<PAGE>
1996
Annual -----------------
Report
Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Corporate Income Fund
Federal Bond Fund
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PHOTO
A Tradition of Sound Investing Since 1929
DELAWARE
GROUP
========
Philadelphia * London
<PAGE>
PHOTO
About Our Cover
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Headquartered in Philadelphia, Pennsylvania, Delaware Group shares in the
tradition of a city built on the vision of opportunity. Amidst the city's
historic sites, symbolic of our nation's freedom and prosperity, Delaware Group
provides both individual and institutional investors with a conservative,
disciplined approach to money management.
DELAWARE GROUP
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A TRADITION OF
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SOUND INVESTING
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Delaware Management Company's investment experience dates back to 1929. Our
first mutual fund was established in 1938. Headquartered in Philadelphia with
an affiliate in London, Delaware manages a full range of mutual fund and
annuity investments and also offers retirement plan service to individuals
and companies. Delaware International Advisers Ltd., our London-based
international affiliate, was established in 1990.
Delaware Group manages mutual funds with the same time-tested,
disciplined strategies demanded by the large public and private pension
plans, foundations and endowments that are among our clients. With over 60
years of experience, we have demonstrated our commitment to quality
investment management and service.
Today, Delaware manages more than $31 billion in mutual funds and
institutional investment advisory accounts. We measure our success by the
financial success and satisfaction of our nearly 500,000 shareholders.
<PAGE>
NOVEMBER 15, 1996
DEAR
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SHAREHOLDER:
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The 1996 fiscal year was an important time of transition for the U.S. stock
and bond markets, and a period of renewed growth in international equity
markets.
After five years of unprecedented gains, volatility in the U.S.
stock market increased this past summer. Some investors became uncertain
about the future. Corporate earnings growth slowed while a low unemployment
rate made it more difficult for some employers to fill open jobs, suggesting
higher inflation.
However, the stock and bond markets' anxiety over a possible
1970s-like consumer price spiral proved to be much ado about nothing. Indeed,
most economists believe inflation will not be a significant problem in the
months ahead. As of this writing, the Federal Reserve Board appeared to have
an effective monetary policy in place under the leadership of Alan Greenspan.
For the 12 months ended October 31, 1996, the unmanaged Standard &
Poor's 500 Index provided a robust total return of +24.10% (with dividends
reinvested) while the unmanaged Lehman Brothers Aggregate Bond Index rose
+5.85% (with income reinvested).
Some international stock markets, among them emerging markets in the
Pacific Rim, provided above-average returns during fiscal 1996. Others, such
as the developed markets of Japan and Germany, reflected investors' fickle
views about the progress of economic recovery. The Morgan Stanley Europe
Australia Far East Index, an unmanaged benchmark of established overseas
stock markets, rose +8.77% for the 12 months ended October 31, 1996.
Undoubtedly, the recent U.S. national election results will
influence how the U.S. stock and bond markets behave in 1997. Likewise, the
political climate and monetary policy of foreign countries can affect an
individual country's financial markets, often to a greater degree than in a
relatively stable nation like the U.S.
As an investor, one of the best ways you can be prepared for change
is with a diversified investment plan. With the help of your financial
adviser, you can select a variety of funds that, taken together, have the
potential to both reduce volatility and meet your investment goals.
We encourage you to review the performance discussion of the six
mutual funds in this report, as well as the portfolio managers' outlook. As
shareholders in Delaware Group's growing fund family, you have a choice of 28
funds with a wide variety of objectives and investment styles. We will strive
to exceed your expectations and we thank you for the confidence you have
shown in Delaware.
Sincerely,
/s/ Wayne A. Stork
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Wayne A. Stork
Chairman, President and Chief Executive Officer
<PAGE>
DOMESTIC
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EQUITY FUNDS
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Enterprise Fund
Managed by a Lynch & Mayer portfolio team
Headed by Kevin Ferguson
and Edward Petner
Seeks to maximize capital appreciation by investing in medium-sized companies
which have a dominant position within their industry, are undervalued, or
have potential for growth in earnings.
With the help of strong performance from energy stocks, Enterprise Fund
achieved very robust results during the fiscal year. We outperformed both the
unmanaged S&P Midcap 400 Index, a benchmark representing stocks of medium
size companies, and comparable mutual funds, as shown to the right.
The Fund's strategy includes a constant search for companies that
exhibit what we believe are early indications of positive fundamental change
such as:
* an acceleration of earnings growth;
* an improving industry environment;
* a corporate restructuring; and,
* a turnaround.
In fiscal 1996, the Fund provided a total return of +20.37% (capital
change plus income based on A Class shares at net asset value). That was more
than 300 basis points (3.00%) higher than the S&P Midcap 400.
Our energy focus is on companies, particularly those in the oil
service sector, that we believe are benefiting from higher oil prices, new
exploration and drilling technology and higher profit margins. In our
opinion, the industry is finally poised for growth after years of
consolidation.
As of October 31, 1996, some 16.3% of the Fund's holdings were
energy stocks, compared to just 4% of the S&P Midcap 400. We have reduced our
weighting in technology companies and as of October 31, this sector
represented 18.5% of the portfolio.
In our opinion, U.S. economic growth will slow in 1997, making the
stocks of companies that can sustain above average earnings growth more
attractive. We believe, based on securities analysts projections, that
companies in your Fund's portfolio can expand earnings by an average of 20%
in 1997, more than double the expected earnings growth rate for companies in
the S&P 500 Index.
We believe that the stocks of medium size companies generally have
the potential to outperform the stocks of large companies over time. In our
opinion the market is poised to recognize the superior growth potential of
certain medium size companies.
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Portfolio Highlights
(October 31, 1996)
Median Market
Capitalization $2.0 billion
Number of Stocks 60
Average Stock
Price-to-Earnings Ratio 21x*
Largest Holding - Conseco, Inc. 3.3%
Top Sector - Consumer Cyclicals 22%
*Based on analysts' earnings estimates for 1997
as reported to I/B/E/S.
Comparative Index Returns for the
12 Months Ended October 31, 1996
Standard & Poor's
Midcap 400 Index +17.35%
Lipper Midcap Fund Average
(146 funds) +18.27%
All performance includes reinvested dividends. Lipper Fund Average
performance is based on net asset values.
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<PAGE>
Enterprise Fund's Performance
Growth of a $10,000 Investment
December 3, 1993 to October 31, 1996
[CHART HERE]
Enterprise Fund A S&P Midcap 400 Index
Dec-93 $ 9,525 $10,000
Jan-94 $ 9,857 $10,232
Apr-94 $ 9,042 $ 9,691
Jul-94 $ 8,094 $ 9,581
Oct-94 $ 8,719 $10,005
Jan-95 $ 8,378 $ 9,721
Apr-95 $ 9,430 $10,625
Jul-95 $10,492 $11,918
Oct-95 $10,700 $12,117
Jan-96 $11,639 $12,798
Apr-96 $12,776 $13,800
Jul-96 $11,515 $12,846
Oct-96 $12,880 $14,219
Chart assumes $10,000 invested on December 3, 1993 and includes the effect of a
4.75% front-end sales charge and the reinvestment of all dividends. Performance
of other classes of Enterprise Fund will vary due to differing charges and
expenses.
Enterprise Fund Performance
Average Annual Return Through October 31, 1996
Lifetime One Year
Class A (Est. 1993) +9.28% +14.68%
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Class B (Est. 1994)
Excluding Sales Charge +15.18% +19.90%
Including Sales Charge +14.23% +15.90%
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Class C (Est. 1994)
Excluding Sales Charge +16.49% +19.57%
Including Sales Charge +16.49% +18.57%
All performance includes reinvestment of distributions and applicable sales
charges as described below. Return and share value will fluctuate so that shares
when redeemed may be worth more or less than the original cost. Past performance
is not a guarantee of future results. Performance for Class B and C shares
"excluding sales charge" assumes the investment was not redeemed.
Class A shares, initially offered December 3, 1993, have a 4.75% maximum
front-end sales charge and a 12b-1 fee of 0.30%.
Class B shares, initially offered April 14, 1994, do not carry a front-end
sales charge, but are subject to a 1% annual distribution and service fee.
They are also subject to a deferred sales charge if redeemed before the end
of the sixth year.
Class C shares, initially offered May 10, 1994, have a 1% annual distribution
and service fee. If shares are redeemed within 12 months, a 1% contingent
deferred sales charge applies.
The average annual total returns for the lifetime and one-year periods ended
October 31, 1996 for Enterprise Fund's Institutional Class were +10.27% and
+20.80%. This class was initially offered February 3, 1994 and is available
without sales or asset-based distribution charges only to institutional
accounts.
<PAGE>
U.S. Growth Fund
Managed by a Lynch & Mayer portfolio team
Headed by Anthony Segalas
Seeks to maximize capital appreciation by investing in companies with low
dividend yields, strong balance sheets and high expected earnings growth
relative to their industry.
U.S. Growth Fund generated a total return of +11.18% (capital change plus
income for A Class shares at net asset value) for the 12 months ended October
31, 1996, less than the total return of the unmanaged S&P 500 Index.
These disappointing results were attributable to the Fund's
overweighting in technology, credit sensitive businesses and managed care
companies sectors that did not perform well during the past year.
Prior to May 6, 1996, your Fund was managed by Provident Investment
Counsel of California, who focused on technology and other "high growth"
areas. Through April 30, 1996, the Fund underperformed the S&P 500 by
approximately 900 basis points (9.0%).
Lynch & Mayer, the Fund's subadviser as of May 6, 1996, repositioned
the portfolio to focus on companies exhibiting signs of positive fundamental
change and strong long-term growth prospects such as INTEL CORP. and GILLETTE
CORP.
For much of the year, the capital appreciation from many traditional
"growth" stocks lagged that from stocks of cyclical companies that is those
businesses whose fortunes are tied to the performance of the overall U.S.
economy. This pattern began to change following this past summer's market
correction.
In the opinion of your Fund's management team, corporate earnings
growth will slow in 1997. By focusing on companies with better-than-average
earnings prospects, your Fund's management team believes U.S. Growth Fund is
well-positioned for the year ahead. Securities analysts estimate that
companies in your Fund's portfolio will report earnings growth of 15% to 20%
in 1997, double the projected average growth of companies in the S&P 500
Index.
During the past six months, Lynch & Mayer doubled the portfolio's
weighting in large consumer growth companies such as Merck & Co. and
substantially increased holdings of retail stocks, an industry where we believe
several companies have strong revenue and earnings growth potential.
Since becoming your Fund's subadviser, Lynch & Mayer has reduced the
number of holdings from 72 stocks to 47 stocks while remaining
well-diversified among many industries. This more concentrated focus provides
management with the flexibility to closely monitor each stock. Since the
Fund's current total net assets are modest, our concentrated focus gives us
the ability to make changes more quickly than could be done in a
multi-billion-dollar portfolio. This flexibility could provide the Fund with
a strategic advantage relative to other mutual funds whenever portfolio
repositioning is prudent.
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Portfolio Highlights
(As of October 31, 1996)
Median Market
Capitalization $7.6 billion
Number of Stocks 47
Average Stock
Price-to-Earnings Ratio 22.x*
Largest Holding - Intel Corp. 5.3%
Top Sector - Technology 27.1%
*Based on analysts' earnings estimates for 1997 as reported to I/B/E/S.
Comparative Index Returns for the
12 Months Ended October 31, 1996
Standard & Poor's 500 Index +24.10%
Lipper Growth Fund Average
(642 funds) +18.47%
All performance includes reinvested dividends. Lipper Fund Average
performance is based on net asset values.
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<PAGE>
U.S. Growth Fund's Performance
Growth of a $10,000 Investment
December 3, 1993 to October 31, 1996
[CHART HERE]
US Growth Fund A S&P 500 Index
Dec-93 $ 9,525 $10,000
Jan-94 $ 9,895 $10,348
Apr-94 $ 9,079 $ 9,756
Jul-94 $ 9,079 $ 9,986
Oct-94 $ 9,696 $10,365
Jan-95 $ 9,212 $10,396
Apr-95 $ 9,620 $11,451
Jul-95 $11,282 $12,581
Oct-95 $11,804 $13,090
Jan-96 $11,709 $14,399
Apr-96 $12,336 $14,891
Jul-96 $11,918 $14,647
Oct-96 $13,124 $16,227
Chart assumes $10,000 invested on December 3, 1993 and includes the effect of
a 4.75% front-end sales charge and the reinvestment of all dividends.
Performance of other classes of U.S. Growth Fund will vary due to differing
charges and expenses.
U.S. Growth Fund Performance
Average Annual Return Through October 31, 1996
Lifetime One Year
Class A (Est. 1993) +9.93% +5.90%
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Class B (Est. 1994)
Excluding Sales Charge +12.61% +10.38%
Including Sales Charge +11.65% +6.38%
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Class C (Est. 1994)
Excluding Sales Charge +15.36% +10.35%
Including Sales Charge +15.36% +9.35%
All performance includes reinvestment of distributions and applicable sales
charges as described below. Return and share value will fluctuate so that shares
when redeemed may be worth more or less than the original cost. Past performance
is not a guarantee of future results. Performance for Class B and C shares
"excluding sales charge" assumes the investment was not redeemed.
Class A shares, initially offered December 3, 1993, have a 4.75% maximum
front-end sales charge and a 12b-1 fee of 0.30%.
Class B shares, initially offered March 29, 1994, do not carry a front-end
sales charge, but are subject to a 1% annual distribution and service fee.
They are also subject to a deferred sales charge if redeemed before the end
of the sixth year.
Class C shares, initially offered May 23, 1994, have a 1% annual distribution
and service fee. If shares are redeemed within 12 months, a 1% contingent
deferred sales charge applies.
The average annual total returns for the lifetime and one-year periods ended
October 31, 1996 for U.S Growth Fund's Institutional Class were +10.81% and
+11.52% . This class was initially offered February 3, 1994 and is available
without sales or asset-based distribution charges only to institutional
accounts.
<PAGE>
INTERNATIONAL
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EQUITY FUNDS
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World Growth Fund
Managed by a portfolio team
at Walter Scott & Partners, Ltd.
Seeks to maximize total return by investing in an internationally diversified
mix of stocks.
World Growth Fund provided a total return of +8.90% (capital change plus
income based on A Class shares at net asset value) for the 12 months ended
October 31, 1996. Your Fund more than matched the return of the unmanaged
Morgan Stanley Europe Australia Far East (EAFE) Index for the period.
During the year, your Fund had a larger percentage of its portfolio
in Japan than any other country. While this positioning boosted your Fund's
performance through April 30, weakness in the Japanese market negatively
affected our results during the second half of fiscal 1996.
We believe the weakness in Japan is temporary and reflects that the
country is still ironing out problems in its financial sector and overcoming
the effects of a five-year drought in capital spending. Some economic data
suggest a recovery is underway. We have invested in industrial and consumer
companies whose earnings we believe are likely to benefit from Japan's
resurgence. An example is Promise, a Japanese consumer finance provider we
believe has strong management and strict credit analysis.
As of October 31, in Europe, your Fund had higher-than-EAFE Index
weightings in Germany, the Netherlands and Norway and a much lower-than-index
weighting in stocks in the United Kingdom. In Europe, rising consumer
confidence has benefited the retail sector, a trend we believe will continue.
World Growth Fund
Country Allocation
(October 31, 1996)
Japan 31.7%
Germany 14.1%
France 8.6%
Netherlands 8.5%
Singapore/Malaysia 3.0%
United Kingdom 6.0%
Norway 5.6%
Other 22.7%
Your Fund's largest holdings as of October 31 were IHC Caland and
Ahold, two Dutch companies.
The Fund focuses on companies that we believe can expand by more
than 20% a year. We seek businesses that can generate high levels of cash
flow over long periods of time. As of October 31, more than one third of the
Fund's holdings were companies that, in our opinion, stand to benefit as
living standards around the world improve.
Investing in international stocks involves special risks which
result from differences in accounting, currency fluctuations, and political
and economic systems that may be less stable than those in the U.S. In our
opinion, these risks are worth taking because of the potential for greater
rewards.
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Comparative Index Returns for the
12 Months Ended October 31, 1996
Morgan Stanley Europe Australia
Far East Index +8.77%
Lipper International Fund
Average (324 funds) +10.73%
All performance includes reinvested dividends. Lipper Fund Average
performance is based on net asset values.
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<PAGE>
World Growth Fund's Performance
Growth of a $10,000 Investment
December 3, 1993 to October 31, 1996
[CHART HERE]
World Growth Fund A MSCI EAFE Index
Jan-94 $ 9,986 $10,848
Apr-94 $10,168 $10,798
Jul-94 $10,471 $10,999
Oct-94 $10,577 $11,276
Jan-95 $ 9,464 $10,394
Apr-95 $10,282 $11,433
Jul-95 $10,855 $11,799
Oct-95 $10,980 $11,268
Jan-96 $11,253 $12,107
Apr-96 $11,986 $12,776
Jul-96 $11,851 $12,252
Oct-96 $11,957 $12,485
Charts assmes $10,000 invested on December 3, 1993 and includes the effect of a
4.75% front-end sales charge and the reinvestment of all dividends. Performance
of other classes of World Growth Fund will vary due to differing charges and
expenses.
World Growth Fund Performance
Average Annual Return Through October 31, 1996
Lifetime One Year
Class A (Est. 1993) +6.05% +3.71%
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Class B (Est. 1994)
Excluding Sales Charge +6.01% +8.16%
Including Sales Charge +4.95% +4.16%
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Class C (Est. 1994)
Excluding Sales Charge +6.37% +8.15%
Including Sales Charge +6.37% +7.15%
All performance includes reinvestment of distributions and applicable sales
charges as described below. Return and share value will fluctuate so that shares
when redeemed may be worth more or less than the original cost. Past performance
is not a guarantee of future results. Performance for Class B and C shares
"excluding sales charge" assumes the investment was not redeemed.
Class A shares, initially offered December 3, 1993, have a 4.75% maximum
front-end sales charge and a 12b-1 fee of 0.30%.
Class B shares, initially offered March 29, 1994, do not carry a front-end
sales charge, but are subject to a 1% annual distribution and service fee.
They are also subject to a deferred sales charge if redeemed before the end
of the sixth year.
Class C shares, initially offered May 23, 1994, have a 1% annual distribution
and service fee. If shares are redeemed within 12 months, a 1% contingent
deferred sales charge applies.
The average annual total returns for the lifetime and one-year periods ended
October 31, 1996 for World Growth Fund's Institutional Class were +6.33% and
+7.91%. This class was initially offered February 3, 1994 and is available
without sales or asset-based distribution charges only to institutional
accounts.
<PAGE>
New Pacific Fund
Managed by Peter Robson
at John Govett & Co.
Seeks long-term capital appreciation by investing primarily in companies that
are located in or have their principal business in the Pacific Basin.
Stock markets along the Pacific Rim provided a mixed performance during the
12 months ended October 31, 1996. For the period, the New Pacific Fund
achieved a total return of +8.26% (capital change plus income based on A
Class shares at net asset value).
During the first six months of fiscal 1996, the Fund provided a
strong total return of +15.84% that reflected prudent stock selection, lower
regional interest rates and our ability to capitalize on political
uncertainty in some countries. The second half was disappointing, however.
The net asset value of your Fund's shares dropped -6.55% from April 30 to
October 31.
Some markets we had invested in did well early in the year but
faltered this past summer, notably Japan and Thailand. Japan's economic
recovery is proceeding more slowly than we expected while Thailand's stock
market is being affected by political turmoil. We reduced our weighting in
both countries during the second half and this helped your Fund outperform
its benchmark and its peers, as shown to the right.
During the year, New Pacific Fund's investments in Hong Kong and
Malaysia did well, particularly stocks of conglomerates such as China
Resources and Malaysia Resources. In the past six months, we increased our
securities holdings in Hong Kong and mainland China. We are optimistic that
there can be a smooth transition when the People's Republic of China takes
over Hong Kong in June 1997. We believe the market has more than discounted
the possible political fallout from the change in government.
The Fund's strategy is to focus on major growth areas of the Pacific
Rim by emphasizing emerging Asian economies.
New Pacific Fund
Country/Allocation
(October 31, 1996)
[CHART HERE]
Japan 18.1%
Hong Kong 17.8%
Singapore/Malaysia 20.6%
Thailand 7.4%
Taiwan 1.3%
China 1.2%
Philippines 3.8%
India/Pakistan 3.4%
Other 26.4%
The Fund seeks to find investment "value" by analyzing the earnings potential of
a company relative to its current stock price and historical prices.
In our opinion, the gross domestic product (value of goods and
services) of Pacific Rim countries excluding Japan should rise about 6.5% in
1997. That is more than twice the rate of growth many economists anticipate
for the U.S. We believe more U.S. investors will consider the region's
investment opportunities as domestic growth slows next year. This is a
positive for Pacific Rim stock markets which are greatly affected by foreign
inflows of capital.
Investing in emerging markets involves special risks which result
from differences in the regulation of financial data and reporting, currency
fluctuations, and political and economic systems that tend to be less stable
than those in the U.S. However, we believe the Pacific Rim offers substantial
reward potential. In our view, the region's risks are worth taking for
long-term investors.
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Comparative Index Returns for the
12 Months Ended October 31, 1996
Morgan Stanley Pacific Index +3.51%
Lipper Pacific Region Fund
Average (38 funds) +5.10%
All performance includes reinvested dividends. Lipper Fund Average
performance is based on net asset values.
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<PAGE>
New Pacific Fund's Performance
Growth of a $10,000 Investment
December 3, 1993 to October 31, 1996
[CHART HERE]
New Pacific Fund A Morgan Stanley Pacific Index
Jan-94 $10,000 $10,000
Apr-94 $ 8,770 $10,820
Jul-94 $ 9,030 $11,940
Oct-94 $ 9,930 $11,590
Jan-95 $ 8,900 $11,300
Apr-95 $ 8,140 $11,120
Jul-95 $ 8,410 $10,670
Oct-95 $ 8,560 $11,110
Jan-96 $ 8,560 $11,640
Apr-96 $ 9,150 $11,890
Jul-96 $ 9,360 $11,960
Oct-96 $ 8,990 $10,940
Chart assumes $10,000 invested on December 3, 1993 and includes the effect of a
4.75% front-end sales charge and the reinvestment of all dividends. Performance
of other classes of New Pacific Fund will vary due to differing charges and
expenses.
New Pacific Fund Performance
Average Annual Return Through October 31, 1996
Lifetime One Year
Class A (Est. 1993) -2.58% +3.17%
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Class B (Est. 1994)
Excluding Sales Charge -0.09% +7.54%
Including Sales Charge -1.22% +3.54%
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Class C (Est. 1994)
Excluding Sales Charge -0.92% +7.58%
Including Sales Charge -0.92% +6.58%
All performance includes reinvestment of distributions and applicable sales
charges as described below. Return and share value will fluctuate so that shares
when redeemed may be worth more or less than the original cost. Past performance
is not a guarantee of future results. Performance for Class B and C shares
"excluding sales charge" assumes the investment was not redeemed.
Class A shares, initially offered December 3, 1993, have a 4.75% maximum
front-end sales charge and a 12b-1 fee of 0.30%.
Class B shares, initially offered March 29, 1994, do not carry a front-end
sales charge, but are subject to a 1% annual distribution and service fee.
They are also subject to a deferred sales charge if redeemed before the end
of the sixth year.
Class C shares, initially offered July 7, 1994, have a 1% annual distribution
and service fee. If shares are redeemed within 12 months, a 1% contingent
deferred sales charge applies.
The average annual total returns for the lifetime and one-year periods ended
October 31, 1996 for New Pacific Fund's Institutional Class were -4.45% and
+8.77%. This class was initially offered February 3, 1994 and is available
without sales or asset-based distribution charges only to institutional
accounts.
<PAGE>
BOND FUNDS
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Corporate Income Fund
Managed by Tim Policinski,
Lincoln Investment Management Inc.
Seeks to provide high current income consistent with preservation of capital
by investing in a diversified mix of investment grade fixed income securities
issued by U.S. corporations.
Corporate Income Fund's total return for the 1996 fiscal year was +4.81%
(capital change plus income for A Class shares at net asset value).
Your Fund performed well during the fall of 1995 as the market
anticipated lower interest rates. The Federal Reserve Board lowered its
interest rate target on December 19, 1995 by 25 basis points (0.25%) to
5.25%. At the time, we maintained a duration somewhat longer than the
benchmark Lehman Brothers Corporate Bond Index, allowing the Fund to benefit
more from falling interest rates. Duration measures a bond's sensitivity to
interest rates and indicates the likely change in a bond's price given a 1%
change in interest rates.
Beginning in February, optimism about U.S. economic growth
increased. While the healthy economy helped corporations generate profits to
pay bond interest and repay principal, it also ignited a fear of inflation
that prompted investors to demand higher yields from fixed income
investments.
As concern about consumer prices grew last winter, bond prices
declined sharply, and your Fund's longer duration caused it to underperform
its benchmark. To help preserve your Fund's principal while still allowing
the Fund to benefit from the modest recovery in bond prices that we believed
would occur, we moved closer to the index's duration.
In September, in response to economic signals that showed inflation
was well under control, we again increased your Fund's duration, allowing the
portfolio to benefit from the substantial drop in interest rates that
occurred in October.
For 1997, our outlook for corporate bonds is generally positive. We
believe interest rates should continue to fall as U.S. economic growth slows.
However, in our opinion, the slowdown will not be pronounced enough to affect
the ability of most corporations to meet their bond obligations. Since your
Fund focuses on investment grade bonds, which generally tend to be more
affected by changes in interest rates than changes in corporate profits, we
believe it is well-positioned for the months ahead.
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Portfolio Highlights
(October 31, 1996)
Average Effective Maturity 12.89 years
Average Effective Duration 6.10 years
Average Quality A
30-Day Annualized Yield* 5.81%
*For Class A shares based on Securities and Exchange Commission guidelines.
SEC Yields for B and C classes were 4.92% and 4.93% respectively.
Comparative Index Returns for the
12 Months Ended October 31, 1996
Lehman Brothers Corporate
Bond Index +6.22%
Lipper Corporate BBB Bond
Fund Average (96 funds) +5.54%
All performance includes reinvested dividends. Lipper Fund Average
performance is based on net asset values.
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<PAGE>
Corporate Income Fund's Performance
Growth of a $10,000 Investment
December 3, 1993 to October 31, 1996
[CHART HERE]
Corporate Income Fund A Lehman Brothers Corporate Bond Index
Dec-93 $ 9,525 $10,000
Jan-94 $ 9,669 $10,194
Apr-94 $ 9,020 $ 9,555
Jul-94 $ 9,100 $ 9,736
Oct-94 $ 8,909 $ 9,544
Jan-95 $ 9,124 $ 9,810
Apr-95 $ 9,571 $10,347
Jul-95 $10,058 $10,884
Oct-95 $10,487 $11,336
Jan-96 $10,915 $11,820
Apr-96 $10,405 $11,346
Jul-96 $10,542 $11,514
Oct-96 $10,992 $12,042
Chart assumes $10,000 invested on December 3, 1993 and includes the effect of a
4.75% front-end sales charge and the reinvestment of all dividends. Performance
of other classes of Corporte Income Fund will vary
Corporate Income Fund Performance
Average Annual Return Through October 31, 1996
Lifetime One Year
Class A (Est. 1993) +3.08% -0.20%
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Class B (Est. 1994)
Excluding Sales Charge +8.37% +4.16%
Including Sales Charge +7.28% +0.20%
- --------------------------------------------------------------------------------
Class C (Est. 1994)
Excluding Sales Charge +8.83% +4.06%
Including Sales Charge +8.83% +3.07%
All performance includes reinvestment of distributions and applicable sales
charges as described below. Return and share value will fluctuate so that shares
when redeemed may be worth more or less than the original cost. Past performance
is not a guarantee of future results. Performance for Class B and C shares
"excluding sales charge" assumes the investment was not redeemed.
Class A shares, initially offered December 3, 1993, have a 4.75% maximum
front-end sales charge and a 12b-1 fee of 0.30%.
Class B shares, initially offered July 27, 1994, do not carry a front-end
sales charge, but are subject to a 1% annual distribution and service fee.
They are also subject to a deferred sales charge if redeemed before the end
of the sixth year.
Class C shares, initially offered July 7, 1994, have a 1% annual distribution
and service fee. If shares are redeemed within 12 months, a 1% contingent
deferred sales charge applies.
The average annual total returns for the lifetime and one-year periods ended
October 31, 1996 for Corporate Income Fund's Institutional Class were +5.36%
and +5.19%. This class was initially offered February 3, 1994 and is
available without sales or asset-based distribution charges only to
institutional accounts.
<PAGE>
Federal Bond Fund
Managed by Tim Policinski,
Lincoln Investment Management Inc.
Seeks to maximize current income consistent with preservation of capital by
investing in securities issued by the U.S. government, its agencies and
instrumentalities.
Fiscal 1996 was a roller coaster year for government bonds.
During the fall of calendar 1995, Federal Bond Fund performed
well as the Federal Reserve Board lowered its interest rate target on December
19, 1995 by 25 basis points (0.25%) to 5.25%.
Beginning in February 1996, however, the fortunes of the bond market
suddenly and unexpectedly turned south. Optimism about more interest rate
cuts by the Fed faded and bond prices fell sharply. Strong growth in the
number of new jobs in the U.S. and higher commodity prices generated a fear
of higher inflation.
This fear proved unwarranted. The bond market recovered some ground
starting in the late summer following Alan Greenspan's reappointment for a
second-term as Fed chairman. Still, prices of long-term Treasury bonds as of
October 31, 1996 were lower than a year earlier.
Your Fund provided a total return of +3.43% (capital change plus
income for A Class shares at net asset value) in fiscal 1996, an amount that
exceeded the U.S.'s inflation rate during the period.
We are hopeful that November's national election results will result
in restraint in federal spending and a resumption of the long-term decline in
interest rates that has been underway since the early 1980s. Since neither
party has a mandate for tax cuts or new programs, there is reason to be
optimistic that the government's annual budget deficit may shrink as a
percentage of America's gross national product. This bodes well for Treasury
prices because when the government borrows less, interest rates generally
fall.
At the start of the fiscal year, Federal Bond Fund maintained a
duration longer than the benchmark Lehman Brothers Government Bond Index,
allowing the Fund to benefit more from declining interest rates in the fall
of 1995 than did the Index. However, your Fund's longer duration caused it to
underperform this index as bond prices fell. Duration measures a bond's
sensitivity to interest rates and indicates the likely change in a bond's
price given a 1% change in interest rates.
As of this writing, your Fund's duration remains slightly longer
than that of our benchmark, positioning us to benefit from a rise in bond
prices that, in our opinion, should occur as U.S. economic growth slows in
1997. Keep in mind, however, that income has historically been the dominant
component of total return from bonds, a pattern we believe will continue.
- -------------------------------------------------------------------------------
Portfolio Highlights
(October 31, 1996)
Average Effective Maturity 11.54 years
Average Effective Duration 5.03 years
Average Quality AAA
30-Day Annualized Yield* 5.31%
*For Class A shares based on Securities and Exchange Commission guidelines.
SEC Yields for B and C classes were 4.58% and 4.50% respectively.
Comparative Index Returns for the
12 Months Ended October 31, 1996
Lehman Brothers Government
Bond Index +5.12%
Lipper General U.S. Government
Bond Fund Average
(169 funds) +4.04%
All performance includes reinvested dividends. Lipper Fund Average
performance is based on net asset values.
- -------------------------------------------------------------------------------
<PAGE>
Federal Bond Fund's Performance
Growth of a $10,000 Investment
December 3, 1993 to October 31, 1996
[CHART HERE]
Federal Bond Fund A Lehman Brothers Government Bond Index
Dec-93 $ 9,525 $10,000
Jan-94 $ 9,640 $10,239
Apr-94 $ 9,140 $ 9,276
Jul-94 $ 9,242 $ 9,434
Oct-94 $ 9,091 $ 9,032
Jan-95 $ 9,277 $ 9,467
Apr-95 $ 9,619 $ 9,996
Jul-95 $10,012 $10,716
Oct-95 $10,338 $11,471
Jan-96 $10,697 $12,076
Apr-96 $10,252 $11,074
Jul-96 $10,345 $11,258
Oct-96 $10,693 $11,876
Chart assumes $10,000 invested on December 3, 1993 and includes the effect of a
4.75% front-end sales charge and the reinvestment of all dividends. Performance
of other classes of Federal Bond Fund will vary due to differing charges and
expenses.
Federal Bond Fund Performance
Average Annual Return Through October 31, 1996
Lifetime One Year
Class A (Est. 1993) +2.20% -1.49%
- --------------------------------------------------------------------------------
Class B (Est. 1994)
Excluding Sales Charge +6.32% +2.76%
Including Sales Charge +5.09% -1.17%
- --------------------------------------------------------------------------------
Class C (Est. 1994)
Excluding Sales Charge +5.74% +2.74%
Including Sales Charge +5.74% +1.75%
All performance includes reinvestment of distributions and applicable sales
charges as described below. Return and share value will fluctuate so that shares
when redeemed may be worth more or less than the original cost. Past performance
is not a guarantee of future results. Performance for Class B and C shares
"excluding sales charge" assumes the investment was not redeemed.
Class A shares, initially offered December 3, 1993, have a 4.75% maximum
front-end sales charge and a 12b-1 fee of 0.30%.
Class B shares, initially offered May 11, 1994, do not carry a front-end
sales charge, but are subject to a 1% annual distribution and service fee.
They are also subject to a deferred sales charge if redeemed before the end
of the sixth year.
Class C shares, initially offered September 14, 1994, have a 1% annual
distribution and service fee. If shares are redeemed within 12 months, a 1%
contingent deferred sales charge applies.
The average annual total returns for the lifetime and one-year periods ended
October 31, 1996 for Federal Bond Fund's Institutional Class were +3.15% and
+0.60%. This class was initially offered February 3, 1994 and is available
without sales or asset-based distribution charges only to institutional
accounts.
<PAGE>
FINANCIAL
- ----------------------
STATEMENTS
- ----------------------
Delaware Group Advisor Funds, Inc.
Enterprise Fund
Statement of Net Assets
October 31, 1996
Number Market
of Shares Value
COMMON STOCK - 94.67%
AUTOMOBILES & AUTO PARTS - 1.13%
*Tower Automotive .............................. 11,000 $ 321,063
----------
321,063
----------
Banking, Finance & Insurance - 10.81%
Charter One Financial ......................... 11,025 478,898
CONSECO ....................................... 17,600 941,600
First USA ..................................... 9,100 523,250
UNUM .......................................... 7,800 490,425
Washington Mutual ............................. 8,200 345,425
Western National .............................. 16,600 298,800
----------
3,078,398
----------
Buildings & Materials - 1.24%
*Dynatech ...................................... 7,100 351,894
----------
351,894
----------
Cable,Media, & Publishing - 3.08%
*Evergreen Media Class A ....................... 12,700 341,312
Omnicom Group ................................. 10,800 537,300
----------
878,612
----------
Chemicals - 3.15%
Crompton & Knowles ............................ 16,700 300,600
IMC Global .................................... 15,900 596,250
----------
896,850
----------
Computers & Technology - 10.93%
*Adaptec ....................................... 9,000 547,313
*BMC Software .................................. 7,200 596,700
*Cadence Design Systems ........................ 13,725 500,962
*Parametric Technology ......................... 9,800 478,363
*STORAGE TECHNOLOGY ............................ 15,800 673,475
*VeriFone ...................................... 6,200 208,475
*Xircom ........................................ 5,300 107,656
----------
3,112,944
----------
Electronics & Electrical - 2.66%
*Etec Systems .................................. 5,800 158,050
*UCAR International ............................ 8,800 344,300
*Xilinx ........................................ 7,800 254,963
----------
757,313
----------
Energy - 16.29%
*BJ SERVICES ................................... 16,600 744,925
*Benton Oil & Gas .............................. 11,700 285,919
*Diamond Offshore Drilling ..................... 9,680 589,270
*ENSCO INTERNATIONAL ........................... 20,500 886,625
Top 10 holdings in boldface.
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Contined)
Energy (Continued)
*Oryx Energy ..................................... 23,600 $ 454,300
*Reading & Bates ................................. 17,000 488,750
TRANSOCEAN OFFSHORE ............................. 10,600 670,450
*Triton Energy ................................... 11,700 522,113
----------
4,642,352
----------
Farming & Agriculture - 4.15%
Delta & Pine Land ............................... 1,500 54,000
DOLE FOOD ....................................... 16,900 659,100
Pioneer Hi-Bred Internationa .................... 7,000 469,875
----------
1,182,975
----------
Food,Beverage & Tobacco - 1.90%
Coca-Cola Enterprises ........................... 12,700 541,337
----------
541,337
----------
Healthcare & Pharmaceuticals - 13.04%
*BIOCHEM PHARMA .................................. 18,100 772,644
*Biogen .......................................... 6,300 470,137
*Biovail ......................................... 5,000 146,250
*Centocor ........................................ 15,500 454,344
*HEALTHSOUTH ..................................... 17,900 671,250
*Liposome ........................................ 25,400 433,387
*MedPartners ..................................... 25,894 547,011
*VISX ............................................ 8,800 220,000
----------
3,715,023
----------
Industrial Machinery - 1.15%
Harnischfeger Industries ........................ 8,200 328,000
----------
328,000
----------
Leisure, Lodging & Entertainment - 2.75%
*Sun International Hotels ........................ 10,000 472,500
*Trump Hotels & Casino Resorts ................... 19,600 311,150
----------
783,650
----------
Metals & Mining - 1.69%
Potash Corporation of Saskatchewan .............. 6,800 481,950
----------
481,950
----------
Retail - 8.06%
Claire's Stores ................................. 28,900 491,300
Dollar General .................................. 9,800 271,950
*Kohl's .......................................... 3,800 136,800
*Proffitt's ...................................... 7,600 305,900
*Staples ......................................... 21,975 412,031
*Zale ............................................ 35,000 678,125
----------
2,296,106
----------
Telecommunications - 4.95%
*Brooks Fiber Properties ......................... 8,300 241,737
*McLeod Class A .................................. 12,900 419,250
*Octel Communications ............................ 31,400 500,437
*Paging Network .................................. 14,400 247,500
----------
1,408,924
----------
Textiles, Apparel & Furniture - 4.00%
*Lear ............................................ 14,600 540,200
*TOMMY HILFIGER .................................. 11,500 598,000
----------
1,138,200
----------
<PAGE>
Enterprise Fund
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
Transportation & Shipping - 3.69%
Tidewater ................................... 12,800 $ 560,000
*Wisconsin Central Transportation ............ 13,500 491,063
----------
1,051,063
----------
Total Common Stock
(cost $21,418,126) .......................... 26,966,654
----------
Principal
Amount
REPURCHASE AGREEMENTS - 5.49%
With Chase Manhattan Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $489,075,
collateralized by $491,000 U.S. Treasury
Notes 5.50% due 11/15/98,
market value $500,124) ......................... $ 489,000 489,000
With Prudential Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $538,082,
collateralized by $533,000 U.S. Treasury
Notes 6.125% due 5/31/97,
market value $548,533) ......................... 538,000 538,000
With PaineWebber Securities 5.52%
11/01/96 (dated 10/31/96,
to be repurchased at $538,082,
collateralized by $548,000 U.S. Treasury
Notes 5.875% due 10/31/98,
market value $548,782) ......................... 538,000 538,000
---------
Total Repurchase Agreements
(cost $1,565,000) .............................. 1,565,000
----------
TOTAL MARKET VALUE OF SECURITIES - 100.16%
(cost $22,983,126) ....................................... 28,531,654
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (0.16%) ............................... (45,389)
------------
NET ASSETS APPLICABLE TO 2,083,536 SHARES
($.01 PAR VALUE OUTSTANDING) - 100.00% .................... $28,486,265
============
NET ASSET VALUE -
ENTERPRISE FUND A CLASS
($18,825,726/1,384,863 SHARES) ........................... $13.59
======
(MAXIMUM OFFERING PRICE $13.59/.9525 = $14.27)
NET ASSET VALUE -
ENTERPRISE FUND B CLASS
($2,364,609/164,873 SHARES) .............................. $14.34
======
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE -
ENTERPRISE FUND C CLASS
($70,503/4,826 SHARES) ................................... $14.61
======
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
<PAGE>
Market
Value
NET ASSET VALUE -
ENTERPRISE FUND INSTITUTIONAL CLASS
($7,225,427 / 528,974 SHARES) ............................... $13.66
======
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1996:
Common stock $.01 par value, 70,000,000 shares
authorized to the Enterprise Fund with 20,000,000
shares allocated to the Enterprise Fund A Class,
20,000,000 shares allocated to the Enterprise Fund B
Class, 15,000,000 shares allocated to the Enterprise
Fund C Class and 15,000,000 shares allocated to the
Enterprise Fund Institutional Class .......................... $21,000,706
Accumulated undistributed:
Net realized gain on investments and futures contracts ....... 2,013,391
Net unrealized appreciation of investments
and futures contracts ........................................ 5,472,168
-----------
Total Net Assets .............................................. $28,486,265
===========
- -----------
* Non-income producing security for the year ended October 31, 1996.
See accompanying notes
Delaware Group Adviser Funds, Inc.
U.S. Growth Fund
Statement of Net Assets
October 31, 1996
Number Market
of Shares Value
COMMON STOCK - 95.39%
Aerospace & Defense - 2.83%
Boeing ................................................ 8,000 763,000
---------
763,000
---------
Banking, Finance & Insurance - 4.64%
Chase Manhattan ....................................... 3,200 274,400
Chubb ................................................. 1,400 70,000
Citicorp .............................................. 5,600 554,400
Conseco ............................................... 6,600 353,100
---------
1,251,900
---------
Buildings & Materials - 3.01%
FLUOR ................................................. 12,400 812,200
---------
812,200
---------
Chemicals - 2.19%
Monsanto .............................................. 14,900 590,412
---------
590,412
---------
Computers & Technology - 18.03%
*Cisco Systems ......................................... 8,800 543,950
Computer Associates International ..................... 11,425 675,503
Electronic Data Systems ............................... 2,600 117,000
First Data ............................................ 12,144 968,452
Hewlett-Packard ....................................... 5,600 247,100
International Business Machines ....................... 6,300 812,700
*MICROSOFT ............................................. 5,800 796,412
*Oracle ................................................ 10,550 446,397
*SunGuard Data Systems ................................. 6,100 258,869
---------
4,866,383
---------
Top 10 holdings in boldface.
<PAGE>
U.S. Growth Fund
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
Consumer Products - 6.12%
GILLETE ............................................. 14,800 $1,106,300
Procter & Gamble .................................... 5,500 544,500
----------
1,650,800
----------
Electronics & Electrical - 5.33%
Intel................................................ 13,100 1,438,544
----------
1,438,544
----------
Energy - 7.50%
*BJ Services ......................................... 6,200 278,225
*Diamond Offshore Drilling ........................... 9,400 572,225
Schlumberger Limited ................................ 5,100 505,538
*Triton Energy ....................................... 15,000 669,375
----------
2,025,363
----------
Healthcare & Pharmaceuticals - 19.00%
*Amgen ............................................... 6,700 410,794
*Biochem Pharma ...................................... 7,300 311,619
*Boston Scientific ................................... 7,900 429,563
*Centocor ............................................ 7,500 219,844
Eli Lilly & Company ................................. 8,900 627,450
*Healthsouth ......................................... 4,700 176,250
Johnson & Johnson ................................... 6,800 334,900
MERCK & COMPANY ..................................... 16,800 1,245,300
Pfizer .............................................. 7,200 595,800
Warner-Lambert ...................................... 12,200 776,225
----------
5,127,745
----------
Leisure, Lodging & Entertainment - 0.98%
McDonald's .......................................... 6,000 266,250
----------
266,250
----------
Paper & Forest Products - 2.11%
Kimberly-Clark ...................................... 6,100 568,825
----------
568,825
----------
Retail - 15.87%
*AutoZone ............................................ 22,300 571,437
Dollar General ...................................... 23,000 638,250
GAP ................................................. 27,100 785,900
Home Depot .......................................... 11,300 618,675
*Kohl's .............................................. 17,500 630,000
LOWE'S COMPANIES .................................... 19,800 799,425
*Staples ............................................. 12,800 240,000
----------
4,283,687
----------
Telecommunications - 3.72%
GTE ................................................. 7,100 299,087
Lucent Technologies ................................. 1,900 89,300
*WorldCom ............................................ 25,200 615,825
----------
1,004,212
----------
Textiles, Apparel & Furniture - 3.02%
GUCCI GROUP N.V ..................................... 11,800 814,200
----------
814,200
----------
Miscellaneous - 1.04%
*CUC International ................................... 11,400 279,300
----------
279,300
----------
Total Common Stock
(cost $ 22,028,334) ............................... 25,742,821
----------
<PAGE>
Principal Market
Amount Value
REPURCHASE AGREEMENTS - 4.96%
With Chase Manhattan Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $418,064,
collateralized by $419,000 U.S. Treasury
Notes 5.50% due 11/15/98,
market value $427,582) ......................... $ 418,000 $ 418,000
With Prudential Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $460,070,
collateralized by $456,000 U.S. Treasury
Notes 6.125% due 5/31/97,
market value $468,969) ......................... 460,000 460,000
With PaineWebber Securities 5.52%
11/01/96 (dated 10/31/96,
to be repurchased at $460,070,
collateralized by $468,000 U.S. Treasury
Notes 5.875% due 10/31/98,
market value $469,183) ......................... 460,000 460,000
----------
Total Repurchase Agreements
(cost $1,338,000) .............................. 1,338,000
----------
TOTAL MARKET VALUE OF SECURITIES
(cost $23,366,334) - 100.35% ................................ 27,080,821
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (0.35%) .................................. (95,577)
------------
NET ASSETS APPLICABLE TO 1,947,606 SHARES
($.01 PAR VALUE OUTSTANDING) - 100.00% ...................... $ 26,985,244
============
NET ASSET VALUE
U.S. GROWTH FUND A CLASS
($16,117,954/1,166,536 shares) .............................. $13.82
(MAXIMUM OFFERING PRICE $13.82/.9525 = $14.51)
NET ASSET VALUE
U.S. GROWTH FUND B CLASS
($809,032/59,445 shares) .................................... $13.61
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE
U.S. GROWTH FUND C CLASS
($55,170/3,890 shares) ...................................... $14.18
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE
U.S. GROWTH FUND INSTITUTIONAL CLASS
($10,003,088/717,735 shares) ................................ $13.94
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1996:
Common stock $.01 par value, 70,000,000 shares
authorized to the U.S. Growth Fund with 20,000,000
shares allocated to the U.S. Growth Fund A Class,
20,000,000 shares allocated to the U.S. Growth Fund
B Class, 15,000,000 shares allocated to the U.S. Growth
Fund C Class and 15,000,000 shares allocated to the
U.S. Growth Fund Institutional Class ........................ $ 20,556,392
Accumulated undistributed:
Net realized gain on investments ............................ 2,714,365
Net unrealized appreciation of investments .................. 3,714,487
------------
Total Net Assets ............................................. $ 26,985,244
============
- ----------
*Non-income producing security for the year ended October 31, 1996
See accompanying notes
<PAGE>
Delaware Group Adviser Funds, Inc.
World Growth Fund
Statement of Net Assets
October 31, 1996
Number Market
of Shares Value
COMMON STOCK - 91.10%
Australia - 2.56%
WOODSIDE PETROLEUM, LTD. ......................... 60,000 $ 422,741
----------
422,741
----------
Chile - 2.15%
Embotelladora Andina SA,ADR ...................... 10,300 355,350
----------
355,350
----------
Denmark - 2.14%
Sophus Berendsen,Class B ......................... 2,860 352,130
----------
352,130
----------
France - 8.53%
Brioche Pasquier SA .............................. 2,000 279,775
CASTORAMA DUBOIS INVESTISSEM ..................... 2,268 387,178
Cermex SA ........................................ 3,544 242,003
SEB GROUP ........................................ 2,465 497,756
----------
1,406,712
----------
Germany - 14.05%
ADIDAS ........................................... 6,000 503,903
Bien-Haus ........................................ 600 165,991
Dyckerhoff Preferred Shares ...................... 877 194,099
Gea .............................................. 790 271,113
Heidelberger Zement German ....................... 3,300 242,802
Kampa ............................................ 5,256 183,492
MOEBEL WALTHER ................................... 6,250 385,337
Spar Handels ..................................... 18,000 221,124
Westag and Getalit ............................... 750 146,725
----------
2,314,586
----------
Japan - 31.63%
Chain Store Okuwa ................................ 17,000 247,544
Daifuko .......................................... 24,000 294,737
Familymart ....................................... 7,600 317,334
Fanuc Company .................................... 7,000 224,123
Fuji Machine Manufacturing ....................... 11,000 259,561
Futaba Industrial ................................ 18,000 301,579
Higashi Nihon House .............................. 4,000 57,544
Ito-Yokado,Ltd ................................... 6,000 298,947
Kubota ........................................... 30,000 169,474
Kyocera .......................................... 4,000 263,509
Misumi ........................................... 9,000 205,263
Nippon Kanzai .................................... 8,640 236,463
Nippon Telegraph & Telephone ..................... 35 244,079
Promise .......................................... 7,000 326,053
Rohm ............................................. 6,000 355,263
Saiwa Rakuda Industry ............................ 10,000 114,035
Sankyo ........................................... 13,900 343,842
Secom ............................................ 5,000 297,369
Shimachu ......................................... 8,000 219,649
Shimano .......................................... 8,000 142,456
Tokio Marine & Fire Insurance .................... 27,000 296,053
----------
5,214,877
----------
Top 10 holdings in boldface.
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Netherlands - 8.16%
IHC CALAND .......................................... 10,000 $ 556,617
Koninklijke Ahold ................................... 9,338 543,370
Polygram ............................................ 5,250 245,937
----------
1,345,924
----------
Norway - 5.55%
*PETROLEUM GEO-SERVICES ASA .......................... 12,000 406,907
SAGA PETROLEUM ASA .................................. 30,000 508,633
----------
915,540
----------
Singapore/Malaysia - 6.99%
Carlsberg Brewery Malaysia .......................... 48,000 336,209
Clipsal Industries .................................. 115,000 368,000
R.J. Reynolds Berhad ................................ 110,000 319,945
Sembawang ........................................... 30,000 128,860
----------
1,153,014
----------
Sweden - 2.88%
ERICSSON(LM) TELEPHONE (ordinary shares) ............ 17,600 475,654
----------
475,654
----------
Switzerland - 0.53%
AFG Arbonia-Forster ................................. 200 86,700
----------
86,700
----------
United Kingdom - 5.93%
Cable & Wireless plc ................................ 48,000 381,889
RMC Group ........................................... 20,000 353,222
Redland ............................................. 35,519 243,293
----------
978,404
----------
Total Common Stock
(cost $13,475,372) .................................. 15,021,632
----------
Principal
Amount
CURRENCY PUT OPTIONS - 3.54%
German Deutsche Marks 04/14/97
(Strike Price 1.500) .......................... $2,070,000 43,263
Japanese Yen 11/08/96
(Strike Price 102.65) ......................... 4,500,000 455,850
Japanese Yen 04/11/97
(Strike Price 108.50) ......................... 1,100,000 55,660
Japanese Yen 06/23/97
(Strike Price 109.00) ......................... 700,000 29,260
----------
Total Currency Put Options
(cost $307,955) ............................... 584,033
----------
REPURCHASE AGREEMENTS - 4.11%
With Chase Manhattan Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $212,032,
collateralized by $213,000 U.S. Treasury
Notes 5.50% due 11/15/98,
market value of $216,667) ....................... 212,000 212,000
With Prudential Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $233,036,
collateralized by $231,000 U.S. Treasury
Notes 6.125% due 05/31/97,
market value of $237,639) ....................... 233,000 233,000
<PAGE>
World Growth Fund
Statement of Net Assets (Continued)
Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber Securities 5.52%
11/01/96 (dated 10/31/96,
to be repurchased at $233,036,
collateralized by $237,000 U.S. Treasury
Notes 5.875% due 10/31/98,
market value of $237,747) ......................... $233,000 $ 233,000
-----------
Total Repurchase Agreements
(cost $678,000) .................................. 678,000
-----------
TOTAL MARKET VALUE OF SECURITIES -
(cost $14,461,327) 98.75% .................................... 16,283,665
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.25% ................................... 206,208
-----------
NET ASSETS APPLICABLE TO 1,338,201 SHARES
($.01 PAR VALUE OUTSTANDING) - 100.00% ........................ $16,489,873
===========
NET ASSET VALUE
WORLD GROWTH FUND A CLASS
($14,886,310/1,201,042 shares) ............................. $12.39
======
(MAXIMUM OFFERING PRICE $12.39/.9525 = $13.01)
NET ASSET VALUE
WORLD GROWTH FUND B CLASS
($1,208,143/104,484 shares) ................................. $11.56
======
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE
WORLD GROWTH FUND C CLASS
($112,085/9,681 shares) ...................................... $11.58
======
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE
WORLD GROWTH FUND INSTITUTIONAL CLASS
($283,335/22,994 shares) ..................................... $12.32
======
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1996:
Common stock $.01 par value, 70,000,000 shares
authorized to the World Growth Fund with 20,000,000
shares allocated to the World Growth Fund A Class,
20,000,000 shares allocated to the World Growth Fund
B Class, 15,000,000 shares allocated to the World Growth
Fund C Class and 15,000,000 shares allocated to the
World Growth Fund Institutional Class ......................... $13,665,786
Accumulated undistributed:
Net realized gain on investments and foreign currencies ....... 1,006,754
Net unrealized appreciation of investments
and foreign currencies ........................................ 1,817,333
-----------
Total Net Assets ............................................... $16,489,873
===========
- ----------
*Non-income producing security for the year ended October 31, 1996.
ADR - American Depository Receipt
See accompanying notes
<PAGE>
Delaware Group Adviser Funds, Inc.
New Pacific Fund
Statement of Net Assets
October 31, 1996
Number of Market
Shares Value
COMMON STOCK - 81.74%
Australia - 2.59%
National Foods .................................. 88,300 $ 108,349
Pasminco Limited ................................ 63,750 98,917
Village Roadshow ................................ 40,000 115,581
----------
322,847
----------
China - 3.00%
China North Industries .......................... 76,000 34,200
*Huaneng Power International - ADR ............... 9,400 143,350
*WANT WANT HOLDINGS .............................. 80,000 196,800
----------
374,350
----------
Hong Kong - 18.98%
Aeon Credit Service ............................. 274,000 92,133
CHAIFA HOLDINGS,LIMITED ......................... 600,000 180,413
China Apollo Holdings ........................... 88,000 7,512
China Light & Power ............................. 30,500 141,608
China Overseas Land & Investment ................ 462,000 171,779
China Resources ................................. 100,000 112,515
China Travel International Investment Bank ...... 530,000 164,505
*Continental Mariner Investment .................. 350,000 48,433
Cosco Pacific Unlimited ......................... 158,000 151,210
ELEC & Eltek Int ................................ 50,000 151,000
Guangdong Electric Power ........................ 180,000 124,543
*Guangshen Railway ............................... 349,000 129,764
Guoco Group ..................................... 28,000 148,106
New World Development ........................... 24,000 139,674
ORIENTAL PRESS GROUP ............................ 442,000 234,368
REGAL HOTEL INTERNATIONAL ....................... 648,000 178,084
*Smartone Telecom ................................ 48,000 102,427
Winsor Industrial ............................... 98,000 22,813
*Winsor Properties Holdings ...................... 49,000 67,173
----------
2,368,060
----------
India - 3.40%
CESC Limited, GDR ............................... 18,000 31,500
Crompton Greaves, GDR ........................... 12,000 52,020
*Industrial Credit & Investment, GDR ............. 10,000 87,400
Larsen & Toubro, GDR ............................ 3,250 47,125
Ranbaxy Laboratories, GDR ....................... 5,000 90,000
*Southern Petrochemical, GDR ..................... 4,000 16,000
*Southern Petrochemical 144A, GDR ................ 2,000 8,000
Steel Authority India, GDR ...................... 11,000 92,125
----------
424,170
----------
Indonesia - 2.32%
PT Bank Unum Nasional ........................... 150,000 86,935
PT Panin Bank ................................... 78,750 78,604
PT Sinar Mas Agro ............................... 146,000 100,287
PT Supreme Cable Manufacturing .................. 26,500 23,891
----------
289,717
----------
Japan - 18.09%
ADO Electronic Industry ......................... 3,000 71,579
Asatsu .......................................... 3,000 110,789
Autobacs Seven .................................. 1,000 78,772
Hitachi Limited ................................. 10,000 88,596
Top 10 holdings in boldface.
<PAGE>
New Pacific Fund
Statement of Net Assets (Continued)
Number of Market
Shares Value
COMMON STOCK (Continued)
Japan (Continued)
Hitachi Zosen ................................... 19,000 $ 92,667
Inaba Denkisangyo ............................... 5,000 105,263
JGC ............................................. 4,000 42,105
Japan Radio ..................................... 9,000 120,000
Kandenko ........................................ 6,000 64,737
Kawasaki ........................................ 20,000 91,404
Kirin Brewery ................................... 8,000 82,105
Koito Manufacturing ............................. 7,000 47,281
Kyocera ......................................... 1,000 65,877
Mitsubishi Cable ................................ 17,000 93,351
Mitsubishi Estate ............................... 5,000 62,281
Mitsubishi Motors ............................... 12,000 99,158
*Mitsui Mining ................................... 18,000 76,105
NIFCO ........................................... 8,800 94,175
Nippon Telegraph & Telephone .................... 11 76,711
Nomura Securities ............................... 5,000 82,456
Seven Eleven Japan .............................. 2,000 116,140
Shimadzu ........................................ 9,000 52,895
Snow Brand Milk Products ........................ 8,000 49,474
Sony ............................................ 1,300 77,886
Sumitoma Osaka Cement ........................... 11,000 44,868
Taisho Pharmaceutical ........................... 4,000 79,298
Taiyo Yuden Limited ............................. 8,000 103,158
Tokyu Construction .............................. 23,000 88,368
----------
2,257,499
----------
Pakistan - 0.59%
*Pakistan Telecommunications, GDR ................ 941 73,869
----------
73,869
----------
Philippines - 3.80%
*Belle ........................................... 475,000 126,522
Picop Resources ................................. 137,500 24,591
Sime Darby Pilipinas ............................ 140,000 165,145
Union Bank of Philippines ....................... 138,360 157,945
----------
474,203
----------
Singapore/Malaysia - 17.58%
ACMA ............................................ 28,800 63,796
ACP Industries Berhad ........................... 21,500 141,235
DCB Holdings Berhad ............................. 41,000 140,344
GADEK (MALAYSIA) BERHAD ......................... 22,000 182,825
IOI BERHAD ...................................... 120,000 188,999
Land & General Holdings ......................... 74,000 161,061
Leader Universal Holdings ....................... 50,000 111,793
MBF Capital-Berhad .............................. 118,000 162,501
MBM RESOURCES BERHAD ............................ 73,000 174,772
Malaysian Industrial ............................ 92,000 156,549
MALAYSIAN RESOURCES ............................. 50,000 191,927
MULTI-PURPOSE HOLDINGS .......................... 112,000 191,468
Rashid Hussain .................................. 12,000 75,030
Sembawang ....................................... 34,000 146,042
United Overseas Land ............................ 74,000 105,602
----------
2,193,944
----------
<PAGE>
Number of Market
Shares Value
COMMON STOCK (Continued)
South Korea - 2.70%
Daewoo Securities ............................... 1,180 $ 23,707
Han Wha ......................................... 4,010 56,298
Hyundai Construction ............................ 860 25,100
Korea Electric Power ............................ 700 20,587
*Korea Housing Bank .............................. 1,800 34,638
*Korea Industrial Development .................... 1,320 19,970
L.G. Electronics, GDR ........................... 408 1,897
Samchully ....................................... 639 52,203
Samsung Display Devices ......................... 700 44,055
Samsung Electronics ............................. 667 46,894
*Samsung Electronics, GDR ........................ 336 11,014
Shinsegae Department Store ...................... 4 213
----------
336,576
----------
Taiwan - 1.28%
Asia Cement, GDR ................................ 250 5,375
GVC, GDR ........................................ 16,700 129,425
Tung Ho Steel 144A, GDR ......................... 2,666 25,331
----------
160,131
----------
Thailand - 7.41%
Bank of Ayudhya ................................. 26,600 76,113
*Dhipaya Insurance ............................... 20,900 63,899
*EMC Public Limited .............................. 33,500 129,341
First Bangkok City Bank ......................... 82,340 95,211
First Bangkok City Bank plc ..................... 16,660 19,264
IFTCT Finance & Securities plc .................. 67,000 114,897
Property Perfect Public ......................... 21,000 33,337
Singer Thailand ................................. 21,200 130,464
Thai Military Bank (local) ...................... 59,494 137,588
Thai Military Bank (foreign) .................... 506 1,170
United Communication ............................ 14,800 122,985
----------
924,269
----------
Total Common Stock
(cost $10,986,855) ............................ 10,199,635
----------
PREFERRED STOCK - 0.47%
Cho Sun Brewery-Preferred ....................... 2,200 58,578
----------
Total Preferred Stock
(cost $61,277) ................................ 58,578
----------
INVESTMENT COMPANIES - 3.78%
*R.O.C. Taiwan Fund .............................. 6,300 61,425
*Taipei Fund ..................................... 44 369,072
Taiwan Fund ..................................... 1,900 40,613
----------
Total Investment Companies
(cost $477,679) ............................... 471,110
----------
<PAGE>
New Pacific Fund
Statement of Net Assets (Continued)
Warrants/ Market
Rights Value
WARRANTS & RIGHTS - 0.38%
*ACMA Warrants 7/24/01 ................................ 7,200 $ 4,575
*China Travel International Investment
Warrants 6/30/98 ..................................... 6,400 588
*Daewoo Warrants 11/8/96 ............................... 11 825
*Far East Bank & Trust Rights 12/26/97 ................. 995 21,505
*Jardine Strategic Holdings Warrants 5/2/98............. 6,375 1,849
*Nankai Warrants 12/2/97 ............................... 25 938
*Optec Warrants 2/8/00 ................................ 20 8,875
*Oriental Press Group Warrants 10/2/98 ................. 44,200 3,544
*United Overseas Land Warrants 5/28/01 ................. 7,400 4,466
-------
Total Warrants & Rights
(cost $62,081) ...................................... 47,165
-------
Principal
Amount
CONVERTIBLE BONDS - 2.28%
ACER 4.00% 06/10/01 ............................... $ 10,000 26,250
MBL International Finance-Bermuda
3.00% 11/30/02 ................................... 100,000 110,750
President Enterprises 0.00% 07/22/01 ............... 60,000 91,350
Yangming Marine Transport
2.00% 10/06/01 ................................... 49,000 56,534
--------
Total Convertible Bonds
(cost $240,784) .................................. 284,884
--------
REPURCHASE AGREEMENTS - 6.20%
With Chase Manhattan Securities 5.50%
11/1/96 (dated 10/31/96,
to be repurchased ar $242,037,
collateralized by $242,000 U.S. Treasury
Notes 5.50% due 11/15/98,
market value $247,102) ........................... 242,000 242,000
With Prudential Securities 5.50%
11/1/96 (dated 10/31/96,
to be repurchased ar $266,041,
collateralized by $264,000 U.S. Treasury
Notes 6.125% due 5/31/97,
market value $271,404) ........................... 266,000 266,000
With PaineWebber Securities 5.52%
11/1/96 (dated 10/31/96,
to be repurchased at $266,041
collateralized by $271,000 U.S. Treasury
Notes 5.875% due 10/31/98,
market value $271,528) ........................... 266,000 266,000
--------
Total Repurchase Agreements
(cost $774,000) .................................. 774,000
--------
TOTAL MARKET VALUE OF SECURITIES - 94.85%
(cost $12,602,676) ........................................ 11,835,372
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 5.15% ................................ 642,506
-----------
NET ASSETS APPLICABLE TO 1,322,689 SHARES
($.01 PAR VALUE OUTSTANDING) - 100.00% ..................... $12,477,878
===========
<PAGE>
Market
Value
NET ASSET VALUE -
NEW PACIFIC FUND A CLASS
($11,752,142/1,247,415 SHARES) .............................. $9.42
=====
(MAXIMUM OFFERING PRICE $9.42/.9525 = $9.89)
NET ASSET VALUE -
NEW PACIFIC FUND B CLASS
($562,302/58,104 SHARES) .................................. $9.68
=====
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE -
NEW PACIFIC FUND C CLASS
($44,007/4,637 SHARES) .................................... $9.49
=====
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE -
NEW PACIFIC FUND INSTITUTIONAL CLASS
($119,427/12,533 SHARES) .................................. $9.53
=====
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1996:
Common stock $.01 par value, 70,000,000 shares
authorized to the New Pacific Fund with 20,000,000
shares allocated to the New Pacific Fund A Class,
20,000,000 shares allocated to the New Pacific Fund
B Class, 15,000,000 shares allocated to the New Pacific
Fund C Class and 15,000,000 shares allocated to the
New Pacific Fund Institutional Class ....................... $ 13,125,829
Accumulated undistributed:
Net realized gain on investments and foreign currencies .... 106,958
Net unrealized depreciation of investments
and foreign currencies ................................... (754,909)
------------
Total Net Assets ............................................. $ 12,477,878
============
- ------------
*Non-income producing security for the year ended October 31, 1996.
ADR - American Depository Receipt
GDR - Global Depository Receipt
144A - Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
See accompanying notes
Delaware Group Adviser Funds, Inc.
Corporate Income Fund
Statement of Net Assets
October 31, 1996
Principal Market
Amount Value
CORPORATE BONDS - 81.05%
Banking, Finance & Insurance - 29.19%
American Express 8.50% 08/15/01 .................... $200,000 $216,750
CIT Group Holdings 5.88% 10/15/08 .................. 250,000 230,000
Citicorp Notes 6.33% 01/05/06 ...................... 200,000 191,250
Chrysler Finance 9.50% 12/15/99 .................... 400,000 436,000
Dow Capital 9.00% 05/15/10 ......................... 155,000 177,669
<PAGE>
Corporate Income Fund
Statement of Net Assets (Continued)
Principal Market
Amount Value
CORPORATE BONDS (Continued)
Banking, Finance & Insurance (Continued)
First Bank System 6.88% 09/15/07 ................. $ 250,000 $ 247,500
First Security 7.00% 07/15/05 .................... 250,000 249,062
Ford Motor Credit 7.25% 05/15/99 ................. 340,000 348,500
General Electric Capital
8.75% 05/21/07 ................................. 400,000 459,500
Heller Financial 5.63% 03/15/00 .................. 100,000 97,875
International Lease Finance
8.25% 01/15/00 ................................. 250,000 263,437
John Deere Capital 8.63% 08/01/19 ................ 100,000 110,000
Lehman Brothers Holdings
8.88% 03/01/02 ................................. 300,000 326,625
NationsBank 6.62% 01/15/98 ....................... 220,000 221,925
PaineWebber Group 6.75% 02/01/06 ................. 250,000 241,250
Smith Barney Holdings
7.88% 10/01/99 ................................. 100,000 104,250
Societe Generale-NY Notes
7.40% 06/01/06 ................................. 100,000 102,875
SouthTrust Bank of Birmingham
7.69% 05/15/25 ................................. 250,000 264,063
Tenneco Credit 9.63% 08/15/01 .................... 250,000 279,063
Transamerica Financial
6.80% 03/15/99 ................................. 150,000 152,063
Travelers 8.63% 02/01/07 ........................ 120,000 134,100
Union Bank Switzerland
7.25% 07/15/06 ................................. 500,000 515,000
----------
5,368,757
----------
Cable, Media & Publishing - 2.09%
Continental Cablevision
11.00% 06/01/07 ................................ 250,000 283,437
Viacom International 8.75% 05/15/01 .............. 100,000 100,250
----------
383,687
----------
Energy - 5.08%
Occidental Petroleum 10.13% 09/15/09 ............. 250,000 305,313
Pennzoil 10.13% 11/15/09 ........................ 290,000 351,625
Phillips Petroleum 9.18% 09/15/21 ................ 250,000 276,875
----------
933,813
----------
Food, Beverage & Tobacco - 4.56%
Archer Daniels 8.88% 04/15/11 .................... 250,000 294,062
ConAgra 9.88% 11/15/05 .......................... 250,000 298,125
Nabisco 7.55% 06/15/15 .......................... 250,000 245,938
----------
838,125
----------
Healthcare & Pharmaceuticals - 1.38%
Allegiance 7.30% 10/15/06 ........................ 250,000 253,125
----------
253,125
----------
Leisure, Lodging & Entertainment - 1.28%
Darden Restaurants 6.38% 02/01/06 ................ 250,000 234,687
----------
234,687
----------
Metals & Mining - 3.70%
Cyprus Amax Minerals 7.37% 05/15/07 .............. 250,000 253,750
Inco 9.60% 06/15/22 ............................. 100,000 110,625
Newmont Gold 8.91% 01/05/09 ...................... 96,551 104,516
Noranda 8.13% 06/15/04 .......................... 200,000 212,000
----------
680,891
----------
<PAGE>
Principal Market
Amount Value
CORPORATE BONDS (Continued)
Paper & Forest Products - 2.34%
Georgia-Pacific 9.13% 07/01/22 ............... $ 400,000 $ 429,500
-----------
429,500
-----------
Retail - 5.40%
Dayton Hudson 10.00% 01/01/11 ................ 250,000 306,562
Federated Department Stores
10.00% 02/15/01 ............................ 100,000 108,875
Sears Roebuck 9.05% 02/06/12 ................. 500,000 578,125
-----------
993,562
-----------
Telecommunications - 5.60%
AT&T Capital 7.47% 05/11/05 .................. 250,000 256,250
Comsat 7.92% 03/20/07 ....................... 250,000 262,500
GTE 9.38% 12/01/00 .......................... 100,000 110,125
GTE Hawaii 7.00% 02/01/06 .................... 400,000 401,500
-----------
1,030,375
-----------
Transportation & Shipping - 9.74%
Burlington Northern Railroad
6.94% 01/02/14 ............................. 250,000 248,442
Federal Express 7.96% 03/28/17 ............... 250,000 253,125
NWA Trust 10.23% 06/21/14 .................... 240,769 273,875
Norfolk Southern 7.40% 09/15/06 .............. 500,000 521,875
United Air Lines 9.21% 01/21/17 .............. 450,000 493,325
-----------
1,790,642
-----------
Utilities - 9.22%
Great Lakes Power 9.00% 08/01/04 ............. 100,000 108,375
Old Dominion Electric 8.76% 12/01/22 ......... 400,000 445,000
Pennsylvania Power & Light
7.70% 10/01/09 ............................. 200,000 211,000
Public Service Company of Colorado
7.13% 06/01/06 ............................. 250,000 254,063
Texas Gas Transmissions
8.63% 04/01/04 ............................. 100,000 109,375
Texas Utilities 7.37% 11/01/99 ............... 450,000 463,500
Utilicorp United 8.45% 11/15/99 .............. 100,000 105,250
-----------
1,696,563
-----------
Miscellaneous - 1.47%
Service Company International
8.38% 12/15/04 ............................. 250,000 270,313
-----------
270,313
-----------
Total Corporate Bonds
(cost $14,553,931) ......................... 14,904,040
-----------
FOREIGN BONDS - 1.36%
Mexico - 1.36%
United Mexican States
0.00% 08/06/01 ............................. 250,000 250,000
-----------
Total Foreign Bonds
(cost $248,750) ............................ 250,000
-----------
<PAGE>
Corporate Income Fund
Statement of Net Assets (Continued)
Principal Market
Amount Value
CORPORATE COLLATERALIZED MORTGAGE
OBLIGATIONS - 1.39%
Green Tree Home Improvement
7.35% 07/15/21 .................................. $ 250,000 $ 255,606
----------
Total Corporate Collateralized Mortgage
Obligations (cost $251,094) ..................... 255,606
----------
AGENCY OBLIGATIONS - 9.90%
Federal National Mortgage Association
6.66% 12/01/05 .................................. 297,714 297,156
Federal National Mortgage Association
0.00% 04/12/06 .................................. 600,000 505,944
Federal National Mortgage Association
7.04% 07/01/06 .................................. 299,293 302,005
Federal National Mortgage Association
7.15% 10/01/15 .................................. 244,468 241,870
Federal National Mortgage Association
7.00% 10/01/25 .................................. 481,259 473,138
----------
Total Agency Obligations
(cost $1,821,211) ............................... 1,820,113
----------
U.S. TREASURY OBLIGATIONS - 4.22%
U.S. Treasury Note 7.00% 07/15/06 ................ 350,000 365,733
U.S. Treasury Bond 6.00% 02/15/26 ................ 450,000 410,823
----------
Total U.S. Treasury Obligations
(cost $759,454) ................................. 776,556
----------
REPURCHASE AGREEMENTS - 0.27%
With Chase Manhattan Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $15,002,
collateralized by $15,000 U.S. Treasury
Notes 5.50% due 11/15/98,
market value $15,659) ........................... 15,000 15,000
With Prudential Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $17,003,
collateralized by $17,000 U.S. Treasury
Notes 6.125% due 5/31/97,
market value $17,175) ........................... 17,000 17,000
With PaineWebber Securities 5.52%
11/01/96 (dated 10/31/96,
to be repurchased at $17,003,
collateralized by $17,000 U.S. Treasury
Notes 5.875% due 10/31/98,
market value $17,183) ........................... 17,000 17,000
----------
Total Repurchase Agreements
(cost $49,000) .................................. 49,000
----------
TOTAL MARKET VALUE OF SECURITIES - 98.19%
(cost $17,683,440) ........................................ 18,055,315
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.81% ................................ 333,973
-----------
NET ASSETS APPLICABLE TO 1,927,665 SHARES
($.01 PAR VALUE OUTSTANDING) - 100.00% ..................... $18,389,288
===========
<PAGE>
Market
Value
NET ASSET VALUE -
CORPORATE INCOME FUND A CLASS
($12,269,798/1,275,160 SHARES) ............................ $ 9.62
======
(MAXIMUM OFFERING PRICE $9.62/.9525 = $10.10)
NET ASSET VALUE -
CORPORATE INCOME FUND B CLASS
($196,181/18,961 SHARES) ................................. $10.35
======
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE -
CORPORATE INCOME FUND C CLASS
($70,915/6,864 SHARES) ................................... $10.33
======
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE -
CORPORATE INCOME FUND INSTITUTIONAL CLASS
($5,852,394/626,680 SHARES) .............................. $ 9.34
======
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1996:
Common stock $.01 par value, 70,000,000 shares
authorized to the Corporate Income Fund with 20,000,000
shares allocated to the Corporate Income Fund A Class,
20,000,000 shares allocated to the Corporate Income
Fund B Class, 15,000,000 shares allocated to the Corporate
Income Fund C Class and 15,000,000 shares allocated
to the Corporate Income Fund Institutional Class .......... $ 18,536,303
Accumulated undistributed:
Net realized loss on investments .......................... (518,890)
Net unrealized appreciation of investments ................ 371,875
--------------
Total Net Assets ............................................ $ 18,389,288
==============
- --------------
See accompanying notes
Delaware Group Adviser Funds, Inc.
Federal Bond Fund
Statement of Net Assets
October 31, 1996
Principal Market
Amount Value
U.S. TREASURY OBLIGATIONS - 39.76%
U.S. Treasury Note 5.13% 11/30/98 .............. $ 650,000 $ 642,102
U.S. Treasury Note 6.50% 04/30/99 .............. 500,000 507,795
U.S. Treasury Note 6.88% 08/31/99 .............. 250,000 256,312
U.S. Treasury Note 6.50% 08/31/01 .............. 1,625,000 1,652,349
U.S. Treasury Note 7.00% 07/15/06 .............. 500,000 522,475
U.S. Treasury Bond 6.00% 02/15/26 .............. 1,350,000 1,232,469
----------
Total U.S. Treasury Obligations
(cost $4,732,593) ............................. 4,813,502
----------
AGENCY OBLIGATIONS - 44.55%
Federal Home Loan Mortgage Corporation
6.30% 04/08/99 ............................... 1,000,000 1,000,160
Federal Home Loan Mortgage Corporation
7.30% 12/01/12 ............................... 296,239 299,757
<PAGE>
Federal Bond Fund
Statement of Net Assets (Continued)
Principal Market
Amount Value
Federal Home Loan Mortgage Corporation
7.50% 11/15/23 ................................. $ 500,000 $ 512,513
Federal National Mortgage Association Strip
0.00% 12/20/01 ................................. 500,000 495,905
Federal National Mortgage Association
0.00% 04/12/06 ................................. 400,000 337,296
Federal National Mortgage Association
7.04% 07/01/06 ................................. 199,528 201,337
Federal National Mortgage Association Strip
0.00% 07/24/06 ................................. 1,000,000 530,700
Federal National Mortgage Association
7.50% 01/25/07 ................................. 500,000 510,655
Federal National Mortgage Association
6.00% 03/01/09 ................................. 814,396 789,200
Federal National Mortgage Association
7.15% 10/01/15 ................................. 244,468 241,870
Federal National Mortgage Association
7.00% 10/01/25 ................................. 481,259 473,138
----------
Total Agency Obligations
(cost $5,373,632) .............................. 5,392,531
----------
CORPORATE BONDS - 11.89%
Associates N.A. 9.13% 04/01/00 ................... 400,000 434,000
CIT Group Holdings 5.88% 10/15/08 ................ 250,000 230,000
National Power Plc 7.13% 07/11/01 ................ 250,000 253,750
Norfolk Southern 7.40% 09/15/06 .................. 500,000 521,875
----------
Total Corporate Bonds
(cost $1,426,443) .............................. 1,439,625
----------
CORPORATE COLLATERALIZED MORTGAGE
OBLIGATIONS - 2.11%
Green Tree Home Improvement
7.35% 07/15/21 ................................. 250,000 255,606
----------
Total Corporate Collateralized Mortgage
Obligations (cost $251,093) ..................... 255,606
----------
REPURCHASE AGREEMENTS - 1.05%
With Chase Manhattan Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $40,006,
collateralized by $40,000 U.S. Treasury
Notes 5.50% due 11/15/98,
market value $40,585) .......................... 40,000 40,000
With Prudential Securities 5.50%
11/01/96 (dated 10/31/96,
to be repurchased at $43,007,
collateralized by $43,000 U.S. Treasury
Notes 6.125% due 5/31/97,
market value $44,513) .......................... 43,000 43,000
<PAGE>
Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber Securities 5.52%
11/01/96 (dated 10/31/96,
to be repurchased at $44,007,
collateralized by $44,000 U.S. Treasury
Notes 5.875% due 10/31/98,
market value $44,534) ............................ $ 44,000 $ 44,000
--------
Total Repurchase Agreements
(cost $127,000) .................................. 127,000
--------
TOTAL MARKET VALUE OF SECURITIES - 99.36%
(cost $11,910,761) .......................................... 12,028,264
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.64% .................................. 77,007
------------
NET ASSETS APPLICABLE TO 1,258,661 SHARES
($.01 PAR VALUE OUTSTANDING) - 100.00% ....................... $ 12,105,271
============
NET ASSET VALUE -
FEDERAL BOND FUND A CLASS
($11,418,983/1,189,371 SHARES) ............................ $ 9.60
======
(MAXIMUM OFFERING PRICE $9.60/.9525 = $10.08)
NET ASSET VALUE -
FEDERAL BOND FUND B CLASS
($567,888/56,418 SHARES) .................................... $10.07
======
(subject to a contingent deferred sales charge which
varies from 1%-4% depending upon the holding period)
NET ASSET VALUE -
FEDERAL BOND FUND C CLASS
($12,612/1,237 SHARES) ...................................... $10.20
======
(subject to a contingent deferred sales charge
of 1% depending upon the holding period)
NET ASSET VALUE -
FEDERAL BOND FUND INSTITUTIONAL CLASS
($105,788/11,635 SHARES) ..................................... $ 9.09
======
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1996:
Common stock $.01 par value, 70,000,000 shares
authorized to the Federal Bond Fund with 20,000,000
shares allocated to the Federal Bond Fund A Class,
20,000,000 shares allocated to the Federal Bond Fund
B Class, 15,000,000 shares allocated to the Federal Bond
Fund C Class and 15,000,000 shares allocated to the
Federal Bond Fund Institutional Class ........................ $ 12,444,127
Accumulated undistributed:
Net realized loss on investments ............................. (456,359)
Net unrealized appreciation of investments ................... 117,503
------------
Total Net Assets .............................................. $ 12,105,271
============
- ----------
See accompanying notes
<PAGE>
Delaware Group Adviser Funds, Inc.
Statements of Operations
Year Ended October 31, 1996
<TABLE>
<CAPTION>
U.S. World New Corporate Federal
Enterprise Growth Growth Pacific Income Bond
Fund Fund Fund Fund Fund Fund
------------ --------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest.............................. $ 56,091 $ 73,823 $ 30,872 $14,363 $1,212,542 $761,384
Dividends (net of withholding taxes).. 91,537 154,914 181,320 158,890 -- --
-------- -------- ------- ------- --------- --------
147,628 228,737 212,192 173,253 1,212,542 761,384
-------- -------- ------- -------- --------- -------
EXPENSES:
Management fees....................... 210,155 154,309 167,584 116,131 48,958 34,787
Custodian fees........................ 41,209 40,714 56,248 81,833 39,058 38,486
Dividend disbursing and transfer
agent fees and expenses............. 60,110 45,599 42,459 36,281 33,419 19,065
Distribution expense.................. 78,468 54,665 57,128 43,691 42,090 41,087
Federal and state registration fees... 39,684 37,989 30,685 31,790 36,475 34,222
Reports and statements to shareholders. 34,596 32,424 27,524 19,888 19,506 19,660
Professional fees...................... 14,564 10,190 6,487 6,190 16,018 16,179
Directors' fees........................ 3,120 3,701 3,067 3,674 3,070 3,269
Taxes (other than taxes on income)..... 1,469 1,724 1,524 1,524 1,424 1,299
Amortization of organization expenses.. 2,064 1,599 1,998 1,892 2,035 2,123
Other.................................. 9,905 16,390 10,561 535 15,281 12,360
------- -------- ------- ------- ------- -------
495,344 399,304 405,265 343,429 257,334 222,537
Less expenses waived by manager....... 22,095 16,950 119,590 115,928 68,369 78,467
------- -------- ------- ------- ------- -------
473,249 382,354 285,675 227,501 188,965 144,070
------- -------- ------- ------- ------- -------
NET INVESTMENT INCOME (LOSS).......... (325,621) (153,617) (73,483) (54,248) 1,023,577 617,314
------- -------- ------- ------- --------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions............. 2,677,337 3,956,760 1,318,274 478,809 20,020 (169,368)
Foreign currencies.................. -- -- (11,718) 211,001 -- --
--------- ---------- --------- ------- ------- -------
Net realized gain (loss)........... 2,677,337 3,956,760 1,306,556 689,810 20,020 (169,368)
Net unrealized appreciation
(depreciation) of investments
and foreign currencies during the
year................................ 2,338,469 (1,322,583) 34,912 269,109 (185,462) (32,850)
--------- ---------- --------- ------- -------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES.............. 5,015,806 2,634,177 1,341,468 958,919 (165,442) (202,218)
--------- --------- --------- ------- --------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................. $4,690,185 $2,480,560 $1,267,985 $904,671 $ 858,135 $415,096
========== ========== ========== ======== ========= ========
</TABLE>
See accompanying notes
<PAGE>
Delaware Group Adviser Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Enterprise Fund U.S. Growth Fund World Growth Fund
---------------- ------------------- -----------------
Year Ended Year Ended Year Ended
October 31, October 31, October 31,
1996 1995 1996 1995 1996 1995
----------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................ $ (325,621) $ (127,474 $ (153,617) $ (127,175) $ (73,483) $ (4,785)
Net realized gain (loss) on investments
and foreign currencies ..................... 2,677,337 952,012 3,956,760 (476,502) 1,306,556 (56,010)
Net change in unrealized appreciation
(depreciation) on investments, foreign
currency forward currency contracts,
futures and other assets ................... 2,338,469 2,165,537 (1,322,583) 3,893,441 34,912 631,558
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ................. 4,690,185 2,990,075 2,480,560 3,289,764 1,267,985 570,763
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class ..................................... -- -- -- -- (26,689) (9,506)
B Class ..................................... -- -- -- -- (2,249) (1,209)
C Class ..................................... -- -- -- -- (93) (104)
Institutional Class ......................... -- -- -- -- (10) (263)
Net realized gain from security transactions:
A Class ..................................... -- -- -- -- -- --
B Class ..................................... -- -- -- -- -- --
C Class ..................................... -- -- -- -- -- --
Institutional Class ......................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
0 0 0 0 (29,041) (11,082)
----------- ----------- ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .................................. 2,275,881 1,624,685 1,369,974 551,988 1,232,465 933,753
B Class .................................. 795,312 854,499 366,669 276,925 255,022 672,282
C Class .................................. 38,507 17,046 41,965 21,207 75,221 17,206
Institutional Class ...................... 3,105,531 3,416,787 5,978,904 3,303,266 422,003 116,640
Net asset value of shares issued upon
reinvestment of dividends from net
realized gain on security transactions:
A Class .................................. 0 0 0 0 26,515 9,471
B Class .................................. 0 0 0 0 2,156 1,192
C Class .................................. 0 0 0 0 93 104
Institutional Class ...................... 0 0 0 0 10 262
---------- ----------- ----------- ----------- ----------- -----------
6,215,231 5,913,017 7,757,512 4,153,386 2,013,485 1,750,910
---------- ----------- ----------- ----------- ----------- -----------
Cost of shares repurchased:
A Class .................................. (1,082,040) (292,832) (405,142) (63,231) (544,997) (143,637)
B Class .................................. (626,025) (73,731) (199,197) (8,494) (313,741) (67,664)
C Class .................................. (38,554) (6,965) (19,270) (2,435) (9,744) (14,973)
Institutional Class ...................... (715,737) (98,099) (1,616,507) (892,235) (298,223) (27,631)
------------ ------------ ------------ ------------ ------------ ------------
(2,462,356) (471,627) (2,240,116) (966,395) (1,166,705) (253,905)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in assets derived
from capital share transactions ......... 3,752,875 5,441,390 5,517,396 3,186,991 846,780 1,497,005
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS .... 8,443,060 8,431,465 7,997,956 6,476,755 2,085,724 2,056,686
NET ASSETS:
Beginning of year ........................ 20,043,205 11,611,740 18,987,288 12,510,533 14,404,149 12,347,463
------------ ------------ ------------ ------------ ------------ ------------
End of year .............................. $ 28,486,265 $ 20,043,205 $ 26,985,244 $ 18,987,288 $ 16,489,873 $ 14,404,149
============ ============ ============ ============ ============ ============
Undistributed net investment income (loss) $ 0 $ 0 $ 0 $ 0 $ 0 $ 28,952
============ ============ ============ ============ ============ ============
</TABLE>
<PAGE>
Statements of Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
New Pacific Fund Corporate Income Fund Federal Bond Fund
---------------- ------------------- -----------------
Year Ended Year Ended Year Ended
October 31, October 31, October 31,
1996 1995 1996 1995 1996 1995
----------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .............. $ (54,248) $ (68,480) $ 1,023,577 $ 896,150 $ 617,314 $ 683,071
Net realized gain (loss) on investments and
foreign currencies ....................... 689,810 (388,609) 20,020 104,351 (169,368) 315,265
Net change in unrealized appreciation
(depreciation) on investments, foreign
currency forward currency contracts,
futures and other assets ................. 269,109 (1,231,855) (185,462) 1,219,589 (32,850) 453,575
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ................ 904,671 (1,688,944) 858,135 2,220,090 415,096 1,451,911
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class .................................. (11,516) -- (718,871) (633,907) (603,847) (620,799)
B Class .................................. (518) -- (17,832) (24,234) (16,564) (19,661)
C Class .................................. (16) -- (1,624) (604) (738) (224)
Institutional Class ...................... (5) -- (287,769) (236,120) (5,449) (51,430)
Net realized gain from security
transactions:
A Class .................................. -- (316,289) -- -- -- --
B Class .................................. -- (15,095) -- -- -- --
C Class .................................. -- (342) -- -- -- --
Institutional Class ...................... -- (1,631) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
(12,055) (333,357) 1,026,096) (894,865) (626,598) (692,114)
----------- ----------- ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class................................... 1,193,031 793,387 305,376 236,627 48,548 124,019
B Class................................... 159,517 345,285 81,050 99,507 262,721 36,391
C Class................................... 31,250 8,907 63,666 4,556 3,700 14,219
Institutional Class....................... 226,105 25,647 3,648,730 2,785,489 155,011 711,902
Net asset value of shares issued upon
reinvestment of dividends from net
realized gain on security transactions:
A Class................................... 11,472 315,456 708,496 628,474 600,991 617,698
B Class................................... 495 14,514 16,283 22,994 14,743 16,613
C Class................................... 16 342 1,623 61 724 223
Institutional Class....................... 5 1,631 292,853 236,120 5,449 51,430
---------- ---------- ---------- ---------- ---------- ----------
1,621,891 1,505,169 5,118,077 4,013,828 1,091,887 1,572,495
---------- ---------- ---------- ---------- ---------- ----------
Cost of shares repurchased:
A Class................................... (668,487) (167,228) (105,817) (62,774) (70,780) (52,127)
B Class................................... (203,256) (127,921) (256,466) (6,742) (5,294) (6,424)
C Class................................... (4,910) (2,436) (747) (9,951) (6,151) (49,646)
Institutional Class....................... (166,392) (4,175) (1,785,656) (827,213) (1,047,866) (169,910)
---------- ---------- ---------- ---------- ---------- ----------
(1,043,045) (301,760) (2,148,686) (906,680) (1,130,091) (278,107)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in assets derived from
capital share transactions................ 578,846 1,203,409 2,969,391 3,107,148 (38,204) 1,294,388
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS..... 1,471,462 (818,892) 2,801,430 4,432,373 (249,706) 2,054,185
NET ASSETS:
Beginning of year......................... 11,006,416 11,825,308 15,587,858 11,155,485 12,354,977 10,300,792
---------- ---------- ---------- ---------- ---------- ----------
End of year............................... $12,477,878 $11,006,416 $18,389,288 $15,587,858 $12,105,271 $12,354,977
=========== =========== =========== =========== =========== ===========
Undistributed net investment income (loss) $ 0 $ (9,219) $ 0 $ 2,057 $ 0 $ 5,468
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes
<PAGE>
Delaware Group Adviser Funds, Inc.
Notes to Financial Statements
October 31, 1996
The Delaware Group Adviser Funds, Inc. ("The Company"), is registered as
a diversified open-end Investment Company under the Investment Company Act
of 1940, as amended. The Company is organized as a Maryland corporation.
The Delaware Group Adviser Funds, Inc. currently issues six separate series
of shares (each referred to as a "Fund" or collectively as the "Funds")
Enterprise Fund, U.S. Growth Fund, World Growth Fund, New Pacific Fund,
Corporate Income Fund and Federal Bond Fund. Each Fund offers four classes
of shares.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally
accepted accounting principles and are consistently followed by each of the
Funds:
Securities Valuation - Securities listed on a national exchange are
valued at the last quoted sales price as of 4:00 pm EST on the valuation
date. Securities not traded are valued at the mean of the last quoted bid
and asked prices. Securities not listed on a national exchange are valued
at the mean of the last quoted bid and asked prices. Securities listed on a
foreign exchange are valued at the last quoted sale price before the time
when the Fund is valued. Debt obligations that are issued or guaranteed by
the U.S. Government, its agencies, authorities and instrumentalities are
valued on the basis of prices provided by independent pricing services.
Money Market instruments having less than 60 days to maturity are valued at
amortized cost, which approximates market value.
Federal Income Taxes - Each Fund intends to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no federal income tax provision is required in the financial
statements.
Repurchase Agreements - Each Fund may invest in a pooled cash account
along with other members of the Delaware Group of Funds. The aggregated
daily balance of the pooled cash account is invested in repurchase
agreements secured by obligations of the U.S. government. The respective
collateral is held by the Funds' custodian bank until the maturity of the
respective repurchase agreements. Each repurchase agreement is at least
100% collateralized. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization of the collateral may be subject
to legal proceedings.
Class Accounting - Investment income, common expenses and gains (losses)
on investments are allocated to the various classes of each Fund on the
basis of daily net assets of each class. Distribution expenses relating to
a specific class are charged directly to that class.
Foreign Currencies - The value of all assets and liabilities denominated
in foreign currencies are translated into U.S. dollars at the exchange rate
of such currencies against the U.S. dollar as of 3:00 pm EST. Forward
foreign currency contracts are valued at the mean between the bid and asked
prices of the contracts. Interpolated values are derived when the
settlement date of the contract is an interim date for which quotations are
not available. Risks may arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
Futures Transactions - Certain portfolios may enter into futures
contracts subject to certain limitations. Risks of entering into futures
contracts include the possibility that there will not be a perfect price
correlation between the futures contracts and the underlying securities,
and that a portfolio could lose more than the original margin deposit
required to initiate a futures transaction.
<PAGE>
Other - Expenses common to all Funds within the Delaware Group of Funds
are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased
or sold (trade date). Costs used in calculating realized gains and losses
on the sale of investment securities are those of the specific securities
sold. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Original issue discounts are
accreted to interest income over the lives of the respective securities.
Organization costs are amortized over a five year period beginning on the
date of commencement of operations. The balance of organization costs at
October 31, 1996 were $4,306, $3,336, $4,161, $3,941, $4,243 and $4,427 for
the Enterprise Fund, U.S. Growth Fund, World Growth Fund, New Pacific Fund,
Corporate Income Fund and Federal Bond Fund, respectively.
Certain Fund expenses are paid directly by brokers. The amount of these
expenses is less than 0.01% of each Fund's average net assets.
2. Investment Management and Distribution Agreements
In accordance with the terms of the Investment Management Agreement, the
Fund's pay Delaware Management Company, Inc. (DMC), the investment manager
of each fund a monthly fee 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%
Corporate Income Fund......................... .30%
Federal Bond Fund............................. .30%
DMC has entered into sub-advisory agreements with Lynch & Mayer, Inc.
with respect to the management of the Enterprise Fund and U.S. Growth Fund,
with Walter Scott & Partners Limited with respect to the management of the
World Growth Fund, with John Govett & Company Limited with respect to the
management of the New Pacific Fund, and with Lincoln Investment Management,
Inc. with respect to the management of the Corporate Income Fund and
Federal Bond Fund. The sub-advisers receive sub-advisory 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:
Enterprise Fund............................... 50% on the first
$150 million and
.35% on assets
over $150 million
U.S. Growth Fund.............................. .40%
World Growth Fund............................. .80%
New Pacific Fund.............................. .50%
Corporate Income Fund......................... .30%
Federal Bond Fund............................. .30%
The Manager has elected voluntarily to waive that portion, if any, of the
annual management fees payable by the Fund to the extent necessary to
ensure that the annual operating expenses exclusive of taxes, interest,
brokerage commissions, extraordinary expenses and 12b-1 expenses exceed
1.50% of average net assets for the Enterprise Fund, the U.S. Growth Fund,
<PAGE>
Notes to Financial Statements (Continued)
2. Investment Management and Distribution Agreements (Continued)
the World Growth Fund, and the New Pacific Fund, and .90% of average net
assets for the Corporate Income Fund and the Federal Bond Fund for each class
through October 31, 1996. At October 31, 1996, the Enterprise Fund, the
U.S. Growth Fund, the World Growth Fund and the New Pacific Fund had
liabilities for investment management fees and other expenses payable to
DMC for $49,571, $39,131, $33,462 and $10,159, respectively.
On May 3, 1996 DMC, a wholly owned subsidiary of Lincoln National
Corporation became the investment manager of the Funds. Additionally, on
May 3, 1996, the sub-advisory agreement for the U.S. Growth Fund was
terminated with Provident Investment Council. Effective May 3, 1996 a new
sub-advisory agreement with Lynch & Mayer, Inc., a wholly owned subsidiary
of Lincoln National Corporation, was approved by shareholders of the U.S.
Growth Fund. For the period from November 1, 1995 through May 3, 1996,
Lincoln Investment Management, Inc. (LIM) served as the Fund's investment
manager. In return for these services LIM earned the same management fee
payable to DMC on each fund with the exception of the New Pacific Fund. LIM
earned a monthly fee of 1.10% based upon the average daily net assets of
the New Pacific Fund.
Pursuant to the Distribution Agreement, each Fund pays Delaware
Distributors L.P. (DDLP), the Distributor and an affiliate of DMC, an
annual fee of .30% of the average daily net assets of the A Class and 1.00%
of the average daily net assets of the B Class and the C Class. No
distribution expenses are paid by the Institutional Class. At October 31,
1996 the Enterprise Fund, the U.S. Growth Fund, the World Growth Fund, the
New Pacific Fund, the Corporate Income Fund and the Federal Bond Fund had
liabilities for distribution fees and other expenses payable to DDLP for
$7,345, $6,799, $6,815, $6,634, $6,607 and $6,116, respectively. For the
period from November 1, 1995 through May 3, 1996 each Fund paid DDLP an
annual fee of .35% of the average daily net assets of the A class.
Each of the Funds have engaged Delaware Service Co., Inc. (DSC), an
affiliate of DMC to serve as dividend disbursing and transfer agent for the
Fund. For the year ended October 31, 1996 the amount expensed for these
services were $60,110, $45,599, $42,459, $36,281, $33,419 and $19,065 for
the Enterprise Fund, the U.S. Growth Fund, the World Growth Fund, the New
Pacific Fund, the Corporate Income Fund and the Federal Bond Fund,
respectively. Effective August 19, 1996, each Fund engaged DSC to provide
accounting services. At October 31, 1996, the Enterprise Fund, the U.S.
Growth Fund, the World Growth Fund, the New Pacific Fund, the Corporate
Income Fund and the Federal Bond Fund had liabilities for such fees and
other expenses payable to DSC for $4,760, $2,991, $2,827, $2,130, $1,834
and $1,008, respectively.
Certain officers of DMC are officers, directors and/or employees of each
Fund. These officers, directors and employees are paid no compensation by
each Fund.
<PAGE>
3. Investments
For the year ended October 31, 1996 each Fund made purchases and sales of
investment securities other than U.S. government securities and temporary
cash investments as follows:
Purchases Sales
---------- -----------
Enterprise Fund................. $25,034,183 $21,787,838
U.S. Growth Fund................ 25,034,183 21,787,838
World Growth Fund............... 4,667,414 4,469,576
New Pacific Fund................ 18,985,868 18,865,708
Corporate Income Fund........... 7,309,902 3,809,363
Federal Bond Fund............... 5,454,800 1,767,630
Investment securities based on cost for federal income tax purposes at
October 31, 1996, are as follows:
<TABLE>
<CAPTION>
Enterprise U.S. Growth World Growth
Fund Fund Fund
---------- ----------- ------------
<S> <C> <C> <C>
Cost of Investments $22,983,126 $23,366,334 $14,461,327
Aggregated unrealized
appreciation......... 6,307,811 4,120,126 3,105,234
Aggregated unrealized
depreciation......... (759,283) (405,639) (1,282,896)
Market value of
investments.......... 28,531,654 27,080,821 16,283,665
</TABLE>
<TABLE>
<CAPTION>
New Pacific Corporate Federal Bond
Fund Income Fund Fund
----------- ----------- ------------
<S> <C> <C> <C>
Cost of Investments.. $12,602,676 $17,683,440 $11,910,761
Aggregated unrealized
appreciation......... 807,396 511,592 163,988
Aggregated unrealized
depreciation......... (1,574,700) (139,717) (46,485)
Market value of
investments.......... 11,835,372 18,055,315 12,028,264
</TABLE>
For federal income tax purposes, the Fund had accumulated capital losses
at October 31, 1996 of $518,890 for the Corporate Income Fund and $456,359
for the Federal Bond Fund which may be carried forward and applied against
future capital gains. The capital loss carryover for the Corporate Income
Fund expires in 2002. The capital loss carryover for the Federal Bond Fund
expires as follows: $286,991 - 2002 and $169,368 - 2003.
<PAGE>
Notes to Financial Statements (Continued)
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
Enterprise Fund U.S. Growth Fund
----------------------------------- ----------------------------------
Year Ended Year Ended
October 31, 1996 October 31, 1995 October 31, 1996 October 31, 1995
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
A Class............................ 182,506 165,155 105,330 52,639
B Class............................ 58,416 81,179 29,115 26,729
C Class............................ 2,813 1,660 3,225 1,865
Institutional Class................ 265,237 308,608 458,645 307,706
Shares issued upon reinvestment of
dividends from net investment
income and net realized gains
from security transactions:
A Class............................ __ __ __ __
B Class............................ __ __ __ __
C Class............................ __ __ __ __
Institutional Class................ __ __ __ __
--------- --------- ---------- ----------
508,972 556,602 596,315 388,939
--------- --------- ---------- ----------
Shares repurchased:
A Class............................ (83,533) (28,541) (30,815) (5,890)
B Class............................ (45,008) (7,295) (15,662) (829)
C Class............................ (2,754) (637) (1,448) (232)
Institutional Class................ (60,648) (9,614) (126,549) (81,517)
--------- --------- ---------- ----------
(191,943) (46,087) (174,474) (88,468)
Net Increase....................... 317,029 510,515 421,841 300,471
========= ========= ========== ==========
</TABLE>
<PAGE>
Notes to Financial Statements (Continued)
4. Capital Stock (Continued)
<TABLE>
<CAPTION>
World Growth Fund New Pacific Fund
------------------------------------ ---------------------------------
Year Ended Year Ended
October 31, 1996 October 31, 1995 October 31, 1996 October 31, 1995
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
A Class............................ 102,429 87,908 126,895 88,098
B Class............................ 22,652 66,883 16,203 36,512
C Class............................ 6,554 1,735 3,204 1,031
Institutional Class................ 34,323 10,800 23,242 2,883
Shares issued upon reinvestment of dividends
from net investment income and net realized
gains from security transactions:
A Class............................ 2,274 895 1,188 33,992
B Class............................ 197 123 50 1,505
C Class............................ 9 11 2 37
Institutional Class................ 1 25 1 176
--------- --------- ---------- ----------
168,439 168,380 170,785 164,234
--------- --------- ---------- ----------
Shares repurchased:
A Class............................ (45,169) (13,283) (69,123) (18,925)
B Class............................ (28,774) (6,937) (21,797) (14,072)
C Class............................ (881) (1,466) (549) (271)
Institutional Class................ (25,402) (2,532) (17,836) (494)
--------- --------- ---------- ----------
(100,226) (24,218) (109,305) (33,762)
Net Increase....................... 68,213 144,162 61,480 130,472
========= ========= ========== ==========
</TABLE>
<PAGE>
Notes to Financial Statements (Continued)
4. Capital Stock (Continued)
<TABLE>
<CAPTION>
Corporate Income Fund Federal Bond Fund
-------------------------------------- ----------------------------------
Year Ended Year Ended
October 31, 1996 October 31, 1995 October 31, 1996 October 31, 1995
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
A Class.......................... 32,118 25,773 5,073 13,148
B Class.......................... 7,873 10,034 26,258 3,642
C Class.......................... 6,328 445 356 1,394
Institutional Class................ 393,897 307,225 16,707 75,898
Shares issued upon reinvestment of dividends
from net investment income and net realized
gains from security transactions:
A Class.......................... 73,998 67,335 62,600 65,220
B Class.......................... 1,585 2,352 1,469 1,698
C Class.......................... 160 6 71 22
Institutional Class.............. 31,592 26,256 568 5,547
--------- --------- ---------- ----------
547,551 439,426 113,102 166,569
--------- --------- ---------- ----------
Shares repurchased:
A Class.......................... (11,043) (6,735) (7,195) (5,486)
B Class.......................... (25,116) (677) (518) (634)
C Class.......................... (72) (1,004) (606) (5,071)
Institutional Class.............. (189,008) (90,608) (107,611) (18,066)
--------- --------- ---------- ----------
(225,239) (99,024) (115,930) (29,257)
Net Increase (Decrease)............ 322,312 340,402 (2,828) 137,312
========= ========= ========== ==========
</TABLE>
5. Foreign Currency Forward Contracts
The following currency forward contracts were outstanding October 31,
1996:
<TABLE>
<CAPTION>
Contract to Deliver In Exchange For Settlement Date Unrealized Gain
------------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
New Pacific Fund 152,010,000 Japanese Yen $1,350,000 11/7/96 $15,611
</TABLE>
6. Concentration of Risk
Like any investment in securities, the value of the portfolio securities
may be subject to risk of loss from market, currency, economic and
political factors which occur in the countries where the Funds are
invested.
The Corporate Income Fund and Federal Bond Fund invest in securities
whose value is derived from an underlying pool of mortgages or consumer
loans. Prepayment of these loans may shorten the stated maturity of the
respective obligation and may result in a loss of premium, if it has been
paid.
The New Pacific Fund may invest 10% of its total net assets in illiquid
securities which include securities with contractual restrictions on
resale, securities exempt from registration under Rule 144A of the
Securities Act of 1933, as amended, and other securities which may not be
readily marketable. The relative illiquidity of some of these securities
may adversely affect the Fund's ability to dispose of such securities in a
timely manner and at a fair price when it is necessary to liquidate such
securities. These securities have been denoted in the Statement of Net
Assets.
7. Futures Contracts
The following futures contracts were outstanding October 31, 1996:
<TABLE>
<CAPTION>
Contract Number of Contracts Market Value Unrealized Loss
--------------------------- ------------------- ------------ ---------------
<S> <C> <C> <C> <C>
Enterprise Fund MidCap 400 Future Dec. 1996 34 $4,148,850 ($76,361)
</TABLE>
<PAGE>
8. Financial Highlights
Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>
Enterprise Fund A Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Dec. 3, 1993(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $11.28 $ 9.20 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.16) (0.08) (0.08)
Net realized and unrealized gain (loss) from
security transactions............................ 2.47 2.16 (0.71)
------- ------ ------
Net increase (decrease) in net assets from
investment operations............................ 2.31 2.08 (0.79)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. -- -- (0.01)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. 0.00 0.00 (0.01)
------- ------ ------
Net asset value, end of period..................... $13.59 $11.28 $ 9.20
======= ====== ======
Total Return(2).................................... 20.37% 22.72% (7.91%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $18,826 $14,508 $10,579
Ratio of expenses to average net assets .......... 1.82% 1.85% 1.85%
Ratio of expenses to average net assets prior to
expense limitation............................... 1.90% 2.42% 3.10%
Ratio of net investment loss to average net assets (1.26%) (0.83%) (1.01%)
Ratio of net investment loss to average net assets
prior to expense limitation...................... (1.34%) (1.40%) (2.26%)
Portfolio turnover................................ 92% 106% 120%
Average commission rate paid...................... $0.0505 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Enterprise Fund B Class
-----------------------------------------------------
For the Year For the Year For the Period
Ended Ended April 14, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
-------------- ------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $11.96 $ 9.81 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.26) (0.12) (0.04)
Net realized and unrealized gain (loss) from
security transactions............................ 2.64 2.27 (0.15)
------ ------ ------
Net increase (decrease) in net assets from
investment operations............................ 2.38 2.15 (0.19)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. -- -- --
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. 0.00 0.00 0.00
------ ------ ------
Net asset value, end of period..................... $14.34 $11.96 $ 9.81
====== ====== ======
Total Return(2).................................... 19.90% 21.92% (1.91%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $2,365 $1,811 $761
Ratio of expenses to average net assets .......... 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.58% 3.07% 3.76%
Ratio of net investment loss to average net assets (1.94%) (1.50%) (1.53%)
Ratio of net investment loss to average net assets
prior to expense limitation...................... (2.02%) (2.07%) (2.79%)
Portfolio turnover................................. 92% 106% 120%
Average commission rate paid....................... $0.0505 N/A N/A
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Enterprise Fund C Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended May 10, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $12.21 $10.02 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.25) (0.15) (0.05)
Net realized and unrealized gain (loss) from
security transactions............................ 2.65 2.34 0.07
------- ------ ------
Net increase (decrease) in net assets from
investment operations............................ 2.40 2.19 0.02
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. -- -- --
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. 0.00 0.00 0.00
------- ------ ------
Net asset value, end of period..................... $14.61 $12.21 $10.02
======= ====== ======
Total Return(2).................................... 19.57% 21.86% 0.23%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $70 $58 $37
Ratio of expenses to average net assets .......... 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.58% 3.07% 3.75%
Ratio of net investment loss to average net assets (1.94%) (1.49%) (1.53%)
Ratio of net investment loss to average net assets
prior to expense limitation...................... (2.02%) (2.06%) (2.78%)
Portfolio turnover................................ 92% 106% 120%
Average commission rate paid...................... $0.0505 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Enterprise Fund Institutional Class
-----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Feb. 3, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
-------------- ------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $11.30 $ 9.23 $10.44
Income from investment operations:
Net investment income (loss)...................... (0.12) (0.02) (0.02)
Net realized and unrealized gain (loss) from
security transactions............................ 2.48 2.09 (1.19)
------ ------ ------
Net increase (decrease) in net assets from
investment operations............................ 2.36 2.07 (1.21)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. -- -- --
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. 0.00 0.00 0.00
------ ------ ------
Net asset value, end of period..................... $13.66 $11.30 $ 9.23
====== ====== ======
Total Return(2).................................... 20.80% 22.43% (11.61%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $7,225 $3,666 $234
Ratio of expenses to average net assets .......... 1.50% 1.53% 1.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 1.58% 2.07% 2.75%
Ratio of net investment loss to average net assets (0.94%) (0.60%) (0.63%)
Ratio of net investment loss to average net assets
prior to expense limitation...................... (1.02%) (1.14%) (1.88%)
Portfolio turnover................................. 92% 106% 120%
Average commission rate paid....................... $0.0505 N/A N/A
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
U.S. Growth Fund A Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Dec. 3, 1993(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $12.43 $10.21 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.09) (0.09) (0.04)
Net realized and unrealized gain (loss) from
security transactions............................ 1.48 2.31 0.26
------- ------ ------
Net increase (decrease) in net assets from
investment operations............................ 1.39 2.22 0.22
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. -- -- (0.01)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. 0.00 0.00 (0.01)
------- ------ ------
Net asset value, end of period..................... $13.82 $12.43 $10.21
======= ====== ======
Total Return(2).................................... 11.18% 21.74% 2.18%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $16,118 $13,574 $10,669
Ratio of expenses to average net assets .......... 1.80% 1.85% 1.85%
Ratio of expenses to average net assets prior to
expense limitation............................... 1.88% 2.18% 2.94%
Ratio of net investment loss to average net assets (0.77%) (0.88%) (0.51%)
Ratio of net investment loss to average net assets
prior to expense limitation...................... (0.85%) (1.21%) (1.60%)
Portfolio turnover rate........................... 131% 58% 66%
Average commission rate paid...................... $0.0519 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
U.S. Growth Fund B Class
-----------------------------------------------------
For the Year For the Year For the Period
Ended Ended March 29, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
-------------- ------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $12.33 $10.19 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.17) (0.14) (0.03)
Net realized and unrealized gain (loss) from
security transactions............................ 1.45 2.28 0.22
------ ------ ------
Net increase (decrease) in net assets from
investment operations............................ 1.28 2.14 0.19
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. -- -- --
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. 0.00 0.00 0.00
------ ------ ------
Net asset value, end of period..................... $13.61 $12.33 $10.19
====== ====== ======
Total Return(2).................................... 10.38% 21.00% 1.90%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $809 $567 $204
Ratio of expenses to average net assets .......... 2.48% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.56% 2.83% 3.60%
Ratio of net investment loss to average net assets (1.45%) (1.57%) (1.26%)
Ratio of net investment loss to average net assets
prior to expense limitation...................... (1.53%) (1.90%) (2.36%)
Portfolio turnover rate............................ 131% 58% 66%
Average commission rate paid....................... $0.0519 N/A N/A
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
U.S. Growth Fund C Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended May 23, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $12.85 $10.62 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.16) (0.10) (0.03)
Net realized and unrealized gain (loss) from
security transactions............................ 1.49 2.33 0.65
------- ------ ------
Net increase (decrease) in net assets from
investment operations............................ 1.33 2.23 0.62
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. -- -- --
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. 0.00 0.00 0.00
------- ------ ------
Net asset value, end of period..................... $14.18 $12.85 $10.62
======= ====== ======
Total Return(2).................................... 10.35% 21.00% 6.17%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $55 $27 $5
Ratio of expenses to average net assets .......... 2.48% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.56% 2.82% 3.54%
Ratio of net investment loss to average net assets (1.45%) (1.61%) (1.09%)
Ratio of net investment loss to average net assets
prior to expense limitation...................... (1.53%) (1.93%) (2.13%)
Portfolio turnover rate........................... 131% 58% 66%
Average commission rate paid...................... $0.0519 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
U.S. Growth Fund Institutional Class
-----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Feb. 3, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
-------------- ------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $12.50 $10.23 $10.52
Income from investment operations:
Net investment income (loss)...................... (0.05) (0.05) (0.01)
Net realized and unrealized gain (loss) from
security transactions............................ 1.49 2.32 (0.28)
------ ------ ------
Net increase (decrease) in net assets from
investment operations............................ 1.44 2.27 (0.29)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. -- -- --
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. 0.00 0.00 0.00
------ ------ ------
Net asset value, end of period..................... $13.94 $12.50 $10.23
====== ====== ======
Total Return(2).................................... 11.52% 22.19% 2.78%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $10,003 $4,819 $1,630
Ratio of expenses to average net assets .......... 1.48% 1.50% 1.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 1.56% 1.83% 2.60%
Ratio of net investment loss to average net assets (0.45%) (0.59%) (0.27%)
Ratio of net investment loss to average net assets
prior to expense limitation...................... (0.53%) (0.92%) (1.37%)
Portfolio turnover rate............................ 131% 58% 66%
Average commission rate paid....................... $0.0519 N/A N/A
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
World Growth Fund A Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Dec. 3, 1993(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $11.40 $11.00 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.06) 0.01 0.02
Net realized and unrealized gain (loss) from
security transactions............................ 1.07 0.40 1.01
------- ------ ------
Total from investment operations.................. 1.01 0.41 1.03
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.02) (0.01) (0.03)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.02) (0.01) (0.03)
------- ------ ------
Net asset value, end of period..................... $12.39 $11.40 $11.00
======= ====== ======
Total Return(2).................................... 8.90% 3.81% 10.25%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $14,886 $13,018 $11,721
Ratio of expenses to average net assets .......... 1.82% 1.85% 1.85%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.60% 2.96% 3.56%
Ratio of net investment income (loss) to average
net assets ...................................... (0.51%) 0.00% 0.25%
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... (1.29%) 1.11% 1.96%
Portfolio turnover rate........................... 21% 9% 6%
Average commission rate paid...................... $0.0448 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
World Growth Fund B Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended March 29, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $10.71 $10.40 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.06) (0.02) --
Net realized and unrealized gain (loss) from
security transactions............................ .93 0.35 0.43
------- ------ ------
Total from investment operations.................. 0.87 0.33 0.43
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.02) (0.02) (0.03)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.02) (0.02) (0.03)
------- ------ ------
Net asset value, end of period..................... $11.56 $10.71 $10.40
======= ====== ======
Total Return(2).................................... 8.16% 3.19% 4.28%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $1,208 $1,183 $523
Ratio of expenses to average net assets .......... 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 3.28% 3.61% 4.22%
Ratio of net investment income (loss) to average
income assets.................................... (1.19%) (0.57%) (0.37%)
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... (1.97%) (1.68%) 2.09%
Portfolio turnover rate........................... 21% 9% 6%
Average commission rate paid...................... $0.0448 N/A N/A
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
World Growth Fund C Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended May 10, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $10.73 $10.43 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.06) (0.06) 0.01
Net realized and unrealized gain (loss) from
security transactions............................ 0.93 0.39 0.44
------- ------ ------
Total from investment operations.................. 0.87 0.33 0.45
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.02) (0.03) (0.02)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.02) (0.03) (0.02)
------- ------ ------
Net asset value, end of period..................... $11.58 $10.73 $10.43
======= ====== ======
Total Return(2).................................... 8.15% 3.16% 4.45%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $112 $43 $38
Ratio of expenses to average net assets .......... 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 3.28% 3.61% 4.23%
Ratio of net investment income (loss) to average
net assets ...................................... (1.19%) (0.62%) 0.16%
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... (1.97%) (1.73%) (1.57%)
Portfolio turnover rate........................... 21% 9% 6%
Average commission rate paid...................... $0.0448 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
World Growth Fund Institutional Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Feb. 3, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $11.44 $11.02 $10.50
Income from investment operations:
Net investment income (loss)...................... (0.06) 0.04 0.04
Net realized and unrealized gain (loss) from
security transactions............................ 0.96 0.41 0.52
------- ------ ------
Total from investment operations.................. 0.90 0.45 0.56
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.02) (0.03) (0.04)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.02) (0.03) (0.04)
------- ------ ------
Net asset value, end of period..................... $12.32 $11.44 $11.02
======= ====== ======
Total Return(2).................................... 7.91% 4.22% 5.26%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $284 $161 $63
Ratio of expenses to average net assets .......... 1.50% 1.50% 1.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.28% 2.61% 3.21%
Ratio of net investment income (loss) to average
net assets ...................................... (0.19%) 0.40% 0.76%
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... (0.97%) (0.71%) (0.95%)
Portfolio turnover rate........................... 21% 9% 6%
Average commission rate paid...................... $0.0448 N/A N/A
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
New Pacific Fund A Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Dec. 3, 1993(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 8.71 $10.44 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.05) (0.05) (0.02)
Net realized and unrealized gain (loss) on
security transactions............................ 0.77 (1.39) 0.47
------- ------ ------
Total from investment operations.................. 0.72 (1.44) 0.45
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.01) -- (0.01)
Distributions from net realized gain on
security transactions............................ -- (0.29) --
------ ------ ------
Total dividends and distributions................. (0.01) (0.29) (0.01)
------- ------ ------
Net asset value, end of period..................... $ 9.42 $ 8.71 $10.44
======= ====== ======
Total Return(2).................................... 8.26% (13.99%) 4.53%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $11,752 $10,353 $11,333
Ratio of expenses to average net assets .......... 1.82% 1.85% 1.85%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.77% 3.73% 3.66%
Ratio of net investment income (loss) to average
net assets ...................................... 1.17% (0.60%) (0.21%)
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... 0.22% (2.48%) (2.02%)
Portfolio turnover rate........................... 163% 163% 104%
Average commission rate paid...................... $0.0118 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
New Pacific Fund B Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended March 29, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 9.01 $10.86 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.05) (0.10) (0.03)
Net realized and unrealized gain (loss) on
security transactions............................ 0.73 (1.46) 0.89
------- ------ ------
Total from investment operations.................. 0.68 (1.56) 0.86
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.01) -- --
Distributions from net realized gain on
security transactions............................ -- (0.29) --
------ ------ ------
Total dividends and distributions................. (0.01) (0.29) 0.00
------- ------ ------
Net asset value, end of period..................... $ 9.68 $ 9.01 $10.86
======= ====== ======
Total Return(2).................................... 7.54% (14.56%) 8.58%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $562 $573 $431
Ratio of expenses to average net assets .......... 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 3.45% 4.38% 4.32%
Ratio of net investment income (loss) to average
net assets ...................................... 0.49% (1.20%) (0.88%)
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... (0.46%) (3.08%) (2.70%)
Portfolio turnover rate........................... 163% 163% 104%
Average commission rate paid...................... $0.0118 N/A N/A
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
New Pacific Fund C Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended July 7, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 8.83 $10.66 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.05) (0.08) (0.02)
Net realized and unrealized gain (loss) on
security transactions............................ 0.72 (1.46) 0.68
------- ------ ------
Total from investment operations.................. 0.67 (1.54) 0.66
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.01) -- --
Distributions from net realized gain on
security transactions............................ -- (0.29) --
------ ------ ------
Total dividends and distributions................. (0.01) (0.29) 0.00
------- ------ ------
Net asset value, end of period..................... $ 9.49 $ 8.83 $10.66
======= ====== ======
Total Return(2).................................... 7.58% (14.57%) 6.55%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $44 $17 $12
Ratio of expenses to average net assets .......... 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 3.45% 4.38% 4.31%
Ratio of net investment income (loss) to average
net assets ...................................... 0.49% (1.02%) (0.83%)
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... (0.46%) (2.90%) (2.64%)
Portfolio turnover rate........................... 163% 163% 104%
Average commission rate paid...................... $0.0118 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
New Pacific Fund Institutional Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Feb. 3, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 8.77 $10.48 $11.14
Income from investment operations:
Net investment income (loss)...................... (0.05) (0.01) 0.01
Net realized and unrealized gain (loss) on
security transactions............................ 0.82 (1.41) (0.67)
------- ------ ------
Total from investment operations.................. 0.77 (1.42) (0.66)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.01) -- --
Distributions from net realized gain on
security transactions............................ -- (0.29) --
------ ------ ------
Total dividends and distributions................. (0.01) (0.29) 0.00
------- ------ ------
Net asset value, end of period..................... $ 9.53 $ 8.77 $10.48
======= ====== ======
Total Return(2).................................... 8.77% (13.65%) (5.98%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $119 $62 $47
Ratio of expenses to average net assets .......... 1.50% 1.50% 1.50%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.45% 3.38% 3.31%
Ratio of net investment income (loss) to average
net assets ...................................... 1.49% (0.16%) 0.23%
Ratio of net investment income (loss) to average
net assets prior to expense limitation........... 0.54% (2.04%) (1.58%)
Portfolio turnover rate........................... 163% 163% 104%
Average commission rate paid...................... $0.0118 N/A N/A
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Corporate Income Fund A Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Dec. 3, 1993(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 9.76 $ 8.80 $10.00
Income from investment operations:
Net investment income (loss)...................... 0.59 0.61 0.51
Net realized and unrealized gain (loss) on
security transactions............................ (0.14) 0.91 (1.20)
------- ------ ------
Total from investment operations.................. 0.45 1.52 (0.69)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.59) (0.56) (0.51)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.59) (0.56) (0.51)
------- ------ ------
Net asset value, end of period..................... $ 9.62 $ 9.76 $ 8.80
======= ====== ======
Total Return(2).................................... 4.81% 17.71% (7.06%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $12,270 $11,518 $9,620
Ratio of expenses to average net assets .......... 1.23% 1.25% 1.25%
Ratio of expenses to average net assets prior to
expense limitation............................... 1.65% 1.87% 2.55%
Ratio of net investment income to average
net assets ...................................... 6.20% 6.64% 6.04%
Ratio of net investment income to average
net assets prior to expense limitation........... 5.78% 6.02% 4.74%
Portfolio turnover rate........................... 68% 119% 185%
</TABLE>
<TABLE>
<CAPTION>
Corporate Income Fund B Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended May 11, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $10.45 $ 9.73 $10.00
Income from investment operations:
Net investment income (loss)...................... 0.52 0.66 0.29
Net realized and unrealized gain (loss) on
security transactions............................ (0.10) 0.91 (0.28)
------- ------ ------
Total from investment operations.................. 0.42 1.57 0.01
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.52) (0.85) (0.28)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.52) (0.85) (0.28)
------- ------ ------
Net asset value, end of period..................... $10.35 $10.45 $ 9.73
======= ====== ======
Total Return(2).................................... 4.16% 17.05% 0.11%
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $196 $362 $222
Ratio of expenses to average net assets .......... 1.90% 1.90% 1.90%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.32% 2.52% 3.21%
Ratio of net investment income to average
net assets ...................................... 5.53% 5.97% 5.94%
Ratio of net investment income to average
net assets prior to expense limitation........... 5.11% 5.35% 4.63%
Portfolio turnover rate........................... 68% 119% 185%
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Corporate Income Fund C Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Sept. 14, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $10.44 $ 9.80 $10.00
Income from investment operations:
Net investment income (loss)...................... 0.52 0.18 0.08
Net realized and unrealized gain (loss) on
security transactions............................ (0.11) 1.33 (0.19)
------- ------ ------
Total from investment operations.................. 0.41 1.51 (0.11)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.52) (0.87) (0.09)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.52) (0.87) (0.09)
------- ------ ------
Net asset value, end of period..................... $10.33 $10.44 $ 9.80
======= ====== ======
Total Return(2).................................... 4.06% 16.23% (1.00%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $71 $5 $9
Ratio of expenses to average net assets .......... 1.90% 1.90% 1.85%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.32% 2.52% 3.17%
Ratio of net investment income to average
net assets ...................................... 5.53% 5.75% 5.91%
Ratio of net investment income to average
net assets prior to expense limitation........... 5.11% 5.13% 4.59%
Portfolio turnover rate........................... 68% 119% 185%
</TABLE>
<TABLE>
<CAPTION>
Corporate Income Fund Institutional Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Feb. 3, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 9.49 $ 8.84 $ 9.98
Income from investment operations:
Net investment income (loss)...................... 0.62 0.73 0.41
Net realized and unrealized gain (loss) on
security transactions............................ (0.15) 0.78 (1.12)
------- ------ ------
Total from investment operations.................. 0.47 1.51 (0.71)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.62) (0.86) (0.43)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.62) (0.86) (0.43)
------- ------ ------
Net asset value, end of period..................... $ 9.34 $ 9.49 $ 8.84
======= ====== ======
Total Return(2).................................... 5.19% 18.27% (7.21%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $5,852 $3,704 $1,302
Ratio of expenses to average net assets .......... 0.90% 0.90% 0.90%
Ratio of expenses to average net assets prior to
expense limitation............................... 1.32% 1.52% 2.20%
Ratio of net investment income to average
net assets ...................................... 6.53% 6.95% 6.88%
Ratio of net investment income to average
net assets prior to expense limitation........... 6.11% 6.33% 5.58%
Portfolio turnover rate........................... 68% 119% 185%
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Federal Bond Fund A Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Dec. 3, 1993(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 9.80 $ 9.15 $10.00
Income from investment operations:
Net investment income (loss)...................... 0.52 0.57 0.38
Net realized and unrealized gain (loss) on
security transactions............................ (0.20) 0.65 (0.86)
------- ------ ------
Total from investment operations.................. 0.32 1.22 (0.48)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.52) (0.57) (0.37)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.52) (0.57) (0.37)
------- ------ ------
Net asset value, end of period..................... $ 9.60 $ 9.80 $ 9.15
======= ====== ======
Total Return(2).................................... 3.43% 13.72% (4.93%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $11,419 $11,062 $9,658
Ratio of expenses to average net assets .......... 1.23% 1.25% 1.25%
Ratio of expenses to average net assets prior to
expense limitation............................... 1.91% 2.06% 2.58%
Ratio of net investment income to average
net assets ...................................... 5.33% 6.07% 4.38%
Ratio of net investment income to average
net assets prior to expense limitation........... 4.65% 5.26% 3.05%
Portfolio turnover rate........................... 196% 227% 366%
</TABLE>
<TABLE>
<CAPTION>
Federal Bond Fund B Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended July 27, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $10.25 $ 9.78 $10.00
Income from investment operations:
Net investment income (loss)...................... 0.45 0.57 0.12
Net realized and unrealized gain (loss) on
security transactions............................ (0.18) 0.65 (0.23)
------- ------ ------
Total from investment operations.................. 0.27 1.22 (0.11)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.45) (0.75) (0.11)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.45) (0.75) (0.11)
------- ------ ------
Net asset value, end of period..................... $10.07 $10.25 $ 9.78
======= ====== ======
Total Return(2).................................... 2.76% 13.09% (1.11%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $568 $299 $239
Ratio of expenses to average net assets .......... 1.90% 1.90% 1.90%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.58% 2.71% 3.22%
Ratio of net investment income to average
net assets ...................................... 4.66% 5.43% 4.87%
Ratio of net investment income to average
net assets prior to expense limitation........... 3.98% 4.62% 3.55%
Portfolio turnover rate........................... 196% 227% 366%
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
8. Financial Highlights (Continued)
<TABLE>
<CAPTION>
Federal Bond Fund C Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended July 7, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $10.38 $ 9.79 $10.00
Income from investment operations:
Net investment income (loss)...................... 0.45 0.63 0.15
Net realized and unrealized gain (loss) on
security transactions............................ (0.18) 0.47 (0.22)
------- ------ ------
Total from investment operations.................. 0.27 1.10 (0.07)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.45) (0.51) (0.14)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.45) (0.51) (0.14)
------- ------ ------
Net asset value, end of period..................... $10.20 $10.38 $ 9.79
======= ====== ======
Total Return(2).................................... 2.74% 11.59% (0.72%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $12 $15 $49
Ratio of expenses to average net assets .......... 1.90% 1.85% 1.90%
Ratio of expenses to average net assets prior to
expense limitation............................... 2.58% 2.70% 3.22%
Ratio of net investment income to average
net assets ...................................... 4.66% 4.73% 4.71%
Ratio of net investment income to average
net assets prior to expense limitation........... 3.98% 3.88% 3.39%
Portfolio turnover rate........................... 196% 227% 366%
</TABLE>
<TABLE>
<CAPTION>
Federal Bond Fund Institutional Class
----------------------------------------------------
For the Year For the Year For the Period
Ended Ended Feb. 3, 1994(1) to
Oct. 31, 1996 Oct. 31, 1995 Oct. 31, 1994
------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 9.60 $ 9.15 $10.00
Income from investment operations:
Net investment income (loss)...................... 0.55 0.69 0.33
Net realized and unrealized gain (loss) on
security transactions............................ (0.51) 0.54 (0.85)
------- ------ ------
Total from investment operations.................. 0.04 1.23 (0.52)
------ ------ ------
Less dividends and distributions:
Dividends from net investment income.............. (0.55) (0.78) (0.33)
Distributions from net realized gain on
security transactions............................ -- -- --
------ ------ ------
Total dividends and distributions................. (0.55) (0.78) (0.33)
------- ------ ------
Net asset value, end of period..................... $ 9.09 $ 9.60 $ 9.15
======= ====== ======
Total Return(2).................................... 0.60% 14.15% (5.17%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)........... $106 $979 $353
Ratio of expenses to average net assets .......... 0.90% 0.90% 0.90%
Ratio of expenses to average net assets prior to
expense limitation............................... 1.58% 1.71% 2.23%
Ratio of net investment income to average
net assets ...................................... 5.66% 6.39% 5.57%
Ratio of net investment income to average
net assets prior to expense limitation........... 4.98% 5.58% 4.24%
Portfolio turnover rate........................... 196% 227% 366%
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized.
(2) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares. Does not include contingent
deferred sales charge which varies from 1-4% depending upon the holding
period for Class B and Class C shares.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of the Delaware Group Adviser Funds, Inc.:
We have audited the accompanying statements of net assets of the Delaware Group
Adviser Funds, Inc., (the Fund) consisting of the Enterprise Fund, the U.S.
Growth Fund, the World Growth Fund, the New Pacific Fund, the Corporate Income
Fund and the Federal Bond Fund as of October 31, 1996, and the related
statements of operations for the year then ended, changes in net assets for the
two years in the period then ended and the financial highlights appearing in
note 8 for each of the respective periods presented. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios comprising the Delaware Group Adviser Funds,
Inc. as of October 31, 1996, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and their financial highlights for each of the respective periods
presented, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 20, 1996
<PAGE>
A Report on the Adviser Funds, Inc. Annual Meeting
An annual meeting of shareholders was held on May 4, 1996. The matters submitted
to a vote of shareholders were the election of directors, the approval of a new
investment management agreement and a new sub-advisory agreement and the
ratification of the selection of Coppers & Lybrand LLP as independent auditors
of the Fund. Whenever there is a change in control of an investment manager, the
Investment Company Act of 1940 requires shareholders to vote on a new investment
management agreement.
Enterprise Fund
Number of Votes
-------------------------------------
Against/
For Withheld Abstentions
--------- ---------- -----------
Wayne A. Stork............................ 1,360,697 4,324 --
Walter P. Babich.......................... 1,360,697 4,324 --
Anthony D. Knerr.......................... 1,360,697 4,324 --
Ann R. Leven.............................. 1,360,697 4,324 --
W. Thatcher Longstreth.................... 1,360,222 4,799 --
Charles E. Peck........................... 1,360,550 4,471 --
Approval of the New Investment Management
Agreement................................ 1,355,362 283 9,376
Approval of the New Sub-Advisory
Agreement................................ 1,355,232 321 9,376
Selection of Coopers & Lybrand LLP as
Independent Auditors..................... 1,359,337 2,376 3,307
U.S. Growth Fund
Number of Votes
-------------------------------------
Against/
For Withheld Abstentions
--------- ---------- -----------
Wayne A. Stork............................ 1,544,339 501 --
Walter P. Babich.......................... 1,544,339 501 --
Anthony D. Knerr.......................... 1,544,339 501 --
Ann R. Leven.............................. 1,544,339 501 --
W. Thatcher Longstreth.................... 1,544,042 798 --
Charles E. Peck .......................... 1,544,339 501 --
Approval of the New Investment Management
Agreement................................ 1,540,157 201 4,481
Approval of the New Sub-Advisory
Agreement................................ 1,540,454 201 4,184
Selection of Coopers & Lybrand LLP as
Independent Auditors..................... 1,543,504 232 1,102
World Growth Fund
Number of Votes
-------------------------------------
Against/
For Withheld Abstentions
--------- ---------- -----------
Wayne A. Stork............................ 1,163,993 2,936 --
Walter P. Babich.......................... 1,163,993 2,936 --
Anthony D. Knerr.......................... 1,163,993 2,936 --
Ann R. Leven.............................. 1,163,993 2,936 --
W. Thatcher Longstreth.................... 1,163,925 3,004 --
Charles E. Peck........................... 1,163,925 3,004 --
Approval of the New Investment Management
Agreement................................ 1,157,665 0 9,264
Approval of the New Sub-Advisory
Agreement ............................... 1,157,809 0 9,120
Selection of Coopers & Lybrand LLP as
Independent Auditors..................... 1,162,295 8 4,625
<PAGE>
A Report on the Adviser Funds, Inc. Annual Meeting
New Pacific Fund
Number of Votes
-------------------------------------
Against/
For Withheld Abstentions
--------- ---------- -----------
Wayne A. Stork............................ 1,111,588 0 --
Walter P. Babich.......................... 1,111,588 0 --
Anthony D. Knerr.......................... 1,111,588 0 --
Ann R. Leven.............................. 1,111,588 0 --
W. Thatcher Longstreth.................... 1,111,588 0 --
Charles E. Peck........................... 1,111,588 0 --
Approval of the New Investment Management
Agreement................................ 1,104,121 0 74,874
Approval of the New Sub-Advisory
Agreement................................ 1,103,866 255 7,874
Selection of Coopers & Lybrand LLP as
Independent Auditors..................... 1,106,090 2,376 3,530
Corporate Income Fund
Number of Votes
-------------------------------------
Against/
For Withheld Abstentions
--------- ---------- -----------
Wayne A. Stork............................ 1,563,539 595 --
Walter P. Babich.......................... 1,563,539 595 --
Anthony D. Knerr.......................... 1,563,539 595 --
Ann R. Leven.............................. 1,563,539 595 --
W. Thatcher Longstreth.................... 1,563,539 595 --
Charles E. Peck........................... 1,563,539 595 --
Approval of the New Investment Management
Agreement................................ 1,554,630 0 9,504
Approval of the New Sub-Advisory
Agreement................................ 1,554,279 350 9,504
Selection of Coopers & Lybrand LLP
as Independent Auditors.................. 1,563,539 0 595
Federal Bond Fund
Number of Votes
-------------------------------------
Against/
For Withheld Abstentions
--------- ---------- -----------
Wayne A. Stork............................ 1,156,805 0 --
Walter P. Babich.......................... 1,156,805 0 --
Anthony D. Knerr.......................... 1,156,805 0 --
Ann R. Leven.............................. 1,156,805 0 --
W. Thatcher Longstreth.................... 1,156,805 0 --
Charles E. Peck........................... 1,156,805 0 --
Approval of the New Investment Management
Agreement................................ 1,153,322 0 3,482
Approval of the New Sub-Advisory
Agreement................................ 1,152,978 344 3,482
Selection of Coopers & Lybrand LLP as
Independent Auditors..................... 1,156,805 0 0
<PAGE>
This annual report is for the information of Delaware Group Adviser Funds'
shareholders, but may be used with prospective investors when preceded or
accompanied by a Performance Update for the most recently completed calendar
quarter and a current Prospectus, which sets forth details about charges,
expenses, investment objectives and operating policies of the Funds. Summary
investment results are documented in the current Statement of Additional
Information. The figures in this report represent past results. The return and
principal value of an investment in the Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Board
- ---------------
Members
- ---------------
Wayne A. Stork
Chairman, President and Chief Executive Officer
Delaware Group of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Treasurer, National Gallery of Art
Washington, DC
W. Thacher Longstreth
City Councilman
Philadelphia, PA
Charles E. Peck
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA
Affiliated
- --------------------
Officers
- --------------------
George M. Chamberlain, Jr.
Senior Vice President and Secretary,
Delaware Group of Funds
Philadelphia, PA
Bruce D. Barton
President and CEO,
Delaware Distributors, L.P.
Philadelphia, PA
David K. Downes
Senior Vice President, Chief Financial Officer and
Chief Administrative Officer
Delaware Group of Funds
Philadelphia, PA
<PAGE>
Delaware Group
- -----------------
of Funds
- -----------------
For Growth of Capital
Trend Fund
Enterprise Fund
DelCap Fund
Value Fund
U.S. Growth Fund
For Total Return
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
Delaware Fund
For International Diversification
Emerging Markets Fund
New Pacific Fund
World Growth Fund
International Equity Fund
Global Assets Fund
Global Bond Fund
For Current Income
Delchester Fund
Strategic Income Fund
Corporate Income Fund
Federal Bond Fund
U.S. Government Fund
Limited-Term Government Fund
For Tax-Free Current Income
Tax-Free Pennsylvania Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Money Market Funds
Delaware Cash Reserve
U.S. Government Money Fund
Tax-Free Money Fund
Closed-End Equity/Income*
Dividend and Income Fund
Global Dividend and Income Fund
This report must be preceded or accompanied by a current Adviser Funds
prospectus and the Delaware Group Fund Performance Update for the most
recently completed calendar quarter. For a prospectus of any other Delaware
Group fund, contact your financial adviser or Delaware Group.
* Delaware Group Dividend and Income Fund and Delaware Group Global
Dividend and Income Fund purchases can be made through any registered
broker.
DELAWARE
GROUP
- --------
Philadelphia . London
<PAGE>
Be sure to consult your financial adviser when making investment decisions.
Mutual funds can be a valuable part of your financial plan; however, shares of
the Adviser Funds are not FDIC or NCUSIF insured, are not guaranteed by any bank
or any credit union, are not obligations of or deposits of any bank or any
credit union, and involve investment risk, including the possible loss of
principal. Shares of the Fund are not bank or credit union deposits.
Investment Manager
Delaware Management Company, Inc.
Philadelphia, Pennsylvania
International Affiliate
Delaware International Advisers Ltd.
London, England
Subadvisers
Lynch & Mayer
New York, New York
Walter Scott & Partners, Ltd.
Edinburgh, Scotland
John Govett & Co.
London, England
Lincoln Investment Management Inc.
Fort Wayne, Indiana
National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
Nationwide (800) 523-4640
Securities Dealers Only
Nationwide (800) 362-7500
Financial Institutions Representatives Only
Nationwide (800) 659-2265
Copy Rights Delaware Distributors, L.P.
Printed in the U.S.A. on recycled paper.
DAF-AR[10/96]TKO12/96
