, market value $411,242 and
$593,000 U.S. Treasury Notes 5.50%
due 1/31/03, market value $598,911) .............. 2,253,000 2,253,000

Market
Principal Value
Amount (U.S.$)
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 4.80% 7/1/99
(dated 6/30/99, collateralized by
$560,000 U.S. Treasury Bills 7.125%
due 2/29/00, market value $579,421 and
$593,000 U.S. Treasury Notes 5.625%
due 11/30/00, market value $595,543
and $1,186,000 U.S. Treasury Notes 5.75%
due 11/30/02, market value $1,186,390) ........... $2,313,000 $2,313,000
----------
Total Repurchase Agreements
(cost $6,834,000) ................................ $6,834,000
----------

TOTAL MARKET VALUE OF SECURITIES-98.47% (cost $202,595,726) ... $251,848,780

RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-1.53% ......... 3,908,444
------------
NET ASSETS APPLICABLE TO 14,671,606 SHARES
($0.01 PAR VALUE) OUTSTANDING;
EQUIVALENT TO $17.43 PER SHARE-100.00% ..................... $255,757,224
============
COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common stock, $0.01 par value, 1,000,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to the Series .................................... $200,625,127
Undistributed net investment income** ......................... 4,345,343
Accumulated net realized gain on investments .................. 1,533,724
Net unrealized appreciation of investments and
foreign currencies ......................................... 49,253,030
------------
Total net assets .............................................. $255,757,224
============
- ----------------
*Non-income producing security for the period ended June 30, 1999.
**Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are
treated as net investment income in accordance with provisions of the Internal
Revenue Code.
+Security is partially or fully on loan.

See accompanying notes

International Equity-2

<PAGE>

Delaware Group Premium Fund, Inc.-
International Equity Series
Statement of Operations
Period Ended June 30, 1999
(Unaudited)

INVESTMENT INCOME:
Dividends ............................................. $ 4,738,830
Interest .............................................. 316,517
Foreign tax withheld .................................. (458,909)
-----------
4,596,438
-----------
EXPENSES:
Management fees ....................................... 968,606
Accounting fees and salaries .......................... 63,449
Reports and statements to shareholders ................ 38,440
Professional fees ..................................... 12,800
Taxes (other than taxes on income) .................... 6,060
Registration fees ..................................... 5,950
Custodian fees ........................................ 5,000
Dividend disbursing and transfer agent fees
and expenses ....................................... 3,512
Directors' fees ....................................... 2,141
Other ................................................. 6,704
-----------
1,112,662
-----------

Less expenses absorbed or waived ...................... (9,643)
Less expenses paid indirectly ......................... (2,869)
-----------
Total expenses ........................................ 1,100,150
-----------

NET INVESTMENT INCOME ................................. 3,496,288
-----------

NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on:
Investments ........................................ 2,397,454
Foreign currencies ................................. 1,202,397
-----------
Net realized gain 3,599,851
Net change in unrealized appreciation/
depreciation of investments and foreign
currencies ......................................... 13,278,957
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN CURRENCIES .............. 16,878,808
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .......................... $20,375,096
===========
See accompanying notes

<PAGE>

Delaware Group Premium Fund, Inc.-
International Equity Series
Statements of Changes in Net Assets

Period Ended Year
6/30/99 Ended
(Unaudited) 12/31/98
------------ ------------
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income .......................... $ 3,496,288 $ 5,415,775
Net realized gain on investments and
foreign currencies .......................... 3,599,851 1,031,088
Net change in unrealized appreciation/
depreciation of investments and
foreign currencies .......................... 13,278,957 14,401,533
------------ ------------
Net increase in net assets resulting
from operations ............................. 20,375,096 20,848,396
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .......................... (5,284,951) (7,631,302)
Net realized gain on investments ............... (385,980) --
------------ ------------
(5,670,931) (7,631,302)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ...................... 59,671,854 66,971,858
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized
gain on investments ......................... 5,670,931 7,631,302
------------ ------------
65,342,785 74,603,160
Cost of shares repurchased ..................... (67,825,767) (43,147,474)
------------ ------------
Increase in net assets derived from
capital share transactions .................. (2,482,982) 31,455,686
------------ ------------

NET INCREASE IN NET ASSETS ..................... 12,221,183 44,672,780
------------ ------------
NET ASSETS:
Beginning of period ............................ 243,536,041 198,863,261
------------ ------------
End of period .................................. $255,757,224 $243,536,041
============ ============
See accompanying notes

International Equity-3

<PAGE>

Delaware Group Premium Fund, Inc.-International Equity Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:

Six Months
Ended 6/30/99 Year Ended December 31,
(Unaudited)(1) 1998 1997 1996 1995 1994
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $16.480 $15.520 $15.110 $13.120 $11.840 $11.620

Income from investment operations:
Net investment income(2) ................................. 0.235 0.386 0.359 0.557 0.419 0.220
Net realized and unrealized gain on investments
and foreign currencies ................................ 1.097 1.169 0.596 1.966 1.191 0.080
------- ------- ------- ------- ------- -------
Total from investment operations ......................... 1.332 1.555 0.955 2.523 1.610 0.300
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ..................... (0.356) (0.595) (0.545) (0.420) (0.240) (0.070)
Distributions from net realized gain on investments ...... (0.026) none none (0.113) (0.090) (0.010)
------- ------- ------- ------- ------- -------
Total dividends and distributions ........................ (0.382) (0.595) (0.545) (0.533) (0.330) (0.080)
------- ------- ------- ------- ------- -------
Net asset value, end of period ........................... $17.430 $16.480 $15.520 $15.110 $13.120 $11.840
======= ======= ======= ======= ======= =======
Total return ............................................. 8.30% 10.33% 6.60% 20.03% 13.98% 2.57%

Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $255,757 $243,536 $198,863 $131,428 $81,548 $57,649
Ratio of expenses to average net assets .................. 0.89% 0.87% 0.85% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 0.90% 0.88% 0.90% 0.91% 0.89% 1.01%
Ratio of net investment income to average net assets ..... 2.83% 2.41% 2.28% 4.71% 3.69% 2.63%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid
indirectly ........................................... 2.82% 2.40% 2.23% 4.60% 3.60% 2.42%
Portfolio turnover ....................................... 0% 5% 7% 8% 19% 13%
</TABLE>
- ------------------
(1)Ratios have been annualized and total return has not been annualized.
(2)Per share information for the years ended December 31, 1997 and 1998 and the
period ended June 30, 1999 was based on the average shares outstanding
method.

See accompanying notes

International Equity-4

<PAGE>

Delaware Group Premium Fund, Inc.-International Equity Series
Notes to Financial Statements
June 30, 1999 (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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the International Equity 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. 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.

Foreign Currency Transactions--Transactions denominated in foreign currencies
are recorded at the prevailing exchange rates on the valuation date. The value
of all assets and liabilities denominated in foreign currencies is translated
into U.S. dollars at the exchange rate of such currencies against the U.S.
dollar as of 3:00 PM EST. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the foreign
currency transaction are reported in operations for the current period. It is
not practical to isolate that portion of both realized and unrealized gains and
losses on investments in equity securities in the statement of operations that
result from fluctuations in foreign currency exchange rates. The Series reports
certain foreign currency related transactions as components of realized gains
(losses) for financial reporting purposes, whereas such components are treated
as ordinary income (loss) for federal income tax purposes.

<PAGE>

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 became
aware of such dividends, net of all non-rebatable tax withholdings. 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 International Equity Series will make payments from net investment income
and net realized gain on investments, if any, following the close of the fiscal
year.

Certain expenses of the Series are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $2,869 for the period ended June 30,
1999. The Series may receive earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. The
expenses paid under the above arrangements are included in their respective
expense captions on the Statement of Operations with the corresponding expense
offset shown as "Expenses paid indirectly".

2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Series
pays Delaware International Advisers Ltd. ("DIAL"), the Investment Manager of
the Series, an annual fee which is calculated at the following rates: 0.85% of
the first $500 million of average daily net assets of the series, 0.80% on the
next $500 million, 0.75% on the next $1,500 million and 0.70% on the average
daily net assets over $2,500 million. These rates became effective May 1, 1999.
The old management fee was calculated at the rate of 0.75% on the average daily
net assets of the Series, less the fees paid to the unaffiliated directors.

DIAL has elected to waive that portion, if any, of the annual management fee
payable to the extent necessary to ensure that annual operating expenses
exclusive of taxes, interest, brokerage commissions and extraordinary expenses
do not exceed 0.95% of average daily net assets of the Series through October
31, 1999.

International Equity-5

<PAGE>

International Equity Series
Notes to Financial Statements (Continued)

On June 30, 1999, the Series had liabilities payable to affiliates as follows:

Certain officers of DMC, DSC and DIAL 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, 1999, the Series made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:

Purchases ..................................... -
Sales ......................................... $6,448,355

The cost of investments for federal income tax purposes approximates the cost
for book purposes. At June 30, 1999, the aggregate cost of securities and
unrealized appreciation (depreciation) for the Series were as follows:

For federal income tax purposes, the Series had accumulated capital losses at
December 31, 1998 as follows:

Year of
expiration
2005
----------
$477,750

4. Capital Stock
Transactions in capital stock shares were as follows:

<TABLE>
<CAPTION>
Shares issued upon
reinvestment of distributions
from net investment
income and net realized Shares Net
Shares sold gain on investments repurchased increase (decrease)
----------- ------------------------------ ----------- -------------------
<S> <C> <C> <C> <C>
Period ended June 30, 1999 .................... 3,566,186 356,215 (4,031,454) (109,053)
Year ended December 31, 1998 .................. 4,191,375 498,862 (2,725,472) 1,964,765
</TABLE>

<PAGE>

There were no forward foreign currency contracts outstanding at June 30, 1999.

International Equity-6

<PAGE>

International Equity Series
Notes to Financial Statements (Continued)

The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Series
may be inhibited. In addition, a significant proportion of the aggregate market
value of equity securities listed on the major securities exchanges in emerging
markets is held by a smaller number of investors. This may limit the number of
shares available for acquisition or disposition by the Series.

7. Securities Lending
The Series may participate, along with other funds in the Delaware Investments
Family of Funds, in a Securities Lending Agreement ("Lending Agreement").
Security loans made pursuant to the Lending Agreement are required at all times
to be secured by U.S. Treasury obligations and/or cash collateral at least equal
to 100% 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. Cash collateral received
is invested in fixed-income securities, with a weighted average maturity not to
exceed 90 days, rated in one of the top two tiers by Standard & Poor's Ratings
Group or Moody's Investors Service, Inc. or repurchase agreements collateralized
by such securities. However, in the event of default or bankruptcy by the
lending agent, 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 the collateral received is insufficient to cover the value of the
loaned securities and provided such collateral 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 discretion of the lending agent, replace the loaned
securities. The market value of the securities on loan and the related
collateral received at June 30, 1999 were as follows:

Market value of
securities on loan Collateral
------------------ ------------
$18,522,907 $19,227,797

Net income from securities lending activities for the period ended June 30, 1999
was $105,716 and is included in interest income on the statement of operations.

International Equity-7

<PAGE>

Delaware Group Premium Fund Inc.-International Equity Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund,
Inc.-International Equity Series shareholders voted on the following proposals
at the annual meeting of shareholders on March 17, 1999 or as adjourned. The
description of each proposal and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority Abstain
---------- ------------ -------
Jeffrey J. Nick ................ 13,976,052 889,202 -
Walter P. Babich ............... 13,945,188 920,065 -
John H. Durham ................. 13,979,123 886,131 -
Anthony D. Knerr ............... 13,954,354 910,899 -
Ann R. Leven ................... 13,965,031 900,222 -
Thomas F. Madison .............. 13,978,477 886,776 -
Charles E. Peck ................ 13,942,063 923,190 -
Wayne A. Stork ................. 13,969,396 895,858 -
Jan L. Yeomans ................. 13,960,563 904,690 -

2. To approve the reclassification of the investment objective from fundamental
to non-fundamental.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
12,681,397 1,293,565 890,291

3. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).

3A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
13,010,798 1,043,661 810,794

3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
12,894,701 1,516,842 815,588

3C. To adopt a new fundamental investment restriction concerning underwriting.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
12,956,342 1,097,744 811,167

<PAGE>

3D. To adopt a new fundamental investment restriction concerning investments in
real estate.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
12,868,863 1,190,868 805,522

3E. To adopt a new fundamental investment restriction concerning investments in
commodities.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
12,819,061 1,506,194 812,999

3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
12,856,729 1,208,670 799,855

3G. To reclassify all current fundamental investment restrictions as
non-fundamental.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
12,803,559 1,230,168 831,527

4. To approve a new investment management agreement with Delaware International
Advisers Ltd.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
12,819,945 1,481,660 807,749

5. To ratify the selection of Ernst & Young LLP, as the independent auditors for
Delaware Group Premium Fund, Inc.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
14,042,881 156,767 665,605

6. To approve the restructuring of Delware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- -------
13,155,415 893,575 816,263

International Equity-8

<PAGE>
Delaware Group Premium Fund, Inc.-REIT Series
Statement of Net Assets
June 30, 1999 (Unaudited)

Number of Market
Shares Value
COMMON STOCK-95.44%
Hotels/Diversified REITs-11.81%
*Catellus Development ........... 21,700 $ 336,350
Franchise Finance .............. 9,400 206,800
Glenborough Realty Trust ....... 7,000 122,500
Starwood Hotels & Resorts Trust 13,370 408,621
---------
1,074,271
---------
Mall REITs-5.29%
General Growth Properties ...... 4,350 154,425
*Macerich ....................... 3,300 86,625
Simon Property Group ........... 9,450 239,794
---------
480,844
---------
Manufactured Housing REITs-7.94%
Chateau Communities ............ 12,060 361,046
Sun Communities ................ 10,160 360,680
---------
721,726
---------
Multifamily REITs-14.93%
Apartment Investment
& Management ................. 8,410 359,527
AvalonBay Communities .......... 10,473 387,505
Essex Property Trust ........... 9,160 324,035
Grove Property Trust ........... 22,050 286,650
---------
1,357,717
---------
Office/Industrial REITs-40.77%
Alexandria Real Estate Equities 12,170 380,312
AMB Property ................... 10,990 258,265
Cabot Industrial Trust ......... 15,000 318,750

- ----------
Top 10 stock holdings, representing 40.08% of net assets, are in bold.
<PAGE>

Number of Market
Shares Value
COMMON STOCK (Continued)
Office/Industrial REITs (Continued)
CarrAmerica Realty ............. 10,280 $ 257,000
Duke Realty Investments ........ 13,500 304,594
Equity Office Properties Trust . 13,690 350,806
Liberty Property Trust ......... 8,360 207,955
Prentiss Properties Trust ...... 11,880 279,180
Reckson Associates Realty ...... 14,890 349,915
SL Green Realty ................ 16,890 345,189
Spieker Properties ............. 8,115 315,471
Trizec Hahn .................... 16,700 340,263
---------
3,707,700
---------
Retail Strip Center REITs-10.94%
First Washington Realty Trust .. 10,400 243,100
JDN Realty ..................... 12,870 287,966
Kimco Realty ................... 6,000 234,750
Pan Pacific Retail Properties .. 11,790 229,168
---------
994,984
---------
Self Storage REITs-3.76%
Public Storage ................. 12,200 341,600
---------
341,600
---------
Total Common Stock
(cost $8,407,880) .............. 346,608 8,678,842
---------

REIT-1
<PAGE>
REIT Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
REPURCHASE AGREEMENTS-4.88%
With Chase Manhattan 4.65% 7/1/99
(dated 6/30/99, collateralized by $77,000
U.S. Treasury Notes 5.375% due 2/15/01,
market value $78,227 and $33,000
U.S. Treasury Notes 6.125% due 12/31/01,
market value $33,245 and $38,000
U.S. Treasury Notes 6.375% due 9/30/01,
market value $39,596)........................... $148,000 $148,000
With J.P. Morgan 4.70% 7/1/99
(dated 6/30/99 collateralized by $39,000
U.S. Treasury Notes 5.50% due 1/31/03,
market value $38,912 and $27,000
U.S. Treasury Notes 5.75% due 11/30/02,
market value $26,654 and $39,000
U.S. Treasury Notes 6.25% due 8/31/02,
market value $39,717 and $43,000
U.S. Treasury Notes 6.375% due 8/15/02,
market value $44,149)........................... 146,000 146,000

Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 4.80% 7/1/99
(dated 6/30/99, collateralized by $39,000
U.S. Treasury Notes 5.625% due 11/30/00,
market value $38,693 and $77,000
U.S. Treasury Notes 5.75% due 11/30/02,
market value $77,081 and $36,000
U.S. Treasury Notes 7.125% due 2/29/00,
market value $37,646)........................... $150,000 $150,000
--------
Total Repurchase Agreements
(cost $444,000)................................. 444,000
--------

TOTAL MARKET VALUE OF SECURITIES-100.32% (Cost $8,851,880)....... $9,122,842

LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS-(0.32%).......... (29,011)
--------

NET ASSETS APPLICABLE TO 970,119 SHARES ($.01 PAR VALUE)
OUTSTANDING; EQUIVALENT TO $9.37 PER SHARE-100.00%............ $9,093,831
==========

COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common Stock, $0.01 par value, 1,000,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to the Series....................................... $8,955,019
Undistributed net investment income.............................. 173,440
Accumulated net realized loss on investments..................... (305,590)
Net unrealized appreciation of investments....................... 270,962
----------
Total net assets................................................. $9,093,831
==========

- ----------
* Non-income producing security for the six months ended June 30, 1999.
Reit - Real Estate Investment Trust

See accompanying notes

REIT-2

<PAGE>

Delaware Group Premium Fund, Inc.-
REIT Series
Statement of Operations
Six Months Ended June 30, 1999 (Unaudited)

INVESTMENT INCOME:
Dividends ............................. $ 192,659
Interest .............................. 12,045
---------
204,704
---------

EXPENSES:
Management fees ....................... 26,395
Reports and statements to shareholders 4,757
Accounting and administration ......... 1,405
Custodian fees ........................ 700
Taxes (other than taxes on income) .... 251
Dividend disbursing and transfer agent
fees and expenses .................. 202
Directors' fees ....................... 200
Registration fees ..................... 130
Professional fees ..................... 100
Other ................................. 354
---------
34,494

Less expenses absorbed or waived by
Delaware Management Company ........ (5,115)
Less expenses paid indirectly ......... (81)
---------
Total Operating Expenses .............. 29,298
---------

NET INVESTMENT INCOME ................. 175,406
---------

NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments ...... (129,579)
Net change in unrealized appreciation /
depreciation of investments ........ 374,361
---------

NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ..................... 244,782
---------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .......... $ 420,188
=========

See accompanying notes

<PAGE>

Delaware Group Premium Fund, Inc.- REIT
Series Statements of Changes in Net Assets

Six Months 5/4/98*
Ended 6/30/99 to
(Unaudited) 12/31/98
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ................. $ 175,406 $ 132,582
Net realized loss on investments ...... (129,579) (176,011)
Net change in unrealized appreciation/
depreciation of investments ........ 374,361 (103,399)
----------- -----------
Net increase (decrease) in net assets
resulting from operations .......... 420,188 (146,828)
----------- -----------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................. (134,548) --
----------- -----------
(134,548) --
----------- -----------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ............. 3,652,896 5,925,102
Net asset value of shares issued
upon reinvestment of distributions
from net investment income ......... 134,548 --
----------- -----------
3,787,444 5,925,102
----------- -----------

Cost of shares repurchased ............ (541,045) (216,482)
Increase in net assets derived from
capital share transactions ......... 3,246,399 5,708,620
----------- -----------

NET INCREASE IN NET ASSETS ............ 3,532,039 5,561,792
----------- -----------

NET ASSETS:
Beginning of period ................... 5,561,792 --
----------- -----------
End of period ......................... $ 9,093,831 $ 5,561,792
=========== ===========

- ----------
*Date of commencement of operations.

See accompanying notes

REIT-3
<PAGE>

Delaware Group Premium Fund, Inc.-REIT Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Six Months
Ended 5/4/98(1)
6/30/99(2) to
(Unaudited) 12/31/98
--------- ----------
<S> <C> <C>
Net asset value, beginning of period ...................... $ 9.100 $ 10.000

Income (loss) from investment operations:
Net investment income ..................................... 0.152 0.217
Net realized and unrealized gain (loss) on investments .... 0.118 (1.117)
--------- ----------
Total from investment operations .......................... 0.270 (0.900)
--------- ----------

Net asset value, end of period ............................ $ 9.370 $ 9.100
========= ==========

Total return .............................................. 5.25% (9.00%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) ................... $ 9,094 $ 5,562
Ratio of expenses to average net assets ................... 0.85% 0.85%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........ 1.00% 1.02%
Ratio of net investment income to average net assets ...... 5.02% 6.42%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 4.87% 6.25%
Portfolio turnover ........................................ 50% 39%
</TABLE>

- ----------
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) Ratios have been annualized and total return has not been annualized.

See accompanying notes

REIT-4

<PAGE>

Delaware Group Premium Fund, Inc.-REIT Series
Notes to Financial Statements
June 30, 1999
(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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the REIT 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.

Federal Income Taxes--The Series intends 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.

The REIT Series will make payments from net investment income and net realized
gain on investments, if any, following the close of the fiscal year.

Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $81 for the period ended June 30,
1999. In addition, the Fund receives earnings credits from its custodian when
positive cash balances are maintained, which are used to offset custody fees.
There were no earnings credits for the six months ended June 30, 1999. The
expenses paid under the above arrangements are included in their respective
expense captions on the Statement of Operations with the corresponding expense
offset shown as "Expenses paid indirectly".

DMC has elected to waive that portion, if any, of the annual management fee
payable to the extent necessary to ensure that annual operating expenses
exclusive of taxes, interest, brokerage commissions and extraordinary expenses
do not exceed 0.85% of average daily net assets of the Series through October
31, 1999.

REIT-5

<PAGE>

REIT Series
Notes to Financial Statements (Continued)

At June 30,1999, the Series had liabilities payable to affiliates as follows:
Dividend disbursing Other
Investment transfer agent, expenses
management accounting fees payable
fee payable to and other expenses to DMC
DMC payable to DSC and affiliates
-------------- ------------------ --------------
$4,067 $308 $621

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 six months ended June 30, 1999, the Series made purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments as follows:

Purchases....... $4,929,851
Sales .......... $1,633,904

At June 30, 1999, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes for the Series were as follows:

4. Capital Stock
Transactions in capital stock shares were as follows:

<TABLE>
<CAPTION>
Shares issued upon
reinvestment of
distributions from net
investment income
and net realized gain Shares Net
Shares sold on investments repurchased increase
----------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Period ended June 30, 1999 .............. 403,313 15,718 (60,312) 358,719
Period ended December 31, 1998*.......... 636,299 -- (24,899) 611,400
</TABLE>

- ----------
**The REIT Series commenced operations on 5/4/98.

REIT-6
<PAGE>

Delaware Group Premium Fund Inc.-REIT Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund, Inc. - REIT
Series shareholders voted on the following proposals at the annual meeting of
shareholders on March 17, 1999 or as adjourned. The description of each proposal
and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority Abstain
------- --------- -------
Jeffrey J. Nick................ 441,885 8,883 0
Walter P. Babich............... 443,738 7,030 0
John H. Durham................. 443,738 7,030 0
Anthony D. Knerr............... 443,738 7,030 0
Ann R. Leven................... 443,738 7,030 0
Thomas F. Madison.............. 443,738 7,030 0
Charles E. Peck................ 443,738 7,030 0
Wayne A. Stork................. 441,885 8,883 0
Jan L. Yeomans................. 444,287 6,481 0

2. To approve standardized fundamental investment restrictions (proposal)
involves separate votes on seven sub-proposals 3A-3G).

2A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
384,388 20,790 45,590

2B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
414,136 22,775 13,857

2C. To adopt a new fundamental investment restriction concerning underwriting.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
381,475 23,344 45,949

2D. To adopt a new fundamental investment restriction concerning investments in
real estate.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
381,898 22,956 45,915

2D. To adopt a new fundamental investment restriction concerning investments in
commodities.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
410,855 24,809 15,105

2F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
385,838 53,587 11,343

2G. To reclassify all current fundamental investment restrictions as
non-fundamental.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
413,059 22,256 15,454

3. To approve a new investment management agreement with Delaware Management
Company.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
412,199 21,855 16,715
<PAGE>

4. To approve a new Sub-Advisory Agreement.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
419,899 20,980 9,889

5. To ratify the selection of Ernst & Young LLP, as the independent auditors for
Delaware Group Premium Fund, Inc.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
438,772 4,010 7,986

6. To approve the restructuring of Delware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.
Shares Shares
Voted Voted
For Against Abstain
------- ------- -------
411,315 21,403 18,051

REIT-7

<PAGE>

Delaware Group Premium Fund, Inc.-Small Cap Value Series
Statement of Net Assets
June 30, 1999 (Unaudited)

Number Market
of Shares Value
COMMON STOCK-94.92%
Aerospace & Defense-0.66%
Cordant Technologies .................... 15,000 $ 677,812
----------
677,812
----------
Automobiles & Automotive Parts-7.93%
Arvin Industries ........................ 37,500 1,420,312
Borg-Wagner Automotive .................. 41,408 2,277,440
CLARCOR ................................. 52,750 1,012,140
Federal Signal .......................... 68,900 1,459,819
Harsco .................................. 25,300 809,600
Smith (A.O.) ............................ 43,450 1,200,306
----------
8,179,617
----------
Banking, Finance & Insurance-14.71%
*Avis Rent-A-Car ......................... 61,400 1,788,275
Enhance Financial Services Group ........ 66,200 1,307,450
Everest Re Holdings ..................... 32,400 1,057,050
*Farm Family Holdings .................... 29,300 1,001,694
*Financial Federal ....................... 49,950 1,098,900
Horace Mann Educators ................... 71,600 1,946,625
Liberty Financial Companies ............. 28,800 835,200
North Fork Bancorporation ............... 83,650 1,782,790
Peoples Heritage Financial Group ........ 100,800 1,899,450
Radian Group ............................ 18,000 878,625
Westamerica Bancorporation .............. 43,000 1,568,156
----------
15,164,215
----------
Buildings & Materials-4.16%
D.R. Horton ............................. 85,300 1,418,112
*Griffon ................................. 81,800 639,062
*Jacobs Engineering Group ................ 50,800 1,930,400
*Toll Brothers ........................... 14,200 304,413
----------
4,291,987
----------
Cable, Media & Publishing-1.22%
*World Color Press ....................... 45,900 1,262,250
----------
1,262,250
----------
Chemicals-5.46%
Crompton & Knowles ...................... 43,900 858,794
Hanna (M.A.) ............................ 60,100 987,894
OM Group ................................ 31,300 1,079,850
*Scotts .................................. 56,700 2,700,337
----------
5,626,875
----------
Computers & Technology-4.12%
*Etec Systems ............................ 33,200 1,099,750
*Metamor Worldwide ....................... 17,200 412,800
*Metro Information Services .............. 26,800 443,875
*Synopsys ................................ 41,500 2,288,984
----------
4,245,409
----------
Energy-6.97%
*BJ Services ............................. 25,600 753,600
Nicor ................................... 44,300 1,686,169
NUI ..................................... 26,900 669,138
*Ocean Energy ............................ 77,600 746,900
*Oceaneering International ............... 71,100 1,146,487

- ----------
Top 10 stock holdings, representing 22.16% of net assets, are in bold.

<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Energy (Continued)
*Santa Fe Snyder ........................... 81,400 $ 620,675
Valero Energy ............................. 36,000 771,750
*Weatherford International ................. 21,500 787,437
----------
7,182,156
----------
Food, Beverage & Tobacco-4.81%
Corn Products ............................. 45,400 1,381,862
*Suiza Foods ............................... 33,200 1,390,250
Universal Foods ........................... 103,500 2,186,437
----------
4,958,549
----------
Healthcare & Pharmaceuticals-2.22%
*Trigon Healthcare ......................... 62,900 2,287,988
----------
2,287,988
----------
Industrial Machinery-6.24%
Columbus McKinnon ......................... 37,900 900,125
Hussmann International .................... 59,900 992,094
IDEX ...................................... 37,850 1,244,319
Milacron .................................. 57,700 1,067,450
Regal-Beloit .............................. 42,600 1,006,425
Varian Medical Systems .................... 48,600 1,227,150
----------
6,437,563
----------
Metals & Mining-2.91%
*Bethlehem Steel ........................... 78,900 606,544
LTV ....................................... 93,400 624,613
*Mueller Industries ........................ 33,300 1,130,119
Watts Industries .......................... 33,100 635,106
----------
2,996,382
----------
Paper & Forest Products-2.46%
Caraustar Industries ...................... 32,600 802,775
Chesapeake ................................ 16,900 632,694
Rayonier .................................. 22,200 1,105,837
----------
2,541,306
----------
Real Estate-9.26%
Cabot Industrial Trust .................... 61,100 1,298,375
Chateau Communities ....................... 24,215 724,936
Duke-Weeks Realty ......................... 47,300 1,067,206
Kilroy Realty ............................. 35,900 872,819
MeriStar Hospitality ...................... 46,345 1,039,866
New Plan Excel Realty Trust ............... 45,480 818,640
Pan Pacific Retail Properties ............. 56,700 1,102,106
Prentiss Properties Trust ................. 53,000 1,245,500
Reckson Associates Realty ................. 58,800 1,381,800
----------
9,551,248
----------
Retail-7.70%
*BJ's Wholesale Club ....................... 80,800 2,429,050
Casey's General Stores .................... 78,700 1,178,041
Pier 1 Imports ............................ 129,300 1,454,625
*Zale ...................................... 72,000 2,880,000
----------
7,941,716
----------
Telecommunications-0.70%
*Brightpoint ............................... 119,400 727,594
----------
727,594
----------

Small Cap Value-1

<PAGE>

Small Cap Value Series
Statement of Net Assets (Continued)

Number Market
of Shares Value
COMMON STOCK (Continued)
Textiles, Apparel & Furniture-6.63%
*Furniture Brands International .......... 56,900 $1,586,088
HON Industries .......................... 65,900 1,923,456
Kellwood ................................ 54,000 1,464,750
Springs Industries-Class A .............. 19,300 841,963
Wolverine World Wide .................... 72,600 1,016,400
----------
6,832,657
----------
Transportation & Shipping-4.18%
Alexander & Baldwin ..................... 34,600 767,688
*Mesaba Holdings ......................... 61,500 782,203
*M.S. Carriers ........................... 41,400 1,227,769
USFreightways ........................... 33,200 1,528,238
----------
4,305,898
----------
Utilities-1.50%
California Water Service Group .......... 23,800 621,775
Sierra Pacific Resources ................ 25,300 920,288
----------
1,542,063
----------
Miscellaneous-1.08%
*Modis Professional Services ............. 81,300 1,117,875
----------
1,117,875
----------
Total Common Stock
(cost $88,304,985) ..................... 97,871,160
----------

Principal Market
Amount Value
REPURCHASE AGREEMENTS-5.00%
With Chase Manhattan 4.65% 7/1/99
(dated 6/30/99, collateralized by $894,000
U.S. Treasury Notes 6.375% due 2/15/01,
market value $907,710 and $447,000
U.S. Treasury Notes 6.375% due 9/30/01,
market value $459,454 and $383,000
U.S. Treasury Notes 6.125% due 12/31/01
market value $385,764) ......................... $1,710,000 $1,710,000
With J.P. Morgan Securities 4.70%
7/1/99 (dated 6/30/99, collateralized
by $494,000 U.S. Treasury Notes 6.375%
due 8/15/02, market value $512,290
and $447,000 U.S. Treasury Notes
6.25% due 8/31/02, market value
$460,863 and $309,000 U.S. Treasury
Notes 5.75% due 11/30/02, market value
$309,282 and $447,000 U.S Treasury
Notes 5.50% due 1/31/03,
market value $451,520) ......................... 1,699,000 1,699,000
With PaineWebber 4.80% 7/1/99
(dated 6/30/99, collateralized by
$422,000 U.S. Treasury Notes 7.125%
due 2/29/00, market value $436,826
and $447,000 U.S. Treasury Notes
5.625% due 11/30/00, market value
$448,981 and $894,000 U.S. Treasury
Notes 5.75% due 11/30/02,
market value $894,421) ......................... 1,743,000 1,743,000
----------
Total Repurchase Agreements
(cost $5,152,000) .............................. 5,152,000
----------
<PAGE>

<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES-99.92% (cost $93,456,985) .......................... $103,023,160

RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-0.08% ............................... 78,678
------------

NET ASSETS APPLICABLE TO 6,160,046 SHARES ($0.01, PAR VALUE) OUTSTANDING;
EQUIVALENT TO $16.74 PER SHARE-100.00% ........................................... $103,101,838
============

COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common Stock, $0.01 par value, 1,000,000,000 shares authorized to the Fund with
50,000,000 shares allocated to the Series ........................................ $ 92,856,763
Undistributed net investment income ................................................. 502,333
Accumulated net realized gain on investments ........................................ 176,567
Net unrealized appreciation of investments .......................................... 9,566,175
------------
Total net assets .................................................................... $103,101,838
============
</TABLE>

- ----------
*Non-income producing security for the period ended June 30, 1999.

See accompanying notes

Small Cap Value-2

<PAGE>

Delaware Group Premium Fund, Inc.-
Small Cap Value Series
Statement of Operations
For the Six Months Ended June 30, 1999
(Unaudited)

INVESTMENT INCOME:
Dividends ............................................... $ 789,441
Interest ................................................ 128,207
-----------
917,648
-----------
EXPENSES:
Management fees ......................................... 366,243
Accounting and administration ........................... 19,056
Professional fees ....................................... 6,050
Reports and statements to shareholders .................. 3,750
Registration fees ....................................... 2,750
Custodian fees .......................................... 2,591
Taxes (other than taxes on income) ...................... 1,980
Dividend disbursing and transfer agent
fees and expenses .................................... 1,400
Directors' fees ......................................... 1,313
Other ................................................... 7,668
-----------
412,801
Less expenses paid indirectly ........................... (1,124)
-----------
Total expenses .......................................... 411,677
-----------

NET INVESTMENT INCOME ................................... 505,971
-----------

NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments ........................ 1,511,718
Net change in unrealized appreciation /
depreciation of investments .......................... 1,301,135
-----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS .................................. 2,812,853
-----------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................ $ 3,318,824
===========

See accompanying notes

<PAGE>

Delaware Group Premium Fund, Inc.-
Small Cap Value Series
Statements of Changes in Net Assets

Six Months Year
Ended 6/30/99 Ended
(Unaudited) 12/31/98
----------- --------

INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income .................... $ 505,971 $ 1,245,041
Net realized gain (loss) on investments .. 1,511,718 (827,096)
Net change in unrealized appreciation /
depreciation of investments ........... 1,301,135 (5,586,278)
------------- -------------
Net increase (decrease) in net assets
resulting from operations ............. 3,318,824 (5,168,333)
------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .................... (1,227,218) (638,385)
Net realized gain on investments ......... (503,474) (2,340,745)
------------- -------------
(1,730,692) (2,979,130)
------------- -------------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ................ 8,489,139 34,478,733
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized
gain on investments ................... 1,730,692 2,979,130
------------- -------------
10,219,831 37,457,863
Cost of shares repurchased ............... (12,695,549) (9,392,119)
------------- -------------
Increase (Decrease) in net assets derived
from capital share transactions ....... (2,475,718) 28,065,744
------------- -------------

NET INCREASE (DECREASE)
IN NET ASSETS ......................... (887,586) 19,918,281
------------- -------------

NET ASSETS:
Beginning of period ...................... 103,989,424 84,071,143
------------- -------------
End of period ............................ $ 103,101,838 $ 103,989,424
============= =============

See accompanying notes

Small Cap Value-3

<PAGE>

Delaware Group Premium Fund, Inc.-Small Cap Value Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:

<TABLE>
<CAPTION>
Six Months
Ended 6/30/99 Year Ended December 31,
(Unaudited)(1) 1998 1997 1996 1995 1994
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $16.450 $17.920 $14.500 $12.470 $10.290 $10.210

Income (loss) from investment operations:
Net investment income ..................................... 0.083 0.196 0.122 0.112 0.192 0.148
Net realized and unrealized gain (loss) on investments .... 0.482 (1.036) 4.338 2.548 2.208 (0.068)
------- ------- ------- ------- ------- -------
Total from investment operations .......................... 0.565 (0.840) 4.460 2.660 2.400 0.080
------- ------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income ...................... (0.195) (0.135) (0.110) (0.180) (0.150) none
Distributions from net realized gain on investments ....... (0.080) (0.495) (0.930) (0.450) (0.070) none
------- ------- ------- ------- ------- -------
Total dividends and distributions ......................... (0.275) (0.630) (1.040) (0.630) (0.220) none
------- ------- ------- ------- ------- -------

Net asset value, end of period ............................ $16.740 $16.450 $17.920 $14.500 $12.470 $10.290
======= ======= ======= ======= ======= =======

Total return .............................................. 3.69% (4.79%) 32.91% 22.55% 23.85% 0.78%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ................... $103,101 $103,989 $84,071 $23,683 $11,929 $6,291
Ratio of expenses to average net assets ................... 0.85% 0.83% 0.80% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 0.85% 0.85% 0.90% 0.99% 0.96% 1.41%
Ratio of net investment income to average net assets ...... 1.04% 1.32% 1.24% 1.28% 2.13% 2.62%
Ratio of net investment income to average net
assets prior to expense limitation and expenses
paid indirectly ........................................ 1.04% 1.30% 1.14% 1.09% 1.97% 2.01%
Portfolio turnover ........................................ 49% 45% 41% 84% 71% 26%
</TABLE>
- ----------
(1)Ratios have been annualized and total return has not been annualized.

See accompanying notes

Small Cap Value-4

<PAGE>

Delaware Group Premium Fund, Inc.-Small Cap Value Series
Notes to Financial Statements
June 30, 1999
(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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the Small Cap Value 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.

<PAGE>

The Small Cap Value Series will make payments from net investment income and net
realized gain on investments, if any, once a year.

Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $1,124 for the period ended June 30,
1999. In addition, the Fund receives earnings credits from its custodian when
positive cash balances are maintained, which are used to offset custody fees.
These credits were $0 for the period ended June 30, 1999. The expenses paid
under the above arrangements are included in their respective expense captions
on the Statement of Operations with the corresponding expense offset shown as
"Expenses paid indirectly".

DMC has elected to waive that portion, if any, of the annual management fee
payable to the extent necessary to ensure that annual operating expenses
exclusive of taxes, interest, brokerage commissions and extraordinary expenses
do not exceed 0.85% of average daily net assets of the Series through October
31, 1999.

Small Cap Value-5

<PAGE>

Small Cap Value Series
Notes to Financial Statements (Continued)

On June 30, 1999, the Series had liabilities payable to affiliates as follows:

Dividend disbursing
Investment transfer agent,
management accounting fees
fee payable to and other expenses
DMC payable to DSC
-------------- ------------------
$72,985 $3,408

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, 1999, the Series made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:

Purchases ....................................... $22,723,729
Sales ........................................... $25,784,150

For federal income tax purposes, the Series had accumulated capital losses at
December 31, 1998 as follows:

Year of
expiration
2006
----------
$807,647

4. Capital Stock
Transactions in capital stock shares were as follows:

<TABLE>
<CAPTION>
Shares issued upon
reinvestment of distributions
from net investment
income and net realized Shares Net
Shares sold gain on investments repurchased decrease
----------- ----------------------------- ----------- --------
<S> <C> <C> <C> <C>
Period ended June 30, 1999 ...................... 543,769 118,948 (822,801) (160,084)
Year ended December 31, 1998 .................... 2,030,407 175,656 (578,317) 1,627,746
</TABLE>

Small Cap Value-6

<PAGE>

Delaware Group Premium Fund, Inc.-Small Cap Value Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund, Inc. - Small Cap
Value Series shareholders voted on the following proposals at the annual meeting
of shareholders on March 17, 1999 or as adjourned. The description of each
proposal and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority Abstain
--------- --------- -------
Jeffrey J. Nick .............. 6,181,225 121,968 --
Walter P. Babich ............. 6,179,529 123,665 --
John H. Durham ............... 6,182,255 120,939 --
Anthony D. Knerr ............. 6,177,651 125,543 --
Ann R. Leven ................. 6,182,982 120,212 --
Thomas F. Madison ............ 6,183,345 119,848 --
Charles E. Peck .............. 6,179,468 123,725 --
Wayne A. Stork ............... 6,183,224 119,969 --
Jan L. Yeomans ............... 6,183,345 119,848 --

3. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).

3B. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
5,752,263 123,526 427,405

3C. To adopt a new fundamental investment restriction concerning underwriting.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
5,753,803 148,969 400,421

<PAGE>

3D. To adopt a new fundamental investment restriction concerning investments in
real estate.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
5,716,972 179,717 406,505

3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
5,712,705 189,132 401,356

3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
5,721,522 175,476 406,196

4. To approve a new investment management agreement with Delaware Management
Company.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
5,753,541 132,979 416,674

6. To approve the restructuring of Delaware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
--------- ------- -------
5,750,960 120,330 431,904

Small Cap Value-7

<PAGE>
Delaware Group Premium Fund, Inc.-Social Awareness Series
Statement of Net Assets
June 30, 1999 (Unaudited)

Number of Market
Shares Value
COMMON STOCK-97.11%
Banking, Finance & Insurance-23.37%
A. G. Edwards ..................... 4,745 $ 153,026
Allstate .......................... 8,880 318,570
Ambac Financial Group ............. 500 28,562
American Express .................. 2,800 364,350
American International Group ...... 2,700 316,069
AmSouth Bancorporation ............ 4,455 103,300
Bank One .......................... 3,512 209,183
Chase Manhattan ................... 6,210 537,941
Citigroup ......................... 10,335 490,912
City National ..................... 4,025 150,686
Comerica .......................... 2,662 158,223
Conseco ........................... 3,700 112,619
Countrywide Credit Industries ..... 6,000 256,500
Dime Bancorp ...................... 12,800 257,600
Fannie Mae ........................ 5,600 382,900
First American Financial .......... 8,900 159,087
First Union ....................... 4,670 219,490
Freddie Mac ....................... 1,800 104,400
*FIRSTPLUS Financial Group ......... 6,800 2,125
Hibernia Class A .................. 11,500 180,406
J. P. Morgan ...................... 1,600 224,800
John Nuveen ....................... 3,000 128,063
Marsh & McLennan .................. 3,215 242,733
Mellon Bank ....................... 4,210 153,139
Metris ............................ 11,510 469,033
Morgan Stanley Dean Witter ........ 3,000 307,500
National City ..................... 3,610 236,455
Old Republic International ........ 8,090 140,058
PaineWebber Group ................. 3,870 180,923
PNC Financial Group ............... 3,800 218,975
Reliance Group Holdings ........... 8,870 65,971
SLM Holding ....................... 3,002 137,529
T. Rowe Price Associates .......... 2,200 84,356
UICI .............................. 11,000 303,875
Unionbancal Corporation ........... 8,500 307,063
Washington Mutual ................. 4,000 141,500
----------
7,847,922
----------
Buildings & Materials-1.16%
Kaufman & Broad Home .............. 8,000 199,000
Premark International ............. 5,100 191,250
----------
390,250
----------
Cable, Media & Publishing-5.69%
Dun and Bradstreet ................ 4,805 170,277
Gannett ........................... 2,070 147,746
McGraw-Hill ....................... 5,800 312,838
New York Times .................... 10,200 375,488
Omnicom Group ..................... 1,200 96,000
Reynolds & Reynolds Class A ....... 6,700 156,194
R.H. Donnelley .................... 5,361 104,875
*Snyder Communications ............. 3,700 121,175
Time Warner ....................... 2,200 158,400
*Valassis Communications ........... 5,400 197,775
*World Color Press ................. 2,500 68,750
----------
1,909,518
----------
- ----------
Top 10 stock holdings, representing 19.5% of net assets, are in bold.

<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Chemicals-0.86%
Lubrizol ............................... 10,300 $ 289,044
----------
289,044
----------
Computers & Technology-18.44%
*America Online ......................... 2,200 243,100
*American Power Conversion .............. 9,850 197,923
*Apple Computer ......................... 7,700 357,087
*BMC Software ........................... 6,300 340,003
*Cisco Systems .......................... 12,200 785,756
Compaq Computer ........................ 5,000 118,437
Computer Associates International ...... 8,600 473,000
*Compuware .............................. 7,100 225,647
Comverse Technology .................... 5,000 377,187
*Dell Computer .......................... 7,500 277,266
Deluxe ................................. 3,315 129,078
*EMC .................................... 10,140 557,700
Keane .................................. 1,900 42,987
*Lexmark International Group ............ 7,200 475,650
*Microsoft .............................. 16,160 1,456,420
SunGard Data Systems ................... 4,000 138,000
----------
6,195,241
----------
Consumer Products-2.82%
Avon Products .......................... 4,060 225,330
Clorox ................................. 1,690 180,513
Corning ................................ 2,500 175,312
Gillete ................................ 3,300 135,300
United Stationers ...................... 10,400 229,125
----------
945,580
----------
Electronics & Electrical Equipment-1.41%
General Cable .......................... 9,000 144,000
*Waters ................................. 6,200 329,375
----------
473,375
----------
Energy-0.34%
Helmerich & Payne ...................... 2,980 70,961
Questar ................................ 2,300 44,563
----------
115,524
----------
Food & Beverage-3.26%
*Agribrands International ............... 27 1,068
General Mills .......................... 3,200 257,200
International Multifoods ............... 920 20,757
Interstate Bakeries .................... 1,870 41,958
Keebler Foods .......................... 9,300 282,487
Quaker Oats ............................ 3,925 260,522
*Suiza Foods ............................ 3,900 163,313
Universal Foods ........................ 3,200 67,600
----------
1,094,905
----------
Healthcare & Pharmaceuticals-8.03%
*AmeriSource Health Class A ............. 5,300 135,150
*Amgen .................................. 6,400 389,400
Bergen Brunswig Class A ................ 12,294 212,073
Boston Scientific ...................... 4,000 175,750
Cardinal Health ........................ 3,553 227,836
C.R. Bard .............................. 5,100 243,844
Eli Lilly .............................. 2,600 186,225

Social Awareness-1
<PAGE>
Social Awareness Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
COMMON STOCK (Continued)
Healthcare & Pharmaceuticals (Continued)
*Health Management Associates Class A ... 12,250 $ 137,812
*Lincare Holdings ....................... 2,590 64,831
McKesson ............................... 2,941 94,480
Medtronic .............................. 5,294 412,271
Mylan Laboratories ..................... 6,200 164,300
*Rexall Sundown ......................... 12,900 156,816
Steris ................................. 5,000 96,875
----------
2,697,663
----------
Industrial Machinery-1.80%
Ingersoll-Rand ......................... 6,100 394,212
Tredegar Industries .................... 9,600 208,800
----------
603,012
----------
Leisure, Lodging & Entertainment-2.08%
*Brinker International .................. 9,800 266,437
McDonald's ............................. 6,200 256,138
Walt Disney ............................ 5,700 175,631
----------
698,206
----------
Metals & Mining-0.46%
Cleveland Cliffs Iron .................. 4,800 155,400
----------
155,400
----------
Packaging & Containers-0.10%
*Sealed Air ............................. 500 32,438
----------
32,438
----------
Retail-9.24%
Dayton Hudson .......................... 1,000 65,000
*Dollar Tree Stores ..................... 3,500 153,891
Gap .................................... 6,770 341,014
Home Depot ............................. 7,600 489,725
Jostens ................................ 7,245 152,598
Lowe's Companies ....................... 3,800 215,412
Ross Stores ............................ 5,730 288,112
*Safeway ................................ 4,460 220,770
TJX .................................... 8,520 283,823
Wal-Mart Stores ........................ 13,200 636,900
*Zale ................................... 6,400 256,000
----------
3,103,245
----------
<PAGE>

Number Market
of Shares Value
COMMON STOCK (Continued)
Telecommunications-11.50%
Alltel ............................ 4,850 $ 346,775
Ameritech ......................... 4,650 341,775
AT&T .............................. 9,892 552,097
BellSouth ......................... 12,180 570,937
Century Telecommunications
Enterprise ........................ 7,350 292,162
*MCI Worldcom ...................... 5,000 430,156
SBC Communications ................ 5,590 324,220
*Tellabs ........................... 6,400 432,600
US West Communications Group ...... 6,370 374,238
Vodafone Group .................... 1,000 197,000
----------
3,861,960
----------
Textiles, Apparel & Furniture-1.84%
*Knoll ............................. 1,300 34,612
Shaw Industries ................... 9,900 163,350
*Tommy Hilfiger .................... 3,320 243,813
Westpoint Stevens ................. 5,900 175,894
----------
617,669
----------
Transportation & Shipping-1.96%
Alaska Air Group .................. 3,000 125,250
*AMR ............................... 2,320 158,340
Tidewater ......................... 9,800 298,900
*UAL ............................... 1,180 76,700
----------
659,190
----------
Utilities-2.75%
Enron ............................. 5,400 441,450
OGE Energy ........................ 7,900 187,625
Utilcorp United ................... 12,100 294,181
----------
923,256
----------
Total Common Stock
(cost $27,458,799) ................ 32,613,398
----------

Social Awareness-2

<PAGE>
Social Awareness Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
REPURCHASE AGREEMENTS-2.84%
With Chase Manhattan 4.65% 7/1/99
(dated 6/30/99, collateralized by $166,000
U.S. Treasury Notes 5.375% due 2/15/01,
market value $166,610 and $83,000
U.S. Treasury Notes 6.375% due 9/30/01,
market value $85,345 and $71,000
U.S. Treasury Notes 6.125% due 12/31/01,
market value $71,657) .................... $318,000 $318,000
With J.P. Morgan Securities 4.70% 7/1/99
(dated 6/30/99, collateralized by $92,000
U.S. Treasury Notes 6.375% due 8/15/02,
market value $95,159 and $83,000
U.S. Treasury Notes 6.25% due 8/31/02,
market value $85,607 and $57,000
U.S. Treasury Bills 5.75% due 11/30/02,
market value $57,450 and $83,000
U.S. Treasury Notes 5.50% due 1/31/03,
market value $83,871) .................... 315,000 315,000

Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 4.80% 7/1/99
(dated 6/30/99, collateralized by $78,000
U.S. Treasury Notes 7.125% due 2/29/00,
market value $81,142 and $83,000
U.S. Treasury Notes 5.625% due 11/30/00,
market value $83,400 and $166,000
U.S. Treasury Bills 5.75% due 11/30/02,
market value $166,141) $324,000 $324,000
--------
Total Repurchase Agreements
(cost $957,000) .......................... 957,000
--------

TOTAL MARKET VALUE OF SECURITIES-99.95% (cost $28,415,799) ........ $33,570,398

RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES-0.05% ............. 17,406
-----------

NET ASSETS APPLICABLE TO 2,215,908 SHARES
($0.01 PAR VALUE) OUTSTANDING; EQUIVALENT TO $15.16
PER SHARE-100.00% ............................................... $33,587,804
===========

COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common stock, $0.01 par value, 1,000,000,000 shares authorized
to the Fund with 50,000,000 shares allocated to the Series ........ $29,042,905
Undistributed net investment income ............................... 41,975
Accumulated net realized loss on investments ...................... (651,675)
Net unrealized appreciation of investments ........................ 5,154,599
-----------
Total net assets .................................................. $33,587,804
===========
- ----------
* Non-income producing security for the period ended June 30, 1999.

See accompanying notes

Social Awareness-3
<PAGE>

Delaware Group Premium Fund, Inc.-
Social Awareness Series
Statement of Operations
Six Months Ended June 30, 1999
(Unaudited)

INVESTMENT INCOME:
Dividends ................................. $ 147,115
Interest .................................. 27,815
----------
174,930
----------
EXPENSES:
Management fees ........................... 115,550
Reports and statements to shareholders .... 6,463
Accounting and administration ............. 4,959
Professional fees ......................... 1,950
Custodian fees ............................ 1,260
Taxes (other than taxes on income) ........ 800
Registration fees ......................... 600
Dividend disbursing and transfer agent fees
and expenses ........................... 517
Directors' fees ........................... 394
Other ..................................... 3,971
----------
136,464
----------

Less expenses absorbed or waived .......... (5,941)
Less expenses paid indirectly ............. (1,515)
----------
Total expenses ............................ 129,008
----------

Net investment income ..................... 45,922
----------

NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments .......... (73,934)
Net change in unrealized appreciation /
depreciation of investments ............ 1,465,345
----------

NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ......................... 1,391,411
----------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $1,437,333
==========

See accompanying notes
<PAGE>

Delaware Group Premium Fund, Inc.-
Social Awareness Series
Statements of Changes in Net Assets

DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income ..................... (123,491) (33,744)
Net realized gain on investments .......... -- (124,853)
----------- -----------
(123,491) (158,597)
----------- -----------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ................. 10,363,755 19,771,054
Net asset value of shares issued upon
reinvestment of distributions from
net investment income and net
realized gain on investments ........... 123,491 158,597
----------- -----------
10,487,246 19,929,651
Cost of shares repurchased ................ (5,175,182) (3,210,331)
----------- -----------
Increase in net assets derived from capital
share transactions ..................... 5,312,064 16,719,320
----------- -----------

NET INCREASE IN NET ASSETS ................ 6,625,906 19,161,793
----------- -----------

NET ASSETS:
Beginning of period ....................... 26,961,898 7,800,105
----------- -----------
End of period ............................. $33,587,804 $26,961,898
=========== ===========

See accompanying notes

Social Awareness-4
<PAGE>

Delaware Group Premium Fund, Inc.-Social Awareness Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Six Months
Ended Year 5/1/97(2)
6/30/99(1) Ended to
(Unaudited) 12/31/98 12/31/97
-----------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................................... $14.550 $12.840 $10.000

Income from investment operations:
Net investment income .............................................................. 0.014 0.065 0.051
Net realized and unrealized gain on investments .................................... 0.656 1.880 2.789
------- ------- -------
Total from investment operations ................................................... 0.670 1.945 2.840
------- ------- -------

Less dividends and distributions:
Dividends from net investment income ............................................... (0.060) (0.050) none
Distributions from net realized gain on investments ................................ - (0.185) none
------- ------- -------
Total dividends and distributions .................................................. (0.060) (0.235) none
------- ------- -------

Net asset value, end of period ..................................................... $15.160 $14.550 $12.840
======= ======= =======

Total return ....................................................................... 4.63% 15.45% 28.40%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............................................ $33,588 $26,962 $7,800
Ratio of expenses to average net assets ............................................ 0.84% 0.83% 0.80%
Ratio of expenses to average net assets prior to expense limitation and expenses
paid indirectly ................................................................. 0.89% 0.89% 1.40%
Ratio of net investment income to average net assets ............................... 0.30% 0.80% 1.13%
Ratio of net investment income to average net assets prior to expense limitation
and expenses paid indirectly .................................................... 0.25% 0.74% 0.53%
Portfolio turnover ................................................................. 28% 30% 52%
</TABLE>
- ----------
(1)Ratios have been annualized and total return has not been
annualized.
(2)Date of commencement of operations; ratios have been annualized
and total return has not been annualized.

See accompanying notes

Social Awareness-5
<PAGE>

Delaware Group Premium Fund, Inc.-Social Awareness Series
Notes to Financial Statements
June 30, 1999
(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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the Social Awareness 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.

The Social Awareness Series will make payments from net investment income and
net realized gain on investments, if any, following the close of the fiscal
year.

Certain expenses of the Series are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $355 for the period ended June 30,
1999. The Series may receive earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. These
credits were $1,160 for the period ended June 30, 1999. The expenses paid under
the above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense offset shown as "Expenses
paid indirectly".

<PAGE>

2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Series
pays Delaware Management Company ("DMC"), the Investment Manager of the Series,
an annual fee which is calculated at the rate of 0.75% on the first $500 million
of average daily net assets of the Series, 0.70% on the next $500 million, 0.65%
on the next $1,500 million and 0.60% on the average daily net assets over $2,500
million. These rates became effective May 1, 1999. The old management fee was
calculated at the rate of 0.75% of the average daily net assets of the Series.
Vantage Investment Advisors, Inc., an affiliate of DMC, receives a fee equal to
0.25% of average daily net assets up to $20 million, 0.35% on average daily net
assets between $20 million and $50 million, and 0.40% of average daily net
assets over $50 million of the Series for acting as a sub-adviser to this
Series. The series does not pay any fees to the sub-adviser.

DMC has elected to waive that portion, if any, of the annual management fee
payable to the extent necessary to ensure that annual operating expenses
exclusive of taxes, interest, brokerage commissions and extraordinary expenses
do not exceed 0.85% of average daily net assets of the Series through October
31, 1999.

Social Awareness-6
<PAGE>

Social Awareness Series
Notes to Financial Statements (Continued)

On June 30, 1999, the Series had liabilities payable to affiliates as follows:

Investment
management
fee and other
expenses
payable to DMC
--------------
$21,878

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, 1999, the Series made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:

Purchases ....................... $9,075,807
Sales ........................... $4,127,465

The cost of investments for federal income tax purposes approximates cost for
book purposes.

At June 30, 1999, the aggregate cost of securities and unrealized appreciation
(depreciation) for the Series were as follows:
<TABLE>
<CAPTION>
Aggregate Aggregate
Cost of unrealized unrealized Net unrealized
investments appreciation depreciation appreciation
----------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
$28,415,799 $6,944,529 ($1,789,930) $5,154,599
</TABLE>
For federal income tax purposes, the Series had accumulated capital losses at
December 31, 1998 as follows:

Year of
expiration
2006
----------
$577,691

Social Awareness-7
<PAGE>

Delaware Group Premium Fund, Inc.-Social Awareness Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund, Inc. - Social
Awareness Series shareholders voted on the following proposals at the annual
meeting of shareholders on March 17, 1999 or as adjourned. The description of
each proposal and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority
------ ------------
Jeffrey J. Nick .................................. 1,728,317 80,236
Walter P. Babich ................................. 1,728,317 80,236
John H. Durham ................................... 1,728,317 80,236
Anthony D. Knerr ................................. 1,728,317 80,236
Ann R. Leven ..................................... 1,728,317 80,236
Thomas F. Madison ................................ 1,728,317 80,236
Charles E. Peck .................................. 1,728,317 80,236
Wayne A. Stork ................................... 1,728,317 80,236
Jan L. Yeomans ................................... 1,728,317 80,236

3. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).

3C. To adopt a new fundamental investment restriction concerning underwriting.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,640,688 44,910 122,955

3D. To adopt a new fundamental investment restriction concerning investments in
real estate.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,628,284 47,554 123,181

<PAGE>

3E. To adopt a new fundamental investment restriction concerning investments in
commodities.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,637,000 48,598 122,955

3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,631,887 53,711 122,955

3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,618,474 56,790 123,755

4. To approve a new investment management agreement with Delaware Management
Company.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,626,008 59,590 122,955

5. To approve a new Sub-Advisory Agreement.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,624,182 51,189 133,182

6. To ratify the selection of Ernst & Young LLP, as the independent auditors for
Delaware Group Premium Fund, Inc.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,695,251 14,420 98,882

7. To approve the restructuring of Delaware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.
Shares Shares Shares
Voted Voted Voted
For Against Abstain
------ ------- -------
1,653,907 24,334 130,312

Social Awareness-8

<PAGE>
Delaware Group Premium Fund, Inc.-Trend Series
Statement of Net Assets
June 30, 1999 (Unaudited)

Number of Market
Shares Value
COMMON STOCK-94.88%
Banking, Finance & Insurance-6.74%
Ambac Financial Group ............................ 88,700 $5,066,988
*Annuity And Life ................................. 11,400 256,144
Commerce One ..................................... 1,600 33,600
*Corporate Executive Board ........................ 15,500 551,703
Doral Financial .................................. 108,300 1,864,791
Freedom Securities ............................... 21,800 373,325
*Metris ........................................... 99,000 4,034,250
Webster Financial ................................ 97,000 2,637,188
----------
14,817,989
----------
Buildings & Materials-0.70%
*+Comfort Systems USA .............................. 44,900 808,200
*National Equipment Services ...................... 61,400 736,800
----------
1,545,000
----------
Business Services-2.44%
*+Profit Recovery Group ............................ 113,700 5,375,878
----------
5,375,878
----------
Cable, Media & Publishing-10.55%
*+Chancellor Media Class A ......................... 79,900 4,401,991
*Consolidated Graphics ............................ 116,100 5,805,000
*+Emmis Broadcasting ............................... 34,500 1,698,047
*+Metro Networks ................................... 30,700 1,636,694
*Radio One ........................................ 33,900 1,572,113
TCA Cable TV ..................................... 48,000 2,661,000
*+USA Networks ..................................... 135,304 5,424,845
----------
23,199,690
----------
Chemicals-2.56%
*Mettler-Toledo International ..................... 227,300 5,639,881
----------
5,639,881
----------
Computers & Technology-14.10%
*+Bindview Development ............................. 103,700 2,459,634
*Cisco Systems .................................... 85,599 5,513,116
*Clarify .......................................... 27,900 1,151,747
*Exchange Applications ............................ 77,600 3,164,625
Henry (Jack) & Associates ........................ 99,700 3,900,763
*Legato Systems ................................... 38,300 2,213,022
*Neon Systems ..................................... 13,300 442,225
*New Era of Networks .............................. 23,100 1,014,234
*+Onyx Software .................................... 37,900 817,219
*Persistence Software ............................. 9,700 132,769
*Softworks ........................................ 93,100 1,027,009
*SunGard Data Systems ............................. 62,300 2,149,350
*Veritas Software ................................. 73,675 6,996,823
----------
30,982,536
----------
Consumer Products-5.53%
G&K Services ..................................... 33,800 1,769,219
*Gemstar International Group
Limited .......................................... 159,200 10,397,750
----------
12,166,969
----------
Electronics & Electrical Equipment-11.94%
*Applied Micro Circuits ........................... 121,800 10,117,013
*+HI/FN ............................................ 20,500 1,554,797
*+Micrel ........................................... 102,100 7,568,163
*PMC - Sierra ..................................... 59,100 3,485,053
*Teradyne ......................................... 49,300 3,537,275
----------
26,262,301
----------
<PAGE>

Number of Market
Shares Value
COMMON STOCK (Continued)
Environmental Services-1.60%
*+Waste Connections ................................ 115,500 $ 3,522,750
-----------
3,522,750
-----------
Food, Beverage & Tobacco-1.85%
*Cheesecake Factory ............................... 118,900 3,619,019
*Packaged Ice ..................................... 74,600 445,269
-----------
4,064,288
-----------
Healthcare & Pharmaceuticals-4.65%
*Brookdale Living Communities ..................... 165,900 2,472,947
*+Pharmacopeia ..................................... 38,600 427,013
*QLT Phototheraputics ............................. 17,000 933,406
*Renal Care Group ................................. 35,475 916,807
*Trigon Healthcare ................................ 57,600 2,095,200
*+United Therapeutics .............................. 50,700 602,063
*Wesley Jessen VisionCare ......................... 32,500 1,045,078
*Women First Healthcare ........................... 38,200 510,925
*Xomed Surgical Products .......................... 25,400 1,230,313
-----------
10,233,752
-----------
Industrial Machinery-0.06%
*Spinnaker Industries Common ...................... 5,800 77,575
*Spinnaker Industries Class A ..................... 4,500 57,938
-----------
135,513
-----------
Leisure, Lodging & Entertainment-6.28%
*CEC Entertainment ................................ 109,300 4,617,925
*Dave & Buster's .................................. 81,900 2,375,100
*+Extended Stay America ............................ 135,900 1,630,800
Ruby Tuesday ..................................... 48,900 929,100
*Sonic Corp. ...................................... 131,850 4,268,644
-----------
13,821,569
-----------
Retail-17.84%
*+American Eagle Outfitters ........................ 92,600 4,216,194
*Cost Plus ........................................ 142,350 6,468,028
*Dollar Tree Stores ............................... 111,100 4,884,928
*+Duane Reade ...................................... 111,800 3,423,875
*Hibbett Sporting Goods ........................... 20,600 459,638
*Linens 'n Things ................................. 106,000 4,637,500
*+O'Reilly Automotive .............................. 58,400 2,938,250
*Schultz Sav-O Stores ............................. 30,000 483,750
*Staples .......................................... 205,512 6,351,605
Talbots .......................................... 34,500 1,315,313
*+Tweeter Home Entertainment Group ................. 57,700 2,253,906
*West Marine ...................................... 67,600 986,538
*+Zany Brainy ...................................... 81,600 787,950
-----------
39,207,475
-----------
Telecommunications-7.51%
*Concord Communications ........................... 66,000 2,945,250
*Network Appliance ................................ 96,600 5,400,544
*+Nextlink Communications Class A .................. 70,100 5,211,497
*+Pinnacle Holdings ................................ 121,000 2,956,938
-----------
16,514,229
-----------
Transportation & Shipping-0.53%
*+Forward Air Corp ................................. 41,300 1,160,272
-----------
1,160,272
-----------
Total Common Stock
(cost $142,007,381) 208,650,092
.................................................... -----------

- -------------------
Top 10 stock holdings, representing 32.0% of net assets, are printed in bold.

Trend-1

<PAGE>

Trend Series
Statement of Net Assets (Continued)

Principal Market
Amount Value
REPURCHASE AGREEMENTS-9.91%
With Chase Manhattan 4.65% 7/1/99
(dated 6/30/99, collateralized by
$3,783,000 U.S. Treasury Notes 5.375%
due 2/15/01, market value $3,840,205
and $1,891,000 U.S. Treasury Notes
4.65% due 9/30/01, market value
$1,943,791 and $1,621,000
U.S. Treasury Notes 6.125% due 12/31/01,
market value $1,632,032) ....................... $7,233,000 $7,233,000
With J.P. Morgan Securities 4.70% 7/1/99
(dated 6/30/99, collateralized by
$2,089,000 U.S. Treasury Notes 6.375%
due 8/15/02, market value $2,167,320
and $1,891,000 U. S. Treasury Notes
6.25% due 8/31/02, market value
$1,949,750 and $1,308,000
U.S. Treasury Notes 5.75% due 11/30/02,
market value $1,308,464 and $1,891,000
U.S. Treasury Notes 5.50% due 1/31/03,
market value $1,910,223) ....................... 7,188,000 7,188,000

Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 4.80% 7/1/99
(dated 6/30/99, collateralized by
$1,785,000 U.S. Treasury Bills 7.125%
due 2/29/00, market value $1,848,058
and $1,891,000 U.S. Treasury Notes
5.625% due 11/30/00, market value
$1,899,481 and $3,783,000
U.S. Treasury Notes 5.75% due 11/30/02,
market value $3,783,983) ...................... $7,376,000 $ 7,376,000
-----------
Total Repurchase Agreements
(cost $21,797,000) ............................ $21,797,000
-----------

TOTAL MARKET VALUE OF SECURITIES-104.79% (cost $163,804,381) .. $230,447,092

LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS-(4.79%) ....... (10,539,519)
------------
NET ASSETS APPLICABLE TO 9,202,887 SHARES ($0.01 PAR VALUE)
OUTSTANDING; EQUIVALENT TO $23.90 PER SHARE-100.00% ........ $219,907,573
============

COMPONENTS OF NET ASSETS AT JUNE 30, 1999:
Common stock, $0.01 par value, 1,000,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to the Series .................................... $142,779,608
Distributions in excess of net investment income .............. (241,868)
Accumulated net realized gain on investments .................. 10,727,122
Net unrealized appreciation of investments .................... 66,642,711
------------
Total net assets .............................................. $219,907,573
============

- -------------------
* Non-income producing security for the period ending June 30, 1999.
+ Security is partially or fully on loan.

See accompanying notes

Trend-2

<PAGE>

Delaware Group Premium Fund, Inc.-
Trend Series
Statement of Operations
Six Months Ended June 30, 1999
(Unaudited)

INVESTMENT INCOME:
Interest ........................................... $368,265
Dividends .......................................... 135,567
-----------
503,832
-----------

EXPENSES:
Management fees .................................... 672,599
Accounting and administration ...................... 44,556
Professional fees .................................. 9,280
Reports and statements to shareholders ............. 8,380
Taxes (other than taxes on income) ................. 3,429
Registration fees .................................. 2,750
Dividend disbursing and transfer agent fees
and expenses .................................... 2,370
Custodian fees ..................................... 2,000
Directors' fees .................................... 1,732
Other .............................................. 6,057
-----------
753,153
Less expenses absorbed or waived ................... (9,991)
Less expenses paid indirectly ...................... 2,064
-----------
Total expenses ..................................... 741,098
-----------

NET INVESTMENT LOSS ................................ (237,266)
-----------

NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments ................... 12,079,481
Net change in unrealized appreciation /
depreciation of investments ..................... 25,421,620
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS .................................. 37,501,101
-----------

NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ...................................... $37,263,835
===========

See accompanying notes

<PAGE>

Delaware Group Premium Fund, Inc.-
Trend Series
Statements of Changes in Net Assets

Period Year
Ended 6/30/99 Ended
(Unaudited) 12/31/98
------------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ................... $ (237,266) $ 42,700
Net realized gain (loss) on investments ........ 12,079,481 (1,048,182)
Net change in unrealized appreciation /
depreciation of investments ................. 25,421,620 23,501,658
------------ ------------
Net increase in net assets resulting
from operations ............................. 37,263,835 22,496,176
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .......................... (17,149) (135,410)
Net realized gain on investments ............... -- (2,315,513)
------------ ------------
(17,149) (2,450,923)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ...................... 69,259,240 113,799,362
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized
gain on investments ......................... 17,149 2,450,923
------------ ------------
69,276,389 116,250,285

Cost of shares repurchased ..................... (54,866,712) (86,320,418)
------------ ------------
Increase in net assets derived from capital
share transactions .......................... 14,409,677 29,929,867
------------ ------------
NET INCREASE IN NET ASSETS ..................... 51,656,363 49,975,120
------------ ------------
NET ASSETS:
Beginning of period ............................ 168,251,210 118,276,090
------------ ------------
End of period .................................. $219,907,573 $168,251,210
============ ============

See accompanying notes

Trend-3

<PAGE>

Delaware Group Premium Fund, Inc.-Trend Series
Financial Highlights

Selected data for each share of the Series outstanding throughout each period
were as follows:

<TABLE>
<CAPTION>
Six Months
Ended 6/30/99(1) Year Ended December 31,
(Unaudited) 1998 1997 1996 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $19.760 $17.380 $14.560 $14.020 $10.160 $10.200

Income (loss) from investment operations:
Net investment income .................................... (0.023) 0.006 0.019 0.050 0.098 0.079
Net realized and unrealized gain (loss) on investments ... 4.165 2.736 3.031 1.380 3.852 (0.119)
------- ------- ------- ------- ------- -------
Total from investment operations ......................... 4.142 2.742 3.050 1.430 3.950 (0.040)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ..................... (0.002) (0.020) (0.050) (0.090) (0.090) none
Distributions from net realized gain on investments ...... none (0.342) (0.180) (0.800) none none
------- ------- ------- ------- ------- -------
Total dividends and distributions ........................ (0.002) (0.362) (0.230) (0.890) (0.090) none
------- ------- ------- ------- ------- -------

Net asset value, end of period ........................... $23.900 $19.760 $17.380 $14.560 $14.020 $10.160
======= ======= ======= ======= ======= =======

Total return ............................................. 20.97% 16.04% 21.37% 11.00% 39.21% (0.39%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $219,907 $168,251 $118,276 $56,423 $20,510 $7,087
Ratio of expenses to average net assets .................. 0.83% 0.81% 0.80% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation and expenses
paid indirectly ....................................... 0.84% 0.85% 0.88% 0.92% 0.96% 1.47%
Ratio of net investment income to average net assets ..... (0.27%) 0.03% 0.16% 0.56% 1.03% 1.63%
Ratio of net investment income to average net
assets prior to expense limitation and expenses
paid indirectly ....................................... (0.28%) (0.01%) 0.08% 0.44% 0.87% 0.96%
Portfolio turnover ....................................... 104% 121% 125% 112% 76% 59%
</TABLE>

- -------------------
(1) Ratios have been annualized and total return has not been annualized.

See accompanying notes

Trend-4

<PAGE>

Delaware Group Premium Fund, Inc.-Trend Series
Notes to Financial Statements
June 30, 1999
(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 17 series:
the Aggressive Growth Series, the Capital Reserves Series, the Cash Reserve
Series, the Convertible Securities Series, the Delaware Balanced Series
(formerly the Delaware Series), the DelCap Series, the Delchester Series, the
Devon Series, the Emerging Markets Series, the Global Bond Series, the Growth
and Income Series (formerly the Decatur Total Return Series), the International
Equity Series, the REIT Series, the Small Cap Value Series, the Social Awareness
Series, the Strategic Income Series, and the Trend Series. These financial
statements and the related notes pertain to the Trend 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.

<PAGE>

The Trend Series will make payments from net income and net realized gain on
investments, if any, following the close of the fiscal year.

Certain expenses of the Series are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $2,064 for the period ended June 30,
1999. The Series may receive earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. There were
no earnings credits for the period ended June 30, 1999. The expenses paid under
the above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense offset shown as "Expenses
paid indirectly".

DMC has elected to waive that portion, if any, of the annual management fee
payable to the extent necessary to ensure that annual operating expenses
exclusive of taxes, interest, brokerage commissions and extraordinary expenses
do not exceed 0.85% of average daily net assets of the Series through October
31, 1999.

Trend-5

<PAGE>

Trend Series
Notes to Financial Statements (Continued)

On June 30, 1999, the Series had liabilities payable to affiliates as follows:

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, 1999, the Series made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:

Purchases .................................... $98,899,222
Sales ........................................ $87,552,860

Aggregate Aggregate
Cost of unrealized unrealized Net unrealized
investments appreciation depreciation appreciation
- ------------ ------------ ------------ --------------
$163,804,381 $67,695,609 ($1,052,898) $66,642,711

For federal income tax purposes, the Series had accumulated capital losses at
December 31, 1998 as follows:

Year of
expiration
2006
-----------
$916,288

<PAGE>

4. Capital Stock
Transactions in capital stock shares were as follows:

<TABLE>
<CAPTION>
Shares issued upon
reinvestment of
distributions from net
investment income
and net realized gain Shares Net
Shares sold on investments repurchased increase
----------- ---------------------- ----------- ---------
<S> <C> <C> <C> <C>
Period ended June 30, 1999 ............ 3,334,682 895 (2,649,504) 686,073
Year ended December 31, 1998 .......... 6,458,076 147,114 (4,891,718) 1,713,472
</TABLE>

Market value
of securities Market value
on loan of collateral
------------- -------------
$33,649,483 $34,032,450

Net income from securities lending activities for the period ended June 30, 1999
was $44,504 and is included in interest income on the statement of operations.

Trend-6

<PAGE>

Delaware Group Premium Fund Inc.-Trend Series
Proxy Results
(Unaudited)

For the six months ended June 30, 1999, Delaware Premium Fund, Inc. - Trend
Series shareholders voted on the following proposals at the annual meeting of
shareholders on March 17, 1999 or as adjourned. The description of each proposal
and number of shares voted are as follows:

1. To elect the Delaware Group Premium Fund, Inc. Board of Directors.

Shares Shares Voted
Voted Withheld
For Authority Abstain
---------- ------------ -------
Jeffrey J. Nick ................. 8,228,270 207,630 -
Walter P. Babich ................ 8,227,819 208,081 -
John H. Durham .................. 8,242,542 193,369 -
Anthony D. Knerr ................ 8,240,765 195,135 -
Ann R. Leven .................... 8,215,497 220,403 -
Thomas F. Madison ............... 8,241,934 193,966 -
Charles E. Peck ................. 8,227,353 208,547 -
Wayne A. Stork .................. 8,239,149 196,751 -
Jan L. Yeomans .................. 8,208,494 227,406 -

2. To approve the reclassification of the investment objective from fundamental
to non-fundamental.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,464,471 439,478 531,951

2. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).

3A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,645,408 287,628 502,864

3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,613,455 308,112 523,333

3C. To adopt a new fundamental investment restriction concerning underwriting.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,636,398 243,008 556,495

3D. To adopt a new fundamental investment restriction concerning investments in
real estate.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,641,021 304,236 490,642

<PAGE>

3E. To adopt a new fundamental investment restriction concerning investments in
commodities.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,620,227 305,744 509,929

3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,648,984 292,128 494,788

3G. To reclassify all current fundamental investment restrictions as
non-fundamental.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,518,084 394,994 522,823

4. To approve a new investment management agreement with Delaware Management
Company.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,631,543 331,007 473,350

6. To approve the restructuring of Delaware Group Premium Fund, Inc. from a
Maryland Corporation into a Delaware Business Trust.

Shares Shares Shares
Voted Voted Voted
For Against Abstain
---------- --------- ---------
7,565,860 321,435 548,605

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