LINCOLN ADVISOR FUNDS INC, 485BPOS, 1996-05-02

LINCOLN ADVISOR FUNDS INC
485BPOS, 1996-05-02

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

File 33-67490
-------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-------
-------
Pre-Effective Amendment No.
------ -------
-------
Post-Effective Amendment No. 6 X
----- -------
AND

-------
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-------
Amendment No. 8
------

LINCOLN ADVISOR FUNDS, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

200 East Berry Street, Fort Wayne, Indiana 46802
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (219) 455-2000
--------------

John L. Steinkamp, Esq., 200 East Berry Street, Fort Wayne, Indiana 46802
- -------------------------------------------------------------------------------
(Name and Address of Agent for Service)

Copies to: Arthur J. Simon, Esq., Gardner, Carton & Douglas,
321 North Clark Street, Suite 3400 Chicago, Illinois 60610

Approximate Date of Public Offering: May 6, 1996
-----------

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
------

X on May 6, 1996 pursuant to paragraph (b)
------

60 days after filing pursuant to paragraph (a)(1)
------

on (date) pursuant to paragraph (a)(1)
------

75 days after filing pursuant to paragraph (a)(2)
------

on (date) pursuant to paragraph (a)(2) of Rule 485.
------

Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
the Registrant hereby declares that an indefinite number or amount
of its shares have been registered under the Securites Act of 1933.
Form 24f-2 for the fiscal year ended October 31, 1995 was filed on
November 17, 1995. Amended and Restated Form 24f-2 was filed on
December 22, 1995.

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

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

This Post-Effective Amendment No. 6 to Registration File No. 33-67490 includes
the following:

1. Facing Page

2. Contents Page

3. Cross-Reference Sheet

4. Part A - Prospectuses

5. Part B - Statement of Additional Information

6. Part C - Other Information

7. Signatures
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

CROSS-REFERENCE SHEET*

PART A

<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
<S> <C> <C> <C>
A Classes/ Institutional
B Classes/ Classes
C Classes

1 Cover Page..................................................... Cover Cover

2 Synopsis....................................................... Synopsis; Synopsis;
Summary of Summary of
Expenses Expenses

3 Condensed Financial Information................................ Financial Financial
Highlights Highlights

4 General Description of Registrant ............................. Investment Investment
Objectives and Objectives and
Strategies; Strategies;
Other Other
Shareholder Shareholder
Matters Matters

5 Management of the Fund......................................... Management of Management of
the Funds the Funds

6 Capital Stock and Other Securities ............................ Delaware Dividends,
Difference; Distributions
Dividends, and Taxes;
Distributions Other
and Taxes; Shareholder
Other Matters
Shareholder
Matters

7 Purchase of Securities Being Offered........................... Cover; Cover;
How to Buy How to Buy
Shares; Shares;
Calculation of Calculation of
Offering Price Net Asset
and Net Asset Value Per
Value Per Share; Management
Share; Management of the Funds
of the Funds

8 Redemption or Repurchase....................................... How to Buy How to Buy
Shares; Shares;
Redemption and Redemption and
Exchange Exchange

9 Legal Proceedings.............................................. None None
</TABLE>
* This filing relates to the Class A Shares, Class B Shares and Class C
Shares of the Enterprise Fund, the U.S. Growth Fund, the World Growth
Fund, the New Pacific Fund, the Federal Bond Fund and the Corporate Income
Fund, which are described in one prospectus. This filing also relates to
the Institutional Class of each Fund, which is described in another
prospectus. The six Funds (and 24 classes) have a common Part B and Part
C.
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

CROSS-REFERENCE SHEET

PART B
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
10 Cover Page..................................................... Cover

11 Table of Contents.............................................. Table of Contents

12 General Information and History................................ General Information

13 Investment Objectives and Policies............................. Investment Objective and
Policies; Investment Restrictions

14 Management of the Registrant................................... Management

15 Control Persons and Principal Holders of Securities Management

16 Investment Advisory and Other Services......................... Plans Under Rule 12b-1 for
the Fund Classes (under
Purchasing Shares); Investment
Management Agreements; Management;
General Information;
Financial Statements

17 Brokerage Allocation........................................... Trading Practices and Brokerage

18 Capital Stock and Other Securities............................. Capitalization and
Noncumulative Voting
(under General Information)

19 Purchase, Redemption and Pricing of Securities
Being Offered................................................. Purchasing Shares;
Determining Offering Price
and Net Asset Value;
Redemption and Repurchase,
Exchange Privilege

20 Tax Status..................................................... Dividends, Distributions and Taxes

21 Underwriters .................................................. Purchasing Shares

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

23 Financial Statements........................................... Financial Statements
</TABLE>
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

CROSS-REFERENCE SHEET

PART C
<TABLE>
<CAPTION>
Location in
Part C
------------
<S> <C> <C>
24 Financial Statements and Exhibits...................................... Item 24

25 Persons Controlled by or under Common
Control with Registrant................................................ Item 25

26 Number of Holders of Securities........................................ Item 26

27 Indemnification........................................................ Item 27

28 Business and Other Connections of Investment Adviser................... Item 28

29 Principal Underwriters................................................. Item 29

30 Location of Accounts and Records....................................... Item 30

31 Management Services.................................................... Item 31

32 Undertakings........................................................... Item 32
</TABLE>

<PAGE>

The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international funds and closed-end equity funds give investors the
ability to create a portfolio that fits their personal financial goals. For more
information, contact your financial adviser or call Delaware Group at
800-523-4640.

INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
Eleven Penn Center Plaza
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank, N.A.
4 Chase Metrotech Center
Brooklyn, NY 11245

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

DELAWARE GROUP ADVISER
FUNDS, INC.

ENTERPRISE FUND
U.S. GROWTH FUND
WORLD GROWTH FUND
NEW PACIFIC FUND
FEDERAL BOND FUND
CORPORATE INCOME FUND

A CLASSES

B CLASSES

C CLASSES
- --------------------------------

P R O S P E C T U S
- --------------------------------
MAY 6, 1996

DELAWARE
GROUP
--------

<PAGE>

TABLE OF CONTENTS

Cover Page

Synopsis

Summary of Expenses

Financial Highlights

Investment Objectives and Strategies

Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Federal Bond Fund
Corporate Income Fund

The Delaware Difference
Plans and Services

Retirement Planning

Classes of Shares

How to Buy Shares

Redemption and Exchange

Dividends, Distributions and Taxes

Calculation of Offering Price and Net Asset Value Per Share

Management of the Funds

Implementation of Investment Objectives and Policies

Appendix A - Investment Illustrations

Appendix B - Description of Security Ratings

-1-

<PAGE>
DELAWARE GROUP ADVISER FUNDS, INC. PROSPECTUS
MAY 6, 1996
A CLASS SHARES
B CLASS SHARES
C CLASS SHARES

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

1818 Market Street, Philadelphia, PA 19103

For Prospectus and Performance: Nationwide 800-523-4640

Information on Existing Accounts: (SHAREHOLDERS ONLY)
Nationwide 800-523-1918

Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800-362-7500

Representatives of Financial Institutions
Nationwide 800-659-2259

Class A Shares of each Fund may be purchased at the public offering
price, which is equal to the next determined net asset value per share, plus a
front-end sales charge. Class A Shares are subject to a maximum front-end sales
charge of 4.75% and annual 12b-1 Plan expenses of up to .35% (currently, no more
than .30% pursuant to Board action).
Class B Shares of each Fund may be purchased at a price equal to the
next determined net asset value per share. Class B Shares are subject to a
contingent deferred sales charge ("CDSC") which may be imposed on redemptions
made within six years of purchase and annual 12b-1 Plan expenses of 1%, which
are assessed against the Class B Shares for approximately eight years after
purchase. See Automatic Conversion of Class B Shares under Classes of Shares.
Class C Shares of each Fund may be purchased at a price equal to the
next determined net asset value per share. Class C Shares are subject to a CDSC
which may be imposed on redemptions made within 12 months of purchase and annual
12b-1 Plan expenses of 1%, which are assessed against the Class C Shares for the
life of the investment.
In choosing the most suitable class, an investor should consider the
differences among the Classes, including the effects of sales charges and 12b-1
Plan expenses given the amount of the purchase, and the length of time the
investor expects to hold the shares, among other circumstances. See Summary of
Expenses and Classes of Shares.

-2-

<PAGE>
This Prospectus relates only to the Classes listed above and sets forth
information that you should read and consider before you invest. Please retain
it for future reference. Part B of Adviser Funds, Inc.'s registration statement,
dated May 6, 1996, as it may be amended from time to time, contains additional
information about the Funds and has been filed with the Securities and Exchange
Commission. Part B is incorporated by reference into this Prospectus and is
available, without charge, by writing to Delaware Distributors, L.P. at the
above address or by calling any of the above numbers. The Funds' financial
statements appear in their Annual Report, which will accompany any response to
requests for Part B.
This Prospectus contains useful information that can help the investor
decide whether a Fund's investment objective matches his/her own. Achievement of
a Fund's investment objective cannot, of course, be assured due to the risk of
capital loss from fluctuating prices inherent in any investment in securities.
Investments in the Funds are neither insured or guaranteed by any entity.
Each Fund also offers an Institutional Class, which is available for
purchase only by certain investors. A prospectus for the Funds' Institutional
Classes can be obtained by writing to Delaware Distributors, L.P. at the above
address or by calling the above number.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUNDS ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUNDS ARE NOT BANK
OR CREDIT UNION DEPOSITS.

-3-

<PAGE>

The investment objectives of each Fund are as follows:

Equity Funds Enterprise Fund seeks to provide maximum appreciation
of capital by investing in medium-sized companies
which have a dominant position within their industry,
are undervalued, or have potential for growth in
earnings.

U.S. Growth Fund seeks to maximize capital
appreciation by investing in companies of all sizes
which have low dividend yields, strong balance sheets
and high expected earnings growth rates relative to
their industry.

World Growth Fund seeks to maximize total return
(capital appreciation and income), principally
through investments in an internationally diversified
portfolio of equity securities.

New Pacific Fund seeks long-term capital appreciation
by investing primarily in companies which are
domiciled in or have their principal business
activities in the Pacific Basin.

Fixed-Income Funds Federal Bond Fund seeks to maximize current income
consistent with preservation of capital. The Fund
attempts to achieve this objective by investing
primarily in securities issued by the U.S.
Government, its agencies and instrumentalities.

Corporate Income Fund seeks to provide high current
income consistent with preservation of capital. The
Fund attempts to achieve this objective primarily by
investing in a diversified portfolio of
investment-grade fixed income securities issued by
U.S. corporations. Investment-grade fixed income
securities are those rated at least Baa by Moody's
Investors Service, Inc. or BBB by Standard & Poor's
Ratings Group or, if not rated, are of comparable
quality in the opinion of the manager or sub-adviser.

-4-

<PAGE>

SYNOPSIS

The following synopsis is qualified in its entirety by the more
detailed information appearing in the body of the Prospectus.

Investment Objectives and Policies

Each Fund's investment objective is stated on page 2 of this
Prospectus. Each objective is "fundamental" and may be changed only with the
approval of the holders of a majority of the outstanding voting securities of
the Fund, as defined in the Investment Company Act of 1940 (the "1940 Act").
Certain investment policies also are fundamental and thus require approval of
shareholders if a Fund wishes to change them. See Investment Restrictions in
Part B. Still other investment policies reflect current practices of the Funds
and may be changed by the Funds without the approval of shareholders.

Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") is the investment
manager for each Fund. See Restructuring of the Funds under Management of the
Funds. The Manager or its affiliate, Delaware International Advisers Ltd., also
manages the other funds in the Delaware Group. Delaware Distributors, L.P. (the
"Distributor") is the national distributor for each Fund and for all of the
other mutual funds in the Delaware Group. Delaware Service Company, Inc. (the
"Transfer Agent") is the shareholder servicing, dividend disbursing and transfer
agent for each Fund and for all of the other mutual funds in the Delaware Group.
See Management of the Funds.

The Manager has selected sub-advisers to provide the day-to-day
investment management of the Funds. The sub-advisers for the Funds are: Lynch &
Mayer, Inc. for Enterprise Fund and U.S. Growth Fund; Walter Scott & Partners
Limited for World Growth Fund; John Govett & Company Limited for New Pacific
Fund; and Lincoln Investment Management, Inc. for Corporate Income Fund and
Federal Bond Fund.

Open-End Investment Company
Adviser Funds, Inc., which was organized as a Maryland corporation on
August 10, 1993, is an open-end management investment company. Each Fund's
portfolio of assets is diversified as defined by the 1940 Act. See Other
Shareholder Matters under Management of the Funds.

Sales Charges

Class A
The price of the Class A Shares includes a maximum front-end sales
charge of 4.75% of the offering price, which, based on the net asset value per
share of the Class A Shares as of the end of Adviser Funds, Inc.'s most recent
fiscal year, is equivalent to:

Fund Percentage of Amount Invested
---- -----------------------------

Enterprise Fund 4.96%
U.S. Growth Fund 4.99%
World Growth Fund 5.00%
New Pacific Fund 4.94%
Federal Bond Fund 5.00%
Corporate Income Fund 5.02%

The sales charge is reduced on certain transactions of at least
$100,000 but under $1,000,000. There is no front-end sales charge on purchases
of $1,000,000 or more. Class A Shares are subject to annual 12b- 1 Plan
expenses.

-5-

<PAGE>
Class B
The price of the Class B Shares is equal to the net asset value per
share. Class B Shares are subject to a CDSC of: (i) 4% if shares are redeemed
within two years of purchase; (ii) 3% if shares are redeemed during the third or
fourth year following purchase; (iii) 2% if shares are redeemed during the fifth
year following purchase; and (iv) 1% if shares are redeemed during the sixth
year following purchase. Class B Shares are subject to annual 12b-1 Plan
expenses for approximately eight years after purchase. See Automatic Conversion
of Class B Shares under Classes of Shares.

Class C
The price of the Class C Shares is equal to the net asset value per
share. Class C Shares are subject to a CDSC of 1% if shares are redeemed within
12 months of purchase. Class C Shares are subject to annual 12b-1 Plan expenses
for the life of the investment.
See Classes of Shares and Distribution (12b-1) and Service under
Management of the Funds.

Purchase Amounts
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments in any Class must generally be at least $100.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. An investor may exceed the maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative purchases
over a period of time. An investor should keep in mind, however, that reduced
front-end sales charges apply to investments of $100,000 or more of Class A
Shares, which are subject to lower annual 12b-1 Plan expenses than Class B
Shares and Class C Shares and generally are not subject to a CDSC. The minimum
and maximum purchase amounts for retirement plans may vary. See How to Buy
Shares.

Redemption and Exchange

Class A Shares of each Fund may be redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Funds nor the Distributor assesses a charge for redemptions or
exchanges of Class A Shares, except for certain redemptions of shares purchased
at net asset value, which may be subject to a CDSC if a dealer's commission was
paid in connection with such purchases. See Front-End Sales Charge Alternative -
Class A Shares under Classes of Shares.

Class B Shares and Class C Shares may be redeemed or exchanged at the
net asset value calculated after receipt of the redemption or exchange request
subject, in the case of redemptions, to any applicable CDSC. Neither the Funds
nor the Distributor assesses any charges other than the CDSC for redemptions or
exchanges of Class B or Class C Shares. There are certain limitations on an
investor's ability to exchange shares between the various classes of shares that
are offered. See Redemption and Exchange.

Risk Factors
Prospective investors should consider a number of factors:

-6-

<PAGE>

2. Each Fund has the right to engage in options and futures
transactions for certain hedging, return enhancement and risk management
purposes in accordance with regulations of the Commodity Futures Trading
Commission ("CFTC"). While the Funds do not engage in options and futures for
speculative purposes, there are risks which result from the use of these
instruments, and an investor should carefully review the descriptions of these
risks in this Prospectus. Certain options and futures may be considered to be
derivative securities. See Implementation of Investment Objectives and Policies.

3. Each Fund may invest in interest rate, currency and other types of
swaps for hedging purposes which could subject the Fund to increased risks.
Interest rate swaps may be considered to be derivative securities. See
Implementation of Investment Objectives and Policies.

4. The Corporate Income Fund may invest up to 35% of its assets and the
U.S. Growth Fund may invest up to 10% of its assets in non-investment grade
fixed income securities ("junk bonds"). Consequently, greater risks may be
involved with an investment in these Funds. See Lower-Rated Securities under
Risk Factors and Special Considerations.

-7-

<PAGE>
SUMMARY OF EXPENSES

A general comparison of the sales arrangements and other expenses
applicable to each Fund's Class A, Class B and Class C Shares follows:

EQUITY FUNDS
<TABLE>
<CAPTION>

Enterprise U.S. Growth World Growth New Pacific

Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares
- -------------------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)........... 4.75% None None 4.75% None None 4.75% None None 4.75% None None

Maximum Sales Charge Imposed
on Reinvested Dividends (as
a percentage of offering price) None None None None None None None None None None None None

Maximum Contingent Deferred
Sales Charge (as a percentage
of original purchase price or
redemption proceeds, whichever
is lower).................... None* 4.00%* 1.00%* None* 4.00%* 1.00%* None* 4.00%* 1.00%* None* 4.00%* 1.00%*

Redemption Fees.............. None** None** None** None** None** None** None** None** None** None** None** None**

</TABLE>

FIXED-INCOME FUNDS
<TABLE>
<CAPTION>

Federal Bond Corporate Income

Class A Class B Class C Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares Shares Shares Shares
- -------------------------------- ------ ------ ------ ------ ------ ------

<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)........... 4.75% None None 4.75% None None

Maximum Sales Charge Imposed
on Reinvested Dividends (as
a percentage of offering price) None None None None None None

Maximum Contingent Deferred
Sales Charge (as a percentage
of original purchase price or
redemption proceeds, whichever
is lower).................... None* 4.00%* 1.00%* None* 4.00%* 1.00%*

Redemption Fees.............. None** None** None** None** None** None**
</TABLE>

- --------------------
* Class A purchases of $1 million or more may be made at net asset value.
However, if in connection with any such purchase a dealer's commission is
paid to the financial adviser through whom such purchase is effected, a
CDSC of 1% will be imposed on certain redemptions within 12 months of
purchase ("Limited CDSC"). Class B Shares are subject to a CDSC of: (i) 4%
if shares are redeemed within two years of purchase; (ii) 3% if shares are
redeemed during the third or fourth year following purchase; (iii) 2% if
shares are redeemed during the fifth year following purchase; (iv) 1% if
shares are redeemed during the sixth year following purchase; and (v) 0%
thereafter. Class C Shares are subject to a CDSC of 1% if the shares are
redeemed within 12 months of purchase. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value
under Redemption and Exchange; Deferred Sales Charge Alternative - Class B
Shares and Level Sales Charge Alternative - Class C Shares under Classes of
Shares.

** CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.

-8-

<PAGE>

Annual Operating Expenses (as percentage of daily net assets)

The purpose of the following tables is to assist the investor in
understanding the various costs and expenses they will bear directly or
indirectly in owning shares of each Fund.

EQUITY FUNDS

Annual Operating Expenses Enterprise U.S. Growth World Growth New Pacific
(as a percentage of average Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
daily net assets) Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares
- ----------------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees
(after voluntary waiver)+.... 0.23% 0.23% 0.23% 0.37% 0.37% 0.37% 0.00% 0.00% 0.00% 0.00%++ 0.00%++ 0.00%++

12b-1 Expenses............... 0.30%*/** 1.00%* 1.00%* 0.30%*/** 1.00%* 1.00%* 0.30%*/** 1.00%* 1.00%* 0.30%*/** 1.00%* 1.00%*

Other Operating Expenses
(after giving effect to
voluntary waiver
reimbursements)+........ 1.27% 1.27% 1.27% 1.13% 1.13% 1.13% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----

Total Operating Expenses
(after giving effect to
voluntary waiver
reimbursements)+.... 1.80% 2.50% 2.50% 1.80% 2.50% 2.50% 1.80% 2.50% 2.50% 1.80% 2.50% 2.50%
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====

</TABLE>

FIXED-INCOME FUNDS

Annual Operating Expenses Federal Bond Corporate Income
(as a percentage of average Class A Class B Class C Class A Class B Class C
daily net assets) Shares Shares Shares Shares Shares Shares
- -------------------------------- ------ ------ ------ ------ ------ ------

<S> <C> <C> <C> <C> <C> <C>
Management Fees
(after voluntary waiver)+.... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

12b-1 Expenses............... 0.30%*/** 1.00%* 1.00%* 0.30%*/** 1.00%* 1.00%*

Other Operating Expenses
(after giving effect to
voluntary waiver
reimbursements)+........ 0.90% 0.90% 0.90% 0.90% 0.90% 0.90%
----- ----- ----- ----- ----- -----

Total Operating Expenses
(after giving effect to
voluntary waiver
reimbursements)+.... 1.20% 1.90% 1.90% 1.20% 1.90% 1.90%
===== ===== ===== ===== ===== =====
</TABLE>

- ------------------------
For expense information about the Institutional Classes, see the separate
Prospectus relating to those classes.

+ The Manager elected voluntarily to waive that portion, if any, of the
annual Management Fees payable by a particular Fund and to reimburse a Fund
for its expenses to the extent necessary to ensure that the expenses of
that Fund (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, but inclusive of 12b-1 Plan expenses) do not
exceed, as a percentage of average net assets, on an annualized basis, the
amounts noted above corresponding to the caption "Total Operating Expenses"
through the six months from the date of this Prospectus. Absent such fee
waivers and expense reimbursements, "Total Operating Expenses" and
"Management Fees" would be as follows:

<PAGE>

Total Operating Expenses Management Fees
Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Enterprise Fund.......................................... 2.37% 3.07% 3.07% 0.80% 0.80% 0.80%
U.S. Growth Fund......................................... 2.13% 2.83% 2.83% 0.70% 0.70% 0.70%
World Growth Fund........................................ 2.91% 3.61% 3.61% 1.10% 1.10% 1.10%
New Pacific Fund......................................... 3.38% 4.08% 4.08% 0.80% 0.80% 0.80%
Federal Bond Fund........................................ 2.01% 2.71% 2.71% 0.30% 0.30% 0.30%
Corporate Income Fund.................................... 1.82% 2.52% 2.52% 0.30% 0.30% 0.30%
</TABLE>

++ Effective the close of business May 3, 1996, the investment management fee
payable by the New Pacific Fund changed from 1.10% of average daily net
assets to 0.80% of average daily net assets. The expense information has
been restated to reflect that change.

* Class A Shares, Class B Shares and Class C Shares of each Fund are subject
to separate 12b-1 Plans. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted by
rules of the National Association of Securities Dealers, Inc. (the "NASD").
See Distribution (12b-1) and Service under Management of the Funds.
** As of October 31, 1995, 12b-1 Plan expenses for the Class A Shares were
.35%. Beginning May 6, 1996, those expenses were reduced by action of the
Board of Directors to .30%. The expense information has been restated to
reflect that change.

-9-

<PAGE>

The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return, (2) redemption at the end of each time period and (3) for Class
B Shares and Class C Shares, payment of a CDSC at the time of redemption, if
applicable.
<TABLE>
<CAPTION>

Assuming Redemption Assuming No Redemption
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Enterprise Fund
Class A $65(1) $101 $140 $249 $65 $101 $140 $249
Class B $65 $108 $153 $266(2) $25 $ 78 $133 $266(2)
Class C $35 $ 78 $133 $284 $25 $ 78 $133 $284

U.S. Growth Fund
Class A $65(1) $101 $140 $249 $65 $101 $140 $249
Class B $65 $108 $153 $266(2) $25 $ 78 $133 $266(2)
Class C $35 $ 78 $133 $284 $25 $ 78 $133 $284

World Growth Fund
Class A $65(1) $101 $140 $249 $65 $101 $140 $249
Class B $65 $108 $153 $266(2) $25 $ 78 $133 $266(2)
Class C $35 $ 78 $133 $284 $25 $ 78 $133 $284

New Pacific Fund
Class A $65(1) $101 $140 $249 $65 $101 $140 $249
Class B $65 $108 $153 $266(2) $25 $ 78 $133 $266(2)
Class C $35 $ 78 $133 $284 $25 $ 78 $133 $284

Federal Bond Fund
Class A $60(1) $ 85 $113 $191 $60 $ 85 $113 $191
Class B $60 $ 90 $123 $205(2) $19 $ 60 $103 $205(2)
Class C $30 $ 60 $103 $222 $19 $ 60 $103 $222

Corporate Income Fund
Class A $60(1) $ 85 $113 $191 $60 $ 85 $113 $191
Class B $59 $ 90 $123 $205(2) $19 $ 60 $103 $205(2)
Class C $30 $ 60 $103 $222 $19 $ 60 $103 $222
</TABLE>

(1) Generally, no redemption charge is assessed upon redemption of Class A
Shares. Under certain circumstances, however, a Limited CDSC, which has not
been reflected in this calculation, may be imposed on certain redemptions
within 12 months of purchase. See Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange.

(2) At the end of approximately eight years after purchase, Class B Shares will
be automatically converted into Class A Shares. The example above assumes
conversion of Class B Shares at the end of the eighth year. However, the
conversion may occur as late as three months after the eighth anniversary
of purchase, during which time the higher 12b-1 Plan fees payable by Class
B Shares will continue to be assessed. Information for the ninth and tenth
years reflects expenses of the Class A Shares. See Automatic Conversion of
Class B Shares under Classes of Shares for a description of the automatic
conversion feature.

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.

-10-

<PAGE>

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

FINANCIAL HIGHLIGHTS

The table below provides financial highlights of income and capital changes for
one share of each Class outstanding for the fiscal year ended October 31, 1995
and the period ended October 31, 1994, and has been audited by Coopers & Lybrand
L.L.P., Adviser Funds, Inc.'s independent accountants, whose report thereon is
included in the Annual Report which accompanies Part B. This information is
supplemented by the audited financial statements and accompanying notes
appearing in such Annual Report.

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

-11-

Adviser Funds, Inc.
-----------------------------------------------------------------------
Class A Shares Class B Shares Class C Shares
Enterprise Fund Enterprise Fund Enterprise Fund
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
1995 1994 1995 1994 1995 1994

<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $9.20 $10.00 $9.81 $10.00 $10.02 $10.00

Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss)........................ (0.08) (0.08) (0.12) (0.04) (0.15) (0.05)
Net Realized and Unrealized Gain (Loss)
on Investments.................................... 2.16 (0.71) 2.27 (0.15) 2.34 0.07
---- ------ ---- ------ ---- ----
Total From Investment Operations.............. 2.08 (0.79) 2.15 (0.19) 2.19 0.02
---- ------ ---- ------ ---- ----

Less Distributions to Shareholders
- ----------------------------------

From Net Investment Income.......................... --- (0.03) --- --- --- ---
From Net Realized Gains............................. --- --- --- --- --- ---
----- ----- ---- ----- ----- ----
Total Distributions........................... 0.00 (0.03) 0.00 0.00 0.00 0.00
---- ------ ---- ---- ---- ----

Net Asset Value, End of Period...................... $11.28 $9.20 11.96 $9.81 $12.21 $10.02
====== ===== ===== ===== ====== ======

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

Total Return(2) .................................... 22.72% (7.91%) 21.92% (1.91%) 21.86% 0.23%
- ------------

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

Ratios/Supplemental Data
- ------------------------

Net Assets, End of Period (000's omitted)...........$14,508 $10,579 $1,811 $761 $58 $37
Net Expenses to Average Daily Net Assets............ 1.85% 1.85%(1) 2.50% 2.50%(1) 2.50% 2.50%(1)
Net Investment Income (Loss) to Average Daily
Net Assets......................................... (0.83%) (1.01%)(1) (1.50%) (1.53%)(1) (1.49%) (1.53%)(1)
Portfolio Turnover Rate............................. 106% 120% 106% 120% 106% 120%
Commencement of Operations.......................... 12/03/93 04/14/94 05/10/94
Without the Waiver of Fees and Reimbursement
of Expenses by the Adviser, the Ratio of
Net Expenses to Average Net Assets would have been:. 2.42% 3.10%(1) 3.07% 3.76%(1) 3.07% 3.75%(1)
</TABLE>

- --------------------
(1) Annualized.
(2) Total return calculations exclude front-end sales load.

<PAGE>
<TABLE>
<CAPTION>
Adviser Funds, Inc.
--------------------------------------------------------------------
Class A Shares Class B Shares Class C Shares
U.S. Growth Fund U.S. Growth Fund U.S. Growth Fund
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
1995 1994 1995 1994 1995 1994

<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $10.21 $10.00 $10.19 $10.00 $10.62 $10.00

Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss)................................ (0.09) (0.04) (0.14) (0.03) (0.10) (0.03)
Net Realized and Unrealized Gain (Loss) on Investments...... 2.31 0.26 2.28 0.22 2.33 0.65
Total From Investment Operations...................... 2.22 0.22 2.14 0.19 2.23 0.62
---- ---- ---- ---- ---- ----

Less Distributions to Shareholders
- ----------------------------------

From Net Investment Income.................................. --- (0.01) --- --- --- ---
From Net Realized Gains..................................... --- --- --- --- --- ---
----- ----- ----- ----- ----- ----
Total Distributions................................... 0.00 (0.01) 0.00 0.00 0.00 0.00
---- ------ ---- ---- ---- ----

Net Asset Value, End of Period.............................. $12.43 $10.21 $12.33 $10.19 $12.85 $10.62
====== ====== ====== ====== ====== ======

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

Total Return(2) ............................................ 21.74% 2.18% 21.00% 1.90% 21.00% 6.17%
- ------------

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

Ratios/Supplemental Data
- ------------------------

Net Assets, End of Period (000's omitted)...................$13,574 $10,669 $567 $204 $27 $5
Net Expenses to Average Daily Net Assets.................... 1.85% 1.85%(1) 2.50% 2.50%(1) 2.50% 2.50%(1)
Net Investment Income (Loss) to Average Daily Net Assets.... (0.88%) (0.51%)(1) (1.57%) (1.26%)(1) (1.61%) (1.09%)(1)
Portfolio Turnover Rate..................................... 58% 66% 58% 66% 58% 66%
Commencement of Operations.................................. 12/03/93 03/29/94 05/23/94
Without the Waiver of Fees and Reimbursement
of Expenses by the Adviser, the Ratio of
Net Expenses to Average Net Assets would have been:......... 2.94% 2.94%(1) 2.83% 3.60%(1) 2.82% 3.54%(1)

</TABLE>

- --------------------
(1) Annualized.
(2) Total return calculations exclude front-end sales load.

<PAGE>

<TABLE>
<CAPTION>
Adviser Funds, Inc.
------------------------------------------------------------------
Class A Shares Class B Shares Class C Shares
World Growth Fund World Growth Fund World Growth Fund
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
1995 1994 1995 1994 1995 1994

<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $11.00 $10.00 $10.40 $10.00 $10.43 $10.00

Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss)................................ 0.01 0.02 (0.02) (0.00) (0.06) (0.01)
Net Realized and Unrealized Gain (Loss) on Investments...... 0.40 1.01 0.35 0.43 0.39 0.44
---- ---- ---- ---- ---- ----
Total From Investment Operations...................... 0.41 1.03 0.33 0.43 0.33 0.45
---- ---- ---- ---- ---- ----

Less Distributions to Shareholders
- ----------------------------------

From Net Investment Income.................................. (0.01) (0.01) (0.02) (0.03) (0.03) (0.02)
From Net Realized Gains..................................... --- --- --- --- --- ---
----- ----- ----- ----- ----- ----
Total Distributions................................... (0.01) (0.01) (0.02) (0.03) (0.03) (0.02)
------ ------ ------ ------ ------ ------

Net Asset Value, End of Period.............................. $11.40 $11.00 $10.71 $10.40 $10.73 $10.43
====== ====== ====== ====== ====== ======

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

Total Return(2) ............................................ 3.81% 10.25% 3.19% 4.28% 3.16% 4.45%
- ------------

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

Ratios/Supplemental Data
- ------------------------

Net Assets, End of Period (000's omitted)...................$13,018 $11,721 $1,183 $523 $43 $38
Net Expenses to Average Daily Net Assets.................... 1.85% 1.85%(1) 2.50% 2.50%(1) 2.50% 2.50%(1)
Net Investment Income (Loss) to Average Daily Net Assets.... 0.00% 0.25%(1) (0.57%) 0.37%(1) (0.62%) (0.16%)(1)
Portfolio Turnover Rate..................................... 9% 6% 9% 6% 9% 6%
Commencement of Operations.................................. 12/03/93 03/29/94 05/10/94
Without the Waiver of Fees and Reimbursement
of Expenses by the Adviser, the Ratio of
Net Expenses to Average Net Assets would have been:......... 2.96% 3.56%(1) 3.61% 4.22%(1) 3.61% 4.23%(1)

</TABLE>

- --------------------
(1) Annualized.
(2) Total return calculations exclude front-end sales load.

<PAGE>

<TABLE>
<CAPTION>
Adviser Funds, Inc.
------------------------------------------------------------------
Class A Shares Class B Shares Class C Shares
New Pacific Fund New Pacific Fund New Pacific Fund
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
1995 1994 1995 1994 1995 1994

Net Asset Value, Beginning of Period........................... $10.44 $10.00 $10.86 $10.00 $10.66 $10.00

Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss)................................... (0.05) (0.02) (0.10) (0.03) (0.08) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments......... (1.39) 0.47 (1.46) 0.89 (1.46) 0.68
------ ---- ------ ---- ------ ----
Total From Investment Operations......................... (1.44) 0.45 (1.56) 0.86 (1.54) 0.66
------ ---- ------ ---- ------ ----

Less Distributions to Shareholders
- ----------------------------------

From Net Investment Income..................................... --- (0.01) --- --- --- ---
----- ----- ----- ---
From Net Realized Gains........................................ (0.29) --- (0.29) --- (0.29) ---
------- ----- ----- ----- ------ ----
Total Distributions...................................... (0.29) (0.01) (0.29) 0.00 (0.29) 0.00
------ ------ ------ ---- ------ ----

Net Asset Value, End of Period................................. $8.71 $10.44 $9.01 $10.86 $8.83 $10.66
===== ====== ===== ====== ===== ======

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

Total Return(2) ............................................... 13.99% 4.53% (14.56%) 8.58% 14.57% 6.55%
- ------------

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

Ratios/Supplemental Data
- ------------------------

Net Assets, End of Period (000's omitted)......................$10,353 $11,333 $573 $431 $17 $12
Net Expenses to Average Daily Net Assets....................... 1.85% 1.85%(1) 2.50% 2.50%(1) 2.50% 2.50%(1)
Net Investment Income (Loss) to Average Daily Net Assets....... (0.60%) (0.21%)(1) (1.20%) (0.88%)(1) (1.02%) (0.83%)(1)
Portfolio Turnover Rate........................................ 163% 104% 163% 104% 163% 104%
Commencement of Operations..................................... 12/03/93 03/29/94 07/07/94
Without the Waiver of Fees and Reimbursement
of Expenses by the Adviser, the Ratio of
Net Expenses to Average Net Assets would have been:............ 3.73% 3.66%(1) 4.38% 4.32%(1) 4.38% 4.31%(1)

</TABLE>

- --------------------
(1) Annualized.
(2) Total return calculations exclude front-end sales load.

<PAGE>

<TABLE>
<CAPTION>
Adviser Funds, Inc.
------------------------------------------------------------------
Class A Shares Class B Shares Class C Shares
Federal Bond Fund Federal Bond Fund Federal Bond Fund
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
1995 1994 1995 1994 1995 1994

<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................... $9.15 $10.00 $9.78 $10.00 $9.79 $10.00

Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss)................................... 0.57 0.38 0.57 0.12 0.63 0.15
Net Realized and Unrealized Gain (Loss) on Investments......... 0.65 (0.86) 0.65 (0.23) 0.47 (0.22)
---- ------ ---- ------ ---- ------
Total From Investment Operations......................... 1.22 (0.48) 1.22 (0.11) 1.10 (0.07)
---- ------ ---- ------ ---- ------

Less Distributions to Shareholders
- ----------------------------------

From Net Investment Income..................................... (0.57) (0.37) (0.75) (0.11) (0.51) (0.14)
From Net Realized Gains........................................ --- --- --- --- --- ---
----- ----- ----- ----- ----- ----
Total Distributions...................................... (0.57) (0.37) (0.75) (0.11) (0.51) (0.14)
------ ------ ------ ------ ------ ------

Net Asset Value, End of Period................................. $9.80 $9.15 $10.25 $9.78 $10.38 $9.79
===== ===== ====== ===== ====== =====

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

Total Return(2) ............................................... 13.72% (4.93%) 13.09% (1.11%) 11.59% (0.72%)
- ------------

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

Ratios/Supplemental Data
- ------------------------

Net Assets, End of Period (000's omitted)......................$11,062 9,658 $299 $239 $15 $49
Net Expenses to Average Daily Net Assets....................... 1.25% 1.25%(1) 1.90% 1.90%(1) 1.85% 1.90%(1)
Net Investment Income (Loss) to Average Daily Net Assets....... 6.07% 4.38%(1) 5.43% 4.87%(1) 4.73% 4.71%(1)
Portfolio Turnover Rate........................................ 227% 366% 227% 366% 227% 366%
Commencement of Operations..................................... 12/03/93 07/27/94 07/07/94
Without the Waiver of Fees and Reimbursement
of Expenses by the Adviser, the Ratio of
Net Expenses to Average Net Assets would have been:............ 2.06% 2.58%(1) 2.71% 3.22%(1) 2.70% 3.22%(1)

</TABLE>

- --------------------
(1) Annualized.
(2) Total return calculations exclude front-end sales load.

<PAGE>

<TABLE>
<CAPTION>
Adviser Funds, Inc.
------------------------------------------------------------------
Class A Shares Class B Shares Class C Shares
Corporate Income Fund Corporate Income Fund Corporate Income Fund
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $8.80 $10.00 $9.73 $10.00 $9.80 $10.00

Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss)................................ 0.61 0.51 0.66 0.29 0.18 0.08
Net Realized and Unrealized Gain (Loss) on Investments...... 0.91 (1.20) 0.91 (0.28) 1.33 (0.19)
---- ------ ---- ------ ---- ------
Total From Investment Operations...................... 1.52 (0.69) 1.57 0.01 1.51 (0.11)
---- ------ ---- ---- ---- ------

Less Distributions to Shareholders
- ----------------------------------

From Net Investment Income.................................. (0.56) (0.51) (0.85) (0.28) (0.87) (0.09)
From Net Realized Gains..................................... --- --- --- --- --- ---
------ ----- ------ ----- ----- -----
Total Distributions................................... (0.56) (0.51) (0.85) (0.28) (0.87) (0.09)
------ ------ ------ ------ ------ ------

Net Asset Value, End of Period.............................. $9.76 $8.80 $10.45 $9.73 $10.44 $9.80
===== ===== ====== ===== ====== =====

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

Total Return(2) ............................................ 17.71% (7.06%) 17.05% 0.11% 16.23% (1.00%)
- ------------

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

Ratios/Supplemental Data
- ------------------------

Net Assets, End of Period (000's omitted)...................$11,518 $9,620 $362 $222 $5 $9
Net Expenses to Average Daily Net Assets.................... 1.25% 1.25%(1) 1.90% 1.90%(1) 1.90% 1.90%(1)
Net Investment Income (Loss) to Average Daily Net Assets.... 6.64% 6.04%(1) 5.97% 5.94%(1) 5.75% 5.91%(1)
Portfolio Turnover Rate..................................... 119% 185% 119% 185% 119% 185%
Commencement of Operations.................................. 12/03/93 05/11/94 09/14/94
Without the Waiver of Fees and Reimbursement
of Expenses by the Adviser, the Ratio of
Net Expenses to Average Net Assets would have been:......... 1.87% 2.55%(1) 2.52% 3.21%(1) 2.52% 3.17%(1)

</TABLE>

- --------------------
(1) Annualized.
(2) Total return calculations exclude front-end sales load.

<PAGE>

INVESTMENT OBJECTIVES AND
STRATEGIES

The Equity Funds

Enterprise Fund. This Fund's fundamental investment objective is to
seek to provide maximum appreciation of capital by investing in medium-sized
companies which have a dominant position within their industry, are undervalued,
or have potential for growth in earnings. Currently, medium-sized companies are
considered to have market capitalizations between $250 million and $5 billion.
The Fund is unlikely to participate in slow growth industries such as utilities
and is likely to invest frequently in high growth rate companies in the retail,
health care, computer, communication and entertainment industries. Under normal
circumstances, at least 65% of the value of the Fund's assets will be invested
in equity securities.

In selecting investments, the Fund's Manager or sub-adviser seeks small
or medium capitalization companies that it believes have earnings that may be
expected to grow faster than the U.S. economy in general. These companies will
typically possess one or more characteristics, including high quality
management, a leading or dominant position in a product and a relatively high
rate of return on invested capital. Income derived from securities of such
companies is only an incidental consideration of the Fund.
The Fund will primarily invest in common stocks although it may invest
up to 35% of the value of its assets in convertible bonds, convertible preferred
stock, warrants to purchase common stock, futures and options.
The Fund may invest up to 15% of its assets in securities of foreign
issuers.

U.S. Growth Fund. This Fund's fundamental investment objective is to
seek to maximize capital appreciation by investing in companies of all sizes
which have low dividend yields, strong balance sheets and high expected earnings
growth rates relative to their industry.

The Manager or sub-adviser will seek investments in companies of all
sizes that the Manager or sub-adviser believes have earnings that may be
expected to grow faster than the U.S. economy in general. Such companies may
offer the possibility of accelerated earnings growth because of management
changes, new products or structural changes in the economy. In addition, those
companies with relatively high rates of return on invested capital may be able
to finance future growth from internal sources. Income derived from securities
in such companies will be only an incidental consideration of the Fund.

The Fund intends to invest primarily in common stocks believed by the
Manager or sub-adviser to have appreciation potential. However, common stock is
not always the class of security that provides the greatest possibility for
appreciation. The Fund may invest up to 35% of its assets in debt securities,
bonds, convertible bonds, preferred stock and convertible preferred stock. The
Fund may also invest up to 10% of its assets in securities rated lower than Baa
by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's
Ratings Group ("S&P") if, in the opinion of the Manager, doing so would further
the Fund's objective. Lower-rated or unrated securities, commonly referred to as
"junk bonds," are more likely to react to developments affecting market and
credit risk than are more highly rated securities, which react primarily to
movements in the general level of interest rates. See Risk Factors and Special
Considerations for a description of the risks inherent in such securities and
see Description of Security Ratings in Appendix B for a description of Moody's
and S&P ratings.

The Fund may invest up to 20% of its assets in foreign securities.

-12-
<PAGE>

World Growth Fund. This Fund's fundamental objective is to seek to
maximize total return (capital appreciation and income) by investing primarily
in equity securities of foreign issuers located in countries that the Fund's
Manager or sub-adviser deems to have attractive investment opportunities. "Total
return" refers to income plus realized and unrealized appreciation of the
securities. Under normal circumstances, the Fund will invest at least 65% of the
value of its total assets in securities of issuers located in at least three
countries other than the United States. However, more than 25% of the Fund's
total assets may be invested in the securities of issuers located in the same
country.

The Fund will emphasize established companies, although it may invest
in companies of varying sizes as measured by assets, sales and capitalization.
The Fund may invest in securities of issuers located in a variety of different
foreign regions and countries which includes, but is not limited to, the
following: Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Greece, Hong Kong, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico,
The Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, Thailand and The United Kingdom. The relative strength or weakness
of a particular country's currency or economy may dictate whether securities of
issuers located in such country will be purchased or sold. Criteria for
determining the appropriate distribution of investments among various countries
and regions include prospects for relative economic growth among foreign
countries, expected levels of inflation, government policies influencing
business conditions, the outlook for currency relationships, and the range of
investment opportunities available to international investors.
The Fund invests in common stock and may invest in other securities
with equity characteristics, consisting of trust or limited partnership
interests, preferred stock, rights and warrants. The Fund may also invest in
convertible securities, consisting of debt securities or preferred stock that
may be converted into common stock or that carry the right to purchase common
stock. The Fund may invest in securities listed on foreign or domestic
securities exchanges and securities traded in foreign and domestic
over-the-counter markets and may invest in restricted or unlisted securities. In
addition, the Fund's investments may include American Depository Receipts
(ADRs), American Depository Shares (ADSs) and securities of foreign investment
funds or trusts to the extent permitted under the Fund's investment
restrictions. See Risk Factors and Special Considerations -- Foreign
Investments, below. For a complete list of the Fund's investment restrictions,
see Investment Restrictions in Part B.
The Fund may invest up to 20% of its assets in securities of companies
located in, or governments of, developing countries. For temporary defensive
purposes, the Fund may invest a major portion of its assets in securities of
U.S. issuers. In addition, the Fund may be invested in short-term debt
instruments to meet anticipated day-to-day operating expenses and liquidity
requirements.

New Pacific Fund. This Fund's fundamental investment objective is to
seek to maximize long-term capital appreciation by investing primarily in equity
securities of companies domiciled or having their principal business activities
in countries located in the Pacific Basin.

The Fund will invest in companies of varying size, measured by assets,
sales and capitalization. The Fund will invest in companies in one or more of
the following Pacific Basin countries:

Australia Pakistan
China Philippines
Hong Kong Singapore
India South Korea
Indonesia Sri Lanka
Japan Taiwan
Malaysia Thailand
New Zealand

-13-

<PAGE>

The Fund may invest in companies located in other countries or regions
in the Pacific Basin as those economies and markets become more accessible. The
Fund will invest in other countries or regions only after the decision to do so
is disclosed in an amendment to this Prospectus. Any amendment to this
Prospectus containing such a material change will be delivered to investors.
While the Fund will generally have investments in companies located in at least
three different countries or regions, the Fund may from time to time have
investments only in one or a few countries or regions.
The Fund invests in common stock and may invest in other securities
with equity characteristics, consisting of trust or limited partnership
interests, preferred stock, rights and warrants. The Fund may also invest in
convertible securities, consisting of debt securities or preferred stock that
may be converted into common stock or that carry the right to purchase common
stock. The Fund may invest in securities listed on foreign or domestic
securities exchanges and securities traded in foreign and domestic
over-the-counter markets and may invest in restricted or unlisted securities.
Under normal circumstances, at least 65% of the Fund's assets will be
invested in equity securities of foreign issuers located in the Pacific Basin.
The Fund may invest in securities of companies located in, or governments of,
developing countries within the Pacific Basin. The Fund may invest up to 35% of
its assets in securities of U.S. issuers. In addition, the Fund may be invested
in short-term debt instruments to meet anticipated day-to-day operating expenses
and liquidity requirements.

The Fixed-Income Funds

Federal Bond Fund. This Fund's fundamental investment objective is to
seek to maximize current income consistent with the preservation of capital by
investing primarily in securities issued by the U.S. Government, its agencies
and instrumentalities ("U.S. Government Securities"). Under normal conditions,
at least 65% of the value of the Fund's total assets will be invested in U.S.
Government Securities.
Depending upon prevailing market conditions, the Fund may invest in
U.S. Government Securities of varying maturities, ranging up to 40 years. U.S.
Government Securities include certain mortgage-backed securities, such as
Government National Mortgage Association Certificates. See Mortgage-Backed
Securities under Implementation of Investment Objectives and Policies. As the
Fund invests primarily in U.S. Government Securities, which are lower-risk
securities, it may not achieve as high a level of income under all market
conditions as would be the case if the Fund invested in higher yielding
securities. Up to 35% of the Fund's assets may be invested in corporate bonds of
U.S. companies, mortgage-backed securities and asset-backed securities that are
rated at least Aa by Moody's or AA by S&P or, if not rated, are of comparable
quality in the Manager's or sub-adviser's opinion. See Description of Security
Ratings in Appendix B.
Corporate Income Fund. This Fund's fundamental investment objective is
to seek to provide a high level of current income consistent with preservation
of capital by investing primarily in corporate bonds of U.S. companies that are
rated at least Baa by Moody's or BBB by S&P or, if not rated, are of comparable
quality in the opinion of the Manager or sub-adviser. See Description of
Security Ratings in Appendix B.

Maturities of the corporate bonds held by the Fund are expected to
range from seven to 40 years, unless the Fund's Manager or sub-adviser believes
that investing in corporate bonds with shorter or longer maturities would be
appropriate in light of prevailing market conditions.

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<PAGE>

The Fund may also invest up to 35% of its assets in preferred stock,
corporate bonds and preferred stock convertible into or that carry the right to
acquire common stock, corporate bonds that are not of investment grade quality,
U.S. Government Securities, various mortgage-backed securities and asset-backed
securities, common stock consistent with the Fund's objective, and bonds issued
by foreign governments or foreign corporations, provided that no more than 10%
of the Fund's assets will be invested in bonds issued by foreign governments or
foreign corporations and no more than 10% of the Fund's assets will be
denominated in any one foreign currency. The Fund will not invest more than 35%
of its assets in bonds that are not of investment grade quality and will not
invest in bonds rated below Caa by Moody's or CCC by S&P. Lower-rated or unrated
securities, commonly referred to as "junk bonds," are more likely to react to
developments affecting market and credit risk than are more highly rated
securities, which primarily react to movements in the general level of interest
rates. See Risk Factors and Special Considerations for a description of the
risks inherent in such securities and see Description of Security Ratings in
Appendix B for a description of Moody's and S&P ratings.

Certain Investment Guidelines
Illiquid Securities. Up to 10% of the assets of each Fund may be
invested in securities that are not readily marketable, including, where
applicable: (1) repurchase agreements with maturities greater than seven
calendar days; (2) time deposits maturing in more than seven calendar days; (3)
certain instruments, futures contracts and options thereon for which there is no
liquid secondary market; (4) certain over-the-counter options, as described in
Part B; (5) certain variable rate demand notes having a demand period of more
than seven days; and (6) certain Rule 144A restricted securities (Rule 144A
securities for which a dealer or institutional market exists will not be
considered illiquid).

Restricted Securities. The Enterprise, U.S. Growth, World Growth and
New Pacific Funds may invest in restricted securities. Restricted securities are
securities with legal or contractual restrictions on resale. Restricted
securities eligible for resale pursuant to Rule 144A that have a readily
available market will not be considered illiquid for purposes of the Funds'
investment restriction concerning illiquid securities.

Other Guidelines. In addition, each Fund may invest up to 5% of its
assets in the securities of issuers which have been in continuous operation for
less than three years. Each Fund may also borrow from banks for temporary or
other emergency purposes, but not for investment purposes, in an amount up to
one-third of its total assets, and may pledge its assets to the same extent in
connection with such borrowings. Whenever these borrowings, including reverse
repurchase agreements, exceed 5% of the value of a Fund's total assets, the Fund
will not purchase any securities. Except for the limitations on borrowing, the
investment guidelines set forth in this paragraph may be changed at any time
without shareholder consent by vote of the Board of Directors. A complete list
of investment restrictions that identifies additional restrictions that cannot
be changed without the approval of a majority of an affected Fund's outstanding
shares (as well as other non-fundamental restrictions) is contained in Part B.

Risk Factors and Special Considerations
Fixed-Income Securities. The market value of fixed-income obligations
held by the Funds and, consequently, the net asset value per share of the Funds
investing in fixed-income securities can be expected to vary inversely to
changes in prevailing interest rates. When interest rates are falling, the

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<PAGE>

inflow of net new money to a Fixed-Income Fund will likely be invested in
instruments producing lower yields than the balance of assets in the Fund,
thereby reducing current yields. In periods of rising interest rates, the
opposite can be expected to occur. In addition, obligations purchased by the
Corporate Income Fund that are rated in the lowest of the top four ratings (Baa
by Moody's or BBB by S&P) are considered to have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher grade securities. See Lower-Rated Securities, below.
Foreign Investments. The World Growth Fund and the New Pacific Fund may
invest substantially all of their assets in foreign investments. Certain of the
Funds may invest the following percentages of their assets in foreign
securities: the Enterprise Fund (15%), the U.S. Growth Fund (20%) and the
Corporate Income Fund (10%). There are certain risks involved in investing in
foreign securities, including those resulting from fluctuations in currency
exchange rates, devaluation of currencies, future political or economic
developments and the possible imposition of currency exchange blockages or other
foreign governmental laws or restrictions, reduced availability of public
information concerning issuers, and the fact that foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to those
applicable to domestic companies. Although the Funds' Manager or sub-advisers do
not intend to expose the Funds to such risks, with respect to certain foreign
countries, there is the possibility of expropriation, nationalization,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Funds, including the withholding of dividends. When the Funds'
Manager or sub-adviser believes that currency in which a Fund security or
securities is denominated may suffer a decline against the United States dollar,
it may hedge such risk by entering into a forward contract to sell an amount of
foreign currency approximating the value of some or all of the Funds' portfolio
securities denominated in such foreign currency.

In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange. Accordingly, the Funds' foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of United States companies. Moreover, the
settlement periods for foreign securities, which are often longer than those for
securities of United States issuers, may affect portfolio liquidity. In buying
and selling securities on foreign exchanges, the Funds normally pay fixed

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<PAGE>

commissions that are generally higher than the negotiated commissions charged in
the United States. In addition, there is generally less governmental supervision
and regulation of securities exchanges, brokers and issuers in foreign countries
than in the United States.

The World Growth Fund and the New Pacific Fund may purchase foreign
equity and debt securities that are listed on a principal foreign securities
exchange or over-the-counter market, represented by American Depository Receipts
(ADRs) or American Depository Shares (ADSs). An ADR or ADS facility may be
either a "sponsored" or "unsponsored" arrangement. In a sponsored arrangement,
the foreign issuer establishes the facility, pays some or all the depository's
fees, and usually agrees to provide shareholder communications. In an
unsponsored arrangement, the foreign issuer is not involved and the ADR or ADS
holders pay the fees of the depository. Depository banks arrange unsponsored ADR
and ADS facilities, either upon their initiative or at the urging of large
shareholders of or dealers in the foreign securities.

Unsponsored ADRs or ADSs may involve more risk to the Fund than
sponsored ADRs or ADSs due to the additional costs involved to the Fund, the
relative illiquidity of the issue in U.S. markets, and the possibility of higher
trading costs in the over the counter market as opposed to exchange-based
trading. The Funds will take these and other risk considerations into account
before making an investment in an unsponsored ADR or ADS.
Investments in foreign securities offer potential benefits not
available from investments in securities of domestic issuers. Such benefits
include the opportunity to invest in securities that appear to offer greater
potential for long-term capital appreciation than investments in domestic
securities, and to reduce fluctuations in Fund value by taking advantage of
foreign stock markets that do not move in a manner parallel to U.S. markets.

Lower-Rated Securities. The following Funds may invest the following
percentages of their total assets in debt securities rated lower than Baa by
Moody's or BBB by S&P: U.S. Growth Fund (10%) and Corporate Income Fund (35%).
Prices for securities rated below investment grade may be affected by
legislative and regulatory developments. Securities rated Ba\BB or lower are
commonly referred to as "junk bonds." See Description of Security Ratings in
Appendix B. As of February 1, 1996, the Corporate Income Fund held 9.35% of its
total assets in securities rated BBB-, 1.89% of its total assets in securities
rated BB and 1.37% of its total assets in securities rated BB-. All such ratings
applied at the time of investment.

Securities rated below investment grade as well as unrated securities
usually entail greater risk (including the possibility of default or bankruptcy
of the issuers), and generally involve greater price volatility and risk of
principal and income, and may be less liquid, than securities in higher rated
categories. Both price volatility and illiquidity may make it difficult for the
Fund to value certain of these securities at certain times and these securities
may be difficult to sell under certain market conditions. Prices for securities
rated below investment grade may be affected by legislative and regulatory
developments.

Borrowing. Each of the Funds may borrow money for temporary or
emergency purposes in amounts not in excess of one-third of each Fund's total
assets. If a Fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is repaid. If a Fund makes additional
investments while borrowings are outstanding, this may be construed as a form of
leverage. None of the Funds, except for the Enterprise and U.S. Growth Funds,
will purchase additional securities when money borrowed exceeds 5% of the Fund's
total assets.

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<PAGE>

Securities Lending. Each Fund may lend securities with a value of up to
one-third of its total assets to broker/dealers, institutions and other persons
as a means of earning additional income. Any such loan shall be continuously
secured by collateral at least equal to 100% of the value of the security being
loaned. If the collateral is cash, it may be invested in short-term securities,
U.S. Government obligations or certificates of deposit. Each Fund will retain
the evidence of ownership of any loaned securities and will continue to be
entitled to the interest or dividends payable on the loaned securities. In
addition, the Fund will receive interest on the loan. The loan will be
terminable by the Fund at any time and will not be made to affiliates of the
Fund, the Manager or the respective sub-adviser. The Fund may pay reasonable
finder's fees to persons unaffiliated with it in connection with the arrangement
of loans.

If the other party to a securities loan becomes bankrupt, a Fund could
experience delays in recovering its securities. To the extent that, in the
meantime, the value of securities loans has increased, the Fund could experience
a loss.
Temporary Defensive Position. For temporary defensive purposes when the
Manager or sub-adviser determines that market conditions warrant, each Fund may
invest up to 100% of its assets in money market instruments. To the extent a
Fund is engaged in a temporary defensive position, the Fund will not be pursuing
its investment objective. Each Fund may also hold a portion of its assets in
cash for liquidity purposes.
Portfolio Turnover. The portfolio turnover rates for the Funds were
as follows:

Period Year
Ended Ended
October October
Fund 31, 1994 31, 1995
- ---- -------- --------

Enterprise
Fund 120% 106%

U.S. Growth
Fund 66% 58%

World Growth
Fund 6% 9%

New Pacific
Fund 104% 163%

Federal Bond
Fund 366% 227%

Corporate Income
Fund 185% 119%

High turnover in any Fund could result in additional brokerage
commissions to be paid by the Fund. In addition, high portfolio turnover may
also mean that a proportionately greater amount of distributions to shareholders
will be taxed as ordinary income rather than long-term capital gains compared to
investment companies with lower portfolio turnover. See Dividends, Distributions
and Taxes.

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<PAGE>

THE DELAWARE DIFFERENCE

PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.

SHAREHOLDER PHONE DIRECTORY

Investor Information Center
800-523-4640
Fund Information
Literature
Price, Yield and
Performance Figures

Shareholder Service Center
800-523-1918
Information on Existing
Regular Investment
Accounts and Retirement
Plan Accounts
Wire Investments
Wire Liquidations
Telephone Liquidations
Telephone Exchanges

Delaphone
800-362-FUND
(800-362-3863)

Shareholder Services
During business hours, you can call the Delaware Group's Shareholder
Service Center. Our representatives can answer any questions about your account,
the Funds, the various service features and other funds in the Delaware Group.

Performance Information
During business hours, you can call the
Investor Information Center for current performance information.

Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your account
faster than the mailed statements and confirmations. Delaphone also provides
current performance information on the Funds, as well as other funds in the
Delaware Group. Delaphone is available seven days a week, 24 hours a day.

Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of dividends. You
should examine statements and confirmations immediately and promptly report any
discrepancy by calling the Shareholder Service Center.

Duplicate Confirmations
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.

Tax Information
Each year, Adviser Funds, Inc. will mail to you information on the tax
status of your dividends and distributions.

Dividend Payments
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective, subject to
certain exceptions and limitations.

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<PAGE>

For more information, see Dividend Reinvestment Plan under How to Buy
Shares Additional Methods of Adding to Your Investment or call the Shareholder
Service Center.

Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of the other funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges, see
Investing by Exchange under How to Buy Shares and Redemption and Exchange.

Wealth Builder Option
You may elect to have amounts in your account automatically invested in
shares of other funds in the Delaware Group. Investments under this feature are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Class A, Class B and Class C Shares. See Redemption and
Exchange.

Right of Accumulation

With respect to Class A Shares, the Right of Accumulation feature
allows you to combine the value of your current holdings of Class A Shares,
Class B Shares and Class C Shares of a Fund with the dollar amount of new
purchases of Class A Shares of that Fund to qualify for a reduced front-end
sales charge on such purchases of Class A Shares. Under the Combined Purchases
Privilege, you may also include certain shares that you own in other funds in
the Delaware Group. See Classes of Shares.

Letter of Intention
The Letter of Intention feature permits you to obtain a reduced
front-end sales charge on purchases of Class A Shares by aggregating certain of
your purchases of Delaware Group fund shares over a 13-month period. See Classes
of Shares and Part B.

12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds
from a redemption of Class A Shares within one year of the date of the
redemption, without paying a front-end sales charge. See Part B.

Delaware Group Asset Planner

Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four
predesigned allocation strategies (each with a different risk/reward profile)
made up of separate investments in predetermined percentages of Delaware Group
funds. With the guidance of a financial adviser, investors may also tailor an
allocation strategy that meets their personal needs and goals. See Classes of
Shares and How to Buy Shares.

MoneyLine Direct Deposit Service
If you elect to have your dividends and distributions paid in cash and
such dividends and distributions are in an amount of $25 or more, you may choose
the MoneyLine Direct Deposit Service and have such payments transferred from
your Fund account to your predesignated bank account. See Dividends,
Distributions and Taxes. In addition, you may elect to have your Systematic
Withdrawal Plan payments transferred from your Fund account to your
predesignated bank account through this service. See Systematic Withdrawal Plans
under Redemption and Exchange. Your funds will normally be credited to your bank
account two business days after the payment date. There are no fees for this
service. You can initiate the MoneyLine Direct Deposit Service by completing an

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<PAGE>

Authorization Agreement. If your name and address are not identical to the name
and address on your Fund account, you must have your signature guaranteed. This
service is not available for retirement plans.

Financial Information about the Funds
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
each Fund's investments and performance. Adviser Funds, Inc.'s fiscal year ends
on October 31.

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<PAGE>

RETIREMENT PLANNING

An investment in the Funds may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred Compensation
Plans.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials. Fees
are quoted upon request. Certain shareholder investment services available to
non-retirement plan shareholders may not be available to retirement plan
shareholders. Certain retirement plans may qualify to purchase the Institutional
Class of each Fund. For additional information on any of the plans and
Delaware's retirement services, call the Shareholder Service Center or see
Part B.

Individual Retirement Account ("IRA")
Individuals, even if they participate in an employer-sponsored retirement
plan, may establish their own retirement program for investments in each of the
Classes. Contributions to an IRA may be tax-deductible and earnings are
tax-deferred. Under the Tax Reform Act of 1986, the tax deductibility of IRA
contributions is restricted, and in some cases eliminated, for individuals who
participate in certain employer-sponsored retirement plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn on a tax-deferred basis.

Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.

Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer may
also elect to make additional contributions to this plan. Class B Shares are not
available for purchase by such plans.

403(b)(7) Deferred Compensation Plan
Permits employees of public school systems or of certain types of
non-profit organizations to enter into a deferred compensation arrangement for
the purchase of shares of each of the Classes.

457 Deferred Compensation Plan
Permits employees of state and local governments and certain other
entities to enter into a deferred compensation arrangement for the purchase of
shares of each of the Classes.

Prototype Profit Sharing or Money Purchase Pension Plan
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in Class A
Shares or Class C Shares. Class B Shares are not available for purchase by such
plans.

Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan based on salary

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<PAGE>

deferral contributions in Class A Shares or Class C Shares. Class B Shares are
not available for purchase by such plans.
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another institution
through which mutual funds are marketed and which allow investments in Class A
Shares of designated Delaware Group funds ("eligible Delaware Group fund
shares"), as well as shares of designated classes of non-Delaware Group funds
("eligible non-Delaware Group fund shares"). Class B Shares and Class C Shares
are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Group and eligible non- Delaware Group fund shares
held by the Allied Plan may be combined with the dollar amount of new purchases
by that Allied Plan to obtain a reduced front-end sales charge on additional
purchases of eligible Delaware Group fund shares. See Front-End Sales Charge
Alternative - Class A Shares under Classes of Shares.

Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non-Delaware Group, which were not subject to a front-end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange under How to
Buy Shares.

A dealer's commission may be payable on purchases of eligible Delaware
Group fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of eligible
Delaware Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated. See Front-End Sales Charge
Alternative - Class A Shares under Classes of Shares.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described below under Waiver of Limited
Contingent Deferred Sales Charge - Class A Shares, apply to redemptions by
participants in Allied Plans, except in the case of exchanges between eligible
Delaware Group and non- Delaware Group fund shares. When eligible Delaware Group
fund shares are exchanged into eligible non-Delaware Group fund shares, the
Limited CDSC will be imposed at the time of the exchange, unless the joint
venture agreement specifies that the amount of the CDSC will be paid by the
financial adviser or selling dealer. See Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange.

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<PAGE>

CLASSES OF SHARES

Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed, at the
election of the purchaser, at the time of the purchase for Class A Shares
("front-end sales charge alternative"), or on a contingent deferred basis for
Class B Shares ("deferred sales charge alternative") or Class C Shares ("level
sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Class A Shares incur a sales charge when
they are purchased but generally are not subject to any sales charge when they
are redeemed. Class A Shares are subject to annual 12b-1 Plan expenses of up to
a maximum of .35% (currently, no more than .30% pursuant to Board action) of
average daily net assets of such shares. Certain purchases of Class A Shares
qualify for reduced front-end sales charges. See Front-End Sales Charge
Alternative - Class A Shares, below. See also Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value and
Distribution (12b-1) and Service.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end sales charge
when they are purchased, but are subject to a contingent deferred sales charge
if they are redeemed within six years of purchase. Class B Shares are subject to
annual 12b-1 Plan expenses of up to a maximum of 1% (.25% of which are service
fees to be paid to the Distributor, dealers or others for providing personal
service and/or maintaining shareholder accounts) of average daily net assets of
such shares for approximately eight years after purchase. Class B Shares permit
all of the investor's dollars to work from the time the investment is made. The
higher 12b-1 Plan expenses paid by Class B Shares will cause such shares to have
a higher expense ratio and to pay lower dividends than Class A Shares. At the
end of approximately eight years after purchase, the Class B Shares will
automatically be converted into Class A Shares. See Automatic Conversion of
Class B Shares, below. See Restructuring of the Funds under Management of the
Funds for information concerning the CDSC schedule and conversion feature
applicable to Class B Shares purchased on or before May 3, 1996.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares, which do not incur a front-end sales charge
when they are purchased, but are subject to a contingent deferred sales charge
if they are redeemed within 12 months of purchase. Class C Shares are subject to
annual 12b-1 Plan expenses of up to a maximum of 1% (.25% of which are service
fees to be paid to the Distributor, dealers or others for providing personal
service and/or maintaining shareholder accounts) of average daily net assets of
such shares for the life of the investment. The higher 12b-1 Plan expenses paid
by Class C Shares will cause such shares to have a higher expense ratio and to
pay lower dividends than Class A Shares.
Unlike Class B Shares, Class C Shares do not convert to another class.
The alternative purchase arrangements described above permit investors
to choose the method of purchasing shares that is most suitable given the amount
of their purchase, the length of time they expect to hold their shares and other
relevant circumstances. Investors should determine whether, given their
particular circumstances, it is more advantageous to purchase Class A Shares and
incur a front-end sales charge, purchase Class B Shares and have the entire
initial purchase amount invested in a Fund with their investment being subject
to a CDSC if they redeem shares within six years of purchase, or purchase Class
C Shares and have the entire initial purchase amount invested in a Fund with
their investment being subject to a CDSC if they redeem shares within 12 months
of purchase. In addition, investors should consider the level of annual 12b-1
Plan expenses applicable to each Class. In comparing Class B Shares to Class C
Shares, investors should also consider the desirability of an automatic
conversion feature, which is available only for Class B Shares.

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<PAGE>

As an illustration, investors who qualify for significantly reduced
front-end sales charges on purchases of Class A Shares, as described below,
might choose the front-end sales charge alternative because similar sales charge
reductions are not available under either the deferred sales charge alternative
or the level sales charge alternative. Moreover, shares acquired under the
front-end sales charge alternative are subject to annual 12b-1 Plan expenses of
up to .35% (currently, no more than .30% pursuant to Board action), whereas
Class B Shares acquired under the deferred sales charge alternative are subject
to annual 12b-1 Plan expenses of up to 1% for approximately eight years after
purchase (see Automatic Conversion of Class B Shares) and Class C Shares
acquired under the level sales charge alternative are subject to annual 12b-1
Plan expenses of up to 1% for the life of the investment. However, because
front-end sales charges are deducted from the purchase amount at the time of
purchase, investors who buy Class A Shares will not have their full purchase
amount invested in the Fund.
Other investors might determine it to be more advantageous to purchase
Class B Shares and have all their money invested initially, even though they
would be subject to a CDSC for up to six years after purchase and annual 12b-1
Plan expenses of up to 1% until the shares are automatically converted into
Class A Shares. Still other investors might determine it to be more advantageous
to purchase Class C Shares and have all of their funds invested initially,
recognizing that they would be subject to a CDSC for just 12 months after
purchase but that Class C Shares do not offer a conversion feature, so their
shares would be subject to annual 12b-1 Plan expenses of up to 1% for the life
of the investment. The higher 12b-1 Plan expenses on Class B Shares and Class C
Shares will be offset to the extent a return is realized on the additional money
initially invested upon the purchase of such shares. However, there can be no
assurance as to the return, if any, that will be realized on such additional
money.
Prospective investors should refer to Appendix A to this Prospectus for
an illustration of the potential effect that each of the purchase options may
have on a long-term shareholder's investment.
For the distribution and related services provided to, and the expenses
borne on behalf of, a Fund, the Distributor and others will be paid, in the case
of the Class A Shares, from the proceeds of the front-end sales charge and 12b-1
Plan fees and, in the case of the Class B Shares and the Class C Shares, from
the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred upon
redemption. Financial advisers may receive different compensation for selling
Class A, Class B and Class C Shares. Investors should understand that the
purpose and function of the respective 12b-1 Plans and the CDSCs applicable to
Class B and Class C Shares are the same as those of the 12b-1 Plan and the
front-end sales charge applicable to Class A Shares in that such fees and
charges are used to finance the distribution of the respective Classes.
See 12b-1 Distribution Plans - Class A, Class B and Class C Shares.
Dividends paid on Class A, Class B and Class C Shares, to the extent
any dividends are paid, will be calculated in the same manner, at the same time,
on the same day and will be in the same amount, except that the additional
amount of 12b-1 Plan expenses relating to Class B and Class C Shares will be
borne exclusively by such shares. See Calculation of Offering Price and Net
Asset Value Per Share.
The NASD has adopted certain rules relating to investment company sales
charges. Adviser Funds, Inc. and the Distributor intend to operate in compliance
with these rules.

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<PAGE>

Front-End Sales Charge Alternative - Class A Shares
Class A Shares of each Fund may be purchased at the offering price,
which reflects a maximum front-end sales charge of 4.75%. See Calculation of
Offering Price and Net Asset Value Per Share.
Purchases of $100,000 or more carry a reduced front-end sales charge as
shown in the following table.
<TABLE>
<CAPTION>

Class A Shares
- --------------------------------------------------------------------------------------------------------------------------
Dealer's
Commission***
Front-End Sales Charge as % of as % of
Amount of Purchase Offering Offering
Price Amount Invested** Price
- --------------------------------------------------------------------------------------------------------------------------

Corpo-
Enter- U.S. World New Federal rate
prise Growth Growth Pacific Bond Income
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than $100,000 4.75% 4.96% 4.99% 5.00% 4.94% 5.00% 5.02% 4.00%
$100,000 but under $250,000 3.75 3.90 3.86 3.86 3.90 3.88 3.89 3.00
$250,000 but under $500,000 2.50 2.57 2.57 2.54 2.53 2.55 2.56 2.00
$500,000 but under $1,000,000* 2.00 2.04 2.01 2.02 2.07 2.04 2.05 1.00

</TABLE>

* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% Limited CDSC
may apply upon redemption of such shares.

** Based on the net asset value per share of the Class A Shares as of the end
of Adviser Funds, Inc.'s most recent fiscal year.

*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.

- -------------------------------------------------------------------------------
Each Fund, as appropriate, must be notified when a sale takes place which
would qualify for the reduced front-end sales charge on the basis of
previous or current purchases. The reduced front-end sales charge will be
granted upon confirmation of the shareholder's holdings by such Fund. Such
reduced front-end sales charges are not retroactive.

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<PAGE>

For initial purchases of Class A Shares of $1,000,000 or more, a dealer's
commission may be paid by the Distributor to financial advisers through whom
such purchases are made, in accordance with the following schedule:

Dealer's
Commission
----------
(as a percent-
age of amount
Amount of Purchase purchased)
- ------------------

Up to $2 million 1.00%
Next $1 million up to $3 million .75
Next $2 million up to $5 million .50
Amount over $5 million .25

In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A Shares
of a Fund. Financial advisers also may be eligible for a dealer's commission in
connection with certain purchases made under a Letter of Intention or pursuant
to an investor's Right of Accumulation. Financial advisers should contact the
Distributor concerning the applicability and calculation of the dealer's
commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for payment
of the dealer's commission, unless a dealer's commission or similar payment has
not been previously paid on the assets being exchanged. The schedule and program
for payment of the dealer's commission are subject to change or termination at
any time by the Distributor at its discretion.
Redemptions of Class A Shares purchased at net asset value may result in
the imposition of a Limited CDSC if the dealer's commission described above was
paid in connection with the purchase of those shares. See Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange.

Combined Purchases Privilege
By combining your holdings of Class A Shares with your holdings of
Class B Shares and/or Class C Shares of a Fund and shares of the other funds in
the Delaware Group, except those noted below, you can reduce the front-end sales
charges on any additional purchases of Class A Shares. Shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with ownership of variable
insurance products may be combined with other Delaware Group fund holdings.
Shares of other funds that do not carry a front-end sales charge or CDSC may not
be included unless they were acquired through an exchange from a Delaware Group
fund that does carry a front-end sales charge or CDSC.
This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of Intention.
A Letter of Intention allows you to make purchases over a 13-month period and
qualify the entire purchase for a reduction in front-end sales charges on Class
A Shares.
Combined purchases of $1,000,000 or more, including certain purchases made
at net asset value pursuant to a Right of Accumulation or under a Letter of
Intention, may result in the payment of a dealer's commission and the
applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative - Class A Shares, above.

Buying Class A Shares at Net Asset Value
Class A Shares may be purchased at net asset value under the Delaware
Group Dividend Reinvestment Plan and, under certain circumstances, the Exchange

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Privilege and the 12-Month Reinvestment Privilege. (See The Delaware Difference
and Redemption and Exchange for additional information.)

Purchases of Class A Shares may be made at net asset value by current and
former officers, directors and employees (and members of their families) of the
Manager, any affiliate, any of the funds in the Delaware Group, certain of their
agents and registered representatives and employees of authorized investment
dealers and by employee benefit plans for such entities. Individual purchases,
including those in retirement accounts, must be for accounts in the name of the
individual or a qualifying family member.
Purchases of Class A Shares may be made by clients of registered
representatives of an authorized investment dealer at net asset value within 12
months after the registered representative changes employment, if the purchase
is funded by proceeds from an investment where a front-end sales charge,
contingent deferred sales charge or other sales charge has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of Delaware Group
funds. Officers, directors and key employees of institutional clients of the
Manager or any of its affiliates may purchase Class A Shares at net asset value.
Moreover, purchases may be effected at net asset value for the benefit of the
clients of brokers, dealers and registered investment advisers affiliated with a
broker or dealer, if such broker, dealer or investment adviser has entered into
an agreement with the Distributor providing specifically for the purchase of
Class A Shares in connection with special investment products, such as wrap
accounts or similar fee based programs.
Investors who held shares in any class of any Delaware Group fund as of
December 1, 1995, may currently purchase Class A Shares at net asset value
through the Delaware Group Asset Planner service if such shares are being
purchased with proceeds from the redemption of shares of a fund (other than a
money market fund) outside of the Delaware Group of funds. The Investment
Application and check for such a transaction should note that the investment is
being made under the "NAV/Asset Planner Accommodation Program." Prior notice
will be given should this program be discontinued. Class A Shares may also be
purchased at net asset value in an IRA through the Delaware Group Asset Planner
service if the assets being invested are being transferred from an existing IRA
held outside of the Delaware Group or are part of a distribution received from
an employer-sponsored or other retirement plan. See Delaware Group Asset Planner
under How To Buy Shares.

Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.

Each Fund, as appropriate, must be notified in advance that an
investment qualifies for purchase of Class A Shares at net asset value.

Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit Sharing,
Pension and 401(k) Defined Contribution Plans) may benefit from the reduced
front-end sales charges available on Class A Shares set forth in the table on

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<PAGE>

page , based on total plan assets. In addition, 403(b)(7) and 457 Retirement
Plan Accounts may benefit from a reduced front-end sales charge on Class A
Shares based on the total amount invested by all participants in the plan by
satisfying the following criteria: (i) the employer for which the plan was
established has 250 or more eligible employees and the plan lists only one
broker of record, or (ii) the plan includes employer contributions and the plan
lists only one broker of record. If a company has more than one plan investing
in the Delaware Group of funds, then the total amount invested in all plans will
be aggregated to determine the applicable sales charge reduction on each
purchase, both initial and subsequent, if, at the time of each such purchase,
the company notifies the Fund in which it is investing that it qualifies for the
reduction. Employees participating in such Group Investment Plans may also
combine the investments held in their plan account to determine the front-end
sales charge applicable to purchases in non-retirement Delaware Group investment
accounts if, at the time of each such purchase, they notify the Fund in which
they are investing that they are eligible to combine purchase amounts held in
their plan account.

For additional information on retirement plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
For other retirement plans and special services, see Retirement Planning.

Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class B Shares at the time of
purchase from its own assets in an amount equal to no more than 4% of the dollar
amount purchased. As discussed below, however, Class B Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within six years of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b- 1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees makes it possible for the Funds to sell
Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class B Shares
described in this Prospectus, even after the exchange. Such CDSC schedule may be
higher than the CDSC schedule for the Class B Shares acquired as a result of the
exchange. See Redemption and Exchange.

Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the last business day
of the second full week of March, June, September and December (each, a
"Conversion Date"). If the eighth anniversary after a purchase of Class B Shares
falls on a Conversion Date, an investor's Class B Shares will be converted on
that date. If the eighth anniversary occurs between Conversion Dates, an

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<PAGE>

investor's Class B Shares will be converted on the next Conversion Date after
such anniversary. Consequently, if a shareholder's eighth anniversary falls on
the day after a Conversion Date, that shareholder will have to hold Class B
Shares for as long as three additional months after the eighth anniversary after
purchase before the shares will automatically convert into Class A Shares. See
Restructuring of the Fund under Management of the Funds concerning the
conversion feature applicable to Class B Shares purchased on or before May 3,
1996.
Class B Shares of a fund acquired through reinvestment of dividends will
convert to the corresponding Class A Shares of that fund (or, in the case of
Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant Class)
pro-rata with Class B Shares of that fund not acquired through dividend
reinvestment.

All such automatic conversions of Class B Shares will constitute tax-free
exchanges for federal income tax purposes. See Dividends, Distributions and
Taxes.

Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the Fund will invest the full amount of the
investor's purchase payment. The Distributor currently anticipates compensating
dealers or brokers for selling Class C Shares at the time of purchase from its
own assets in an amount equal to no more than 1% of the dollar amount purchased.
As discussed below, however, Class C Shares are subject to annual 12b-1 Plan
expenses and, if redeemed within 12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b- 1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class C
Shares. Payments to the Distributor and others under the Class C 12b-1 Plan may
be in an amount equal to no more than 1% annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class C Shares
described in this Prospectus. See Redemption and Exchange.

Contingent Deferred Sales Charge - Class B Shares and Class C Shares

Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below, and Class C Shares redeemed within 12 months
of purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the net asset value at the time of purchase of the shares
being redeemed or the net asset value of those shares at the time of redemption.
No CDSC will be imposed on increases in net asset value above the initial
purchase price. Nor will a CDSC be assessed on redemptions of shares acquired
through reinvestments of dividends or capital gains distributions. For purposes
of this formula, the "net asset value at the time of purchase" will be the net
asset value at purchase of either the Class B Shares or the Class C Shares of a
Fund, as the case may be, even if those shares are later exchanged for shares of
another Delaware Group fund. In the event of an exchange of the shares, the "net
asset value of such shares at the time of redemption" will be the net asset
value of the shares that were acquired in the exchange.

The following table sets forth the rates of the CDSC for the Class B
Shares of the Funds:

Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
- ------------------------ ------------------

0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None

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<PAGE>

During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, the Class B Shares will still be subject to
the annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. See Automatic Conversion of Class B Shares, above. See also
Restructuring of the Fund under Management of the Funds for information
concerning the CDSC schedule applicable to Class B Shares purchased on or before
May 3, 1996. Investors are reminded that the Class A Shares into which the Class
B Shares will convert are subject to ongoing annual 12b-1 Plan expenses of up to
a maximum of .35% (currently, no more than .30% pursuant to Board action) of
average daily net assets of such shares.
In determining whether a CDSC applies to a redemption of Class B Shares,
it will be assumed that shares held for more than six years are redeemed first,
followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to Class C Shares, it will be assumed that shares held for more
than 12 months are redeemed first, followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for 12
months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of Contingent Deferred Sales Charge - Class B and Class C
Shares under Redemption and Exchange.

12b-1 Distribution Plans -- Class A, Class B and Class C Shares
Under the distribution plans adopted by Adviser Funds, Inc. in accordance
with Rule 12b- 1 under the 1940 Act, Adviser Funds, Inc. is permitted to pay the
Distributor annual distribution fees of up to .35% (currently, no more than .30%
pursuant to Board action) of the average daily net assets of the Class A Shares,
and 1% of the average daily net assets of each of the Class B Shares and the
Class C Shares. These fees, which are payable monthly, compensate the
Distributor for providing distribution and related services and bearing certain
expenses of each Class. The 12b-1 Plans applicable to the Class B Shares and the
Class C Shares are designed to permit an investor to purchase these shares
through dealers or brokers without paying a front-end sales charge while
enabling the Distributor to compensate dealers and brokers for the sale of such
shares. For a more detailed discussion of the 12b-1 Plans relating to the Class
A, Class B, and Class C Shares, see Distribution (12b-1) and Service under
Management of the Funds.

Other Payments to Dealers -- Class A, Class B and Class C Shares
From time to time at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Classes exceed certain limits, as
set by the Distributor, may receive from the Distributor an additional payment
of up to .25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.
Subject to pending amendments to the NASD's Rules of Fair Practice, in
connection with the promotion of Delaware Group fund shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars and
conferences, reimburse dealers for expenses incurred in connection with

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preapproved seminars, conferences and advertising and may, from time to time,
pay or allow additional promotional incentives to dealers, which shall include
non-cash concessions, such as certain luxury merchandise or a trip to or
attendance at a business or investment seminar at a luxury resort, as part of
preapproved sales contests. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Rules of Fair Practice will be amended such that
the ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Rules of Fair Practice as they may be amended.

Classes Offered

The following funds currently offer Class A, Class B and Class C Shares:
Delaware Group Delchester High-Yield Bond Fund, Inc., Delaware Group Government
Fund, Inc., Limited-Term Government Fund of Delaware Group Limited- Term
Government Funds, Inc., Delaware Group Cash Reserve, Inc., Tax-Free USA Fund,
Tax- Free Insured Fund and Tax-Free USA Intermediate Fund of Delaware Group
Tax-Free Fund, Inc., Delaware Group DelCap Fund, Inc., Delaware Fund and Devon
Fund of Delaware Group Delaware Fund, Inc., Delaware Group Value Fund, Inc.,
Delaware Group Trend Fund, Inc., Decatur Income Fund and Decatur Total Return
Fund of Delaware Group Decatur Fund, Inc., International Equity Fund, Global
Bond Fund, Global Assets Fund and Emerging Markets Fund of Delaware Group Global
& International Funds, Inc., DMC Tax-Free Income Trust - Pennsylvania and each
Fund. In addition, Delaware Group Cash Reserve, Inc. offers Consultant Class
shares.

U.S. Government Money Series of Delaware Group Limited-Term Government
Funds, Inc. and Delaware Group Tax-Free Money Fund, Inc. offer only Class A and
Consultant Class shares.

Institutional Classes
In addition to offering the Class A, Class B and Class C Shares of each
Fund, Adviser Funds, Inc. also offers an Institutional Class for each Fund
(formerly referred to as Class D Shares), which is described in a separate
prospectus and is available for purchase only by certain investors.
Institutional Class shares generally are distributed directly by the Distributor
and do not have a front-end sales charge, a CDSC or a Limited CDSC, and are not
subject to 12b-1 plan distribution expenses. To obtain the prospectus that
describes the Institutional Classes, contact the Distributor by writing to the
address or by calling the telephone number listed on the back cover of this
Prospectus.

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HOW TO BUY SHARES

Purchase Amounts

Generally, the minimum initial purchase is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases of shares of any Class
generally must be $100 or more. For purchases under a Uniform Gifts to Minors
Act or Uniform Transfers to Minors Act or through an Automatic Investing Plan,
there is a minimum initial purchase of $250 and a minimum subsequent purchase of
$25. Minimum purchase requirements do not apply to retirement plans other than
IRAs for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25, regardless of which class is selected.

There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares. For Class C Shares, each purchase must be in an amount that is
less than $1,000,000. An investor may exceed these maximum purchase limitations
by making cumulative purchases over a period of time. In doing so, an investor
should keep in mind that reduced front-end sales charges are available on
investments of $100,000 or more in Class A Shares, and that Class A Shares (i)
are subject to lower annual 12b-1 Plan expenses than Class B Shares and Class C
Shares and (ii) generally are not subject to a CDSC. For retirement plans, the
maximum purchase limitations apply only to the initial purchase of Class B
Shares or Class C Shares by the plan.

Investing through Your Investment Dealer
You can make a purchase of shares of the Funds through most investment
dealers who, as part of the service they provide, must transmit orders promptly.
They may charge for this service. If you want a dealer but do not have one, we
can refer you to one.

Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
account, an appropriate retirement plan application, must be completed, signed
and sent with a check payable to the specific Fund and Class selected at 1818
Market Street, Philadelphia, PA 19103.

2. Subsequent Purchases--Additional purchases may be made at any time by mailing
a check payable to the specific Fund and Class selected. Your check should be
identified with your name(s) and account number. An investment slip (similar to
a deposit slip) is provided at the bottom of transaction confirmations and
dividend statements that you will receive from Adviser Funds, Inc. Use of this
investment slip can help expedite processing of your check when making
additional purchases. Your investment may be delayed if you send additional
purchases by certified mail.

Investing by Wire
You may purchase shares by requesting your bank to transmit funds by wire
to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include your
name(s) and your account number for the Class in which you are investing).

1. Initial Purchases--Before you invest, telephone the Shareholder Service
Center to get an account number. If you do not call first, processing of your
investment may be delayed. In addition, you must promptly send your Investment
Application or, in the case of a retirement account, an appropriate retirement
plan application, to the specific Fund and Class selected, at 1818 Market
Street, Philadelphia, PA 19103.

2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Shareholder Service Center by telephone of each wire you send.

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If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.

Delaware Group Asset Planner
To invest in Delaware Group funds using the Delaware Group Asset Planner
asset allocation service, you should complete a Delaware Group Asset Planner
Account Registration Form, which is available only from a financial adviser or
investment dealer. As previously described, the Delaware Group Asset Planner
service offers a choice of four predesigned asset allocation strategies (each
with a different risk/reward profile) in predetermined percentages in Delaware
Group funds or, with the help of a financial adviser, you may design a
customized asset allocation strategy.

The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Group accounts into the Asset Planner service may be made at net asset value
under the circumstances described under Investing by Exchange, below. Also see
Buying Class A Shares at Net Asset Value under Classes of Shares. The minimum
initial investment per Strategy is $2,000; subsequent investments must be at
least $100. Individual fund minimums do not apply to investments made using the
Asset Planner service. Class A, Class B and Class C Shares are available through
the Asset Planner service; however, only shares within the same class may be
used within the same Strategy.
An annual maintenance fee, currently $35 per Strategy, is due at the time
of initial investment and by September 30th of each subsequent year. However,
for all IRA accounts established with the same Social Security number under the
Asset Planner service, the annual maintenance fee will be limited to $35
irrespective of the number of Strategies selected. For example, if you transfer
regular IRA assets and rollover assets from a qualified plan into an IRA through
the Delaware Group Asset Planner service and, to avoid commingling, maintain
more than one Strategy registered under the same Social Security number, only
one $35 annual fee needs to be paid. The fee, payable to Delaware Service
Company, Inc. to defray extra costs associated with administering the Asset
Planner service, will be deducted automatically from one of the funds within
your Asset Planner account if not paid by September 30th. See Part B.

Investors will receive a customized quarterly Strategy Report summarizing
all Delaware Group Asset Planner investment performance and account activity
during the prior period. Confirmation statements will be sent following all
transactions other than those involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.

Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
shares of a Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus.
Holders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group, including other
Class A Shares, but may not exchange their Class A Shares for Class B Shares or
Class C Shares of a Fund or of any other fund in the Delaware Group. Holders of

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Class B Shares of a Fund are permitted to exchange all or part of their Class B
Shares only into Class B Shares of other Delaware Group funds. Similarly,
holders of Class C Shares of a Fund are permitted to exchange all or part of
their Class C Shares only into Class C Shares of other Delaware Group funds.
Class B Shares of a Fund and Class C Shares of a Fund acquired by exchange will
continue to carry the CDSC and, in the case of Class B Shares, the automatic
conversion schedule of the fund from which the exchange is made. The holding
period of the Class B Shares of a Fund acquired by exchange will be added to
that of the shares that were exchanged for purposes of determining the time of
the automatic conversion into Class A Shares of that Fund.
Permissible exchanges into Class A Shares of a Fund will be made without a
front-end sales charge except for exchanges of shares that were not previously
subject to a front-end sales charge (unless such shares were acquired through
the reinvestment of dividends). Permissible exchanges into Class B Shares or
Class C Shares of a Fund will be made without the imposition of a CDSC by the
fund from which the exchange is being made at the time of the exchange.
See Retirement Planning for information on exchanges by participants in an
Allied Plan.

Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to
use the following services:

1. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize Adviser Funds,
Inc. to transfer a designated amount monthly from your checking account to your
Fund account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases and
changes to these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.

2. Direct Deposit
You may have your employer or bank make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). Each Fund also accepts preauthorized recurring government and private
payments by Electronic Fund Transfer, which avoids mail time and check clearing
holds on payments such as social security, federal salaries, Railroad Retirement
benefits, etc.

* * *

Should investments by direct deposit or through an Automatic Investing
Plan be reclaimed or returned for some reason, Adviser Funds, Inc. has the right
to liquidate your Fund shares to reimburse the government or transmitting bank.
If there are insufficient funds in your account, you are obligated to reimburse
the Fund.

3. Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in a Fund through
regular liquidations of shares in their accounts in other funds in the Delaware
Group, subject to the same conditions and limitations as other exchanges noted
above.

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<PAGE>

Shareholders also may elect to invest in other mutual funds in the
Delaware Group through our Wealth Builder Option through exchanges from their
Fund account. Under this automatic exchange program, shareholders can authorize
regular monthly amounts (minimum of $100 per fund) to be liquidated from their
Fund account and invested automatically into an account in one or more funds in
the Delaware Group. If, in connection with the Wealth Builder Option, a
shareholder wishes to open a new account in such other fund or funds to receive
the automatic investment, such new account must meet such other fund's minimum
initial purchase requirements. Investments under this option are exchanges and
are therefore subject to the same conditions and limitations as other exchanges
noted above.

Shareholders can terminate their participation at any time by written
notice to their Fund. See Redemption and Exchange.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.

4. Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account. Or, you may invest
your distributions in certain other funds in the Delaware Group, subject to the
exceptions noted below as well as the eligibility and minimum purchase
requirements set forth in each fund's prospectus.
Reinvestments of distributions into Class A Shares of a Fund or of other
Delaware Group funds are made without a front-end sales charge. Reinvestments of
distributions into Class B Shares of a Fund or of other Delaware Group funds or
into Class C Shares of a Fund or of other Delaware Group funds are also made
without any sales charge and will not be subject to a CDSC if later redeemed.
See Automatic Conversion of Class B Shares under Classes of Shares for
information concerning the automatic conversion of Class B Shares acquired by
reinvesting dividends.
Holders of Class A Shares of a Fund may not reinvest their distributions
into Class B Shares or Class C Shares of any fund in the Delaware Group,
including the Funds. Holders of Class B Shares of a Fund may reinvest their
distributions only into Class B Shares of the funds in the Delaware Group which
offer that class of shares (the "Class B Funds"). Similarly, holders of Class C
Shares of a Fund may reinvest their distributions only into Class C Shares of
the funds in the Delaware Group which offer that class of shares (the"Class C
Funds"). See Classes Offered under Classes of Shares for a list of the funds
offering those classes of shares. For more information about reinvestments, call
the Shareholder Service Center.

Purchase Price and Effective Date
The offering price and net asset value of the
Class A, Class B and Class C Shares are determined as of the close of regular
trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on
days when the Exchange is open.
The effective date of a purchase made through an investment dealer is the
date the order is received by the Fund in which the shares are being purchased.
The effective date of a direct purchase is the day your wire, electronic
transfer or check is received, unless it is received after the time the offering
price or net asset value of shares is determined, as noted above. Purchase
orders received after such time will be effective the next business day.

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The Conditions of Your Purchase
Each Fund reserves the right to reject any purchase order. If a
purchase is canceled because your check is returned unpaid, you are responsible
for any loss incurred. Each Fund can redeem shares from your account(s) to
reimburse itself for any loss, and you may be restricted from making future
purchases in any of the funds in the Delaware Group. Each Fund reserves the
right to reject purchase orders paid by third-party checks or checks that are
not drawn on a domestic branch of a United States financial institution. If a
check drawn on a foreign financial institution is accepted, you may be subject
to additional bank charges for clearance and currency conversion.
Each Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account balance
and advised that they have until the end of the current calendar quarter to
raise their balance to the stated minimum. If the account has not reached the
minimum balance requirement by that time, the Fund in which the account is held
will charge a $9 fee for that quarter and each subsequent calendar quarter until
the account is brought up to the minimum balance. The service fee will be
deducted from the account during the first week of each calendar quarter for the
previous quarter, and will be used to help defray the cost of maintaining
low-balance accounts. No fees will be charged without proper notice, and no CDSC
will apply to such assessments.
Each Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of a
CDSC or Limited CDSC if he or she redeems any portion of his or her account.

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REDEMPTION AND EXCHANGE

You can redeem or exchange your shares in a number of different ways. The
exchange service is useful if your investment requirements change and you want
an easy way to invest in other equity funds, tax-advantaged funds, bond funds or
money market funds. This service is also useful if you are anticipating a major
expenditure and want to move a portion of your investment into a fund that has
the checkwriting feature. Exchanges are subject to the requirements of each fund
and all exchanges of shares constitute taxable events. See Dividends,
Distributions and Taxes. Further, in order for an exchange to be processed,
shares of the fund being acquired must be registered in the state where the
acquiring shareholder resides. You may want to consult your financial adviser or
investment dealer to discuss which funds in the Delaware Group will best meet
your changing objectives and the consequences of any exchange transaction. You
may also call the Delaware Group directly for fund information.

All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC or Limited CDSC.
Redemption or exchange requests received in good order after the time the
offering price and net asset value of shares are determined, as noted above,
will be processed on the next business day. See Purchase Price and Effective
Date under How to Buy Shares. A shareholder submitting a redemption request may
indicate that he or she wishes to receive redemption proceeds of a specific
dollar amount. In the case of such a request, and in the case of certain
redemptions from retirement plan accounts, the Fund will redeem the number of
shares necessary to deduct the applicable CDSC in the case of Class B or Class C
Shares, or, if applicable, the Limited CDSC in the case of Class A Shares and
tender to the shareholder the requested amount, assuming the shareholder holds
enough shares in his or her account for the redemption to be processed in this
manner. Otherwise, the amount tendered to the shareholder upon redemption will
be reduced by the amount of the applicable CDSC or Limited CDSC.

Except as noted below, for a redemption request to be in "good order," you
must provide your account number, account registration, and the total number of
shares or dollar amount of the transaction. For exchange requests, you must also
provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Shareholder Service Center at 800-523-1918. Any
certificates that have been issued for shares you wish to redeem or exchange
must accompany your order. See below and Part B. Each Fund may suspend,
terminate, or amend the terms of the exchange privilege upon 60 days' written
notice to shareholders.
Each Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. No Fund will honor redemption requests as to shares for which a check
was tendered as payment until the Fund is reasonably satisfied that the check
has cleared, which may take up to 15 days from the purchase date. You can avoid
this potential delay if you purchase shares by wiring Federal Funds. Each Fund
reserves the right to reject a written or telephone redemption request or delay
payment of redemption proceeds if there has been a recent change to the
shareholder's address of record.

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There is no front-end sales charge or fee for exchanges made between
shares of funds which both carry a front-end sales charge. Any applicable
front-end sales charge will apply to exchanges from shares of funds not subject
to a front-end sales charge, except for transfers involving assets that were
previously invested in a fund with a front-end sales charge and/or transfers
involving the reinvestment of dividends.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for Class B Shares of other Class B Funds or Class C Shares
of other Class C Funds, as applicable (in each case, "New Shares"), will not be
subject to a CDSC that might otherwise be due upon redemption of the Original
Shares. However, such shareholders will continue to be subject to the CDSC and,
in the case of Class B Shares, the automatic conversion schedule of the Original
Shares as described in this Prospectus and any CDSC assessed upon redemption
will be charged by the Fund from which the Original Shares were exchanged. In an
exchange of Class B Shares from a Fund, such Fund's CDSC schedule may be higher
than the CDSC schedule relating to the New Shares acquired as a result of the
exchange. For purposes of computing the CDSC that may be payable upon a
disposition of the New Shares, the period of time that an investor held the
Original Shares is added to the period of time that an investor held the New
Shares. With respect to Class B Shares, the automatic conversion schedule of the
Original Shares may be longer than that of the New Shares. Consequently, an
investment in the New Shares by exchange may subject an investor to the higher
12b-1 fees applicable to Class B Shares for a longer period of time than if the
investment in the New Shares were made directly. See Restructuring of the Funds
under Management of the Funds for the CDSC schedule and the conversion feature
applicable to Class B Shares purchased on or before May 3, 1996.
Various redemption and exchange methods are outlined below. Except for the
CDSC applicable to certain redemptions of Class B Shares and Class C Shares and
the Limited CDSC applicable to certain redemptions of Class A Shares purchased
at net asset value, there is no fee charged by either Fund or the Distributor
for redeeming or exchanging your shares, but such fees could be charged in the
future. You may have your investment dealer arrange to have your shares redeemed
or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund to which the
authorization relates or its agent.

Written Redemption
You can write to each Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares. The request must be signed by all owners
of the account or your investment dealer of record. For redemptions of more than
$50,000, or when the proceeds are not sent to the shareholder(s) at the address
of record, the Funds require a signature by all owners of the account and a
signature guarantee for each owner. Each signature guarantee must be supplied by
an eligible guarantor institution. The Funds reserve the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Funds may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day, but no later than seven
days, after receipt of your redemption request. If your Class A Shares are in
certificate form, the certificate must accompany your request and also be in
good order. Certificates are issued for Class A Shares only if a shareholder
submits a specific request. Certificates are not issued for Class B or Class C
Shares.

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Written Exchange
You may also write to each Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group, subject to the same conditions and limitations as
other exchanges noted above.

Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you may
redeem or exchange only by written request and you must return your
certificates.
The Telephone Redemption-Check to Your Address of Record service and the
Telephone Exchange service, both of which are described below, are automatically
provided unless you notify the Fund in which you have your account in writing
that you do not wish to have such service available with respect to your
account. Each Fund reserves the right to modify, terminate or suspend these
procedures upon 60 days' written notice to shareholders. It may be difficult to
reach the Funds by telephone during periods when market or economic conditions
lead to an unusually large volume of telephone requests.

Neither the Funds nor their Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, each Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, such Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.

Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day, but no later than seven days, after receipt of the request. This service is
only available to individual, joint and individual fiduciary-type accounts.

Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next business
day, but no later than seven days, after receipt of your request to your
predesignated bank account. Except for any CDSC which may be applicable to Class
B and Class C Shares and the Limited CDSC which may be applicable to certain
Class A Shares, there are no fees for this redemption method, but the mail time

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may delay getting funds into your bank account. Simply call the Shareholder
Service Center prior to the time the offering price and net asset value are
determined, as noted above.
If expedited payment by check or wire could adversely affect a Fund, such
Fund may take up to seven days to pay.

Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to adjust
your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into any fund in the Delaware Group under the same registration, subject
to the same conditions and limitations as other exchanges noted above. As with
the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.

Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or quarterly)
payment. This is particularly useful to shareholders living on fixed incomes,
since it can provide them with a stable supplemental amount. With accounts of at
least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or more.
The Funds do not recommend any particular monthly amount, as each shareholder's
situation and needs vary. Payments are normally made by check. In the
alternative, you may elect to have your payments transferred from your Fund
account to your predesignated bank account through the MoneyLine Direct Deposit
Service. Except for the Limited CDSC which may be applicable to Class A Shares
and the CDSC which may be applicable to Class B and Class C Shares as noted
below, there are no fees for this redemption method. See MoneyLine Direct
Deposit Service under The Delaware Difference for more information above this
service.

2. Retirement Plans

For shareholders eligible under the applicable retirement plan to receive
benefits in periodic payments, the Systematic Withdrawal Plan provides you with
maximum flexibility. A number of formulas are available for calculating your
withdrawals, depending upon whether the distributions are required or optional.
Withdrawals must be for $25 or more; however, no minimum account balance is
required. The MoneyLine Direct Deposit Service described above is not available
for retirement plans.

* * *

Shareholders should not purchase additional shares while participating in
a Systematic Withdrawal Plan.
Redemptions of Class A Shares via a Systematic Withdrawal Plan may be
subject to a Limited CDSC if the original purchase was made at net asset value
within the 12 months prior to the withdrawal and a dealer's commission has been
paid on that purchase. See Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value, below.

The applicable CDSC for Class B Shares and Class C Shares redeemed via a
Systematic Withdrawal Plan will be waived if, on the date that the Plan is
established, the annual amount selected to be withdrawn is less than 12% of the
account balance. If the annual amount selected to be withdrawn exceeds 12% of
the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be

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redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or were
acquired through the reinvestment of distributions. The 12% annual limit will be
reset on the date that any Systematic Withdrawal Plan is modified (for example,
a change in the amount selected to be withdrawn or the frequency or date of
withdrawals), based on the balance in the account on that date. See Waiver of
Contingent Deferred Sales Charge - Class B and Class C Shares, below.
For more information on Systematic Withdrawal Plans, call the Shareholder
Service Center.

Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value

A Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission previously described. See
Classes of Shares.

The Limited CDSC will be paid to the Distributor and will be equal to the
lesser of 1% of: (1) the net asset value at the time of purchase of the Class A
Shares being redeemed; or (2) the net asset value of such Class A Shares at the
time of redemption. For purposes of this formula, the "net asset value at the
time of purchase" will be the net asset value at purchase of the Class A Shares
even if those shares are later exchanged for shares of another Delaware Group
fund and, in the event of an exchange of Class A Shares, the "net asset value of
such shares at the time of redemption" will be the net asset value of the shares
acquired in the exchange.
Redemptions of such Class A Shares held for more than 12 months will not
be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group fund will not trigger the imposition of the Limited CDSC
at the time of such exchange. The period a shareholder owns shares into which
Class A Shares are exchanged will count towards satisfying the 12-month holding
period. The Limited CDSC is assessed if such 12-month period is not satisfied
irrespective of whether the redemption triggering its payment is of Class A
Shares of a Fund or Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed that
shares not subject to the Limited CDSC are the first redeemed followed by other
shares held for the longest period of time. The Limited CDSC will not be imposed
upon shares representing reinvested dividends or capital gains distributions, or
upon amounts representing share appreciation. All investments made during a
calendar month, regardless of what day of the month the investment occurred,
will age one month on the last day of that month and each subsequent month.

Waiver of Limited Contingent Deferred Sales Charge--Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that result
from a Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
minimum account size; (ii) distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986,
as amended ("the Code"), or due to death of a participant in such a plan; (iii)
redemptions pursuant to the direction of a participant or beneficiary of a
retirement plan qualified under section 401(a) or 401(k) of the Code with

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respect to that retirement plan; (iv) distributions from a section 403(b)(7)
Plan or an IRA due to death, disability, or attainment of age 59 1/2; (v)
returns of excess contributions to an IRA; (vi) distributions by other employee
benefit plans to pay benefits; (vii) distributions described in (ii), (iv), and
(vi) above pursuant to a systematic withdrawal plan; and (viii) redemptions by
the classes of shareholders who are permitted to purchase shares at net asset
value, regardless of the size of the purchase (see Buying Class A Shares at Net
Asset Value under Classes of Shares).

Waiver of Contingent Deferred Sales Charge--Class B and Class C Shares

The CDSC is waived on redemptions of Class B Shares in connection with the
following redemptions: (i) redemptions that result from a Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the shares
held in the account is less than the then-effective minimum account size; (ii)
returns of excess contributions to an IRA or 403(b)(7) Deferred Compensation
Plan; (iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, or 457 Deferred Compensation Plan; and (iv) distributions
from an account if the redemption results from the death of all registered
owners of the account (in the case of accounts established under the Uniform
Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts, the
waiver applies upon the death of all beneficial owners) or a total and permanent
disability (as defined in Section 72 of the Code) of all registered owners
occurring after the purchase of the shares being redeemed.

The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from a Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii) returns of
excess contributions to an IRA, 403(b)(7) Deferred Compensation Plan, Profit
Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution Plan;
(iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan, or 401(k) Defined Contribution Plan; (iv) distributions
from a 403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan,
Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) Deferred Compensation
Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money Purchase
Pension Plan or a 401(k) Defined Contribution Plan upon attainment of normal
retirement age under the plan or upon separation from service; (vi)
distributions from an IRA on or after attainment of age 59 1/2; and (vii)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts,
the waiver applies upon the death of all beneficial owners) or a total and
permanent disability (as defined in Section 72 of the Code) of all registered
owners occurring after the purchase of the shares being redeemed.

In addition, the CDSC will be waived on Class B and Class C Shares
redeemed in accordance with a Systematic Withdrawal Plan if the annual amount
selected to be withdrawn under the Plan does not exceed 12% of the value of the
account on the date that the Systematic Withdrawal Plan was established or
modified.

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DIVIDENDS, DISTRIBUTIONS AND TAXES

The tax discussion set forth below is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in a Fund.
The Fixed-Income Funds accrue dividends from net investment income and
usually distribute such accrued dividends to shareholders monthly. The Equity
Funds declare dividends from net investment income and usually distribute such
accrued dividends to shareholders at least annually. All capital gains, if any,
are distributed annually, usually in December. When a capital gain dividend is
declared, the net asset value per share is reduced by the amount of the
dividend. Investors considering buying shares of one of the Funds just prior to
a record date for a taxable dividend or capital gain distribution should be
aware that, regardless of whether the price of the Fund shares to be purchased
reflects the amount of the forthcoming dividend or distribution payment, any
such payment will be a taxable dividend or distribution payment.
Both dividends and distributions, if any, are automatically reinvested in
your account at net asset value unless you elect otherwise. Any check in payment
of dividends or other distributions which cannot be delivered by the United
States Post Office or which remains uncashed for a period of more than one year
may be reinvested in the shareholder's account at the then-current net asset
value, and the dividend option may be changed from cash to reinvest. If you
elect to take your dividends and distributions in cash and such dividends and
distributions are in an amount of $25 or more, you may choose the MoneyLine
Direct Deposit Service and have such payments transferred from your Fund account
to your predesignated bank account. See MoneyLine Direct Deposit Service under
The Delaware Difference for more information about this service.
Each Fund has qualified and intends to continue to qualify as a "regulated
investment company" under the Code. In any fiscal year in which each Fund so
qualifies and distributes to shareholders its net investment income and net
realized capital gains, each Fund will be relieved of federal income tax. It is
each Fund's policy to distribute to the shareholders all of its net investment
income and capital gains realized during each fiscal year.
Under current law for each of the Funds, dividends paid from net
investment income and distributions of net realized short-term capital gains are
taxable to shareholders as ordinary income, regardless of how long shareholders
have held their Fund shares or whether such dividends and distributions are
received in cash or reinvested in additional Fund shares. Distributions of net
realized long-term capital gains will be taxable to shareholders as long-term
capital gains, regardless of how long shareholders have held Fund shares and
whether such distributions are received in cash or are reinvested in additional
Fund shares. The per share dividends and distributions on Class A Shares will be
higher than the per share dividends and distributions on Class B and Class C
Shares as a result of lower distribution fees applicable to Class A Shares.
Furthermore, as a general rule, a shareholder's gain or loss on a sale or
redemption of Fund shares will be a long-term capital gain or loss if the
shareholder has held the shares for more than one year and will be a short-term
capital gain or loss if the shareholder has held the shares for one year or
less. Some of the Funds' dividends declared from net investment income may
qualify for the federal dividends-received deduction for corporations. The
investor will be notified each year as to the amount and federal tax status of
all dividends and capital gains paid during the prior year. Such dividends and
capital gains may also be subject to state or local taxes.

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A portion of each Fund's income, including income from repurchase
agreements and gains from options and futures transactions may be taxable to
shareholders as ordinary income. Long-term capital gains from options and
futures transactions may be taxable to shareholders as ordinary income.
Long-term capital gains distributions, if any, are taxable as long term capital
gains, regardless of the length of time a shareholder has owned shares.
Short-term capital gains and other taxable income distributions are taxable as
ordinary income.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November or December to shareholders of
record on a specified date in one of those months, but which, for operational
reasons, may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by a Fund and received by the shareholder on
December 31 of the year declared.
If an investor has not furnished a certified correct taxpayer
identification number (generally a Social Security number) and has not certified
that withholding does not apply, or if the Internal Revenue Service has notified
a Fund that the taxpayer identification number listed on the investor's account
is incorrect according to their records or that the investor is subject to
backup withholding, federal law generally requires the Fund to withhold 31% from
any dividends and/or redemptions (including exchange redemptions). Amounts
withheld are applied to the investor's federal tax liability; a refund may be
obtained from the Internal Revenue Service if withholding results in overpayment
of taxes. Federal law also requires the Funds to withhold 30% or the applicable
tax treaty rate from dividends paid to certain nonresident alien, non-U.S.
partnership and non-U.S. corporation shareholder accounts.
The automatic conversion of Class B Shares into Class A Shares at the end
of approximately eight years after purchase will be tax-free for federal tax
purposes. See Automatic Conversion of Class B Shares under Classes of Shares.

In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. Government Securities may be exempt from
state personal income taxes. Shares of each Fund are exempt from Pennsylvania
county personal property taxes.

Certain Funds may be required to pay withholding and other taxes imposed
by foreign countries in connection with their investments outside the U.S.
generally at rates from 10% to 40%, which would reduce these Funds' investment
income.

Certain income received by the World Growth and New Pacific Funds may be
subject to foreign taxes. If more than 50% of the value of the Fund's total
assets at the close of any taxable year consists of securities of foreign
corporations, the Fund may elect to treat any foreign taxes paid by it as paid
by its shareholders. If a Fund makes this election, its shareholders will
generally be required to include in income their respective pro-rata positions
in computing their taxable income or, alternatively, to claim foreign tax
credits (subject, in either case, to certain limitations). Each year that a Fund
makes such an election, it will report to its shareholders the amount per share
of foreign taxes it has elected to have treated as paid by its shareholders.

See Dividends, Distributions and Taxes in Part B for additional
information on tax matters relating to each Fund and its shareholders.

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CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE

The offering price and NAV are computed as of the close of regular trading
on the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when
the Exchange is open.

The net asset values of all outstanding shares of each class of a Fund
will be computed on a pro-rata basis for each outstanding share based on the
proportionate participation in that Fund represented by the value of shares of
that class. All income earned and expenses incurred by a Fund will be borne on a
pro-rata basis by each outstanding share of a class, based on each class'
percentage in that Fund represented by the value of shares of such classes,
except that the Institutional Classes will not incur any distribution fees under
the 12b-1 Plans and the Class A, Class B and Class C Shares alone will bear the
12b-1 Plan expenses payable under their respective 12b-1 Plans. Due to the
specific distribution expenses and other costs that will be allocable to each
class, the net asset value of each class of a Fund may vary.

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MANAGEMENT OF THE FUNDS

Directors
The business and affairs of Adviser Funds, Inc. are managed under the
direction of its Board of Directors. Part B contains additional information
regarding the directors and officers.

Investment Manager

Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to each Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On December 31, 1995, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $28 billion in assets in the various institutional (approximately
$17,606,321,000) and investment company (approximately $10,522,726,000)
accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). In turn, DMH is a wholly-owned subsidiary, and subject
to the ultimate control, of Lincoln National Corporation ("Lincoln National").
Lincoln National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services industry,
including insurance and investment management.
The Manager administers the affairs of and is ultimately responsible for
the investment management of each of the Funds under separate Investment
Management Agreements with Adviser Funds, Inc. on behalf of each Fund dated May
4, 1996.

Investment Management Agreements. The Investment Management Agreements
were approved by the Board of Directors of Adviser Funds, Inc., including a
majority of the Directors who are not "interested persons" of Adviser Funds,
Inc., on February 23, 1996 and approved by the respective shareholders of the
Funds at a shareholder meeting held on May 3, 1996. See Restructuring of the
Funds, below.
Under the Investment Management Agreements, the Manager receives advisory
fees monthly based upon each Fund's average daily net assets at the following
annual rates:

Enterprise Fund .80%
U.S. Growth Fund .70%
World Growth Fund 1.10%
New Pacific Fund .80%
Federal Bond Fund .30%
Corporate Income Fund .30%

The Manager elected voluntarily to waive that portion, if any, of its
investment advisory fees and to reimburse a Fund's expenses to the extent
necessary to ensure that a Fund's expenses do not exceed the amounts noted under
Summary of Expenses.

The advisory fees for the Enterprise, World Growth and New Pacific Funds,
while higher than the advisory fees paid by other mutual funds in general, are
comparable to fees paid by other mutual funds with similar objectives and
policies. For the fiscal year ended October 31, 1995, the following investment
management fees based on a percentage of a Fund's average daily net assets
(before reimbursement) were paid to Lincoln Investment Management, Inc. ("LIM"),
the investment manager to the Funds prior to the close of business on May 3,
1996:

Enterprise Fund .80%
U.S. Growth Fund .70%
World Growth Fund 1.10%
New Pacific Fund 1.10%*
Federal Bond Fund .30%
Corporate Income Fund .30%

* The Board of Directors approved a reduction from 1.10% to .80% in the
investment advisory fee for New Pacific Fund effective the close of
business May 3, 1996.

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<PAGE>

Securities regulations of various states in which the Funds intend to have
shareholders may provide that, if expenses borne by a Fund in any fiscal year
exceed certain limitations, the Manager must reimburse the Fund for any such
excess at least annually and prior to publication of the Fund's Annual Report.

The percentage limitation includes the advisory fee but excludes interest,
taxes, a portion of a Fund's service and distribution fee, a portion of a Fund's
custody fee attributable to investments in foreign securities, brokerage fees
and, where permitted, extraordinary expenses. These expense limitations may be
raised or lowered from time to time. Under present state regulations, the most
restrictive limitation of state securities commissions is: 2 1/2% of the first
$30,000,000 of average net assets of a Fund, 2% of the next $70,000,000 of
average net assets and 1 1/2% of average net assets in excess of $100,000,000
during the applicable year. During any year the Manager will be bound by the
most stringent applicable requirements of any state in which a Fund has
registered its shares for sale.

The Investment Management Agreements will continue in effect for a period
of two years from the date of their execution, and will continue annually
thereafter if approved by a vote of a majority of the directors who are not
interested persons of Adviser Funds, Inc. or the Manager, at a meeting called
for the purpose of voting on such approval. The Investment Management Agreements
may be terminated without penalty at any time (1) on 60 days' written notice, by
vote of a majority of the Board of Directors of Adviser Funds, Inc., (2) on 60
days' written notice, by vote of a majority of the outstanding voting securities
of the Funds, or (3) on 60 days' written notice by the Manager. The Investment
Management Agreements terminate automatically in the event of "assignment." The
terms "assignment," "majority of outstanding voting securities" and "interested
person" are as defined in the 1940 Act.

Investment Sub-Advisers

Pursuant to a sub-advisory agreement with the Manager (the "Sub-Advisory
Agreement" or, collectively, the "Sub-Advisory Agreements"), each Fund's
sub-adviser participates in the management of its respective Fund's assets, is
responsible for the day-to-day investment management of the Fund, makes
investment decisions for the Fund in accordance with the Fund's investment
objective and stated policies and places orders on behalf of the Fund to effect
the investment decisions made. The Manager continues to have ultimate
responsibility for all investment advisory services in connection with the
management of the Funds pursuant to the Investment Management Agreement and
supervises the sub-advisers' performance of such services.
The following registered investment advisers act as sub-advisers (the
"Sub-Advisers" or individually the "Sub-Adviser") to the Manager with respect to
the management of the assets of the Funds as indicated below.
LIM, Sub-Adviser to the Manager with respect to management of the assets
of the Corporate Income Fund and the Federal Bond Fund, 200 East Berry Street,
Fort Wayne, Indiana 46802, is an indirect, wholly-owned subsidiary of Lincoln
National and an affiliate of the Manager. LIM acts as investment adviser to
several registered investment companies in addition to those Funds. LIM also
provides investment services to Lincoln National and its principal subsidiaries
and acts as investment adviser to the other clients. As of December 31, 1995,
LIM had total assets under management in excess of $37 billion. Timothy J.
Policinski has had primary responsibility for making investment decisions for
Federal Bond Fund and Corporate Income Fund since January 1995. Mr. Policinski

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<PAGE>

currently serves as a Second Vice President and a Portfolio Manager for LIM. Mr.
Policinski joined Lincoln in 1978 and has held several investment-related
positions including management of annuity and pension assets in excess of $3
billion. He also has experience in short-term investments and cash management.
He holds a BS in economics and an MBA from Indiana University. He is also a
candidate for CFA designation.
Lynch & Mayer, Inc., Sub-Adviser to the Manager with respect to
management of the assets of the Enterprise Fund and the U.S. Growth Fund, 520
Madison Avenue, New York, New York 10022, is an indirect, wholly-owned
subsidiary of Lincoln National and an affiliate of the Manager. Lynch & Mayer,
Inc. provides investment advice to pension funds, foundations, endowments,
trusts and high net worth individuals and families and had assets under
management, as of December 31, 1995, in excess of $6.6 billion. Edward J. Petner
and Kevin P. Ferguson have had primary responsibility for making investment
decisions for Enterprise Fund since the Fund's inception. Mr. Petner currently
serves as President and Co-Chief Executive Officer of Lynch & Mayer, Inc. Before
joining Lynch & Mayer, Inc. in 1983, Mr. Petner received a BA from Duquesne
University in 1981 and an MBA from the Wharton School in 1983. Mr. Ferguson
serves as Vice President for Lynch & Mayer, Inc. Before joining Lynch & Mayer,
Inc. in 1992, he was a Senior Financial Analyst for American Express. Mr.
Ferguson received a BS from Boston College in 1986 and an MBA from New York
University in 1992.
Anthony A. Segalas has had primary responsibility for making investment
decisions for U.S. Growth Fund since Lynch & Mayer, Inc. assumed sub-advisory of
the Fund in 1996. Before joining Lynch & Mayer, Inc. in 1984, Mr. Segalas was
Assistant Treasurer/Pension Trust for Chase Manhattan Bank, N.A. He received a
BS from Boston University in 1980 and an MBA from Fordham University in 1985.
Walter Scott & Partners Limited, Sub-Adviser to the Manager with respect
to management of the assets of the World Growth Fund, Millburn Tower, Gogar,
Edinburgh, Scotland EH12 9BS, provides investment advice to pension funds and
foundations and had assets under management, as of December 31, 1995, in excess
of $2.0 billion. Walter Scott & Partners Limited uses a team of Fund managers to
provide the advisory services to World Growth Fund pursuant to the Sub-Advisory
Agreement.
John Govett & Company Limited, Sub-Adviser to the Manager with respect to
management of the assets of the New Pacific Fund, Shackleton House, 4
Battlebridge Lane, London, England SE1 2HR, provides investment advice to
investment trusts, investment companies, mutual funds and pension funds and had
assets under management, as of December 31, 1995, of $5.1 billion. Peter Robson
has had primary responsibility for making investment decisions for New Pacific
Fund since the Fund's inception. Mr. Robson currently serves as a Senior
Portfolio Manager and Director for John Govett & Company Limited and specializes
in the management of Far Eastern investments. Before joining John Govett &
Company Limited in 1990, Mr. Robson was with BZW Investment Management where he
managed UK unit trusts before moving to specialize in Far Eastern Markets. Mr.
Robson is a graduate of Oxford University, and was commissioned into the 1st
Queen's Dragoon Guards in 1985.

The sub-advisers receive subadvisory fees from the Manager for their
services calculated in accordance with the schedule set forth below. The Funds
do not pay any fees to the sub-advisers.

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<PAGE>

Fund Sub-Adviser Annual Fee
- ---- ----------- ----------

U.S.
Growth Fund Lynch Mayer, Inc. .40%

World Walter Scott &
Growth Fund Partners Limited .80%

New Pacific John Govett &
Fund Company Limited .50%

Corporate
Income Lincoln Investment
Fund Management, Inc. .30%

Federal
Bond Lincoln Investment
Fund Management, Inc. .30%

Enterprise
Fund Lynch & Mayer, Inc. .50% on the
first $150
million and
.35% on
assets over
$150
million

Custodian
The Chase Manhattan Bank, N.A. serves as Custodian for each of the Funds
and, in that capacity, has custody of the Funds' securities. Its mailing address
is 4 Chase Metrotech Center, Brooklyn, NY 11245. The Chase Manhattan Bank, N.A.
is not involved in the investment decisions made with respect to the Funds.

Execution of Fund Transactions
Each Fund uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager or
its advisory clients. These services may be used by the Manager in servicing any
of its accounts. Subject to best price and execution, each Fund may consider a
broker/dealer's sales of Fund shares in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain Fund expenses such
as custodian fees.

Affiliates of the Manager, such as Lynch & Mayer, Inc., may act as a
broker or futures commission merchant for Adviser Funds, Inc., provided that the
commissions, fees or other remuneration it receives are fair and reasonable. See
Execution of Fund Transactions in Part B.

Performance Information
From time to time, each Fund may quote total return performance or yield
(if applicable) of its Classes in advertising and other types of literature.
Total return will be based on a hypothetical $1,000 investment, reflecting
the reinvestment of all distributions at net asset value and: (i) in the case of
Class A Shares, the impact of the maximum front-end sales charge at the
beginning of each specified period; and (ii) in the case of Class B Shares and
Class C Shares, the deduction of any applicable CDSC at the end of the relevant
period. Each presentation will include the average annual total return for one-,
five- and ten-year periods, as relevant. Each Fund may also advertise aggregate
and average total return information concerning a Class over additional periods
of time. In addition, each Fund may present total return information that does
not reflect the deduction of the maximum front-end sales charge or any
applicable CDSC. In this case, such total return information would be more
favorable than total return information which includes deductions of the maximum
front-end sales charge or any applicable CDSC.

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<PAGE>

The current yield for a Class will be calculated by dividing the
annualized net investment income earned by that Class during a recent 30-day
period by the net asset value per share on the last day of the period. The yield
formula provides for semi-annual compounding which assumes that net investment
income is earned and reinvested at a constant rate and annualized at the end of
a six-month period.
Because securities prices fluctuate, investment results of the Classes
will fluctuate over time and past performance should not be considered as a
representation of future results.

Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor for
each Fund under separate Distribution Agreements dated September 25, 1995.
Adviser Funds, Inc. has adopted a separate distribution plan under Rule
12b-1 for each of the Class A Shares, the Class B Shares and the Class C Shares
(the "Plans"). Each Plan permits the Fund to which it relates to pay the
Distributor from the assets of its respective Classes a monthly fee for the
Distributor's services and expenses in distributing and promoting sales of
shares. These expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, holding special promotions
for specified periods of time, and paying distribution and maintenance fees to
brokers, dealers and others.
The 12b-1 Plan expenses relating to each of the Class B Shares and Class C
Shares are also used to pay the Distributor for advancing the commission costs
to dealers with respect to the initial sale of such shares.
Under the Plans, the aggregate fees paid a Fund from the assets of its
respective Classes to the Distributor and others under the Plans may not exceed
.35% of the Class A Shares' average daily net assets in any year, and 1% (.25%
of which are service fees to be paid by such Fund to the Distributor, dealers
and others, for providing personal service and/or maintaining shareholder
accounts) of each of the Class B Shares' and the Class C Shares' average daily
net assets in any year. The Class A, Class B and Class C Shares will not incur
any distribution expenses beyond these limits, which may not be increased
without shareholder approval. The Distributor may, however, incur additional
expenses and make additional payments to dealers from its own resources to
promote the distribution of shares of the Classes.

Although the maximum fee payable under the Plan relating to each of the
Class A Shares is .35% of average daily net assets, the Board of Directors,
effective at the close of business on May 3, 1996, has determined that the
annual fee payable on a monthly basis, under such Plan, will be equal to .30% of
average daily net assets.

Adviser Funds, Inc.'s Plans do not apply to the Institutional Classes of
shares. Those shares are not included in calculating the Plans' fees, and the
Plans are not used to assist in the distribution and marketing of the
Institutional Classes.
While payments pursuant to the Plans may not exceed .35% annually with
respect to the Class A Shares and 1% annually with respect to each of the Class
B Shares and the Class C Shares, the Plans do not limit fees to amounts actually
expended by the Distributor. It is therefore possible that the Distributor may
realize a profit in any particular year. However, the Distributor currently
expects that its distribution expenses will likely equal or exceed payments to
it under the Plans. The monthly fees paid to the Distributor are subject to the
review and approval of Adviser Funds, Inc.'s unaffiliated directors who may
reduce the fees or terminate the Plans at any time.

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<PAGE>

In connection with the promotion of Class A, Class B and Class C Shares,
the Distributor may, from time to time, pay to participate in dealer- sponsored
seminars and conferences, and reimburse dealers for expenses incurred in
connection with preapproved seminars, conferences and advertising. The
Distributor may pay or allow additional promotional incentives to dealers as
part of preapproved sales contests and/or to dealers who provide extra training
and information concerning a Class and increase sales of the Class. In addition,
each Fund may make payments from the assets of its respective Classes directly
to others, such as banks, who aid in the distribution of Class shares or provide
services in respect of such Classes, pursuant to service agreements with Adviser
Funds, Inc. See Other Payments to Dealers - Class A, Class B and Class C Shares
under Classes of Shares.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for each Fund
under separate Agreements dated September 25, 1995. The directors annually
review service fees paid to the Transfer Agent.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH and Lincoln National.

Expenses
Each Fund is responsible for all of its own expenses other than those
borne by the Manager under its Investment Management Agreements and those borne
by the Distributor under its Distribution Agreements. For the fiscal year ended
October 31, 1995, the ratios of expenses to average daily net assets for each
Class were as follows:

Class Class Class
A B C
Shares Shares Shares
------ ------ ------

Enterprise Fund 1.85% 2.50% 2.50%
U.S. Growth Fund 1.85% 2.50% 2.50%
World Growth Fund 1.85% 2.50% 2.50%
New Pacific Fund 1.85% 2.50% 2.50%
Federal Bond Fund 1.25% 1.90% 1.85%
Corporate Income Fund 1.25% 1.90% 1.90%

The expense ratio of each Class reflects the impact of its 12b-1 Plan and the
fee waiver and reimbursements in effect on October 31, 1995. See Summary of
Expenses for current fee waivers and reimbursements.

Restructuring of the Funds

Until April 26, 1996, Adviser Funds, Inc. consisted of nine series of
shares (the six current Funds as well as three other funds) and was named the
Lincoln Advisor Funds, Inc. ("LAF"). On February 23, 1996, the LAF's Board of
Directors approved a restructuring to integrate fully the LAF into the Delaware
Group of funds. The restructuring provided, among other things, for the
liquidation of three funds, other than the Funds; the appointment of Delaware
Management Company, Inc. as the investment manager of each of the Funds; the
appointment of the sub-advisers described in this Prospectus; the changes in the
names as follows: Lincoln Enterprise Portfolio to Enterprise Fund; Lincoln U.S.
Growth Portfolio to U.S. Growth Fund; Lincoln World Growth Portfolio to World
Growth Fund; Lincoln New Pacific Portfolio to New Pacific Fund; Lincoln
Government Income Portfolio to Federal Bond Fund; and Lincoln Corporate Income
Portfolio to Corporate Income Fund; and the change of the LAF to Delaware Group
Adviser Funds, Inc. The liquidations were completed on April 26, 1996 and
following required shareholder approval of the investment management and
sub-advisory arrangements at a meeting of shareholders held on May 3, 1996, the
restructuring was consummated.

In accordance with the restructuring, the front-end sales charges for and
12b-1 Plan distribution fees assessable against Class A Shares and the

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<PAGE>

contingent deferred sales charge schedule for Class B Shares, as well as its
feature for conversion to Class A Shares, have been modified to be made
consistent with the charges, fees and features that generally apply to all other
Delaware Group funds. The charges and fees previously applicable to the Class C
Shares have not been changed.

Beginning May 6, 1996, the charges, fees and features described in this
Prospectus will apply to the respective shares, except for Class B Shares
purchased before that date. Class B Shares purchased prior to May 6, 1996 will
continue to be subject to the following contingent deferred sales charge
schedule if redemptions are made during the time periods described: within the
first year after purchase (5.0%); within the second year after purchase (4.0%);
within the third year after purchase (4.0%) within the fourth year after
purchase (3.0%); within the fifth year after purchase (2.0%) within the sixth
year after purchase (1.0%); and, thereafter, none. In addition, Class B Shares
purchased prior to May 6, 1996 still will convert to Class A Shares after the
expiration of approximately six years after purchase. Class B Shares purchased
with reinvested dividends, whether effected before or after May 6, 1996, will be
aggregated and converted pro-rata with other Class B Shares.

Other Shareholder Matters

All shares of Adviser Funds, Inc. have equal voting rights and are
entitled to one vote per share with proportional voting for fractional shares.
As permitted by Maryland law, there will normally be no meetings of shareholders
for the purpose of electing directors unless and until such time as fewer than a
majority of the directors holding office have been elected by shareholders. At
that time, the directors in office will call a shareholders meeting for election
of directors. Shareholders have certain rights, including the right to call a
meeting upon a vote of 10% of Adviser Funds, Inc.'s outstanding shares for the
purpose of voting on the removal of one or more directors or to transact any
other business. The shares do not have cumulative voting rights. Accordingly,
the holders of a majority of the shares voting for the election of directors can
elect all the directors. Shares of Adviser Funds, Inc., when issued, will be
fully paid and non-assessable.

In matters which only affect a particular Fund, the matter shall have been
effectively acted upon by a majority vote of that Fund even though: (1) the
matter has not been approved by a majority vote of any other Fund; or (2) the
matter has not been approved by a majority vote of Adviser Funds, Inc.
In addition to Class A Shares, Class B Shares and Class C Shares, each
Fund also offers an Institutional Class of shares. Shares of each class
represent proportionate interests in the assets of the respective Fund and have
the same voting and other rights and preferences as the other classes of that
Fund, except that shares of the Institutional Classes are not subject to, and
may not vote on matters affecting, the 12b-1 Plans relating to the Classes.
Similarly, as a general matter, shareholders of Class A Shares, Class B Shares
and Class C Shares may vote only on matters affecting the 12b-1 Plan that
relates to the class of shares that they hold. However, the Class B Shares may
vote on any proposal to increase materially the fees to be paid by a Fund under
the 12b-1 Plan relating to the Class A Shares.

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<PAGE>

98% of the outstanding shares of Federal Bond Fund A Class and 95% of the
outstanding shares of Corporate Income Fund A Class. In addition, as of March
31, 1996, LIM held 100% of the outstanding shares of World Growth Fund
Institutional Class, 100% of the outstanding shares of New Pacific Fund
Institutional Class and 100% of the outstanding shares of Federal Bond Fund
Institutional Class. Subject to certain limited exceptions, there are no
limitations on the Lincoln National Corporation affiliates' ability to redeem
the shares of the Adviser Funds, Inc. and they may do so at any time.

General Information

Shareholder Services
Shareholder servicing, reporting and general shareholder services
functions for each Fund are performed by Delaware Service Company, Inc., which
maintains its offices at 1818 Market Street, Philadelphia, PA 19103.

Independent Accountants

Adviser Funds, Inc.'s independent accountants are Coopers & Lybrand
L.L.P., Eleven Penn Center Plaza, Philadelphia, PA 19103. Coopers & Lybrand
L.L.P. conducts an annual audit of each Fund and consults with the Fund and each
Fund as to matters of accounting, regulatory filings and federal and state
income taxation.

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IMPLEMENTATION OF INVESTMENT OBJECTIVES AND POLICIES

In attempting to achieve their investment objectives and policies, the
Funds may employ, among others, one or more of the strategies set forth below.

Convertible Securities
The Funds may invest in securities that either have warrants or rights
attached or are otherwise convertible into other or additional securities. A
convertible security is typically a fixed-income security (a bond or preferred
stock) that may be converted at a stated price within a specified period of time
into a specified number of shares of common stock of the same or a different
issuer. Convertible securities are generally senior to common stocks in a
corporation's capital structure but are usually subordinated to similar
non-convertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from a common stock but lower than
that afforded by a similar non-convertible security), a convertible security
also affords an investor the opportunity, through its conversion feature, to
participate in capital appreciation attendant upon a market price advance in the
common stock underlying the convertible security. In general, the market value
of a convertible security is at least the higher of its "investment value"
(i.e., its value as a fixed-income security) or its "conversion value" (i.e.,
its value upon conversion into its underlying common stock). While no securities
investment is without some risk, investments in convertible securities generally
entail less risk than investments in the common stock of the same issuer.

U.S. Government Securities
All of the Funds may invest in securities of the U.S. Government.
Securities guaranteed by the U.S. Government include: (1) direct obligations of
the U.S. Treasury (such as Treasury bills, notes and bonds) and (2) federal
agency obligations guaranteed as to principal and interest by the U.S. Treasury
(such as GNMA certificates and Federal Housing Administration debentures). For
these securities, the payment of principal and interest is unconditionally
guaranteed by the U.S. Government, and thus they are of the highest possible
credit quality. Such securities are subject to variations in market value due to
fluctuations in interest rates, but if held to maturity are deemed to be free of
credit risk for the life of the investment.
Securities issued by U.S. Government instrumentalities and certain federal
agencies are neither direct obligations of, nor guaranteed by, the U.S.
Treasury. However, they generally involve federal sponsorship in one way or
another: some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the U.S. Treasury; some are supported by the
discretionary authority of the U.S. Treasury to purchase certain obligations of
the issuer; and others are supported only by the credit of the issuing
government agency or instrumentality. These agencies and instrumentalities
include, but are not limited to, Federal Land Banks, Farmers Home
Administration, Central Bank for Cooperatives, Federal Intermediate Credit
Banks, and Federal Home Loan Banks.

Mortgage-Backed Securities

The Corporate Income and Federal Bond Funds may invest in various types of
mortgage-backed securities. Mortgage-backed securities may be issued by
governmental agencies (such as the Government National Mortgage Association
("GNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC")), by the
Federal National Mortgage Association ("FNMA"), which is a federally chartered
and privately-owned corporation, or by private financial institutions such as

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<PAGE>

commercial banks, savings and loan associations, mortgage bankers and securities
broker/dealers (or separate trusts or affiliates of such institutions
established to issue these securities).

Most mortgage-backed securities, including the securities issued by GNMA,
FHLMC and FNMA, are so-called "pass-through" securities representing interests
in a pool of underlying mortgage loans, on which the regular interest and
principal payments (including any prepayments) are passed through to the holder
of the securities. Although the mortgage loans in a pool will have stated
maturities of up to 30 years, due to both normal principal repayment and
prepayments, the average effective maturities of these securities will vary and
will tend to be shorter than those of the underlying mortgages. Due to the
prepayment feature and the need to reinvest prepayments of principal at current
market rates, these securities can be less effective than typical bonds of
similar maturities at "locking in" yields during periods of declining interest
rates. Like other fixed-income investments, the value of mortgage-related
securities will tend to rise when interest rates fall and to fall when interest
rates rise. Their value may also change due to changes in the market's
perception of the creditworthiness of the entity that issues or guarantees them.
For additional information regarding mortgage-backed securities, see Part B.

U.S. Government Securities may be acquired by the Funds in the form of
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
Obligations of Resolution Funding Corporation are similarly divided into
principal and interest components and maintained as such on the book-entry
records of the Federal Reserve Banks.
In addition, the Funds may invest in custodial receipts that evidence
ownership of future interest payments, principal payments or both on certain
U.S. Treasury notes or bonds in connection with programs sponsored by banks and
brokerage firms. Such notes and bonds are held in custody by a bank on behalf of
the owners of the receipts. These custodial receipts are known by various names,
including "Treasury Receipts" ("Trs"), ("TIGRs") and "Certificates of Accrual on
Treasury Securities" ("CATS"), and may not be deemed U.S. Government Securities.
The Funds may also invest from time to time in collective investment
vehicles, the assets of which consist principally of U.S. Government Securities
or other assets substantially collateralized or supported by such securities,
such as government trust certificates.
The U.S. Government Securities in which the Funds invest do not, in
general, have as high a yield as more speculative securities or securities not
supported by the U.S. Government or its agencies or instrumentalities. When
interest rates increase, the value of debt securities and shares of the Funds
can be expected to decline.

Asset-Backed Securities
The Federal Bond and Corporate Income Funds may purchase asset-backed
securities, which represent a participation in, or are secured by and payable
from, a stream of payments generated by particular assets, most often a pool of
assets similar to one another. Assets generating such payments will consist of
motor vehicle installment purchase obligations, credit card receivables, other
financial receivables and home equity loans. See Part B.

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Repurchase Agreements

The Funds may enter into repurchase agreements, under which a Fund buys a
security (typically a U.S. Government Security or other money market security)
and obtains a simultaneous commitment from the seller to repurchase the security
at a specified time and price. The seller must maintain with the Adviser Funds,
Inc.'s Custodian collateral equal to at least 100% of the repurchase price
including accrued interest, as monitored daily by the Manager and/or
sub-adviser. A Fund only will enter into repurchase agreements involving
securities in which it could otherwise invest and with banks, brokers or dealers
deemed by the Board of Directors to be creditworthy. If the seller under the
repurchase agreement defaults, the Fund may incur a loss if the value of the
collateral securing the repurchase agreement has declined and may incur
disposition costs in connection with liquidating the collateral. If bankruptcy
proceedings are commenced with respect to the seller, realization upon the
collateral by the Fund may be delayed or limited.

The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow the
Delaware Group funds jointly to invest cash balances. The Funds may invest cash
balances in a joint repurchase agreement in accordance with the terms of the
Order and subject generally to the conditions described above.

When-Issued Securities and Firm Commitment Agreements
All of the Funds may purchase securities on a delayed delivery or
"when-issued" basis and enter into firm commitment agreements (transactions
whereby the payment obligation and interest rate are fixed at the time of the
transaction but the settlement is delayed). The transactions may involve either
corporate, municipal or government securities. A Fund as a purchaser assumes the
risk of any decline in value of the security beginning on the date of the
agreement or purchase. The Funds may invest in when-issued securities in order
to take advantage of securities that may be especially under or over valued when
trading on a when-issued basis.

Each Fund will segregate liquid assets such as cash, U.S. Government
Securities or other appropriate high grade debt obligations in an amount
sufficient to meet its payment obligations in these transactions. Although these
transactions will not be entered into for leveraging purposes, to the extent a
Fund's aggregate commitments under these transactions exceed its holdings of
cash and securities that do not fluctuate in value (such as money market
instruments), the Fund temporarily will be in a leveraged position (i.e., it
will have an amount greater than its net assets subject to market risk). Should
market values of a Fund's portfolio securities decline while Adviser Funds, Inc.
is in a leveraged position, greater depreciation of its net assets would likely
occur than were it not in such a position. The Funds will not borrow money to
settle these transactions and, therefore, will liquidate other Fund securities
in advance of settlement if necessary to generate additional cash to meet their
obligations thereunder.

Money Market Instruments
All of the Funds may invest in money market instruments without limit for
temporary or defensive purposes. These are shorter-term debt securities
generally maturing in one year or less which include (1) commercial paper
(short-term notes up to 9 months issued by corporations or governmental bodies),
(2) commercial bank obligations (certificates of deposit (interest-bearing time
deposits), bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity), and documented discount
notes (corporate promissory discount notes accompanied by a commercial bank

-57-
<PAGE>

guarantee to pay at maturity)), (3) corporate bonds and notes (corporate
obligations that mature, or that may be redeemed, in one year or less), (4)
variable rate demand notes, short-term tax-exempt obligations and (5) savings
association obligations (certificates of deposit issued by mutual savings banks
or savings and loan associations). Although certain floating or variable rate
obligations (securities which have a coupon rate that changes at least annually
and generally more frequently) have maturities in excess of one year, they are
also considered to be short-term debt securities.

Strategic Transactions

General. The Funds may, but are not required to, utilize various other
investment strategies as described below to hedge various market risks (such as
interest rates, currency exchange rates, and broad or specific equity or
fixed-income market movements), to manage the effective maturity or duration of
fixed income securities in the Fund's portfolio or to enhance potential gain.
Such strategies are generally accepted as modern Fund management and are
regularly utilized by many mutual funds and other institutional investors.
Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur. In the course of pursuing
these investment strategies, the Fund may purchase and sell derivative
securities. In particular, the Funds may purchase and sell exchange-listed and
over-the-counter put and call options on securities, equity and fixed-income
indices and other financial instruments, purchase and sell financial futures
contracts and options thereon, enter into various interest rate transactions
such as swaps, caps, floors or collars, and enter into various currency
transactions such as currency forward contracts, currency futures contracts,
currency swaps or options on currencies or currency futures (collectively, all
the above are called "Strategic Transactions"). Strategic Transactions may be
used to attempt to protect against possible changes in the market value of
securities held in or to be purchased for the Fund resulting from securities
markets or currency exchange rate fluctuations, to protect the Fund's unrealized
gains in the value of its Fund securities, to facilitate the sale of such
securities for investment purposes, to manage the effective maturity or duration
of fixed income securities in a Fund, or to establish a position in the
derivatives markets as a temporary substitute for purchasing or selling
particular securities. Any or all of these investment techniques may be used at
any time and there is no particular strategy that dictates the use of one
technique rather than another, as use of any Strategic Transaction is a function
of numerous variables including market conditions. The ability of a Fund to
utilize these Strategic Transactions successfully will depend on the Manager's
or sub-adviser's ability to predict pertinent market movements, which cannot be
assured. The Funds will comply with applicable regulatory requirements when
implementing these strategies, techniques and instruments. Strategic
Transactions involving financial futures and options thereon will be purchased,
sold or entered into only for bona fide hedging, risk management or Fund
management purposes and not for speculative purposes. Additional information
relating to certain financial instruments or strategies is set forth below. In
addition, see Special Risks of Strategic Transactions, below, for a discussion
of certain risks.

Limitations on Futures and Options Transactions. A Fund will not enter
into any futures contract or option on a futures contract if, as a result, the
sum of initial margin deposits on futures contracts and related options and
premiums paid for options on futures contracts the Funds have purchased, after

-58-
<PAGE>

taking into account unrealized profits and losses on such contracts, would
exceed 5% of the Fund's net asset value without reference to the definition of
"bona fide hedging transactions and positions" under the Commodity Exchange Act,
as amended, or unless the futures contract is covered by cash equivalent
set-asides equal to the total contract value.
In addition to the above limitations, each Fund will not (a) sell futures
contracts, purchase put options or write call options if, as a result, more than
25% of a Fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options if, as a
result, a Fund's total obligations upon settlement or exercise of purchased
futures contracts and written put options would exceed 25% of its total assets;
or (c) purchase call options if, as a result, the current value of option
premiums for call options purchased by a Fund would exceed 5% of the Fund's
total assets. These limitations do not apply to options attached to or acquired
or traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.
The limitations on the Funds' investments in futures contracts and
options, and the Funds' policies regarding futures contracts and options
discussed elsewhere are not fundamental policies and may be changed as
regulatory agencies permit.
Options Transactions. The Funds may purchase and write (i.e., sell) put
and call options on securities and currencies that are traded on national
securities exchanges or in the over-the-counter market to enhance income or to
hedge their Funds. A call option gives the purchaser, in exchange for a premium
paid, the right for a specified period of time to purchase securities or
currencies subject to the option at a specified price (the exercise price or
strike price). When a Fund writes a call option, the Fund gives up the potential
for gain on the underlying securities in excess of the exercise price of the
option.
A put option gives the purchaser, in return for a premium, the right for a
specified period of time to sell the securities or currencies subject to the
option to the writer of the put at the specified exercise price. The writer of
the put option, in return for the premium, has the obligation, upon exercise of
the option, to acquire the securities underlying the option at the exercise
price. A Fund might, therefore, be obligated to purchase the underlying
securities for more than their current market price.

The Funds will write only "covered" options. An option is covered if a
Fund owns an offsetting position in the underlying security or maintains cash,
U.S. Government Securities or other high-grade debt obligations with a value
sufficient at all times to cover its obligations. See Part B.

Forward Foreign Currency Exchange Contracts. The Funds may enter into
forward foreign currency exchange contracts to protect the value of their Funds
against future changes in the level of currency exchange rates. The Funds may
enter into such contracts on a spot (i.e., cash) basis at the rate then
prevailing in the currency exchange market or on a forward basis, by entering
into a forward contract to purchase or sell currency at a future date. A Fund's
dealings in forward contracts will be limited to hedging involving either
specific transactions or Fund positions. Transaction hedging generally arises in
connection with the purchase or sale of its Fund securities and accruals of
interest or dividends receivable and Fund expenses. Position hedging generally
arises with respect of existing Fund security or currency positions.

-59-
<PAGE>

Futures Contracts and Options Thereon. The Funds may purchase and sell
financial futures contracts and options thereon which are exchange-listed or
over-the-counter for certain hedging, return enhancement and risk management
purposes in accordance with regulations of the CFTC. These futures contracts and
related options will be on interest-bearing securities, financial indices and
interest rate indices. A financial futures contract is an agreement to purchase
or sell an agreed amount of securities at a set price for delivery in the
future.
A Fund may not purchase or sell futures contracts and related options if
immediately thereafter the sum of the amount of initial margin deposits on the
Fund's existing futures and options on futures and premiums paid on such related
options would exceed 5% of the market value of the Fund's total assets. In
addition, the value of all futures contracts sold will not exceed the total
market value of the Fund.
Swap Agreements. The Funds may enter into interest rate swaps, currency
swaps, and other types of swap agreements such as caps, collars and floors. In
an interest rate swap, one party agrees to make regular payments of a floating
rate times a "notional" principal amount in return for payments of a fixed rate
times the same amount. Swaps may also depend on other prices or rates such as
the value of an index or mortgage prepayment rates.

Swap agreements usually involve a small investment of cash relative to the
magnitude of risk assumed. As a result, swaps can be very volatile and may
substantially impact a Fund's performance. Swap agreements are also subject to
the risk of a counterpart's ability to perform (i.e., creditworthiness). A Fund
may also suffer losses if it is unable to terminate swap agreements or reduce
exposure through offsetting transactions in a timely manner.

Special Risks of Strategic Transactions. Participation in the options or
futures markets and in currency exchange transactions involves investment risks
and transaction costs to which a Fund would not be subject absent the use of
these Strategic Transactions. If the Manager's and/or sub-adviser's prediction
of movements in the direction of the securities, foreign currency and interest
rate markets are inaccurate, the adverse consequences to a Fund may leave the
Fund in a worse position than if such Strategic Transactions were not used.
Risks inherent in the use of options, foreign current and futures contracts and
options on futures contracts include (1) dependence on the Manager's and/or
sub-adviser's ability to predict current movements in the direction of interest
rates, securities prices and currency markets; (2) imperfect correlation between
the price of options and futures contracts and options thereon and movements in
the prices of securities being hedged; (3) the fact that skills need to use
these strategies are different from those needed to select Fund securities; (4)
the possible absence of a liquid secondary market for any particular instrument
at any time; (5) the possible need to defer closing out certain hedged positions
to avoid adverse tax consequences; and (6) the possible inability of a Fund to
purchase or sell a Fund security at a time that otherwise would be favorable for
it to do so, or the possible need for a Fund to sell a Fund security at a
disadvantageous time, due to the need for a Fund to maintain "cover" or to
segregate securities in connection with Strategic Transactions. Although the use
of futures contracts and options transactions for hedging should tend to
minimize the risk of loss due to a decline in the value of the hedged position,
at the same time they tend to limit any potential gain which might result from
an increase in value of such position. Finally, the daily variation margin
requirements for futures contracts would create a greater ongoing potential
financial risk than would purchase of options, where the exposure is limited to

-60-
<PAGE>

the cost of the initial premium. Losses resulting from the use of Strategic
Transactions would reduce net asset value, and possibly income, and such losses
can be greater than if the Strategic Transactions had not been utilized. The
Strategic Transactions that the Funds may use and some of their risks are
described more fully in Part B.
Each Fund's ability to engage in Strategic Transactions is limited by the
requirements of the Internal Revenue Code of 1986, as amended, for qualification
as a regulated investment company.
See Part B.

-61-

<PAGE>
APPENDIX A - INVESTMENT ILLUSTRATIONS
Illustrations of the Potential Impact on Investment Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>

Scenario 1 Scenario 2
No Redemption Redeem 1st Year
----------------------------------------- ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+
2 11,525 11,946 11,946
3 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,599 15,599
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418+ 20,369 20,369
9 22,459 22,405* 22,263
10 24,705 24,646* 24,333
</TABLE>
APPENDIX A - INVESTMENT ILLUSTRATIONS
Illustrations of the Potential Impact on Investment Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
--------------------------------------- ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,399 15,599+
6
7
8
9
10
</TABLE>
*This assumes that Class B Shares were converted to Class A Shares at the end
of the eighth year.

<PAGE>

$250,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
----------------------------------------- ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+
2 294,938 298,662 298,662
3 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 389,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
</TABLE>
<TABLE>
<CAPTION>
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
--------------------------------------- ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 384,979 389,979
6
7
8
9
10
</TABLE>
*This assumes that ClassB Shares were converted to Class A Shares at the end of
the eighth year.

<PAGE>

Assumes a hypothetical return for Class A of 10% per year, a hypothetical return
for Class B of 9.3% for years 1-8 and 10% for years 9-10, and a hypothetical
return for Class C of 9.3% per year. Hypothetical returns vary due to the
different expense structure for each Class and do not represent actual
performance.

Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).

Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1% in
years 1-2-3-4-5-6).

Class C purchase assessed 1% CDSC upon redemption in year 1.

Figures marked "+" identify which Class offers the greater return potential
based on the investment amount, the holding period and the expense structure for
each Class.

<PAGE>

APPENDIX A
Illustrations of the Potential Impact on Investment Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>

Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
--------------------------------------- ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,192 10,630 10,630 10,192 10,630 10,630
2 10,905 11,300 11,300 10,905 11,300 11,300
3 11,669 11,712 12,012+ 11,669 12,012 12,012
4 12,485 12,768 12,768
5 13,359 13,373 13,573+
6
7
8
9
10
</TABLE>
*This assumes that Class B Shares were converted to Class A Shares at the end of
the eighth year.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
--------------------------------------- ---------------------------------------
Year Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 260,813 265,750 265,750 260,813 265,750 265,750
2 279,069 282,492 282,492 279,069 282,492 282,492
3 298,604 292,789 300,289+ 298,604 300,289 300,289
4 319,507+ 319,207 319,207
5 341,872 334,318 339,318
6
7
8
9
10
</TABLE>
*This assumes that Class B Shares were converted to Class A Shares at the end of
the eighth year.

Assumes a hypothetical return for Class A of 7% per year, a hypothetical return
for Class B of 6.3% for years 1-8 and 7% for years 9-10, and a hypothetical
return for Class C of 6.3% per year. Hypothetical returns vary due to the
different expense structure for each Class and do not represent actual
performance.

Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).

Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1% in
years 1-2-3-4-5-6).

Class C purchase assessed 1% CDSC upon redemption in year 1.

Figures marked "+" identify which Class offers the greater return potential
based on the investment amount, the holding period and the expense structure for
each Class.

<PAGE>

APPENDIX B - DESCRIPTION OF SECURITIES RATINGS

MOODY'S INVESTORS SERVICE

BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds that are rated Baa are considered medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

SHORT-TERM DEBT RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior obligations which have an original maturity not
exceeding one year.
P-1: Issuers rated "PRIME-1" or "P-1" (or supporting institutions) have
superior ability for repayment of senior short-term debt obligations.
P-2: Issuers rated "PRIME-2" or "P-2" (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations.
P-3: Issuers rated "PRIME-3" or "P-3" (or supporting institutions) have an
acceptable ability for repayment of senior short-term debt obligations.

-62-
<PAGE>

MUNICIPAL NOTE RATINGS

Issuers or the features associated with Moody's MIG or VMIG ratings are
identified by date of issue, date of maturity or maturities or rating expiration
date and description to distinguish each rating from other ratings. Each rating
designation is unique with no implication as to any other similar issue of the
same obligor. MIG ratings terminate at the retirement of the obligation while
VMIG rating expiration will be a function of each issue's specific structural or
credit features.

MIG 1/VMIG 1:
This designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support, or demonstrated
broad-based access to the market for refinancing.

MIG 2/VMIG 2:
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.

MIG 3/VMIG 3:
This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.

MIG 4/VMIG 4:
This designation denotes adequate quality. Protection commonly regarded as
required of an investment security is present and although not distinctly
or predominantly speculative, there is specific risk.

STANDARD & POOR'S RATINGS GROUP

BOND RATINGS
AAA: Debt rated AAA has the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest an repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC and CC: Debt rated BB, B, CCC or CC is regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C: This rating is reserved for income bonds on which no interest is being
paid.
D: Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.

-63-
<PAGE>

COMMERCIAL PAPER RATINGS

S&P's commercial paper ratings are current assessments of the likelihood
of timely payment of debt having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. A plus (+) designation is
applied only to those issues rated A-1 which possess an overwhelming degree of
safety.
A-2: Capacity for timely payment on issues with the designation A-2 is
strong. However, the relative degree of safely is not as high as for issues
designated A-1.
A-3: Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.

MUNICIPAL NOTE RATINGS

An S&P municipal note rating reflects the liquidity concerns and market
access risks unique to notes. Notes due in 3 years or less will likely receive a
note rating. Notes maturing beyond 3 years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:
Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
Sources of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
SP-3: Speculative capacity to pay principal and interest.

-64-

<PAGE>

-------------------------------
DELAWARE GROUP ADVISER FUNDS,
INC.

ENTERPRISE FUND
U.S. GROWTH FUND
WORLD GROWTH FUND
NEW PACIFIC FUND
FEDERAL BOND FUND
For more information contact CORPORATE INCOME FUND
Delaware Group at 800-828-5052.
INSTITUTIONAL CLASSES
-------------------------------

INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT P R O S P E C T U S
Delaware Service Company, Inc. -------------------------------
1818 Market Street
Philadelphia, PA 19103 MAY 6, 1996
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
Eleven Penn Center Plaza
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank, N.A.
4 Chase Metrotech Center DELAWARE
Brooklyn, NY 11245 GROUP
==========

<PAGE>

TABLE OF CONTENTS

Cover Page

Synopsis

Summary of Expenses

Financial Highlights

Investment Objectives and Strategies
Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Federal Bond Fund
Corporate Income Fund

Classes of Shares

How to Buy Shares

Redemption and Exchange

Dividends, Distributions and Taxes

Calculation of Net Asset Value Per Share

Management of the Funds

Implementation of Investment Objectives and Policies

Appendix A - Description of Security Ratings

-1-

<PAGE>

DELAWARE GROUP ADVISER FUNDS, INC. PROSPECTUS
INSTITUTIONAL CLASSES MAY 6, 1996

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

1818 Market Street, Philadelphia, PA 19103

For more information about the Institutional Classes
call Delaware Group at 800-828-5052.

Delaware Group Adviser Funds, Inc. ("Adviser Funds, Inc.") (formerly,
Lincoln Advisor Funds, Inc.) is an open-end management investment company.
Adviser Funds, Inc. currently issues six separate series of shares (each
referred to as a "Fund" or collectively as the "Funds"), each representing a
separate, diversified portfolio of securities. The Funds are the Enterprise
Fund, U.S. Growth Fund, World Growth Fund, New Pacific Fund, Federal Bond Fund
and Corporate Income Fund. See Restructuring of the Funds under Management of
the Funds. Each Fund has a fundamental investment objective and certain
investment policies which are described in this Prospectus.
Each Fund offers an Institutional Class, which is referred to
individually as a "Class" and collectively as the "Classes." Shares of each
Class are available for purchase only by certain eligible investors and are
offered at net asset value without the imposition of a front-end or contingent
deferred sales charge and without a 12b-1 charge. See Classes of Shares.
This Prospectus relates only to the Classes and sets forth information
that you should read and consider before you invest. Please retain it for future
reference. Part B of Adviser Funds, Inc.'s registration statement, dated May 6,
1996, as it may be amended from time to time, contains additional information
about the Funds and has been filed with the Securities and Exchange Commission.
Part B is incorporated by reference into this Prospectus and is available,
without charge, by writing to Delaware Distributors, L.P. at the above address
or by calling the above number. The Funds' financial statements appear in their
Annual Report, which will accompany any response to requests for Part B.
This Prospectus contains useful information that can help the investor
decide whether a Fund's investment objective matches his/her own. Achievement of
a Fund's investment objective cannot, of course, be assured due to the risk of
capital loss from fluctuating prices inherent in any investment in securities.
Investments in the Funds are neither insured or guaranteed by any entity.
Each Fund also offers Class A Shares, Class B Shares and Class C
Shares. Shares of these classes are subject to sales charges and other expenses,
which may affect their performance. A prospectus for these classes can be
obtained by writing to Delaware Distributors, L.P. at the above address or by
calling the above number.

-2-

<PAGE>

The investment objectives of each Fund are as follows:

Equity Funds Enterprise Fund seeks to provide maximum
appreciation of capital by investing in medium-sized
companies which have a dominant position within
their industry, are undervalued, or have potential
for growth in earnings.

U.S. Growth Fund seeks to maximize capital
appreciation by investing in companies of all sizes
which have low dividend yields, strong balance
sheets and high expected earnings growth rates
relative to their industry.

World Growth Fund seeks to maximize total return
(capital appreciation and income), principally
through investments in an internationally
diversified portfolio of equity securities.

New Pacific Fund seeks long-term capital
appreciation by investing primarily in companies
which are domiciled in or have their principal
business activities in the Pacific Basin.

Fixed-Income Funds Federal Bond Fund seeks to maximize current
income consistent with preservation of capital. The
Fund attempts to achieve this objective by investing
primarily in securities issued by the U.S.
Government, its agencies and instrumentalities.

-3-

<PAGE>

SYNOPSIS

The following synopsis is qualified in its entirety by the more
detailed information appearing in the body of the Prospectus.

Investment Objectives and Policies
Each Fund's investment objective is stated on the cover page of this
Prospectus. Each objective is "fundamental" and may be changed only with the
approval of the holders of a majority of the outstanding voting securities of
the Fund, as defined in the Investment Company Act of 1940 (the "1940 Act").
Certain investment policies also are fundamental and thus require approval of
shareholders if a Fund wishes to change them. See Investment Restrictions in
Part B. Still other investment policies reflect current practices of the Funds
and may be changed by the Funds without the approval of shareholders.

Purchase Price
Shares of each Class offered by this Prospectus are available at net
asset value, without a front-end or contingent deferred sales charge and are not
subject to distribution fees under a Rule 12b-1 distribution plan. See Classes
of Shares.

Redemption and Exchange
Shares of each Class are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.

-4-

<PAGE>

Risk Factors
Prospective investors should consider a number of factors:

1. World Growth Fund and New Pacific Fund may invest substantially all
of their assets in nonUnited States issuers. U.S. Growth Fund, Enterprise Fund
and Corporate Income Fund may invest, respectively, 20%, 15% and 10% of their
assets in such issuers. Investing in securities of non-United States companies
which are generally denominated in foreign currencies and the utilization of
forward foreign currency exchange contracts in connection with those investments
involve certain risk and opportunity considerations not typically associated
with investing in United States companies. Some of these investments may be in
markets of emerging countries which may be subject to a greater degree of
economic, political and social instability than is the case in the United States
and Western European markets. See Foreign Investments under Risk Factors and
Special Considerations and Implementation of Investment Objectives and Policies.
2. Each Fund has the right to engage in options and futures
transactions for certain hedging, return enhancement and risk management
purposes in accordance with regulations of the Commodity Futures Trading
Commission ("CFTC"). While the Funds do not engage in options and futures for
speculative purposes, there are risks which result from the use of these
instruments, and an investor should carefully review the descriptions of these
risks in this Prospectus. Certain options and futures may be considered to be
derivative securities. See Implementation of Investment Objectives and Policies.

-5-

<PAGE>

SUMMARY OF EXPENSES

EQUITY FUNDS

Enterprise Fund U.S. Growth World Growth Fund New Pacific Fund
Shareholder Transaction Expenses Institutional Class Institutional Class Institutional Class Institutional Class
- -------------------------------- ------------------- ------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)........... None None None None

Maximum Sales Charge Imposed
on Reinvested Dividends (as
a percentage of offering price) None None None None

Redemption Fees.............. None* None* None* None*

Exchange Fees................ None** None** None** None**
</TABLE>

FIXED-INCOME FUNDS

Federal Bond Corporate Income
Shareholder Transaction Expenses Fund Institutional Class Fund Institutional Class
- -------------------------------- ------------------------ -------------------------------
<S> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price)........... None None

Maximum Sales Charge Imposed
on Reinvested Dividends (as
a percentage of offering price) None None

Redemption Fees.............. None* None*

Exchange Fees................ None** None**
</TABLE>

- --------------
* CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
** Exchanges are subject to the requirements of each Fund and a front-end
sales charge may apply.

-6-

<PAGE>

Annual Operating Expenses (as percentage of daily net assets)
The purpose of the following tables is to assist the investor in
understanding the various costs and expenses they will bear directly or
indirectly in owning shares of each Fund.

EQUITY FUNDS
<TABLE>
<CAPTION>

Annual Operating Expenses
(as a percentage of Enterprise Fund U.S. Growth Fund World Growth Fund New Pacific Fund
average daily net assets) Institutional Class Institutional Class Institutional Class Institutional Class
- -------------------------- ------------------- ------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Management Fees (after
voluntary waiver)+...... 0.23% 0.37% 0.00% 0.00%++
12b-1 Expenses............... None None None None

Other Operating Expenses
(after giving effect to
voluntary waiver
reimbursements)+........ 1.27% 1.13% 1.50% 1.50%
----- ----- ----- -----

Total Operating Expenses
(after giving effect to
voluntary waiver
reimbursements)+..... 1.50% 1.50% 1.50% 1.50%
===== ===== ===== =====

</TABLE>

FIXED-INCOME FUNDS

Annual Operating Expenses
(as a percentage of Federal Bond Corporate Income
average daily net assets) Fund Institutional Class Fund Institutional Class
- ------------------------- ------------------------ ------------------------

Management Fees (after
voluntary waiver)+...... 0.00% 0.00%

12b-1 Expenses............... None None

Other Operating Expenses
(after giving effect to
voluntary waiver
reimbursements)+........ 0.90% 0.90%
===== =====

Total Operating Expenses
(after giving effect to
voluntary waiver
reimbursements)+..... 0.90% 0.90%
===== =====

<PAGE>

- ------------------------
For expense information about the Class A Shares, Class B Shares and Class C
Shares of each Fund, see the separate Prospectus relating to those classes.

+ The Manager elected voluntarily to waive that portion, if any, of the
annual Management Fees payable by a particular Fund and to reimburse a Fund
for its expenses to the extent necessary to ensure that the expenses of
that Fund (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses) do not exceed, as a percentage of average net
assets, on an annualized basis, the amounts noted above corresponding to
the caption "Total Operating Expenses" through the six months from the date
of this Prospectus. Absent such fee waivers and expense reimbursements,
"Total Operating Expenses" and "Management Fees" would be as follows:

Total Operating Expenses Management Fees
------------------------ ---------------
<S> <C> <C>
Enterprise Fund Institutional Class.......................... 2.07% 0.80%
U.S. Growth Fund Institutional Class......................... 1.83% 0.70%
World Growth Fund Institutional Class........................ 2.61% 1.10%
New Pacific Fund Institutional Class......................... 3.08% 0.80%
Federal Bond Fund Institutional Class........................ 1.71% 0.30%
Corporate Income Fund Institutional Class.................... 1.52% 0.30%
</TABLE>

-7-

<PAGE>

The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return and (2) redemption at the end of each time period.

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

<S> <C> <C> <C> <C>
Enterprise Fund Institutional Class $15 $47 $82 $179
U.S. Growth Fund Institutional Class $15 $47 $82 $179
World Growth Fund Institutional Class $15 $47 $82 $179
New Pacific Fund Institutional Class $15 $47 $82 $179
Federal Bond Fund Institutional Class $ 9 $29 $50 $111
Corporate Income Fund Institutional Class $ 9 $29 $50 $111

</TABLE>

This example should not be considered a representation of past or
future expenses or performance. Actual expenses may be greater or less than
those shown.

-8-

<PAGE>

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

FINANCIAL HIGHLIGHTS

-9-

<PAGE>

ADVISER FUNDS, INC. INSTITUTIONAL CLASSES
Enterprise Fund U.S. Growth Fund World Growth Fund New Pacific Fund
---------------- ---------------- ------------------ ----------------
Year Period Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended Ended Ended
1995 1994 1995 1994 1995 1994 1995 1994

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .. $ 9.23 $10.44 $10.23 $10.52 $11.02 $10.50 $10.48 $11.14

Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss) .......... (0.02) (0.02) (0.05) (0.01) 0.04 0.04 (0.01) 0.01
Net Realized and Unrealized Gain (Loss)
on Investments ....................... 2.09 (1.19) 2.32 (0.28) 0.41 0.52 (1.41) (0.67)
------ ------ ------ ------ ------ ------ ----- ------
Total From Investment Operations 2.07 (1.21) 2.27 (0.29) 0.45 0.56 (1.42) (0.66)
------ ------ ------ ------ ------ ------ ----- ------

Less Distributions to Shareholders
- ----------------------------------
From Net Investment Income ............ -- -- -- -- (0.03) (0.04) -- --
From Net Realized Gains ............... -- -- -- -- -- -- (0.29) --
------ ------ ------ ------ ------ ------ ----- ------
Total Distributions ............. 0.00 0.00 0.00 0.00 (0.03) (0.04) (0.29) 0.00
------ ------ ------ ------ ------ ------ ----- ------
Net Asset Value, End of Period ........ $11.30 $ 9.23 $12.50 $10.23 $11.44 $11.02 $8.77 $10.48
====== ====== ====== ====== ====== ====== ===== =====

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

Total Return .......................... 22.43% (11.61%) 22.19% (2.78%) 4.22% 5.26% (13.65%) (5.98%)
- ------------

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

Ratios/Supplemental Data
- ------------------------

Net Assets, End of Period
(000's omitted)...................... $3,666 $234 $4,819 $1,630 $161 $63 $62 $47
Net Expenses to Average Daily
Net Assets............................ 1.53% 1.50%(1) 1.50% 1.50%(1) 1.50% 1.50%(1) 1.50% 1.50%(1)
Net Investment Income (Loss) to
Average Daily Net Assets.............. (0.60%) (0.63%)(1) (0.59%) (0.27%)(1) 0.40% 0.76%(1) (0.16%) (0.23%)(1)
Portfolio Turnover Rate................ 106% 120% 58% 66% 9% 6% 163% 104%
Commencement of Operations............. 02/03/94 02/03/94 02/03/94 02/03/94
Without the Waiver of Fees
and Reimbursement of Expenses by the
Adviser, the Ratio of Net Expenses to
Average Net Assets would have been:.... 2.07% 2.75%(1) 1.83% 2.60%(1) 2.61% 3.21%(1) 3.38% 3.31%(1)

</TABLE>

- --------------------
(1) Annualized.

ADVISER FUNDS, INC. INSTITUTIONAL CLASSES
Federal Bond Fund Corporate Bond Fund
----------------- -------------------
Year Period Year Period
Ended Ended Ended Ended
1995 1994 1995 1994

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................... $9.15 $10.00 $8.84 $9.98

Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss)................................... 0.69 0.33 0.73 0.41
Net Realized and Unrealized Gain (Loss) on Investments......... 0.54 (0.85) 0.78 (1.12)
------ ------ ------ ------
Total From Investment Operations......................... 1.23 (0.52) 1.51 (0.71)
------ ------ ------ ------

Less Distributions to Shareholders
- ----------------------------------
From Net Investment Income..................................... (0.78) (0.33) (0.86) (0.43)
From Net Realized Gains........................................ --- --- --- ---
------ ------ ------ ------
Total Distributions...................................... (0.78) (0.33) (0.86) (0.43)
------ ------ ------ ------

Net Asset Value, End of Period................................. $9.60 $9.15 $9.49 $8.84
===== ===== ===== =====
- ---------------------------------------------------------------

Total Return ............................................... 14.15% (5.17%) 18.27% (7.21%)
- ------------

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

Ratios/Supplemental Data
- ------------------------

Net Assets, End of Period (000's omitted)...................... $979 $353 $3,704 $1,302
Net Expenses to Average Daily Net Assets....................... 0.90% 0.90%(1) 0.90% 0.90%(1)
Net Investment Income (Loss) to Average Daily Net Assets....... 6.39% 5.57%(1) 6.95% 6.88%(1)
Portfolio Turnover Rate........................................ 227% 366% 119% 185%
Commencement of Operations..................................... 02/03/94 02/03/94
Without the Waiver of Fees and Reimbursement
of Expenses by the Adviser, the Ratio of
Net Expenses to Average Net Assets would have been:............ 1.71% 2.23%(1) 1.52% 2.20%(1)
</TABLE>

- --------------------
(1) Annualized.

<PAGE>

INVESTMENT OBJECTIVES AND STRATEGIES

The Equity Funds

The Fund may invest up to 20% of its assets in foreign securities.

-10-
<PAGE>

The Fund will invest in companies of varying size, measured by assets,
sales and capitalization. The Fund will invest in companies in one or more of
the following Pacific Basin countries:

Australia Pakistan
China Philippines
Hong Kong Singapore
India South Korea
Indonesia Sri Lanka
Japan Taiwan
Malaysia Thailand
New Zealand

-11-
<PAGE>

The Fixed-Income Funds

Federal Bond Fund. This Fund's fundamental investment objective is to
seek to maximize current income consistent with the preservation of capital by
investing primarily in securities issued by the U.S. Government, its agencies
and instrumentalities ("U.S. Government Securities"). Under normal conditions,
at least 65% of the value of the Fund's total assets will be invested in U.S.
Government Securities.
Depending upon prevailing market conditions, the Fund may invest in
U.S. Government Securities of varying maturities, ranging up to 40 years. U.S.
Government Securities include certain mortgage-backed securities, such as
Government National Mortgage Association Certificates. See Mortgage-Backed
Securities under Implementation of Investment Objectives and Policies. As the
Fund invests primarily in U.S. Government Securities, which are lower-risk
securities, it may not achieve as high a level of income under all market
conditions as would be the case if the Fund invested in higher yielding
securities. Up to 35% of the Fund's assets may be invested in corporate bonds of
U.S. companies, mortgage-backed securities and asset-backed securities that are
rated at least Aa by Moody's or AA by S&P or, if not rated, are of comparable
quality in the Manager's or sub-adviser's opinion. See Description of Security
Ratings in Appendix A.
Corporate Income Fund. This Fund's fundamental investment objective is
to seek to provide a high level of current income consistent with preservation
of capital by investing primarily in corporate bonds of U.S. companies that are
rated at least Baa by Moody's or BBB by S&P or, if not rated, are of comparable
quality in the opinion of the Manager or sub-adviser. See Description of
Security Ratings in Appendix A.

-12-
<PAGE>

-13-
<PAGE>

changes in prevailing interest rates. When interest rates are falling, the
inflow of net new money to a Fixed-Income Fund will likely be invested in
instruments producing lower yields than the balance of assets in the Fund,
thereby reducing current yields. In periods of rising interest rates, the
opposite can be expected to occur. In addition, obligations purchased by the
Corporate Income Fund that are rated in the lowest of the top four ratings (Baa
by Moody's or BBB by S&P) are considered to have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher grade securities. See Lower-Rated Securities, below.
Foreign Investments. The World Growth Fund and the New Pacific Fund may
invest substantially all of their assets in foreign investments. Certain of the
Funds may invest the following percentages of their assets in foreign
securities: the Enterprise Fund (15%), the U.S. Growth Fund (20%) and the
Corporate Income Fund (10%). There are certain risks involved in investing in
foreign securities, including those resulting from fluctuations in currency
exchange rates, devaluation of currencies, future political or economic
developments and the possible imposition of currency exchange blockages or other
foreign governmental laws or restrictions, reduced availability of public
information concerning issuers, and the fact that foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to those
applicable to domestic companies. Although the Funds' Manager or sub-advisers do
not intend to expose the Funds to such risks, with respect to certain foreign
countries, there is the possibility of expropriation, nationalization,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Funds, including the withholding of dividends. When the Funds'
Manager or sub-adviser believes that currency in which a Fund security or
securities is denominated may suffer a decline against the United States dollar,
it may hedge such risk by entering into a forward contract to sell an amount of
foreign currency approximating the value of some or all of the Funds' portfolio
securities denominated in such foreign currency.

Because foreign securities generally are denominated and pay dividends
or interest in foreign currencies, and the Funds hold various foreign currencies
from time to time, the value of the net assets of the Funds as measured in
United States dollars will be affected favorably or unfavorably by changes in
exchange rates. Generally, currency exchange transactions will be conducted on a
spot (i.e., cash) basis at the spot rate prevailing in the currency exchange
market. The cost of currency exchange transactions will generally be the
difference between the bid and offer spot rate of the currency being purchased
or sold. In order to protect against uncertainty in the level of future foreign
currency exchange rates, the Funds are authorized to enter into certain foreign
transactions. Investors should be aware that exchange rate movements can be
significant and can endure for long periods of time. The Manager and
sub-advisers of the Funds attempt to manage exchange rate risk through active
currency management.
In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange. Accordingly, the Funds' foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of United States companies. Moreover, the
settlement periods for foreign securities, which are often longer than those for
securities of United States issuers, may affect portfolio liquidity. In buying

-14-
<PAGE>

and selling securities on foreign exchanges, the Funds normally pay fixed
commissions that are generally higher than the negotiated commissions charged in
the United States. In addition, there is generally less governmental supervision
and regulation of securities exchanges, brokers and issuers in foreign countries
than in the United States.

Lower-Rated Securities. The following Funds may invest the following
percentages of their total assets in debt securities rated lower than Baa by
Moody's or BBB by S&P: U.S. Growth Fund (10%) and Corporate Income Fund (35%).
Prices for securities rated below investment grade may be affected by
legislative and regulatory developments. Securities rated Ba\BB or lower are
commonly referred to as "junk bonds." See Description of Security Ratings in
Appendix A. As of February 1, 1996, the Corporate Income Fund held 9.35% of its
total assets in securities rated BBB-, 1.89% of its total assets in securities
rated BB and 1.37% of its total assets in securities rated BB-. All such ratings
applied at the time of investment.

-15-
<PAGE>

will purchase additional securities when money borrowed exceeds 5% of the Fund's
total assets.

Period Ended Year Ended
Fund October 31, 1994 October 31, 1995
- ---- ---------------- ----------------

Enterprise
Fund 120% 106%

U.S. Growth
Fund 66% 58%

World Growth
Fund 6% 9%

New Pacific
Fund 104% 163%

Federal Bond
Fund 366% 227%

Corporate
Income Fund 185% 119%

-16-
<PAGE>

CLASSES OF SHARES

The Distributor serves as the national distributor for each Fund.
Shares may be purchased directly by contacting a Fund or its agent or through
authorized investment dealers. All purchases of shares are at net asset value.
There is no front-end or contingent deferred sales charge.
Investment instructions given on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees considering purchasing shares as part of
their retirement program should contact their employer for details.

Shares are available for purchase only by: (a) retirement plans
introduced by persons not associated with brokers or dealers that are primarily
engaged in the retail securities business and rollover individual retirement
accounts from such plans; (b) tax-exempt employee benefit plans of the Manager
or its affiliates and securities dealer firms with a selling agreement with the
Distributor; (c) institutional advisory accounts of the Manager or its
affiliates and those having client relationships with Delaware Investment
Advisers, a division of the Manager, or its affiliates and their corporate
sponsors, as well as subsidiaries and related employee benefit plans and
rollover individual retirement accounts from such institutional advisory
accounts; (d) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of a class; and (e) registered investment advisers investing
on behalf of clients that consist solely of institutions and high net- worth
individuals having at least $1,000,000 entrusted to the adviser for investment
purposes, but only if the adviser is not affiliated or associated with a broker
or dealer and derives compensation for its services exclusively from its clients
for such advisory services.

Class A Shares, Class B Shares and Class C Shares
In addition to offering Institutional Class shares, each Fund also
offers Class A Shares, Class B Shares and Class C Shares, which are described in
a separate prospectus relating only to those classes. Class A Shares carry a
front-end sales charge and have annual 12b-1 expenses equal to a maximum of
.35%. The maximum front-end sales charge as a percentage of the offering price
is 4.75% and is reduced on certain transactions of $100,000 or more. Class B
Shares and Class C Shares have no front-end sales charge but are subject to
annual 12b-1 expenses equal to a maximum of 1%. Class B Shares and Class C
Shares and certain Class A Shares may be subject to a contingent deferred sales
charge upon redemption. To obtain a prospectus relating to such classes, contact
the Distributor by writing to the address on the back cover of this Prospectus
or by calling 800-523-4640.

-17-
<PAGE>

HOW TO BUY SHARES

Each Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Classes.

Investing Directly by Mail 1. Initial Purchases--An Investment Application or,
in the case of a retirement account, an appropriate retirement plan application,
must be completed, signed and sent with a check payable to the specific Fund and
Class selected, at 1818 Market Street, Philadelphia, PA 19103.

Investing Directly by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include
your name(s) and your account number for the Class).

1. Initial Purchases--Before you invest, telephone the Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application or, in the case of a retirement account, an
appropriate retirement plan application, to the specific Fund and Class
selected, to 1818 Market Street, Philadelphia, PA 19103.

2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You must advise your Client
Services Representative by telephone at 800-828-5052 prior to sending your wire.

Investing by Exchange

If you have an investment in another mutual fund in the Delaware Group
and you qualify to purchase shares of a Class, you may write and authorize an
exchange of part or all of your investment into shares of the Fund. However,
Class B Shares and Class C Shares of each Fund and the Class B Shares and Class
C Shares of the other funds in the Delaware Group offering such a class of
shares may not be exchanged into the Classes. If you wish to open an account by
exchange, call your Client Services Representative at 800-828-5052 for more
information.

Investing through Your Investment Dealer
You can make a purchase of shares of the Funds through most investment
dealers who, as part of the service they provide, must promptly transmit orders
to a Fund. They may charge for this service.

Purchase Price and Effective Date
The purchase price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when the Exchange is open.
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund in which the shares are being
purchased. The effective date of a direct purchase is the day your wire,
electronic transfer or check is received, unless it is received after the time

-18-
<PAGE>

the share price is determined, as noted above. Purchase orders received after
such time will be effective the next business day.

The Conditions of Your Purchase

Each Fund reserves the right to reject any purchase order. If a
purchase is canceled because your check is returned unpaid, you are responsible
for any loss incurred. Each Fund can redeem shares from your account(s) to
reimburse itself for any loss, and you may be restricted from making future
purchases in any of the funds in the Delaware Group. Each Fund reserves the
right to reject purchases by third-party checks or checks that are not drawn on
a domestic branch of a United States financial institution. If a check drawn on
a foreign financial institution is accepted, you may be subject to additional
bank charges for clearance and currency conversion.

Each Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $250 as a result of redemptions.

-19-
<PAGE>

REDEMPTION AND EXCHANGE

Redemption and exchange requests made on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees should therefore contact their employer for
details.

Your shares will be redeemed or exchanged at a price equal to the net
asset value next determined after we receive your request in good order.
Redemption and exchange requests received in good order after the time the net
asset value of shares is determined, as noted above, will be processed on the
next business day. See Purchase Price and Effective Date under How to Buy
Shares. Except as otherwise noted below, for a redemption request to be in "good
order," you must provide your Class account number, account registration, and
the total number of shares or dollar amount of the transaction. For exchange
requests, you must also provide the name of the fund you want to receive the
proceeds. Exchange instructions and redemption requests must be signed by the
record owner(s) exactly as the shares are registered. You may also request a
redemption or an exchange by calling 800-828- 5052. Any certificates that have
been issued for shares you wish to redeem or exchange must accompany your order.
See below and Part B.

Each Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. No Fund will honor redemption requests as to shares for which a check
was tendered as payment until the Fund is reasonably satisfied that the check
has cleared, which may take up to 15 days from the purchase date. You can avoid
this potential delay if you purchase shares by wiring Federal Funds. Each Fund
reserves the right to reject a written or telephone redemption request or delay
payment of redemption proceeds if there has been a recent change to the
shareholder's address of record.
Shares of a Class may be exchanged into any other Delaware Group mutual
fund provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of a Class, such exchange will be exchanged at net
asset value. Shares of a Class may not be exchanged into the Class B Shares or
Class C Shares of any of the funds in the Delaware Group. Each Fund may suspend,
terminate or amend the terms of the exchange privilege upon 60 days' written
notice to shareholders.

Various redemption and exchange methods are outlined below. No fee is
charged by any Fund or the Distributor for redeeming or exchanging your shares.
You may also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.
All authorizations, including selection of any of the features
described below, shall continue in effect until such time as a written
revocation or modification has been received by the Fund to which the
authorization relates or its agent.

Written Redemption and Exchange
You can write to each Fund at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your shares or to request an exchange of any or

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all your shares into another mutual fund in the Delaware Group, subject to the
same conditions and limitations as other exchanges noted above. The request must
be signed by all owners of the account or your investment dealer of record.
For redemptions of more than $50,000, or when the proceeds are not sent
to the shareholder(s) at the address of record, the Funds require a signature by
all owners of the account and may require a signature guarantee. Each signature
guarantee must be supplied by an eligible guarantor institution. The Funds
reserve the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Funds may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.
The redemption request is effective at the net asset value next
determined after it is received in good order. Payment is normally mailed the
next business day, but no later than seven days, after receipt of your
redemption request. Certificates for shares are issued only if you submit a
specific request. If your shares are in certificate form, the certificate must
accompany your request and also be in good order.
Shareholders also may submit their written request for redemption or
exchange by facsimile transmission at the following number: 215-255- 8864.

Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you may redeem or
exchange only by written request and you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in which you have your account
in writing that you do not wish to have such service available with respect to
your account. Each Fund reserves the right to modify, terminate or suspend these
procedures upon 60 days' written notice to shareholders. It may be difficult to
reach the Funds by telephone during periods when market or economic conditions
lead to an unusually large volume of telephone requests.

Neither the Funds nor their Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of shares which are reasonably believed to be genuine.
With respect to such telephone transactions, each Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, such Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be provided
for all purchase, exchange and redemption transactions initiated by telephone.
By exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.

Telephone Redemption-Check to Your Address of Record

You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day, but no later than seven days, after receipt of the request.

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<PAGE>

Telephone Redemption-Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must submit a written authorization and you may need to have your
signature guaranteed. For your protection, your authorization must be on file.
If you request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next business
day, but no later than seven days, after receipt of your request to your
predesignated bank account. There are no fees for this redemption method, but
the mail time may delay getting funds into your bank account. Simply call your
Client Services Representative prior to the time the net asset value is
determined, as noted above.

Telephone Exchange
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the same conditions and
limitations as other exchanges noted above. Telephone exchanges may be subject
to limitations as to amounts or frequency.

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DIVIDENDS, DISTRIBUTIONS AND TAXES

Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value.

Each Fund has qualified and intends to continue to qualify as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended. In any fiscal year in which a Fund so qualifies and distributes to
shareholders its net investment income and net realized capital gains, the Fund
will be relieved of federal income tax. It is each Fund's policy to distribute
to the shareholders all of its net investment income and capital gains realized
during each fiscal year.
Under current law for each of the Funds, dividends paid from net
investment income and distributions of net realized short-term capital gains are
taxable to shareholders as ordinary income, regardless of how long shareholders
have held their Fund shares. Distributions of net realized long-term capital
gains will be taxable to shareholders as long-term capital gains, regardless of
how long shareholders have held Fund shares. Furthermore, as a general rule, a
shareholder's gain or loss on a sale or redemption of Fund shares will be a
long-term capital gain or loss if the shareholder has held the shares for more
than one year and will be a short-term capital gain or loss if the shareholder
has held the shares for one year or less. Some of the Funds' dividends declared
from net investment income may qualify for the federal dividends-received
deduction for corporations. The investor will be notified each year as to the
amount and federal tax status of all dividends and capital gains paid during the
prior year. Such dividends and capital gains may also be subject to state or
local taxes.
A portion of each Fund's income, including income from repurchase
agreements and gains from options and futures transactions may be taxable to
shareholders as ordinary income. Long-term capital gains from options and
futures transactions may be taxable to shareholders as ordinary income.
Long-term capital gains distributions, if any, are taxable as long term capital
gains, regardless of the length of time a shareholder has owned shares.
Short-term capital gains and other taxable income distributions are taxable as
ordinary income.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November or December to shareholders of
record on a specified date in one of those months, but which, for operational
reasons, may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by a Fund and received by the shareholder on
December 31 of the year declared.

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<PAGE>

If an investor has not furnished a certified correct taxpayer
identification number (generally a Social Security number) and has not certified
that withholding does not apply, or if the Internal Revenue Service has notified
a Fund that the taxpayer identification number listed on the investor's account
is incorrect according to their records or that the investor is subject to
backup withholding, federal law generally requires the Fund to withhold 31% from
any dividends and/or redemptions (including exchange redemptions). Amounts
withheld are applied to the investor's federal tax liability; a refund may be
obtained from the Internal Revenue Service if withholding results in overpayment
of taxes. Federal law also requires the Funds to withhold 30% or the applicable
tax treaty rate from dividends paid to certain nonresident alien, non-U.S.
partnership and non-U.S. corporation shareholder accounts.

Certain Funds may be required to pay withholding and other taxes
imposed by foreign countries in connection with their investments outside the
U.S. generally at rates from 10% to 40%, which would reduce these Funds'
investment income.

Certain income received by the World Growth and New Pacific Funds may
be subject to foreign taxes. If more than 50% of the value of the Fund's total
assets at the close of any taxable year consists of securities of foreign
corporations, the Fund may elect to treat any foreign taxes paid by it as paid
by its shareholders. If a Fund makes this election, its shareholders will
generally be required to include in income their respective pro-rata positions
in computing their taxable income or, alternatively, to claim foreign tax
credits (subject, in either case, to certain limitations). Each year that a Fund
makes such an election, it will report to its shareholders the amount per share
of foreign taxes it has elected to have treated as paid by its shareholders.

See Dividends, Distributions and Taxes in Part B for additional
information on tax matters relating to each Fund and its shareholders.

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<PAGE>

CALCULATION OF NET ASSET VALUE PER SHARE

The net asset value ("NAV") per share is computed by adding the value
of all securities and other assets in the portfolio, deducting any liabilities
(expenses and fees are accrued daily) and dividing by the number of shares
outstanding. Portfolio securities for which market quotations are available are
priced at market value. Short- term investments having a maturity of less than
60 days are valued at amortized cost, which approximates market value. All other
securities are valued at their fair value as determined in good faith and in a
method approved by Adviser Funds, Inc.'s Board of Directors. See Determining
Offering Price and Net Asset Value in Part B.
The purchase and redemption price of a Class is the NAV per share of
the Class next computed after the order is received. The NAV is computed as of
the close of regular trading on the New York Stock Exchange (ordinarily, 4 p.m.,
Eastern time) on days when the Exchange is open.
The net asset values of all outstanding shares of each class of a Fund
will be computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Fund represented by the value of shares of
that class. All income earned and expenses incurred by a Fund will be borne on a
pro-rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of shares of such classes,
except that the Classes will not incur any of the expenses under Adviser Funds,
Inc.'s 12b-1 Plans and each Fund's Class A Shares, Class B Shares and Class C
Shares alone will bear the 12b-1 Plan fees payable under their respective Plans.
Due to the specific distribution expenses and other costs that will be allocable
to each class, the net asset value of and dividends paid to each class of a Fund
may vary.

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<PAGE>

MANAGEMENT OF THE FUNDS

Directors
The business and affairs of Adviser Funds, Inc. are managed under the
direction of its Board of Directors. Part B contains additional information
regarding the directors and officers.

Investment Manager

Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to each Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On December 31, 1995, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $28 billion in assets in the various institutional (approximately
$17,606,321,000) and investment company (approximately $10,522,726,000)
accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). In turn, DMH is a wholly-owned subsidiary,
and subject to the ultimate control, of Lincoln National Corporation ("Lincoln
National"). Lincoln National, with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management.
The Manager administers the affairs of and is ultimately responsible
for the investment management of each of the Funds under separate Investment
Management Agreements with Adviser Funds, Inc. on behalf of each Fund dated May
4, 1996.
Investment Management Agreements. The Investment Management Agreements
were approved by the Board of Directors of Adviser Funds, Inc., including a
majority of the directors who are not "interested persons" of Adviser Funds,
Inc., on February 23, 1996 and approved by the respective shareholders of the
Funds at a shareholder meeting held on May 3, 1996. See Restructuring of the
Funds, below.

Under the Investment Management Agreements, the Manager receives
advisory fees monthly based upon each Fund's average daily net assets at the
following annual rates:

Enterprise Fund .80%
U.S. Growth Fund .70%
World Growth Fund 1.10%
New Pacific Fund .80%
Federal Bond Fund .30%
Corporate Income Fund .30%

The advisory fees for the Enterprise, World Growth and New Pacific
Funds, while higher than the advisory fees paid by other mutual funds in
general, are comparable to fees paid by other mutual funds with similar
objectives and policies. For the fiscal year ended October 31, 1995, the
following investment management fees based on a percentage of a Fund's average
daily net assets (before reimbursement) were paid to Lincoln Investment
Management, Inc. ("LIM"), the investment manager to the Funds prior to the close
of business on May 3, 1996:

Enterprise Fund .80%
U.S. Growth Fund .70%
World Growth Fund 1.10%
New Pacific Fund 1.10%*
Federal Bond Fund .30%
Corporate Income Fund .30%

* The Board of Directors approved a reduction from 1.10% to .80% in the
investment advisory fee for New Pacific Fund effective the close of
business May 3, 1996.

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<PAGE>

The Investment Management Agreements will continue in effect for a period
of two years from the date of their execution, and will continue annually
thereafter if approved by a vote of a majority of the directors who are not
interested persons of Adviser Funds, Inc. or the Manager, at a meeting called
for the purpose of voting on such approval. The Investment Management Agreements
may be terminated without penalty at any time (1) on 60 days' written notice, by
vote of a majority of the Board of directors of Adviser Funds, Inc., (2) on 60
days' written notice, by vote of a majority of the outstanding voting securities
of the Funds, or (3) on 60 days' written notice by the Manager. The Investment
Management Agreements terminate automatically in the event of "assignment." The
terms "assignment," "majority of outstanding voting securities" and "interested
person" are as defined in the 1940 Act.

Investment Sub-Advisers

The following registered investment advisers act as sub-advisers (the
"Sub-Advisers" or individually the "Sub-Adviser") to the Manager with respect to
the management of the assets of the Funds as indicated below.
LIM, Sub-Adviser to the Manager with respect to management of the assets
of the Corporate Income Fund and the Federal Bond Fund, 200 East Berry Street,
Fort Wayne, Indiana 46802, is an indirect, wholly-owned subsidiary of Lincoln
National and an affiliate of the Manager. LIM acts as investment adviser to
several registered investment companies in addition to those Funds. LIM also
provides investment services to Lincoln National and its principal subsidiaries
and acts as investment adviser to the other clients. As of December 31, 1995,

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<PAGE>

LIM had total assets under management in excess of $37 billion. Timothy J.
Policinski has had primary responsibility for making investment decisions for
Federal Bond Fund and Corporate Income Fund since January 1995. Mr. Policinski
currently serves as a Second Vice President and a Portfolio Manager for LIM. Mr.
Policinski joined Lincoln in 1978 and has held several investment-related
positions including management of annuity and pension assets in excess of $3
billion. He also has experience in short-term investments and cash management.
He holds a BS in economics and an MBA from Indiana University. He is also a
candidate for CFA designation.
Lynch & Mayer, Inc., Sub-Adviser to the Manager with respect to
management of the assets of the Enterprise Fund and the U.S. Growth Fund, 520
Madison Avenue, New York, New York 10022, is an indirect, wholly-owned
subsidiary of Lincoln National and an affiliate of the Manager. Lynch & Mayer,
Inc. provides investment advice to pension funds, foundations, endowments,
trusts and high net worth individuals and families and had assets under
management, as of December 31, 1995, in excess of $6.6 billion. Edward J. Petner
and Kevin P. Ferguson have had primary responsibility for making investment
decisions for Enterprise Fund since the Fund's inception. Mr. Petner currently
serves as President and Co-Chief Executive Officer of Lynch & Mayer, Inc. Before
joining Lynch & Mayer, Inc. in 1983, Mr. Petner received a BA from Duquesne
University in 1981 and an MBA from the Wharton School in 1983. Mr. Ferguson
serves as Vice President for Lynch & Mayer, Inc. Before joining Lynch & Mayer,
Inc. in 1992, he was a Senior Financial Analyst for American Express. Mr.
Ferguson received a BS from Boston College in 1986 and an MBA from New York
University in 1992.
Anthony A. Segalas has had primary responsibility for making investment
decisions for U.S. Growth Fund since Lynch & Mayer, Inc. assumed sub-advisory of
the Fund in 1996. Before joining Lynch & Mayer, Inc. in 1984, Mr. Segalas was
Assistant Treasurer/Pension Trust for Chase Manhattan Bank, N.A. He received a
BS from Boston University in 1980 and an MBA from Fordham University in 1985.
Walter Scott & Partners Limited, Sub-Adviser to the Manager with respect
to management of the assets of the World Growth Fund, Millburn Tower, Gogar,
Edinburgh, Scotland EH12 9BS, provides investment advice to pension funds and
foundations and had assets under management, as of December 31, 1995, in excess
of $2.0 billion. Walter Scott & Partners Limited uses a team of Fund managers to
provide the advisory services to World Growth Fund pursuant to the Sub-Advisory
Agreement.
John Govett & Company Limited, Sub-Adviser to the Manager with respect to
management of the assets of the New Pacific Fund, Shackleton House, 4
Battlebridge Lane, London, England SE1 2HR, provides investment advice to
investment trusts, investment companies, mutual funds and pension funds and had
assets under management, as of December 31, 1995, of $5.1 billion. Peter Robson
has had primary responsibility for making investment decisions for New Pacific
Fund since the Fund's inception. Mr. Robson currently serves as a Senior
Portfolio Manager and Director for John Govett & Company Limited and specializes
in the management of Far Eastern investments. Before joining John Govett &
Company Limited in 1990, Mr. Robson was with BZW Investment Management where he
managed UK unit trusts before moving to specialize in Far Eastern Markets. Mr.
Robson is a graduate of Oxford University, and was commissioned into the 1st
Queen's Dragoon Guards in 1985.

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<PAGE>
The sub-advisers receive subadvisory fees from the Manager for their
services calculated in accordance with the schedule set forth below. The Funds
do not pay any fees to the sub-advisers.

Fund Sub-Adviser Annual Fee
- ---- ----------- ----------

U.S.
Growth Fund Lynch Mayer, Inc. .40%

World Walter Scott &
Growth Fund Partners Limited .80%

New Pacific John Govett &
Fund Company Limited .50%

Corporate
Income Lincoln Investment
Fund Management, Inc. .30%

Federal
Bond Lincoln Investment
Fund Management, Inc. .30%

Enterprise
Fund Lynch & Mayer, Inc. .50% on the
first $150
million and
.35% on
assets over
$150
million

Custodian
The Chase Manhattan Bank, N.A. serves as Custodian for each of the
Funds and, in that capacity, has custody of the Funds' securities. Its mailing
address is 4 Chase Metrotech Center, Brooklyn, NY 11245. The Chase Manhattan
Bank, N.A. is not involved in the investment decisions made with respect to the
Funds.

Performance Information
From time to time, the each Fund may quote total return performance or
yield (if applicable) of its Class in advertising and other types of literature.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value. Each
presentation will include the average annual total return for one-, five- and
ten year periods, as relevant. Each Fund may also advertise aggregate and
average total return information concerning a Class over additional periods of
time.
The current yield will be calculated by dividing the annualized net
investment income earned by the Class during a recent 30-day period by the net
asset value per share on the last day of the period. The yield formula provides
for semi-annual compounding which assumes that net investment income is earned
and reinvested at a constant rate and annualized at the end of a six-month
period.
Because securities prices fluctuate, investment results will fluctuate
over time and past performance should not be considered as a representation of
future results.

Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following

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<PAGE>

all transactions other than those involving a reinvestment of dividends. You
should examine statements and confirmations immediately and promptly report any
discrepancy by calling your Client Services Representative.

Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor for
each Fund under separate Distribution Agreements dated September 25, 1995. The
Distributor bears all of the costs of promotion and distribution.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for each Fund
under separate Agreements dated September 25, 1995. The directors annually
review service fees paid to the Transfer Agent. Certain recordkeeping and other
shareholder services that otherwise would be performed by the Transfer Agent may
be performed by certain other entities and the Transfer Agent may elect to enter
into an agreement to pay such other entities for those services. In addition,
participant account maintenance fees may be assessed for certain recordkeeping
provided as part of retirement plan and administration service packages. These
fees are based on the number of participants in the plan and the various
services selected. Fees will be quoted upon request and are subject to change.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH and Lincoln National.

Expenses
Each Fund is responsible for all of its own expenses other than those
borne by the Manager under its Investment Management Agreements and those borne
by the Distributor under its Distribution Agreements. The ratio of expenses to
average daily net assets for each Class was as follows for the fiscal year ended
October 31, 1995:

Enterprise Fund Institutional Class 1.53%
U.S. Growth Fund Institutional Class 1.50%
World Growth Fund Institutional Class 1.50%
New Pacific Fund Institutional Class 1.50%
Federal Bond Fund Institutional Class 0.90%
Corporate Income Fund Institutional Class 0.90%

The expense ratio of each Class reflects the fee waiver and reimbursements in
effect on October 31, 1995. See Summary of Expenses for current
fee waivers and reimbursements.

Restructuring of the Funds

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<PAGE>

Government Income Portfolio to Federal Bond Fund; and Lincoln Corporate Income
Portfolio to Corporate Income Fund; and the change of the LAF to Delaware Group
Adviser Funds, Inc. The liquidations were completed on April 26, 1996 and
following required shareholder approval of the investment management and
sub-advisory arrangements at a meeting of shareholders held on May 3, 1996, the
restructuring was consummated.

In accordance with the restructuring, beginning May 6, 1996, the former
Class D shares have been redesignated as the Institutional Class shares.

Other Shareholder Matters

Initial investments into Adviser Funds, Inc. were made by American
States Insurance Company ("ASI") and Lincoln National Life Insurance Company
("LNLIC"), both affiliates of the Manager. As of March 31, 1996, LIM held 100%
of the outstanding shares of World Growth Fund Institutional Class, 100% of the
outstanding shares of New Pacific Fund Institutional Class and 100% of the
outstanding shares of Federal Bond Fund Institutional Class. In addition, as of
March 31, 1996, ASI held 74% of the outstanding shares of Enterprise Fund A
Class and 90% of the outstanding shares of U.S. Growth Fund A Class, LNLIC held
85% of the outstanding shares of World Growth Fund A Class, 77% of the
outstanding shares of New Pacific Fund A Class, 98% of the outstanding shares of
Federal Bond Fund A Class and 95% of the outstanding shares of Corporate Income
Fund A Class. Subject to certain limited exceptions, there are no limitations on
the Lincoln National Corporation affiliates' ability to redeem the shares of the
Adviser Funds, Inc. and they may do so at any time.

General Information

Independent Accountants

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<PAGE>

IMPLEMENTATION OF INVESTMENT OBJECTIVES AND POLICIES

In attempting to achieve their investment objectives and policies, the
Funds may employ, among others, one or more of the strategies set forth below.

U.S. Government Securities
All of the Funds may invest in securities of the U.S. Government.
Securities guaranteed by the U.S. Government include: (1) direct obligations of
the U.S. Treasury (such as Treasury bills, notes and bonds) and (2) federal
agency obligations guaranteed as to principal and interest by the U.S. Treasury
(such as GNMA certificates and Federal Housing Administration debentures). For
these securities, the payment of principal and interest is unconditionally
guaranteed by the U.S. Government, and thus they are of the highest possible
credit quality. Such securities are subject to variations in market value due to
fluctuations in interest rates, but if held to maturity are deemed to be free of
credit risk for the life of the investment.
Securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the U.S.
Treasury. However, they generally involve federal sponsorship in one way or
another: some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the U.S. Treasury; some are supported by the
discretionary authority of the U.S. Treasury to purchase certain obligations of
the issuer; and others are supported only by the credit of the issuing
government agency or instrumentality. These agencies and instrumentalities
include, but are not limited to, Federal Land Banks, Farmers Home
Administration, Central Bank for Cooperatives, Federal Intermediate Credit
Banks, and Federal Home Loan Banks.

Mortgage-Backed Securities

The Corporate Income and Federal Bond Funds may invest in various types
of mortgage-backed securities. Mortgage-backed securities may be issued by
governmental agencies (such as the Government National Mortgage Association
("GNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC")), by the
Federal National Mortgage Association ("FNMA"), which is a federally chartered

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<PAGE>

and privately-owned corporation, or by private financial institutions such as
commercial banks, savings and loan associations, mortgage bankers and securities
broker/dealers (or separate trusts or affiliates of such institutions
established to issue these securities).

Most mortgage-backed securities, including the securities issued by
GNMA, FHLMC and FNMA, are so-called "pass-through" securities representing
interests in a pool of underlying mortgage loans, on which the regular interest
and principal payments (including any prepayments) are passed through to the
holder of the securities. Although the mortgage loans in a pool will have stated
maturities of up to 30 years, due to both normal principal repayment and
prepayments, the average effective maturities of these securities will vary and
will tend to be shorter than those of the underlying mortgages. Due to the
prepayment feature and the need to reinvest prepayments of principal at current
market rates, these securities can be less effective than typical bonds of
similar maturities at "locking in" yields during periods of declining interest
rates. Like other fixed-income investments, the value of mortgage-related
securities will tend to rise when interest rates fall and to fall when interest
rates rise. Their value may also change due to changes in the market's
perception of the creditworthiness of the entity that issues or guarantees them.
For additional information regarding mortgage-backed securities, see Part B.

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<PAGE>

Repurchase Agreements

The Funds may enter into repurchase agreements, under which a Fund buys
a security (typically a U.S. Government Security or other money market security)
and obtains a simultaneous commitment from the seller to repurchase the security
at a specified time and price. The seller must maintain with the Adviser Funds,
Inc.'s Custodian collateral equal to at least 100% of the repurchase price
including accrued interest, as monitored daily by the Manager and/or
sub-adviser. A Fund only will enter into repurchase agreements involving
securities in which it could otherwise invest and with banks, brokers or dealers
deemed by the Board of Directors to be creditworthy. If the seller under the
repurchase agreement defaults, the Fund may incur a loss if the value of the
collateral securing the repurchase agreement has declined and may incur
disposition costs in connection with liquidating the collateral. If bankruptcy
proceedings are commenced with respect to the seller, realization upon the
collateral by the Fund may be delayed or limited.

Money Market Instruments
All of the Funds may invest in money market instruments without limit
for temporary or defensive purposes. These are shorter-term debt securities
generally maturing in one year or less which include (1) commercial paper
(short-term notes up to 9 months issued by corporations or governmental bodies),
(2) commercial bank obligations (certificates of deposit (interest-bearing time
deposits), bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity), and documented discount

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<PAGE>

notes (corporate promissory discount notes accompanied by a commercial bank
guarantee to pay at maturity)), (3) corporate bonds and notes (corporate
obligations that mature, or that may be redeemed, in one year or less), (4)
variable rate demand notes, short-term tax-exempt obligations and (5) savings
association obligations (certificates of deposit issued by mutual savings banks
or savings and loan associations). Although certain floating or variable rate
obligations (securities which have a coupon rate that changes at least annually
and generally more frequently) have maturities in excess of one year, they are
also considered to be short-term debt securities.

Strategic Transactions

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<PAGE>

taking into account unrealized profits and losses on such contracts, would
exceed 5% of the Fund's net asset value without reference to the definition of
"bona fide hedging transactions and positions" under the Commodity Exchange Act,
as amended, or unless the futures contract is covered by cash equivalent
set-asides equal to the total contract value.
In addition to the above limitations, each Fund will not (a) sell
futures contracts, purchase put options or write call options if, as a result,
more than 25% of a Fund's total assets would be hedged with futures and options
under normal conditions; (b) purchase futures contracts or write put options if,
as a result, a Fund's total obligations upon settlement or exercise of purchased
futures contracts and written put options would exceed 25% of its total assets;
or (c) purchase call options if, as a result, the current value of option
premiums for call options purchased by a Fund would exceed 5% of the Fund's
total assets. These limitations do not apply to options attached to or acquired
or traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.
The limitations on the Funds' investments in futures contracts and
options, and the Funds' policies regarding futures contracts and options
discussed elsewhere are not fundamental policies and may be changed as
regulatory agencies permit.
Options Transactions. The Funds may purchase and write (i.e., sell) put
and call options on securities and currencies that are traded on national
securities exchanges or in the over-the-counter market to enhance income or to
hedge their Funds. A call option gives the purchaser, in exchange for a premium
paid, the right for a specified period of time to purchase securities or
currencies subject to the option at a specified price (the exercise price or
strike price). When a Fund writes a call option, the Fund gives up the potential
for gain on the underlying securities in excess of the exercise price of the
option.
A put option gives the purchaser, in return for a premium, the right
for a specified period of time to sell the securities or currencies subject to
the option to the writer of the put at the specified exercise price. The writer
of the put option, in return for the premium, has the obligation, upon exercise
of the option, to acquire the securities underlying the option at the exercise
price. A Fund might, therefore, be obligated to purchase the underlying
securities for more than their current market price.

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<PAGE>

over-the-counter for certain hedging, return enhancement and risk management
purposes in accordance with regulations of the CFTC. These futures contracts and
related options will be on interest-bearing securities, financial indices and
interest rate indices. A financial futures contract is an agreement to purchase
or sell an agreed amount of securities at a set price for delivery in the
future.
A Fund may not purchase or sell futures contracts and related options
if immediately thereafter the sum of the amount of initial margin deposits on
the Fund's existing futures and options on futures and premiums paid on such
related options would exceed 5% of the market value of the Fund's total assets.
In addition, the value of all futures contracts sold will not exceed the total
market value of the Fund.
Swap Agreements. The Funds may enter into interest rate swaps, currency
swaps, and other types of swap agreements such as caps, collars and floors. In
an interest rate swap, one party agrees to make regular payments of a floating
rate times a "notional" principal amount in return for payments of a fixed rate
times the same amount. Swaps may also depend on other prices or rates such as
the value of an index or mortgage prepayment rates.

Swap agreements usually involve a small investment of cash relative to
the magnitude of risk assumed. As a result, swaps can be very volatile and may
substantially impact a Fund's performance. Swap agreements are also subject to
the risk of a counterpart's ability to perform (i.e., creditworthiness). A Fund
may also suffer losses if it is unable to terminate swap agreements or reduce
exposure through offsetting transactions in a timely manner.

Special Risks of Strategic Transactions. Participation in the options
or futures markets and in currency exchange transactions involves investment
risks and transaction costs to which a Fund would not be subject absent the use
of these Strategic Transactions. If the Manager's and/or sub-adviser's
prediction of movements in the direction of the securities, foreign currency and
interest rate markets are inaccurate, the adverse consequences to a Fund may
leave the Fund in a worse position than if such Strategic Transactions were not
used. Risks inherent in the use of options, foreign current and futures
contracts and options on futures contracts include (1) dependence on the
Manager's and/or sub-adviser's ability to predict current movements in the
direction of interest rates, securities prices and currency markets; (2)
imperfect correlation between the price of options and futures contracts and
options thereon and movements in the prices of securities being hedged; (3) the
fact that skills need to use these strategies are different from those needed to
select Fund securities; (4) the possible absence of a liquid secondary market
for any particular instrument at any time; (5) the possible need to defer
closing out certain hedged positions to avoid adverse tax consequences; and (6)
the possible inability of a Fund to purchase or sell a Fund security at a time
that otherwise would be favorable for it to do so, or the possible need for a
Fund to sell a Fund security at a disadvantageous time, due to the need for a
Fund to maintain "cover" or to segregate securities in connection with Strategic
Transactions. Although the use of futures contracts and options transactions for
hedging should tend to minimize the risk of loss due to a decline in the value
of the hedged position, at the same time they tend to limit any potential gain
which might result from an increase in value of such position. Finally, the
daily variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would purchase of options, where the
exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value, and possibly
income, and such losses can be greater than if the Strategic Transactions had

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<PAGE>

not been utilized. The Strategic Transactions that the Funds may use and some of
their risks are described more fully in Part B.
Each Fund's ability to engage in Strategic Transactions is limited by
the requirements of the Internal Revenue Code of 1986, as amended, for
qualification as a regulated investment company. See Part B.

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<PAGE>

APPENDIX A - DESCRIPTION OF
SECURITIES RATINGS

MOODY'S INVESTORS SERVICE

BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds that are rated Baa are considered medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

SHORT-TERM DEBT RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers
to repay punctually senior obligations which have an original maturity not
exceeding one year.
P-1: Issuers rated "PRIME-1" or "P-1" (or supporting institutions) have
superior ability for repayment of senior short-term debt obligations.
P-2: Issuers rated "PRIME-2" or "P-2" (or supporting institutions) have
a strong ability for repayment of senior short-term debt obligations.
P-3: Issuers rated "PRIME-3" or "P-3" (or supporting institutions) have
an acceptable ability for repayment of senior short-term debt obligations.

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<PAGE>

MUNICIPAL NOTE RATINGS

MIG 1/VMIG 1: This designation denotes best quality. There is
present strong protection by established cash flows,
superior liquidity support, or demonstrated broad-
based access to the market for refinancing.

MIG 2/VMIG 2: This designation denotes high quality.
Margins of protection are ample although not so large
as in the preceding group.

MIG 3/VMIG 3: This designation denotes favorable quality. All
security elements are accounted for but there is
lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to
be less well established.

MIG 4/VMIG 4: This designation denotes adequate quality. Protection
commonly regarded as required of an investment
security is present and although not distinctly or
predominantly speculative, there is specific risk.

STANDARD & POOR'S RATINGS GROUP

BOND RATINGS
AAA: Debt rated AAA has the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A: Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest an repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC and CC: Debt rated BB, B, CCC or CC is regarded, on balance,
as predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C: This rating is reserved for income bonds on which no interest is
being paid.
D: Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.

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<PAGE>

COMMERCIAL PAPER RATINGS

S&P's commercial paper ratings are current assessments of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. A plus (+) designation is
applied only to those issues rated A-1 which possess an overwhelming degree of
safety.
A-2: Capacity for timely payment on issues with the designation A-2 is
strong. However, the relative degree of safely is not as high as for issues
designated A-1.
A-3: Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.

MUNICIPAL NOTE RATINGS

An S&P municipal note rating reflects the liquidity concerns and market
access risks unique to notes. Notes due in 3 years or less will likely receive a
note rating. Notes maturing beyond 3 years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:
Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
Sources of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
SP-1: Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
SP-3: Speculative capacity to pay principal and interest.

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<PAGE>

The Delaware Group includes --------------------------------------
funds with a wide range of investment DELAWARE GROUP ADVISER FUNDS, INC.
objectives. Stock funds, income funds, (FORMERLY LINCOLN ADVISOR FUNDS, INC.)
tax-free funds, money market funds, --------------------------------------
global and international funds and A CLASSES
closed-end equity funds give investors --------------------------------------
the ability to create a portfolio that B CLASSES
fits their personal financial goals. --------------------------------------
For more information, shareholders of C CLASSES
the Fund Classes should contact their --------------------------------------
financial adviser or call Delaware INSTITUTIONAL CLASSES
Group at 800-523- 4640 and shareholders --------------------------------------
of the Institutional Class should
contact Delaware Group at 800-828-5052.

INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103

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

Walter Scott & Partners Limited
Millburn Tower, Gogar
Edinburgh, Scotland EH12 9BS

John Govett & Company Limited
Shackleton House
4 Battlebridge Lane
London, England SE1 2HR

Lincoln Investment Management, Inc. PART B
200 East Berry Street
Fort Wayne, IN 46802 STATEMENT OF
ADDITIONAL INFORMATION
NATIONAL DISTRIBUTOR --------------------------------------
Delaware Distributors, L.P. MAY 6, 1996
1818 Market Street
Philadelphia, PA 19103

SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103

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

INDEPENDENT AUDITORS
Coopers & Lybrand, L.L.P.
Eleven Penn Center Plaza
Philadelphia, PA 19103

CUSTODIAN
The Chase Manhattan Bank, N.A. DELAWARE
4 Chase Metrotech Center GROUP
Brooklyn, NY 11245 --------

<PAGE>

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

PART B--STATEMENT OF ADDITIONAL INFORMATION
MAY 6, 1996
- --------------------------------------------------------------------------------

DELAWARE GROUP ADVISER FUNDS, INC.

ENTERPRISE FUND
U.S. GROWTH FUND
WORLD GROWTH FUND
NEW PACIFIC FUND
FEDERAL BOND FUND
CORPORATE INCOME FUND
- --------------------------------------------------------------------------------

1818 Market Street
Philadelphia, PA 19103

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

For more information about the Institutional Class shares of each Fund:
800-828-5052

For a Prospectus and Performance information for the A Class, B Class and C
Class of each Fund: 800-523-4640

For Information on Existing Accounts of the A Class, B Class and C Class of each
Fund:
(SHAREHOLDERS ONLY) 800-523-1918

Dealer Services:
(BROKER/DEALERS ONLY) 800-362-7500
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

- --------------------------------------------------------------------------------
Cover Page
- --------------------------------------------------------------------------------
Investment Objectives and Policies
- --------------------------------------------------------------------------------
Investment Restrictions
- --------------------------------------------------------------------------------
Performance Information
- --------------------------------------------------------------------------------
Trading Practices and Brokerage
- --------------------------------------------------------------------------------
Purchasing Shares
- --------------------------------------------------------------------------------
Investment Plans
- --------------------------------------------------------------------------------
Determining Offering Price and Net Asset Value
- --------------------------------------------------------------------------------
Redemption and Repurchase
- --------------------------------------------------------------------------------
Dividends, Distributions and Taxes
- --------------------------------------------------------------------------------
Investment Management Agreements
- --------------------------------------------------------------------------------
Officers and Directors
- --------------------------------------------------------------------------------
Exchange Privilege
- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------
Financial Statements
- --------------------------------------------------------------------------------
Appendix A--IRA Information
- --------------------------------------------------------------------------------
Appendix B--The Equity Market
- --------------------------------------------------------------------------------

-1-

<PAGE>

Delaware Group Adviser Funds, Inc. ("Adviser Funds, Inc.") is a
professionally-managed mutual fund currently offering six separate series of
shares: the Enterprise Fund, U.S. Growth Fund, World Growth Fund, New Pacific
Fund, Federal Bond Fund and Corporate Income Fund (each a "Fund" and
collectively, the "Funds"). This Statement of Additional Information ("Part B"
of Adviser Funds, Inc.'s registration statement) describes each of the Funds,
except where noted. Until the close of business on May 3, 1996, Delaware Group
Adviser Funds, Inc. was called Lincoln Advisor Funds, Inc., and the Enterprise
Fund, U.S. Growth Fund, World Growth Fund, New Pacific Fund, Federal Bond Fund
and Corporate Income Fund were called the Lincoln Enterprise Portfolio, Lincoln
U.S. Growth Portfolio, Lincoln World Growth Portfolio, Lincoln New Pacific
Portfolio, Lincoln Government Income Portfolio and Lincoln Corporate Income
Portfolio, respectively.

Each Fund offers four classes of shares consisting of an A Class of
shares ("Class A Shares"), a B Class of shares ("Class B Shares"), a C Class of
shares ("Class C Shares") (together the "Fund Classes") and an Institutional
Class of shares (individually, an "Institutional Class" and collectively, the
"Institutional Classes"). Each class may be referred to individually as a
"Class" and collectively as the "Classes." The Fund Classes are offered through
a Prospectus dated May 6, 1996, and the Institutional Classes are offered
through a separate Prospectus also dated May 6, 1996.

Class B Shares, Class C Shares and Institutional Class shares may be
purchased at a price equal to the next determined net asset value per share.
Class A Shares may be purchased at the public offering price, which is equal to
the next determined net asset value per share, plus a front-end sales charge.
Class A Shares are subject to a maximum front-end sales charge of 4.75% and
annual 12b-1 Plan expenses of up to .35% (currently, .30% pursuant to Board
action). Class B Shares are subject to a contingent deferred sales charge
("CDSC") which may be imposed on redemptions made within six years of purchase
and annual 12b-1 Plan expenses of up to 1%, which are assessed against Class B
Shares for approximately eight years after purchase. See Automatic Conversion of
Class B Shares under Classes of Shares in the Fund Classes' Prospectus. Class C
Shares are subject to a CDSC which may be imposed on redemptions made within 12
months of purchase and annual 12b-1 Plan expenses of up to 1%, which are
assessed against Class C Shares for the life of the investment. All references
to "shares" in this Part B refer to all Classes of shares of the Fund, except
where noted.

This Part B supplements the information contained in the current
Prospectus for the Fund Classes, and the current Prospectus for the
Institutional Classes, as they may be amended from time to time. It should be
read in conjunction with the respective Class' Prospectus. Part B is not itself
a prospectus but is, in its entirety, incorporated by reference into each Class'
Prospectus. A Prospectus relating to the Fund Classes and a Prospectus relating
to the Institutional Classes may be obtained by writing or calling your
investment dealer or by contacting the Fund's national distributor, Delaware
Distributors, L.P. (the "Distributor"), 1818 Market Street, Philadelphia, PA
19103.

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<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The Prospectuses discuss the Funds' investment objectives and the
policies followed to achieve those objectives. The following discussion
supplements the description of the Funds' investment objectives and policies in
the Prospectuses. Capitalized terms that are not defined herein are defined in
the Funds' Prospectuses.

Lower-Rated Debt Securities
The U.S. Growth Fund and the Corporate Income Fund may purchase
securities that are rated lower than Baa by Moody's Investors Service, Inc.
("Moody's") or lower than BBB by Standard & Poor's Ratings Group ("S&P"). These
securities are often considered to be speculative and involve significantly
higher risk of default on the payment of principal and interest or are more
likely to experience significant price fluctuation due to changes in the
issuer's creditworthiness. Market prices of these securities may fluctuate more
than higher-rated debt securities and may decline significantly in periods of
general economic difficulty which may follow periods of rising interest rates.
While the market for high yield corporate debt securities has been in existence
for many years and has weathered previous economic downturns, the market in
recent years has experienced a dramatic increase in the large-scale use of such
securities to fund highly leveraged corporate acquisitions and restructurings.
Accordingly, past experience may not provide an accurate indication of future
performance of the high yield bond market, especially during periods of economic
recession. See Description of Security Ratings in the Prospectuses.

The market for lower-rated securities may be less active than that for
higher-rated securities, which can adversely affect the prices at which these
securities can be sold. If market quotations are not available, these securities
will be valued in accordance with procedures established by the Board of
Directors, including the use of outside pricing services. Judgment plays a
greater role in valuing high yield corporate debt securities than is the case
for securities for which more external sources for quotations and last-sale
information are available. Adverse publicity and changing investor perceptions
may affect the ability of outside pricing services used by a Fund to value its
portfolio securities and the Fund's ability to dispose of these lower-rated debt
securities.

Since the risk of default is higher for lower-quality securities, the
Manager's and/or sub-adviser's research and credit analysis is an integral part
of managing any securities of this type held by a Fund. In considering
investments for a Fund, the Manager and/or sub-adviser will attempt to identify
those issuers of high-yielding securities whose financial condition is adequate
to meet future obligations, has improved, or is expected to improve in the
future. The Manager's and/or sub-adviser's analysis focuses on relative values
based on such factors as interest or dividend coverage, asset coverage, earnings
prospects, and the experience and managerial strength of the issuer. There can
be no assurance that such analysis will prove accurate.

A Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as security holder to seek to
protect the interests of security holders if it determines this to be in the
best interest of shareholders.

Mortgage-Backed Securities
Each Fund may invest in mortgage-related securities including those
representing an undivided ownership interest in a pool of mortgages.

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<PAGE>
Government National Mortgage Association Certificates. Certificates
issued by the Government National Mortgage Association ("GNMA") are
mortgage-backed securities representing part ownership of a pool of mortgage
loans, which are issued by lenders such as mortgage bankers, commercial banks
and savings and loan associations, and are either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration. A pool of these
mortgages is assembled and, after being approved by GNMA, is offered to
investors through securities dealers. The timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. Government.

Principal is paid back monthly by the borrower over the term of the
loan. Investment of prepayments may occur at higher or lower rates than the
anticipated yield on the certificates. Due to the prepayment feature and the
need to reinvest prepayments of principal at current market rates, GNMA
certificates can be less effective than typical bonds of similar maturities at
"locking in" yields during periods of declining interest rates. GNMA
certificates typically appreciate or decline in market value during periods of
declining or rising interest rates, respectively. Due to the regular repayment
of principal and the prepayment feature, the effective maturities of mortgage
pass-through securities are shorter than stated maturities, will vary based on
market conditions and cannot be predicted in advance. The effective maturities
of newly-issued GNMA certificates backed by relatively new loans at or near the
prevailing interest rates are generally assumed to range between approximately
nine and 12 years.

FNMA and FHLMC Mortgage-Backed Obligations. The Federal National
Mortgage Association ("FNMA"), a federally chartered and privately-owned
corporation, issues pass-through securities representing interests in a pool of
conventional mortgage loans. FNMA guarantees the timely payment of principal and
interest but this guarantee is not backed by the full faith and credit of the
U.S. Government. The Federal Home Loan Mortgage Corporation ("FHLMC"), a
corporate instrumentality of the U.S. Government, issues participation
certificates which represent an interest in a pool of conventional mortgage
loans. FHLMC guarantees the timely payment of interest and the ultimate
collection of principal, and maintains reserves to protect holders against
losses due to default, but the certificates are not backed by the full faith and
credit of the U.S. Government.

As is the case with GNMA certificates, the actual maturity of and
realized yield on particular FNMA and FHLMC pass-through securities will vary
based on the prepayments of the underlying pool of mortgages and cannot be
predicted.

Other Mortgage-Backed Securities. The Federal Bond and Corporate Income
Funds may invest in mortgage-backed securities issued by financial institutions
such as commercial banks, savings and loan associations, mortgage bankers and
securities broker/dealers (or separate trusts or affiliates of such institutions
established to issue these securities). These securities include mortgage
pass-through certificates, collateralized mortgage obligations ("CMOs") (which
include real estate mortgage investment conduits as authorized under the
Internal Revenue Code of 1986) or mortgage-backed bonds. Each class of bonds in
a CMO series may have a different maturity than the other classes of bonds in
the series and may bear a different coupon. The different maturities occur
because payments of principal, both regular principal payments as well as any
prepayments are passed through first to the holders of the class with the
shortest maturity until it is completely retired. Thereafter, principal payments
are passed through to the next class of bonds in the series, until all the
classes have been paid off. As a result, an acceleration in the rate of
prepayments may also be associated with declining interest rates, shortening the
expected life of each class, with the greatest cash flow impact on those classes
with the shortest maturities. Should the rate of prepayments slow down, as may
happen in times of rising interest rates, the expected life of each class
lengthens, again with the greatest cash flow impact on those classes with the
shortest maturities. In the case of some CMO series, each class may receive a
different proportion of the monthly interest and principal repayments on the

-4-
<PAGE>

underlying collateral. In these series the classes have proportionally greater
interests in principal repayments generally and would be more affected by a
change in the rate of prepayments although the percentage impact on those
classes consisting mostly of interest payments could be greater.

Asset-Backed Securities. The Federal Bond and Corporate Income Funds
may invest in bonds or notes backed by loan paper or accounts receivable
originated by banks, credit card companies, or other providers of credit. These
securities are often "enhanced" by a bank letter of credit or by insurance
coverage provided by an institution other than the issuer; such an enhancement
typically covers only a portion of the par value until exhausted. Generally, the
originator of the loan or accounts receivable paper sells it to a specially
created trust, which repackages it as securities with a term of five years or
less. Examples of these types of securities include "certificates for automobile
receivables" (commonly referred to as "CARs") and bonds backed by credit card
loan receivables (commonly referred to as "plastic bonds"). The loans underlying
these securities are subject to prepayments which can decrease maturities and
returns. The values of these securities are ultimately dependent upon payment of
the underlying loans by individuals, and the holders generally have no recourse
against the originator of the loans. Holders of these securities may experience
losses or delays in payment if the original payments of principal and interest
are not made to the trust with respect to the underlying loans. The values of
these securities also may fluctuate due to changes in the market perception of
the creditworthiness of the servicing agent for the loan pool, the originator of
the loan, or the financial institution providing the credit enhancement.

Foreign Investments
The World Growth and New Pacific Funds may invest substantially all of
their assets in foreign investments. Certain of the Funds may invest the
following percentages of their assets in foreign securities: the Enterprise Fund
(15%), the U.S. Growth Fund (20%) and the Corporate Income Fund (10%). Foreign
investments can involve significant risks in addition to the risks inherent in
U.S. investments. The value of securities denominated in or indexed to foreign
currencies, and of dividends and interest from such securities, can change
significantly when foreign currencies strengthen or weaken relative to the U.S.
dollar. Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be highly
volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial costs, are generally
higher than for U.S. investments.

Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It may also be difficult to enforce legal rights
in foreign countries.

Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that the Manager or sub-adviser
will be able to anticipate or counter these potential events.

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<PAGE>

The considerations noted above generally are intensified for
investments in developing countries. Developing countries may have relatively
unstable governments, economies based on only a few industries, and securities
markets that trade a small number of securities.

The Funds may invest in foreign securities that impose restrictions on
transfer within the United States or to U.S. persons. Although securities
subject to transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject to such
restrictions.

American Depository Receipts and European Depository Receipts ("ADRs"
and "EDRs") are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed for
use in U.S. and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their national
markets and currencies.

Mortgage Dollar Rolls
Each Fund may enter into mortgage "dollar rolls" in which the Fund
sells mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. Dollar roll transactions
consist of the sale by a Fund of mortgage-backed securities, together with a
commitment to purchase similar, but not necessarily identical, securities at a
future date. Any difference between the sale price and the purchase price is
netted against the interest income foregone on the securities to arrive at an
implied borrowing (reverse repurchase) rate. Alternatively, the sale and
purchase transactions which constitute the dollar roll can be executed at the
same price, with the Fund being paid a fee as consideration for entering into
the commitment to purchase. Dollar rolls may be renewed prior to cash settlement
and initially may involve only a firm commitment agreement by the Fund to buy a
security. If the broker/dealer to whom the Fund sells the security becomes
insolvent, the Fund's right to purchase or repurchase the security may be
restricted; the value of the security may change adversely over the term of the
dollar roll; the security that the Fund is required to repurchase may be worth
less than the security that the Fund originally held, and the return earned by
the Fund with the proceeds of a dollar roll may not exceed transaction costs.
The Fund will place U.S. Government or other liquid, high quality assets in a
segregated account in an amount sufficient to cover its repurchase obligation.

Options on Foreign and U.S. Currencies and Securities
The Funds may purchase and sell (write) put and call options on
securities, although the present intent is to write only covered call options.
These covered call options must remain covered so long as a Fund is obligated as
a writer. A call option written by a Fund is "covered" if the Fund owns the
security underlying the option or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash
consideration held in a segregated account by the Fund's Custodian) upon
conversion or exchange of other securities held in its fund. A call option is
also covered if a Fund holds on a share-for-share basis a call on the same
security as the call written where the exercise price of the call held is equal
to or less than the exercise price of the call written or greater than the
exercise price of the call written if the difference is maintained by the Fund
in cash, treasury bills or other high grade, short-term debt obligations in a
segregated account with the Custodian. The premium paid by the purchaser of an
option will reflect, among other things, the relationship of the exercise price
to the market price and volatility of the underlying security, the remaining
term of the option, supply and demand and interest rates.

If the writer of an option wishes to terminate the obligation, he or
she may effect a "closing purchase transaction." This is accomplished by buying
an option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be canceled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after he or she has been notified of the exercise of an option. Similarly, an

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investor who is the holder of an option may liquidate his or her position by
effecting a "closing sale transaction." This is accomplished by selling an
option of the same series as the option previously purchased. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected. To secure the obligation to deliver the underlying security in the
case of a call option, the writer of the option (whether an exchange-traded
option or a NASDAQ option) is required to pledge for the benefit of the broker
the underlying security or other assets in accordance with the rules of The
Options Clearing Corporation (OCC), the Chicago Board of Trade and the Chicago
Mercantile Exchange, institutions which interpose themselves between buyers and
sellers of options. Technically, each of these institutions assumes the other
side of every purchase and sale transaction on an exchange and, by doing so,
guarantees the transaction.

An option position may be closed out only on an exchange, board of
trade or other trading facility which provides a secondary market for an option
of the same series. Although a Fund will generally purchase or write only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange or other trading
facility will exist for any particular option, or at any particular time, and
for some options no secondary market on an exchange or otherwise may exist. In
such event it might not be possible to effect closing transactions in particular
options, with the result that the Fund would have to exercise its options in
order to realize any profit and would incur brokerage commissions upon the
exercise of call options and upon the subsequent disposition of underlying
securities acquired through the exercise of call options or upon the purchase of
underlying securities for the exercise of put options. If a Fund as a covered
call option writer is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise.

Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a clearing corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at times, render certain of the facilities of any of the clearing
corporations inadequate, and thereby result in the institution by an exchange of
special procedures which may interfere with the timely execution of customers'
orders. However, the OCC, based on forecasts provided by the U.S. exchanges,
believes that its facilities are adequate to handle the volume of reasonably
anticipated options transactions, and such exchanges have advised such clearing
corporation that they believe their facilities will also be adequate to handle
reasonably anticipated volume.

Options on Stock Indices

Options on stock indices are similar to options on stock except that,
rather than the right to take or make delivery of stock at a specified price, an
option on a stock index gives the holder the right to receive, upon exercise of
the option, an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. This amount of cash is equal to
such difference between the closing price of the index and the exercise price of
the option expressed in dollars times a specified multiple (the "multiplier").
The writer of the option is obligated, in return for the premium received, to
make delivery of this amount. Unlike stock options, all settlements are in cash.

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<PAGE>

The multiplier for an index option performs a function similar to the
unit of trading for a stock option. It determines the total dollar value per
contract of each point in the difference between the exercise price of an option
and the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.

Except as described below, a Fund will write call options on indices
only if on such date it holds a portfolio of securities at least equal to the
value of the index times the multiplier times the number of contracts. When a
Fund writes a call option on a broadly-based stock market index, the Fund will
segregate or put into escrow with the Custodian, or pledge to a broker as
collateral for the option, cash, cash equivalents or at least one "qualified
security" with a market value at the time the option is written of not less than
100% of the current index value times the multiplier times the number of
contracts. A Fund will write call options on broadly-based stock market indices
only if at the time of writing it holds a diversified portfolio of stocks.

If a Fund has written an option on an industry or market segment index,
it will so segregate or put into escrow with the Custodian, or pledge to a
broker as collateral for the option, at least ten "qualified securities," which
are stocks of an issuer in such industry or market segment, with a market value
at the time the option is written of not less than 100% of the current index
value times the multiplier times the number of contracts. Such stocks will
include stocks which represent at least 50% of the Fund's holdings in that
industry or market segment. No individual security will represent more than 15%
of the amount so segregated, pledged or escrowed in the case of broadly-based
stock market index options or 25% of such amount in the case of industry or
market segment index options.

If at the close of business, the market value of such qualified
securities so segregated, escrowed or pledged falls below 100% of the current
index value times the multiplier times the number of contracts, a Fund will
segregate, escrow or pledge an amount in cash, Treasury bills or other high
grade short-term debt obligations equal in value to the difference. In addition,
when a Fund writes a call on an index which is in-the-money at the time the call
is written, the Fund will segregate with the Custodian or pledge to the broker
as collateral, cash, U.S. Government or other high grade short-term debt
obligations equal in value to the amount by which the call is in-the-money times
the multiplier times the number of contracts. Any amount segregated pursuant to
the foregoing sentence may be applied to the Fund's obligation to segregate
additional amounts in the event that the market value of the qualified
securities falls below 100% of the current index value times the multiplier
times the number of contracts. However, if a Fund holds a call on the same index
as the call written where the exercise price of the call held is equal to or
less than the exercise price of the call written or greater than the exercise
price of the call written if the difference is maintained by the Fund in cash,
Treasury bills or other high grade short-term debt obligations in a segregated
account with the Custodian, it will not be subject to the requirements described
in this paragraph.

Risks of Options on Stock Indices. Index prices may be distorted if
trading of certain securities included in the index is interrupted. Trading in
the index options also may be interrupted in certain circumstances, such as if
trading were halted in a substantial number of securities included in the index.
If this occurred, a Fund would not be able to close out options which it had
purchased or written and, if restrictions on exercise were imposed, may be
unable to exercise an option it holds, which could result in substantial losses
to the Fund. It is the Funds' policy to purchase or write options only on
indices which include a number of securities sufficient to minimize the
likelihood of a trading halt in the index.

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<PAGE>

Special Risks of Writing Calls on Stock Indices. Unless a Fund has
other liquid assets which are sufficient to satisfy the exercise of a call, the
Fund would be required to liquidate portfolio securities in order to satisfy the
exercise. Because an exercise must be settled within hours after receiving the
notice of exercise, if a Fund fails to anticipate an exercise it may have to
borrow from a bank (in amounts not exceeding 20% of the value of the Fund's
total assets) pending settlement of the sale of securities in its portfolio and
would incur interest charges thereon.

When a Fund has written a call, there is also a risk that the market
may decline between the time the Fund has a call exercised against it, at a
price which is fixed as of the closing level of the index on the date of
exercise, and the time the Fund is able to sell securities in its portfolio. As
with stock options, a Fund will not learn that an index option has been
exercised until the day following the exercise date. Unlike a call on stock
where the Fund would be able to deliver the underlying securities in settlement,
the Fund may have to sell part of its portfolio in order to make settlement in
cash, and the price of such securities might decline before they can be sold.
This timing risk makes certain strategies involving more than one option
substantially more risky with index options than with stock options. For
example, even if an index call which a Fund has written is "covered" by an index
call held by the Fund with the same strike price, the Fund will bear the risk
that the level of the index may decline between the close of trading on the date
the exercise notice is filed with the clearing corporation and the close of
trading on the date the Fund exercises the call it holds or the time the Fund
sells the call, which in either case would occur no earlier than the day
following the day the exercise notice was filed.

Over-the-Counter Options and Illiquid Securities. As indicated in the
Prospectuses, all Funds may deal in over-the-counter ("OTC") options. The Funds
understand the position of the staff of the Securities and Exchange Commission
("SEC") to be that purchased OTC options and the assets used as "cover" for
written OTC options are illiquid securities. The Funds, the Manager, and the
sub-advisers disagree with this position and have found the dealers with which
they engage in OTC options transactions generally agreeable to and capable of
entering into closing transactions. As also indicated in the Prospectuses, the
Funds have adopted procedures for engaging in OTC options for the purpose of
reducing any potential adverse impact of such transactions upon the liquidity of
each Fund's portfolio.

As part of these procedures the Funds will engage in OTC options
transactions only with primary dealers that have been specifically approved by
the Board of Directors of Adviser Funds, Inc. and the Manager and/or
sub-advisers believe that the approved dealers should be agreeable and able to
enter into closing transactions if necessary and, therefore, present minimal
credit risks to the Funds. The Funds anticipate entering into written agreements
with those dealers to whom the Funds may sell OTC options, pursuant to which the
Funds would have the absolute right to repurchase the OTC options from such
dealers at any time at a price determined pursuant to a formula set forth in
certain no action letters published by the SEC staff. A Fund will not engage in
OTC options transactions if the amount invested by the Fund in OTC options plus,
with respect to OTC options written by the Fund, the amounts required to be
treated as illiquid pursuant to the terms of such letters (and the value of the
assets used as cover with respect to OTC option sales which are not within the
scope of such letters), plus the amount invested by the Fund in illiquid
securities, would exceed 15% of the Fund's total assets. OTC options on
securities other than U.S. Government securities may not be within the scope of
such letters and, accordingly, the amount invested by a Fund in OTC options on
such other securities and the value of the assets used as cover with respect to
OTC option sales regarding such non-U.S. Government securities will be treated
as illiquid and subject to the 10% limitation on the Fund's net assets that may
be invested in illiquid securities. See "Illiquid Securities" herein.

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<PAGE>

Futures Contracts and Options Thereon
A futures contract is an agreement in which the writer (or seller) of
the contract agrees to deliver to the buyer an amount of cash or securities
equal to a specific dollar amount times the difference between the value of a
specific fixed-income security or index at the close of the last trading day of
the contract and the price at which the agreement is made. No physical delivery
of the underlying securities is made. When the futures contract is entered into,
each party deposits with a broker or in a segregated custodial account
approximately 5% of the contract amount, called the "initial margin." Subsequent
payments to and from the broker, called "variation margin," will be made on a
daily basis as the price of the underlying security or index fluctuates, making
the long and short positions in the futures contracts more or less valuable, a
process known as "marking to market." In the case of options on futures
contracts, the holder of the option pays a premium and receives the right, upon
exercise of the option at a specified price during the option period, to assume
a position in the futures contract (a long position if the option is a call and
a short position if the option is a put). If the option is exercised by the
holder before the last trading day during the option period, the option writer
delivers the futures position, as well as any balance in the writer's futures
margin account. If it is exercised on the last trading day, the option writer
delivers to the option holder cash in an amount equal to the difference between
the option exercise price and the closing level of the relevant security or
index on the date the option expires.

Each Fund intends to engage in futures contracts and options thereon as
a hedge against changes, resulting from market conditions, in the value of
securities which are held by the Fund or which the Fund intends to purchase, in
accordance with the rules and regulations of the Commodity Futures Trading
Commission ("CFTC"). Additionally, the Funds may write options on futures
contracts to realize through the receipt of premium income a greater return than
would be realized in a Fund's portfolio securities alone.

Risks of Transactions in Futures Contracts. There are several risks in
connection with the use of futures contracts as a hedging device. Successful use
of futures contracts by a Fund is subject to the ability of the Fund's Manager
or sub-adviser to correctly predict movements in the direction of interest rates
or changes in market conditions. These predictions involve skills and techniques
that may be different from those involved in the management of the portfolio
being hedged. In addition, there can be no assurance that there will be a
correlation between movements in the price of the underlying index or securities
and movements in the price of the securities which are the subject of the hedge.
A decision of whether, when and how to hedge involves the exercise of skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of market behavior or unexpected trends in interest rates.

Although certain Funds will purchase or sell futures contracts only on
exchanges where there appears to be an adequate secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular contract or at any particular time. Accordingly, there can be no
assurance that it will be possible, at any particular time, to close a futures
position. In the event a Fund could not close a futures position and the value
of such position declined, the Fund would be required to continue to make daily
cash payments of variation margin. However, in the event futures contracts have
been used to hedge portfolio securities, such securities will not be sold until
the futures contract can be terminated. In such circumstances, an increase in
the price of the securities, if any, may partially or completely offset losses
on the futures contract. However, there is no guarantee that the price movements
of the securities will, in fact, correlate with the price movements in the
futures contract and thus provide an offset to losses on a futures contract.

The hours of trading of futures contracts may not conform to the hours
during which a Fund may trade the underlying securities. To the extent that the
futures markets close before the securities markets, significant price and rate
movements can take place in the securities markets that cannot be reflected in
the futures market.

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<PAGE>

Foreign Currency Transactions. The Enterprise Fund, the U.S. Growth
Fund, the World Growth Fund, the New Pacific Fund and the Corporate Income Fund
may hold foreign currency deposits from time to time and may convert dollars and
foreign currencies in the foreign exchange markets. Currency conversion involves
dealer spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering into
forward contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. The parties to a forward contract may agree to offset or terminate
the contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.

Forward Foreign Currency Exchange Contracts
The Funds' dealings in forward contracts will be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of forward contracts with respect to specific
receivables or payables of a Fund generally arising in connection with the
purchase or sale of its portfolio securities and accruals of interest or
dividends receivable and Fund expenses. Position hedging is the sale of a
foreign currency with respect to portfolio security positions denominated or
quoted in that currency. A Fund may not position hedge with respect to a
particular currency for an amount greater than the aggregate market value
(determined at the time of making any sale of a forward contract) of securities
held in its portfolio denominated or quoted in, or currently convertible into,
such currency.

When a Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when a Fund anticipates the
receipt in a foreign currency of dividends or interest payments on a security
which it holds, the Fund may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment as
the case may be. By entering into a forward contract for a fixed amount of
dollars for the purchase or sale of the amount of foreign currency involved in
the underlying transactions, a Fund will be able to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the date
on which the security is purchased or sold, or on which the dividend or interest
payment is declared, and the date on which such payments are made or received.

Additionally, when the Manager and/or applicable sub-adviser believes
that the currency of a particular foreign country may suffer a substantial
decline against the U.S. dollar, a Fund may enter into a forward contract for a
fixed amount of dollars, to sell the amount of foreign currency approximating
the value of some or all of the securities of the Fund denominated in such
foreign currency.

The Funds may use currency forward contracts to manage currency risks
and to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by these Funds.

In connection with purchases and sales of securities denominated in
foreign currencies, a Fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a "settlement hedge" or
"transaction hedge." The Manager and/or sub-advisers expect to enter into
settlement hedges in the normal course of managing the Funds' foreign
investments. The Funds could also enter into forward contracts to purchase or
sell a foreign currency in anticipation of future purchases or sales of
securities denominated in foreign currency, even if the specific investments
have not yet been selected by the Manager and/or sub-adviser.

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<PAGE>

The Funds may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For example,
if a Fund owned securities denominated in pounds sterling, it could enter into a
forward contract to sell pounds sterling in return for U.S. dollars to hedge
against possible declines in the pound's value. Such a hedge (sometimes referred
to as a "position hedge") would tend to offset both positive and negative
currency fluctuations, but would not offset changes in security values caused by
other factors. The Fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling -- for example, by
entering into a forward contract to sell Deutschemarks or European Currency
Units in return for U.S. dollars. This type of hedge, sometimes referred to as a
"proxy hedge," could offer advantages in terms of cost, yield, or efficiency,
but generally will not hedge currency exposure as effectively as a simple hedge
into U.S. dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged securities
are denominated.

Under certain conditions, SEC guidelines require mutual funds to set
aside cash and appropriate liquid assets in a segregated custodian account to
cover currency forward contracts. As required by SEC guidelines, the Enterprise
Fund, the U.S. Growth Fund, the World Growth Fund, the New Pacific Fund and the
Corporate Income Fund will segregate assets to cover currency forward contracts,
if any, whose purpose is essentially speculative. The Funds will not segregate
assets to cover forward contracts, including settlement hedges, position hedges,
and proxy hedges. Successful use of forward currency contracts will depend on
the Manager's and/or sub-advisers' skill in analyzing and predicting currency
values. Forward contracts may substantially change the Funds' investment
exposure to changes in currency exchange rates, and could result in losses to
the Funds if currencies do not perform as the Manager and/or sub-advisers
anticipate. For example, if a currency's value rose at a time when the Manager
and/or applicable sub-adviser had hedged a Fund by selling that currency in
exchange for dollars, the Fund would be unable to participate in the currency's
appreciation. If the Manager and/or applicable sub-adviser hedges currency
exposure through proxy hedges, a Fund could realize currency losses from the
hedge and the security position at the same time if the two currencies do not
move in tandem. Similarly, if the Manager and/or sub-adviser increases a Fund's
exposure to a foreign currency, and that currency's value declines, the Fund
will realize a loss. There is no assurance that the Manager's and/or
sub-advisers' use of forward currency contracts will be advantageous to the
Funds or that it will hedge at an appropriate time.

Foreign Currency Options
The Enterprise Fund, the U.S. Growth Fund, the World Growth Fund, the
New Pacific Fund and the Corporate Income Fund may purchase U.S. exchange-listed
call and put options on foreign currencies. Such options on foreign currencies
operate similarly to options on securities. Options on foreign currencies are
affected by all of those factors which influence foreign exchange rates and
investments generally.

The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.

There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealer or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller

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<PAGE>

transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options market.

Foreign Currency Conversion
Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the "spread")
between prices at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the Enterprise Fund, the U.S.
Growth Fund, the World Growth Fund, the New Pacific Fund or the Corporate Income
Fund at one rate, while offering a lesser rate of exchange should those Funds
desire to resell that currency to the dealer.

Combined Transactions
Each Fund may enter into multiple transactions, including multiple
options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single transaction, as
part of a single or combined strategy when, in the opinion of the Manager and/or
sub-adviser, it is in the best interests of the Fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the Manager's and/or sub-adviser's judgment that the combined
strategies will reduce risk or otherwise more effectively achieve the desired
portfolio management goal, it is possible that the combination will instead
increase such risks or hinder achievement of the portfolio management objective.

Swaps, Caps, Floors and Collars
Each Fund may enter into interest rate, currency and index swaps and
the purchase or sale of related caps, floors and collars. The Funds expect to
enter into these transactions primarily to preserve a return or spread on a
particular investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Funds intend to use these transactions as hedges and not speculative
investments and will not sell interest rate caps or floors where it does not own
securities or other instruments providing the income stream the Fund may be
obligated to pay. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments with respect to a
nominal amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.

A Fund will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the
investment manager and the Fund believe such obligations do not constitute
senior securities under the 1940 Act and, accordingly, will not treat them as

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<PAGE>

being subject to its borrowing restrictions. A Fund will not enter into any
swap, cap, floor or collar transaction unless, at the time of entering into such
transaction, the unsecured long-term debt of the counterparty, combined with any
credit enhancements, is rated at least A by S&P or Moody's or is determined to
be of equivalent credit quality by the Manager and/or sub-adviser. If there is a
default by the counterparty, the Fund may have contractual remedies pursuant to
the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agent utilizing standardized swap
documentation. As a result, the swap market has become relatively liquid. Caps,
floors and collars are more recent innovations for which standardized
documentation has not yet been fully developed and, accordingly, they are less
liquid than swaps.

Eurodollar Instruments
The Funds may make investments in Eurodollar instruments. Eurodollar
instruments are U.S. dollar-denominated futures contracts or options thereon
which are linked to the London Interbank Offered Rate ("LIBOR"), although
foreign currency-denominated instruments are available from time to time.
Eurodollar futures contracts enable purchasers to obtain a fixed rate for the
lending of funds and sellers to obtain a fixed rate for borrowings. A Fund might
use Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR, to which many interest rate swaps and fixed income instruments are
linked.

Lending of Portfolio Securities
As discussed in the Prospectuses, each Fund has the ability to lend
securities from its portfolio to brokers, dealers and other financial
organizations. Such loans, if and when made, may not exceed one-third of a
Fund's total assets. A Fund may not lend its portfolio securities to Lincoln
National Corporation or its affiliates unless it has applied for and received
specific authority from the SEC. Loans of securities by the Funds will be
collateralized by cash, letters of credit or U.S. Government securities, which
will be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. From time to time, a Fund may
return a part of the interest earned from the investment of collateral received
for securities loaned to the borrower and/or a third party, which is
unaffiliated with the Fund or with Lincoln National Corporation, and which is
acting as a "finder."

In lending its portfolio securities, a Fund can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term instruments or obtaining yield in
the form of interest paid by the borrower when government securities are used as
collateral. Requirements of the SEC, which may be subject to future
modifications, currently provide that the following conditions must be met
whenever portfolio securities are loaned: (a) the Fund must receive at least
100% cash collateral or equivalent securities from the borrower; (b) the
borrower must increase such collateral whenever the market value of the loaned
securities rises above the level of such collateral; (c) the Fund must be able
to terminate the loan at any time; (d) the Fund must receive reasonable interest
on the loan, as well as an amount equal to any dividends, interest or other
distributions on the loaned securities, and any increase in market value; (e)
the Fund may pay only reasonable custodian fees in connection with the loan; and
(f) voting rights on the loaned securities may pass to the borrower; however, if
a material event adversely affecting the investment occurs, the Fund's Board of
Directors must terminate the loan and regain the right to vote the securities.
The risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delay in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially.

-14-
<PAGE>

When-Issued Securities
As discussed in the Prospectuses, the Funds may purchase securities on
a "when-issued" basis. When a Fund agrees to purchase securities, the Custodian
will set aside cash or liquid portfolio securities equal to the amount of the
commitment in a separate account. Normally, the Custodian will set aside
portfolio securities to satisfy a purchase commitment. In such a case, a Fund
may be required subsequently to place additional assets in the separate account
in order to assure that the value of the account remains equal to the amount of
the Fund's commitment. It may be expected that a Fund's net assets will
fluctuate to a greater degree when it sets aside portfolio securities to cover
such purchase commitments than when it sets aside cash. No Fund intends to
purchase "when-issued" securities for speculative purposes but only in
furtherance of its investment objective. Because a Fund will set aside cash or
liquid portfolio securities to satisfy its purchase commitments in the manner
described, the Fund's liquidity and the ability of the Manager or sub-adviser to
manage the Fund might be affected in the event its commitments to purchase
when-issued securities ever exceeded 25% of the value of its assets.

When a Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund's incurring a loss or missing the opportunity to obtain a price considered
to be advantageous.

Money Market Instruments
Each Fund may invest for defensive purposes in corporate government
bonds and notes and money market instruments. Money market instruments in which
the Funds may invest include U.S. Government securities; certificates of
deposit, time deposits and bankers' acceptances issued by domestic banks
(including their branches located outside the U.S. and subsidiaries located in
Canada), domestic branches of foreign banks, savings and loan associations and
similar institutions; high grade commercial paper; and repurchase agreements
with respect to the foregoing types of instruments. The following is a more
detailed description of such money market instruments.

Bank Obligations
Certificates of deposit ("CDs") are short-term negotiable obligations
of commercial banks; time deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified periods of time at stated
interest rates; and bankers' acceptances are time drafts drawn on commercial
banks by borrowers usually in connection with international transactions.

Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing branch,
or may be limited by the terms of a specific obligation and government
regulation. Such obligations are subject to different risks than are those of
domestic banks or domestic branches of foreign banks. These risks include
foreign economic and political developments, foreign governmental restrictions
that may adversely affect payment of principal and interest on the obligations,
foreign exchange controls and foreign withholding and other taxes on interest
income. Foreign branches of domestic banks are not necessarily subject to the
same or similar regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing and
financial recordkeeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank than about a
domestic bank. CDs issued by wholly owned Canadian subsidiaries of domestic
banks are guaranteed as to repayment of principal and interest (but not as to
sovereign risk) by the domestic parent bank.

Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental regulation as
well as governmental action in the country in which the foreign bank has its

-15-
<PAGE>

head office. A domestic branch of a foreign bank with assets in excess of $1
billion may or may not be subject to reserve requirements imposed by the Federal
Reserve System or by the state in which the branch is located if the branch is
licensed in that state. In addition, branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may or may
not be required to: (a) pledge to the regulator by depositing assets with a
designated bank within the state, an amount of its assets equal to 5% of its
total liabilities; and (b) maintain assets within the state in an amount equal
to a specified percentage of the aggregate amount of liabilities of the foreign
bank payable at or through all of its agencies or branches within the state. The
deposits of state branches may not necessarily be insured by the FDIC. In
addition, there may be less publicly available information about a domestic
branch of a foreign bank than about a domestic bank.

In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks or by domestic branches of
foreign banks, the Manager and/or sub-advisers will carefully evaluate such
investments on a case-by-case basis.

Savings and loan associations whose CDs may be purchased by the Funds
are supervised by the Office of Thrift Supervision and are insured by the
Savings Association Insurance Fund, which is administered by the FDIC and is
backed by the full faith and credit of the U.S. Government. As a result, such
savings and loan associations are subject to regulation and examination.

Reverse Repurchase Agreements
All Funds are authorized to enter into reverse repurchase agreements. A
reverse repurchase agreement is the sale of a security by a Fund and its
agreement to repurchase the security at a specified time and price. A Fund will
maintain in a segregated account with the Custodian cash, cash equivalents or
U.S. Government securities in an amount sufficient to cover its obligations
under reverse repurchase agreements with broker/dealers (but no collateral is
required on reverse repurchase agreements with banks). Under the 1940 Act,
reverse repurchase agreements may be considered borrowings by a Fund;
accordingly, each Fund will limit its investments in reverse repurchase
agreements, together with any other borrowings, to no more than one-third of its
total assets. The use of reverse repurchase agreements by a Fund creates
leverage which increases the Fund's investment risk. If the income and gains on
securities purchased with the proceeds of reverse repurchase agreements exceed
the costs of the agreements, a Fund's earnings or net asset value will increase
faster than otherwise would be the case; conversely, if the income and gains
fail to exceed the costs, earnings or net asset value would decline faster than
otherwise would be the case.

"Roll" Transactions
Each Fund may engage in "roll" transactions. A "roll" transaction is
the sale of securities together with a commitment (for which a Fund may receive
a fee) to purchase similar, but not identical, securities at a future date.
Under the 1940 Act, these transactions may be considered borrowings by the
Funds; accordingly, each Fund will limit its use of these transactions, together
with any other borrowings, to no more than one-third of its total assets. The
Funds will segregate liquid assets such as cash, U.S. Government securities or
other high grade debt obligations in an amount sufficient to meet their payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent a Fund's aggregate
commitments under these transactions exceed its holdings of cash and securities
that do not fluctuate in value (such as short-term money market instruments),
the Fund temporarily will be in a leveraged position (i.e., it will have an
amount greater than its net assets subject to market risk). Should the market
value of a Fund's portfolio securities decline while the Fund is in a leveraged
position, greater depreciation of its net assets would likely occur than were it
not in such a position. As a Fund's aggregate commitments under these
transactions increase, the opportunity for leverage similarly increases.

-16-
<PAGE>

Repurchase Agreements
While the Funds are permitted to do so, they normally do not invest in
repurchase agreements, except to invest cash balances.

The funds in the Delaware Group have obtained an exemption (the
"Order")from the joint-transaction prohibitions of Section 17(d) of the 1940 act
to allow the Delaware Group funds jointly to invest cash balances. The Funds may
invest cash balances in a joint repurchase agreement in accordance with the
terms of the Order and subject generally to the conditions described below.

A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to the
Funds, if any, would be the difference between the repurchase price and the
market value of the security. A Fund will limit its investments in repurchase
agreements to those which the Manager and/or sub-adviser, under the guidelines
of the Board of Directors, determines to present minimal credit risks and which
are of high quality. In addition, a Fund must have collateral of at least 100%
of the repurchase price, including the portion representing the Fund's yield
under such agreements, which is monitored on a daily basis.

Illiquid Securities
Each Fund may invest no more than 10% of the value of its net assets in
illiquid securities.

Each Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many privately
placed and legally restricted securities to be freely traded among certain
institutional buyers such as the Funds.

While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of a Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to consider
the following factors in determining the liquidity of a Rule 144A Security: (i)
the frequency of trades and trading volume for the security; (ii) whether at
least three dealers are willing to purchase or sell the security and the number
of potential purchasers; (iii) whether at least two dealers are making a market
in the security; and (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of transfer).

If the Manager determines that a Rule 144A Security that was previously
determined to be liquid is no longer liquid and, as a result, a Fund's holdings
of illiquid securities exceed the Fund's 10% limit on investment in such
securities, the Manager will determine what action to take to ensure that the
Fund continues to adhere to such limitation.

Variable and Floating Rate Notes
Variable rate master demand notes, in which the Funds may invest, are
unsecured demand notes that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate according to the terms of
the instrument. A Fund will not invest over 5% of its assets in variable rate
master demand notes. Because master demand notes are direct lending arrangements

-17-
<PAGE>

between a Fund and the issuer, they are not normally traded. Although there is
no secondary market in the notes, a Fund may demand payment of principal and
accrued interest at any time. While the notes are not typically rated by credit
rating agencies, issuers of variable amount master demand notes (which are
normally manufacturing, retail, financial, and other business concerns) must
satisfy the same criteria as set forth above for commercial paper. In
determining average weighted portfolio maturity, a variable amount master demand
note will be deemed to have a maturity equal to the period of time remaining
until the principal amount can be recovered from the issuer through demand.

A variable rate note is one whose terms provide for the adjustment of
its interest rate on set dates and which, upon such adjustment, can reasonably
be expected to have a market value that approximates its par value. A floating
rate note is one whose terms provide for the adjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value.
Such notes are frequently not rated by credit rating agencies; however, unrated
variable and floating rate notes purchased by a Fund will be determined by the
Fund's Manager and/or sub-adviser under guidelines established by the Fund's
Board of Directors to be of comparable quality at the time of purchase to rated
instruments eligible for purchase under the Fund's investment policies. In
making such determinations, the Manager and/or sub-adviser, if any, will
consider the earning power, cash flow and other liquidity ratios of the issuers
of such notes (such issuers include financial, merchandising, bank holding and
other companies) and will continuously monitor their financial condition.
Although there may be no active secondary market with respect to a particular
variable or floating rate note purchased by a Fund, the Fund may re-sell the
note at any time to a third party. The absence of such an active secondary
market, however, could make it difficult for the Fund to dispose of the variable
or floating rate note involved in the event the issuer of the note defaulted on
its payment obligations, and the Fund could, for this or other reasons, suffer a
loss to the extent of the default. Variable or floating rate notes may be
secured by bank letters of credit.

Variable and floating rate notes for which no readily available market
exists will be purchased in an amount which, together with securities with legal
or contractual restrictions on resale or for which no readily available market
exists (including repurchase agreements providing for settlement more than seven
days after notice), exceed 10% of the Fund's total assets only if such notes are
subject to a demand feature that will permit the Fund to demand payment of the
Principal within seven days after demand by the Fund. If not rated, such
instruments must be found by the Fund's Manager and/or sub-adviser under
guidelines established by the Fund's Board of Directors, to be of comparable
quality to instruments that are rated high quality. A rating may be relied upon
only if it is provided by a nationally recognized statistical rating
organization that is not affiliated with the issuer or guarantor of the
instruments. For a description of the rating symbols of S&P and Moody's used in
this paragraph, see the Prospectuses. The Fund may also invest in Canadian
Commercial Paper which is commercial paper issued by a Canadian corporation or a
Canadian counterpart of a U.S. corporation and in Europaper which is U.S. dollar
denominated commercial paper of a foreign issuer.

Municipal Securities Municipal Securities are issued to obtain funds
for various public purposes, including the construction of a wide range of
public facilities such as bridges, highways, roads, schools, water and sewer
works, and other utilities. Other public purposes for which Municipal Securities
may be issued include refunding outstanding obligations, obtaining funds for
general operating expenses and obtaining funds to lend to other public
institutions and facilities. In addition, certain debt obligations known as
"private activity bonds" may be issued by or on behalf of municipalities and

-18-
<PAGE>

public authorities to obtain funds to provide certain water, sewage and solid
waste facilities, qualified residential rental projects, certain local electric,
gas and other heating or cooling facilities, qualified hazardous waste
facilities, high-speed intercity rail facilities, governmentally-owned airports,
docks and wharves and mass commuting facilities, certain qualified mortgages,
student loan and redevelopment bonds and bonds used for certain organizations
exempt from federal income taxation. Certain debt obligations known as
"industrial development bonds" under prior federal tax law may have been issued
by or on behalf of public authorities to obtain funds to provide certain
privately-operated housing facilities, sports facilities, industrial parks,
convention or trade show facilities, airport, mass transit, port or parking
facilities, air or water pollution control facilities, sewage or solid waste
disposal facilities, and certain facilities for water supply. Other private
activity bonds and industrial development bonds issued to finance the
construction, improvement, equipment or repair of privately-operated industrial,
distribution, research, or commercial facilities may also be Municipal
Securities, but the size of such issues is limited under current and prior
federal tax law.

Information about the financial condition of issuers of Municipal
Securities may be less available than about corporations with a class of
securities registered under the Securities Exchange Act of 1934.

-19-
<PAGE>

INVESTMENT RESTRICTIONS

Each Fund has adopted policies and investment restrictions. The
investment restrictions numbered 1 through 9 may not be changed without a
majority vote of its outstanding shares, and are considered fundamental. Such
majority is defined in the 1940 Act as the vote of the lesser of: (i) 67% or
more of the outstanding voting securities present at a meeting, if the holders
of more than 50% of the outstanding voting securities are present in person or
by proxy, or (ii) more than 50% of the outstanding voting securities. All
percentage limitations expressed in the following investment restrictions are
measured immediately after and giving effect to the relevant transaction.
Investment restrictions numbered 10 through 12 may be changed by the vote of a
majority of the Board of Directors.

Each Fund normally may not:

1. Purchase any security (other than obligations of
the U.S. Government, its agencies or instrumentalities) if as
a result, with respect to 75% of the Fund's total assets, more
than 5% of the Fund's assets (determined at the time of
investment) would then be invested in securities of a single
issuer;

2. Purchase any securities (other than obligations of
the U.S. Government, its agencies and instrumentalities) if as
a result 25% or more of the value of the Fund's total assets
(determined at the time of investment) would be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry, provided
that there is no limitation with respect to money market
instruments of domestic banks, U.S. branches of foreign banks
that are subject to the same regulations as U.S. banks and
foreign branches of domestic banks (provided that the domestic
bank is unconditionally liable in the event of the failure of
the foreign branch to make payment on its instruments for any
reason). Foreign governments, including agencies and
instrumentalities thereof, and each of the electric utility,
natural gas distribution, natural gas pipeline, combined
electric and natural gas utility, and telephone industries
shall be considered as a separate industry for this purpose;

3. Buy or sell real estate, interests in real estate
or commodities or commodity contracts; however, each Fund may
invest in debt securities secured by real estate or interests
therein, or issued by companies which invest in real estate or
interests therein, including real estate investment trusts,
and may purchase or sell currencies (including forward
currency contracts) and financial futures contracts and
options thereon;

4. Engage in the business of underwriting securities
of other issuers, except to the extent that the disposal of an
investment position may technically cause the Adviser Funds,
Inc. to be considered an underwriter as that term is defined
under the Securities Act of 1933, as amended;

5. Make loans in an aggregate amount in excess of
one-third of a Fund's total assets, taken at the time any loan
is made, provided that entering into certain repurchase
agreements and purchasing debt securities shall not be deemed
loans for the purposes of this restriction;

-20-
<PAGE>

6. Make short sales of securities or maintain a short
position if, when added together, more than 25% of the value
of the Fund's net assets would be (i) deposited as collateral
for the obligation to replace securities borrowed to effect
short sales and (ii) allocated to segregated accounts in
connection with short sales;

7. Borrow money, except from banks for temporary or
emergency purposes not in excess of one-third of the value of
a Fund's assets, and except that Funds may enter into reverse
repurchase agreements and engage in "roll" transactions,
provided that reverse repurchase agreements, "roll"
transactions and any other transactions constituting borrowing
by a Fund may not exceed one-third of the Fund's total assets;

8. Invest in securities of other investment companies
except as may be acquired as part of a merger, consolidation,
reorganization or acquisition of assets and except that each
of the Funds may invest up to 5% of its total assets in the
securities of any one investment company, but may not own more
than 3% of the securities of any investment company or invest
more than 10% of its total assets in the securities of other
investment companies;

9. Make investments for the purpose of exercising
control or management;

10. Invest in securities of any issuer if, to the
knowledge of Adviser Funds, Inc., any officer or director of
the Adviser Funds, Inc. or the Manager or any sub-adviser owns
more than 1/2 of 1% of the outstanding securities of such
issuer, and such officers and directors who own more than 1/2
of 1% own in the aggregate more than 5% of the outstanding
securities of such issuer;

11. Purchase any security if as a result a Fund would
then have more than 5% of its total assets (determined at the
time of investment) invested in securities of companies
(including predecessors) less than three years old; or

12. Purchase illiquid securities or other securities
that are not readily marketable if more than 10% of the total
assets of the Fund would be invested in such securities.

In order to comply with certain state "blue sky" restrictions, each
Fund will not as a matter of operating policy:

1. Invest in oil, gas and mineral leases or programs;

2. Purchase warrants if as a result the Fund would
then have more than 5% of its net assets (determined at the
time of investment) invested in warrants. Warrants will be
valued at the lower of cost or market and investment in
warrants which are not listed on the New York Stock Exchange
or American Stock Exchange will be limited to 2% of the net
assets of the Adviser Funds, Inc. (determined at the time of
investment). For the purpose of this limitation, warrants
acquired in units or attached to securities are deemed to be
without value;

-21-
<PAGE>

3. In connection with investment restriction number
eight above, invest in securities issued by other investment
companies without waiving the advisory fee on that portion of
its assets invested in such securities; or

4. Purchase puts, calls, straddles, spreads, and any
combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed
5% of its total assets.

-22-
<PAGE>

PERFORMANCE INFORMATION

From time to time, each Fund may state total return for each Class in
advertisements and other types of literature. Any statements of total return
performance data for a Class will be accompanied by information on the average
annual compounded rate of return for that Class over, as relevant, the most
recent one-, five- and ten-year (or life of fund, if applicable) periods. Each
Fund may also advertise aggregate and average compounded rate of return
information of each Class over additional periods of time.

The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:

n
P(1+T) = ERV

Where: P = a hypothetical initial purchase order of $1,000 from which,
in the case of only Class A Shares, the maximum front-end
sales charge is deducted;

T = average annual total return;

n = number of years;

ERV = redeemable value of the hypothetical $1,000 purchase at
the end of the period after the deduction of the applicable
CDSC, if any, with respect to Class B Shares and Class C
Shares.

In presenting performance information for Class A Shares, the Limited
CDSC, applicable only to certain redemptions of those shares, will not be
deducted from any computations of total return. See the Prospectus for the Fund
Classes for a description of the Limited CDSC and the limited instances in which
it applies. All references to a CDSC will apply to Class B Shares or Class C
Shares.

Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the maximum
front-end sales charge, if any, is deducted from the initial $1,000 investment
at the time it is made with respect to Class A Shares and that all distributions
are reinvested at net asset value, and, with respect to Class B Shares and Class
C Shares, reflects the deduction of the CDSC that would be applicable upon
complete redemption of such shares. In addition, the Fund may present total
return information that does not reflect the deduction of the maximum front-end
sales charge or any applicable CDSC.

The performance of Class A Shares, Class B Shares, Class C Shares and
the Institutional Class, as shown below, is the average annual total return
quotations through October 31, 1995, computed as described above.

The average annual total return for Class A Shares at offer reflects
the maximum front-end sales charge of 4.75% paid on the purchase of shares. The
average annual total return for Class A Shares at net asset value (NAV) does not
reflect the payment of the maximum front-end sales charge of 4.75%.

-23-
<PAGE>

The average annual total return for Class B Shares and Class C Shares
including deferred sales charge reflects the deduction of the applicable CDSC
that would be paid if the shares were redeemed on October 31, 1995. The average
annual total return for Class B Shares and Class C Shares excluding deferred
sales charge assumes the shares were not redeemed on October 31, 1995 and
therefore does not reflect the deduction of a CDSC.

Pursuant to applicable regulation, total return shown for the
Institutional Classes for the periods prior to the commencement of operations of
such Classes is calculated by taking the performance of the respective Class A
Shares and adjusting it to reflect the elimination of all front-end sales
charges. However, for those periods, no adjustment has been made to eliminate
the impact of 12b-1 payments, and performance may have been affected had such an
adjustment been made.

Securities prices fluctuated during the periods covered and past
results should not be considered as representative of future performance.

Average Annual Total Return(1)
Enterprise Fund
<S> <C> <C> <C> <C> <C>
Class B Class B
Class A Class A Shares Shares
Shares(2) Shares (including (excluding
(at offer) (at NAV) CDSC)(4) CDSC)
---------- -------- -------- -----
1 year 1 year
ended ended
10/31/95 16.87% 22.72% 10/31/95 17.92% 21.92%

Period Period
12/3/93(3) 4/14/94(3)
through through
10/31/95 3.89% 6.58% 10/31/95 9.80% 12.23%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
1 year 1 year
ended ended
10/31/95 20.86% 21.86% 10/31/95 22.43%

Period Period
5/10/94(3) 2/3/94(3)
through through
10/31/95 14.45% 14.45% 10/31/95 7.27%

<PAGE>

U.S. Growth Fund
Class B Class B
Class A Class A Shares Shares
Shares(2) Shares (including (excluding
(at offer) (at NAV) CDSC)(4) CDSC)
---------- -------- -------- -----
1 year 1 year
ended ended
10/31/95 15.95% 21.74% 10/31/95 17.00% 21.00%

Period Period
12/3/93(3) 3/29/94(3)
through through
10/31/95 9.28% 12.11% 10/31/95 11.70% 14.04%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
1 year 1 year
ended ended
10/31/95 20.00% 21.00% 10/31/95 22.19%

Period Period
5/23/94(3) 2/3/94(3)
through through
10/31/95 18.97% 18.97% 10/31/95 13.66%

World Growth Fund
Class B Class B
Class A Class A Shares Shares
Shares(2) Shares (including (excluding
(at offer) (at NAV) CDSC)(4) CDSC)
---------- -------- -------- -----
1 year 1 year
ended ended
10/31/95 (1.13%) 3.81% 10/31/95 (0.81%) 3.19%

Period Period
12/3/93(3) 3/29/94(3)
through through
10/31/95 4.59% 7.29% 10/31/95 2.23% 4.69%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
1 year 1 year
ended ended
10/31/95 2.16% 3.16% 10/31/95 4.22%

Period Period
5/10/94(3) 2/3/94(3)
through through
10/31/95 5.18% 5.18% 10/31/95 8.42%

-24-
</TABLE>
<PAGE>

Average Annual Total Return(1)
New Pacific Fund
Class B Class B
Class A Class A Shares Shares
Shares(2) Shares (including (excluding
(at offer) (at NAV) CDSC)(4) CDSC)
---------- -------- -------- -----
<S> <C> <C> <C> <C> <C>
1 year 1 year
ended ended
10/31/95 (18.07%) (13.99%) 10/31/95 (17.88%) (14.57%)

Period Period
12/3/93(3) 3/29/94(3)
through through
10/31/95 (7.81%) (5.43%) 10/31/95 (6.93%) (4.59%)

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
1 year 1 year
ended ended
10/31/95 (15.40%) (14.57%) 10/31/95 (13.65%)

Period Period
7/7/94(3) 2/3/94(3)
through through
10/31/95 (6.91%) (6.91%) 10/31/95 (11.78%)

Federal Bond Fund
Class B Class B
Class A Class A Shares Shares
Shares(5) Shares (including (excluding
(at offer) (at NAV) CDSC)(4) CDSC)
---------- -------- -------- -----
1 year 1 year
ended ended
10/31/95 8.28% 13.72% 10/31/95 9.09% 13.09%

Period Period
12/3/93(3) 7/27/94(3)
through through
10/31/95 1.48% 4.18% 10/31/95 6.13% 9.23%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
1 year 1 year
ended ended
10/31/95 10.59% 11.59% 10/31/95 14.15%

Period Period
7/7/94(3) 2/3/94(3)
through through
10/31/95 8.08% 8.08% 10/31/95 4.64%

<PAGE>

Corporate Income Fund
Class B Class B
Class A Class A Shares Shares
Shares(5) Shares (including (excluding
(at offer) (at NAV) CDSC)(4) CDSC)
---------- -------- -------- -----
1 year 1 year
ended ended
10/31/95 12.11% 17.71% 10/31/95 13.05% 17.05%

Period Period
12/3/93(3) 5/11/94(3)
through through
10/31/95 4.83% 2.19% 10/31/95 8.73% 11.31%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
1 year 1 year
ended ended
10/31/95 15.23% 16.23% 10/31/95 18.27%

Period Period
9/14/94(3) 2/3/94(3)
through through
10/31/95 13.23% 13.23% 10/31/95 5.45%

</TABLE>

<PAGE>

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

(1) The previous Investment Manager, Lincoln Investment Management, Inc.,
waived a portion of its annual compensation or reimbursed expenses to limit
the operating expenses of the Funds. See Investment Management Agreements.
In the absence of such waivers or reimbursements, performance would have
been affected negatively.

(2) The 12b-1 fees payable by each Fund for the Class A Shares were at a rate
equal to .35% of the average daily net assets. Beginning May 6, 1996, the
Board of Directors reduced the payments to .30%. Performance calculations
for periods after May 6, 1996 will be made using the lower 12b-1 fee rate.
The maximum front-end sales charge was reduced from 5.5% to 4.75% effective
May 6, 1996. The above performance figures are calculated using 4.75% as
the applicable sales charge for all time periods.

(3) Commencement of operations.

(4) Effective May 6, 1996 Class B Shares will be subject to a CDSC schedule of
(i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase;
(iii) 2% if shares are redeemed during the fifth year following purchase;
(iv) 1% if shares are redeemed during the sixth year following purchase;
and (v) 0% thereafter. The above performance figures are calculated using
the new applicable CDSC schedule.

(5) The maximum front-end sales charge was increased from 4.5% to 4.75%
effective May 6, 1996. The above performance figures are calculated using
4.75% as the applicable sales charge for all time periods.

-25-
<PAGE>

As stated in the Prospectuses, the Federal Bond Fund and the Corporate
Income Fund may also quote the current yield for each of its Classes in
advertisements and investor communications. The yield computation is determined
by dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period and annualizing
the resulting figure, according to the following formula:

a -- b
------- 6
YIELD = 2[( cd + 1) -- 1]

Where: a = dividends and interest earned during the period;

b = expenses accrued for the period (net of reimbursements);

c = the average daily number of shares outstanding during the period
that were entitled to receive dividends;

d = the maximum offering price per share on the last day of the period.

The above formula will be used in calculating quotations of yield of
each Class, based on specified 30- day periods identified in advertising by the
Fund. Yield assumes the maximum front-end sales charge, if any, and does not
reflect the deduction of any CDSC or Limited CDSC. Actual yield may be affected
by variations in front-end sales charges on investments. Past performance, such
as is reflected in quoted yields, should not be considered as a representation
of the results which may be realized from an investment in any class of Adviser
Funds, Inc. in the future.

From time to time, the Funds may also quote actual total return for
each Class in advertising and other types of literature compared to indices or
averages of alternative financial products available to prospective investors.
For example, the performance comparisons may include the average return of
various bank instruments, some of which may carry certain return guarantees
offered by leading banks and thrifts as monitored by Bank Rate Monitor, and
those of corporate bond and government security price indices of various
durations prepared by Lehman Brothers and Salomon Brothers, Inc. These indices
are not managed for any investment goal.

Comparative information on the Consumer Price Index may also be
included. The Consumer Price Index, as prepared by the U.S. Bureau of Labor
Statistics, is the most commonly used measure of inflation. It indicates the
cost fluctuations of a representative group of consumer goods. It does not
represent a return from an investment.

Total return performance of each Class will reflect the appreciation or
depreciation of principal, reinvestment of income and any capital gains
distributions paid during any indicated period, and the impact of the maximum
front-end sales charge or CDSC, if any, paid on the illustrated investment
amount, annualized. The results will not reflect any income taxes, if
applicable, payable by shareholders on the reinvested distributions included in
the calculations. As securities prices fluctuate, an illustration of past
performance should not be considered as representative of future results.

-26-
<PAGE>

Statistical and performance information and various indices compiled
and maintained by organizations such as the following may also be used in
preparing exhibits comparing certain industry trends and competitive mutual fund
performance to comparable Fund activity and performance and in illustrating
general financial planning principles. From time to time, certain mutual fund
performance ranking information, calculated and provided by these organizations
may also be used in the promotion of sales in the Fund. Any indices used are not
managed for any investment goal.

CDA Investment Technologies, Inc., Lipper Analytical Services,
Inc. and Morningstar, Inc. are performance evaluation services
that maintain statistical performance databases, as reported
by a diverse universe of independently-managed mutual funds.

Ibbotson Associates, Inc. is a consulting firm that provides a
variety of historical data including total return, capital
appreciation and income on the stock market as well as other
investment asset classes, and inflation. With their
permission, this information will be used primarily for
comparative purposes and to illustrate general financial
planning principles.

Interactive Data Corporation is a statistical access service
that maintains a database of various international industry
indicators, such as historical and current price/earning
information, individual equity and fixed income price and
return information.

Salomon Brothers and Lehman Brothers are statistical research
firms that maintain databases of international market, bond
market, corporate and government-issued securities of various
maturities. This information, as well as unmanaged indices
compiled and maintained by these firms, will be used in
preparing comparative
illustrations.

Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H.15), may also be used. As well, current rate information on
municipal debt obligations of various durations, as reported daily by The Bond
Buyer, may also be used. The Bond Buyer is published daily and is an
industry-accepted source for current municipal bond market information.

The following table is an example, for purposes of illustration only,
of cumulative total return performance for Class A Shares, Class B Shares, Class
C Shares and the Institutional Classes through October 31, 1995. For these
purposes, the calculations assume the reinvestment of any realized securities
profits distributions and income dividends paid during the indicated periods. In
addition, these calculations, as shown below, reflect maximum sales charges, if
any, paid on the purchase or redemption of shares, as applicable, but not any
income taxes payable by shareholders on the reinvested distributions included in
the calculations. The performance of Class B Shares and Class C Shares is
calculated both with the applicable CDSC included and excluded. Pursuant to
applicable regulation, total return shown for an Institutional Class for the
periods prior to the commencement of operations of such Class is calculated by
taking the performance of the respective Class A Shares and adjusting it to
reflect the elimination of all sales charges. However, for those periods, no
adjustment has been made to eliminate the impact of 12b-1 payments, and
performance may have been affected had such an adjustment been made.

The net asset value of a Class fluctuates so shares, when redeemed, may
be worth more or less than the original investment, and a Class' results should
not be considered as representative of future performance.

-27-
<PAGE>

Cumulative Total Return(1)
Enterprise Fund
Class B Class B
Class A Shares Shares
Shares(2) (including (excluding
(at offer) CDSC)(4) CDSC)
---------- -------- -----
3 months 3 months
ended ended
10/31/95 (2.84%) 10/31/95 (2.13%) 1.87%

6 months 6 months
ended ended
10/31/95 8.04% 10/31/95 9.15% 13.15%

9 months 9 months
ended ended
10/31/95 21.66% 10/31/95 23.23% 27.23%

1 year 1 year
ended ended
10/31/95 16.87% 10/31/95 17.92% 21.92%

Period Period
12/3/93(3) 4/14/94(3)
through through
10/31/95 7.58% 10/31/95 15.60% 19.60%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
3 months 3 months
ended ended
10/31/95 0.84% 1.83% 10/31/95 1.62%

6 months 6 months
ended ended
10/31/95 12.06% 13.06% 10/31/95 13.11%

9 months 9 months
ended ended
10/31/95 26.06% 27.06% 10/31/95 27.40%

1 year 1 year
ended ended
10/31/95 20.86% 21.86% 10/31/95 22.43%

Period Period
5/10/94(3) 2/3/94(3)
through through
10/31/95 22.10% 22.10% 10/31/95 13.00%

<PAGE>

U.S. Growth Fund
Class B Class B
Class A Shares Shares
Shares(2) (including (excluding
(at offer CDSC)(4) CDSC)
--------- -------- -----
3 months 3 months
ended ended
10/31/95 (0.32%) 10/31/95 0.49% 4.49%

6 months 6 months
ended ended
10/31/95 16.82% 10/31/95 18.32% 22.32%

9 months 9 months
ended ended
10/31/95 22.10% 10/31/95 23.51% 27.51%

1 year 1 year
ended ended
10/31/95 15.95% 10/31/95 17.00% 21.00%

Period Period
12/3/93(3) 3/29/94(3)
through through
10/31/95 18.50% 10/31/95 19.30% 23.30%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
3 months 3 months
ended ended
10/31/95 3.56% 4.56% 10/31/95 4.78%

6 months 6 months
ended ended
10/31/95 21.38% 22.38% 10/31/95 23.03%

9 months 9 months
ended ended
10/31/95 26.61% 27.61% 10/31/95 28.47%

1 year 1 year
ended ended
10/31/95 20.00% 21.00% 10/31/95 22.19%

Period Period
5/23/94(3) 2/3/94(3)
through through
10/31/95 28.50% 28.50% 10/31/95 25.00%

-28-
<PAGE>

Cumulative Total Return(1)
World Growth Fund
Class B Class B
Class A Shares Shares
Shares(2) (including (excluding
(at offer) CDSC)(4) CDSC)
---------- -------- -----
3 months 3 months
ended ended
10/31/95 (3.63%) 10/31/95 (2.96%) 1.04%

6 months 6 months
ended ended
10/31/95 1.74% 10/31/95 2.57% 6.57%

9 months 9 months
ended ended
10/31/95 10.51% 10/31/95 11.53% 15.53%

1 year 1 year
ended ended
10/31/95 (1.13%) 10/31/95 (.81%) 3.19%

Period Period
12/3/93(3) 3/29/94(3)
through through
10/31/95 8.96% 10/31/95 3.58% 7.58%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
3 months 3 months
ended ended
10/31/95 (0.06%) 0.94% 10/31/95 1.24%

6 months 6 months
ended ended
10/31/95 5.45% 6.45% 10/31/95 7.03%

9 months 9 months
ended ended
10/31/95 14.50% 15.50% 10/31/95 16.38%

1 year 1 year
ended ended
10/31/95 2.16% 3.16% 10/31/95 4.22%

Period Period
5/10/94(3) 2/3/94(3)
through through
10/31/95 7.75% 7.75% 10/31/95 15.13%

<PAGE>

New Pacific Fund
Class B Class B
Class A Shares Shares
Shares(2) (including (excluding
(at offer) CDSC)(4) CDSC)
---------- -------- -----
3 months 3 months
ended ended
10/31/95 (8.99%) 10/31/95 (8.47%) (4.66%)

6 months 6 months
ended ended
10/31/95 (2.46%) 10/31/95 (1.96%) 2.04%

9 months 9 months
ended ended
10/31/95 1.16% 10/31/95 1.75% 5.75%

1 year 1 year
ended ended
10/31/95 (18.07%) 10/31/95 (17.88%) (14.57%)

Period Period
12/3/93(3) 3/29/94(3)
through through
10/31/95 (14.40%) 10/31/95 (10.82%) (7.27%)

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
3 months 3 months
ended ended
10/31/95 (5.70%) (4.75%) 10/31/95 4.47%

6 months 6 months
ended ended
10/31/95 0.96% 1.96% 10/31/95 2.57%

9 months 9 months
ended ended
10/31/95 4.62% 5.62% 10/31/95 6.56%

1 year 1 year
ended ended
10/31/95 (15.40%) (14.57%) 10/31/95 (13.65%)

Period Period
7/7/94(3) 2/3/94(3)
through through
10/31/95 (9.02%) (9.02%) 10/31/95 (18.85%)

-29-
<PAGE>

Cumulative Total Return(1)
Federal Bond Fund
Class B Class B
Class A Shares Shares
Shares(5) (including (excluding
(at offer) CDSC)(4) CDSC)
---------- -------- -----
3 months 3 months
ended ended
10/31/95 1.65% 10/31/95 (0.86%) 3.14%

6 months 6 months
ended ended
10/31/95 2.35% 10/31/95 3.12% 7.12%

9 months 9 months
ended ended
10/31/95 6.14% 10/31/95 6.97% 10.97%

1 year 1 year
ended ended
10/31/95 8.28% 10/31/95 9.09% 13.09%

Period Period
12/3/93(3) 7/27/94(3)
through through
10/31/95 2.84% 10/31/95 7.82% 11.82%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
3 months 3 months
ended ended
10/31/95 2.21% 3.21% 10/31/95 3.31%

6 months 6 months
ended ended
10/31/95 6.15% 7.15% 10/31/95 7.60%

9 months 9 months
ended ended
10/31/95 10.08% 11.08% 10/31/95 11.74%

1 year 1 year
ended ended
10/31/95 10.59% 11.59% 10/31/95 14.15%

Period Period
7/7/94(3) 2/3/94(3)
through through
10/31/95 10.81% 10.81% 10/31/95 8.23%

<PAGE>

Corporate Income Fund
Class B Class B
Class A Shares Shares
Shares(5) (including (excluding
(at offer) CDSC)(4) CDSC)
---------- -------- -----
3 months 3 months
ended ended
10/31/95 (0.65%) 10/31/95 0.01% 4.01%

6 months 6 months
ended ended
10/31/95 4.35% 10/31/95 5.21% 9.21%

9 months 9 months
ended ended
10/31/95 9.43% 10/31/95 10.41% 14.41%

1 year 1 year
ended ended
10/31/95 12.11% 10/31/95 13.05% 17.05%

Period Period
12/3/93(3) 5/11/94(3)
through through
10/31/95 4.23% 10/31/95 13.15% 17.15%

Class C Class C
Shares Shares
(including (excluding
CDSC) CDSC) Institutional Class
----- ----- -------------------
3 months 3 months
ended ended
10/31/95 3.02% 4.02% 10/31/95 4.26%

6 months 6 months
ended ended
10/31/95 8.21% 9.21% 10/31/95 9.68%

9 months 9 months
ended ended
10/31/95 12.67% 13.67% 10/31/95 15.16%

1 year 1 year
ended ended
10/31/95 15.23% 16.23% 10/31/95 18.27%

Period Period
9/14/94(3) 2/3/94(3)
through through
10/31/95 15.09% 15.09% 10/31/95 9.69%

--------------------
(1) The previous Investment Manager, Lincoln Investment Management, Inc.,
waived a portion of its annual compensation or reimbursed expenses to limit
the operating expenses of the Funds. See Investment Management Agreements.
In the absence of such waivers or reimbursements, performance would have
been affected negatively.

(3) Commencement of operations.

-30-
<PAGE>

Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Funds and other mutual funds in the Delaware
Group, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
personal financial planning. One typical way of addressing these issues is to
compare an individual's goals and the length of time the individual has to
attain these goals to his or her risk threshold. In addition, the Distributor
will provide information that discusses the Manager's or sub-adviser's
overriding investment philosophy and how that philosophy impacts the Funds', and
other Delaware Group funds', investment disciplines employed in seeking their
objectives. The Distributor may also from time to time cite general or specific
information about the institutional clients of the Manager or sub-adviser's,
including the number of such clients serviced by such persons.

Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and logic
says to invest when prices are low. However, even experts can't always pick the
highs and the lows. By using a strategy known as dollar-cost averaging, you
schedule your investments ahead of time. If you invest a set amount on a regular
basis, that money will always buy more shares when the price is low and fewer
when the price is high. You can choose to invest at any regular interval--for
example, monthly or quarterly--as long as you stick to your regular schedule.

Dollar-cost averaging looks simple and it is, but there are important
things to remember. Dollar-cost averaging works best over longer time periods,
and it doesn't guarantee a profit or protect against losses in declining
markets. If you need to sell your investment when prices are low, you may not
realize a profit no matter what investment strategy you utilize. That's why
dollar-cost averaging can make sense for long-term goals. Since the potential
success of a dollar-cost averaging program depends on continuous investing, even
through periods of fluctuating prices, you should consider your dollar-cost
averaging program a long-term commitment and invest an amount you can afford and
probably won't need to withdraw. Investors also should consider their financial
ability to continue to purchase shares during periods of low fund share prices.
Delaware Group offers three services -- Automatic Investing Program, Direct
Deposit Program and the Wealth Builder Option -- that can help to keep your
regular investment program on track. See Investing by Electronic Fund Transfer -
Direct Deposit Purchase Plan and Automatic Investing Plan under Investment Plans
and Wealth Builder Option under Redemption and Repurchase for a complete
description of these services including restrictions or limitations.

The example below illustrates how dollar-cost averaging can work. In a
fluctuating market, the average cost per share over a period of time will be
lower than the average price per share for the same time period.

Number of
Investment Amount Price Per Share Shares Purchased

Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $ 5.00 12
Month 4 $100 $10.00 10
----------------------------------------------------

$400 $37.50 48

Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)

This example is for illustration purposes only. It is not intended to represent
the actual performance of any Fund.

-31-
<PAGE>

THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional shares of a
Fund, your investment is given yet another opportunity to grow. It's called the
Power of Compounding and the following chart illustrates just how powerful it
can be.

Compounded Returns
Results for various assumed fixed rates of return on a $10,000
investment compounded monthly for 10 years:

6% 8% 10% 12%
Rate of Rate of Rate of Rate of
Return Return Return Return
------ ------ ------ ------

1 Year $10,617 $10,830 $11,047 $11,268
2 Years $11,272 $11,729 $12,204 $12,697
3 Years $11,967 $12,702 $13,482 $14,308
4 Years $12,705 $13,757 $14,894 $16,122
5 Years $13,488 $14,898 $16,453 $18,167
6 Years $14,320 $16,135 $18,176 $20,471
7 Years $15,203 $17,474 $20,079 $23,067
8 Years $16,141 $18,924 $22,182 $25,993
9 Years $17,137 $20,495 $24,504 $29,290
10 Years $18,194 $22,196 $27,070 $33,004

Results for various assumed fixed rates of return on a $10,000
investment compounded quarterly for 10 years:

6% 8% 10% 12%
Rate of Rate of Rate of Rate of
Return Return Return Return
------ ------ ------ ------

1 Year $10,614 $10,824 $11,038 $11,255
2 Years $11,265 $11,717 $12,184 $12,668
3 Years $11,956 $12,682 $13,449 $14,258
4 Years $12,690 $13,728 $14,845 $16,047
5 Years $13,468 $14,859 $16,386 $18,061
6 Years $14,295 $16,084 $18,087 $20,328
7 Years $15,172 $17,410 $19,965 $22,879
8 Years $16,103 $18,845 $22,038 $25,751
9 Years $17,091 $20,399 $24,326 $28,983
10 Years $18,140 $22,080 $26,851 $32,620

The figures are calculated assuming a fixed constant investment return
and assume no fluctuation in the value of principal. These figures, which do not
reflect payment of applicable taxes or sales charges, are not intended to be a
projection of investment results and do not reflect the actual performance
results of any of the classes.

-32-
<PAGE>

TRADING PRACTICES AND BROKERAGE

Fund transactions are executed by the Manager or any sub-adviser
(collectively referred to in this section as the "Manager") on behalf of the
Fund in accordance with the standards described below.

Brokers, dealers, banks and others are selected to execute transactions
for the purchase or sale of portfolio securities or other instruments on the
basis of the Manager's judgment of their professional capability to provide the
service. The primary consideration is to have brokers, dealers or banks execute
securities transactions at best price and execution. Best price and execution
refers to many factors, including the price paid or received for a security, the
commission charged, the promptness and reliability of execution, the
confidentiality and placement accorded the order and other factors affecting the
overall benefit obtained by the account on the transaction. Trades are generally
made on a net basis where securities are either bought or sold directly from or
to a broker, dealer or bank or others. In these instances, there is no direct
commission charged, but there is a spread (the difference between the buy and
sell price) which is the equivalent of a commission. When a commission is paid,
the Funds pay reasonably competitive brokerage commission rates based upon the
professional knowledge of the Manager's trading department as to rates paid and
charged for similar transactions throughout the securities industry. In some
instances, the Funds pay a minimal share transaction cost when the transaction
presents no difficulty.

The Manager may allocate out of all commission business generated by
all of the funds and accounts under their management, brokerage business to
brokers, dealers or members of an exchange who provide brokerage and research
services. These services include advice, either directly or through publications
or writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; providing information on economic
factors and trends; assisting in determining portfolio strategy; providing
computer software and hardware used in security analyses; and providing
portfolio performance evaluation and technical market analyses. Such services
are used by the Manager in connection with its investment decision-making
process with respect to one or more funds and accounts managed by it, and may
not be used, or used exclusively, with respect to the fund or account generating
the brokerage.

As provided in the Securities Exchange Act of 1934 and the Investment
Management and Sub-Advisory Agreements, higher commissions are permitted to be
paid to brokers, dealers or members of an exchange who provide brokerage and
research services than to broker, dealers or members of an exchange who do not
provide such services, if such higher commissions are deemed reasonable in
relation to the value of the brokerage and research services provided. Although
transactions are directed to brokers, dealers or members of an exchange who
provide such brokerage and research services, the Fund believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the Manager which constitute in some part brokerage and research services used
by the Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation of
brokerage and research services and will pay out of its own resources for
services used by the Manager in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to broker/dealers who provide
daily portfolio pricing services to the Funds and to other funds in the Delaware
Group. Subject to best price and execution, commissions allocated to brokers
providing such pricing services may or may not be generated by the funds
receiving the pricing service.

-33-
<PAGE>

The Manager may place a combined order for two or more accounts or
funds engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will result in
best price and execution. Transactions involving commingled orders are allocated
in a manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and the Board of
Directors that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.

Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Manager may place orders with broker/dealers that have agreed to
defray certain Fund expenses such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of shares of the Funds as a factor
in the selection of brokers and dealers to execute portfolio transactions.

Subject to the above considerations, an affiliate of the Manager may
act as a securities broker for the Funds. In order for an affiliate of the
Manager to effect any portfolio transactions for the Funds, the commissions,
fees or other remuneration received by the affiliate must be reasonable and fair
compared to the commissions, fees or other remuneration paid to other brokers in
connection with comparable transactions involving similar securities being
purchased or sold on an exchange during a comparable period of time. This
standard would allow an affiliate of the Manager to receive no more than the
remuneration which would be expected to be received by an unaffiliated broker in
a commensurate arm's-length transaction. Furthermore, the Directors of the
Adviser Funds, Inc., including a majority of the Directors who are not
"interested" persons, have adopted procedures which are reasonably designed to
provide that any commissions, fees or other remuneration paid to an affiliate of
the Manager are consistent with the foregoing standard. In accordance with
Section 11(a) under the Securities Exchange Act of 1934, an affiliate of the
Manager may not retain compensation for effecting transactions on a national
securities exchange for the Funds unless the Adviser Funds, Inc. has expressly
authorized the retention of such compensation in a written contract executed by
the Adviser Funds, Inc. and such affiliate. Section 11(a) provides that an
affiliate of the Manager must furnish to the Adviser Funds, Inc. at least
annually a statement setting forth the total amount of all compensation retain
by the affiliate from transactions effected for the Funds during the applicable
period. Brokerage and futures transactions with an affiliate of the Manager are
also subject to such fiduciary standards as may be imposed by applicable law. No
such trade have been made through affiliates to date.

Brokerage commissions for the Funds for the fiscal year ended October
31, 1995 and the period ended October 31, 1994, respectively, were as follows:
Enterprise Fund $42,482 and $35,533; U.S. Growth Fund $23,709 and $27,955; World
Growth Fund $12,019 and $31,838; and New Pacific Fund $187,987 and $142,441. The
other Funds did not incur brokerage commissions in either period.

Portfolio Turnover

While the Funds do not intend to trade in securities for short-term
profits, securities may be sold without regard to the amount of time they have
been held by a Fund when warranted by the circumstances. A Fund's portfolio
turnover rate is calculated by dividing the lesser of purchases or sales of
portfolio securities for a year by the monthly average value of portfolio
securities for that year. Securities with remaining maturities of one year or
less at the date of acquisition are excluded from the calculation. A portfolio
turnover rate of 100% would occur, for example, if all the securities in the
Fund's portfolio were replaced once during a period of one year. A high

-34-
<PAGE>

rate of portfolio turnover in any year may increase brokerage commissions paid
and could result in high amounts of realized investment gain subject to the
payment of taxes by shareholders. The turnover rate may also be affected by cash
requirements from redemptions and repurchases of fund shares.

For the Federal Bond Fund and Corporate Income Fund, which are
fixed-income funds, portfolio trading will be undertaken principally to
accomplish the Funds' objectives in relation to anticipated movements in the
general level of interest rates, and not for the purpose of realizing capital
gains, although capital gains may be realized on certain portfolio transactions.
For example, capital gains may be realized when a security is sold (i) so that,
provided capital is preserved or enhanced, another security can be purchased to
obtain a higher yield, (ii) to take advantage of what the Manager believes to be
a temporary disparity in the normal yield relationship between the two
securities to increase income or improve the quality of the portfolio, (iii) to
purchase a security which the Manager believes is of higher quality than its
rating or current market value would indicate, or (iv) when the Manager
anticipates a decline in value due to market risk or credit risk. The Fund is
free to dispose of portfolio securities at any time, subject to complying with
the Internal Revenue Code and the 1940 Act, when changes in circumstances or
conditions make such a move desirable in light of the investment objective. The
Fund will not attempt to achieve or be limited to a predetermined rate of
portfolio turnover, such a turnover always being incidental to transactions
undertaken with a view to achieving the Fund's investment objective.

Although the Fixed-Income Funds trade principally to seek a high level
of income and stability of principal and not for profits, the portfolio turnover
may be high, particularly if interest rates are volatile. The portfolio turnover
rate of the Funds is calculated by dividing the lesser of purchases or sales of
portfolio securities for the particular fiscal year by the monthly average of
the value of the portfolio securities owned by the Funds during the particular
fiscal year, exclusive of securities whose maturities at the time of acquisition
are one year or less.

During the period ended October 31, 1994 and the fiscal year ended
October 31, 1995, the Fund's portfolio turnover rates were as follows:

FUND 1994 1995
---- ---- ----
Enterprise Fund 120% 106%
U.S. Growth Fund 66% 58%
World Growth Fund 6% 9%
New Pacific Fund 104% 163%
Federal Bond Fund 366% 227%
Corporate Income Fund 185% 119%

-35-
<PAGE>

PURCHASING SHARES

The Distributor serves as the national distributor for each Funds' four
classes of shares - Class A Shares, Class B Shares, Class C Shares and the
Institutional Class, and has agreed to use its best efforts to sell shares of
the Classes. See the Prospectuses for additional information on how to invest.
Shares of the Funds are offered on a continuous basis, and may be purchased
through authorized investment dealers or directly by contacting Adviser Funds,
Inc. or its agent.

The minimum initial investment for each of the Fund Classes generally
is $1,000. Subsequent purchases generally must be at least $100. The initial and
subsequent minimum investment with respect to Class A Shares will be waived for
purchases by officers, directors and employees of any Delaware Group fund, the
Manager or any sub-adviser to a Fund, or any affiliates of the Manager or any
such sub-adviser if the purchases are made pursuant to a payroll deduction
program. Shares purchased pursuant to the Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act and shares purchased in connection with an Automatic
Investing Plan are subject to a minimum initial purchase of $250 and a minimum
subsequent purchase of $25. Accounts opened under the Delaware Group Asset
Planner service are subject to a minimum initial investment of $2,000 per Asset
Planner Strategy selected. There are no minimum purchase requirements for the
Institutional Classes, but certain eligibility requirements must be satisfied.

Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares each purchase must be in an amount
that is less than $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Adviser Funds, Inc. will reject any order for
purchase of more than $250,000 of Class B Shares and $1,000,000 or more of Class
C Shares. An investor may exceed these limitations by making cumulative
purchases over a period of time. In doing so, an investor should keep in mind,
however, that reduced front-end sales charges apply to investments of $100,000
or more in Class A Shares, which are subject to lower annual 12b-1 Plan expenses
than Class B Shares and Class C Shares and generally are not subject to a CDSC.

Selling dealers have the responsibility of transmitting orders
promptly. Adviser Funds, Inc. reserves the right to reject any order for the
purchase of a Fund's shares if in the opinion of management such rejection is in
the Fund's best interest. The NASD has adopted Rules of Fair Practice relating
to investment company sales charges. Adviser Funds, Inc. and the Distributor
intend to operate in compliance with these rules.

Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales charges
apply for larger purchases. See the table below. Class A Shares are also subject
to annual 12b-1 Plan expenses.

Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year of purchase; (iv) 1% if shares are
redeemed during the sixth year following purchase; and (v) 0% thereafter. Class
B Shares are also subject to annual 12b-1 Plan expenses which are higher than
those to which Class A Shares are subject and are assessed against Class B
Shares for approximately eight years after purchase.

Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.

-36-
<PAGE>

Institutional Class shares are purchased at the net asset value per
share without the imposition of a front-end or contingent deferred sales charge
or 12b-1 Plan expenses.

Institutional Class shares, Class A Shares, Class B Shares and Class C
Shares of each Fund represent a proportionate interest in the particular Fund's
assets and will receive a proportionate interest in the particular Fund's
income, before application, as to Class A, Class B and Class C Shares, of any
expenses under the Fund's 12b-1 Plans.

See Automatic Conversion of Class B Shares under Classes of Shares in
the Fund Classes' Prospectus, and Determining Offering Price and Net Asset Value
and Plans Under Rule 12b-1 for the Fund Classes in this Part B.

Certificates representing shares purchased are not ordinarily issued
unless a shareholder submits a specific request. Certificates are not issued in
the case of Class B Shares or Class C Shares. However, purchases not involving
the issuance of certificates are confirmed to the investor and credited to the
shareholder's account on the books maintained by Delaware Service Company, Inc.
(the "Transfer Agent"). The investor will have the same rights of ownership with
respect to such shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing shares
purchased by sending a letter to the Transfer Agent requesting the certificate.
No charge is assessed by Adviser Funds, Inc. for any certificate issued.
Investors who hold certificates representing any of their shares may only redeem
those shares by written request. The investor's certificate(s) must accompany
such request.

Alternative Purchase Arrangements
The alternative purchase arrangements of Class A Shares, Class B Shares
and Class C Shares permit investors to choose the method of purchasing shares
that is most suitable for their needs given the amount of their purchase, the
length of time they expect to hold their shares and other relevant
circumstances. Investors should determine whether, given their particular
circumstances, it is more advantageous to purchase Class A Shares and incur a
front-end sales charge and annual 12b-1 Plan expenses of up to a maximum of .35%
(currently, no more than .30% pursuant to Board action) of the average daily net
assets of Class A Shares or to purchase either Class B or Class C Shares and
have the entire initial purchase amount invested in the Fund with the investment
thereafter subject to a CDSC and annual 12b-1 Plan expenses. Class B Shares are
subject to a CDSC if the shares are redeemed within six years of purchase, and
Class C Shares are subject to a CDSC if the shares are redeemed within 12 months
of purchase. Class B and Class C Shares are each subject to annual 12b-1 Plan
expenses of up to a maximum of 1% (.25% of which are service fees to be paid to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of the respective
Class. Class B Shares will automatically convert to Class A Shares at the end of
approximately eight years after purchase and, thereafter, be subject to annual
12b-1 Plan expenses of up to a maximum of .35% (currently no more than .30%
pursuant to Board action) of average daily net assets of such shares. Unlike
Class B Shares, Class C Shares do not convert to another class.

Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features - Class A
Shares, below, for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.

-37-
<PAGE>

<TABLE>
<CAPTION>
Class A Shares
- -------------------------------------------------------------------------------------------------------------------------------

Dealer's
Commission***
Offering Front-End Sales Charge as % of as % of
Amount of Purchase Price Amount Invested** Price
- -------------------------------------------------------------------------------------------------------------------------------
Corpo-
Enter- U.S. World New Federal rate
prise Growth Growth Pacific Bond Income
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than $100,000 4.75% 4.96% 4.99% 5.00% 4.94% 5.00% 5.02% 4.00%
$100,000 but under $250,000 3.75 3.90 3.86 3.86 3.90 3.88 3.89 3.00
$250,000 but under $500,000 2.50 2.57 2.57 2.54 2.53 2.55 2.56 2.00
$500,000 but under $1,000,000* 2.00 2.04 2.01 2.02 2.07 2.04 2.05 1.00
</TABLE>

* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% Limited CDSC
may apply upon redemption of such shares.

** Based on the net asset value per share of the Class A Shares as of the end
of Adviser Funds, Inc.'s most recent fiscal year.

*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.

- --------------------------------------------------------------------------------
Each Fund, as appropriate, must be notified when a sale takes place
which would qualify for the reduced front-end sales charge on the basis
of previous or current purchases. The reduced front-end sales charge
will be granted upon confirmation of the shareholder's holdings by such
Fund. Such reduced front-end sales charges are not retroactive.

From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during
which the Distributor may reallow to dealers up to the full amount of
the front-end sales charge shown above. In addition, certain dealers
who enter into an agreement to provide extra training and information
on Delaware Group products and services and who increase sales of
Delaware Group funds may receive an additional commission of up to .15%
of the offering price. Dealers who receive 90% or more of the sales
charge may be deemed to be underwriters under the Securities Act of
1933.
- --------------------------------------------------------------------------------
Certain dealers who enter into an agreement to provide extra training
and information on Delaware Group products and services and who increase sales
of Delaware Group funds may receive an additional commission of up to .15% of
the offering price in connection with sales of Class A Shares. Such dealers must
meet certain requirements in terms of organization and distribution capabilities
and their ability to increase sales. The Distributor should be contacted for
further information on these requirements as well as the basis and circumstances
upon which the additional commission will be paid. Participating dealers may be
deemed to have additional responsibilities under the securities laws.

-38-
<PAGE>

Dealer's Commission
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers through
whom such purchases are effected in accordance with the following schedule:

Dealer's Commission
(as a percentage of
Amount of Purchase amount purchased)
------------------ -----------------
Up to $2 million 1.00%
Next $1 million up to $3 million 0.75%
Next $2 million up to $5 million 0.50%
Amount over $5 million 0.25%

In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies (see Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under Redemption and
Exchange in the Fund Classes Prospectus) may be aggregated with those of Class A
Shares of a Fund. Financial advisers also may be eligible for a dealer's
commission in connection with certain purchases made under a Letter of Intention
or pursuant to an investor's Right of Accumulation. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.

An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The schedule
and program for payment of the dealer's commission are subject to change or
termination at any time by the Distributor at its discretion.

Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B and Class C Shares are purchased without a front-end sales
charge. Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below and Class C Shares redeemed within 12 months
of purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the net asset value at the time of purchase of the shares
being redeemed or the net asset value of those shares at the time of redemption.
No CDSC will be imposed on increases in net asset value above the initial
purchase price. Nor will a CDSC be assessed on redemption of shares acquired
through reinvestment of dividends or capital gains distributions. See Waiver of
Contingent Deferred Sales Charge - Class B and Class C Shares under Redemption
and Exchange in the Prospectus for the Fund Classes for a list of the instances
in which the CDSC is waived.

The following table sets forth the rates of the CDSC for the Class B
Shares of each Fund:

Contingent Deferred Sales
Year After Charge (as a Percentage of
Purchase Made Dollar Amount Subject to Charge)
------------- --------------------------------

0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None

-39-
<PAGE>

During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. At the end of approximately eight years after purchase, the investor's
Class B Shares will be automatically converted into Class A Shares of the
relevant Fund. See Automatic Conversion of Class B Shares under Classes of
Shares in the Fund Classes' Prospectus. Such conversion will constitute a
tax-free exchange for federal income tax purposes. See Dividends, Distributions
and Taxes in the Prospectus for the Fund Classes.

Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, Adviser Funds, Inc. has
adopted a separate plan for each of the Class A Shares, Class B Shares and Class
C Shares of each Fund (the "Plans"). Each Plan permits the particular Fund to
pay for certain distribution, promotional and related expenses involved in the
marketing of only the Class to which the Plan applies. The Plans do not apply to
the Institutional Classes of shares. Such shares are not included in calculating
the Plans' fees, and the Plans are not used to assist in the distribution and
marketing of shares of the Institutional Classes. Shareholders of the
Institutional Classes may not vote on matters affecting the Plans.

The Plans permit the Funds, pursuant to the Distribution Agreements, to
pay out of the assets of Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to securities
brokers and dealers who enter into agreements with the Distributor. The Plan
expenses relating to Class B and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares.

In addition, the Funds may make payments out of the assets of Class A,
Class B and Class C Shares directly to other unaffiliated parties, such as
banks, who either aid in the distribution of shares of, or provide services to,
such classes.

The maximum aggregate fee payable by the Funds under the Plans, and the
Funds' Distribution Agreements, is on an annual basis up to .35% of Class A
Shares' average daily net assets for the year, and up to 1% (.25% of which are
service fees to be paid to the Distributor, dealers and others for providing
personal service and/or maintaining shareholder accounts) of each of Class B
Shares' and Class C Shares' average daily net assets for the year. Adviser
Funds, Inc.'s Board of Directors may reduce these amounts at any time. The
Distributor has agreed to waive these distribution fees to the extent such fees
for any day exceeds the net investment income realized by the Fund Classes for
such day.

The Board of Directors has determined, effective at the close of
business on May 3, 1996, that the annual fee payable on a monthly basis under
the Class A Shares' Plan will be equal to .30% of average daily net assets.

All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of Class
A, Class B and Class C Shares would be borne by such persons without any
reimbursement from such classes. Subject to seeking best price and execution,
the Fund may, from time to time, buy or sell portfolio securities from or to
firms which receive payments under the Plans. From time to time, the Distributor
may pay additional amounts from its own resources to dealers for aid in
distribution or for aid in providing administrative services to shareholders.

-40-
<PAGE>

The Plans and the Distribution Agreement, as amended, have been
approved by the Board of Directors of Adviser Funds, Inc., including a majority
of the directors who are not "interested persons" (as defined in the 1940 Act)
of Adviser Funds, Inc. and who have no direct or indirect financial interest in
the Plans, by vote cast in person at a meeting duly called for the purpose of
voting on the Plans and such Distribution Agreement. Continuation of the Plans
and the Distribution Agreement, as amended, must be approved annually by the
Board of Directors in the same manner as specified above.

Each year, the directors must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, Class A Shares,
Class B Shares and Class C Shares and that there is a reasonable likelihood of
the Plan relating to a Fund Class providing a benefit to the relevant
shareholders of that Class. The Plans and the Distribution Agreement, as
amended, may be terminated at any time without penalty by a majority of those
directors who are not "interested persons" or by a majority vote of the
outstanding voting securities of the relevant Fund Class. Any amendment
materially increasing the percentage payable under the Plans must likewise be
approved by a majority vote of the outstanding voting securities of the relevant
Fund Class, as well as by a majority vote of those directors who are not
"interested persons." With respect to the Class A Shares' Plan, any material
increase in the maximum percentage payable thereunder must also be approved by a
majority of the outstanding voting Class B Shares. Also, any other material
amendment to the Plans must be approved by a majority vote of the directors,
including a majority of the directors who are not "interested persons" of
Adviser Funds, Inc. having no interest in the Plans. In addition, in order for
the Plans to remain effective, the selection and nomination of directors who are
not "interested persons" of Adviser Funds, Inc. must be effected by the
directors who themselves are not "interested persons" and who have no direct or
indirect financial interest in the Plans. Persons authorized to make payments
under the Plans must provide written reports at least quarterly to the Board of
Directors for their review.

-41-
<PAGE>

For the fiscal year ended October 31, 1995, payments to the Distributor
and, in its capacity as national distributor, LNC Equity under the Plans for the
Class A Shares, Class B Shares and Class C Shares were as follows:

12b-1 Fees Paid
In Year Ended
Fund and Class 10/31/95
-------------- --------

Enterprise Fund
Class A Shares $42,883
Class B Shares $12,474
Class C Shares $486

U.S. Growth Fund
Class A Shares $40,509
Class B Shares $3,983
Class C Shares $127

World Growth Fund
Class A Shares $41,866
Class B Shares $8,469
Class C Shares $408

New Pacific Fund
Class A Shares $35,982
Class B Shares $5,374
Class C Shares $159

Federal Bond Fund
Class A Shares $36,161
Class B Shares $2,650
Class C Shares $74

Corporate Income Fund
Class A Shares $36,880
Class B Shares $2,991
Class C Shares $53

-42-
<PAGE>

The staff of the Securities and Exchange Commission ("SEC") has
proposed amendments to Rule 12b-1 and other related regulations that could
impact Rule 12b-1 Distribution Plans. Adviser Funds, Inc. intends to amend the
Plans, if necessary, to comply with any new rules or regulations the SEC may
adopt with respect to Rule 12b-1.

Other Payments to Dealers - Class A, Class B and Class C Shares
From time to time at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Fund Classes exceed certain limits
as set by the Distributor, may receive from the Distributor an additional
payment of up to .25% of the dollar amount of such sales. The Distributor may
also provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.

Payment to dealers made in connection with seminars, conferences or
contests relating to the promotion of fund shares may be in an amount up to 100%
of the expenses incurred or awards made. The Distributor may also pay a portion
of the expense of preapproved dealer advertisements promoting the sale of
Delaware Group fund shares.

Special Purchase Features - Class A Shares

Buying Class A Shares at Net Asset Value
Class A Shares may be purchased without a front-end sales charge under
the Dividend Reinvestment Plan and, under certain circumstances, the Exchange
Privilege and the 12-Month Reinvestment Privilege.

Current and former officers, directors and employees of Adviser Funds,
Inc., any other fund in the Delaware Group, the Manager, or any of the Manager's
affiliates that may in the future be created, legal counsel to the funds and
registered representatives and employees of broker/dealers who have entered into
Dealer's Agreements with the Distributor may purchase Class A Shares of the
Funds and any of the funds in the Delaware Group, including any fund that may be
created, at the net asset value per share. Family members of such persons at
their direction, and any employee benefit plan established by any of the
foregoing funds, corporations, counsel or broker/dealers may also purchase
shares at net asset value. Purchases of Class A Shares may also be made by
clients of registered representatives of an authorized investment dealer at net
asset value within 12 months after the registered representative changes
employment, if the purchase is funded by proceeds from an investment where a
front-end sales charge, contingent deferred sales charge or other sales charge
has been assessed. Purchases of Class A Shares may also be made at net asset
value by bank employees that provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of
Delaware Group funds. Officers, directors and key employees of institutional
clients of the Manager, or any of its affiliates, may purchase Class A Shares at
net asset value. Moreover, purchases may be effected at net asset value for the
benefit of the clients of brokers, dealers and registered investment advisers
affiliated with a broker or dealer, if such broker, dealer or investment adviser
has entered into an agreement with the Distributor providing specifically for
the purchase of Class A Shares in connection with special investment products,
such as wrap accounts or similar fee based programs. Such purchasers are
required to sign a letter stating that the purchase is for investment only and
that the securities may not be resold except to the issuer. Such purchasers may

-43-
<PAGE>

also be required to sign or deliver such other documents as Adviser Funds, Inc.
may reasonably require to establish eligibility for purchase at net asset value.
Adviser Funds, Inc. must be notified in advance that the trade qualifies for
purchase at net asset value.

Investors who held shares in any class of any Delaware Group fund as of
December 1, 1995, may currently purchase Class A Shares at net asset value
through the Delaware Group Asset Planner service if such shares are being
purchased with proceeds from the redemption of shares of a fund (other than a
money market fund) outside of the Delaware Group of funds. The Investment
Application and check for such a transaction should note that the investment is
being made under the "NAV/Asset Planner Accommodation Program." Prior notice
will be given should this program be discontinued. Class A Shares may also be
purchased at net asset value in an IRA through the Delaware Group Asset Planner
service if the assets being invested are being transferred from an existing IRA
held outside of the Delaware Group or are part of a distribution received from
an employer-sponsored or other retirement plan. See Delaware Group Asset Planner
under How To Buy Shares in the Prospectus for the Fund Classes.

Letter of Intention
The reduced front-end sales charges described above with respect to
Class A Shares are also applicable to the aggregate amount of purchases made by
any such purchaser previously enumerated within a 13-month period pursuant to a
written Letter of Intention provided by the Distributor and signed by the
purchaser, and not legally binding on the signer or Adviser Funds, Inc., which
provides for the holding in escrow by the Transfer Agent of 5% of the total
amount of Class A Shares intended to be purchased until such purchase is
completed within the 13-month period. A Letter of Intention may be dated to
include shares purchased up to 90 days prior to the date the Letter is signed.
The 13-month period begins on the date of the earliest purchase. If the intended
investment is not completed, except as noted below, the purchaser will be asked
to pay an amount equal to the difference between the front-end sales charge on
Class A Shares purchased at the reduced rate and the front-end sales charge
otherwise applicable to the total shares purchased. If such payment is not made
within 20 days following the expiration of the 13-month period, the Transfer
Agent will surrender an appropriate number of the escrowed shares for redemption
in order to realize the difference. Such purchasers may include the value (at
offering price at the level designated in their Letter of Intention) of all
their shares of the Funds and of any class of any of the other mutual funds in
the Delaware Group (except shares of any Delaware Group fund which do not carry
a front-end sales charge or CDSC or Limited CDSC, other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
a Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC) previously purchased and still held as of the date of their Letter of
Intention toward the completion of such Letter. For purposes of satisfying an
investor's obligation under a Letter of Intention, Class B Shares and Class C
Shares of the Funds and the corresponding classes of shares of other Delaware
Group funds which offer such shares may be aggregated with Class A Shares of the
Funds and the corresponding class of shares of the other Delaware Group funds.

-44-
<PAGE>

Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments of
Class A Shares made by the plan. The aggregate investment level of the Letter of
Intention will be determined and accepted by the Transfer Agent at the point of
plan establishment. The level and any reduction in front-end sales charge will
be based on actual plan participation and the projected investments in Delaware
Group funds that are offered with a front-end sales charge, CDSC or Limited CDSC
for a 13-month period. The Transfer Agent reserves the right to adjust the
signed Letter of Intention based on this acceptance criteria. The 13-month
period will begin on the date this Letter of Intention is accepted by the
Transfer Agent. If actual investments exceed the anticipated level and equal an
amount that would qualify the plan for further discounts, any front-end sales
charges will be automatically adjusted. In the event this Letter of Intention is
not fulfilled within the 13-month period, the Plan level will be adjusted
(without completing another Letter of Intention) and the employer will be billed
for the difference in front-end sales charges due, based on the plan's assets
under management at that time. Employers may also include the value (at offering
price at the level designated in their Letter of Intention) of all their shares
intended for purchase that are offered with a front-end sales charge, CDSC or
Limited CDSC of any class. Class B Shares and Class C Shares of the Funds and
other Delaware Group funds which offer corresponding classes of shares may also
be aggregated for this purpose.

Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of Class B Shares and/or Class C Shares of the
Funds, as well as shares of any other class of any of the other Delaware Group
funds (except shares of any Delaware Group fund which do not carry a front-end
sales charge, CDSC or Limited CDSC, other than shares of Delaware Group Premium
Fund, Inc. beneficially owned in connection with the ownership of variable
insurance products, unless they were acquired through an exchange from a
Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC).

The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21; or
a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit programs).

Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of the Funds, as
well as shares of any other class of any of the other Delaware Group funds which
offer such classes (except shares of any Delaware Group fund which do not carry
a front-end sales charge, CDSC or Limited CDSC, other than shares of Delaware
Group Premium Funds, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
shares from a Delaware Group fund which carried a front-end sales charge, CDSC
or Limited CDSC). If, for example, any such purchaser has previously purchased
and still holds Class A Shares and/or shares of any other of the classes
described in the previous sentence with a value of $40,000 and subsequently
purchases $60,000 at offering price of additional shares of Class A Shares, the
charge applicable to the $60,000 purchase would currently be 3.75%. For the
purpose of this calculation, the shares presently held shall be valued at the
public offering price that would have been in effect were the shares purchased
simultaneously with the current purchase. Investors should refer to the table of
sales charges for Class A Shares to determine the applicability of the Right of
Accumulation to their particular circumstances.

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12-Month Reinvestment Privilege
Holders of Class A Shares (and of Institutional Class shares which were
acquired through an exchange of one of the other mutual funds in the Delaware
Group offered with a front-end sales charge) who redeem such shares have one
year from the date of redemption to reinvest all or part of their redemption
proceeds in Class A Shares of a Fund or in Class A Shares of any of the other
funds in the Delaware Group, subject to applicable eligibility and minimum
purchase requirements, in states where shares of such other funds may be sold,
at net asset value without the payment of a front-end sales charge. This
privilege does not extend to Class A Shares where the redemption of the shares
triggered the payment of a Limited CDSC. Persons investing redemption proceeds
from direct investments in mutual funds in the Delaware Group offered without a
front-end sales charge will be required to pay the applicable sales charge when
purchasing Class A Shares. The reinvestment privilege does not extend to a
redemption of either Class B or Class C Shares.

Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at the
net asset value next determined after receipt of remittance. A redemption and
reinvestment could have income tax consequences. It is recommended that a tax
adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is proposed to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses.

Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Funds' shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the Fund Classes' Prospectus) in connection with the
features described above.

Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Classes may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page 00, based on
total plan assets. If a company has more than one plan investing in the Delaware
Group of funds, then the total amount invested in all plans would be used in
determining the applicable front-end sales charge reduction upon each purchase,
both initial and subsequent, upon notification to the Funds at the time of each
such purchase. Employees participating in such Group Investment Plans may also
combine the investments made in their plan account when determining the
applicable front-end sales charge on purchases to non-retirement Delaware Group
investment accounts if they so notify the Funds in connection with each
purchase.

For other retirement plans and special services, see Retirement Plans
for the Fund Classes under Investment Plans.

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Adviser Funds Institutional Classes
The Institutional Classes are available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans; (b) tax-exempt employee benefit
plans of the Manager or its affiliates and securities dealer firms with a
selling agreement with the Distributor; (c) institutional advisory accounts of
the Manager or its affiliates and those having client relationships with
Delaware Investment Advisers, a division of the Manager, or its affiliates and
their corporate sponsors, as well as subsidiaries and related employee benefit
plans and rollover individual retirement accounts from such institutional
advisory accounts; (d) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of a class; and (e) registered investment advisers investing
on behalf of clients that consist solely of institutions and high net-worth
individuals having at least $1,000,000 entrusted to the adviser for investment
purposes, but only if the adviser is not affiliated or associated with a broker
or dealer and derives compensation for its services exclusively from its clients
for such advisory services.

Shares of the Institutional Classes are available for purchase at net
asset value, without the imposition of a front-end or contingent deferred sales
charge and are not subject to Rule 12b-1 expenses.

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INVESTMENT PLANS

Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of the respective
Fund Class in which an investor has an account (based on the net asset value in
effect on the reinvestment date) and will be credited to the shareholder's
account on that date. All dividends and distributions of the Institutional Class
are reinvested in the account of the holders of such shares (based on the net
asset value in effect on the reinvestment date). Confirmations of any
distributions from realized securities profits will be mailed to shareholders in
the first quarter of each fiscal year.

Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to the Fund. Such
purchases, which must meet the minimum subsequent purchase requirements set
forth in the Prospectuses and this Part B, are made for Class A Shares at the
public offering price, and for the Institutional Classes, Class B and Class C
Shares at the net asset value, at the end of the day of receipt. A reinvestment
plan may be terminated at any time. This plan does not assure a profit nor
protect against depreciation in a declining market.

Reinvestment of Dividends in Other Delaware Group Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A, Class B
and Class C Shares may automatically reinvest their dividends and/or
distributions in any of the mutual funds in the Delaware Group, including the
Funds, in states where their shares may be sold. Such investments will be made
at the net asset value per share at the close of business on the reinvestment
date without any front-end sales charge or service fee. The shareholder must
notify the Transfer Agent in writing and must have established an account in the
fund into which the dividends and/or distributions are to be invested. Any
reinvestment directed to a fund in which the investor does not then have an
account, will be treated like all other initial purchases of a fund's shares.
Consequently, an investor should obtain and read carefully the prospectus for
the fund in which the investment is proposed to be made before investing or
sending money. The prospectus contains more complete information about the fund,
including charges and expenses. See also Additional Methods of Adding to Your
Investment - Dividend Reinvestment Plan under How to Buy Shares in the
Prospectus for the Fund Classes.

Subject to the following limitations, dividends and/or distributions
from other funds in the Delaware Group may be invested in shares of the Funds at
net asset value, provided an account has been established. Dividends from Class
A Shares may not be directed to Class B or Class C Shares. Likewise, dividends
from Class B Shares may only be directed to other Class B Shares and dividends
from Class C Shares may only be directed to other Class C Shares. See Classes
Offered under Classes of Shares in the Fund Classes' Prospectus for the funds in
the Delaware Group that are eligible for investment by holders of Fund shares.

This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.

Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for the Funds to
accept for investment in Class A, Class B or Class C Shares, through an agent
bank, preauthorized government or private recurring payments by Electronic Fund
Transfer. This method of investment assures the timely credit to the

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shareholder's account of payments such as social security, veterans' pension or
compensation benefits, federal salaries, Railroad Retirement benefits, private
payroll checks, dividends, and disability or pension fund benefits. It also
eliminates lost, stolen and delayed checks.

Automatic Investing Plan--Shareholders of Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their Fund
accounts. This type of investment will be handled in either of the following two
ways. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at a
specified date although no check is required to initiate the transaction. (2) If
the shareholder's bank is not a member of NACHA, deductions will be made by
preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.

* * *

Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such Plans must be for $25 or more. An investor wishing to take advantage
of either option should contact the Shareholder Service Center at 800-523-1918
for the necessary authorization forms and information. These services can be
discontinued by the shareholder at any time without penalty by giving written
notice.

Payments to the Funds from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
the Funds may liquidate sufficient shares from a shareholder's account to
reimburse the government or the private source. In the event there are
insufficient shares in the shareholder's account, the shareholder is expected to
reimburse the Funds.

Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Fund account. The Funds will accept these
investments, such as bank-by-phone, annuity payments and payroll allotments, by
mail directly from the third party. Investors should contact their employers or
financial institutions who in turn should contact the Funds for proper
instructions.

Retirement Plans for the Fund Classes
An investment in the Funds may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 403(b)(7) Deferred Compensation Plans and 457 Deferred Compensation
Plans. The CDSC may be waived on certain redemptions of Class B Shares and Class
C Shares. See Waiver of Contingent Deferred Sales Charge - Class B and Class C
Shares under Redemption and Exchange in the Prospectus for the Fund Classes for
a list of the instances in which the CDSC is waived.

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<PAGE>

Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000 for retirement plans. Each purchase of Class C Shares
must be in an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.

Minimum investment limitations generally applicable to other investors
do not apply to retirement plans, other than Individual Retirement Accounts
("IRAs"), for which there is a minimum initial purchase of $250 and a minimum
subsequent purchase of $25 regardless of which class is selected. Retirement
plans may be subject to plan establishment fees, annual maintenance fees and/or
other administrative or trustee fees. Fees are based upon the number of
participants in the plan as well as the services selected. Additional
information about fees is included in retirement plan materials. Fees are quoted
upon request. Annual maintenance fees may be shared by Delaware Management Trust
Company, the Transfer Agent, other affiliates of the Manager and others that
provide services to such plans.

Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Classes.
See Adviser Funds Institutional Classes, above. For additional information on
any of the Plans and Delaware's retirement services, call the Shareholder
Service Center telephone number.

It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.

Taxable distributions from the retirement plans described below may be
subject to withholding. Please contact your investment dealer or the Distributor
for the special application forms required for the plans described below.

Prototype Profit Sharing or Money Purchase Pension Plans
Prototype plans are available for self-employed individuals,
partnerships and corporations which replace the former Keogh and corporate
retirement plans. These plans contain profit sharing or money purchase pension
plan provisions. Contributions may be invested only in Class A and Class C
Shares.

Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
by making contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year or elects to be treated
as having no compensation for the year. Investments in each of the Fund Classes
are permissible.

The Tax Reform Act of 1986 (the "Act") restructured, and in some cases
eliminated, the tax deductibility of IRA contributions. Under the Act, the full
deduction for IRAs ($2,000 for each working spouse and $2,250 for one-income
couples) was retained for all taxpayers who are not covered by an
employer-sponsored retirement plan. Even if a taxpayer (or his or her spouse) is
covered by an employer-sponsored retirement plan, the full deduction is still
available if the taxpayer's adjusted gross income is below $25,000 ($40,000 for
taxpayers filing joint returns). A partial deduction is allowed for married
couples with incomes between $40,000 and $50,000, and for single individuals
with incomes between $25,000 and $35,000. The Act does not permit deductions for
contributions to IRAs by taxpayers whose adjusted gross income before IRA
deductions exceeds $50,000 ($35,000 for singles) and who are active participants
in an employer-sponsored retirement plan. Taxpayers who are not allowed

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<PAGE>

deductions on IRA contributions still can make nondeductible IRA contributions
of as much as $2,000 for each working spouse ($2,250 for one-income couples),
and defer taxes on interest or other earnings from the IRAs. Special rules apply
for determining the deductibility of contributions made by married individuals
filing separate returns.

A company or association may establish a Group IRA for employees or
members who want to purchase shares of the Funds. Purchases of $1 million or
more of the Class A Shares qualify for purchase at net asset value but may,
under certain circumstances, be subject to a Limited CDSC. See Purchasing Shares
for information on reduced front-end sales charges applicable to Class A Shares.

Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. See Class B Shares and Class C Shares under Alternative Purchase
Arrangements in the Fund Classes' Prospectus concerning the applicability of a
CDSC upon redemption.

See Appendix A for additional IRA information.

Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Employers with 25 or fewer eligible employees can establish this plan
which permits employer contributions and salary deferral contributions in Class
A Shares and Class C Shares only.

Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Plan documents are available to
enable employers to establish a plan. An employer may also elect to make profit
sharing contributions and/or matching contributions with investments in only
Class A Shares and Class C Shares or certain other funds in the Delaware Group.
Purchases under the Plan may be combined for purposes of computing the reduced
front-end sales charge applicable to Class A Shares as set forth in the table on
page 00.

Deferred Compensation Plan for Public Schools and Non-Profit
Organizations ("403(b)(7)")

Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page 00.

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<PAGE>

Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of any of the Fund Classes. Although investors
may use their own plan, there is available a Delaware Group 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or their
investment dealers to obtain further information. Applicable front-end sales
charges for such purchases of Class A Shares are set forth in the table on page
00.

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DETERMINING OFFERING PRICE AND NET ASSET VALUE

Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Funds after receipt of the order by the Funds or
their agent. Orders for purchases of Class B Shares, Class C Shares and the
Institutional Class of a Fund are effected at the net asset value per share next
calculated by the Funds after receipt of the order by the Fund or its agent.
Selling dealers have the responsibility of transmitting orders promptly.

The offering price for Class A Shares consists of the net asset value
per share plus any applicable front-end sales charges. Offering price and net
asset value are computed as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open. The New York Stock Exchange is scheduled to be open Monday through Friday
throughout the year except for New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. When the
New York Stock Exchange is closed, the Fund will generally be closed, pricing
calculations will not be made and purchase and redemption orders will not be
processed.

An example showing how to calculate the net asset value per share and,
in the case of Class A Shares, the offering price per share, is included in the
Funds' financial statements which are incorporated by reference into this Part
B.

The Funds' net asset value per share is computed by adding the value of
all securities and other assets in the portfolio of the Funds, deducting any
liabilities and dividing by the number of shares outstanding. Expenses and
income are accrued daily. U.S. Government and other debt securities are valued
at the mean between the last reported bid and asked prices. Options are valued
at the last reported sales price or, if no sales are reported, at the mean
between the last reported bid and asked prices. Short-term investments having
remaining maturities of 60 days or less are valued at amortized cost. All other
securities and assets, including non-Exchange-traded options, are valued at fair
value as determined in good faith by the Board of Directors of Adviser Funds,
Inc.

Each Class of the Funds will bear, pro-rata, all of the common expenses
of the particular Fund. The net asset values of all outstanding shares of each
Class of a Fund will be computed on a pro-rata basis for each outstanding share
based on the proportionate participation in the Funds represented by the value
of shares of that Class. All income earned and expenses incurred by the Funds
will be borne on a pro-rata basis by each outstanding share of a Class, based on
each Class' percentage in the Funds represented by the value of shares of such
Classes, except that the Institutional Classes will not incur any of the
expenses under the Funds' 12b-1 Plans and Class A, Class B and Class C Shares
alone will bear the 12b-1 Plan expenses payable under their respective Plans.
Due to the specific distribution expenses and other costs that would be
allocable to each Class, the dividends paid to each Class of a Fund and the net
asset value of each Class may vary. However, the net asset value per share of
each Class is expected to be equivalent.

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REDEMPTION AND REPURCHASE

Any shareholder may require the Funds to redeem shares by sending a
written request, signed by the record owner or owners exactly as the shares are
registered, to the Funds at 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. Certificates are issued for Class
A Shares and Institutional Class shares only if a shareholder specifically
requests them. Certificates are not issued for Class B Shares or Class C Shares.
If stock certificates have been issued for shares being redeemed, they must
accompany the written request. For redemptions of $50,000 or less paid to the
shareholder at the address of record, the request must be signed by all owners
of the shares or the investment dealer of record, but a signature guarantee is
not required. When the redemption is for more than $50,000, or if payment is
made to someone else or to another address, signatures of all record owners are
required and a signature guarantee may be required. Each signature guarantee
must be supplied by an eligible guarantor institution. The Funds reserve the
right to reject a signature guarantee supplied by an eligible institution based
on its creditworthiness. The Funds may request further documentation from
corporations, retirement plans, executors, administrators, trustees or
guardians.

In addition to redemption of Fund shares by the Funds, the Distributor,
acting as agent of the Funds, offers to repurchase Fund shares from
broker/dealers acting on behalf of shareholders. The redemption or repurchase
price, which may be more or less than the shareholder's cost, is the net asset
value per share next determined after receipt of the request in good order by
the Fund or its agent, subject to any applicable CDSC or Limited CDSC. This is
computed and effective at the time the offering price and net asset value are
determined. See Determining Offering Price and Net Asset Value. The Funds and
the Distributor end their business days at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by the
Distributor.

Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to the applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.

Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the Prospectus for the Fund Classes. Redemptions of
Class B Shares made within three years of purchase are subject to a CDSC of: (i)
4% if shares are redeemed within two years of purchase; (ii) 3% if shares are
redeemed during the third or fourth year following purchase; (iii) 2% if shares
are redeemed during the fifth year following purchase; (iv) 1% if shares are
redeemed during the sixth year following purchase; and (v) 0% thereafter. See
Restructuring of the Funds under Management of the Funds in the Prospectus for
the Fund Classes. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge - Class B and Class C Shares under Classes of Shares in the Prospectus
for the Fund Classes. Except for the applicable CDSC or Limited CDSC and, with
respect to the expedited payment by wire described below, for which there is
currently a $7.50 bank wiring cost, neither the Funds nor their Distributor
charges a fee for redemptions or repurchases, but such fees could be charged at
any time in the future.

Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order. If a shareholder redeems an entire account, all dividends accrued

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to the time of withdrawal will be paid by a separate check at the end of that
particular monthly dividend period.

Each Fund will process written redemption requests to the extent that
the purchase orders for the shares being redeemed have already settled. No Fund
will honor redemption requests as to shares for which a check was tendered as
payment until the Fund is reasonably satisfied that the check has cleared. This
potential delay can be avoided by making investments by wiring Federal Funds.

If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
appropriate Fund will automatically redeem from the shareholder's account the
Fund's shares purchased by the check plus any dividends earned thereon.
Shareholders may be responsible for any losses to the Fund or to the
Distributor.

In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by the Funds of securities owned by it is not reasonably
practical, or it is not reasonably practical for the Fund fairly to value its
assets, or in the event that the Commission has provided for such suspension for
the protection of shareholders, the Funds may postpone payment or suspend the
right of redemption or repurchase. In such case, the shareholder may withdraw
the request for redemption or leave it standing as a request for redemption at
the net asset value next determined after the suspension has been terminated.

Payment for shares redeemed or repurchased may be made either in cash
or in kind, or partly in cash and partly in kind. Any portfolio securities paid
or distributed in kind would be valued as described in Determining Offering
Price and Net Asset Value. Subsequent sale by an investor receiving a
distribution in kind could result in the payment of brokerage commissions.

The value of the Funds' investments are subject to changing market
prices. Thus, a shareholder reselling shares to the Fund may sustain either a
gain or loss, depending upon the price paid and the price received for such
shares.

Small Accounts
Before the Funds involuntarily redeem shares from an account that,
under the circumstances listed in the relevant Prospectus, has remained below
the minimum amounts required by the Funds' Prospectuses and sends the proceeds
to the shareholder, the shareholder will be notified in writing that the value
of the Fund shares in the account is less than the minimum required and will be
allowed 60 days from the date of notice to make an additional investment to meet
the required minimum. See The Conditions of Your Purchase under How to Buy
Shares in the Funds' Prospectuses. Any redemption in an inactive account
established with a minimum investment may trigger mandatory redemption. No CDSC
or Limited CDSC will apply to the redemptions described in this paragraph.

* * *

The Funds have made available certain special redemption privileges, as
described below. The Funds reserve the right to suspend or terminate these
expedited payment procedures upon 60 days' written notice to shareholders.

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Expedited Telephone Redemptions
Shareholders of the Fund Classes or their investment dealers of record
wishing to redeem any amount of Fund shares of $50,000 or less for which
certificates have not been issued may call the Shareholder Service Center at
800-523-1918 or, in the case of shareholders of the Institutional Classes, their
Client Services Representative at 800-828-5052 prior to the time the offering
price and net asset value are determined, as noted above, and have the proceeds
mailed to them at the record address. Checks payable to the shareholder(s) of
record will normally be mailed the next business day, but no later than seven
days, after the receipt of the redemption request. This option is only available
to individual, joint and individual fiduciary-type accounts.

In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
numbers listed above. An authorization form must have been completed by the
shareholder and filed with the particular Fund before the request is received.
Payment will be made by wire or check to the bank account designated on the
authorization form as follows:

1. Payment by Wire: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will normally
be wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption. If the proceeds are wired to the shareholder's account at
a bank which is not a member of the Federal Reserve System, there could be a
delay in the crediting of the funds to the shareholder's bank account.

2. Payment by Check: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.

Redemption Requirements: In order to change the name of the bank and
the account number it will be necessary to send a written request to the Fund
and a signature guarantee may be required. Each signature guarantee must be
supplied by an eligible guarantor institution. The Fund reserves the right to
reject a signature guarantee supplied by an eligible institution based on its
creditworthiness.

To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form. Each Fund will process telephone
redemption requests to the extent that the purchase orders for the shares being
redeemed have already settled. No Fund will honor redemption requests as to
shares for which a check was tendered as payment until the Fund is reasonably
satisfied that the check has cleared.

If expedited payment under these procedures could adversely affect the
Funds, the Funds may take up to seven days to pay the shareholder.

Neither the Funds nor the Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Funds will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Funds or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received by
shareholders of the Fund Classes are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.

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Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price, or net asset
value, as applicable, for which certificates have not been issued may establish
a Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although the Fund does not recommend any
specific amount of withdrawal. This $5,000 minimum does not apply for the Fund's
prototype retirement plans. Shares purchased with the initial investment and
through reinvestment of cash dividends and realized securities profits
distributions will be credited to the shareholder's account and sufficient full
and fractional shares will be redeemed at the net asset value calculated on the
third business day preceding the mailing date.

Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend) and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital and the share balance
may in time be depleted, particularly in a declining market.

The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.

Withdrawals under this plan made concurrently with the purchases of
additional shares of the Fund may be disadvantageous to the shareholder.
Purchases of Class A Shares through a periodic investment program in a fund
managed by the Manager must be terminated before a Systematic Withdrawal Plan
with respect to such shares can take effect, except if the shareholder is a
participant in one of our retirement plans or is investing in funds of the
Delaware Group which do not carry a sales charge. Redemptions of Class A Shares
pursuant to a Systematic Withdrawal Plan may be subject to a Limited CDSC if the
purchase was made at net asset value and a dealer's commission has been paid on
that purchase. Redemptions of Class B Shares or Class C Shares pursuant to a
Systematic Withdrawal Plan may be subject to a CDSC, unless the annual amount
selected to be withdrawn is less than 12% of the account balance on the date
that the Systematic Withdrawal Plan was established. See Waiver of Contingent
Deferred Sales Charge - Class B and Class C Shares and Waiver of Limited
Contingent Deferred Sales Charge - Class A Shares under Redemption and Exchange
in the Prospectus for the Fund Classes. Shareholders should consult their
financial advisers to determine whether a Systematic Withdrawal Plan would be
suitable for them.

An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the Transfer
Agent at any time by giving written notice.

The Systematic Withdrawal Plan is not available for the Institutional
Classes.

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Wealth Builder Option
Shareholders of the Fund Classes may elect to invest in one or more of
the other mutual funds in the Delaware Group through our Wealth Builder Option.
Under this automatic exchange program, shareholders can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from their
account and invested automatically into other mutual funds in the Delaware
Group, subject to the conditions and limitations set forth in the Fund Classes'
Prospectus. See Wealth Builder Option and Redemption and Exchange in the
Prospectus for the Fund Classes.

The investment will be made on the 20th day of each month (or, if the
fund selected is not open that day, the next business day) at the public
offering price or net asset value, as applicable, of the fund selected on the
date of investment. No investment will be made for any month if the value of the
shareholder's account is less than the amount specified for investment.

Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax consequences of
exchanges.

Shareholders can also use the Wealth Builder Option to invest in the
Fund Classes through regular liquidations of shares in their accounts in other
mutual funds in the Delaware Group, subject to the conditions and limitations
described in the Fund Classes' Prospectus. Shareholders can terminate their
participation at any time by written notice to the particular Fund.

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<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

The following supplements the information in each Prospectus under the
heading Dividends, Distributions and Taxes.

Tax Information Concerning All Funds
Each Fund has qualified and intends to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). By doing so, each Fund expects to eliminate or
reduce to a nominal amount the federal income taxes to which it may be subject.

In order to qualify as a regulated investment company, each Fund must,
among other things, (1) derive at least 90% of its gross income from dividends,
interest, payment with respect to securities loans, and gains from the sale or
other disposition of stock or securities, foreign currencies or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in stock, securities or currencies, (2)
derive less than 30% of its gross income from the sale or other disposition of
stock, securities, options, futures, forward contracts, and certain foreign
currencies (or options, futures, or forward contracts on foreign currencies)
held for less than three months, and (3) diversify its holdings so that at the
end of each quarter of its taxable year (i) at least 50% of the market value of
the Fund's assets is represented by cash or cash items (including receivables),
United States Government securities, securities of other regulated investment
companies, and other securities limited, in respect of any one issuer, to an
amount not greater than 5% of the value of the Fund's assets at the date of
purchase and 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities of
any one issuer (other than United States Government securities or the securities
of other regulated investment companies) or of two or more issuers that the
Adviser Funds, Inc. controls and that are engaged in the same, similar or
related trades or businesses. These requirements may restrict the degree to
which the Adviser Funds, Inc. may engage in short-term trading and limit the
range of the Adviser Funds, Inc.'s investments. If a Fund qualifies as a
regulated investment company, it will not be subject to federal income tax on
the part of its income distributed to shareholders, provided the Fund
distributes at least 90% of its net investment income (including short-term
capital gains) other than long-term capital gains in each year. Each Fund
intends to make sufficient distributions to shareholders to meet this
requirement.

Consequently, in order to avoid realizing a gain within the three-month
period, each Fund may be required to defer the closing out of a contract beyond
the time when it might otherwise be advantageous to do so. Each Fund may also be
restricted in the sale of purchased put options and the purchase of put options
for the purpose of hedging underlying securities because of the application of
the short sale holding period rules with respect to such underlying securities.

The Code imposes a non-deductible excise tax on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of their
"ordinary income" (as defined) for the calendar year plus 98% of their "capital
gain net income" (as defined) for the one-year period ending on October 31 of
such calendar year plus 100% of the prior calendar year's undistributed income
(if any). The balance, if any, of such income must be distributed during the
next calendar year. For the foregoing purposes, a Fund is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year. If distributions during a calendar year are less
than the required amount, that particular Fund will be subject to a
non-deductible excise tax equal to 4% of the deficiency.

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<PAGE>

Shareholders of the Funds will generally pay federal income tax on
distributions received from the Fund. Dividends that are attributable to a
Fund's taxable net investment income will be taxed as ordinary income.
Distributions of net capital gain that are designated by a Fund as capital gain
dividends will generally be taxable as long-term capital gain. Distributions in
excess of a Fund's current and accumulated earnings and profits will be treated
by shareholders receiving such distributions as a return of capital; a return of
capital is taxable to a shareholder as capital gain to the extent that it
exceeds such shareholder's basis in its shares in the Fund. Shareholders not
subject to tax on their income generally will not be required to pay tax on
amounts distributed to them. Such shareholders will include qualified retirement
plans.

It is the present policy of Adviser Funds, Inc. to declare and pay
dividends from net investment income of each fixed-income Fund monthly.
Dividends are declared at the time the offering price and net asset value are
determined (see Determining Offering Price and Net Asset Value) on the second to
last business day of each month and are payable on the last business day of each
month. For the Equity Funds, the current policy is to declare dividends of net
investment income, if any, on the second to last business day of each quarter
which are payable on the last business day of the quarter. Checks are normally
mailed within three business days of the payable date. Any check in payment of
dividends or other distributions which cannot be delivered by the United States
Post Office or which remains uncashed for a period of more than one year may be
reinvested in the shareholder's account at the then-current net asset value and
the dividend option may be changed from cash to reinvest. A Fund may deduct from
a shareholder's account the costs of the Fund's effort to locate a shareholder
if a shareholder's mail is returned by the United States Post Office or the Fund
is otherwise unable to locate the shareholder or verify the shareholder's
mailing address. These costs may include a percentage of the account when a
search company charges a percentage fee in exchange for their location services.
Net investment income earned on days when a Fund is not open will be declared as
a dividend on the next business day. Purchases of Fund shares by wire begin
earning dividends when converted into Federal Funds and available for
investment, normally the next business day after receipt. Purchases by check
earn dividends upon conversion to Federal Funds, normally one business day after
receipt.

Each class of a Fund will share proportionately in the investment
income and expenses of the Fund, except that the Class A Shares, Class B Shares
and the Class C Shares alone will incur distribution fees under their respective
12b-1 Plans.

For each of the Fund classes, dividends and realized securities profits
distributions are automatically reinvested in additional shares of a Fund at net
asset value in effect on the payable date, and credited to the shareholder's
account, unless an election to receive distributions in cash has been made by
the shareholder. All dividends and distributions are reinvested for the
Institutional Class. Dividend payments of $1.00 or less will be automatically
reinvested, notwithstanding a shareholder's election to receive dividends in
cash. If such a shareholder's dividends increase to greater than $1.00, the
shareholder would have to file a new election in order to begin receiving
dividends in cash again.

Adviser Funds, Inc. anticipates distributing to its shareholders
substantially all of a Fund's net investment income. Any net short-term capital
gains after deducting any net long-term capital losses (including carryforwards)
would be distributed quarterly but, in the discretion of Adviser Funds, Inc.'s
Board of Directors, might be distributed less frequently. Distributions of net
long-term gains, if any, realized on sales of investments will be distributed
annually during the quarter following the close of the fiscal year.

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Taxation of Shareholders
Gain or loss on the sale of a security generally will be long-term
capital gain or loss if a Fund has held the securities for more than one year.
Gain or loss on the sale of securities held for not more than one year will be
short-term. If one of the Funds acquires a debt security at a substantial
discount, a portion of any gain upon the sale or redemption will be taxed as
ordinary income, rather than capital gain to the extent it reflects accrued
market discount. Alternatively, this discount may be accredited as ordinary
income on a daily basis rather than recognized at disposition.

Dividends of net investment income and distributions of net realized
short-term capital gains will be taxable to shareholders as ordinary income for
federal income tax purposes, whether received in cash or reinvested in
additional shares. Dividends received by corporate shareholders will qualify for
the dividends-received deduction only to the extent that each of the Equity
Funds designates the amount distributed as a dividend and the amount so
designated does not exceed the aggregate amount of dividends received by the
Funds from domestic corporations for the taxable year. The federal
dividends-received deduction for corporate shareholders may be further reduced
or disallowed if the shares with respect to which dividends are received are
treated as debt-financed or are deemed to have been held for less than 46 days.

Foreign countries may impose withholding and other taxes on dividends
and interest paid to the Funds with respect to investments in foreign
securities. However, certain foreign countries have entered into tax conventions
with the U.S. to reduce or eliminate such taxes.

Distributions of long-term capital gains will be taxable to
shareholders as such, whether paid in cash or reinvested in additional shares
and regardless of the length of time that the shareholder has held his or her
interest in one of the Funds. If a shareholder receives a distribution taxable
as long-term capital gain with respect to his or her investment in a Fund and
redeems or exchanges the shares before he or she has held them for more than six
months, any loss on the redemption or exchange that is less than or equal to the
amount of the distribution will be treated as a long-term capital loss.

If a shareholder: (a) incurs a sales charge or in acquiring or
redeeming shares of one of the Funds; (b) disposes of those shares and acquires
within 90 days after the original acquisition; or (c) acquires within 90 days of
the redemption those shares in a mutual fund for which the otherwise applicable
sales charge is reduced by reason of reinvestment right (i.e., an exchange
privilege), the original sales charge increases the shareholder's tax basis in
the original shares only to the extent the other applicable sales charge for the
second acquisition is not reduced. The portion of the original sales charge that
does not increase the shareholder's tax basis in the original shares would be
treated as incurred with respect to the second acquisition and, as a general
rule, would increase the shareholder's tax basis in the newly acquired shares.
Furthermore, the same rule also applies to a disposition of the newly acquired
or redeemed shares made within 90 days of the second acquisition. This provision
prevents a shareholder from immediately deducting the sales charge by shifting
his or her investment in a family of mutual funds.

Investors considering buying shares of one of the Funds just prior to a
record date for a taxable dividend or capital gain distribution should be aware
that, regardless of whether the price of the Fund shares to be purchased
reflects the amount of the forthcoming dividend or distribution payment, any
such payment will be a taxable dividend or distribution payment. This is of
particular concern for investors in the Equity Funds since these Funds may make
distributions on an annual basis.

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Each Fund will be required in certain cases to withhold and remit to
the United States Treasury 31% of taxable dividends or of gross proceeds from
redemptions paid to any shareholder who has provided either an incorrect tax
identification number or no number at all, or who is subject to withholding by
the Internal Revenue Service for failure to properly include on his tax return
payments of interest or dividends. This withholding, known as backup
withholding, is not an additional tax, and any amounts withheld may be credited
against the shareholder's ultimate U.S. tax liability.

Certain investments and hedging activities of the Funds, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities will be subject
to special tax rules. See Option Transactions, Straddles and Wash Sales. In a
given case, these rules may accelerate income to a Fund, defer losses to a Fund,
cause adjustments in the holding periods of a Fund's securities, convert
short-term capital losses into long-term capital losses, or otherwise affect the
character of a Fund's income. These rules could therefore affect the amount,
timing and character of distributions to shareholders. Each Fund will endeavor
to make any available elections pertaining to such transactions in a manner
believed to be in the best interest of a Fund.

Certain securities purchased by the Funds (such as STRIPS, CUBES, TRs,
TIGRs and CATS), are sold at original issue discount and do not make periodic
cash interest payments. A Fund will be required to include as part of its
current income the imputed interest on such obligations even though a Fund has
not received any interest payments on such obligations during that period.
Because a Fund distributes all of its net investment income to its shareholders
(including such imputed interest), a Fund may have to sell securities in order
to generate the cash necessary for the required distributions. Such sales may
occur at a time when the Manager or sub-adviser would not have chosen to sell
such securities and which may result in a taxable gain or loss.

The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of shares of each Fund of Adviser
Funds, Inc. Further tax information regarding the World Growth and the New
Pacific Funds are included in following sections of this Part B. No attempt is
made to present a detailed explanation of the federal income tax treatment of
each Fund or its shareholders, and this discussion is not intended as a
substitute for careful tax planning. Accordingly, prospective purchasers of
shares of a Fund are urged to consult their tax advisors with specific reference
to their own tax situation, including the potential application of state and
local taxes.

The foregoing discussion and the discussion below regarding the World
Growth and the New Pacific Funds are based on tax laws and regulations which are
in effect on the date of this Part B; such laws and regulations may be changed
by legislative or administrative action, and such changes may be retroactive.

Additional Tax Information Concerning the World Growth and the New Pacific Funds
Gain or loss on the sale or other disposition of foreign currency by
the World Growth and the New Pacific Funds on a spot (or cash) basis will result
in ordinary gain or loss for federal income tax purposes.

Gains from foreign currencies (including foreign currency options,
foreign currency futures and foreign currency forward contracts) will constitute
qualifying income for purposes of the 90% test. However, future Treasury
regulations may exclude from qualifying income foreign currency gains not
directly related to a Fund's business of investing in stock or securities (and
may further define those foreign currency transactions that are not directly
related).

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Investment by a Fund in certain "passive foreign investment companies"
could subject a Fund to U.S. federal income tax or other charge on distributions
received from, or the sale of its investment in, such a company, which tax
cannot be eliminated by making distributions to shareholders. If the Funds elect
to treat a passive foreign investment company as a "qualified electing fund,"
different rules would apply, although the Funds do not expect to be in the
position to make such elections.

Foreign Tax Credit
Shareholders of the World Growth and the New Pacific Funds who are U.S.
citizens may be able to claim a foreign tax credit or deduction on their U.S.
income tax returns with respect to foreign taxes paid by the Funds. Generally, a
credit for foreign taxes is subject to the limitation that it may not exceed the
shareholder's U.S. tax attributable to his or her total foreign source taxable
income. For this purpose, the source of a Fund's income flows through to its
shareholders. A Fund's gains from the sale of securities generally will be
treated as derived from U.S. sources and certain currency fluctuation gains,
including fluctuation gains from foreign currency denominated debt securities,
receivables and payables, will be treated as ordinary income derived from U.S.
sources. With limited exceptions, the foreign tax credit is allowed to offset
only 90% of the alternative minimum tax imposed on corporations and individuals.
Because of these limitations, shareholders may be unable to claim a credit for
the full amount of their proportionate share of the foreign taxes paid by a
Fund.

The foregoing is only a general description of the treatment of foreign
withholding or other foreign taxes under the U.S. federal income tax laws.
Because the availability of a credit or deduction depends on the particular
circumstances of each shareholder, shareholders are advised to consult their own
tax advisers.

Options Transactions
When a Fund writes a call option, an amount equal to the premium
received by it is included in the Fund's assets and liabilities as an asset and
as an equivalent liability. The amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the principal
Exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and asked prices. If an option which a Fund has written
expires on its stipulated expiration date, or if a Fund enters into a closing
purchase transaction, the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. Any such gain or loss is a
short-term capital gain or loss for federal income tax purposes. If a call
option which a Fund has written is exercised, the Fund realizes a capital gain

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or loss (long-term or short-term, depending on the holding period of the
underlying security) from the sale of the underlying security, and the proceeds
from such sale are increased by the premium originally received.

The premium paid by a Fund for the purchase of a put option is recorded
in the section of the Fund's assets and liabilities as an investment and
subsequently adjusted daily to the current market value of the option. For
example, if the current market value of the option exceeds the premium paid, the
excess would be unrealized appreciation and, conversely, if the premium exceeds
the current market value, such excess would be unrealized depreciation. If a put
option which a Fund has purchased expires on the stipulated expiration date,
that Fund realizes a long- or short-term capital loss for federal income tax
purposes in the amount of the cost of the option. If the Fund sells the put
option, it realizes a long- or short-term capital gain or loss, depending on
whether the proceeds from the sale are greater or less than the cost of the
option. If the Fund exercises a put option, it realizes a capital gain or loss
(long-term or short-term, depending on the holding period of the underlying
security) from the sale of the underlying security and the proceeds from such
sale will be decreased by the premium originally paid. However, since the
purchase of a put option is treated as a short sale for federal income tax
purposes, the holding period of the underlying security will be affected by such
a purchase.

Futures Contracts
The initial margin deposits made when entering into futures contracts
are recognized as assets due from the broker. During the period the futures
contract is open, changes in the value of the contract will be reflected at the
end of each day.

Regulated futures contracts held by the Fund at the end of each fiscal
year will be required to be "marked to market" for federal income tax purposes.
Any unrealized gain or loss on futures contracts will therefore be recognized
and deemed to consist of 60% long-term capital gain or loss and 40% short-term
capital gain or loss. Therefore, adjustments are made to the tax basis in the
futures contract to reflect the gain or loss recognized at year end.

Straddles
The Code contains rules applicable to "straddles," that is, "offsetting
positions in actively traded personal property." Such personal property includes
offsetting puts of the same class, section 1256 contracts or other investment
contracts. Where applicable, the straddle rules generally override the other
provisions of the Code. In general, investment positions will be offsetting if
there is a substantial diminution in the risk of loss from holding one position
by reason of holding one or more other positions (although certain covered call
options would not be treated as part of a straddle). The Funds are authorized to
enter into covered call and covered put positions. Depending on what other
investments are held by a Fund, at the time it enters into one of the above
transactions, the Fund may create a straddle for purposes of the Code.

Wash Sales
"Wash sale" rules will apply to prevent the recognition of loss with
respect to a position where an identical or substantially identical position has
been acquired 30 days prior to or 30 days after the date of the loss.

The foregoing is only a summary of certain federal tax considerations
generally affecting the Funds and their shareholders and is not intended as a
substitute for careful tax planning. Shareholders are urged to consult their tax
advisers with specific reference to their own tax situations, including their
state and local tax liabilities.

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INVESTMENT MANAGEMENT AGREEMENTS

The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to each Fund, subject to the
supervision and direction of the Board of Directors of Adviser Funds, Inc.

The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. The aggregate assets of these funds on December 31,
1995 were approximately $10,522,726,000. Investment advisory services are also
provided to institutional accounts with assets on December 31, 1995 of
approximately $17,606,321,000.

Separate Investment Management Agreements for each Fund are dated May
4, 1996 and were approved by shareholders on May 3, 1996. The Agreements have an
initial term of two years and may be further renewed only so long as such
renewals and continuance are specifically approved at least annually by the
Board of Directors or by vote of a majority of the outstanding voting securities
of the relevant Fund, and only if the terms and renewal thereof have been
approved by the vote of a majority of the directors of Adviser Funds, Inc. who
are not parties thereto or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. The Agreements
are terminable without penalty on 60 days' notice by the directors of Adviser
Funds, Inc. or by the Manager. An Agreement will terminate automatically in the
event of its assignment.

The Investment Management Agreements provide that each Fund shall pay
the Manager an annual management fee payable monthly and computed on the average
daily net assets of each Fund at the following annual rates:

Management
Fund Fee Rate
---- --------

Enterprise Fund 0.80%
U.S. Growth Fund 0.70%
World Growth Fund 1.10%
New Pacific Fund 0.80%
Federal Bond Fund 0.30%
Corporate Income Fund 0.30%

On October 31, 1995, each Fund's total net assets were as follows:

Enterprise Fund $20,043,205
U.S. Growth Fund $18,987,288
World Growth Fund $14,404,149
New Pacific Fund $11,006,416
Federal Bond Fund $12,354,977
Corporate Income Fund $15,587,858

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The total investment management fees paid by each Fund during the
fiscal year ended October 31, 1995 and the period ended October 31, 1994 were
paid to the previous investment manager, Lincoln Investment Management, Inc.,
and were as follows:

Management
Fees Incurred
-------------
Fund 1995 1994
---- ---- ----
Enterprise Fund $116,353 $75,244
U.S. Growth Fund $105,965 $68,168
World Growth Fund $142,529 $111,392
New Pacific Fund $119,820 $108,975
Federal Bond Fund $33,749 $27,383
Corporate Income Fund $40,247 $28,095

As authorized by the Investment Management Agreements relating to each
Fund, the Investment Manager, under the general supervision of the Board of
Directors, has selected and contracted with various sub-advisers to assist with
the management of the Fund's portfolios in accordance with each Fund's stated
objectives and policies. The Manager is responsible for compensating such
sub-advisers. The Manager has entered into separate Sub-Advisory Agreements in
respect of each of the Funds dated May 4, 1996. The terms of the Sub-Advisory
Agreements and requirements for Board approval and termination are the same for
these agreements as they are for the Investment Management Agreements described
above.

Each Fund pays all of its other expenses, including its proportionate
share of rent and certain other administrative expenses. The ratios of expenses
to average daily net assets for Class A Shares, Class B Shares, Class C Shares
and the Institutional Class for each Fund for the fiscal year ended October 31,
1995 were as follows with and without giving effect to any expense waivers or
reimbursements, as more fully described below:

Ratio (With Ratio (Without
Giving Effect Giving Effect
Fund To Waiver) To Waiver)
---- ---------- ----------

Enterprise Fund
Class A Shares 1.85% 2.42%
Class B Shares 2.50% 3.07%
Class C Shares 2.50% 3.07%
Institutional Class 1.53% 2.07%

U.S. Growth Fund
Class A Shares 1.85% 2.18%
Class B Shares 2.50% 2.83%
Class C Shares 2.50% 2.82%
Institutional Class 1.50% 1.83%

World Growth Fund
Class A Shares 1.85% 2.96%
Class B Shares 2.50% 3.61%
Class C Shares 2.50% 3.61%
Institutional Class 1.50% 2.61%

-66-
<PAGE>

Ratio (With Ratio (Without
Giving Effect Giving Effect
Fund To Waiver) To Waiver)
---- ---------- ----------

New Pacific Fund
Class A Shares 1.85% 3.73%
Class B Shares 2.50% 4.38%
Class C Shares 2.50% 4.38%
Institutional Class 1.50% 3.38%

Federal Bond Fund
Class A Shares 1.25% 2.06%
Class B Shares 1.90% 2.71%
Class C Shares 1.85% 2.70%
Institutional Class 0.90% 1.71%

Corporate Income Fund
Class A Shares 1.25% 1.87%
Class B Shares 1.90% 2.52%
Class C Shares 1.90% 2.52%
Institutional Class 0.90% 1.52%

By California regulation, the Manager is required to waive certain fees
and reimburse the Funds for certain expenses to the extent that a Fund's annual
operating expenses, exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, exceed 2 1/2% of its first $30 million of average daily
net assets, 2% of the next $70 million of average daily net assets and 1 1/2% of
any additional average daily net assets. The Manager has voluntarily committed
to waive its fees or reimburse expenses for the Funds for the first six months
after May 3, 1996, as reflected below. The cap for each Fund has been lowered
from that maintained by the previous investment manager by .05%, reflecting the
reduction from .35% to .30% of the 12b-1 fees payable by the Funds with respect
to Class A Shares pursuant to Board action. The expense waivers and/or
reimbursements will be reevaluated by the Manager periodically. The expense
ratios presently being maintained are as follows:

U.S. World New Federal Corporate
Enterprise Growth Growth Pacific Bond Income
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Class A Shares 1.80% 1.80% 1.80% 1.80% 1.20% 1.20%
Class B Shares 2.50% 2.50% 2.50% 2.50% 1.90% 1.90%
Class C Shares 2.50% 2.50% 2.50% 2.50% 1.90% 1.90%
Institutional Class 1.50% 1.50% 1.50% 1.50% 0.90% 0.90%
</TABLE>

Sub-Advisers
The following registered investment advisers serve as sub-advisers to
the Funds indicated: Lincoln Investment Management, Inc. serves as sub-adviser
of the Federal Bond Fund and the Corporate Income Fund; Lynch & Mayer, Inc.
serves as sub-adviser of the U.S. Growth Fund and Enterprise Fund; Walter Scott
& Partners Limited serves as sub-adviser of the World Growth Fund; and John
Govett & Company Limited serves as sub-adviser of the New Pacific Fund.

-67-
<PAGE>

Lincoln Investment Management, Inc. Lincoln Investment Management, Inc.
provides investment services to Lincoln National Corporation and its principal
subsidiaries and acts as investment adviser to other clients in addition to the
funds. As of December 31, 1995, Lincoln Investment Management, Inc. had total
assets under management in excess of $37 billion.

Lynch & Mayer, Inc. Dennis Lynch and Eldon Mayer established Lynch &
Mayer, Inc. in 1976. Currently the firm manages $6.6 billion in assets for
pension funds, foundations, endowments, trusts and high net worth individuals
and families. The firm also manages a closed-end convertible security fund which
is traded on the New York Stock Exchange. Lynch & Mayer, Inc.'s investment
expertise is in equities and convertible securities. As of December 31, 1995,
Lynch & Mayer, Inc. had total assets under management in excess of $6.6 billion.

Walter Scott & Partners Limited. Walter Scott & Partners Limited was
founded in 1983. The firm is an investment adviser registered with the
Securities and Exchange Commission. The firm's area of expertise is in providing
both international and global management of equity securities. The firm manages
money for pension funds and foundations of over $2.0 billion for investors in
the United Kingdom and United States. As of December 31, 1995, Walter Scott &
Partners Limited had assets under management in excess of $2.0 billion.

John Govett & Company Limited. The London-based investment management
firm of John Govett & Company Limited was established in 1920. In December 1995,
John Govett & Company Limited was acquired by John Govett Holdings Limited, a
majority-owned subsidiary of the AIB Group of Companies. John Govett & Company
Limited manages assets of over $5.1 billion for investment trusts, investment
companies, mutual funds and pension funds. The firm has other investment offices
in Singapore and San Francisco. As of December 31, 1995, John Govett & Company
Limited had assets under management in excess of $5.1 billion.

Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor of the Funds' shares
under separate Distribution Agreements dated September 25, 1995. The Distributor
is an affiliate of the Manager and bears all of the costs of promotion and
distribution, except for payments by Class A Shares, Class B Shares and Class C
Shares of the Funds under their respective 12b-1 Plans. Prior to September 25,
1995, LNC Equity Sales, Inc. served as the national distributor of the Fund's
shares. Delaware Distributors Inc. ("DDI") is the corporate general partner of
Delaware Distributors, L.P. and both DDI and Delaware Distributors, L.P. are
indirect, wholly-owned subsidiaries of Delaware Management Holdings, Inc.
which, in turn, is a wholly-owned subsidiary of Lincoln National Corporation.

The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as
the shareholder servicing, dividend disbursing and transfer agent for each Fund
pursuant to a Shareholders Services Agreement dated September 25, 1995. The
Transfer Agent is also an indirect, wholly-owned subsidiary of Delaware
Management Holdings, Inc. and, therefore, Lincoln National Corporation.

-68-
<PAGE>

OFFICERS AND DIRECTORS

DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., Delaware Capital
Management, Inc. and Delaware Investment & Retirement Services, Inc. are direct
or indirect, wholly-owned subsidiaries of Delaware Management Holdings, Inc.
("DMH"). On April 3, 1995, a merger between DMH and a wholly-owned subsidiary of
Lincoln National Corporation was completed. Lincoln National Corporation, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management. DMH and the Manager are now wholly-owned
subsidiaries, and subject to the ultimate control, of Lincoln National
Corporation. After Lincoln National's acquisition of DMH and the Manager,
Lincoln National was operating two mutual fund complexes, the Delaware Group and
Lincoln Advisor Funds, Inc. (the "Lincoln Funds"). The directors and management
of both mutual fund complexes concluded that the extensive mutual fund
experience and resources of the Delaware Group of funds warranted the
consolidation of Lincoln Funds into the Delaware Group of funds. On May 3, 1996,
the shareholders of the Lincoln Funds approved the Investment Management and
Sub-Advisory Agreements and other matters giving effect to the restructuring of
the Funds to integrate them into the Delaware Group. See Restructuring of the
Funds under Management of the Funds in the Prospectuses.

DIRECTORS

The business and affairs of Adviser Funds, Inc. are managed under the
direction of its Board of Directors.

Directors of Adviser Funds, Inc. are noted below along with their ages
and their business experience for the past five years. Unless otherwise noted,
the address of each officer and director is One Commerce Square, Philadelphia,
PA 19103.

*Wayne A. Stork (58)
Chairman,President, Chief Executive Officer, Director and/or Trustee
of Adviser Funds, Inc. and 16 other investment companies in
the Delaware Group (which excludes Delaware Pooled Trust,
Inc.), Delaware Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings, Inc.
Chairman and Director of Delaware Pooled Trust, Inc., Delaware
Distributors, Inc., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
Chairman,President, Chief Executive Officer, Chief Investment Officer
and Director of Delaware Management Company, Inc.
Chairman,Chief Executive Officer and Director of Delaware
International Advisers Ltd.
Director of Delaware Service Company, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware
organization.

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

-69-
<PAGE>

Walter P. Babich (68)
Director and/or Trustee of Adviser Funds, Inc. and each of the other 17
investment companies in the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.

Anthony D. Knerr (57)
Director and/or Trustee of Adviser Funds, Inc. and each of the other 17
investment companies in the Delaware Group.
500 Fifth Avenue, New York, NY 10110.
Founder and Managing Director, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance
and Treasurer of Columbia University, New York. From 1987 to
1989, he was also a lecturer in English at the University. In
addition, Mr. Knerr was Chairman of The Publishing Group,
Inc., New York, from 1988 to 1990. Mr. Knerr founded The
Publishing Group, Inc. in 1988.

Ann R. Leven (55)
Director and/or Trustee of Adviser Funds, Inc. and each of the other 17
investment companies in the Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer
of the Smithsonian Institution, Washington, DC, and from 1975
to 1992, she was Adjunct Professor of Columbia Business
School.

W. Thacher Longstreth (75)
Director and/or Trustee of Adviser Funds, Inc. and each of the other 17
investment companies in the Delaware Group.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.

Charles E. Peck (70)
Director and/or Trustee of Adviser Funds, Inc. and each of the other 17
investment companies in the Delaware Group.
P.O. Box 1102, Columbia, MD 21044.
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive
Officer of The Ryland Group, Inc., Columbia, MD.

-70-
<PAGE>

The following is a compensation table listing for each director
entitled to receive compensation. The present directors were elected on May 3,
1996 and, therefore, did not previously receive compensation from the Funds.
However, the previous directors entitled to receive compensation each received
annual fees of $13,000 for their services to Adviser Funds, Inc., while it
operated as Lincoln Advisor Funds, Inc. The following table shows the total
compensation received from all Delaware Group funds for the year ended December
31, 1995 and an estimate of annual benefits to be received upon retirement under
the Delaware Group Retirement Plan.
<TABLE>
<CAPTION>

Pension or
Retirement
Benefits
Aggregate Accrued as Estimated Total
Compensation Part of Annual Compensation
from Adviser Benefits from all 17
Adviser Funds, Inc. Upon Delaware
Name Funds, Inc. Expenses Retirement* Group Funds
- ---- ----------- -------- ----------- -----------

<S> <C> <C> <C> <C>
W. Thacher Longstreth N/A None $30,000 $61,324
Ann R. Leven N/A None $30,000 $66,324
Walter P. Babich N/A None $30,000 $64,188
Anthony D. Knerr N/A None $30,000 $65,324
Charles E. Peck N/A None $30,000 $58,188

</TABLE>

* Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director who, at the time of his or
her retirement from the Board, has attained the age of 70 and served on the
Board for at least five continuous years, is entitled to receive payments
from each fund in the Delaware Group for a period equal to the lesser of
the number of years that such person served as a director or the remainder
of such person's life. The amount of such payments will be equal, on an
annual basis, to the amount of the annual retainer that is paid to
directors of each fund at the time of such person's retirement. If an
eligible director retired as of April 18, 1996, he or she would be entitled
to annual payments totaling $30,000, in the aggregate, from all of the
funds in the Delaware Group, based on the number of funds in the Delaware
Group as of that date.

OFFICERS

The day to day business operations of Adviser Funds, Inc. are managed
under the direction of the officers of Adviser Funds, Inc., who are listed
below:

Winthrop S. Jessup (50)
Executive Vice President of Adviser Funds, Inc. and 16 other funds in
the Delaware Group (which excludes Delaware Pooled Trust,
Inc.) and Delaware Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Capital Management, Inc.
Executive Vice President and Director of DMH Corp., Delaware Management
Company, Inc., Delaware International Holdings Ltd. and
Founders Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc., Delaware International
Advisers Ltd., Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.
During the past five years, Mr. Jessup has served in various
executive capacities at different times within the Delaware
organization.

-71-
<PAGE>

Richard G. Unruh, Jr. (56)
Executive Vice President of Adviser Funds, Inc. and each of the other
17 funds in the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware
organization.

David K. Downes (56)
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of Adviser Funds, Inc., each of the other 17 funds in
the Delaware Group and Delaware Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
Chief Executive Officer and Director of Delaware Investment
& Retirement Services, Inc.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director
of DMH Corp.
Senior Vice President/Chief Administrative Officer and Director of
Delaware Distributors, Inc.
Senior Vice President/Chief Administrative Officer of Delaware
Distributors, L.P.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer and Director of Delaware Service Company, Inc.
Chief Financial Officer and Director of Delaware International
Holdings Ltd.
Senior Vice President/Chief Financial Officer/Treasurer of Delaware
Capital Management, Inc.
Senior Vice President and Director of Founders Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer
of Equitable Capital Management Corporation, New York, from
December 1985 through August 1992, Executive Vice President
from December 1985 through March 1992 and Vice Chairman from
March 1992 through August 1992.

George M. Chamberlain, Jr. (49)
Senior Vice President and Secretary of Adviser Funds, Inc., each of
the other 17 funds in the Delaware Group, Delaware Management
Holdings, Inc. and Delaware Distributors, L.P.
Executive Vice President, Secretary and Director of Delaware Management
Trust Company.
Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Investment &
Retirement Services, Inc. and Delaware Capital Management,
Inc.
Corporate Vice President, Secretary and Director of Founders Holdings,
Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware
organization.

-72-
<PAGE>

Joseph H. Hastings (46)
Vice President/Corporate Controller of Adviser Funds, Inc., each of
the other 17 funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Capital Management,
Inc., Founders Holdings, Inc. and Delaware International
Holdings Ltd.
Chief Financial Officer/Treasurer of Delaware Investment &
Retirement Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P.,
New York, NY from 1989 to 1992. Prior to that, Mr. Hastings
served as Controller and Treasurer for Fine Homes
International, L.P., Stamford, CT from 1987 to 1989.

Michael P. Bishof (33)
Vice President/Treasurer of Adviser Funds, Inc., each of the other
17 funds in the Delaware Group, Delaware Management Company,
Inc., Delaware Distributors, Inc., Delaware Distributors,
L.P., Delaware Service Company, Inc., Founders Holdings, Inc.
and Founders CBO Corporation.
Vice President/Manager of Investment Accounting of Delaware
International Holdings Ltd.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a
Vice President for CS First Boston Investment Management, New
York, NY from 1993 to 1994 and an Assistant Vice President for
Equitable Capital Management Corporation, New York, NY from
1987 to 1993.

Principal Holders of Securities
As of February 1, 1996, the officers and directors of Adviser Funds,
Inc., as a group, owned less than 1% of the outstanding shares of each of the
Class A Shares, Class B Shares, Class C Shares and the Institutional Class, of
each Fund, respectively.

Listed below are the shareholders of record who held 25% or more of the
outstanding shares of each Class as of February 1, 1996.

Listed below are the shareholders of record who management believes
held 25% or more of the outstanding shares of each Class as of March 31, 1996.

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

Enterprise Fund American States Insurance Co. 74.55
(Class A) Attn: Corporate Accounting P/C
David Rogers
500 North Meridian St.
Indianapolis, IN 46207

Enterprise Fund None
(Class B)

-73-
<PAGE>

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- --------------

Enterprise Fund NFSC FBO John Robertson Trust 48.02
(Class C) John Robertson Plumbing Inc.
P.O. Box 118
Burlington, KY 41005

Enterprise Fund NBD Bank 100.00
(Institutional Trst Motor Wheel Corp.
Class) 415819602
P.O. Box 771072
Detroit, MI 48277

U.S. Growth Fund American States Insurance Co. 90.15
(Class A) Attn: Corporate Accounting P/C
David Rogers
500 North Meridian St.
Indianapolis, IN 46207

U.S. Growth Fund None
(Class B)

U.S. Growth Fund None
(Class C)

U.S. Growth Fund Federated Life Insurance Co. 100.00
(Institutional Separate Account A
Class) Attn: Tom Koch
121 E. Park Sq.
Owatonna, MN 55060

World Growth Fund Lincoln National Life Insurance Co. 85.95
(Class A) 1300 S. Clinton St.
Fort Wayne, IN 46801

World Growth Fund None
(Class B)

World Growth Fund None
(Class C)

World Growth Fund Lincoln National Investment Management 100.00
(Institutional 1300 South Clinton St.
Class) P.O. Box 1110
Fort Wayne, IN 46801

-74-
<PAGE>

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

New Pacific Fund Lincoln National Life Insurance Co. 77.43
(Class A) 1300 S. Clinton St.
Fort Wayne, IN 46801

New Pacific Fund None
(Class B)

New Pacific Fund None
(Class C)

New Pacific Fund Lincoln National Investment Management 100.00
(Institutional 1300 South Clinton St.
Class) P.O. Box 1110
Fort Wayne, IN 46801

Federal Bond Fund Lincoln National Life Insurance Co. 98.58
(Class A) 1300 S. Clinton St.
Fort Wayne, IN 46801

Federal Bond Fund NFSC FBO Lawrence B Silver 68.88
(Class B) NFSC/FMTC IRA R/O BRD-983756
1800 Linglestown Rd. Ste. 404
Harrisburg, PA 17110

Federal Bond Fund Willard L. Shively and 67.84
(Class C) Carolyn R. Shively JTWROS
6649 E. 150 N
Columbia City, IN 46725

Federal Bond Fund Lincoln National Investment Management 100.00
(Institutional 1300 Clinton St.
Class) P.O. Box 1110
Fort Wayne, IN 46801

Corporate Income Fund Lincoln National Life Insurance Co. 95.57
(Class A) 1300 S. Clinton St.
Fort Wayne, IN 46801

Corporate Income Fund NFSC FBO Lawrence B. Silver 77.52
(Class B) NFSC/FMTC IRA R/O BRD-983756
1800 Linglestown Rd. Ste. 404
Harrisburg, PA 17110

-75-
<PAGE>

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

Corporate Income Fund Willard L. Shively and 97.42
(Class C) Carolyn R. Shively JTWROS
6649 E. 150 N
Columbia City, IN 46725

Corporate Income Fund Federated Life Insurance Co. 100.00
(Institutional Separate Account A
Class) Attn: Tom Koch
121 E. Park Sq.
Owatonna, MN 55060

Listed below are the shareholders who management believes held at least
5% but less than 25% of the outstanding shares of each Class as of March 31,
1996.

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

Enterprise Fund None
(Class A)

Enterprise Fund Marlin Drake and Jeanne Drake 16.01
(Class B) Trst Unitrust
Dtd 11-28-89
11595 N. Meridian St. Ste. 250
Carmel, IN 46032

NFSC FBO Lawrence B. Silver 6.84
NFSC/FMTC IRA R/0 BRD-983756
1800 Linglestown Rd. Ste. 404
Harrisburg, PA 17110

Enterprise Fund NFSC FBO Garold A. Nest 12.09
(Class C) 6225 Shilo Road
Alpharetta, GA 30202

Enterprise Fund None
(Institutional
Class)

U.S. Growth Fund None
(Class A)

-76-
<PAGE>

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

U.S. Growth Fund NFSC FBO Lawrence B. Silver 18.95
(Class B) NFSC/FMTC IRA R/O BRD-983756
1800 Linglestown Rd. Ste. 404
Harrisburg, PA 17110

Marlin Drake and Jeanne Drake 16.72
Trst Unitrust
Dtd 11-28-89
11595 N. Meridian St. Ste. 250
Carmel, IN 46032

NFSC FBO Marlene M. Clark 8.17
BT9-312363
1536 Kensington Ln.
Lancaster, OH 43130

L. R. Brown 5.60
1201 Winner Ave.
Huntsville, AL 35805

U.S. Growth Fund NFSC FBO Garold A. Nest 16.58
(Class C) 6225 Shilo Road
Alpharetta, GA 30202

Fred Farah and Teresa Farah 12.98
1204 Chamberlain 10
Memphis, TN 38119

NFSC FBO Precision Aviation 12.93
Design Inc.
C/O Patricia Godfrey
1822 6th Ave. W.
Bradenton, FL 34205

NFSC FBO Leonel R. Felteau 11.59
and Anne L. Felteau
1578 Greyson Ridge
Marietta, GA 30062

Senen S. Santos Cust. 10.23
Imelda May Cardona
UTMA/CA
2109 Charlemagne Ave.
Long Beach, CA 90815

-77-
<PAGE>

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

U.S. Growth Fund Paul E. Moberg 9.92
(Class C) 62 Hall Rd.
Hampton, VA 23664

Susan W. Horne 7.94
2412 Catherine Dr.
Virginia Beach, VA 23454

U.S. Growth Fund None
(Institutional
Class)

World Growth Fund None
(Class A)

World Growth Fund NFSC FBO Lawrence B. Silver 12.22
(Class B) NFSC/FMTC IRA R/O BRD-983756
1800 Linglestown Rd. Ste. 404
Harrisburg, PA 17110

Carl W. Niederwimmer 6.89
301 N.W. 73rd Terrace
Gladstone, MO 64118

NFSC FBO Joan Miller 5.05
BRD-165050
4917 Waterfowl Way
Rockville, MD 20853

World Growth Fund NFSC FBO John Robertson Trst 24.21
(Class C) John Robertson Plumbing Inc.
BTJ-241857
P.O. Box 118
Burlington, KY 41005

NFSC FBO Chester M. Boltwood 22.98
and Karen A. Boltwood
BNW-302864
828 Cobblestone Cir.
Modesto, CA 95355

NFSC FBO Garold A. Nest 10.12
BRE-136204
6225 Shilo Road
Alpharetta, GA 30202

-78-
<PAGE>

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

World Growth Fund Paul E. Moberg 7.74
(Class C) 62 Hall Rd.
Hampton, VA 23664

Susan W. Horne 6.59
2412 Catherine Dr.
Burlington NC 27215

Eileen Shiman 6.32
3625 Yale Dr.
Santa Rosa, CA 95405

World Growth Fund None
(Institutional
Class)

New Pacific Fund None
(Class A)

New Pacific Fund NFSC FBO Lawrence B. Silver 22.82
(Class B) NFSC/FMTC IRA R/O BRD-983756
1800 Linglestown Rd. Ste. 404
Harrisburg, PA 17110

Kenneth D. Willis M.D. 8.76
1506 Olive Dr.
Huntsville, AL 35801

New Pacific Fund NFSC FBO Chester M. Boltwood 26.24
(Class C) and Karen A. Boltwood
BNW-302864
828 Cobblestone Cir.
Modesto, CA 95355

NFSC FBO Garold A. Nest 19.55
BRE-136204
6225 Shilo Road
Alpharetta, GA 30202

Paul E. Moberg 19.50
62 Hall Rd.
Hampton, VA 23664

-79-
<PAGE>

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

New Pacific Fund Timothy H. Keyes and 6.56
(Class C) Gwendolyn C. Campbell JTWROS
C/O Expatriate Timothy H. Keyes
P.O. Box 4381
Houston, TX 77210

Charles H. Stephens 6.37
2413 Jenan Rd.
Virginia Beach, VA 23454

Edward K. Robinson and 5.22
Dianne McKenzie JTWROS
11999 W. Florida
Boise, ID 83709

New Pacific Fund None
(Institutional
Class)

Federal Bond Fund None
(Class A)

Federal Bond Fund Irene E. Hall 7.75
(Class B) 5503 Monticello Ave.
Dallas, TX 75206

Federal Bond Fund William H. Lambert 16.53
(Class C) 7775 Chaple Ridge
Memphis, TN 38018

Eileen Shiman 16.00
3625 Yale Dr.
Santa Rosa, CA 95405

Federal Bond Fund None
(Institutional
Class)

Corporate Income Fund None
(Class A)

-80-
<PAGE>

Fund Name and Address of Shareholder Percentage Held
- ---- ------------------------------- ---------------

Corporate Income Fund None
(Class B)

Corporate Income Fund None
(Class C)

Corporate Income Fund None
(Institutional
Class)

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<PAGE>

EXCHANGE PRIVILEGE

The exchange privileges available for shareholders of the Classes and
for shareholders of classes of other funds in the Delaware Group are set forth
in the relevant prospectuses for such classes. The following supplements that
information. The Funds may modify, terminate or suspend the exchange privilege
upon 60 days' notice to shareholders.

An exchange constitutes, for tax purposes, the sale of one fund and the
purchase of another. The sale may involve either a capital gain or loss to the
shareholder for federal income tax purposes.

In addition, investment advisers and dealers may make exchanges between
funds in the Delaware Group on behalf of their clients by telephone or other
expedited means. This service may be discontinued or revised at any time by the
Transfer Agent. Such exchange requests may be rejected if it is determined that
a particular request or the total requests at any time could have an adverse
effect on any of the funds. Requests for expedited exchanges may be submitted
with a properly completed exchange authorization form, as described above.

Telephone Exchange Privilege
Shareholders owning shares for which certificates have not been issued
or their investment dealers of record may exchange shares by telephone for
shares in other mutual funds in the Delaware Group. This service is
automatically provided unless the Fund receives written notice from the
shareholder to the contrary.

Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800- 523-1918 or, in the case of shareholders of
the Institutional Class, their Client Services Representative at 800- 828-5052
to effect an exchange. The shareholder's current Fund account number must be
identified, as well as the registration of the account, the share or dollar
amount to be exchanged and the fund into which the exchange is to be made.
Requests received on any day after the time the offering price and net asset
value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
sales charges, eligibility and investment minimums, must be met. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent or, as
relevant, your Client Services Representative.) Certain funds are not available
for retirement plans.

The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds in the Delaware Group. Telephone exchanges may be subject to limitations
as to amounts or frequency. The Transfer Agent and the Funds reserve the right
to record exchange instructions received by telephone and to reject exchange
requests at any time in the future.

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<PAGE>

As described in the Funds' Prospectuses, neither the Funds nor the
Transfer Agent is responsible for any shareholder loss incurred in acting upon
written or telephone instructions for redemption or exchange of Fund shares
which are reasonably believed to be genuine.

Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Funds will refuse any new timing
arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Group funds from Timing Firms. The Funds reserve the right to temporarily or
permanently terminate the exchange privilege or reject any specific purchase
order for any person whose transactions seem to follow a timing pattern who: (i)
makes an exchange request out of a Fund within two weeks of an earlier exchange
request out of such Fund, or (ii) makes more than two exchanges out of a Fund
per calendar quarter, or (iii) exchanges shares equal in value to at least $5
million, or more than 1/4 of 1% of a Fund's net assets. Accounts under common
ownership or control, including accounts administered so as to redeem or
purchase shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.

Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Group funds: (1) Decatur
Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve, (7)
Delchester Fund and (8) Tax-Free Pennsylvania Fund. No other Delaware Group
funds are available for timed exchanges. Assets redeemed or exchanged out of
Timing Accounts in Delaware Group funds not listed above may not be reinvested
back into that Timing Account. The Funds reserve the right to apply these same
restrictions to the account(s) of any person whose transactions seem to follow a
time pattern (as described above).

The Funds also reserve the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Funds would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if the
Funds receive or anticipate simultaneous orders affecting significant portions
of the Funds' assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a Fund and therefore may be
refused.

Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.

* * *

Following is a summary of the investment objectives of the other
Delaware Group funds:

Delaware Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. Devon Fund
seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.

Trend Fund seeks long-term growth by investing in common stocks issued
by emerging growth companies exhibiting strong capital appreciation potential.

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<PAGE>

Value Fund seeks capital appreciation by investing primarily in common
stocks whose market values appear low relative to their underlying value or
future potential.

DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.

Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return Fund
seeks long-term growth by investing primarily in securities that provide the
potential for income and capital appreciation without undue risk to principal.

Delchester Fund seeks as high a current income as possible by investing
principally in high yield, high risk corporate bonds, and also in U.S.
Government securities and commercial paper.

U.S. Government Fund seeks high current income by investing primarily
in long-term debt obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.

Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
instruments secured by such securities. U.S. Government Money Fund seeks maximum
current income with preservation of principal and maintenance of liquidity by
investing only in short-term securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities, and
repurchase agreements collateralized by such securities, while maintaining a
stable net asset value.

Delaware Cash Reserve seeks the highest level of income consistent with
the preservation of capital and liquidity through investments in short-term
money market instruments, while maintaining a stable net asset value.

Tax-Free USA Fund seeks high current income exempt from federal income
tax by investing in municipal bonds of geographically-diverse issuers. Tax-Free
Insured Fund invests in these same types of securities but with an emphasis on
municipal bonds protected by insurance guaranteeing principal and interest are
paid when due. Tax-Free USA Intermediate Fund seeks a high level of current
interest income exempt from federal income tax, consistent with the preservation
of capital by investing primarily in municipal bonds.

Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while maintaining
a stable net asset value.

Tax-Free Pennsylvania Fund seeks a high level of current interest
income exempt from federal and, to the extent possible, certain Pennsylvania
state and local taxes, consistent with the preservation of capital.

International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. Global Bond Fund
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed income securities that may also provide the
potential for capital appreciation. Global Assets Fund seeks to achieve
long-term total return by investing in global securities which will provide
higher current income than a portfolio comprised exclusively of equity

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<PAGE>

securities, along with the potential for capital growth. Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity securities
of issuers located or operating in emerging countries.

Delaware Group Premium Fund offers nine funds available exclusively as
funding vehicles for certain insurance company separate accounts. Equity/Income
Series seeks the highest possible total rate of return by selecting issues that
exhibit the potential for capital appreciation while providing higher than
average dividend income. High Yield Series seeks as high a current income as
possible by investing in rated and unrated corporate bonds, U.S. Government
securities and commercial paper. Capital Reserves Series seeks a high stable
level of current income while minimizing fluctuations in principal by investing
in a diversified portfolio of short- and intermediate-term securities. Money
Market Series seeks the highest level of income consistent with preservation of
capital and liquidity through investments in short-term money market
instruments. Growth Series seeks long-term capital appreciation by investing its
assets in a diversified portfolio of securities exhibiting the potential for
significant growth. Multiple Strategy Series seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. International
Equity Series seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers that provide the
potential for capital appreciation and income. Value Series seeks capital
appreciation by investing in small- to mid-cap common stocks whose market values
appear low relative to their underlying value or future earnings and growth
potential. Emphasis will also be placed on securities of companies that may be
temporarily out of favor or whose value is not yet recognized by the market.
Emerging Growth Series seeks long-term capital appreciation by investing
primarily in small-cap common stocks and convertible securities of emerging and
other growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. Global Bond
Series seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed income securities that may also
provide the potential for capital appreciation.

For more complete information about any of the Delaware Group funds,
including charges and expenses, you can obtain a prospectus from the
Distributor. Read it carefully before you invest or forward funds.

Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).

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<PAGE>

GENERAL INFORMATION

The Manager is the investment manager of Adviser Funds, Inc. The
Manager or its affiliate, Delaware International Advisers Ltd., also manages the
other funds in the Delaware Group. The Manager, through a separate division,
also manages private investment accounts. While investment decisions of the
Funds are made independently from those of the other funds and accounts,
investment decisions for such other funds and accounts may be made at the same
time as investment decisions for the Funds.

Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to the Manager, Delaware International Advisers Ltd. or their
affiliates, are permitted to engage in personal securities transactions subject
to the exceptions set forth in Rule 17j-1 and the following general restrictions
and procedures: (1) certain blackout periods apply to personal securities
transactions of those persons; (2) transactions must receive advance clearance
and must be completed on the same day as the clearance was received; (3) certain
persons are prohibited from investing in initial public offerings of securities
and other restrictions apply to investments in private placements of securities;
(4) opening positions may only be closed-out at a profit after a 60-day holding
period has elapsed; and (5) the Compliance Officer must be informed periodically
of all securities transactions and duplicate copies of brokerage confirmations
and account statements must be supplied to the Compliance Officer.

The Distributor acts as national distributor for the Funds and for the
other mutual funds in the Delaware Group. As previously described, prior to
September 25, 1995, LNC Equity Sales, Inc. ("LNC Equity") served as the national
distributor for the Funds.

The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Fund and for the other
mutual funds in the Delaware Group. The Transfer Agent is paid a fee by the
Funds for providing these services consisting of an annual per account charge of
$5.50 plus transaction charges for particular services according to a schedule.
Compensation is fixed each year and approved by the Board of Directors,
including a majority of the directors who are not "interested persons."

The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of Adviser Funds, Inc.'s
advisory relationship with the Manager or its distribution relationship with the
Distributor, the Manager and its affiliates could cause Adviser Funds, Inc. to
delete the words "Delaware Group" from Adviser Funds, Inc.'s name.

The Chase Manhattan Bank, N.A., 4 Chase Metrotech Center, Brooklyn, NY
11245 is custodian of Adviser Funds, Inc.'s securities and cash. As custodian,
Chase maintains a separate account for each Fund; receives, holds and releases
portfolio securities on account of the Funds; receives and disburses money on
behalf of each Fund; and collects and receives income and other payments and
distributions on account of each Fund's portfolio securities.

The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the 1940 Act, has been passed upon for Adviser
Funds, Inc. by Stradley, Ronon, Stevens & Young, LLP, Philadelphia,
Pennsylvania.

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<PAGE>

Capitalization
Adviser Funds, Inc. was incorporated under the laws of Maryland on
August 12, 1993 under the name Lincoln Advisor Funds, Inc. Adviser Funds, Inc.
and all of its series (the Funds) shall continue perpetually subject to the
provisions in the Articles of Incorporation concerning termination by action of
the shareholders or by the directors by written notice to the shareholders.

The authorized capital of Adviser Funds, Inc. consists of 810,000,000
shares of Common Stock, $.01 par value, issued in separate series. Each Fund,
for federal income tax purposes, will constitute a separate entity which will be
governed by the provisions of the Articles of Incorporation. All shares of any
Fund issued and outstanding will be fully paid and non-assessable by Adviser
Funds, Inc. The assets of Adviser Funds, Inc. received for the issue or sale of
the shares of each Fund and all income, earnings, profits and proceeds thereof,
subject only to the rights of creditors of such Fund, are specially allocated to
such Fund and constitute the underlying assets of such Fund. The underlying
assets of each Fund are segregated on the books of account, and are to be
charged with the liabilities in respect to such Fund and with a share of the
general liabilities incurred by each Fund of Adviser Funds, Inc. General
liabilities of the Fund include, without limitation, director's fees,
professional expenses and printing expenses. Under no circumstances would the
assets of a Fund be used to meet liabilities which are not otherwise properly
chargeable to it. Expenses with respect to any two or more Funds are to be
allocated in proportion to the net asset value of the respective Fund except
where allocations of direct expenses can otherwise be fairly made. The officers
of Adviser Funds, Inc., subject to the general supervision of the Board of
Directors, have the power to determine which liabilities are allocable to a
given Fund or which are general or allocable to two or more Funds. Upon
redemption of shares of a Fund, the shareholder will receive proceeds solely of
the assets of such Fund. In the event of the dissolution or liquidation of
Adviser Funds, Inc., the holders of the shares of any Fund are entitled to
receive as a class the underlying assets of such Fund available for distribution
to shareholders.

Pursuant to the Articles of Incorporation, the directors may authorize
the creation of additional series of shares (the proceeds of which would be
invested in separate, independently managed portfolios with distinct investment
objectives and policies and share purchase, redemption and net asset valuation
procedures) and additional classes of shares within any Fund (which would be
used to distinguish among the rights of different categories of shareholders as
might be required by future regulations or other unforeseen circumstances) with
such preferences, privileges, limitations and voting and dividend rights as the
directors may determine. All consideration received by Adviser Funds, Inc. for
shares of any additional series or class, and all assets in which such
consideration is invested, would belong to that series or class (subject only to
the rights of creditors of such series or class) and would be subject to the
liabilities related thereto. Pursuant to the 1940 Act, shareholders of any
additional series or class of shares would normally have to approve the adoption
of any advisory contract relating to such series or class and of any changes in
the investment policies related thereto.

Adviser Funds, Inc. does not intend to hold shareholders' meetings
unless otherwise required by law. Adviser Funds, Inc. will not be required to
hold meetings of shareholders unless the election of directors is required to be
acted on by shareholders under the 1940 Act. Shareholders have certain rights,
including the right to call a meeting upon a vote of 10% of a Fund's outstanding
shares for the purpose of voting on the removal of one or more directors or to
transact any other business.

Identifiable expenses to each Fund will be paid by that Fund. General
expenses of all Funds will be allocated on a pro-rata basis according to asset
size. Where matters must be submitted to a vote of shareholders, the holders of
a majority of shares of each Fund affected must vote affirmatively for that
class to be affected.

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<PAGE>

All shares have equal voting rights, except as noted, no preemptive
rights, are fully transferable and, when issued, are fully paid. All shares of
the Advisers Funds, Inc. participate equally in dividends, and upon liquidation
would share equally.

The Class A Shares, Class B Shares, Class C Shares and Institutional
Class (formerly, Class D Shares) represent a proportionate interest in the
assets of each Fund of Adviser Funds, Inc. and have the same voting and other
rights and preferences, except that shares of the Institutional Classes may not
vote on matters affecting the Funds' Distribution Plans under Rule 12b-1.
Similarly, as a general matter, shareholders of Class A Shares, Class B Shares
and Class C Shares may vote only on matters affecting the 12b-1 Plan that
relates to the class of shares that they hold. However, shareholders of Class B
Shares must be given a vote on any material increase in the 12b-1 fees payable
by Class A Shares under the Plans for the Funds. General expenses of each Fund
will be allocated on a pro-rata basis to the Classes according to asset size,
except that expenses of the 12b-1 Plans of Class A, Class B and Class C Shares
will be allocated solely to those classes.

As of the close of business on May 3, 1996, the changes of the names of
the Funds were as follows: Lincoln Enterprise Portfolio to Enterprise Fund;
Lincoln U.S. Growth Portfolio to U.S. Growth Fund; Lincoln World Growth
Portfolio to World Growth Fund; Lincoln New Pacific Portfolio to New Pacific
Fund; Lincoln Government Income Portfolio to Federal Bond Fund; and Lincoln
Corporate Income Portfolio to Corporate Income Fund.

Noncumulative Voting
Fund shares have noncumulative voting rights which means that the
holders of more than 50% of the shares of Adviser Funds, Inc. voting for the
election of directors can elect all the directors if they choose to do so, and,
in such event, the holders of the remaining shares will not be able to elect any
directors.

This Part B does not include all of the information contained in the
Registration Statement which is on file with the Securities and Exchange
Commission.

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<PAGE>

FINANCIAL STATEMENTS

Coopers & Lybrand, L.L.P. serves as the independent auditors for
Adviser Funds, Inc. and, in its capacity as such, audits the financial
statements contained in the Annual Report. The Portfolio of Investments,
Statements of Net Assets, Statements of Operations, Statements of Changes in Net
Assets and Notes to Financial Statements, as well as the report of Coopers &
Lybrand, L.L.P., independent auditors, for the fiscal year ended October 31,
1995 are included in the Annual Report to shareholders. The financial
statements, the notes relating thereto and the report of Coopers & Lybrand,
L.L.P. listed above are incorporated by reference from the Annual Report into
this Part B.

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<PAGE>

APPENDIX A - IRA INFORMATION

The Tax Reform Act of 1986 restructured, and in some cases eliminated,
the tax deductibility of IRA contributions. Under the Act, the full deduction
for IRAs ($2,000 for each working spouse and $2,250 for one- income couples) was
retained for all taxpayers who are not covered by an employer-sponsored
retirement plan. Even if a taxpayer (or his or her spouse) is covered by an
employer-sponsored retirement plan, the full deduction is still available if the
taxpayer's adjusted gross income is below $25,000 ($40,000 for taxpayers filing
joint returns). A partial deduction is allowed for married couples with incomes
between $40,000 and $50,000, and for single individuals with incomes between
$25,000 and $35,000. The Act does not permit deductions for contributions to
IRAs by taxpayers whose adjusted gross income before IRA deductions exceeds
$50,000 ($35,000 for singles) and who are active participants in an
employer-sponsored retirement plan. Taxpayers who were not allowed deductions on
IRA contributions still can make nondeductible IRA contributions of as much as
$2,000 for each working spouse ($2,250 for one-income couples), and defer taxes
on interest or other earnings from the IRAs. Special rules apply for determining
the deductibility of contributions made by married individuals filing separate
returns.

As illustrated in the following tables, maintaining an IRA remains a
valuable opportunity.

For many, an IRA will continue to offer both an up-front tax break with
its tax deduction each year and the real benefit that comes with tax-deferred
compounding. For others, losing the tax deduction will impact their taxable
income status each year. Over the long term, however, being able to defer taxes
on earnings still provides an impressive investment opportunity--a way to have
money grow faster due to tax-deferred compounding.

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<PAGE>

Even if your IRA contribution is no longer deductible, the benefits of
saving on a tax-deferred basis can be substantial. The following tables
illustrate the benefits of tax-deferred versus taxable compounding. One table
reflects a constant 10% rate of return, and one table reflects a constant 7%
rate of return compounded annually, with the reinvestment of all proceeds. The
tables do not take into account any fees. Of course, earnings accumulated in
your IRA will be subject to tax upon withdrawal. If you choose a mutual fund
with a fluctuating net asset value, like any Fund, your bottom line at
retirement could be lower--it could also be much higher.

$2,000 Invested Annually Assuming a 10% Annualized Return

15% Tax Bracket Single - $0-$24,000
---------------
Joint - $0-$40,100
How Much You
End of Cumulative How Much You Have With Full
Year Investment Amount Have Without IRA IRA Deduction
---- ----------------- ---------------- -------------

1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704

[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5%
(10% less 15%)]

28% Tax Bracket Single - $24,001-$58,150
---------------
Joint - $40,101-$96,900

End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------

1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704

[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)] [With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning
10%]

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<PAGE>

31% Tax Bracket Single - $58,151-$121,300
--------------- Joint - $96,901-$147,700

End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------

1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704

[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)] [With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning
10%]

36% Tax Bracket* Single - $121,301-$263,750
---------------
Joint - $147,701-$263,750

End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------

1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704

[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)] [With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning
10%]

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<PAGE>

39.6% Tax Bracket* Single - over $263,750
-----------------
Joint - over $263,750

End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------

1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704

[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)] [With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%)
earning 10%]

* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $250,000. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.

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<PAGE>

$2,000 Invested Annually Assuming a 7% Annualized Return

15% Tax Bracket Single - $0-$24,000
---------------
Joint - $0-$40,100

How Much You
End of Cumulative How Much You Have With Full
Year Investment Amount Have Without IRA IRA Deduction
---- ----------------- ---------------- -------------

1 $ 2,000 $ 1,801 $ 2,140
5 10,000 10,143 12,307
10 20,000 23,685 29,567
15 30,000 41,764 53,776
20 40,000 65,901 87,730
25 50,000 98,126 135,353
30 60,000 141,149 202,146
35 70,000 198,587 295,827
40 80,000 275,271 427,219

[Without IRA--investment of $1,700 ($2,000 less 15%) earning 5.95% (7% less
15%)]

28% Tax Bracket Single - $24,001-$58,150
---------------
Joint - $40,101-$96,900

End of Cumulative How Much You How Much You Have with Full
Year Investment Amount Have Without IRA No Deduction IRA Deduction
---- ----------------- ---------------- ------------ -------------

1 $ 2,000 $ 1,513 $ 1,541 $ 2,140
5 10,000 8,365 8,861 12,307
10 20,000 19,061 21,288 29,567
15 30,000 32,738 38,719 53,776
20 40,000 50,227 63,166 87,730
25 50,000 72,590 97,454 135,353
30 60,000 101,187 145,545 202,146
35 70,000 137,754 212,995 295,827
40 80,000 184,512 307,598 427,219

[Without IRA--investment of $1,440 ($2,000 less 28%) earning 5.04% (7% less
28%)] [With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning
7%]

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<PAGE>

31% Tax Bracket Single - $58,151-$121,300
--------------- Joint - $96,901-$147,700

End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------

1 $ 2,000 $ 1,447 $ 1,477 $ 2,140
5 10,000 7,967 8,492 12,307
10 20,000 18,052 20,401 29,567
15 30,000 30,820 37,106 53,776
20 40,000 46,985 60,534 87,730
25 50,000 67,448 93,394 135,353
30 60,000 93,355 139,481 202,146
35 70,000 126,152 204,121 295,827
40 80,000 167,673 294,781 427,219

[Without IRA--investment of $1,380 ($2,000 less 31%) earning 4.83% (7% less
31%)] [With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning
7%]

36% Tax Bracket* Single - $121,301-$263,750
---------------
Joint - $147,701-$263,750

End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------

1 $ 2,000 $ 1,337 $ 1,370 $ 2,140
5 10,000 7,313 7,876 12,307
10 20,000 16,418 18,923 29,567
15 30,000 27,754 34,417 53,776
20 40,000 41,867 56,147 87,730
25 50,000 59,437 86,626 135,353
30 60,000 81,312 129,373 202,146
35 70,000 108,545 189,329 295,827
40 80,000 142,451 273,420 427,219

[Without IRA--investment of $1,280 ($2,000 less 36%) earning 4.48% (7% less
36%)] [With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning
7%]

-95-
<PAGE>

39.6% Tax Bracket* Single - over $263,750
-----------------
Joint - over $263,750

End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
---- ----------------- ---------------- ------------ ---------

1 $ 2,000 $ 1,259 $ 1,293 $ 2,140
5 10,000 6,851 7,433 12,307
10 20,000 15,277 17,859 29,567
15 30,000 25,643 32,481 53,776
20 40,000 38,392 52,989 87,730
25 50,000 54,075 81,753 135,353
30 60,000 73,366 122,096 202,146
35 70,000 97,094 178,679 295,827
40 80,000 126,281 258,040 427,219

[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 4.23% (7% less
39.6%)] [With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%)
earning 7%]

-96-
<PAGE>

$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED ANNUALLY

TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ------------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
10 $ 3,595 $ 3,719 $ 3,898 $ 4,008 $ 4,522 $ 5,187
15 4,820 5,072 5,441 5,675 6,799 8,354
20 6,463 6,916 7,596 8,034 10,224 13,455
30 11,618 12,861 14,803 16,102 23,117 34,899
40 20,884 23,916 28,849 32,272 52,266 90,519

$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED ANNUALLY

10 $ 28,006 $ 28,581 $ 29,400 $ 29,904 $ 32,192 $ 35,062
15 49,514 51,067 53,314 54,714 61,264 69,899
20 78,351 81,731 86,697 89,838 104,978 126,005
30 168,852 180,566 198,360 209,960 269,546 361,887
40 331,537 364,360 415,973 450,711 641,631 973,704
</TABLE>

-97-
<PAGE>

$2,000 SINGLE INVESTMENT AT A RETURN OF 7% COMPOUNDED MONTHLY

<S> <C> <C> <C> <C> <C> <C>
10 $ 3,050 $ 3,128 $ 3,239 $ 3,307 $ 3,621 $ 4,019
15 3,767 3,911 4,121 4,253 4,872 5,698
20 4,652 4,891 5,245 5,469 6,555 8,077
30 7,094 7,650 8,493 9,043 11,867 16,233
40 10,820 11,963 13,753 14,953 21,483 32,623

$2,000 INVESTED ANNUALLY AT A RETURN OF 7% COMPOUNDED MONTHLY

10 $ 25,411 $ 25,788 $ 26,322 $ 26,649 $ 28,125 $ 29,953
15 42,752 43,708 45,079 45,927 49,833 54,851
20 64,166 66,117 68,947 70,716 79,042 90,148
30 123,271 129,187 137,973 143,581 171,220 211,120
40 213,412 227,820 249,750 264,078 338,096 454,233

</TABLE>

-98-
<PAGE>

THE VALUE OF STARTING YOUR IRA EARLY

The following illustrates how much more you would have contributing
$2,000 each January--the earliest opportunity--compared to contributing on April
15th of the following year--the latest, for each tax year.

After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295

Compounded returns for the longest period of time is the key. The above
illustration assumes a 10% rate of return and the reinvestment of all proceeds.

And it pays to shop around. If you get just 2% more per year, it can
make a big difference when you retire. A constant 8% versus 10% return,
compounded monthly, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!

8% Return 10% Return
--------- ----------

10 years $31,291 $35,602
30 years $244,692 $361,887

The statistical exhibits above are for illustration purposes only and
do not reflect the actual performance for any Fund either in the past or in the
future.

-99-
<PAGE>

APPENDIX B - THE EQUITY MARKET

The Company Life Cycle
Traditional business theory contends that a typical company progresses
through basically four stages of development, keyed closely to a firm's sales.
Often an equity mutual fund will focus on companies in a certain development
phase.
1. Emerging Growth--a period of
experimentation in which the company builds
awareness of a new product or firm.
2. Accelerated Development--a period
of rapid growth with potentially high profitability
and acceptance of the product.
3. Maturing Phase--a period of
diminished real growth due to dependence on
replacement or sustained product demand.
4. Cyclical Stage--a period in which a
company faces a potential saturation of demand for
its product. At this point, a firm either diversifies
or becomes obsolete.

Hypothetical Corporate Life Cycle
Hypothetical Corporate Life Cycle Chart shows in a line illustration,
the stages that a typical company would go through, beginning with the emerging
state where sales growth continues at a steep pace to the mature phase where
growth levels off to the cyclical stage where sales show more definitive highs
and lows.

The above chart illustrates the path traditionally followed by
companies that successfully survive the growth sequence.

-100-
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

PART C

Other Information

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Part A - Financial Highlights

*Part B - Portfolios of Investments
Statements of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accounts

* The financial statements and Accountant's Report listed above
relating to the Enterprise Fund, the U.S. Growth Fund, the
World Growth Fund, the New Pacific Fund, the Federal Bond Fund
and the Corporate Income Fund are incorporated by reference
into Part B from the Registrant's Annual Report for the fiscal
year ended October 31, 1995.

(b) Exhibits:

(1) Articles of Incorporation.

(a) Incorporated into this filing by reference to
Exhibit No. 1 to Pre- Effective Amendment No. 1 to
the Registration Statement on Form N- 1A (File No.
33-67490) filed on September 27, 1993.

(b) Articles of Amendment, as filed with the Department
of Assessments and Taxation of Maryland on November
29, 1993. Incorporated into this filing by reference
to Exhibit No. 1(b) to Pre-Effective Amendment No. 2
to the Registration Statement on Form N-1A (File No.
33-67490) filed on November 29, 1993.

(d) Articles Supplementary (1996) to be filed by
Post-Effective Amendment.

(e) Articles of Amendment (1966) to be filed by
Post-Effective Amendment.

i
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

(2) By-Laws.

(a) Incorporated into this filing by reference to
Exhibit No. 2(a) to Pre- Effective Amendment No. 1
to the Registration Statement on Form N- 1A (File
No. 33-67490) filed on September 27, 1993.

(b) Amended By-Laws. Incorporated into this filing by
reference to Exhibit No. 1(b) to Pre-Effective
Amendment No. 2 to the Registration Statement on
Form N-1A (File No. 33-67490) filed on November 29,
1993.

(3) Inapplicable.

(4) Inapplicable.

(5) Investment Management and Sub-Advisory Agreements.

(a) Form of Investment Management Agreement between
Delaware Management Company, Inc. and Delaware Group
Adviser Funds, Inc. on behalf of Enterprise Fund
(May 1996) attached as Exhibit.

(b) Form of Investment Management Agreement between
Delaware Management Company, Inc. and Delaware Group
Adviser Funds, Inc. on behalf of U.S. Growth Fund
(May 1996) attached as Exhibit.

(c) Form of Investment Management Agreement between
Delaware Management Company, Inc. and Delaware Group
Adviser Funds, Inc. on behalf of World Growth Fund
(May 1996) attached as Exhibit.

(d) Form of Investment Management Agreement between
Delaware Management Company, Inc. and Delaware Group
Adviser Funds, Inc. on behalf of New Pacific Fund
(May 1996) attached as Exhibit.

(e) Form of Investment Management Agreement between
Delaware Management Company, Inc. and Delaware Group
Adviser Funds, Inc. on behalf of Federal Bond Fund
(May 1996) attached as Exhibit.

(f) Form of Investment Management Agreement between
Delaware Management Company, Inc. and Delaware Group
Adviser Funds, Inc. on behalf of Corporate Income
Fund (May 1996) attached as Exhibit.

ii
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

(g) Form of Sub-Advisory Agreement between Delaware
Management Company, Inc. and Sub-Adviser on behalf
of Enterprise Fund (May 1996) attached as Exhibit.

(h) Form of Sub-Advisory Agreement between Delaware
Management Company, Inc. and Sub-Adviser on behalf
of U.S Growth Fund (May 1996) attached as Exhibit.

(i) Form of Sub-Advisory Agreement between Delaware
Management Company, Inc. and Sub-Adviser on behalf
of World Growth Fund (May 1996) attached as Exhibit.

(j) Form of Sub-Advisory Agreement between Delaware
Management Company, Inc. and Sub-Adviser on behalf
of New Pacific Fund (May 1996) attached as Exhibit.

(k) Form of Sub-Advisory Agreement between Delaware
Management Company, Inc. and Sub-Adviser on behalf
of Federal Bond Fund (May 1996) attached as Exhibit.

(l) Form of Sub-Advisory Agreement between Delaware
Management Company, Inc. and Sub-Adviser on behalf
of Corporate Income Fund (May 1996) attached as
Exhibit.

(6) (a) Distribution Agreements. Executed Distribution
Agreements between Delaware Distributors, L.P. and
the Registrant on behalf of each Class (September
25, 1995) incorporated into this filing by reference
to Exhibit No. 6 to Post-Effective Amendment No. 4
to the Registration Statement on Form N-1A (File No.
33-67490) filed on February 28, 1996.

(b) Administration and Service Agreement. Form of
Administration and Service Agreement (as amended
November 1995) incorporated into this filing by
reference to Exhibit No. 6(b) to Post-Effective
Amendment No. 5 to the Registration Statement on
Form N-1A (File No. 33- 67490) filed on March 12,
1996.

(c) Dealer's Agreement. Dealer's Agreement (as amended
November 1995) incorporated into this filing by
reference to Exhibit No. 6(c) to Post-Effective
Amendment No. 5 to the Registration Statement on
Form N-1A (File No. 33-67490) filed on March 12,
1996.

iii
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

(d) Mutual Fund Agreement for the Delaware Group of
Funds (as amended November 1995) incorporated into
this filing by reference to Exhibit No. 6(d) to
Post-Effective Amendment No. 5 to the Registration
Statement on Form N-1A (File No. 33-67490) filed on
March 12, 1996.

(7) Bonus, Profit Sharing, Pension Contracts.

(a) Amended and Restated Profit Sharing Plan (November
17, 1994) incorporated into this filing by reference
to Exhibit No. 7(a) to Post- Effective Amendment No.
5 to the Registration Statement on Form N- 1A (File
No. 33-67490) filed on March 12, 1996.

(b) Amendment to Profit Sharing Plan (December 21, 1995)
incorporated into this filing by reference to
Exhibit No. 7(b) to Post-Effective Amendment No. 5
to the Registration Statement on Form N-1A (File No.
33-67490) filed on March 12, 1996.

(8) Custodian Agreements.

(a) Form of Custodian Agreement (May 1996) attached as
Exhibit.

(b) Form of Securities Lending Agreement (May 1996)
attached as Exhibit.

(9) Other Material Contracts. Shareholders Services
Agreement (September 25, 1995) between Delaware Service
Company, Inc. and the Registrant incorporated into this
filing by reference to Exhibit No. 9 to Post-Effective
Amendment No. 4 to the Registration Statement on Form
N-1A (File No. 33- 67490) filed on February 28, 1996.

(10) Opinion of Counsel. Filed with letter relating to Rule
24f-2 Notice on November 17, 1995 and Amended and
Restated Rule 24f-2 Notice on December 22, 1995.

(11) Consent of Auditors. Attached as Exhibit.

(12) Inapplicable.

(13) Inapplicable.

iv
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

(14) Model Plans. To be filed by Post-Effective Amendment.

(15) Plans under Rule 12b-1. Plans under Rule 12b-1 for each
Class of each Fund (September 25, 1995) incorporated
into this filing by reference to Exhibit No. 15 to
Post-Effective Amendment No. 4 to the Registration
Statement on Form N-1A (File No. 33-67490) filed on
February 28, 1996.

(16) Schedules of Computation for each Performance Quotation.
To be filed by Post-Effective Amendment.

(17) Financial Data Schedules. Incorporated into this filing
by reference to Exhibit 27 to Post-Effective Amendment
No. 4 to the Registration Statement on Form N-1A (File
33-67490) filed on Feberuary 28, 1996.

(18) Other: Directors' Power of Attorney.

(a) Powers of Attorney for Jon A. Boscia,
Priscilla S. Brown, Richard M. Burridge,
Jorge Castro, Adela Cepeda, Roger J.
Deshaies, Charles G. Freund, Gary R. McPhail
and Barbara Peck. Incorporated into this
filing by reference to Exhibit No. 11(b) to
Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A (File
No. 33-67490) filed on September 27, 1993.

(b) Power of Attorney for Philip L. Holstein.
Incorporated into this filing by reference
to Exhibit No. 11(c) to Post-Effective
Amendment No. 1 to the Registration
Statement on Form N- 1A (File No. 33-67490)
filed on June 30, 1994.

(c) Power of Attorney for H. Thomas McMeekin.
Incorporated into this filing by reference
to Exhibit No. 11(d) to Post- Effective
Amendment No. 2 to the Registration
Statement on Form N-1A (File 33-67490) filed
on November 25, 1994.

(d) Powers of Attorney for David G. Humes and
Steven R. Brody. Incorporated into this
filing by reference to Exhibit No. 11(e) to
Post-Effective Amendment No. 4 to
Registration Statement on Form N-1A (File
33-67490) filed on February 28, 1996.

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

v
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Item 26. Number of Holders of Securities.

(1) (2)

Number of
Title of Class Record Holders
-------------- --------------

Lincoln Advisor Funds, Inc.'s
Enterprise Fund:

Enterprise Fund 1,267 Accounts as of
(Class A Shares) March 31, 1996

Enterprise Fund 370 Accounts as of
(Class B Shares) March 31, 1996

Enterprise Fund 27 Accounts as of
(Class C Shares) March 31, 1996

Enterprise Fund 1 Account as of
(Class D Shares) March 31, 1996

Lincoln Advisor Funds, Inc.'s
U.S. Growth Fund:

U.S. Growth Fund 535 Accounts as of
(Class A Shares) March 31, 1996

U.S. Growth Fund 159 Accounts as of
(Class B Shares) March 31, 1996

U.S. Growth Fund 18 Accounts as of
(Class C Shares) March 31, 1996

U.S. Growth Fund 1 Account as of
(Class D Shares) March 31, 1996

vi
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Number of
Title of Class Record Holders
-------------- --------------

Lincoln Advisor Funds, Inc.'s
World Growth Fund:

World Growth Fund 914 Accounts as of
(Class A Shares) March 31, 1996

World Growth Fund 219 Accounts as of
(Class B Shares) March 31, 1996

World Growth Fund 20 Accounts as of
(Class C Shares) March 31, 1996

World Growth Fund 1 Account as of
(Class D Shares) March 31, 1996

Lincoln Advisor Funds, Inc.'s
New Pacific Fund:

New Pacific Fund 687 Accounts as of
(Class A Shares) March 31, 1996

New Pacific Fund 153 Accounts as of
(Class B Shares) March 31, 1996

New Pacific Fund 14 Accounts as of
(Class C Shares) March 31, 1996

New Pacific Fund 1 Account as of
(Class D Shares) March 31, 1996

Lincoln Advisor Funds, Inc.'s
Federal Bond Fund:

Federal Bond Fund 77 Accounts as of
(Class A Shares) March 31, 1996

Federal Bond Fund 23 Accounts as of
(Class B Shares) March 31, 1996

vii
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Number of
Title of Class Record Holders
-------------- --------------
Federal Bond Fund 3 Accounts as of
(Class C Shares) March 31, 1996

Federal Bond Fund 1 Account as of
(Class D Shares) March 31, 1996

Lincoln Advisor Funds, Inc.'s
Corporate Income Fund:

Corporate Income Fund 291 Accounts as of
(Class A Shares) March 31, 1996

Corporate Income Fund 52 Accounts as of
(Class B Shares) March 31, 1996

Corporate Income Fund 4 Accounts as of
(Class C Shares) March 31, 1996

Corporate Income Fund 1 Account as of
(Class D Shares) March 31, 1996

Item 27. Indemnification.

As permitted by Section 17(h) and (i) of the Investment Company Act
of 1940 (the "1940 Act") and pursuant to Article VII of the Registrant's By-Laws
(Exhibit 2 to the Registration Statement), officers, directors, employees and
agents of the Registrant will not be liable to the Registrant, any stockholder,
officer, director, employee, agent or other person for any action or failure to
act, except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of Maryland General Corporation Law permits indemnification of
directors who acted in good faith and reasonably believed that the conduct was
in the best interests of the Registrant. As permitted by Section 17(i) of the
1940 Act and pursuant to Section 10 of each Distribution Agreement (Exhibit 6(a)
herein), the Distributor of the Registrant is indemnified against liabilities
which it may incur, except liabilities arising from bad faith, gross negligence,
willful misfeasance or reckless disregard of duties.

viii
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Insofar as indemnification for liabilities arising under Securities Act
of 1933 (the "1933 Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Investment Company Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such director,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1940 Act and will be governed by the final adjudication of such
issue.
The Registrant purchased an insurance policy insuring its officers and
directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties.
The insurance policy also insures the Registrant against the cost of
indemnification payments to officers and directors under certain circumstances.
Section 8 of the Investment Management Agreements (Exhibit 5(a) herein)
and Section 8 of the Sub-Advisory Agreements (Exhibit 5(b) herein) limit the
liability, respectively, of Delaware Management Company, Inc., Lincoln
Investment Management, Inc., Lynch & Mayer, Inc., Walter Scott & Partners
Limited and John Govett & Co. Limited, to liabilities arising from willful
misfeasance, bad faith or gross negligence in the performance of their
respective duties or from reckless disregard by them of their respective
obligations and duties under the agreements.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and its Distribution Agreements in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretations of Section 17(h) and 17(i) of such Act remain
in effect and are consistently applied.

ix
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Item 28(a). Business and Other Connections of Investment Adviser.

Delaware Management Company, Inc. (the "Manager") or its
affiliate, Delaware International Advisers Ltd., also serves as investment
manager to the other funds in the Delaware Group (Delaware Group Delaware Fund,
Inc., Delaware Group Trend Fund, Inc., Delaware Group Value Fund, Inc., Delaware
Group DelCap Fund, Inc., Delaware Group Decatur Fund, Inc., Delaware Group
Delchester High-Yield Bond Fund, Inc., Delaware Group Government Fund, Inc.,
Delaware Group Limited-Term Government Funds, Inc., Delaware Group Cash Reserve,
Inc., Delaware Group Tax-Free Fund, Inc., DMC Tax-Free Income
Trust-Pennsylvania, Delaware Group Tax-Free Money Fund, Inc., Delaware Group
Premium Fund, Inc., Delaware Group Global & International Funds, Inc., Delaware
Pooled Trust, Inc., Delaware Group Dividend and Income Fund, Inc. and Delaware
Group Global Dividend and Income Fund, Inc.) and provides investment advisory
services to institutional accounts, primarily retirement plans and endowment
funds. In addition, certain directors of the Manager also serve as
directors/trustees of the other Delaware Group funds, and certain officers are
also officers of these other funds. A company indirectly owned by the Manager's
parent company acts as principal underwriter to the mutual funds in the Delaware
Group (see Item 29 below) and another such company acts as the shareholder
servicing, dividend disbursing and transfer agent for all of the mutual funds in
the Delaware Group.

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

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, President, Chief Executive Officer, Chief Investment
Officer and Director of Delaware Management Company, Inc.; President,
Chief Executive Officer, Chairman of the Board and Director of the
Registrant and, with the exception of Delaware Pooled Trust, Inc., each of the
other funds in the Delaware Group, Delaware Management Holdings, Inc.,
DMH Corp., Delaware International Holdings Ltd. and Founders Holdings,
Inc.; Chairman of the Board and Director of Delaware Pooled Trust, Inc.,
Delaware Distributors, Inc., Delaware Capital Management, Inc. and Delaware
Investment & Retirement Services, Inc.; Chairman, Chief Executive Officer
and Director of Delaware International Advisers Ltd.; and Director of
Delaware Service Company, Inc.
</TABLE>

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

x
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Winthrop S. Jessup Executive Vice President and Director of Delaware Management Company,
Inc., DMH Corp., Delaware International Holdings Ltd. and Founders
Holdings, Inc.; Executive Vice President of the Registrant and, with the
exception of Delaware Pooled Trust, Inc., each of the other funds in the
Delaware Group and Delaware Management Holdings, Inc.; President and
Chief Executive Officer of Delaware Pooled Trust, Inc.; Vice Chairman of
Delaware Distributors, L.P.; Vice Chairman and Director of Delaware
Distributors, Inc.; Director of Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Advisers Ltd. and
Delaware Investment & Retirement Services, Inc.; and President and Director
of Delaware Capital Management, Inc.

Richard G. Unruh, Jr. Executive Vice President and Director of Delaware Management Company,
Inc.; Executive Vice President of the Registrant and each of the other funds in
the Delaware Group; Senior Vice President of Delaware Management
Holdings, Inc.; and Director of Delaware International Advisers Ltd.

Board of Directors, Chairman of Finance Committee, Keystone Insurance Company
since 1989, 2040 Market Street, Philadelphia, PA; Board of Directors,
Chairman of Finance Committee, Mid Atlantic, Inc. since 1989, 2040 Market Street,
Philadelphia, PA

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

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

xi
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
David K. Downes Senior Vice President, Chief Administrative Officer and Chief Financial
Officer of Delaware Management Company, Inc., the Registrant and each of
the other funds in the Delaware Group; Chairman and Director of Delaware
Management Trust Company; Senior Vice President, Chief Administrative
Officer, Chief Financial Officer and Treasurer of Delaware Management
Holdings, Inc.; Senior Vice President, Chief Financial Officer, Treasurer and
Director of DMH Corp.; Senior Vice President and Chief Administrative
Officer of Delaware Distributors, L.P.; Senior Vice President, Chief
Administrative Officer and Director of Delaware Distributors, Inc.; Senior
Vice President, Chief Administrative Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.; Chief Financial Officer and
Director of Delaware International Holdings Ltd.; Senior Vice President,
Chief Financial Officer and Treasurer of Delaware Capital Management, Inc.;
Senior Vice President and Director of Founders Holdings, Inc.; Chief
Executive Officer and Director of Delaware Investment & Retirement
Services, Inc.; and Director of Delaware International Advisers Ltd.

Chief Executive Officer, Chief Financial Officer and Treasurer of Forewarn,
Inc. since 1992, 8 Clayton Place, Newtown Square, PA
</TABLE>

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

xii
<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

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

Director of ICI Mutual Insurance Co. since 1992, P.O. Box 730, Burlington,
VT

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

Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverton,
PA; Director and Member of Executive Committee of Stonewall Links, Inc.
since 1991, Bulltown Rd., Elverton, PA

Michael P. Bishof(1) Vice President and Treasurer of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company,
Inc., Founders Holdings, Inc. and Founders CBO Corporation; and Vice
President and Manager of Investment Accounting of Delaware International
Holdings Ltd.

</TABLE>

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

xiii

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware Capital Management, Inc., Founders
Holdings, Inc. and Delaware Investment & Retirement Services, Inc.; and
Assistant Secretary of Founders CBO Corporation and Delaware International
Holdings Ltd.

General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Ln.,
Philadelphia, PA

John M. Zerr(2) Vice President and Assistant Secretary of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group, DMH
Corp., Delaware Distributors, L.P., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.

Secretary and Counsel of Renovisions, Inc. since 1990, 4284 South Dixi
Road, Resaca, GA

</TABLE>

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

xiv

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.0

<S> <C>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------

Joseph H. Hastings Vice President/Corporate Controller of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Capital Management, Inc., Founders Holdings, Inc. and Delaware
International Holdings Ltd.; Executive Vice President, Chief Financial Officer
and Treasurer of Delaware Management Trust Company; Chief Financial
Officer and Treasurer of Delaware Investment & Retirement Services, Inc.;
and Assistant Treasurer of Founders CBO Corporation

Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp. and Delaware Management Trust
Company; and Vice President/Internal Audit of Delaware Investment &
Retirement Services, Inc.

Steven T. Lampe(3) Vice President/Taxation of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Founders Holdings, Inc., Founders CBO
Corporation, Delaware Investment & Retirement Services, Inc. and Delaware
Capital Management, Inc.

Lisa O. Brinkley(4) Vice President/Compliance of
Delaware Management Company, Inc., the
Registrant, each of the other funds in the
Delaware Group, DMH Corp., Delaware
Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Delaware
Capital Management, Inc. and Delaware
Investment & Retirement Services, Inc.

Rosemary E. Milner Vice President/Legal of Delaware
Management Company, Inc., the Registrant,
each of the other funds in the Delaware
Group, Delaware Distributors, L.P.
and Delaware Distributors, Inc.

</TABLE>

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

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Michael T. Taggart Vice President/Facilities Management and Administrative Services of
Delaware Management Company, Inc.

Gerald T. Nichols Vice President/Senior Portfolio
Manager of Delaware Management Company,
Inc., each of the tax-exempt funds, the
fixed income funds and the closed-end funds
in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Treasurer and
Director of Founders CBO Corporation

J. Michael Pokorny Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., each of the tax-exempt funds and the fixed income funds in the
Delaware Group

Gary A. Reed Vice President/Senior Portfolio
Manager of Delaware Management Company,
Inc., each of the tax-exempt funds and the
fixed income funds in the Delaware Group and
Delaware Capital Management, Inc.

Paul A. Matlack Vice President/Senior Portfolio
Manager of Delaware Management Company,
Inc., each of the tax-exempt funds, the
fixed income funds and the closed-end funds
in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Secretary and
Director of Founders CBO Corporation

Patrick P. Coyne Vice President/Senior Portfolio
Manager of Delaware Management Company,
Inc., each of the tax-exempt funds and the
fixed income funds in the Delaware Group

Roger A. Early(5) Vice President/Senior Portfolio
Manager of Delaware Management Company,
Inc., each of the tax-exempt funds and the
fixed income funds in the Delaware Group

</TABLE>

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

xvi

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc. and each of the equity funds in the Delaware Group

General Partner of Zeke Investment Partners since 1991, 569 Canterbury
Lane, Berwyn, PA

George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc. and each of the equity funds in the Delaware Group

John B. Fields Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., each of the equity funds in the Delaware Group and Delaware Capital
Management, Inc.

David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc. and each of the equity funds in the Delaware Group

Faye P. Staples(6) Vice President/Human Resources of Delaware Management Company, Inc.,
Delaware Distributors, L.P. and Delaware Distributors, Inc.; and Vice
President/Director of Human Resources of Delaware Service Company, Inc.

Daniel H. Carlson(7) Vice President/Marketing Manager of Delaware Management Company, Inc.;
And Vice President/Marketing of Delaware Distributors, L.P.

</TABLE>

(1) VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust and
VICE PRESIDENT, CS First Boston Investment Management prior to June 1995.
(2) ATTORNEY, Ballard, Spahr, Andrews and Ingersoll prior to July 1995.
(3) TAX MANAGER, Price Waterhouse prior to October 1995.
(4) VICE PRESIDENT AND COMPLIANCE OFFICER, Banc One Securities Corporation
prior to June 1994 and ASSISTANT VICE PRESIDENT AND COMPLIANCE OFFICER,
Aetna Life and Casualty prior to March 1993.
(5) SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER, Federated Investors prior to
July 1994.
(6) VICE PRESIDENT/HUMAN RESOURCES, Nova Care prior to September 1995.
(7) PRINCIPAL AND CONSULTANT, Buck Consultants prior to October 1995.

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

xvii

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Item 28(b). Business and Other Connections of Investment Sub-Advisers

Lincoln Investment Management, Inc. ("LIM") serves as sub-investment
adviser to Corporate Income Fund, Inc. and Federal Bond Fund, Inc. LIM serves as
investment adviser to Lincoln National Convertible Securities Fund, Inc.,
Lincoln National Income Fund, Inc., Lincoln National Aggressive Growth Fund,
Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital Appreciation
Fund, Inc., Lincoln National Equity-Income Fund, Inc., Lincoln National Global
Asset Allocation Fund, Inc., Lincoln National Growth and Income Fund, Inc.,
Lincoln National International Fund, Inc., Lincoln National Managed Fund, Inc.,
Lincoln National Money Market Fund, Inc., Lincoln National Social Awareness
Fund, Inc. and Lincoln National Special Opportunities Fund, Inc. and to other
clients. LIM is registered with the Securities and Exchange Commission (the
Commission) as an investment adviser and has acted as an investment adviser to
investment companies for over 40 years.

The directors and officers of LIM are listed below. Unless otherwise
indicated, the address of each person is 200 East Berry Street, Fort Wayne, IN
46802.

Name Positions and Offices with LIM
- ---- ------------------------------
<S> <C>
H. Thomas McMeekin President and Director

Dennis A. Blume Senior Vice President, Treasurer and Director, Real Estate

Steven R. Brody Senior Vice President, Assistant Treasurer and Director; Vice President,
The Lincoln National Life Insurance Company

Ann L. Warner Senior Vice President

Janet S. Whitney Vice President and Treasurer, Lincoln National Corporation

Lawrence T. Kissko Vice President

Joann E. Becker Vice President

David A. Berry Vice President

Anne E. Bookwalter Vice President

Phillip C. Byrde Vice President

</TABLE>

xviii

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Name Positions and Offices with LIM
- ---- ------------------------------
<S> <C>
Patrick R. Chasey Vice President

Garrett W. Cooper Vice President

David C. Fischer Vice President

Luc N. Girard Vice President

Donald P. Groover Vice President

William N. Holm, Jr. Vice President

John A. Kellogg Vice President

Jennifer C. Hom Vice President

Timothy H. Kilfoil Vice President

Walter M. Korinke Vice President

Lawrence M. Lee Vice President

Thomas A. McAvity, Jr. Vice President

Harold F. McElraft Vice President

Mary Beth Montgomery Vice President

John David Moore Vice President

Oliver H. G. Nichols Vice President

David C. Patch Vice President

Joseph T. Pusateri Vice President

Gregory E. Reed Vice President

</TABLE>

xix

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Name Positions and Offices with LIM
- ----- ------------------------------
<S> <C>
Bill L. Sanders Vice President

Milton W. Shuey Vice President

Gerald M. Weiss Vice President

O. Douglas Worthington Vice President, Controller and Assistant Treasurer, The Lincoln National
Life Insurance Company

C. Suzanne Womack Assistant Vice President and Corporate Secretary; Vice President, Secretary
and Director, Lincoln National Foundation, Inc.

Joseph J. Voors Regional Vice President

Harold L. Hughes Sales Vice President

</TABLE>

Lynch & Mayer, Inc. serves as sub-investment adviser to U.S. Growth
Fund and Enterprise Fund. The directors and officers of Lynch & Mayer, Inc. are
listed below. Unless otherwise indicated, the address of each person is 520
Madison Avenue, New York, New York 10022.

Name Positions and Offices with Lynch & Mayer, Inc.
- ---- ----------------------------------------------
<S> <C>
Dennis P. Lynch Chairman and Co-Chief Executive Officer

Eldon C. Mayer, Jr. Vice Chairman

Edward J. Petner President and Co-Chief Executive Officer
</TABLE>

Walter Scott & Partners Limited serves as sub-investment adviser to
World Growth Fund. The directors and officers of Walter Scott & Partners Limited
are listed below. Unless otherwise indicated, the address of each person is
Millburn Tower, Gogar, Edinburgh, Scotland EH12 9BS.

Name Positions and Offices with Walter Scott & Partners Limited
- ---- ----------------------------------------------------------
<S> <C>
Dr. Walter G. Scott Chairman and Managing Director

Dr. Kenneth J. Lyall Director and Pension Fund Manager

</TABLE>

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

John Govett & Co. Limited serves as sub-investment adviser to New
Pacific Fund. The directors and officers of John Govett & Co. Limited, a
majority owned indirect subsidiary of the AIB Group of Companies as of December
29, 1995, are listed below. Unless otherwise indicated, the address of each
person is Shackleton House, 4 Battlebridge Lane, London, England SE1 2HR.

Name Positions and Offices with John Govett & Co. Limited
- ---- ----------------------------------------------------
<S> <C>
Andrew Barnett Director

Peter Cotgrove Director

Charles Fowler Joint Chairman

Peter Kysel Director

Caroline Lane Director

Brian Lee Managing Director Operations

Rachael Maunder Director

Peter Moffatt Director

Rosemary Morgan Director

Ian Morley Director

John Murray Director

Kevin Pakenham Joint Chairman and Chief Executive Officer

Peter Pejacsevich Director and Chief Investment Officer

Peter Robson Director

Gareth Watts Director

Steve Wood Director

Andrew Yates Director

</TABLE>

xxi

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Item 29. Principal Underwriters.

(a) Delaware Distributors, L.P. serves as principal underwriter for all
the mutual funds in the Delaware Group.

(b) Information with respect to each director, officer or partner of
principal underwriter:
<TABLE>
<CAPTION>

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------- --------------------- ----------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None

Delaware Management
Company, Inc. Limited Partner Investment Manager

Delaware Capital
Management, Inc. Limited Partner None

Winthrop S. Jessup Vice Chairman Executive Vice President

Keith E. Mitchell President and Chief None
Executive Officer

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

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

J. Lee Cook Senior Vice President/ None
Eastern Sales Division

Thomas E. Sawyer Senior Vice President/ None
Western Sales Division

Stephen H. Slack Senior Vice President/ None
Wholesaler

</TABLE>

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

xxii

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------- ---------------------- ----------------------
<S> <C> <C>
William F. Hostler Senior Vice President/ None
Marketing Services

Dana B. Hall Senior Vice President/ None
Key Accounts

Minette van Noppen Senior Vice President/ None
Retirement Services

J. Chris Meyer Senior Vice President/ None
Product Development

Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs

Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary

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

John M. Zerr Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Michael P. Bishof Vice President/Treasurer Vice President/Treasurer

Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller

Steven T. Lampe Vice President/Taxation Vice President/Taxation

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

</TABLE>

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

xxiii

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ ---------------------- ---------------------
<S> <C> <C>
Rosemary E. Milner Vice President/Legal Vice President/Legal

Daniel H. Carlson Vice President/Marketing None

Diane M. Anderson Vice President/ None
Retirement Services

Denise F. Guerriere Vice President/Client Services None

Julia R. Vander Els Vice President/ None
Client Services

Jerome J. Alrutz Vice President/ None
Client Services

Joanne A. Mettenheimer Vice President/ None
National Accounts

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

Thomas S. Butler Vice President/ None
DDI Administration

Steven J. DeAngelis Vice President/Product None
Development

Susan T. Friestedt Vice President/Customer None
Service

Dinah J. Huntoon Vice President/Product None
Management

Jodie L. Johnson Vice President/National None
Accounts

</TABLE>

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

xxiv

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ ----------------------- ----------------------
<S> <C> <C>
Ellen M. Krott Vice President/ None
Communications

Holly W. Riemel Vice President/ None
Telemarketing

Frank Albanese Vice President/Wholesaler None

William S. Carroll Vice President/Wholesaler None

William S. Castetter Vice President/Wholesaler None

Thomas J. Chadie Vice President/Wholesaler None

Douglas R. Glennon Vice President/Wholesaler None

Alan D. Kessler Vice President/Wholesaler None

William M. Kimbrough Vice President/Wholesaler None

Mac McAuliffe Vice President/Wholesaler None

Patrick L. Murphy Vice President/Wholesaler None

Henry W. Orvin Vice President/Wholesaler None

Philip G. Rickards Vice President/Wholesaler None

Michael W. Rose Vice President/Wholesaler None

Robert E. Stansbury Vice President/Wholesaler None

Larry D. Stone Vice President/Wholesaler None

Faye P. Staples Vice President/Human Resources None

</TABLE>

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

xxv

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

<S> <C>

Item 30. Location of Accounts and Records.

(a) Delaware Group Adviser Funds, Inc.
One Commerce Square
Philadelphia, PA 19103
(Articles of Incorporation and By-Laws)

(b) Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
(with respect to their services as investment adviser)

(c) The Chase Manhattan Bank, N.A.
4 Chase Metrotech Center
Brooklyn, N.Y. 11245
(with respect to their services as custodian)

(d) Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
(with respect to their services as distributor)

(e) Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
(with respect to their services as shareholder services agent)

(f) Lincoln Investment Management, Inc.
200 East Berry Street
Fort Wayne, IN 46802
(with respect to their services as sub-adviser)

(g) Lynch & Mayer, Inc.
520 Madison Avenue
New York, NY 10022
(with respect to their services as sub-adviser)

</TABLE>

xxvi

<PAGE>

Form N-1A
File No. 33-67490
Lincoln Advisor Funds, Inc.

<S> <C>
(h) Walter & Scott & Partners Limited
Millburn Tower
Gogar
Edinburgh, Scotland EH12 9BS
(with respect to their services as sub-adviser)

(i) John Govett & Company Limited
Shackleton House
4 Battlebridge Lane
London, England SE1 2HR
(with respect to their services as sub-adviser)

Item 31. Management Services. None.

Item 32. Undertakings.

(a) Not Applicable.

(b) Not Applicable.

(c) The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.

(d) The Registrant hereby undertakes to promptly call a
meeting of shareholders for the purpose of voting upon the
question of removal of any director when requested in
writing to do so by the record holders of not less than
10% of the outstanding shares.

</TABLE>

xxvii

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all or the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Fort Wayne and State of Indiana on this 30th day of
April, 1996.

LINCOLN ADVISOR
FUNDS, INC.

By /s/ C. Suzanne Womack
----------------------------
C. Suzanne Womack
Secretary

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities indicated on the 30th day of April, 1996.

Signature Titles Date
--------- ------ -----
<S> <C> <C>

/s/Priscilla S. Brown * President and Director April 30, 1996
- -------------------------------------------------
Priscilla S. Brown

/s/Richard M. Burridge * Director April 30, 1996
- -------------------------------------------------
Richard M. Burridge

/s/Jorge G. Castro * Director April 30, 1996
- -------------------------------------------------
Jorge G. Castro

/s/Adela Cepeda * Director April 30, 1996
- -------------------------------------------------
Adela Cepeda

/s/Roger J. Deshaies * Director April 30, 1996
- -------------------------------------------------
Roger J. Deshaies

/s/Charles G. Freund * Director April 30, 1996
- -------------------------------------------------
Charles G. Freund

/s/Philip L. Holstein * Director April 30, 1996
- -------------------------------------------------
Philip L. Holstein

/s/H. Thomas McMeekin * Director April 30, 1996
- ----------------------------------------------
H. Thomas McMeekin

</TABLE>

<PAGE>

Signature Titles Date
--------- ------ -----
<S> <C> <C>

/s/Barbara Peck * Director April 30, 1996
- -------------------------------------------------
Barbara Peck

Vice President, Treasurer and
/s/Steven R. Brody * Chief Financial Officer April 30, 1996
- -------------------------------------------------
Steven R. Brody

Assistant Vice President and
/s/David G. Humes * Chief Accounting Officer April 30, 1996
- -------------------------------------------------
David G. Humes

/s/John Steinkamp
- ------------------------------------------------ April 30, 1996
*John Steinkamp, as Attorney-in-fact
pursuant to Powers of Attorney granted on
October 1, 1993, May 23, 1994, November 22, 1994
and February 14, 1996.

</TABLE>

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Exhibits

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

<PAGE>

INDEX TO EXHIBITS

Exhibit No. Exhibit
- ----------- -------
<S> <C>
EX-99.B5A Form of Investment Management Agreement (May 1996) on behalf of Enterprise
Fund

EX-99.B5B Form of Investment Management Agreement (May 1996) on behalf of U.S.
Growth Fund

EX-99.B5C Form of Investment Management Agreement (May 1996) on behalf of World
Growth Fund

EX-99.B5D Form of Investment Management Agreement (May 1996) on behalf of New
Pacific Fund

EX-99.B5E Form of Investment Management Agreement (May 1996) on behalf of Federal
Bond Fund

EX-99.B5F Form of Investment Management Agreement (May 1996) on behalf of Corporate
Income Fund

EX-99.B5G Form of Sub-Advisory Agreement (May 1996) on behalf of Enterprise Fund

EX-99.B5H Form of Sub-Advisory Agreement (May 1996) on behalf of U.S. Growth Fund

EX-99.B5I Form of Sub-Advisory Agreement (May 1996) on behalf of World Growth Fund

EX-99.B5J Form of Sub-Advisory Agreement (May 1996) on behalf of New Pacific Fund

EX-99.B5K Form of Sub-Advisory Agreement (May 1996) on behalf of Federal Bond Fund

EX-99.B5L Form of Sub-Advisory Agreement (May 1996) on behalf of Corporate Income
Fund

EX-99.B8A Form of Custodian Agreement (May 1996) on behalf of each Fund

EX-99.B8B Form of Securities Lending Agreement (May 1996)

EX-99.B11 Consent of Auditors

</TABLE>

DELAWARE GROUP ADVISER FUNDS, INC.
ENTERPRISE FUND
INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP ADVISER FUNDS, INC.,
Maryland corporation ("Fund") on behalf of the ENTERPRISE FUND (Portfolio"), and
DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation ("Investment
Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and is currently
comprised of six portfolios, including the Portfolio; as a separate series of
the Fund, each portfolio engages in the business of investing and reinvesting
its assets in securities, and further
WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and further
WHEREAS, the Board of Directors of the Fund approved a restructuring
("Restructuring") of the Fund and each of its portfolios for the purpose of
integrating the Fund into the Delaware Group of Funds; and further
WHEREAS, as part of the Restructuring, the names of the Fund and the
Portfolio were changed from the Lincoln Advisor Funds, Inc. and Lincoln
Enterprise Portfolio to, respectively, Delaware Group Adviser Funds, Inc. and
Enterprise Fund; and the Investment Manager was selected to replace Lincoln
Investment Management, Inc. (formerly Lincoln National Investment Management
Company), which served as investment manager for the Portfolio under an
Investment Advisory Agreement dated as of the 25th of October, 1993; and further

<PAGE>

WHEREAS, in connection with the changes in investment manager, the
Fund on behalf of the Portfolio and the Investment Manager desire to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Portfolio's assets and to administer its
affairs, subject to the direction of the Fund's Board of Directors and officers
of the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such period
to render the services and assume the obligations herein set forth for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Fund in any way, or in any way be deemed an agent of the Fund. The Investment
Manager shall regularly make decisions as to what securities and other
instruments to purchase and sell on behalf of the Portfolio and shall effect the
purchase and sale of such investments in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding the Portfolio's investments as the
Investment Manager deems appropriate or as the Directors of the Fund may
reasonably request.
2. The Fund shall conduct its own business and affairs and shall
bear the expenses and salaries necessary and incidental thereto including, but
not in limitation of the foregoing, the costs incurred in: the maintenance of
its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; taxes; and federal and
state registration fees. Directors, officers and employees of the Investment
Manager may be directors, officers and employees of any of the funds (including
the Fund) of which Delaware Management Company, Inc. is investment manager.
Directors, officers and employees of the Investment Manager who are directors,
officers and/or employees of these funds shall not receive any compensation from
the funds for acting in such dual capacity.

<PAGE>

In the conduct of the respective businesses of the parties hereto
and in the performance of this Agreement, the Fund and Investment Manager may
share facilities common to each, with appropriate proration of expenses between
them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for which
the Investment Manager or any such Sub-Adviser provides investment advisory
services and/or with broker/dealers who sell shares of the Fund or who sell
shares of any other fund for which the Investment Manager or any such Sub-
Adviser provides investment advisory services. Broker/dealers who sell shares of
the funds of which Delaware Management Company, Inc. is investment manager,
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund and
the Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where the Fund and the
Investment Manager have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds and other advisory accounts for which the
Investment Manager or any Sub-Adviser, as defined in Paragraph 5 hereof,
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by
the Investment Manager under the provisions of this Agreement, the Fund shall

<PAGE>

pay to the Investment Manager monthly from the Portfolio's assets, a fee
(at an annual rate) equal to .80% of the average daily net assets of the
Portfolio during the month.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
5. The Investment Manager may, at its expense, select and contract
with one or more investment advisers registered under the Investment Advisers
Act of 1940 (the "Sub-Adviser") to perform some or all of the services for the
Portfolio for which it is responsible under this Agreement. The Investment
Manager will compensate any Sub-Adviser for its services to the Portfolio. The
Investment Manager may terminate the services of any Sub- Adviser at any time in
its sole discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Portfolio's shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees,
agents and shareholders may engage in other businesses, may render investment
advisory services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
8. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of its duties as the
Investment Manager to the Fund, the Investment Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder

<PAGE>

or for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
9. This Agreement shall be executed and become effective as of the
date written below if approved by the vote of a majority of the outstanding
voting securities of the Portfolio. It shall continue in effect for a period of
two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Directors
or by the vote of a majority of the outstanding voting securities of the
Portfolio and only if the terms and the renewal hereof have been approved by the
vote of a majority of the Directors of the Fund who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Fund at any time, without the payment of a
penalty, on sixty days' written notice to the Investment Manager of the Fund's
intention to do so, pursuant to action by the Board of Directors of the Fund or
pursuant to the vote of a majority of the outstanding voting securities of the
Portfolio. The Investment Manager may terminate this Agreement at any time,
without the payment of a penalty, on sixty days' written notice to the Fund of
its intention to do so. Upon termination of this Agreement, the obligations of
all the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this Agreement
committed prior to such termination, and except for the obligation of the Fund
to pay to the Investment Manager the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the Investment Company Act of
1940.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused their corporate
seals to be affixed and duly attested and their presents to be signed by their
duly authorized officers as of the 4th day of May, 1996.

Attest: DELAWARE ADVISER FUNDS, INC. for the
ENTERPRISE FUND

_________________________________ By:_____________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

_________________________________ By:_____________________________________

DELAWARE GROUP ADVISER FUNDS, INC.
U.S. GROWTH FUND
INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP ADVISER FUNDS, INC.,
Maryland corporation ("Fund") on behalf of the U.S. GROWTH FUND (Portfolio"),
and DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation ("Investment
Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and is currently
comprised of six portfolios, including the Portfolio; as a separate series of
the Fund, each portfolio engages in the business of investing and reinvesting
its assets in securities, and further
WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and further
WHEREAS, the Board of Directors of the Fund approved a restructuring
("Restructuring") of the Fund and each of its portfolios for the purpose of
integrating the Fund into the Delaware Group of Funds; and further
WHEREAS, as part of the Restructuring, the names of the Fund and the
Portfolio were changed from the Lincoln Advisor Funds, Inc. and Lincoln U.S.
Growth Portfolio to, respectively, Delaware Group Adviser Funds, Inc. and U.S.
Growth Fund; and the Investment Manager was selected to replace Lincoln

<PAGE>

Investment Management, Inc. (formerly Lincoln National Investment Management
Company), which served as investment manager for the Portfolio under an
Investment Advisory Agreement dated as of the 25th of October, 1993; and further
WHEREAS, in connection with the changes in investment manager, the
Fund on behalf of the Portfolio and the Investment Manager desire to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Portfolio's assets and to administer its
affairs, subject to the direction of the Fund's Board of Directors and officers
of the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such period
to render the services and assume the obligations herein set forth for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Fund in any way, or in any way be deemed an agent of the Fund. The Investment
Manager shall regularly make decisions as to what securities and other
instruments to purchase and sell on behalf of the Portfolio and shall effect the
purchase and sale of such investments in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding the Portfolio's investments as the
Investment Manager deems appropriate or as the Directors of the Fund may
reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of

<PAGE>

shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees. Directors, officers and employees of the Investment Manager
may be directors, officers and employees of any of the funds (including the
Fund) of which Delaware Management Company, Inc. is investment manager.
Directors, officers and employees of the Investment Manager who are directors,
officers and/or employees of these funds shall not receive any compensation
from the funds for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Fund and Investment Manager may share
facilities common to each, with appropriate proration of expenses between them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for which
the Investment Manager or any such Sub-Adviser provides investment advisory
services and/or with broker/dealers who sell shares of the Fund or who sell
shares of any other fund for which the Investment Manager or any such
Sub-Adviser provides investment advisory services. Broker/dealers who sell
shares of the funds of which Delaware Management Company, Inc. is investment
manager, shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance with
the Rules of the Securities and Exchange Commission and the National Association
of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund and
the Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where the Fund and the

<PAGE>

Investment Manager have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities
with respect to the Fund and to other funds and other advisory accounts for
which the Investment Manager or any Sub-Adviser, as defined in Paragraph 5
hereof, exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Portfolio's assets, a fee (at an annual
rate) equal to .70% of the average daily net assets of the Portfolio during the
month.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
5. The Investment Manager may, at its expense, select and contract
with one or more investment advisers registered under the Investment Advisers
Act of 1940 (the "Sub-Adviser") to perform some or all of the services for the
Portfolio for which it is responsible under this Agreement. The Investment
Manager will compensate any Sub-Adviser for its services to the Portfolio. The
Investment Manager may terminate the services of any Sub-Adviser at any time in
its sole discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Portfolio's shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

<PAGE>

7. The Investment Manager, its directors, officers, employees, agents
and shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
8. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of its duties as the
Investment Manager to the Fund, the Investment Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
9. This Agreement shall be executed and become effective as of the
date written below if approved by the vote of a majority of the outstanding
voting securities of the Portfolio. It shall continue in effect for a period of
two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Directors
or by the vote of a majority of the outstanding voting securities of the
Portfolio and only if the terms and the renewal hereof have been approved by the
vote of a majority of the Directors of the Fund who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Fund at any time, without the payment of a
penalty, on sixty days' written notice to the Investment Manager of the Fund's
intention to do so, pursuant to action by the Board of Directors of the Fund or
pursuant to the vote of a majority of the outstanding voting securities of the
Portfolio. The Investment Manager may terminate this Agreement at any time,
without the payment of a penalty, on sixty days' written notice to the Fund of
its intention to do so. Upon termination of this Agreement, the obligations of
all the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this Agreement
committed prior to such termination, and except for the obligation of the

<PAGE>

Fund to pay to the Investment Manager the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.

<PAGE>

Attest: DELAWARE ADVISER FUNDS, INC. for the
U.S. GROWTH FUND

__________________________________ By:_____________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

__________________________________ By:_____________________________________

DELAWARE GROUP ADVISER FUNDS, INC.
WORLD GROWTH FUND
INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP ADVISER FUNDS, INC.,
Maryland corporation ("Fund") on behalf of the WORLD GROWTH FUND (Portfolio"),
and DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation ("Investment
Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and is currently
comprised of six portfolios, including the Portfolio; as a separate series of
the Fund, each portfolio engages in the business of investing and reinvesting
its assets in securities, and further
WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and further
WHEREAS, the Board of Directors of the Fund approved a restructuring
("Restructuring") of the Fund and each of its portfolios for the purpose of
integrating the Fund into the Delaware Group of Funds; and further
WHEREAS, as part of the Restructuring, the names of the Fund and the
Portfolio were changed from the Lincoln Advisor Funds, Inc. and Lincoln World
Growth Portfolio to, respectively, Delaware Group Adviser Funds, Inc. and World
Growth Fund; and the Investment Manager was selected to replace Lincoln

<PAGE>

Investment Manager have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities
with respect to the Fund and to other funds and other advisory accounts for
which the Investment Manager or any Sub-Adviser, as defined in Paragraph 5
hereof, exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Portfolio's assets, a fee (at an annual
rate) equal to 1.10% of the average daily net assets of the Portfolio during the
month.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
5. The Investment Manager may, at its expense, select and contract
with one or more investment advisers registered under the Investment Advisers
Act of 1940 (the "Sub-Adviser") to perform some or all of the services for the
Portfolio for which it is responsible under this Agreement. The Investment
Manager will compensate any Sub-Adviser for its services to the Portfolio. The
Investment Manager may terminate the services of any Sub-Adviser at any time in
its sole discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Portfolio's shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

<PAGE>

to pay to the Investment Manager the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.

<PAGE>

Attest: DELAWARE ADVISER FUNDS, INC. for the
WORLD GROWTH FUND

__________________________________ By:______________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

__________________________________ By:______________________________________

DELAWARE GROUP ADVISER FUNDS, INC.
NEW PACIFIC FUND
INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP ADVISER FUNDS, INC.,
Maryland corporation ("Fund") on behalf of the NEW PACIFIC FUND (Portfolio"),
and DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation ("Investment
Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and is currently
comprised of six portfolios, including the Portfolio; as a separate series of
the Fund, each portfolio engages in the business of investing and reinvesting
its assets in securities, and further
WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and further
WHEREAS, the Board of Directors of the Fund approved a restructuring
("Restructuring") of the Fund and each of its portfolios for the purpose of
integrating the Fund into the Delaware Group of Funds; and further
WHEREAS, as part of the Restructuring, the names of the Fund and the
Portfolio were changed from the Lincoln Advisor Funds, Inc. and Lincoln New
Pacific Portfolio to, respectively, Delaware Group Adviser Funds, Inc. and New
Pacific Fund; and the Investment Manager was selected to replace Lincoln

<PAGE>

Investment Manager have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities
with respect to the Fund and to other funds and other advisory accounts for
which the Investment Manager or any Sub-Adviser, as defined in Paragraph 5
hereof, exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Portfolio's assets, a fee (at an annual
rate) equal to .80% of the average daily net assets of the Portfolio during the
month.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
5. The Investment Manager may, at its expense, select and contract
with one or more investment advisers registered under the Investment Advisers
Act of 1940 (the "Sub-Adviser") to perform some or all of the services for the
Portfolio for which it is responsible under this Agreement. The Investment
Manager will compensate any Sub-Adviser for its services to the Portfolio. The
Investment Manager may terminate the services of any Sub-Adviser at any time in
its sole discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Portfolio's shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

<PAGE>

Attest: DELAWARE ADVISER FUNDS, INC. for the
NEW PACIFIC FUND

__________________________________ By:______________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

__________________________________ By:______________________________________

DELAWARE GROUP ADVISER FUNDS, INC.
FEDERAL BOND FUND
INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP ADVISER FUNDS, INC.,
Maryland corporation ("Fund") on behalf of the FEDERAL BOND FUND (Portfolio"),
and DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation ("Investment
Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and is currently
comprised of six portfolios, including the Portfolio; as a separate series of
the Fund, each portfolio engages in the business of investing and reinvesting
its assets in securities, and further
WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and further
WHEREAS, the Board of Directors of the Fund approved a restructuring
("Restructuring") of the Fund and each of its portfolios for the purpose of
integrating the Fund into the Delaware Group of Funds; and further
WHEREAS, as part of the Restructuring, the names of the Fund and the
Portfolio were changed from the Lincoln Advisor Funds, Inc. and Lincoln
Government Income Portfolio to, respectively, Delaware Group Adviser Funds, Inc.
and Federal Bond Fund; and the Investment Manager was selected to replace

<PAGE>

Lincoln Investment Management, Inc. (formerly Lincoln National Investment
Management Company), which served as investment manager for the Portfolio under
an Investment Advisory Agreement dated as of the 25th of October, 1993; and
further
WHEREAS, in connection with the changes in investment manager, the
Fund on behalf of the Portfolio and the Investment Manager desire to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Portfolio's assets and to administer its
affairs, subject to the direction of the Fund's Board of Directors and officers
of the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such period
to render the services and assume the obligations herein set forth for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Fund in any way, or in any way be deemed an agent of the Fund. The Investment
Manager shall regularly make decisions as to what securities and other
instruments to purchase and sell on behalf of the Portfolio and shall effect the
purchase and sale of such investments in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding the Portfolio's investments as the
Investment Manager deems appropriate or as the Directors of the Fund may
reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of

<PAGE>

shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes; and federal and state
registration fees. Directors, officers and employees of the Investment Manager
may be directors, officers and employees of any of the funds (including the
Fund) of which Delaware Management Company, Inc. is investment manager.
Directors, officers and employees of the Investment Manager who are
directors, officers and/or employees of these funds shall not receive any
compensation from the funds for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Fund and Investment Manager may share
facilities common to each, with appropriate proration of expenses between them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for which
the Investment Manager or any such Sub-Adviser provides investment advisory
services and/or with broker/dealers who sell shares of the Fund or who sell
shares of any other fund for which the Investment Manager or any such
Sub-Adviser provides investment advisory services. Broker/dealers who sell
shares of the funds of which Delaware Management Company, Inc. is investment
manager, shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance with
the Rules of the Securities and Exchange Commission and the National Association
of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund and
the Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where the Fund and the

<PAGE>

Investment Manager have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities
with respect to the Fund and to other funds and other advisory accounts for
which the Investment Manager or any Sub-Adviser, as defined in Paragraph 5
hereof, exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Portfolio's assets, a fee (at an annual
rate) equal to .30% of the average daily net assets of the Portfolio during the
month.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
5. The Investment Manager may, at its expense, select and contract
with one or more investment advisers registered under the Investment Advisers
Act of 1940 (the "Sub-Adviser") to perform some or all of the services for the
Portfolio for which it is responsible under this Agreement. The Investment
Manager will compensate any Sub-Adviser for its services to the Portfolio. The
Investment Manager may terminate the services of any Sub-Adviser at any time in
its sole discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Portfolio's shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

<PAGE>

Attest: DELAWARE ADVISER FUNDS, INC. for the
FEDERAL BOND FUND

____________________________________ By:_____________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

____________________________________ By:_____________________________________

DELAWARE GROUP ADVISER FUNDS, INC.
CORPORATE INCOME FUND
INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT, made by and between DELAWARE GROUP ADVISER FUNDS, INC.,
Maryland corporation ("Fund") on behalf of the CORPORATE INCOME FUND
(Portfolio"), and DELAWARE MANAGEMENT COMPANY, INC., a Delaware corporation
("Investment Manager").

W I T N E S S E T H:

WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and is currently
comprised of six portfolios, including the Portfolio; as a separate series of
the Fund, each portfolio engages in the business of investing and reinvesting
its assets in securities, and further
WHEREAS, the Investment Manager is a registered investment adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and further
WHEREAS, the Board of Directors of the Fund approved a restructuring
("Restructuring") of the Fund and each of its portfolios for the purpose of
integrating the Fund into the Delaware Group of Funds; and further
WHEREAS, as part of the Restructuring, the names of the Fund and the
Portfolio were changed from the Lincoln Advisor Funds, Inc. and Lincoln
Corporate Income Portfolio to, respectively, Delaware Group Adviser Funds, Inc.
and Corporate Income Fund; and the Investment Manager was selected to

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replace Lincoln Investment Management, Inc. (formerly Lincoln National
Investment Management Company), which served as investment manager for the
Portfolio under an Investment Advisory Agreement dated as of the 25th of
October, 1993; and further
WHEREAS, in connection with the changes in investment manager, the
Fund on behalf of the Portfolio and the Investment Manager desire to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Portfolio's assets and to administer its
affairs, subject to the direction of the Fund's Board of Directors and officers
of the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such period
to render the services and assume the obligations herein set forth for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Fund in any way, or in any way be deemed an agent of the Fund. The Investment
Manager shall regularly make decisions as to what securities and other
instruments to purchase and sell on behalf of the Portfolio and shall effect the
purchase and sale of such investments in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding the Portfolio's investments as the
Investment Manager deems appropriate or as the Directors of the Fund may
reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of

<PAGE>

Investment Manager have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds and other advisory accounts for which the
Investment Manager or any Sub-Adviser, as defined in Paragraph 5 hereof,
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall pay to
the Investment Manager monthly from the Portfolio's assets, a fee (at an annual
rate) equal to .30% of the average daily net assets of the Portfolio during the
month.
If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
5. The Investment Manager may, at its expense, select and contract
with one or more investment advisers registered under the Investment Advisers
Act of 1940 (the "Sub-Adviser") to perform some or all of the services for the
Portfolio for which it is responsible under this Agreement. The Investment
Manager will compensate any Sub-Adviser for its services to the Portfolio. The
Investment Manager may terminate the services of any Sub-Adviser at any time in
its sole discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Portfolio's shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.

<PAGE>

Attest: DELAWARE ADVISER FUNDS, INC. for the
CORPORATE INCOME FUND

__________________________________ By:_______________________________________

Attest: DELAWARE MANAGEMENT COMPANY, INC.

__________________________________ By:_______________________________________

DELAWARE GROUP ADVISER FUNDS, INC.

SUB-ADVISORY AGREEMENT

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

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP ADVISER FUNDS, INC., a Maryland corporation
("Fund"), on behalf of the Enterprise Fund ("Portfolio"), has been organized and
operates as an investment company registered under the Investment Company Act of
1940 ("1940 Act") and engages in the business of investing and reinvesting its
assets in securities, and
WHEREAS, the Investment Manager and the Fund have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Portfolio; and

<PAGE>

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

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

<PAGE>

In the conduct of the respective business of the parties hereto and
in the performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Sub-Adviser will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information and
services to the Fund, to the Investment Manager, to the Sub- Adviser or to any
other fund for which the Investment Manager or Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or who
sell shares of any other fund for which the Investment Manager or Sub-Adviser
provides investment advisory services. Broker/dealers who sell shares of the
funds for which the Investment Manager or Sub-Adviser provides advisory services
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to the policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Sub-Adviser may ask the Fund and the
Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Sub- Adviser
have determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or the Sub-Adviser's overall responsibilities with respect to the Fund and to

<PAGE>

other funds and other advisory accounts for which the Investment Manager or the
Sub-Adviser exercises investment discretion.
4. The Sub-Adviser shall maintain all books and records with respect
to the Portfolio's portfolio transactions required by subparagraphs (b) (5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act
and shall render to the Fund's Board of Directors such periodic and special
reports as the Board may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records required
to be maintained by the Sub-Adviser pursuant to this Paragraph 4 and shall
timely furnish to the Investment Manager all information relating to the
Sub-Adviser's services hereunder needed by the Investment Manager to keep the
other books and records of the Portfolio required by Rule 31a-1 under the 1940
Act. The Sub-Adviser agrees that all records which it maintains for the
Portfolio are the property of the Fund and the Sub-Adviser will surrender
promptly to the Fund any of such records upon the Fund's request, provided
however that the Sub-Adviser may retain a copy of such records. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Securities and Exchange Commission under the 1940 Act any such records as are
required to be maintained by it pursuant to this Paragraph 4.
5. As compensation for the services to be rendered to the Fund for
the benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a fee at an
annual rate of .50% of the average daily net assets on the first $150 million of
the Portfolio, and .35% of the average daily net assets over $150 million of the
Portfolio. The fee shall be computed daily and will be paid to the Sub-Adviser,
quarterly, in arrears.

<PAGE>

If this Agreement is terminated prior to the end of any calendar
month, the Sub-Advisory fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment management (or similar services) to
another registered investment company (or portfolio thereof) which the
Investment Manager reasonably determines would be in competition with and which
has investment policies similar to those of the Portfolio.
7. The Investment Manager agrees that it shall not use the
Sub-Adviser's name or otherwise refer to the Sub-Adviser in any materials
distributed to third parties, including the Portfolio's shareholders, without
the prior written consent of the Sub- Adviser.
8. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of its duties as
Sub-Adviser to the Fund, the Sub-Adviser shall not be subject to liability to
the Fund, to the Investment Manager or to any shareholder of the Fund for any
action or omission in the course of, or connected with, rendering services

<PAGE>

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

<PAGE>

10. This Agreement shall extend to and bind the successors of the
parties hereto. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. This Agreement shall become effective
when one or more counterparts have been signed and delivered by each of the
parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused their corporate
seals to be affixed and duly attested and their presents to be signed by their
duly authorized officers as of the 4th day of May, 1996.

DELAWARE MANAGEMENT COMPANY, INC.

By: ____________________________________________________

Attest:____________________________________________________

LYNCH & MAYER, INC.

By: ____________________________________________________

Attest:____________________________________________________

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

DELAWARE GROUP ADVISER FUNDS, INC.
on behalf of the Enterprise Fund

By: ___________________________________

Attest:___________________________________

DELAWARE GROUP ADVISER FUNDS, INC.

SUB-ADVISORY AGREEMENT

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

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP ADVISER FUNDS, INC., a Maryland corporation
("Fund"), on behalf of the U.S. Growth Fund ("Portfolio"), has been organized
and operates as an investment company registered under the Investment Company
Act of 1940 ("1940 Act") and engages in the business of investing and
reinvesting its assets in securities, and
WHEREAS, the Investment Manager and the Fund have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Portfolio; and
WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Portfolio;
and

<PAGE>

WHEREAS, the Investment Manager and the Sub-Adviser are registered
investment advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Investment Manager hereby employs the Sub- Adviser to manage
the investment and reinvestment of the Portfolio's assets, subject to the
direction of the Fund's Board of Directors and officers of the Fund for the
period and on the terms hereinafter set forth. The Sub-Adviser hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or represent the Fund in any way, or in any way be
deemed an agent of the Fund. The Sub-Adviser shall regularly make decisions as
to what securities and other instruments to purchase and sell on behalf of the
Portfolio, shall effect the purchase and sale of such investments, as agent of
the Fund on behalf of the Portfolio, in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding its activities as the Investment
Manager deems appropriate or as the Directors of the Fund may reasonably request
consistent with the provisions of Section 15(c) of the 1940 Act.
In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Articles of
Incorporation, By-Laws and Prospectus of the Fund and with the instructions and
directions of the Investment Manager and of the Board of Directors of the Fund

<PAGE>

and will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 and all other applicable federal and state laws
and regulations.
2. Under the terms of the Investment Management Agreement, the Fund
shall conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of stock,
including issuance and repurchase of shares; preparation of share certificates;
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian fees;
legal and accounting fees; taxes; and federal and state registration fees.
Directors, officers and employees of the Sub-Adviser may be
directors, officers and employees of other funds which have employed the
Sub-Adviser as sub-adviser or investment manager.
In the conduct of the respective business of the parties hereto and
in the performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Sub-Adviser will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information and
services to the Fund, to the Investment Manager, to the Sub- Adviser or to any
other fund for which the Investment Manager or Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or who
sell shares of any other fund for which the Investment Manager or Sub-Adviser
provides investment advisory services. Broker/dealers who sell shares of the

<PAGE>

funds for which the Investment Manager or Sub-Adviser provides advisory services
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to the policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Sub-Adviser may ask the Fund and the
Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Sub- Adviser
have determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or the Sub-Adviser's overall responsibilities with respect to the Fund and to
other funds and other advisory accounts for which the Investment Manager or the
Sub-Adviser exercises investment discretion.
4. The Sub-Adviser shall maintain all books and records with respect
to the Portfolio's portfolio transactions required by subparagraphs (b) (5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act
and shall render to the Fund's Board of Directors such periodic and special
reports as the Board may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records required
to be maintained by the Sub-Adviser pursuant to this Paragraph 4 and shall
timely furnish to the Investment Manager all information relating to the
Sub-Adviser's services hereunder needed by the Investment Manager to keep the
other books and records of the Portfolio required by Rule 31a-1 under the 1940

<PAGE>

Act. The Sub-Adviser agrees that all records which it maintains for the
Portfolio are the property of the Fund and the Sub-Adviser will surrender
promptly to the Fund any of such records upon the Fund's request, provided
however that the Sub-Adviser may retain a copy of such records. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Securities and Exchange Commission under the 1940 Act any such records as are
required to be maintained by it pursuant to this Paragraph 4.
5. As compensation for the services to be rendered to the Fund for
the benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a fee at an
annual rate of .40% of the average daily net assets of the Portfolio. The fee
shall be computed daily and will be paid to the Sub-Adviser, quarterly, in
arrears.
If this Agreement is terminated prior to the end of any calendar
month, the Sub-Advisory fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment management (or similar services) to

<PAGE>

another registered investment company (or portfolio thereof) which the
Investment Manager reasonably determines would be in competition with and which
has investment policies similar to those of the Portfolio.
7. The Investment Manager agrees that it shall not use the
Sub-Adviser's name or otherwise refer to the Sub-Adviser in any materials
distributed to third parties, including the Portfolio's shareholders, without
the prior written consent of the Sub-Adviser.
8. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of its duties as
Sub-Adviser to the Fund, the Sub-Adviser shall not be subject to liability to
the Fund, to the Investment Manager or to any shareholder of the Fund for any
action or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security, or otherwise.
9. This Agreement shall be executed and become effective as of the
date written below if approved by the vote of a majority of the outstanding
voting securities of the Portfolio. It shall continue in effect for a period of
two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Directors
or by the vote of a majority of the outstanding voting securities of the
Portfolio and only if the terms and the renewal hereof have been approved by the
vote of a majority of the Directors of the Fund who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this

<PAGE>

Agreement may be terminated by the Investment Manager or the Fund at any time,
without the payment of a penalty, on sixty days' written notice to the
Sub-Adviser, of the Investment Manager's or the Fund's intention to do so, in
the case of the Fund, pursuant to action by the Board of Directors of the Fund
or pursuant to the vote of a majority of the outstanding voting securities of
the Portfolio. The Sub-Adviser may terminate this Agreement at any time, without
the payment of a penalty on sixty days' written notice to the Investment Manager
and the Fund of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach of
this Agreement committed prior to such termination, and except for the
obligation of the Investment Manager to pay to the Sub- Adviser the fee provided
in Paragraph 5 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment. This
Agreement shall automatically terminate upon the termination of the Investment
Management Agreement.
10. This Agreement shall extend to and bind the successors of the
parties hereto. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. This Agreement shall become effective
when one or more counterparts have been signed and delivered by each of the
parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.

<PAGE>

DELAWARE MANAGEMENT COMPANY, INC.

By: ____________________________________________________

Attest:____________________________________________________

LYNCH & MAYER, INC.

By: ____________________________________________________

Attest:____________________________________________________

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

DELAWARE GROUP ADVISER FUNDS, INC.
on behalf of the U.S. Growth Fund

By: ___________________________________

Attest:___________________________________

DELAWARE GROUP ADVISER FUNDS, INC.

SUB-ADVISORY AGREEMENT

AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and WALTER SCOTT & PARTNERS, LTD.,
an entity organized under the laws of Scotland ("Sub- Adviser").

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP ADVISER FUNDS, INC., a Maryland corporation
("Fund"), on behalf of the World Growth Fund ("Portfolio"), has been organized
and operates as an investment company registered under the Investment Company
Act of 1940 ("1940 Act") and engages in the business of investing and
reinvesting its assets in securities, and
WHEREAS, the Investment Manager and the Fund have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Portfolio; and
WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Portfolio;
and

<PAGE>

WHEREAS, the Investment Manager and the Sub-Adviser are registered
investment advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services; and
WHEREAS, the Sub-Adviser is also regulated in the conduct of its
investment business by the Investment Management Regulatory Organization under
whose rules the Investment Manager is a "non-private customer".
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Investment Manager hereby employs the Sub- Adviser to manage
the investment and reinvestment of the Portfolio's assets, subject to the
direction of the Fund's Board of Directors and officers of the Fund for the
period and on the terms hereinafter set forth. The Sub-Adviser hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or represent the Fund in any way, or in any way be
deemed an agent of the Fund. The Sub-Adviser shall regularly make decisions as
to what securities and other instruments to purchase and sell on behalf of the
Portfolio, shall effect the purchase and sale of such investments, as agent for
the Fund on behalf of the Portfolio, in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding its activities as the Investment
Manager deems appropriate or as the Directors of the Fund may reasonably request
consistent with the provisions of Section 15(c) of the 1940 Act.

<PAGE>

In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Articles of
Incorporation, By-Laws and Prospectus of the Fund and with the instructions and
directions of the Investment Manager and of the Board of Directors of the Fund
and will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 and all other applicable federal and state laws
and regulations.
2. Under the terms of the Investment Management Agreement, the Fund
shall conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of stock,
including issuance and repurchase of shares; preparation of share certificates;
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian fees;
legal and accounting fees; taxes; and federal and state registration fees.
Directors, officers and employees of the Sub-Adviser may be
directors, officers and employees of other funds which have employed the
Sub-Adviser as sub-adviser or investment manager.
In the conduct of the respective business of the parties hereto and
in the performance of this Agreement, the Fund, the Investment Manager and the
Sub- Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Sub-Adviser will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information and
services to the Fund, to the Investment Manager, to the Sub-Adviser or to any

<PAGE>

other fund for which the Investment Manager or Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the fund or who
sell shares of any other fund for which the Investment Manager or Sub-Adviser
provides investment advisory services. Broker/dealers who sell shares of the
funds for which the Investment Manager or Sub-Adviser provides advisory services
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to the policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Sub-Adviser may ask the Fund and the
Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Sub- Adviser
have determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or the Sub-Adviser's overall responsibilities with respect to the Fund and to
other funds and other advisory accounts for which the Investment Manager or the
Sub-Adviser exercises investment discretion.
4. The Sub-Adviser shall maintain all books and records with respect
to the Portfolio's portfolio transactions required by subparagraphs (b) (5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act
and shall render to the Fund's Board of Directors such periodic and special
reports as the Board may reasonably request.

<PAGE>

The Sub-Adviser shall keep the Portfolio's books and records required
to be maintained by the Sub-Adviser pursuant to this Paragraph 4 and shall
timely furnish to the Investment Manager all information relating to the
Sub-Adviser's services hereunder needed by the Investment Manager to keep the
other books and records of the Portfolio required by Rule 31a-1 under the 1940
Act. The Sub-Adviser agrees that all records which it maintains for the
Portfolio are the property of the Fund and the Sub-Adviser will surrender
promptly to the Fund any of such records upon the Fund's request, provided
however that the Sub-Adviser may retain a copy of such records. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Securities and Exchange Commission under the 1940 Act any such records as are
required to be maintained by it pursuant to this Paragraph 4.
5. As compensation for the services to be rendered to the Fund for
the benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a fee at an
annual rate of .80% of the average daily net assets of the Portfolio. The fee
shall be computed daily and will be paid to the Sub-Adviser, quarterly, in
arrears.
If this Agreement is terminated prior to the end of any calendar
month, the Sub-Advisory fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services

<PAGE>

provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment management (or similar services) to
another registered investment company (or portfolio thereof) which the
Investment Manager reasonably determines would be in competition with and which
has investment policies similar to those of the Portfolio.
7. The Investment Manager agrees that it shall not use the
Sub-Adviser's name or otherwise refer to the Sub-Adviser in any materials
distributed to third parties, including the Portfolio's shareholders, without
the prior written consent of the Sub- Adviser.
8. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of its duties as
Sub-Adviser to the Fund, the Sub-Adviser shall not be subject to liability to
the Fund, to the Investment Manager or to any shareholder of the Fund for any
action or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security, or otherwise.
9. This Agreement shall be executed and become effective as of the
date written below if approved by the vote of a majority of the outstanding
voting securities of the Portfolio. It shall continue in effect for a period of
two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Directors
or by the vote of a majority of the outstanding voting securities of the
Portfolio and only if the terms and the renewal hereof have been approved by the
vote of a majority of the Directors of the Fund who are not parties hereto or

<PAGE>

interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Investment Manager or the Fund at any time,
without the payment of a penalty, on sixty days' written notice to the
Sub-Adviser, of the Investment Manager's or the Fund's intention to do so, in
the case of the Fund, pursuant to action by the Board of Directors of the Fund
or pursuant to the vote of a majority of the outstanding voting securities of
the Portfolio. The Sub-Adviser may terminate this Agreement at any time, without
the payment of a penalty on sixty days' written notice to the Investment Manager
and the Fund of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach of
this Agreement committed prior to such termination, and except for the
obligation of the Investment Manager to pay to the Sub- Adviser the fee provided
in Paragraph 5 hereof, prorated to the date of termination. This Agreement
shall automatically terminate in the event of its assignment. This Agreement
shall automatically terminate upon the termination of the Investment
Management Agreement.
10. If the Investment Manager has any complaint about the way in
which the Sub-Adviser has carried out its obligations under this Agreement, the
matter should be raised in the first instance with the Sub-Adviser's compliance
officer, who will arrange to investigate the complaint and respond with his
findings. The Investment Manager also has the right to complain directly to the
Investment Ombudsman at 6 Frederick's Place, London EC2R 8BT.
11. This Agreement shall extend to and bind the successors of the
parties hereto.

<PAGE>

This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original. This Agreement shall become effective when
one or more counterparts have been signed and delivered by each of the parties
hereto.
12. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.

<PAGE>

DELAWARE MANAGEMENT COMPANY, INC.

By: ____________________________________________________

Attest:____________________________________________________

WALTER SCOTT & PARTNERS, LTD.

By: ____________________________________________________

Attest:____________________________________________________

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

DELAWARE GROUP ADVISER FUNDS, INC.
on behalf of the World Growth Fund

By: ___________________________________

Attest:___________________________________

DELAWARE GROUP ADVISER FUNDS, INC.

SUB-ADVISORY AGREEMENT

AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and JOHN GOVETT & COMPANY LIMITED,
an entity organized under the laws of England ("Sub- Adviser").

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP ADVISER FUNDS, INC., a Maryland corporation
("Fund"), on behalf of the New Pacific Fund ("Portfolio"), has been organized
and operates as an investment company registered under the Investment Company
Act of 1940 ("1940 Act") and engages in the business of investing and
reinvesting its assets in securities, and
WHEREAS, the Investment Manager and the Fund have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Portfolio; and

<PAGE>

WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Portfolio;
and
WHEREAS, the Investment Manager and the Sub-Adviser are registered
investment advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services; and
WHEREAS, the Sub-Adviser is also regulated in the conduct of its
investment business by the Investment Management Regulatory Organization, under
whose rules the Investment Manager is a "non-private customer".
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Investment Manager hereby employs the Sub- Adviser to manage
the investment and reinvestment of the Portfolio's assets, subject to the
direction of the Fund's Board of Directors and officers of the Fund for the
period and on the terms hereinafter set forth. The Sub-Adviser hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or represent the Fund in any way, or in any way be
deemed an agent of the Fund. The Sub-Adviser shall regularly make decisions as
to what securities and other instruments to purchase and sell on behalf of the
Portfolio, shall effect the purchase and sale of such investments, as agent for
the Fund on behalf of the Portfolio, in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding its activities as the Investment
Manager deems appropriate or as the Directors of the Fund may reasonably request
consistent with the provisions of Section 15(c) of the 1940 Act.

<PAGE>

purchase and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information and
services to the Fund, to the Investment Manager, to the Sub- Adviser or to any
other fund for which the Investment Manager or Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or who
sell shares of any other fund for which the Investment Manager or Sub-Adviser
provides investment advisory services. Broker/dealers who sell shares of the
funds for which the Investment Manager or Sub-Adviser provides advisory services
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to the policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Sub-Adviser may ask the Fund and the
Fund may agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it and the Sub- Adviser
have determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or the Sub-Adviser's overall responsibilities with respect to the Fund and to
other funds and other advisory accounts for which the Investment Manager or the
Sub-Adviser exercises investment discretion.
4. The Sub-Adviser shall maintain all books and records with respect
to the Portfolio's portfolio transactions required by subparagraphs (b) (5),

<PAGE>

(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act
and shall render to the Fund's Board of Directors such periodic and special
reports as the Board may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records required
to be maintained by the Sub-Adviser pursuant to this Paragraph 4 and shall
timely furnish to the Investment Manager all information relating to the
Sub-Adviser's services hereunder needed by the Investment Manager to keep the
other books and records of the Portfolio required by Rule 31a-1 under the 1940
Act. The Sub-Adviser agrees that all records which it maintains for the
Portfolio are the property of the Fund and the Sub-Adviser will surrender
promptly to the Fund any of such records upon the Fund's request, provided
however that the Sub-Adviser may retain a copy of such records. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Securities and Exchange Commission under the 1940 Act any such records as are
required to be maintained by it pursuant to this Paragraph 4.
5. As compensation for the services to be rendered to the Fund for
the benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a fee at an
annual rate of .50% of the average daily net assets of the Portfolio. The fee
shall be computed daily and will be paid to the Sub-Adviser, quarterly, in
arrears.
If this Agreement is terminated prior to the end of any calendar
month, the Sub-Advisory fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.

<PAGE>

6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment management (or similar services) to
another registered investment company (or portfolio thereof) which the
Investment Manager reasonably determines would be in competition with and which
has investment policies similar to those of the Portfolio.
7. The Investment Manager agrees that it shall not use the
Sub-Adviser's name or otherwise refer to the Sub-Adviser in any materials
distributed to third parties, including the Portfolio's shareholders, without
the prior written consent of the Sub- Adviser.
8. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of its duties as
Sub-Adviser to the Fund, the Sub-Adviser shall not be subject to liability to
the Fund, to the Investment Manager or to any shareholder of the Fund for any
action or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security, or otherwise.
9. This Agreement shall be executed and become effective as of the
date written below if approved by the vote of a majority of the outstanding
voting securities of the Portfolio. It shall continue in effect for a period of
two years and may be renewed thereafter only so long as such renewal and

<PAGE>

continuance is specifically approved at least annually by the Board of Directors
or by the vote of a majority of the outstanding voting securities of the
Portfolio and only if the terms and the renewal hereof have been approved by the
vote of a majority of the Directors of the Fund who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Investment Manager or the Fund at any time,
without the payment of a penalty, on sixty days' written notice to the
Sub-Adviser, of the Investment Manager's or the Fund's intention to do so, in
the case of the Fund, pursuant to action by the Board of Directors of the Fund
or pursuant to the vote of a majority of the outstanding voting securities of
the Portfolio. The Sub-Adviser may terminate this Agreement at any time, without
the payment of a penalty on sixty days' written notice to the Investment Manager
and the Fund of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach of
this Agreement committed prior to such termination, and except for the
obligation of the Investment Manager to pay to the Sub- Adviser the fee provided
in Paragraph 5 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment. This
Agreement shall automatically terminate upon the termination of the Investment
Management Agreement.
10. If the Investment Manager has any complaint about the way in
which the Sub-Adviser has carried out its obligations under this Agreement, the
matter should be raised in the first instance with the Sub-Adviser's compliance
officer, who will arrange to investigate the complaint and respond with his
findings. The Investment Manager also has the right to complain directly to the
Investment Ombudsman at 6 Frederick's Place, London EC2R 8BT.

<PAGE>

11. This Agreement shall extend to and bind the successors of the
parties hereto. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. This Agreement shall become effective
when one or more counterparts have been signed and delivered by each of the
parties hereto.
12. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.

<PAGE>

DELAWARE MANAGEMENT COMPANY, INC.

By: ____________________________________________________

Attest:____________________________________________________

JOHN GOVETT & COMPANY LIMITED

By: ____________________________________________________

Attest:____________________________________________________

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

DELAWARE GROUP ADVISER FUNDS, INC.
on behalf of the New Pacific Fund

By: ___________________________________

Attest:___________________________________

DELAWARE GROUP ADVISER FUNDS, INC.

SUB-ADVISORY AGREEMENT

AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and LINCOLN INVESTMENT MANAGEMENT,
INC., an Illinois corporation ("Sub-Adviser").

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP ADVISER FUNDS, INC., a Maryland corporation
("Fund"), on behalf of the Federal Bond Fund ("Portfolio"), has been organized
and operates as an investment company registered under the Investment Company
Act of 1940 ("1940 Act") and engages in the business of investing and
reinvesting its assets in securities, and
WHEREAS, the Investment Manager and the Fund have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Portfolio; and
WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Portfolio;
and

<PAGE>

and will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 and all other applicable federal and state laws
and regulations.
2. Under the terms of the Investment Management Agreement, the Fund
shall conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of stock,
including issuance and repurchase of shares; preparation of share certificates;
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian fees;
legal and accounting fees; taxes; and federal and state registration fees.
Directors, officers and employees of the Sub-Adviser may be
directors, officers and employees of other funds which have employed the
Sub-Adviser as sub-adviser or investment manager.
In the conduct of the respective business of the parties hereto and
in the performance of this Agreement, the Fund, the Investment Manager and the
Sub- Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Sub-Adviser will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information and
services to the Fund, to the Investment Manager, to the Sub-Adviser or to any
other fund for which the Investment Manager or Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or who
sell shares of any other fund for which the Investment Manager or Sub-Adviser
provides investment advisory services. Broker/dealers who sell shares of the

<PAGE>

Act. The Sub-Adviser agrees that all records which it maintains for the
Portfolio are the property of the Fund and the Sub-Adviser will surrender
promptly to the Fund any of such records upon the Fund's request, provided
however that the Sub-Adviser may retain a copy of such records. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Securities and Exchange Commission under the 1940 Act any such records as are
required to be maintained by it pursuant to this Paragraph 4.
5. As compensation for the services to be rendered to the Fund for
the benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a fee at an
annual rate of .30% of the average daily net assets of the Portfolio. The fee
shall be computed daily and will be paid to the Sub-Adviser, quarterly, in
arrears.
If this Agreement is terminated prior to the end of any calendar
month, the Sub-Advisory fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment management (or similar services) to

<PAGE>

another registered investment company (or portfolio thereof) which the
Investment Manager reasonably determines would be in competition with and which
has investment policies similar to those of the Portfolio.
7. The Investment Manager agrees that it shall not use the
Sub-Adviser's name or otherwise refer to the Sub-Adviser in any materials
distributed to third parties, including the Portfolio's shareholders, without
the prior written consent of the Sub- Adviser.
8. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of its duties as
Sub-Adviser to the Fund, the Sub-Adviser shall not be subject to liability to
the Fund, to the Investment Manager or to any shareholder of the Fund for any
action or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security, or otherwise.
9. This Agreement shall be executed and become effective as of the
date written below if approved by the vote of a majority of the outstanding
voting securities of the Portfolio. It shall continue in effect for a period of
two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Directors
or by the vote of a majority of the outstanding voting securities of the
Portfolio and only if the terms and the renewal hereof have been approved by the
vote of a majority of the Directors of the Fund who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this

<PAGE>

Agreement may be terminated by the Investment Manager or the Fund at any time,
without the payment of a penalty, on sixty days' written notice to the
Sub-Adviser, of the Investment Manager's or the Fund's intention to do so, in
the case of the Fund, pursuant to action by the Board of Directors of the Fund
or pursuant to the vote of a majority of the outstanding voting securities of
the Portfolio. The Sub-Adviser may terminate this Agreement at any time, without
the payment of a penalty on sixty days' written notice to the Investment Manager
and the Fund of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach of
this Agreement committed prior to such termination, and except for the
obligation of the Investment Manager to pay to the Sub-Adviser the fee provided
in Paragraph 5 hereof, prorated to the date of termination. This Agreement
shall automatically terminate in the event of its assignment. This Agreement
shall automatically terminate upon the termination of the Investment
Management Agreement.
10. This Agreement shall extend to and bind the successors of the
parties hereto. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. This Agreement shall become effective
when one or more counterparts have been signed and delivered by each of the
parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.

<PAGE>

DELAWARE MANAGEMENT COMPANY, INC.

By: ____________________________________________________

Attest:____________________________________________________

LINCOLN INVESTMENT MANAGEMENT, INC.

By: ____________________________________________________

Attest:____________________________________________________

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

DELAWARE GROUP ADVISER FUNDS, INC.
on behalf of the Federal Bond Fund

By: ___________________________________

Attest:___________________________________

DELAWARE GROUP ADVISER FUNDS, INC.

SUB-ADVISORY AGREEMENT

AGREEMENT, made by and between DELAWARE MANAGEMENT COMPANY, INC., a
Delaware corporation ("Investment Manager"), and LINCOLN INVESTMENT MANAGEMENT,
INC., an Illinois corporation ("Sub-Adviser").

W I T N E S S E T H:

WHEREAS, DELAWARE GROUP ADVISER FUNDS, INC., a Maryland corporation
("Fund"), on behalf of the Corporate Income Fund ("Portfolio"), has been
organized and operates as an investment company registered under the Investment
Company Act of 1940 ("1940 Act") and engages in the business of investing and
reinvesting its assets in securities, and
WHEREAS, the Investment Manager and the Fund have entered into an
agreement of even date herewith ("Investment Management Agreement") whereby the
Investment Manager will provide investment advisory services to the Fund on
behalf of the Portfolio; and
WHEREAS, the Investment Management Agreement permits the Investment
Manager to hire one or more sub-advisers to assist the Investment Manager in
providing investment advisory services to the Fund on behalf of the Portfolio;
and

<PAGE>

WHEREAS, the Investment Manager and the Sub-Adviser are registered
investment advisers under the Investment Advisers Act of 1940 and engage in the
business of providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Investment Manager hereby employs the Sub-Adviser to manage
the investment and reinvestment of the Portfolio's assets, subject to the
direction of the Fund's Board of Directors and officers of the Fund for the
period and on the terms hereinafter set forth. The Sub-Adviser hereby accepts
such employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or represent the Fund in any way, or in any way be
deemed an agent of the Fund. The Sub-Adviser shall regularly make decisions as
to what securities and other instruments to purchase and sell on behalf of the
Portfolio, shall effect the purchase and sale of such investments, as agent of
the Fund on behalf of the Portfolio, in furtherance of the Portfolio's
objectives and policies and shall furnish the Board of Directors of the Fund
with such information and reports regarding its activities as the Investment
Manager deems appropriate or as the Directors of the Fund may reasonably request
consistent with the provisions of Section 15(c) of the 1940 Act.
In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Articles of
Incorporation, By-Laws and Prospectus of the Fund and with the instructions and
directions of the Investment Manager and of the Board of Directors of the Fund

<PAGE>

and will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 and all other applicable federal and state laws
and regulations.
2. Under the terms of the Investment Management Agreement, the Fund
shall conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures; dealing
with its own shareholders; the payment of dividends; transfer of stock,
including issuance and repurchase of shares; preparation of share certificates;
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian fees;
legal and accounting fees; taxes; and federal and state registration fees.
Directors, officers and employees of the Sub-Adviser may be
directors, officers and employees of other funds which have employed the
Sub-Adviser as sub- adviser or investment manager.
In the conduct of the respective business of the parties hereto and
in the performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities common to each, with appropriate proration of
expenses between and among them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Sub-Adviser will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information and
services to the Fund, to the Investment Manager, to the Sub-Adviser or to any
other fund for which the Investment Manager or Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or who
sell shares of any other fund for which the Investment Manager or Sub-Adviser
provides investment advisory services. Broker/dealers who sell shares of the

<PAGE>

Act. The Sub-Adviser agrees that all records which it maintains for the
Portfolio are the property of the Fund and the Sub-Adviser will surrender
promptly to the Fund any of such records upon the Fund's request, provided
however that the Sub-Adviser may retain a copy of such records. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Securities and Exchange Commission under the 1940 Act any such records as are
required to be maintained by it pursuant to this Paragraph 4.
5. As compensation for the services to be rendered to the Fund for
the benefit of the Portfolio by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a fee at an
annual rate of .30% of the average daily net assets of the Portfolio. The fee
shall be computed daily and will be paid to the Sub-Adviser, quarterly, in
arrears.
If this Agreement is terminated prior to the end of any calendar
month, the Sub-Advisory fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
6. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Portfolio under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby; provided, however,
except for advisory arrangements implemented prior to the date of this
Agreement, during the term of this Agreement, the Sub-Adviser, will not, without
the written consent of the Investment Manager, which consent will not be
unreasonably withheld, render investment management (or similar services) to

<PAGE>

Sub-Adviser, of the Investment Manager's or the Fund's intention to do so, in
the case of the Fund, pursuant to action by the Board of Directors of the Fund
or pursuant to the vote of a majority of the outstanding voting securities of
the Portfolio. The Sub-Adviser may terminate this Agreement at any time, without
the payment of a penalty on sixty days' written notice to the Investment Manager
and the Fund of its intention to do so. Upon termination of this Agreement, the
obligations of all the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach of
this Agreement committed prior to such termination, and except for the
obligation of the Investment Manager to pay to the Sub- Adviser the fee provided
in Paragraph 5 hereof, prorated to the date of termination. This Agreement shall
automatically terminate in the event of its assignment. This Agreement shall
automatically terminate upon the termination of the Investment Management
Agreement.
10. This Agreement shall extend to and bind the successors of the
parties hereto. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. This Agreement shall become effective
when one or more counterparts have been signed and delivered by each of the
parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", and "assignment"
shall have the meaning defined in the 1940 Act.

<PAGE>

DELAWARE MANAGEMENT COMPANY, INC.

By: ____________________________________________________

Attest:____________________________________________________

LINCOLN INVESTMENT MANAGEMENT, INC.

By: ____________________________________________________

Attest:____________________________________________________

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

DELAWARE GROUP ADVISER FUNDS, INC.
on behalf of the Corporate Income Fund

By: ___________________________________

Attest:___________________________________

GLOBAL CUSTODY AGREEMENT

This AGREEMENT is effective ___________________, 199_, and is between
THE CHASE MANHATTAN BANK, N.A. (the "Bank") and _______________________________
_______________________________________________________________________________
_____________ (the "Customer").

1. Customer Accounts.

The Bank agrees to establish and maintain the following accounts
("Accounts"):

(a) A custody account in the name of the Customer ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined in
Section 3) for the account of the Customer ("Securities"); and

(b) A deposit account in the name of the Customer ("Deposit Account") for
any and all cash in any currency received by the Bank or its Subcustodian for
the account of the Customer, which cash shall not be subject to withdrawal by
draft or check.

The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the same
class in place of those deposited in the Custody Account.

Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.

2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.

Unless Instructions specifically require another location acceptable to the
Bank:

(a) Securities will be held in the country or other jurisdiction in which
the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and

<PAGE>

(b) Cash will be credited to an account in a country or other jurisdiction
in which such cash may be legally deposited or is the legal currency for the
payment of public or private debts.

Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.

If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by the Bank and the Customer.

3. Subcustodians and Securities Depositories.

The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets in
the Accounts in accounts which the Bank has established with one or more of its
branches or Subcustodians. The Bank and Subcustodians are authorized to hold any
of the Securities in their account with any securities depository in which they
participate.

The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.

4. Use of Subcustodian.

(a) The Bank will identify the Assets on its books as belonging to the
Customer.

(b) A Subcustodian will hold such Assets together with assets belonging to
other customers of the Bank in accounts identified on such Subcustodian's books
as special custody accounts for the exclusive benefit of customers of the Bank.

(c) Any Assets in the Accounts held by a Subcustodian will be subject only
to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.

(d) Any agreement the Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.

5. Deposit Account Transactions.

(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.

<PAGE>

(b) In the event that any payment to be made under this Section 5 exceeds
the funds available in the Deposit Account, the Bank, in its discretion, may
advance the Customer such excess amount which shall be deemed a loan payable on
demand, bearing interest at the rate customarily charged by the Bank on similar
loans.

(c) If the Bank credits the Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, the Customer will
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If the Customer does not promptly return
any amount upon such notification, the Bank shall be entitled, upon oral or
written notification to the Customer, to reverse such credit by debiting the
Deposit Account for the amount previously credited. The Bank or its Subcustodian
shall have no duty or obligation to institute legal proceedings, file a claim or
a proof of claim in any insolvency proceeding or take any other action with
respect to the collection of such amount, but may act for the Customer upon
Instructions after consultation with the Customer.

6. Custody Account Transactions.

(a) Securities will be transferred, exchanged or delivered by the Bank or
its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.

(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.

(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction.

(ii) If any Securities delivered pursuant to this Section 6 are returned by
the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction at any time.

7. Actions of the Bank.

The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:

(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities.

(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.

<PAGE>

(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.

(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.

The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty (60) days of receipt, the Customer shall be deemed to
have approved such statement. In such event, or where the Customer has otherwise
approved any such statement, the Bank shall, to the extent permitted by law, be
released, relieved and discharged with respect to all matters set forth in such
statement or reasonably implied therefrom as though it had been settled by the
decree of a court of competent jurisdiction in an action where the Customer and
all persons having or claiming an interest in the Customer or the Customer's
Accounts were parties.

All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take any action under this Agreement.

8. Corporate Actions; Proxies; Tax Reclaims.

(a) Corporate Actions. Whenever the Bank receives information concerning
the Securities which requires discretionary action by the beneficial owner of
the Securities (other than a proxy), such as subscription rights, bonus issues,
stock repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), the Bank
will give the Customer notice of such Corporate Actions to the extent that the
Bank's central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.

When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received which
bears an expiration date, the Bank will endeavor to obtain Instructions from the
Customer or its Authorized Person, but if Instructions are not received in time
for the Bank to take timely action, or actual notice of such Corporate Action
was received too late to seek Instructions, the Bank is authorized to sell such
rights entitlement or fractional interest and to credit the Deposit Account with
the proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.

(b) Proxy Voting. The Bank will provide proxy voting services only pursuant
to a separate agreement. Proxy voting services may be provided by the Bank or,
in whole or in part, by one or more third parties appointed by the Bank (which
may be affiliates of the Bank).

(i) Subject to the provisions hereof, the Bank will apply for a reduction
of withholding tax and any refund of any tax paid or tax credits which apply in
each applicable market in respect of income payments on Securities for the
benefit of the Customer which the Bank believes may be available to such
Customer.

<PAGE>

(ii) The provision of tax reclaim services by the Bank is conditional upon
the Bank receiving from the beneficial owner of Securities (A) a declaration of
its identity and place of residence and (B) certain other documentation (pro
forma copies of which are available from the Bank). The Customer acknowledges
that, if the Bank does not receive such declarations, documentation and
information, additional United Kingdom taxation will be deducted from all income
received in respect of Securities issued outside the United Kingdom and that
U.S. non-resident alien tax or U.S. backup withholding tax will be deducted from
U.S. source income. The Customer shall provide to the Bank such documentation
and information as it may require in connection with taxation, and warrants
that, when given, this information shall be true and correct in every respect,
not misleading in any way, and contain all material information. The Customer
undertakes to notify the Bank immediately if any such information requires
updating or amendment.

(iii) The Bank shall not be liable to the Customer or any third party for
any tax, fines or penalties payable by the Bank or the Customer, and shall be
indemnified accordingly, whether these result from the inaccurate completion of
documents by the Customer or any third party, or as a result of the provision to
the Bank or any third party of inaccurate or misleading information or the
withholding of material information by the Customer or any other third party, or
as a result of any delay of any revenue authority or any other matter beyond the
control of the Bank.

(iv) The Customer confirms that the Bank is authorized to deduct from any
cash received or credited to the deposit account any taxes or levies required by
any revenue or governmental authority for whatever reason in respect of the
Securities or Cash Accounts.

(v) The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the
Customer from time to time and the Bank may, by notification in writing, at its
absolute discretion, supplement or amend the markets in which the tax reclaim
services are offered. Other than as expressly provided in this sub-clause, the
Bank shall have no responsibility with regard to the Customer's tax position or
status in any jurisdiction.

(vi) The Customer confirms that the Bank is authorised to disclose any
information requested by any revenue authority or any governmental body in
relation to the Customer or the Securities and/or Cash held for the Customer.

(vii) Tax reclaim services may be provided by the Bank or, in whole or in
part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank); provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would have
been if it performed such services itself.

9. Nominees.

Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.

10. Authorized Persons.

As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer under

<PAGE>

this Agreement. Such persons shall continue to be Authorized Persons until such
time as the Bank receives Instructions from the Customer or its designated agent
that any such employee or agent is no longer an Authorized Person.

11. Instructions.

The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.

Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold the
Bank harmless for the failure of an Authorized Person to send such confirmation
in writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time. The Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. The Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which the Bank shall make
available to the Customer or its Authorized Persons.

12. Standard of Care; Liabilities.

(a) The Bank shall be responsible for the performance of only such duties
as are set forth in this Agreement or expressly contained in Instructions which
are consistent with the provisions of this Agreement as follows:

(i) The Bank will use reasonable care with respect to its obligations under
this Agreement and the safekeeping of Assets. The Bank shall be liable to the
Customer for any loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the safekeeping of such
Assets to the same extent that the Bank would be liable to the Customer if the
Bank were holding such Assets in New York. In the event of any loss to the
Customer by reason of the failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the Customer only to the extent of
the Customer's direct damages, to be determined based on the market value of the
property which is the subject of the loss at the date of discovery of such loss
and without reference to any special conditions or circumstances.

(ii) The Bank will not be responsible for any act, omission, default or the
solvency of any broker or agent which it or a Subcustodian appoints unless such
appointment was made negligently or in bad faith.

(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if such act or
omission was in good faith, without negligence. In performing its obligations
under this Agreement, the Bank may rely on the genuineness of any document which
it believes in good faith to have been validly executed.

(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income from
or Assets in the Accounts.

<PAGE>

(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.

(vi) The Bank need not maintain any insurance for the benefit of the
Customer.

(vii) Without limiting the foregoing, the Bank shall not be liable for any
loss which results from: 1) the general risk of investing, or 2) investing or
holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.

(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion,
fission or radiation, or acts of God.

(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:

(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;

(ii) supervise or make recommendations with respect to investments or the
retention of Securities;

(iii) advise the Customer or an Authorized Person regarding any default in
the payment of principal or income of any security other than as provided in
Section 5(c) of this Agreement;

(iv) evaluate or report to the Customer or an Authorized Person regarding
the financial condition of any broker, agent or other party to which Securities
are delivered or payments are made pursuant to this Agreement;

(v) review or reconcile trade confirmations received from brokers. The
Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.

(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.

13. Fees and Expenses.

The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision of
this Agreement.

<PAGE>

14. Miscellaneous.

(a) Foreign Exchange Transactions. To facilitate the administration of the
Customer's trading and investment activity, the Bank is authorized to enter into
spot or forward foreign exchange contracts with the Customer or an Authorized
Person for the Customer and may also provide foreign exchange through its
subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.

(b) Certification of Residency, etc. The Customer certifies that it is a
resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.

(c) Access to Records. The Bank shall allow the Customer's independent
public accountant reasonable access to the records of the Bank relating to the
Assets as is required in connection with their examination of books and records
pertaining to the Customer's affairs. Subject to restrictions under applicable
law, the Bank shall also obtain an undertaking to permit the Customer's
independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Assets as may be required in
connection with the examination of the Customer's books and records.

(d) Governing Law; Successors and Assigns. This Agreement shall be governed
by the laws of the State of New York and shall not be assignable by either
party, but shall bind the successors in interest of the Customer and the Bank.

(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are (Check one):

___ Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");

___ Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;

___ Neither of the above.

This Agreement consists exclusively of this document together with Schedule
A, Exhibits I - _______ and the following Rider(s) [Check applicable rider(s)]:

___ ERISA

___ MUTUAL FUND

___ SPECIAL TERMS AND CONDITIONS

<PAGE>

There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.

(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.

(g) Waiver. Except as otherwise provided in this Agreement, no failure or
delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.

(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:

Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division

or telex:____________________________________

Customer:____________________________________

_____________________________________________

or telex:____________________________________

(i) Termination. This Agreement may be terminated by the Customer or the
Bank by giving sixty (60) days written notice to the other, provided that such
notice to the Bank shall specify the names of the persons to whom the Bank shall
deliver the Assets in the Accounts; and further provided that, if Bank is the
terminating party (other than on account of a material breach hereof by
Customer) Customer may extend the termination period by up to an additional 60
days by sending prompt written notice ("Extension Notice") to Bank of its intent
to do so (including the number of additional days). The Extension Notice shall
be accompanied by a statement from an Authorized Person that Customer shall
continue to abide by Chase's written operating procedures for Russia, as the
same may be in effect from time to time, during any such extension. If notice of
termination is given by the Bank, the Customer shall, within sixty (60) days (or
such other amount of days as is contemplated by the Extension Notice) following
receipt of the notice, deliver to the Bank Instructions specifying the names of
the persons to whom the Bank shall deliver the Assets. In either case the Bank
will deliver the Assets to the persons so specified, after deducting any amounts
which the Bank determines in good faith to be owed to it under Section 13. If
within sixty (60) days following receipt of a notice of termination by

<PAGE>

the Bank, the Bank does not receive Instructions from the Customer specifying
the names of the persons to whom the Bank shall deliver the Assets, the Bank, at
its election, may deliver the Assets to a bank or trust company doing business
in the State of New York to be held and disposed of pursuant to the provisions
of this Agreement, or to Authorized Persons, or may continue to hold the Assets
until Instructions are provided to the Bank.

CUSTOMER

By:____________________________________________
Title:
Date:

THE CHASE MANHATTAN BANK, N.A.

By:____________________________________________
Title:
Date:

63825

<PAGE>

STATE OF )
: ss.
COUNTY OF )

On this day of , 19 , before me personally
came
, to me known, who being by me duly sworn,
did depose and say that he/she resides in
at , that he/she is
of
, the entity described in and which executed the foregoing instrument;
that he/she knows the seal of said entity, that the seal affixed to said
instrument is such seal, that it was so affixed by order of said entity, and
that he/she signed his/her name thereto by like order.

________________________________

Sworn to before me this _______

day of ________, 19__.

_______________________________
Notary

<PAGE>

STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )

On this day of , 19 , before me personally
came
, to me known, who being by me duly sworn,
did depose and say that he/she resides in
at ; that he/she is a Vice
President of THE CHASE MANHATTAN BANK, (National Association), the corporation
described in and which executed the foregoing instrument; that he/she knows the
seal of said corporation, that the seal affixed to said instrument is such
corporate seal, that it was so affixed by order of the Board of Directors of
said corporation, and that he/she signed his/her name thereto by like order.

_________________________________
Sworn to before me this _______

day of ________, 19__.

_______________________________
Notary

<PAGE>

Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
_____________________________________________
effective __________________

Customer represents that the Assets being placed in the Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.

Except to the extent that the Bank has specifically agreed to comply with a
condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.

The following modifications are made to the Agreement:

Section 3. Subcustodians and Securities Depositories.

Add the following language to the end of Section 3:

The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:

(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in
Rule 17f-5 under the Investment Company Act of 1940;

(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country other than
the United States that is regulated as such by that country's government or an
agency thereof and that has shareholders' equity in excess of $200 million in
U.S. currency (or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank holding company
that is incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100 million in
U.S. currency (or a foreign currency equivalent thereof) (iii) a banking
institution or trust company incorporated or organized under the laws of a
country other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is incorporated
or organized under the laws of a country other than the United States which has
such other qualifications as shall be specified in Instructions and approved by
the Bank; or (iv) any other entity that shall have been so qualified by
exemptive order, rule or other appropriate action of the SEC; and

(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States, which operates (i) the central system for
handling securities or equivalent book-entries in that country, or (ii) a
transnational system for the central handling of securities or equivalent
book-entries.

<PAGE>

The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, which are attached
as Exhibits I through of Schedule A, and further represents that its Board has
determined that the use of each Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the Fund(s) and its (their)
shareholders. The Bank will supply the Customer with any amendment to Schedule A
for approval. The Customer has supplied or will supply the Bank with certified
copies of its Board of Directors resolution(s) with respect to the foregoing
prior to placing Assets with any Subcustodian so approved.

Section 11. Instructions.

Add the following language to the end of Section 11:

Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to be
made and Customer shall be solely responsible to assure that Instructions are in
accord with any limitations or restrictions applicable to the Customer by law or
as may be set forth in its prospectus.

(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;

(b) When Securities are called, redeemed or retired, or otherwise become
payable;

(c) In exchange for or upon conversion into other securities alone or other
securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;

(d) Upon conversion of Securities pursuant to their terms into other
securities;

(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;

(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;

(g) In connection with any borrowings by the Customer requiring a pledge of
Securities, but only against receipt of amounts borrowed;

(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;

(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;

<PAGE>

(j) For the purpose of redeeming in kind shares of the Customer against
delivery to the Bank, its Subcustodian or the Customer's transfer agent of such
shares to be so redeemed;

(k) For delivery in accordance with the provisions of any agreement among
the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Customer;

(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return;

(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;

(n) For other proper purposes as may be specified in Instructions issued by
an officer of the Customer which shall include a statement of the purpose for
which the delivery or payment is to be made, the amount of the payment or
specific Securities to be delivered, the name of the person or persons to whom
delivery or payment is to be made, and a certification that the purpose is a
proper purpose under the instruments governing the Customer; and

(o) Upon the termination of this Agreement as set forth in Section 14(i).

Section 12. Standard of Care; Liabilities.

Add the following subsection (c) to Section 12:

(c) The Bank hereby warrants to the Customer that in its opinion, after due
inquiry, the established procedures to be followed by each of its branches, each
branch of a qualified U.S. bank, each eligible foreign custodian and each
eligible foreign securities depository holding the Customer's Securities
pursuant to this Agreement afford protection for such Securities at least equal
to that afforded by the Bank's established procedures with respect to similar
securities held by the Bank and its securities depositories in New York.

Section 14. Access to Records.

Add the following language to the end of Section 14(c):

<PAGE>

Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar reports
as it may reasonably request with respect to each Subcustodian and securities
depository holding the Customer's assets.

<PAGE>

DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER

Domestic Corporate Actions and Proxies

With respect to domestic U.S. and Canadian Securities (the latter if held in
DTC), the following provisions will apply rather than the provisions of Section
8 of the Agreement:

The Bank will send to the Customer or the Authorized Person for a Custody
Account, such proxies (signed in blank, if issued in the name of the Bank's
nominee or the nominee of a central depository) and communications with respect
to Securities in the Custody Account as call for voting or relate to legal
proceedings within a reasonable time after sufficient copies are received by the
Bank for forwarding to its customers. In addition, the Bank will follow coupon
payments, redemptions, exchanges or similar matters with respect to Securities
in the Custody Account and advise the Customer or the Authorized Person for such
Account of rights issued, tender offers or any other discretionary rights with
respect to such Securities, in each case, of which the Bank has received notice
from the issuer of the Securities, or as to which notice is published in
publications routinely utilized by the Bank for this purpose.

SECURITIES LENDING AGREEMENT ("Lending Agreement"), dated as of ,
1996 between ______________________________ ("Lender"), having its principal
place of business at __________________________ , and The Chase Manhattan Bank,
N.A. ("Chase"), having its principal place of business at One Chase Manhattan
Plaza, New York, New York 10081.

It is hereby agreed as follows:

Section 1 - Definitions

Unless the context clearly requires otherwise, the following words
shall have the meanings set forth below when used herein:

a. "Account" shall mean the securities account established and
maintained by Chase on behalf of Lender pursuant to, as the case may be, a
separate custody agreement or a separate directed trust agreement ("Agreement")
between Chase and Lender, which Agreement provides, inter alia, for the
safekeeping of Securities received by Chase from time to time on behalf of
Lender.

b. "Agreement" shall have the meaning assigned thereto in Section 1(a)
hereof.

c. "Authorized Investment" shall mean any type of instrument, security,
participation or other property in which Cash Collateral may be invested or
reinvested, as described in Section 5(f) hereof and Appendix 4 hereto (and as
such Appendix may be amended from time to time by written agreement of the
parties).

d. "Authorized Person" shall mean, except to the extent that Chase is
advised to the contrary by Proper Instruction, any person who is authorized to
give instructions to Chase pursuant to the Agreement and any mandates given to
Chase in connection with such Agreement. An Authorized Person shall continue to
be so until such time as Chase receives Proper Instructions that nay such person
is no longer an Authorized Person.

e. "Borrower" shall mean an entity listed on Appendix 1 hereto, other
than an entity which Chase shall have been instructed to delete from list
pursuant to Written Instructions and as such Appendix may be amended in
accordance with Section 4(b) hereof.

<PAGE>

f. "Business Day" shall have the meaning assigned thereto in the
applicable MSLA.

g. "Buy-in" shall have the meaning assigned thereto in Section 7(c)
hereof.

h. "Cash Collateral" shall mean fed funds, New York Clearing House
Association funds and such non- U.S. currencies as may be pledged by a Borrower
in connection with a particular Loan.

i. "Collateral" shall have the meaning assigned thereto in the
applicable MSLA, together with Cash Collateral.

j. "Collateral Account" shall mean, as the case may be, an account
maintained by Chase with itself, with any Depository or with any Triparty
Institution and designated as a Collateral Account for the purpose of holding
any one or more of Collateral, Authorized Investments, and Proceeds in
connection with Loans hereunder.

k. "Collateral Amount" shall have the meaning assigned thereto in
Section 5(c) hereof.

l. "Collateral Criterion" shall have the meaning assigned thereto in
Section 5(c) hereof.

m. "Depository" shall mean: (1) the Depository Trust Company, the
Participants' Trust Company and any other securities depository or clearing
agency (and each of their respective successors and nominees) registered with
the U.S. Securities and Exchange Commission or registered with or regulated by
the applicable foreign equivalent thereof or otherwise able to act as a
securities depository or clearing agency, (ii) any transnational depository,
(iii) the Federal Reserve book-entry system for the receiving and delivering of
U.S. Government Securities, and (iv) any other national system for the receiving
and delivering of that country's government securities.

n. "Difference" shall have the meaning assigned thereto in Section 7(c)
hereof.

o. "Distributions" shall have the meaning assigned thereto in Section
3(b)(v) hereof.

<PAGE>

p. "Dollars" shall have the meaning assigned thereto in Section 7(b)
hereof.

q. "Due Date" shall have the meaning assigned thereto in Section 7(b)
hereof.

r. "Insolvency Event" shall have the meaning assigned thereto in
Section 7(b) hereof.

s. "Letter of Credit" shall have the meaning assigned thereto in the
applicable MSLA and be issued by a bank listed on Appendix 2 hereto (as such
list may be amended by Chase from time to time on notice to Lender), other than
a bank deleted from such list pursuant to Written Instruction.

t. "Loan" shall mean a loan of Securities hereunder and under the
applicable MSLA.

u. "Loan Fee" shall mean the amount payable by a Borrower to Chase
pursuant to the applicable MSLA in connection with Loans collateralized other
than by Cash Collateral.

v. "Market Value" shall have the meaning assigned thereto in the
applicable MSLA.

w. "MSLA" shall mean a master securities lending agreement between
Chase and a Borrower, pursuant to which Chase as agent lends securities on
behalf of its customers (including Lender) from time to time. A copy of Chase's
standard form of MSLA, including the international addendum thereto, is annexed
as Appendix 3.

x. "Net Assets" shall have the meaning assigned thereto in Section 8
hereof.

y. "Net Realized Income" shall have the meaning thereto in Section 8
hereof.

z. "Oral Instructions" shall have the meaning assigned thereto in
Section 10 hereof.

aa. "Proceeds" shall mean interest, dividends and other payments and
Distributions received by Chase in connection with Authorized Investments.

bb. "Proper Instructions" shall mean Oral Instructions and Written
Instructions.

cc. "Rebate" shall mean the amount payable by Chase on behalf of Lender
to a Borrower in connection with Loans collateralized by Cash Collateral.

<PAGE>

dd. "Return Date" shall have the meaning assigned thereto in Section
7(c) hereof.

ee. "Securities" shall mean government securities (including U.S.
Government Securities), equity securities, bonds, debentures, other corporate
debt securities, notes, mortgages or other obligations, and any certificates,
warrants or other instruments representing rights to receive, purchase, or
subscribe for the same, or evidencing or representing any other rights or
interests therein and held pursuant to the Agreement.

ff. "Term Loan" shall have the meaning assigned thereto in Section 5(i)
hereof.

gg. "Triparty Institution" shall mean a financial institution with
which Chase shall have previously entered a triparty agreement among itself,
such Triparty Institution and a particular Borrower providing, among other
things, for the holding of Collateral in a Collateral Account at such Triparty
Institution in Chase's name on behalf of Chase's lending customers and for the
substitution of Collateral; provided, however, that any substituted Collateral
shall meet the then standards for acceptable Collateral set by Chase.

hh. "U.S. Government Security" shall mean book-entry securities issued
by the U.S. Treasury defined in Subpart 0 of Treasury Department Circular No.
300 and any successor provisions) and any other securities issued or fully
guaranteed by the United States government or any agency, instrumentality or
establishment of the U.S. government, including, without limitation, securities
commonly known as "Ginnie Maes," Sally Maes," "Fannie Maes" and "Freddie Maes".

ii. "Written Instructions" shall have the meaning assigned thereto in
Section 10 hereof.

Section 2 - Appointment, Authority

(a) Appointment. Lender hereby appoints Chase as its agent to lend
Securities in the Account on Lender's behalf on a fully disclosed basis to
Borrowers from time to time in accordance with the terms hereof and on such
terms and conditions and at such times as Chase shall determine and Chase may
exercise all rights and powers provided under any MSLA as may be incidental
thereto, and Chase hereby accepts appointment as such agent and agrees to so
act.

<PAGE>

(b) Authority. Lender hereby authorizes and empowers Chase to execute
in Lender's name on its behalf and at its risk all agreements and documents as
may be necessary to carry out any of the powers herein granted to Chase. Lender
grants Chase the authority set forth herein notwithstanding its awareness that
Chase, in its individual capacity or acting in a fiduciary capacity for other
accounts, may have transactions with the same institutions to which Chase may be
lending Securities hereunder, which transactions may give rise to actual or
potential conflict of interest situations. Chase shall not be bound to: (i)
account to Lender for any sum received or profit made by Chase for its own
account or the account of any other person or (ii) disclose or refuse to
disclose any information or take any other action if the same would or might in
Chase's judgment, made in good faith, constitute a breach of any law or
regulation or be otherwise actionable with respect to Chase; provided that, in
circumstances mentioned in (ii) above, Chase shall promptly inform Lender of the
relevant facts (except where doing so would, or might in Chase's judgment, made
in good faith, constitute a breach of any law or regulation or be otherwise
actionable as aforesaid).

Section 3 - Representation and Warranties

(a) Representations of each party. Each party hereto represents and
warrants to the other that: (i) it has the power to execute and deliver this
Lending Agreement, to enter into the transactions contemplated hereby, and to
perform its obligations hereunder; (ii) it has taken all necessary action to
authorize such execution, delivery, and performance; (iii) this Lending
Agreement constitutes a legal, valid, and binding obligation enforceable against
it; and (iv) the execution, delivery, and performance by it of this Lending
Agreement shall at all times comply with all applicable laws and regulations.

(b) Representations of Lender. Lender represents and warrants to Chase
that: (i) this Lending Agreement is, and each Loan shall be, legally and validly
entered into, and does not and shall not violate any statute, regulation, rule,
order or judgment binding on Lender, or any provision of Lender's charter or
by-laws, or any agreement binding on Lender or affecting its property, and is
enforceable against Lender in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency or similar laws, or by equitable
principles relating to or limiting creditors' rights generally; (ii) the person
executing this Lending Agreement and all Authorized Persons acting on behalf of
Lender has and have been duly and properly authorized to do so; (iii) it is
lending Securities as principal and shall not transfer, assign or encumber its
interest in, or rights with respect to, any Securities available for Loan

<PAGE>

hereunder; (iv) it is the beneficial owner of all Securities or otherwise has
the right to lend Securities; and (v) it is entitled to receive all interest,
dividends and other distributions ("Distributions") made by the issuer with
respect thereto. Lender shall promptly identify to Chase by notice, which notice
may be oral, any Securities that are no longer subject to the representations
contained in (b).

Section 4 - Borrowers

(a) MSLA. Lender hereby acknowledges receipt of the form of MSLA and
authorizes Chase to lend Securities in the Account to Borrowers thereunder
pursuant to an agreement substantially in the form thereof.

(b) Borrowers. Securities may be lent to any Borrower selected by Chase
in Chase's sole discretion, in accordance with the terms hereof. In that
connection, Appendix 1 may be amended from time to time by Chase on notice to
Lender.

Section 5 - Loans

(a) Securities to be lent, Lending opportunities, Loan initiation. All
Securities of Lender held by Chase that are issued, settled or traded in the
markets that have been approved by Chase from time to time for purposes of
Chase's discretionary securities lending program shall be subject to the terms
hereof. Chase shall seek to assure that Lender receives a fair allocation of
lending opportunities vis-a-vis other lenders, taking into account the demand
for and availability of Securities, types of Collateral, eligibility of
Borrowers, limitations on investments of Cash Collateral, tax treatment, and
similar commercial factors. From time to time, Chase may lend to Borrowers
Securities held in the Account (except Securities that are no longer subject to
the representations set forth in Section 3) and shall deliver such Securities
against receipt of Collateral in accordance with the applicable MSLA. Chase
shall have the right to decline to make any Loans to any Borrower and to
discontinue lending to any Borrower in its sole discretion and without notice to
Lender.

(b) Receipt of Collateral, Collateral substitution. For each Loan,
Chase shall receive and hold Letters of Credit received as Collateral and Chase
or a Triparty Institution shall receive and hold all other Collateral required
by the applicable MSLA in a Collateral Account, and Chase is hereby authorized
and directed, without obtaining any further approval from Lender, to invest and
reinvest all or substantially all Cash Collateral. Chase shall credit, or where

<PAGE>

applicable shall have a Triparty Institution credit, all Collateral, Authorized
Investments and Proceeds to a Collateral Account and Chase shall not mark its
books and records to identify Lender's interest therein, it being understood,
however, that all monies credited to a Collateral Account may for purposes of
investment be commingled with cash collateral held for other lenders of
securities on whose behalf Chase may act. Chase may, in its sole discretion,
liquidate any Authorized Investment and credit the net proceeds in a Collateral
Account. Chase shall accept substitutions of Collateral in accordance with the
applicable MSLA and shall credit, or where applicable shall have a Triparty
Institution credit, all such substitutions to a Collateral Account.

(c) Mark to market procedures. (i) Chase shall require initial
Collateral for a Loan in an amount determined by applying the then applicable
"Collateral Criterion" (as defined below) to the Market Value of the Security
that is the subject of the Loan. The Collateral Criterion with respect to a
given Security shall be an amount equal to the then applicable percentage
(currently 102% for securities issued in the U.S. and 105% for securities issued
outside of the U.S.) of the Market Value of the Security (plus accrued interest,
if any, with respect to debt securities) which is the subject of a Loan as
determined as of the close of trading on the preceding Business Day. (ii) Each
Business Day Chase shall determine if the Market Value of all Collateral
received by Chase from a given Borrower in connection with all loans to such
Borrower from all lenders is at least equal to the aggregate amount ("Collateral
Amount") determined by applying the applicable Collateral Criterion to each
security on loan to such Borrower from all lenders. (iii) In accordance with
general market practice, the Market Value of certain securities (including,
without limitation, U.S. Government Securities) whether on Loan or received as
Collateral, may be determined on a same day basis by reference to recognized
pricing services.

<PAGE>

(d) Demand for additional Collateral. If the determination made in
Section 5(c)(ii) above demonstrates that the Market Value of all Collateral
received from a given Borrower is not at least equal to the Collateral Amount,
Chase shall demand additional Collateral from such Borrower in accordance with
the applicable MSLA so as to meet the Collateral Amount by making specific
Loans; provided that, Chase may from time to time establish de minimis
guidelines pursuant to which a mark would not be made even where the aggregate
Collateral Amount has not been met.

(e) Changes in procedures applicable to Collateral. The Collateral
procedures set forth in Sections 5(b)-(d) above reflect Chase's current practice
and may be changed by Chase from time to time based on general market conditions
(including volatility of Securities on Loan and of securities Collateral), the
Market Value of Securities on Loan to a given Borrower, and in accordance with
general market practice and regulatory requirements. Chase shall notify Lender
of material revisions to the foregoing procedures.

(f) Investment of Cash Collateral. (i) Chase is hereby authorized to
invest and reinvest cash Collateral in accordance with the investment guidelines
(and the interpretations, procedures and definitions included therewith) annexed
hereto as Appendix 4. (ii) Authorized Investments are made for the account of,
and at the sole risk of, Lender. In that connection, Lender shall pay to Chase
on demand in cash an amount equal to any deficiency in the amount of Collateral
available for return to a Borrower pursuant to an applicable MSLA.

(g) Lender's rights with respect to Securities on Loan; Distribution
and voting rights. (i) An amount equal to the amount of all Distributions paid
with respect to Securities on Loan that Lender would have received had such
Securities not been on Loan shall be credited to Lender's account on the date
such Distributions are delivered by Borrower to Chase. Any non-cash Distribution
on Securities on Loan which is in the nature of a stock split or a stock
dividend, shall be added to the Loan (and shall be considered to constitute
Securities on Loan) as of the date such non-cash Distribution is received by the
Borrower and shall be subject to the provisions of this Lending Agreement;
provided that the Lender may, by giving chase ten (10) Business Days' notice
prior to the date of such non-cash Distribution (or such different amount of
time as Chase may from time to time require on advice to Lender), direct Chase
to request that the Borrower deliver such non-cash Distribution to Chase
pursuant to the applicable MSLA, in which case Chase shall credit such non-cash
Distribution to Lender's account on the date it is delivered to Chase. Without
regard to the reference to "delivered" in the foregoing, the "AutoCredit"
provisions of the Agreement shall apply where a Borrower fails to make a
Distribution payment to Chase, the effect of which would be for Chase to credit
Lender's account with Distributions on the payable date. (ii) During the term of
any Loan, Chase will permit the Securities on Loan to be transferred into the

<PAGE>

name of and be voted by the Borrower or others. Lender shall not be entitled to
participate in any dividend reinvestment program or to vote proxies with respect
to Securities that are eligible for Loan (whether or not actually on Loan) as of
the applicable record date for such Securities.

(h) Advances, overdrafts and indebtedness, Security Interest. Chase
may, in its sole discretion, advance funds on behalf of Lender in order to pay
to Borrowers any Rebates or to return to Borrowers Cash Collateral to which they
are entitled pursuant to the applicable MSLA. Lender shall repay Chase on demand
the amount of any advance or any other amount owned by Lender hereunder plus
accrued interest at a rate per annum not to exceed the rate customarily charged
by Chase for such loans at the time such loan is made and shall otherwise be on
such terms and conditions as Chase customarily makes such loans available. In
order to secure repayment of any advance or other indebtedness of Lender to
Chase arising hereunder, Chase shall have a continuing lien and security
interest in and to all assets now or hereafter held in the Account and any
Collateral Account (to which Lender is entitled hereunder) and any other
property at any time held by it for the benefit of Lender or in which Lender may
have an interest which is then in Chase's possession or control or in the
possession or control of any third party acting on Chase's behalf. In this
regard, Chase shall be entitled to all the rights and remedies of a pledgee
under common law and a secured party under the New York Uniform Commercial Code
and/or any other applicable laws and/or regulations as then in effect.

(i) Termination of a Loan. (i) Loans shall generally be terminable on
demand. With the prior approval of Lender, however, Loans may be made on the
basis of a reasonably anticipated termination date ("Term Loan") and without
providing for the right of substitution of equivalent Securities. Termination of
a Term Loan prior to its anticipated termination date by either Lender or
Borrower may result in the terminating party having to pay non-terminating party
damages based on the cost of obtaining a replacement loan. (ii) Chase shall
terminate any Loan of Securities to a Borrower as soon as practicable after (a)
receipt by Chase of a notice of termination of the respective MSLA; (b) receipt
by Chase of Written Instructions directing it to terminate a Loan; (c) receipt
by Chase of Written Instructions instructing it to delete from Appendix 2 the
Borrower to whom such Loans was made; (d) receipt by Chase of Written
Instructions advising that the Security subject to a Loan is no longer subject
to the representation contained in Section 3 hereof; (e) receipt by Chase of
notice advising that an Event of Default (as defined in the applicable MSLA) has
occurred and is continuing beyond any applicable grace period; (f) whenever
Chase, in its sole discretion, elects to terminate such Loan other than a Term
Loan; or (g) termination of this Lending Agreement. (iii) If Securities which
are the subject of a Loan being terminated are to be sold by Lender, Written
Instructions shall in no event be given to Chase later than the trade date
established by Lender for such sale or such earlier date of which Chase may

<PAGE>

advise Lender from time to time with respect to particular markets. Chase shall
not be liable for any failure of a Borrower to return Securities on Loans in a
time fashion.

(j) Recordkeeping and Reports. Chase shall establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. Chase shall provide Lender with a monthly statement
describing the Loans made during the preceding month, and the income derived
from Loans, during the period covered by such statement. A party shall comply
with the reasonable requests of the other party for information necessary to the
requester's performance of its duties hereunder.

Section 6 - Default by Borrower

(1) Chase may assume (unless it has actual knowledge to the contrary)
that any representations made by a Borrower in connection with any Loan are
true, that no event which is or may become an Event of Default (as defined in
the applicable MSLA) has occurred and that a Borrower has complied with its
obligations under the applicable MSLA. Subject to Sections 7(b)-(d), Chase shall
have no responsibility for the accuracy or completeness of any information
supplied, or for any breach of any obligation, by any Borrower under or in
connection with any MSLA or Loan. Chase shall not be liable as a result of
taking or omitting to take any action provided that Chase shall have carried out
its responsibilities hereunder in good faith. (ii) If any Borrower with respect
to any Loan affected pursuant hereto and pursuant to the applicable MSLA fails
to return any loaned Securities when due thereunder for reasons other than
relating to the solvency of the Borrower, Chase shall then take whatever action
its deems appropriate in accordance with general market practice and Chase's
reasonable judgment, including, but no necessarily limited to, claiming
compensation from such Borrower on behalf of Lender in the event a trade
executed by Lender fails on account of such Borrower's failure timely to have
returned Securities on Loan or, where Chase deems it necessary, such other
action as may be permitted by the applicable MSLA, including collecting any
applicable MSLA fails to return any Securities on Loan when due thereunder for
reasons relating to the solvency of the Borrower, Chase shall take such action
as its deems appropriate in accordance with Chase's reasonable judgment under
the applicable MSLA.

Section 7 - Standard of Care, Liabilities, Indemnification

(a) Standard of care, Liabilities. Except as provided in paragraphs (b)
and (c) hereof, Chase shall be liable for any costs, expenses, damages,
liabilities or claims (including attorneys' and accountants' fees) incurred by
Lender, except those costs, expenses, damages, liabilities and claims arising
out of the negligence, bad faith or willful misconduct of Chase. Chase shall
have no obligation hereunder for: (i) costs, expenses, damages, liabilities or
claims (including attorneys' and accountants' fees), which are sustained or

<PAGE>

incurred by Lender by reason of any action or inaction by any pricing service,
any Depository or a Triparty Institution or their respective successors or
nominees; and (ii) any failure to perform any obligation due to any matters
beyond the control of Chase. In no event shall Chase be liable for indirect or
consequential damages or lost profits or loss of business, arising hereunder or
in connection herewith, even if previously informed of the possibility of such
damages and regardless of the form of action.

Except for any costs or expenses incurred by Chase in performing its
obligations pursuant to paragraphs (b) and (c) hereof any ordinary operating
expenses incurred by Chase in providing services hereunder, Lender shall
indemnify Chase and hold it harmless from and against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Chase may sustain or incur or which may be asserted against
Chase by reason of or as a result of any action taken or omitted by Chase in
connection with operating under this Lending Agreement or enforcing Lender's
rights under the applicable MSLA, other than those costs, expenses, damages,
liabilities or claims arising out of the negligence, bad faith or willful
misconduct of Chase. The foregoing indemnity shall be a continuing obligation of
the Lender, its successors and assigns, notwithstanding the termination of any
Loans hereunder or of this Lending Agreement. Chase may charge any amounts to
which it is entitled hereunder against the Account, and Lender shall be entitled
to an accounting of all amounts so charged. Actions taken or omitted in reliance
upon Proper Instructions, or upon any information, order, indenture, stock
certificate, power of attorney, assignment, affidavit or other instrument
reasonably believed by Chase, in good faith, to be genuine or bearing the
signature of a person or persons believed, in good faith, to be authorized to
sign, countersign or execute the same, shall be conclusively presumed to have
been taken or omitted in good faith.

(b) Indemnification of Lender in respect to Distributions. If the
Borrower in respect of any Loan effected pursuant hereto and pursuant to the
applicable MSLA fails, as a result of its bankruptcy, insolvency,
reorganization, liquidation, receivership or similar event (each an "Insolvency
Event"), to remit to Chase for Lender's account any Distributions on or with
respect to Securities on Loan when due (the "Due Date") in accordance with such
MSLA and such Due Date occurs at least one day prior to an Insolvency Event then
Chase shall at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Due Date, undertake the following: (i) with respect to
Distributions in the form of cash, Chase shall credit Lender's account with the
full amount of such Distributions and (ii) with respect to Distributions in the
form of securities, Chase shall, at its option, either purchase replacement
securities (of an equal amount of the same issue, class, type or series as the
Distributions) on the principal market in which such securities are traded or
credit Lender's account with the market value in United States dollars
("Dollars") of such Distributions on the Due Date as determined by Chase in good

<PAGE>

faith. Market value shall be determined by Chase in accordance with the
applicable MSLA, including the computation of Dollar equivalents where
Securities on Loan and/or Collateral (and Proceeds) are denominated in a
currency other than Dollars.

(c) Indemnification of Lender in respect of Securities. If the Borrower
in respect of any Loan effected pursuant hereto and pursuant to the applicable
MSLA fails to return any Securities on Loan to Chase for Lender's account when
due thereunder (the "Return Date") which is the date of default, then Chase
shall, at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Return Date, credit Lender's account in Dollars with the
difference ("Difference") (where a positive number), if any, between (x) the
market value of such lent Securities on the Return Date (including, in the case
of debt Securities, accrued but unpaid interest), and (y) in the case of Loans
collateralized by (i) Cash Collateral, the greater of (A) the Market Value of
the Cash Collateral on the date of initial pledge as adjusted for any subsequent
marks-to-market through the Return Date and (B) the Market Value of Cash
Collateral investments on the Return Date, (ii) non-Cash Collateral comprising
securities Collateral, the greater of the Market Value of such Collateral on the
(A) Business Day immediately preceding the Return Date and (B) Return Date, or
(iii) non- Cash Collateral comprising Letter of Credit Collateral, the Market
Value of the Letter of Credit Collateral on the date of initial pledge as
adjusted for any subsequent marks-to-market through the Return Date. Market
Value shall be determined by Chase in accordance with the applicable MSLA,
including the computation of Dollar equivalents where Securities on Loan and/or
Collateral (and Proceeds) are denominated in a currency other than Dollars.
Where Cash Collateral and non-Cash Collateral have each been allocated to a Loan
as of the Return Date, the Difference payable by Chase shall be computed in
accordance with the foregoing as if there had been two Loans in effect on the
Return Date, one collateralized by Cash Collateral and the other collateralized
by non-Cash Collateral. In lieu of paying Lender the Difference, Chase may, at
its sole option and expense, purchase for Lender's account ("Buy-in")
replacement securities of the same issue, type, class, and series as that of the
Securities on Loan.

(d) Subrogation. If Chase makes a payment or a purchase pursuant to
Section 7(b) or effects a Buy-in pursuant to Section 7(c), or if Chase effects a
Difference payment pursuant to Section 7(c) on account of a failure to return
Securities on Loan not arising from an Insolvency Event, Chase shall, to the
extent of such payment, purchase, Difference payment or Buy-in, be subrogated
to, and Lender shall assign and be deemed to have assigned to Chase, all of its
rights in, to and against the Borrower (and any guarantor thereof) in respect of
such Loan, any Collateral pledged by the Borrower in respect of such Loan, and
all proceeds of such Collateral. In the event that Lender receives or is
credited with any payment, benefit or value from or on behalf of the Borrower in
respect of rights to which Chase is subrogated as provided herein, Lender shall

<PAGE>

promptly remit or pay to Chase the same (or its Dollar equivalent) but only to
the extent that Lender has been paid all amounts owed to it by Borrower.

Section 8 - Chase Compensation

(a) In connection with each Loan hereunder, Lender shall pay to Chase a
fee equal to ___% of (i) earnings (less any Rebate paid by Chase to a Borrower)
derived from Authorized Investments in connection with Loans collateralized by
cash, and (ii) any Securities Loan Fee paid or payable by the Borrower on Loans
not collateralized by cash. (b) The fee payable to Chase for services performed
pursuant to Section 5(f) hereof shall be equal to one tenth of the one percent
(0.1%) of the Fund's average daily Assets (with "Fund" being as defined in
Appendix 4 hereto). All securities in the Fund shall be valued based on their
amortized cost. Fees shall be accrued and charged daily against the Fund's yield
or assets, as appropriate, and shall be payable monthly in arrears on the first
business day of the month following the month in which earned. (c) Chase is
authorized, on a monthly basis, to charge all the foregoing fees (together with
reasonable expenses incurred by Chase hereunder) and any other amounts owed by
Lender hereunder against the Account and/or a Collateral Account.

Section 9 - Taxes

Lender shall be responsible for all filings, tax returns and reports on
any Loans undertaken by Chase on Lender's behalf which are to be made to any
authority whether governmental or otherwise and for the payment of all unpaid
calls, taxes (including, without limitations, any value added tax), imposts,
levies or duties due on any principal or interest, or any other liability or
payments arising out of or in connection with any Securities or any Collateral,
and in so far as Chase is under obligation (whether of a governmental nature or
otherwise) to pay the same on Lender's behalf Chase may do so out of any monies
or assets held by it pursuant to the terms of the Agreement or hereunder.

Section 10 - Instructions

(a)(i) Written Instructions. "Written Instructions" shall mean written
communications actually received by Chase from an Authorized Person or from a
person reasonably believed by Chase to be an Authorized Person by letter,
memorandum, telegram, cable, telex, telecopy facsimile, computer, video (CRT)
terminal or other on-line system, or any other method reasonably acceptable to
Chase and whereby Chase is able to verify with a reasonable degree of certainty
the identity of the sender of such communications or with communications are
transmitted with proper testing or authentication pursuant to terms and
conditions which Chase may specify. (ii) Oral Instructions. "Oral Instructions"
shall mean oral communications actually received by Chase from an Authorized
Person or from a person reasonably believed by Chase to be an Authorized Person.

<PAGE>

Oral Instructions shall promptly thereafter be confirmed in writing by an
Authorized Person (which confirmation may bear the facsimile signature of such
Person), but Lender will hold Chase harmless for the failure of an Authorized
Person to send such confirmation in writing, the failure of such confirmation to
conform to the Oral Instructions received, or Chase's failure to produce such
confirmation at any subsequent time. Lender shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
Chase may make available to Lender or its Authorized Persons.

(b) Unless otherwise expressly provided, all Proper Instructions shall
continue in full force and effect until canceled or superseded.

Section 11 - Pricing Services

Chase may use any pricing service referred to in an applicable MSLA and
any other recognized pricing service (including itself and any of its
affiliates) in order to perform its valuation responsibilities with respect to
Securities, Collateral and Authorized Investments, and Lender shall hold Chase
harmless from and against any loss or damage suffered or incurred as a result of
errors or omissions of any such pricing service.

Section 12 - Termination

This Lending Agreement may be terminated at any time by either party
upon delivery to the other party of notice specifying the date of such
termination, which shall be not less than 30 days after the date of receipt of
such notice. Notwithstanding any such notice, this Lending Agreement shall
continue in full force and effect with respect to all Loans outstanding on the
termination date, which Loans shall, however, be terminated as soon as
reasonably practicable.

Section 13 - Miscellaneous

(a) Legal proceedings. Chase may refrain from bringing any legal action
or proceeding arising out of or in connection with any Loan until it shall have
received such security as it may require for all costs, expenses (including
legal fees) and liabilities which it will or may expend or incur in relation
thereto.

(b) Integration, Lending Agreement to Govern. This Lending Agreement
and the Agreement contain the complete agreement of the parties with respect to
the subject matter hereof and supersede and replace any previously made
proposals, representations, warranties or agreements with respect thereto by the
parties. In the event of any conflict between this Lending Agreement, and the
Agreement, this Lending Agreement shall govern.

<PAGE>

(c) Notice. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipt courier
service. All such notices which are mailed shall be deemed delivered upon
receipt. Notices shall be addresses as follows (or to such other address as a
party may from time to time designate on notice duly given in accordance with
this paragraph): notices to Chase shall be addressed to it at 2 Chase Manhattan
Plaza, 19th Floor, New York, New York 10081, Attention: Securities Lending
Division; notices to be given to Lender shall be addressed to it at its offices
at ___________________________________________________________________________
Attention: ___________________________________ .

(d) Amendments, Waiver. This Lending Agreement may be modified only by
a written amendment signed by both parties, and no waiver of any provisions
hereof shall be effective unless expressed in a writing signed by the party to
be charged.

(e) Government Law, Consent to Jurisdiction, Waiver of Immunity. This
Lending Agreement shall be construed in accordance with laws of the State of New
York, without regard to the conflict of laws principles thereof. Chase and
Lender each hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and Lender hereby waives any claim of forum non conveniens to the
extent that it may lawfully do so. To the extent that in any jurisdiction Lender
may now or hereafter be entitled to claim, for itself or its assets, immunity
from suit, execution, attachment (before or after judgment) or other legal
process, Lender irrevocably shall not claim, and it hereby waives, such
immunity.

(f) Counterparts, Headings. This Lending Agreement may be executed in
several counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument. The headings of the sections
hereof are included for convenience of reference only and do not form part of
this Lending Agreement.

(g) Severability. Any provisions of this Lending Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceably in any jurisdiction
shall not invalidate or render unenforceable such provisions in any other
jurisdiction.

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Lending Agreement as
of the date first above-written.

[Insert name of LENDER] THE CHASE
MANHATTAN BANK, N.A.

By: By:

Title: Title:

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Post-Effective Amendment No. 6
to the Registration Statement on Form N-1A (1933 Act File Number 33-67490 and
1940 Act File Number 811-7972) of Lincoln Advisor Funds, Inc. (the "Funds") of
our report dated December 12, 1995 on our audit of the financial statements and
supplementary data of the Funds for the period ended October 31, 1995, which is
included in the 1995 Annual Report to Shareholders.

We also consent to the reference to our Firm under the caption "Financial
Highlights" and "Independent Accountants" in the Prospectuses and under the
caption "Financial Statements" in the Statement of Additional Information of the
Registrant Statement.

/s/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.

Boston, Massachusetts
May 2, 1996