<PAGE>
[LOGO OF LINCOLN LINCOLN
ADVISOR FUNDS ADVISOR
APPEARS HERE] FUNDS
ANNUAL REPORT
OCTOBER 31, 1995
LINCOLN GROWTH AND INCOME PORTFOLIO
LINCOLN ENTERPRISE PORTFOLIO
LINCOLN U.S. GROWTH PORTFOLIO
LINCOLN WORLD GROWTH PORTFOLIO
LINCOLN NEW PACIFIC PORTFOLIO
LINCOLN GOVERNMENT INCOME PORTFOLIO
LINCOLN CORPORATE INCOME PORTFOLIO
LINCOLN TAX-FREE INCOME PORTFOLIO
LINCOLN CASHFUND PORTFOLIO
SECURITIES DISTRIBUTED BY DELAWARE DISTRIBUTORS L.P.,
PHILADELPHIA, PENNSYLVANIA
<PAGE>
[LOGO OF LINCOLN ADVISOR LINCOLN
FUNDS APPEARS HERE] ADVISOR
FUNDS
A LETTER FROM THE PRESIDENT
November 21, 1995
Dear Shareholder:
The fiscal year ended October 31, 1995 was a very rewarding one for investors
in U.S. stocks and bonds as interest rates fell dramatically and corporate
earnings for many domestic and multinational businesses grew substantially
despite a slowdown in U.S. economic growth.
The Standard & Poor's 500 Index climbed +26.4% during this 12-month period
while the Merrill Lynch Corporate-Government-Mortgage Bond Index advanced
+15.8%. Both Indices are broad, unmanaged measures of their respective markets.
Our domestically oriented Lincoln Advisor Funds successfully participated in
this rally, which marked a stunning turnaround from 1994, when the Federal
Reserve Board rapidly raised short-term interest rates, resulting in a flat
stock market, and the worst bond market in nearly 70 years.
Total return from capital appreciation and reinvested dividends for the Lincoln
Advisor Funds for the 12 months ended October 31, 1995 based on Class A net
asset value, are shown in the table below.
<TABLE>
<CAPTION>
TOTAL RETURN FOR CLASS A SHARES
FOR THE 12 MONTHS ENDED
OCTOBER 31, 1995 AT NET ASSET VALUE
<S> <C>
Lincoln Growth & Income Portfolio 19.13%
Lincoln Enterprise Portfolio 22.72%
Lincoln U.S. Growth Portfolio 21.74%
Lincoln World Growth Portfolio 3.81%
Lincoln New Pacific Portfolio (13.99)%
Lincoln Government Income Portfolio 13.72%
Lincoln Corporate Income Portfolio 17.71%
Lincoln Tax-Free Income Portfolio 14.76%
Lincoln Cashfund Portfolio 4.94%
</TABLE>
Total return as shown above assumes reinvestment of dividends and
capital gains, and excludes the effect of the front-end sales load.
Complete performance information for the past fiscal year and for each
Portfolio's lifetime can be found inside in the report on each
respective Portfolio.
In the U.S., we are encouraged by the recent pause in the stock market's
stellar rise because it has reduced what, in our opinion, have been speculative
excesses in some industry groups, especially technology. Positive long-term
economic trends that bode well for 1996 include low inflation, declining
interest rates, increased business productivity and a U.S. dollar valuation
that favors exporters.
As you read this report, you'll see what steps the Funds' managers took during
the year to position their particular portfolio for a U.S. economy
characterized by modest growth as well as this past summer's reversal in the
Federal Reserve's interest rate policy.
Our international Funds' managers adjusted their portfolios to reflect
worldwide economic conditions that were generally not as favorable as
conditions in the U.S. You'll see in the report how these Funds' performance
was affected by the changing value of the dollar in relation to other
currencies and the financial circumstances of regions such as the Far East.
We believe the long-term outlook for financial markets both here and abroad is
bright and we hope to merit your continued confidence. We will strive to help
you meet the long-term investing goals you have developed with the help of your
financial advisor.
Sincerely,
Priscilla S. Brown, President
Lincoln Advisor Funds
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FINANCIAL INFORMATION: PAGE
Management, Discussion & Analysis.......................................... 2
Portfolios of Investments
Lincoln Growth and Income Portfolio...................................... 19
Lincoln Enterprise Portfolio............................................. 22
Lincoln U.S. Growth Portfolio............................................ 26
Lincoln World Growth Portfolio........................................... 29
Lincoln New Pacific Portfolio............................................ 33
Lincoln Government Income Portfolio...................................... 40
Lincoln Corporate Income Portfolio....................................... 42
Lincoln Tax-Free Income Portfolio........................................ 45
Lincoln Cashfund Portfolio............................................... 48
Statements of Assets and Liabilities....................................... 50
Statements of Operations................................................... 52
Statements of Changes in Net Assets........................................ 54
Financial Highlights....................................................... 58
Notes to Financial Statements.............................................. 68
</TABLE>
This annual report is for the information of Lincoln Advisor Funds'
shareholders. 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.
1
<PAGE>
LINCOLN GROWTH AND INCOME PORTFOLIO
Managed by Beutel, Goodman Capital Management
This Portfolio seeks to provide capital appreciation and current income by
investing in stocks, fixed-income securities, convertible bonds and money
market instruments.
The Lincoln Growth & Income Portfolio generated a total return of +19.13%
(capital change plus income based on Class A net asset value) for the 12 months
ended October 31 using a strategy of investing in established companies that
are refocusing operations in ways we believe may add value to their stocks.
We sought companies that paid above-average dividends, and we achieved success
investing in banks, insurance companies, and conglomerates such as ITT Corp.,
which announced in June that it would split up its insurance, automotive and
hotel businesses. Its stock rose more than 40% in the past year.
As can be the case with any portfolio, some investments have yet to bear fruit.
The price of gold stagnated during the fiscal year, and consequently our
investment in Newmont Mining Co., a gold producer, did not rise in price as
much as stocks in other industries, even though the company's earnings doubled
during the fiscal year.
Your Fund participated in the technology stock rally in the past year through
selected investments in semiconductor and personal computer makers such as
Intel and Compaq. Technology stocks were 10% of net assets as of October 31.
Intel was the Fund's best performer, with a substantial price increase during
the fiscal year.
Our performance was not as strong as that of the unmanaged Standard & Poor's
500 Index during the year in part because, compared to the Index, your Fund's
portfolio was underweighted in consumer growth stocks.
In the coming months, we expect to add more companies with higher market
capitalizations to the portfolio at what we believe to be attractive prices.
The focus will be on companies that, in our opinion, have the potential to
perform well should U.S. economic growth slow.
2
<PAGE>
Comparison of a $10,000 Investment
Lincoln Growth & Income Portfolio
Class A Shares
TOTAL LIFETIME RETURN
DECEMBER 3, 1993 THROUGH OCTOBER 31, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lincoln Growth & Standard & Poor's
Income Portfolio 500 Index
---------------- -----------------
<S> <C> <C>
12/3/93 $ 9,451 $10,000
12/31/93 $ 9,537 $10,168
3/31/94 $ 9,329 $ 9,783
6/30/94 $ 9,044 $ 9,824
9/30/94 $ 9,513 $10,303
12/31/94 $ 8,849 $10,301
3/31/95 $ 9,763 $11,303
6/30/95 $10,770 $12,381
9/30/95 $11,148 $13,364
10/31/95 $11,023 $13,315
</TABLE>
The above graph depicts the returns of Class A shares only, includes
the effect of the maximum 5.5% sales charge and assumes reinvestment
of dividends and capital gains. Performance of Class B, C and D
could be greater or less than Class A based on differences in sales
charges and fees among the Classes. Unlike the Portfolio, the S&P
500 Index is an unmanaged hypothetical portfolio that does not
reflect the "real world" costs of buying and selling stocks or bonds
and operating a mutual fund.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------
CLASS DATE ESTABLISHED (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- ---------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
A December 3, 1993 +10.23% +5.23% +12.54%
B March 29, 1994 +8.68% +5.36% +13.36%
C May 5, 1994 +18.13% +11.94% +17.37%
D February 3, 1994 +12.46% +6.96% +19.52%
</TABLE>
Results include the effect of applicable sales charges and fees,
which differ for each Class. Past performance is not a guarantee of
future results. Results assume reinvestment of any dividends and
capital gains. Return and share value fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR THE YEAR ENDED OCTOBER 31
<TABLE>
<S> <C>
Standard & Poor's 500 Index +26.44%
Lipper Growth and Income Fund Average (483 Funds) +20.23%
</TABLE>
3
<PAGE>
LINCOLN ENTERPRISE PORTFOLIO
Managed by Lynch & Mayer
This Portfolio 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.
In the 12 months ended October 31, the Lincoln Enterprise Portfolio was
generally invested in the right place at the right time. Our selection of
medium-size technology and financial stocks turned out to be strong performers
during the past year, helping your Fund generate a total return of +22.72%
(capital change plus income based on Class A net asset value).
For the fiscal year, we outperformed the Standard & Poor's Mid-Cap Index, an
unmanaged broad-based measure of 400 mid-size company stocks that rose +21.21%.
Your Fund's performance was aided by stocks such as Tektronix Inc., which makes
electronic test equipment and computer graphics. Tektronix was the Fund's
largest holding, and its price rose more than 60% during the past year.
We sold some of our basic materials and cyclical consumer stock selections such
as Sunbeam Oster, which did not meet our expectations in the past year. We
attribute the relative performance of these sectors to a slowdown in U.S.
economic growth, which affected industries such as construction and autos, and
to relatively stagnant wage incomes, which hindered consumer spending and
affected retailers' earnings.
In our opinion, we are in the midst of a multi-year cycle of out performance by
mid-cap stocks relative to large capitalization companies. We will continue to
search for companies that exhibit early indications of positive fundamental
change.
Your Fund's management believes that the price-to-earnings ratio of the stocks
in your Fund's portfolio has the potential to expand as long as interest rates
remain low and profit growth from a diverse range of industries continues to
accelerate.
As of October 31, the average market capitalization of companies whose stocks
are included in the Fund was $1.8 billion. Approximately 97% of the Fund's net
assets were invested in stocks, with the balance in options and cash.
4
<PAGE>
Comparison of a $10,000 Investment
Lincoln Enterprise Portfolio
Class A Shares
TOTAL LIFETIME RETURN
DECEMBER 3, 1993 THROUGH OCTOBER 31, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lincoln Enterprise S&P Mid-Cap
Portfolio 400 Index
------------------ -----------
<S> <C> <C>
12/3/93 $ 9,451 $10,000
12/31/93 $ 9,503 $10,499
3/31/94 $ 9,002 $10,100
6/30/94 $ 7,782 $ 9,731
9/30/94 $ 8,587 $10,390
12/31/94 $ 8,491 $10,122
3/31/95 $ 9,191 $10,941
6/30/95 $ 9,769 $11,906
9/30/95 $10,857 $13,068
10/31/95 $10,677 $12,732
</TABLE>
The above graph depicts the returns of Class A shares only, includes
the effect of the maximum 5.5% sales charge and assumes reinvestment
of dividends and capital gains. Performance of Class B, C and D
could be greater or less than Class A based on differences in sales
charges and fees among the Classes. Unlike the Portfolio, the S&P
400 Index is an unmanaged hypothetical portfolio that does not
reflect the "real world" costs of buying and selling stocks or bonds
and operating a mutual fund.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------
CLASS DATE ESTABLISHED (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- ---------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
A December 3, 1993 +6.76% +3.48% +15.91%
B March 29, 1994 +14.82% +9.32% +15.82%
C May 5, 1994 +22.10% +14.45% +20.86%
D February 3, 1994 +8.24% +4.64% +22.43%
</TABLE>
Results include the effect of applicable sales charges and fees,
which differ for each Class. Past performance is not a guarantee of
future results. Results assume reinvestment of any dividends and
capital gains. Return and share value fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR THE YEAR ENDED OCTOBER 31
<TABLE>
<S> <C>
Standard & Poor's Mid-Cap 400 Index +21.21%
Lipper Mid-Cap Fund Average (121 Funds) +23.91%
</TABLE>
5
<PAGE>
LINCOLN U.S. GROWTH PORTFOLIO
Managed by Provident Investment Counsel
This Portfolio 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.
Growth stocks, after two years of being out of favor, made a strong comeback in
the 12 months that ended October 31. The Lincoln U.S. Growth Portfolio- -whose
largest holdings were technology related companies- - generated a total return
of +21.74% (capital change plus income based on Class A net asset value) in the
past year.
The unmanaged Standard & Poor's 500 Index rose +26.44% and our peers, as
represented by the Lipper Growth Fund Average, rose +22.14%. The Fund had
outperformed the Lipper average through September 30. However, the sharp, and
we believe temporary, weakness in technology stocks during October negatively
affected our year-end results.
Our largest holdings include Motorola, Microsoft Corp., Intel Corp. and Texas
Instruments--technology leaders that we believe have bright long-term prospects
as the use of desktop computers and cellular communications with sophisticated
software become widespread worldwide. Even with this past year's gains, we
believe the market is still in the early stages of a two to three year cycle of
favorable performance for many types of growth stocks. In our opinion, stock
prices still remain attractive relative to growth stocks' high rate of earnings
growth.
Your Fund's performance also was favorably affected by the performance of our
holdings in financial and health care stocks, selected telecommunications
stocks such as LM Ericsson and Nokia Corp. and in Capital Cities/ABC Inc.,
which this year agreed to be acquired by the Walt Disney Co.
We look for companies that we believe can be highly profitable even during a
difficult economic environment, firms whose growth comes from selling more
products rather than price increases or internal cost-cutting. Our philosophy
is that businesses with high market share and strong earnings growth will
generate rewarding long-term returns.
As of October 31, more than 99% of the Fund's net assets were invested in
stocks with an average market capitalization of $13 billion. The balance of net
assets was in cash.
6
<PAGE>
Comparison of a $10,000 Investment
Lincoln US Growth Portfolio
Class A Shares
TOTAL LIFETIME RETURN
DECEMBER 3, 1993 THROUGH OCTOBER 31, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lincoln US Standard & Poor's
Growth Portfolio 500 Index
---------------- -----------------
<S> <C> <C>
12/3/93 $ 9,451 $10,000
12/31/93 $ 9,490 $10,168
3/31/94 $ 9,111 $ 9,783
6/30/94 $ 8,770 $ 9,824
9/30/94 $ 9,367 $10,303
12/31/94 $ 9,206 $10,301
3/31/95 $ 9,679 $11,303
6/30/95 $10,730 $12,381
9/30/95 $11,873 $13,364
10/31/95 $11,760 $13,315
</TABLE>
The above graph depicts the returns of Class A shares only, includes
the effect of the maximum 5.5% sales charge and assumes reinvestment
of dividends and capital gains. Performance of Class B, C and D
could be greater or less than Class A based on differences in sales
charges and fees among the Classes. Unlike the Portfolio, the S&P
500 Index is an unmanaged hypothetical portfolio that does not
reflect the "real world" costs of buying and selling stocks or bonds
and operating a mutual fund.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------
CLASS ESTABLISHED ON (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- -------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
A December 3, 1993 +17.60% +8.85% +15.09%
B March 29, 1994 +18.27% +11.15% +14.95%
C May 5, 1994 +28.50% +18.97% +20.00%
D February 3, 1994 +18.82% +10.39% +22.19%
</TABLE>
Results include the effect of applicable sales charges and fees,
which differ for each Class. Past performance is not a guarantee of
future results. Results include reinvestment of any dividends and
capital gains. Return and share value fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR THE YEAR ENDED OCTOBER 31
<TABLE>
<S> <C>
Standard & Poor's 500 Index +26.44%
Lipper Growth Fund Average (643 Funds) +22.14%
</TABLE>
7
<PAGE>
LINCOLN WORLD GROWTH PORTFOLIO
Managed by Walter Scott & Partners
This Portfolio seeks to maximize total return through investments in an
internationally diversified mix of equity securities.
In a difficult year for many international stock markets, the Lincoln World
Growth Portfolio's total return of +3.81% (capital change plus income based on
Class A net asset value) in the 12 months ended October 31 was significantly
better than the negative return provided by the average peer fund. Returns of
major foreign markets were generally weak, as measured by the Morgan Stanley
Europe Asia Far East Index (EAFE), which had a return of -0.37%.
While a single digit return may not seem impressive relative to the performance
of U.S. stocks in the past year, keep in mind that the behavior of
international stock markets has historically had little correlation to what
happens on Wall Street and is affected by currency fluctuations as well as
different economic conditions and political circumstances.
We are pleased to report that your Fund achieved its results even with 33% of
the Fund's net assets invested in Japanese stocks, where the benchmark Nikkei
Index fell 11% in the 12 months ended October 31.
Your Fund's performance was aided by price gains from Japanese technology
companies such as Advantest and Tokyo Electron, both semiconductor companies
whose stock has appreciated more than 70% from the prices your Fund paid. In
Europe, the Fund benefited from gains in major holdings such as Wolford AG, an
Austrian hosiery and bodysuit maker and PolyGram NV, a Dutch company that owns
U.S. music labels such as Motown and Mercury.
Lincoln World Growth Portfolio focuses on established overseas markets, and
generally avoids more volatile emerging markets. Almost half of net assets were
invested in Western Europe as of October 31. Slightly more than 8% of net
assets were invested in U.S. companies at year's end.
In recent months, your Fund has been benefiting from the declining value of the
Japanese yen, primarily due to a successful currency hedging strategy we
employed this past spring. We believe our equity holdings in Japan are well-
positioned to benefit from increased exports should the yen drop further.
8
<PAGE>
Comparison of a $10,000 Investment
Lincoln World Growth Portfolio
Class A Shares
TOTAL LIFETIME RETURN
DECEMBER 3, 1993 THROUGH OCTOBER 31, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lincoln World Growth Portfolio Morgan Stanley EAFE
------------------------------ -------------------
<S> <C> <C>
12/03/93 $ 9,451 $10,000
12/31/93 $ 9,380 $10,724
3/31/94 $ 9,930 $11,106
6/30/94 $10,213 $11,681
9/30/94 $10,350 $11,700
12/31/94 $ 9,738 $11,589
3/31/95 $ 9,938 $11,813
6/30/95 $10,301 $11,909
9/30/95 $11,118 $12,415
10/31/95 $10,814 $12,085
</TABLE>
The above graph depicts the returns of Class A shares only, includes
the effect of the maximum 5.5% sales charge and assumes reinvestment
of dividends and capital gains. Performance of Class B, C and D
could be greater or less than Class A based on differences in sales
charges and fees among the Classes. Unlike the Portfolio, the Morgan
Stanley Europe Asia Far East (EAFE) Index is a hypothetical
portfolio that does not reflect the "real world" cost of buying and
selling stocks or bonds and operating a mutual fund.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------
CLASS DATE ESTABLISHED (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- ---------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
A December 3, 1993 +8.14% +4.18% -1.90%
B March 29, 1994 +3.28% +2.04% -1.97%
C May 5, 1994 +7.75% +5.18% +2.16%
D February 3, 1994 +9.65% +5.42% +4.22%
</TABLE>
Results include the effect of applicable sales charges and fees,
which differ for each Class. Past performance is not a guarantee of
future results. Results assume reinvestment of any dividends and
capital gains. Return and share value fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR THE YEAR ENDED OCTOBER 31
<TABLE>
<S> <C>
Morgan Stanley Europe Asia Far East (EAFE) Index -0.37%
Lipper International Fund Average (288 Funds) -1.09%
</TABLE>
9
<PAGE>
LINCOLN NEW PACIFIC PORTFOLIO
Managed by John Govett & Co.
This Portfolio seeks long-term capital appreciation by investing primarily in
companies that are located in or have their principal business in the Pacific
Basin.
While we believe the Pacific Rim may enjoy rapid long-term economic growth that
should eventually reward patient investors, the Lincoln New Pacific Portfolio's
total return of -13.99% (capital change plus income based on Class A net asset
value) for the 12 months ended October 31 was disappointing.
Such results clearly illustrate the highly volatile nature of emerging markets
like Malaysia, Thailand, Indonesia and the Philippines, where approximately 24%
of the Fund's net assets are invested. In addition, nearly 20% of net assets
were invested in Japanese stocks, where the benchmark Nikkei Index provided a
total return of -11% in the past year.
Some of our individual stock holdings did quite well. Our largest holding,
China Hong Kong Photo Products Ltd., distributors of Fuji brand film in China,
rose 117% in value in the 12 months ended October 31. But your Fund's
participation in such gains did not offset setbacks in other areas.
Jardine Strategic Holdings, a multinational conglomerate with Asian interests
in autos, food, retailing and real estate, the Fund's second largest holding,
lost 18.7% of its value in the past year. Two of the Fund's other top 10
holdings--a Thai bank and a Philippine property company--also suffered double
digit declines in share value.
Stock markets in developing nations such as Malaysia and Thailand were weakened
by rising interest rates that resulted from government efforts to reduce
inflation. Tighter credit also negatively affected growth.
We believe our long-term investment strategy- -to select industries and
companies based on earnings growth and overall economic trends- -is sound.
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.
In our opinion, these risks are manageable and worth taking because of the
region's potential for greater rewards. Japan, meanwhile, remains the region's
dominant economy, and political and business leaders are making strides that,
we believe, will resolve financial problems that have tempered growth. In the
months ahead, we are likely to focus on Korea and Taiwan, two markets we
believe have good potential prospects and somewhat more established patterns of
growth.
10
<PAGE>
Comparison of a $10,000 Investment
Lincoln New Pacific Portfolio
Class A Shares
TOTAL LIFETIME RETURN
DECEMBER 3, 1993 THROUGH OCTOBER 31, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lincoln New Pacific Portfolio Morgan Stanley Pacific Index
----------------------------- ----------------------------
<S> <C> <C>
12/03/93 $ 9,451 $10,000
12/31/93 $10,227 $10,699
3/31/94 $ 8,969 $11,574
6/30/94 $ 9,233 $12,772
9/30/94 $10,160 $12,402
12/31/94 $ 9,051 $12,093
3/31/95 $ 8,330 $11,903
6/30/95 $ 8,602 $11,414
9/30/95 $ 8,759 $11,891
10/31/95 $ 8,496 $11,314
</TABLE>
The above graph depicts the returns of Class A shares only, includes
the effect of the maximum 5.5% sales charge and assumes reinvestment
of dividends and capital gains. Performance of Class B, C and D
could be greater or less than Class A based on differences in sales
charges and fees among the Classes. Unlike the Portfolio, the Morgan
Stanley Pacific Index is a hypothetical portfolio that does not
reflect the "real world" cost of buying and selling stock or bonds
and operating a mutual fund.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------------
CLASS DATE ESTABLISHED (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- ---------------- ------------ ------------ --------
<C> <S> <C> <C> <C>
A December 3, 1993 -15.05% -8.18% -18.74%
B March 29, 1994 -10.93% -7.00% -18.84%
C May 5, 1994 -9.02% -6.91% -15.43%
D February 3, 1994 -18.85% -11.28% -13.65%
</TABLE>
Results include the effect of applicable sales charges and fees,
which differ for each Class. Past performance is not a guarantee of
future results. Results include reinvestment of any dividends and
capital gains. Return and share value fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR THE YEAR ENDED OCTOBER 31
<TABLE>
<S> <C>
Morgan Stanley Pacific Index -11.03%
Lipper Pacific Region Fund Average (39 Funds) -9.48%
</TABLE>
11
<PAGE>
LINCOLN GOVERNMENT INCOME PORTFOLIO
Managed by Lincoln Investment Management Inc.
This Portfolio seeks to maximize current income consistent with preservation of
capital by investing in securities issued by the U.S. government, its agencies
and instrumentalities.
Significantly lower interest rates during 1995 and a change in Federal Reserve
Board policy helped Lincoln Government Income Portfolio more than recover from
1994's weak bond market. The Portfolio posted a positive return of +13.72%
(capital change plus income based on Class A net asset value) for the 12 months
ended October 31.
During the previous fiscal year, your Fund focused on a mix of short and long-
term maturity bonds. We invested approximately 55% of net assets in U.S.
Treasury Notes, with the balance in a broad mix of government agency, corporate
and mortgage securities issued by organizations such as the Federal National
Mortgage Association (Fannie Mae) and the Student Loan Marketing Association
(Sallie Mae).
The Fund sought high current income consistent with preservation of principal
by investing in segments of the bond market that we believed offered the most
attractive risk/reward relationship. We monitored the slowdown in U.S. economic
growth during the fiscal year and increased the portfolio's average maturity
and duration early in the year in anticipation of lower interest rates.
As of October 31, your Fund's portfolio had an average overall quality of AAA,
the highest available, an average effective maturity of 10.4 years and an
effective duration of 5.4 years. Duration is the most common measure of a
bond's sensitivity to interest rates. It indicates the approximate percentage
of change in a bond's price given a 1% change in interest rates.
Total return was slightly less than the Lehman Brothers Government Bond Index,
a broad unmanaged measure of the bond market, and the Lipper General U.S.
Government Bond Fund Average because early in the year we reduced your Fund's
investments in mortgages, modestly reducing income. We believed more homeowners
would refinance at lower rates as interest rates fell. We were a little early
since a major pickup in refinancing--and thus a drop in the value of mortgage
securities--did not begin until this past fall. Although our timing was
slightly off, which lowered this year's results, we believe that in the months
ahead our strategy can help preserve principal.
12
<PAGE>
Comparison of a $10,000 Investment
Lincoln Government Income Portfolio
Class A Shares
TOTAL LIFETIME RETURN
DECEMBER 3, 1993 THROUGH OCTOBER 31, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lincoln Government Lehman Brothers
Income Portfolio Government Bond Index
------------------ ---------------------
<S> <C> <C>
12/03/93 $ 9,551 $10,000
12/31/93 $ 9,518 $10,039
1/31/94 $ 9,633 $10,177
2/28/94 $ 9,441 $ 9,961
3/31/94 $ 9,220 $ 9,737
4/31/94 $ 9,133 $ 9,660
5/31/94 $ 9,123 $ 9,647
6/30/94 $ 9,104 $ 9,625
10/31/94 $ 9,084 $ 9,658
11/30/94 $ 9,055 $ 9,641
12/31/94 $ 9,113 $ 9,700
1/30/95 $ 9,270 $ 9,880
2/28/95 $ 9,463 $10,092
3/31/95 $ 9,501 $10,156
4/30/95 $ 9,612 $10,289
5/31/95 $ 9,983 $10,704
6/30/95 $10,052 $10,786
7/31/95 $10,004 $10,746
8/30/95 $10,112 $10,873
9/30/95 $10,183 $10,977
10/31/95 $10,330 $11,144
</TABLE>
The above graph depicts the returns of Class A shares only, includes
the effect of the maximum 4.5% sales charge and assumes reinvestment
of dividends and capital gains. Performance of Class B, C and D
could be greater or less than Class A based on differences in sales
charges and fees among the Classes. Unlike the Portfolio, the Lehman
Brothers Index is a hypothetical portfolio that does not reflect the
"real world" cost of buying and selling stocks or bonds and
operating a mutual fund.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------------
CLASS DATE ESTABLISHED (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- ---------------- ------------ ------------ --------
<C> <S> <C> <C> <C>
A December 3, 1993 +3.30% +1.71% +8.61%
B March 29, 1994 +7.32% +5.74% +7.43%
C May 5, 1994 +10.80% +8.08% +10.59%
D February 3, 1994 +8.23% +4.64% +14.15%
</TABLE>
Results include the effect of applicable sales charges and fees,
which differ for each Class. Past performance is not a guarantee of
future results. Results include reinvestment of dividends and
capital gains. Return and share value fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR THE YEAR ENDED OCTOBER 31
<TABLE>
<S> <C>
Lehman Brothers Government Bond Index +15.38%
Lipper General U.S. Government Bond Fund Average
(185 Funds) +14.70%
</TABLE>
13
<PAGE>
LINCOLN CORPORATE INCOME PORTFOLIO
Managed by Lincoln Investment Management Inc.
This Portfolio 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.
Lincoln Corporate Income Portfolio benefited from substantially lower interest
rates in 1995 as the U.S. economy slowed. Your Fund generated a total return of
+17.71% (capital change plus income based on Class A net asset value) for the
12 months ended October 31.
This gain more than erased last fiscal year's decline in share value and was
the product of a sharp turnaround from 1994's bond market, which was negatively
affected by the Federal Reserve Board's decision to sharply increase short-term
interest rates.
In the past year, your Fund relied on a mix of bonds with short and long-term
maturities issued by companies in a broad array of industries to achieve a
strong total return with a primary emphasis on high current income.
Investments in bond issues such as those of Delta Airlines--which appreciated
sharply as the airline business recovered--helped your Fund outperform both its
peers and the unmanaged Lehman Brothers Corporate Bond Index before accounting
for sales charges.
As of October 31, your Fund's portfolio had an average overall quality of A, a
high grade rating, an average effective maturity of 10.4 years, and an
effective duration of 6.0 years. Duration is the most common measure of a
bond's sensitivity to interest rates. It indicates the approximate percentage
of change in a bond's price given a 1% change in interest rates. Our average
effective maturity was also about 2.5 months longer than that of the Lehman
Brothers Index.
At year's end, the portfolio's biggest single industry concentration was in the
finance and banking sector, amounting to approximately 14% of net assets. In
most industries, we focused on a combination of A and BBB bonds, which provide
a higher level of income than AAA bonds while maintaining an investment grade
level of credit risk. At all times, we invest at least 65% of the portfolio's
assets in corporate bonds rated BBB or better.
14
<PAGE>
Comparison of a $10,000 Investment
Lincoln Corporate Income Portfolio
Class A Shares
TOTAL LIFETIME RETURN
DECEMBER 3, 1993 THROUGH OCTOBER 31, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lincoln Corporate Lehman Brothers
Income Portfolio Corporate Bond Index
----------------- --------------------
<S> <C> <C>
12/03/93 $ 9,551 $10,000
12/31/93 $ 9,503 $10,062
1/31/94 $ 9,638 $10,222
2/28/94 $ 9,407 $10,028
3/31/94 $ 9,088 $ 9,787
4/30/94 $ 8,991 $ 9,708
5/31/94 $ 8,937 $ 9,713
6/30/94 $ 8,898 $ 9,712
7/31/94 $ 9,070 $ 9,901
8/30/84 $ 9,070 $ 9,942
9/30/94 $ 8,895 $ 9,812
10/31/94 $ 8,880 $ 9,798
11/30/94 $ 8,859 $ 9,750
12/31/94 $ 8,924 $ 9,797
1/31/95 $ 9,094 $ 9,985
2/28/95 $ 9,324 $10,224
3/31/95 $ 9,410 $10,319
4/30/95 $ 9,540 $10,478
5/31/95 $10,010 $10,879
6/30/95 $10,107 $10,967
7/31/95 $10,025 $10,953
8/31/95 $10,175 $11,089
9/30/95 $10,292 $11,192
10/31/95 $10,453 $11,324
</TABLE>
The above graph depicts the returns of Class A shares only, includes
the effect of the maximum 4.5% sales charge and assumes reinvestment
of dividends and capital gains. Performance of Class B, C and D
could be greater or less than Class A based on differences in sales
charges and fees among the Classes. Unlike the Portfolio, the Lehman
Brothers Corporate Bond Index is a hypothetical portfolio that does
not reflect the "real world" cost of buying and selling stock or
bonds and operating a mutual fund.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------
CLASS DATE ESTABLISHED (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- ---------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
A December 3, 1993 +4.53% +2.34% +12.48%
B March 29, 1994 +12.46% +8.28% +11.20%
C May 5, 1994 +15.09% +13.22% +15.23%
D February 3, 1994 +9.69% +5.44% +18.27%
</TABLE>
Results include the effect of applicable sales charges and fees,
which differ for each Class. Past performance is not a guarantee of
future results. Results include reinvestment of dividends and
capital gains. Return and share value fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR THE YEAR ENDED OCTOBER 31
<TABLE>
<S> <C>
Lehman Brothers Corporate Bond Index +15.55%
Lipper Corporate BBB Bond Fund Average (87 Funds) +16.45%
</TABLE>
15
<PAGE>
LINCOLN TAX-FREE INCOME PORTFOLIO
Managed by Lincoln Investment Management Inc.
This Portfolio seeks to provide a high level of current income exempt from
federal income taxes by investing in a diversified mix of municipal bonds.
Despite the uncertainty generated by the debate over federal tax reform this
past spring and its implications for the value of municipal bonds, Lincoln Tax-
Free Income Portfolio generated a strong positive total return of +14.76%
(capital change plus income based on Class A net asset value) for the 12 months
ended October 31.
This gain reflects the fact that interest rates have dropped sharply in the
past year, allowing bonds to recover from capital losses that occurred last
year, when interest rates rose sharply.
In the past year, your Fund has been emphasizing revenue bonds issued by
essential services such as utilities across the United States. These bonds
offered higher yields than were available from comparable general obligation
municipal bonds. Your Fund has also been modestly extending the average
maturity of the portfolio to capture higher yields.
As of October 31, your Fund's portfolio had an average overall quality of AA1--
a high rating--an effective maturity of 8.3 years and an effective duration of
8 years. Duration is the most common measure of a bond's sensitivity to
interest rates. It indicates the approximate percentage of change in a bond's
price given a 1% change in interest rates.
For municipal bonds, tax policy changes in Washington have been a perennial
concern since the 1970s. With the change in leadership in Congress, there have
been a number of proposals to change or eliminate taxation of investment
income. Whether a consensus can be reached on such a change--and whether that
consensus will have any lasting impact on bond values--remains to be seen.
Whatever happens, municipal governments will still need private investors, and
therefore must offer competitive interest rates to fund operations, refinance
debt or make capital improvements.
Last year we compared your Fund's performance to the Lehman Brothers 20-Year
Municipal Bond Index. We have also included the Lehman Brothers Municipal Bond
Index in the chart this year because it has a shorter effective maturity that
more closely reflects the average effective maturity of your Fund's portfolio.
16
<PAGE>
Comparison of a $10,000 Investment
Lincoln Tax-Free Income Portfolio
Class A Shares
TOTAL LIFETIME RETURN
DECEMBER 3, 1993 THROUGH OCTOBER 31, 1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lincoln Tax-Free Lehman Bros. Lehman Bros. 20 Yr.
Income Portfolio Municipal Bond Index Municipal Bond Index
---------------- -------------------- --------------------
<S> <C> <C> <C>
12/03/93 $ 9,551 $10,000 $10,000
12/31/93 $ 9,628 $10,211 $10,241
1/31/94 $ 9,714 $10,327 $10,370
2/28/94 $ 9,397 $10,060 $10,062
3/31/94 $ 8,921 $ 9,650 $ 9,532
4/30/94 $ 9,013 $ 9,733 $ 9,610
5/31/94 $ 9,056 $ 9,817 $ 9,723
6/30/94 $ 8,993 $ 9,757 $ 9,626
7/31/94 $ 9,169 $ 9,936 $ 9,847
8/31/94 $ 9,198 $ 9,971 $ 9,874
9/30/94 $ 9,031 $ 9,824 $ 9,677
10/31/94 $ 8,848 $ 9,649 $ 9,421
11/30/94 $ 8,685 $ 9,475 $ 9,201
12/31/94 $ 8,895 $ 9,683 $ 9,490
1/31/95 $ 9,161 $ 9,960 $ 9,861
2/28/95 $ 9,452 $10,250 $10,219
3/31/95 $ 9,526 $10,368 $10,336
4/30/95 $ 9,529 $10,380 $10,334
5/31/95 $ 9,861 $10,711 $10,724
6/30/95 $ 9,731 $10,618 $10,558
7/31/95 $ 9,815 $10,719 $10,613
8/31/95 $ 9,941 $10,855 $10,759
9/30/95 $ 9,995 $10,923 $10,844
10/31/95 $10,154 $11,082 $11,075
</TABLE>
The above graph depicts the returns of Class A shares only, includes
the effect of the maximum 4.5% sales charge and assumes reinvestment
of dividends and capital gains. Performance of Class B and C could
be greater or less than Class A based on differences in sales
charges and fees among the Classes. Unlike the Portfolio, both the
Lehman Brothers Municipal Bond Index and the Lehman Brothers 20-yr
Municipal Bond Index are hypothetical portfolios that do not reflect
the "real world" cost of buying and selling stocks or bonds and
operating a mutual fund.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------
CLASS DATE ESTABLISHED (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- ---------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
A December 3, 1993 +1.54% +0.80% +9.60%
B March 29, 1994 +7.63% +5.03% +8.34%
C May 5, 1994 +9.99% +8.78% +12.40%
</TABLE>
Results include the effect of applicable sales charges and fees,
which differ for each Class. Past performance is not a guarantee of
future results. Results assume reinvestment of dividends and capital
gains. Return and share value fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR THE YEAR ENDED OCTOBER 31
<TABLE>
<S> <C>
Lehman Brothers Municipal Bond Index +14.44%
Lehman Brothers 20-Year Municipal Bond Index +17.56%
Lipper General Municipal Bond Fund Average (236 Funds) +13.73%
</TABLE>
17
<PAGE>
LINCOLN CASHFUND PORTFOLIO
Managed by Lincoln Investment Management Inc.
Falling interest rates since the spring of 1995, while beneficial to long-term
investments such as stocks and bonds, have had a negative effect on the current
yield of short-term investments such as the Lincoln Cashfund Portfolio.
For the 12 months ended October 31, your Fund provided a total return of 4.94%,
all of which was derived from income from short-term securities such as
certificates of deposit, high quality commercial paper issued by established
businesses and bankers acceptances.
Your total return in fiscal 1995 was more than 2 percentage points higher than
the consumer price index for the preceding 12 months. This is important because
it means that the money you've set aside for near-term and emergency needs and
for future investment is not losing ground to inflation. As of October 31, your
Fund's annualized seven-day yield was 4.82%.
Your Fund sought to enhance yield by increasing the average maturity of the
portfolio from 25 days as of October 31, 1994 to 82 days as of October 31,
1995. The Securities and Exchange Commission limits the average maturity of a
money market fund to 90 days or less.
In the coming months we anticipate increasing the percentage of your Fund's net
assets which are invested in high quality commercial paper and fixed-rate
securities. We expect to reduce the amount of net assets invested in floating
rate notes--debt securities whose income is determined by the movement of
interest rates. This strategy reflects our expectation that the Federal Reserve
Board will further ease interest rates.
TOTAL RETURN THROUGH OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIFETIME
-------------------------
CLASS DATE ESTABLISHED (CUMULATIVE) (ANNUALIZED) ONE YEAR
----- ---------------- ------------ ------------ --------
<S> <C> <C> <C> <C>
A* December 3, 1993 +7.70% +3.96% +4.94%
</TABLE>
Past performance is not a guarantee of future results. An investment in a money
market fund is neither insured nor guaranteed by the U.S. Government. Yield and
return fluctuate with changing interest rates and are not guaranteed.
THE GOAL OF A MONEY MARKET FUND IS TO MAINTAIN A CONSTANT SHARE PRICE OF $1.
HOWEVER, THERE IS NO GUARANTEE THIS GOAL WILL BE MET. THE FIGURES IN THIS
REPORT REPRESENT PAST RESULTS.
*Also known as "Regular Shares"
18
<PAGE>
LINCOLN GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- -----------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENTS--NOTES A AND B
EQUITIES
AUTOMOTIVE
Ford Motor Company.............. 17,700 $ 508,875
General Motors.................. 14,700 643,125
United Technologies............. 4,800 426,000
-----------
1,578,000 7.4%
-----------
BANKING
Bankers Trust New York Corpora-
tion........................... 7,600 484,500
Mellon Bank Corporation......... 19,050 954,881
-----------
1,439,381 6.7%
-----------
CHEMICALS
Great Lakes Chemical............ 9,400 630,975 3.0%
-----------
COMPUTERS & SOFTWARE
Compaq Computer *............... 14,000 780,500
International Business Machines
Corporation.................... 5,500 534,875
-----------
1,315,375 6.2%
-----------
CONGLOMERATES
ITT Corporation................. 6,400 784,000 3.7%
-----------
CONSUMER PRODUCTS & SERVICES
Dial Corporation................ 14,600 355,875
Fruit of the Loom, Inc. *....... 38,200 663,725
Toys R Us Inc. *................ 19,800 433,125
Tyco Toys, Inc.*................ 47,100 259,050
-----------
1,711,775 8.0%
-----------
ELECTRONICS
Intel Corporation............... 14,000 978,250 4.6%
-----------
ENERGY
Amerada Hess Corporation........ 13,700 618,211
Camco........................... 21,200 484,950
Equitable Resources, Inc........ 15,000 438,750
Kerr--McGee Corporation......... 14,400 793,800
Louisiana Land & Exploration.... 12,300 435,113
Tosco Corporation............... 10,458 360,801
-----------
3,131,625 14.5%
-----------
FINANCE
Beneficial Corporation.......... 15,100 739,900 3.5%
-----------
FOOD & BEVERAGE
Philip Morris Companies, Inc.*.. 7,100 599,950 2.8%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
LINCOLN GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HEALTH CARE
Beverly Enterprises.......... 11,700 $ 596,700
Tenet Healthcare
Corporation*................ 39,400 704,275
-----------
1,300,975 6.1%
-----------
INSURANCE
Partnerre Holdings, Ltd...... 15,400 410,025
Paul Revere Corporation...... 25,000 506,250
-----------
916,275 4.3%
-----------
MEDICAL SUPPLIES
Bard C.R..................... 16,400 463,300 2.2%
-----------
METALS & MINING
Newmont Mining............... 18,267 689,579
Trinity Industries........... 24,600 728,775
-----------
1,418,354 6.6%
-----------
PLASTICS
The Geon Company............. 20,900 519,888 2.4%
-----------
PRINTING & PAPER
Champion International....... 15,400 823,900
Weyerhauser Company.......... 18,500 816,313
-----------
1,640,213 7.6%
-----------
RETAIL
Federated Department
Stores*..................... 4,100 104,038
May Department Stores........ 9,200 361,100
-----------
465,138 2.2%
-----------
TELECOMMUNICATIONS
GTE Corporation.............. 17,200 709,500 3.3%
-----------
TRANSPORTATION
Alexander & Baldwin, Inc..... 11,000 253,000 1.2%
---------------------
TOTAL EQUITIES (Cost
$18,864,948) 20,595,874 96.3%
---------------------
CONVERTIBLE BOND
CONSUMER PRODUCTS & SERVICES
Service Corp. International
(convertible to 48.216 shrs
common stk).................. 6.50% 09/01/01 $260,000 483,600 2.3%
---------------------
TOTAL CONVERTIBLE BOND (Cost
$358,800) 483,600 2.3%
---------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
LINCOLN GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- ----------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT
REPURCHASE AGREEMENT
Prudential-Bache
Repurchase Agreement,
dated 10/31/95, due
11/01/95, with a
maturity value of
$1,537,899 and an
effective yield of
5.42%, collateralized
by U.S. Government and
Agency Obligation
Securities with rates
ranging from 5.38% to
5.57% and maturity
dates ranging from
02/01/96 to 08/15/97,
with an aggregate
market value of
$1,568,462............. $1,537,671 $ 1,537,671 7.2%
----------------------
TOTAL INVESTMENTS (Cost
$20,761,419**) 22,617,145 105.8%
Excess of Liabilities
over Other Assets (1,233,407) (5.8)%
----------------------
NET ASSETS $21,383,738 100.0%
======================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
* Non-income producing security.
** Aggregate cost for Federal tax purposes (Note D).
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
LINCOLN ENTERPRISE PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENTS--NOTES A AND B
EQUITIES
ADVERTISING
Omnicom Group................ 5,000 $ 319,375 1.6%
-----------
BANKING
Corestates Financial Corpora-
tion........................ 4,400 160,050
First USA, Inc............... 6,100 280,600
-----------
440,650 2.2%
-----------
CAPITAL GOODS
Harnischfeger Industries..... 13,800 434,700 2.2%
-----------
CHEMICALS
FMC Corporation *............ 2,800 200,550 1.0%
-----------
COMMERCIAL SERVICES
Accustaff, Inc. *............ 9,000 400,500 2.0%
-----------
COMPUTERS & SOFTWARE
Adobe Systems, Inc........... 3,700 210,900
America Online, Inc. *....... 2,800 224,000
CBT Group *.................. 4,400 198,550
DST Systems, Inc. *.......... 3,500 73,500
MEMC Electronic Materials *.. 5,300 169,600
Parametric Technology Corpo-
ration *.................... 4,500 300,938
Symantec *................... 9,300 226,106
-----------
1,403,594 7.0%
-----------
CONSUMER PRODUCTS & SERVICES
Clorox Company............... 3,600 258,300 1.3%
-----------
ELECTRONICS
Altera Corporation *......... 2,400 145,200
Itron, Inc. *................ 6,500 188,500
UCAR International, Inc. *... 8,100 230,850
-----------
564,550 2.8%
-----------
ENERGY
Halliburton Company.......... 9,600 398,400
Reading & Bates Corporation
*........................... 34,300 394,450
-----------
792,850 4.0%
-----------
ENTERTAINMENT
Regal Cinemas *.............. 5,400 211,950
Station Casinos, Inc. *...... 19,100 248,300
-----------
460,250 2.3%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
LINCOLN ENTERPRISE PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- ------------------------------------------------------------
<S> <C> <C> <C>
FINANCE
Greentree Financial Corpo-
ration.................... 11,000 $ 292,875
TCF Financial Corporation.. 5,700 334,875
United Cos Financial Corpo-
ration.................... 9,000 254,250
-----------
882,000 4.4%
-----------
FOOD & BEVERAGE
Coca Cola Enterprises,
Inc....................... 19,000 505,875 2.5%
-----------
HEALTH CARE
Healthsouth
Rehabilitation *.......... 15,500 404,938
Sola International *....... 9,100 222,950
St. Jude Medical, Inc. *... 5,100 271,575
-----------
899,463 4.5%
-----------
INSURANCE
MBIA, Inc.................. 5,600 389,900
MGIC Investment Company.... 7,100 403,813
Partnerre Holdings, Ltd.... 6,900 183,713
TIG Holdings, Inc.......... 18,400 466,900
Unum Corporation........... 4,000 210,500
-----------
1,654,826 8.2%
-----------
MANUFACTURING
American Standard
Companies *............... 6,700 179,225
Oakley, Inc. *............. 6,000 207,000
-----------
386,225 1.9%
-----------
MEDICAL SUPPLIES
Biomet, Inc. *............. 17,900 297,588 1.5%
-----------
NATURAL RESOURCES
Apache Corporation......... 4,900 124,950
Potash Corporation of Sas-
katchewan................. 6,000 417,750
Triton Energy
Corporation *............. 9,700 452,263
-----------
994,963 5.0%
-----------
OFFICE EQUIPMENT & SUPPLIES
Danka Business Systems
PLC....................... 9,800 328,300
Officemax, Inc. *.......... 8,500 210,375
-----------
538,675 2.7%
-----------
OIL & GAS EQUIPMENT
Arethusa (Off--Shore)
Ltd....................... 8,500 164,688
BJ Services Company *...... 14,200 333,700
Ensco International,
Inc. *.................... 17,600 297,000
-----------
795,388 4.0%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
LINCOLN ENTERPRISE PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------
<S> <C> <C> <C>
PHARMACEUTICALS
Alpharma, Inc. ........ 10,400 $ 249,600
Biochem Pharmaceuti-
cals, Inc. *.......... 12,700 485,775
Biogen, Inc. *......... 3,400 208,250
Teva Pharmaceutical.... 7,100 278,675
-----------
1,222,300 6.1%
-----------
PRINTING & PAPER
Scholastic
Corporation *......... 6,500 401,375 2.0%
-----------
RETAIL
Claire's Stores, Inc... 9,900 194,288
Intimate Brands, Inc... 13,400 224,450
Staples, Inc........... 9,650 256,931
Sunglass Hut, Inc. *... 10,600 288,850
-----------
964,519 4.8%
-----------
TECHNOLOGY
Cadence Design Systems,
Inc. *................ 13,050 420,863
Cognex Corporation *... 4,400 262,900
Filenet Corporation *.. 7,400 335,775
General Instrument Cor-
poration *............ 8,100 153,900
Glenayre Technologies,
Inc. *................ 2,900 186,325
Liposome Company,
Inc. *................ 25,200 387,450
Qualcom, Inc. *........ 8,700 334,950
Softkey International,
Inc. *................ 6,300 198,450
Tektronix, Inc. ....... 10,400 616,200
-----------
2,896,813 14.4%
-----------
TELECOMMUNICATIONS
LCI International,
Inc. *................ 11,200 201,600
Octel Communication *.. 6,900 235,458
-----------
437,058 2.2%
-----------
TEXTILES
Tommy Hilfiger Corpora-
tion *................ 15,900 606,188
West Point Stevens *... 16,700 352,788
-----------
958,976 4.8%
-----------
TRANSPORTATION
Atlas Air, Inc. *...... 3,000 44,625
Fritz Companies,
Inc. *................ 9,800 343,000
-----------
387,625 1.9%
---------------------
TOTAL EQUITIES (Cost
$16,304,554) 19,498,988 97.3%
---------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
LINCOLN ENTERPRISE PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION DATE CONTRACTS AMOUNT FAIR VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PURCHASED PUT OPTION
OPTION
Morgan Stanley Emerging
Growth Index, Strike
Price $2.98............ 01/05/96 29,772 $ 99,438 0.5%
---------------------
TOTAL PURCHASED PUT OPTION (Cost $160,173) 99,438 0.5%
---------------------
SHORT-TERM INVESTMENT
REPURCHASE AGREEMENT
Prudential-Bache Repurchase Agreement, dated
10/31/95, due 11/01/95, with a maturity value
of $371,001 and an effective yield of 5.42%,
collateralized by a U.S. Government Agency
Obligation Security with a rate of 5.67% and
a maturity date of 04/11/96 with a market
value of $378,374............................ $370,946 $ 370,946 1.8%
---------------------
TOTAL INVESTMENTS (Cost
$16,835,673**) 19,969,372 99.6%
Excess of Other Assets
over Liabilities 73,833 0.4%
---------------------
NET ASSETS $20,043,205 100.0%
=====================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
* Non-income producing security.
** Aggregate cost for Federal tax purposes (Note D).
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
LINCOLN U.S. GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENTS--NOTES A AND B
EQUITIES
AEROSPACE
Boeing Company................................ 1,700 $ 111,563 0.6%
-----------
AUTOMOTIVE
Autozone, Inc. *.............................. 7,000 173,250 0.9%
-----------
COMPUTERS & SOFTWARE
3 COM Corporation............................. 6,200 291,400
Cabletron Systems, Inc. *..................... 3,550 279,119
Ceridian Corporation *........................ 1,800 78,300
Cirrus Logic, Inc. *.......................... 2,900 122,163
Cisco Systems, Inc. *......................... 6,000 465,000
Computer Associates International, Inc. ...... 7,950 437,250
Computer Sciences Corporation *............... 4,600 307,625
Hewlett-Packard, Inc. ........................ 5,900 546,488
Informix Corporation.......................... 10,800 314,550
Microsoft Corporation *....................... 8,100 810,000
Oracle Systems Corporation *.................. 14,600 636,925
-----------
4,288,820 22.6%
-----------
CONSUMER PRODUCTS & SERVICES
CUC International, Inc. *..................... 2,800 96,950
Gillette Company.............................. 4,400 212,850
-----------
309,800 1.6%
-----------
ELECTRONICS
Analog Devices, Inc. *........................ 7,700 278,163
Intel Corporation............................. 12,800 894,400
LSI Logic Company *........................... 5,000 235,625
SGS--Thomson Microelectric *.................. 3,000 135,750
Texas Instruments............................. 7,200 491,400
Tyco Lab...................................... 4,100 249,075
Xilinx, Inc. *................................ 4,000 184,000
-----------
2,468,413 13.0%
-----------
ENERGY
Enron......................................... 10,400 357,500 1.9%
-----------
FINANCE
Federal Home Loan Mortgage Corporation........ 2,200 152,350
Federal National Mortgage Financial Service... 5,100 534,863
First Data Corporation........................ 15,244 1,007,983
First USA, Inc................................ 6,600 303,600
MBNA Corporation.............................. 12,000 442,500
-----------
2,441,296 12.9%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
LINCOLN U.S. GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH CARE
Cardinal Health, Inc. ......................... 2,400 $ 123,300
Healthsouth Rehabilitation *................... 3,700 96,663
Medtronic, Inc................................. 8,800 508,200
Oxford Health Plans *.......................... 2,400 187,800
St. Jude Medical, Inc. *....................... 3,900 207,675
United Healthcare Corporation.................. 4,000 212,500
-----------
1,336,138 7.0%
-----------
INSURANCE
American International Group................... 1,950 164,531
MGIC Investment Company........................ 4,600 261,625
The PMI Group, Inc............................. 1,900 91,200
-----------
517,356 2.7%
-----------
LODGING & RESTAURANTS
HFS, Inc. *.................................... 4,800 294,000
McDonalds Corporation.......................... 2,000 82,000
-----------
376,000 2.0%
-----------
MANUFACTURING
American Standard Companies *.................. 4,700 125,725
Applied Materials, Inc. *...................... 8,600 431,075
-----------
556,800 2.9%
-----------
MEDIA
British Sky Broadcasting....................... 9,000 321,750
Capital Cities / ABC, Inc...................... 3,200 379,600
-----------
701,350 3.7%
-----------
MISCELLANEOUS
Air Products & Chemicals....................... 1,200 61,950
Circus Circus Enterprises *.................... 2,400 63,900
-----------
125,850 0.7%
-----------
OFFICE EQUIPMENT & SUPPLIES
Alco Standard Corporation...................... 1,600 141,600
Office Depot *................................. 13,150 376,419
-----------
518,019 2.7%
-----------
PHARMACEUTICALS
Amgen, Inc. *.................................. 3,800 182,400
Merck & Co, Inc................................ 4,700 270,250
Pfizer, Inc.................................... 11,600 665,546
-----------
1,118,196 5.9%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
LINCOLN U.S. GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
SERVICES
Automatic Data Processing, Inc............... 2,600 $ 185,900
Loewen Group, Inc............................ 7,000 280,328
Paychex, Inc................................. 2,400 104,100
-----------
570,328 3.0%
-----------
TECHNOLOGY
Glenayre Technologies, Inc. *................ 2,700 173,475 0.9%
-----------
TELECOMMUNICATIONS
ADC Telecommunications, Inc. *............... 2,400 96,000
Andrew Corporation *......................... 4,450 188,013
Ericsson (L M) Telephone ADR................. 34,300 732,624
Motorola, Inc................................ 8,500 557,813
Nokia Corporation............................ 12,200 680,150
U. S. Robotics Corporation................... 2,400 222,000
-----------
2,476,600 13.0%
-----------
TRANSPORTATION
Fritz Companies, Inc. *...................... 2,800 98,000 0.5%
-----------
UTILITIES
Frontier Corporation......................... 7,400 199,800 1.1%
----------------------
TOTAL EQUITIES (Cost $13,881,484) 18,918,554 99.6%
----------------------
SHORT-TERM INVESTMENT
REPURCHASE AGREEMENT
Prudential-Bache Repurchase Agreement, dated
10/31/95, due 11/01/95, with a maturity value
of $146,030 and an effective yield of 5.42%,
collateralized by a U.S. Government Agency
Obligation Security with a rate of 5.67% and
a maturity date of 04/11/96 with a market
value of $148,932............................ $146,008 146,008 0.8%
----------------------
TOTAL INVESTMENTS (Cost $14,027,492**) 19,064,562 100.4%
Excess of Liabilities over Other Assets (77,274) (0.4)%
----------------------
NET ASSETS $18,987,288 100.0%
======================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
* Non-income producing security.
** Aggregate cost for Federal tax purposes (Note D).
ADR American Depository Receipt
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
LINCOLN WORLD GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENTS--NOTES A AND B
EQUITIES
BUILDING SUPPLIES
Castorama Dubois Investissem................... 2,246 $ 364,713
Cermex SA...................................... 3,544 169,598
Dyckerhoff AG Preferred Shares................. 752 183,864
Heidelberger Zement German..................... 330 206,404
Higashi Nihon House *.......................... 4,000 53,597
Kampa Haus..................................... 5,256 208,828
Nippon Kanzai.................................. 7,200 204,215
Redland, PLC................................... 35,519 195,702
RMC Group, PLC................................. 16,000 258,399
Westag and Getalit............................. 750 221,223
-----------
2,066,543 14.3%
-----------
CONGLOMERATES
Jardine Matheson Holdings...................... 23,156 141,252
Sophus Berendsen, Class B...................... 2,600 285,134
Swire Pacific, Ltd., B......................... 213,500 258,187
-----------
684,573 4.8%
-----------
CONSUMER PRODUCTS & SERVICES
Brioche Pasquier............................... 2,000 263,336
SEB Group...................................... 2,465 298,818
Secom Company, Ltd............................. 4,000 260,551
Shimano, Inc................................... 8,000 143,968
Sony Corporation............................... 4,000 179,960
-----------
1,146,633 8.0%
-----------
ELECTRONICS
Advantest Corporation.......................... 8,000 453,812
Fanuc Company.................................. 6,000 259,964
Kyocera Corporation............................ 4,000 327,840
Rohm Company................................... 6,000 362,658
Tokyo Electron, Ltd............................ 8,000 347,401
-----------
1,751,675 12.1%
-----------
ENERGY
Saga Petroleum, A Free......................... 21,700 271,904 1.9%
-----------
ENTERTAINMENT
Polygram....................................... 5,250 327,647 2.3%
-----------
FARM EQUIPMENT
Kubota Corporation............................. 30,000 186,024 1.3%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
LINCOLN WORLD GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
FOOD & BEVERAGE
Docks De France............................... 1,800 $ 274,230
Embotelladora Andina SA, ADR.................. 10,300 342,475
Koninklijke Ahold NV.......................... 9,338 333,692
-----------
950,397 6.6%
-----------
FURNITURE
AFG Arbonia--Forster Holdings................. 200 234,145
Daiwa Rakuda Industry Company, Ltd............ 10,000 143,772
Moebel Walther................................ 625 275,418
Shimachu...................................... 8,000 211,257
-----------
864,592 6.0%
-----------
MANUFACTURING
Bien--Haus AG *............................... 600 174,846
Daifuku Company, Ltd.......................... 20,000 238,642
Fuji Machine Manufacturing.................... 11,000 414,201
Futaba Industrial............................. 13,000 195,804
Gea AG........................................ 500 190,128
NSC (N. Schlumberger)......................... 1,100 211,058
-----------
1,424,679 9.9%
-----------
MARINE SERVICES
IHC Caland N.V................................ 10,000 284,483 2.0%
-----------
NATURAL RESOURCES
Ampolex, Ltd. *............................... 84,000 166,366 1.2%
-----------
PHARMACEUTICALS
Gehe AG (new shares) *........................ 175 83,212
Gehe AG (ordinary shares)..................... 700 343,793
Sankyo Company, Ltd........................... 9,900 217,859
-----------
644,864 4.5%
-----------
RETAIL
Familymart.................................... 3,960 166,928
Ito-Yokado, Ltd............................... 6,000 328,036
Levi Strauss Japan............................ 4,000 60,834
Spar Handles.................................. 900 194,463
-----------
750,261 5.2%
-----------
TELECOMMUNICATIONS
Cable & Wireless *............................ 37,553 245,794
Ericsson (L M) Telephone--B (new shares) *.... 1,600 33,983
Ericsson (L M) Telephone (ordinary shares).... 16,000 339,833
-----------
619,610 4.3%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
LINCOLN WORLD GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
EXPIRATION PRINCIPAL PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION DATE AMOUNT AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TEXTILES
Wolford, AG *................................. 4,000 $ 537,509 3.7%
-----------
TRANSPORTATION
Sembawang Shipyard............................ 30,000 145,435
Sime Darby, Ltd............................... 100,000 109,937
-----------
255,372 1.8%
-----------
UTILITIES
China Light and Power Company................. 48,000 255,778 1.8%
---------------------
TOTAL EQUITIES (Cost $11,959,339) 13,188,910 91.7%
---------------------
RIGHTS
RMC Group, PLC, Rights........................ 4,000 4,522 0.0%
---------------------
TOTAL RIGHTS (Cost $38,255) 4,522 0.0%
---------------------
PURCHASED CURRENCY PUT OPTIONS
CURRENCY OPTIONS
Deutsche Mark, Strike
Price $1.385........... 04/25/96 $2,000,000 82,000
Japanese Yen, Strike
Price $83.73........... 04/23/96 3,700,000 666,000
Japanese Yen, Strike
Price $88.35........... 07/18/96 800,000 107,680
-----------
TOTAL PURCHASED CURRENCY PUT OPTIONS (Cost
$269,620) 855,680 5.9%
---------------------
SHORT-TERM INVESTMENT
REPURCHASE AGREEMENT
Prudential-Bache Repurchase Agreement, dated
10/31/95, due 11/01/95, with a maturity value
of $334,438 and an effective yield of 5.42%,
collateralized by a U.S. Government Agency
Obligation Security with a rate of 5.67% and a
maturity date of 04/11/96 with a market value
of $341,084................................... 334,388 334,388 2.3%
---------------------
TOTAL INVESTMENTS (Cost $12,601,602**) 14,383,500 99.9%
Excess of Other Assets over Liabilities 20,649 0.1%
---------------------
NET ASSETS $14,404,149 100.0%
=====================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
* Non-income producing security.
** Aggregate cost for Federal tax purposes (Note D).
ADR American Depository Receipt
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
LINCOLN WORLD GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
At October 31, 1995, geographic concentration of the Fund's investments was as
follows:
<TABLE>
<CAPTION>
INDUSTRY PERCENTAGE OF
SECTOR NET ASSETS
-------- -------------
<S> <C>
Japan 33.0%
Germany 14.5
France 11.0
United States 8.3
Netherlands 6.6
Great Britain 4.9
Hong Kong 4.3
Austria 3.7
Sweden 2.6
Chile 2.4
Singapore 2.0
Denmark 2.0
Norway 1.9
Switzerland 1.6
Australia 1.1
----
99.9%
====
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
LINCOLN NEW PACIFIC PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENTS--NOTES A AND B
EQUITIES
AIRLINES
Korean Air *...................... 1,800 $ 63,282 0.6%
----------
AUTOMOTIVE
PT Astra International *.......... 55,000 110,193
Swedish Motors.................... 28,000 124,617
----------
234,810 2.1%
----------
BANKING
Cho Hung Bank..................... 8,200 108,240
Commonwealth Bank Of Australia.... 18,000 137,115
First Bangkok City Bank........... 150,000 131,135
Guoco Group, Ltd. *............... 40,000 185,212
HSBC Holdings, PLC................ 8,400 122,224
Overseas Chinese Banking
Corporation...................... 12,000 140,977
Panin Bank........................ 78,750 86,688
Security Bank Corporation *....... 62,000 114,418
Thai Military Bank................ 50,000 171,866
----------
1,197,875 10.9%
----------
BUILDING SUPPLIES
Asia Cement Corporation, GDR *.... 3,740 62,178
Hyundai Engineering &
Construction..................... 2,435 128,568
Komatsu, Ltd. .................... 13,000 101,716
Kurimoto.......................... 10,000 101,716
Maeda Road Construction Company... 5,000 89,491
Pohang Iron & Steel Company....... 700 60,929
----------
544,598 4.9%
----------
CHEMICALS
Kansai Paint...................... 23,000 99,878
Metacorp Berhad................... 30,333 76,996
Nippon Shokubai K.K. Company...... 13,000 113,409
Toray Industries, Inc............. 17,000 106,245
----------
396,528 3.7%
----------
COMPUTERS & SOFTWARE
Creative Technology, Ltd. *....... 8,000 95,000
Koekisha Company, Ltd. ........... 1,000 38,144
----------
133,144 1.2%
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
LINCOLN NEW PACIFIC PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------
<S> <C> <C> <C>
CONGLOMERATES
China Resources Enterprises... 300,000 $ 132,894
Jardine Matheson Holdings..... 28,000 170,800
Jardine Strategic Holdings,
Ltd. ........................ 69,375 186,619
Loxely Company, Ltd. ......... 5,000 95,371
Multi-Purpose Holdings........ 96,000 128,453
Westmont Industries Berhad.... 17,000 58,874
----------
773,011 7.0%
----------
CONSTRUCTION
Taisei Corporation............ 17,000 101,589
Walker Corporation, Ltd. ..... 120,000 42,049
----------
143,638 1.3%
----------
ELECTRONICS
Amcol Holdings, Ltd. ......... 20,000 44,161
Casio Computer Company,
Ltd. *....................... 11,000 96,288
Furukawa Electric Co., Ltd. .. 24,000 107,741
Goldstar Company *............ 408 5,967
Guangdong Electric Power,
B *.......................... 210,000 118,965
K.R. Precision Public Co.
Ltd.--Foreign *.............. 16,000 115,717
Samsung Electronics 144A
Ordinary Shares *............ 109 23,933
Samsung Electronics 144A,
GDR *........................ 116 12,760
Samsung Electronics, GDR *.... 534 35,378
Samsung Electronics, Preferred
Stock *...................... 1,071 130,314
Shanghai Shangling Electric
Apparatus Co. ............... 129,000 111,585
----------
802,809 7.3%
----------
ENERGY
HKR International, Ltd. ...... 176,000 152,515
Southern Petro Chemical,
GDR *........................ 7,000 63,000
----------
215,515 2.0%
----------
ENGINEERING
International Engineering
Company...................... 4,000 19,074
Time Engineering.............. 32,000 81,858
----------
100,932 0.9%
----------
ENTERTAINMENT
Magnum Corporation *.......... 70,000 119,008 1.1%
----------
FINANCE
Finance One Public Co.,
Ltd. ........................ 25,000 140,076
Gadek Berhad.................. 15,500 84,789
Hutchison Whampoa, Ltd. ...... 27,000 148,764
Krungthai Thanakit PLC--
Foreign *.................... 45,000 126,963
Manhattan Card Company,
Ltd. ........................ 159,000 67,863
Promise Company, Ltd. ........ 2,400 94,596
----------
663,051 6.0%
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
LINCOLN NEW PACIFIC PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------------
<S> <C> <C> <C>
FOOD & BEVERAGE
Chosun Brewery Company *........... 2,415 $ 87,744
Mos Food Services.................. 3,300 82,625
----------
170,369 1.5%
----------
HEALTH CARE
NIC Corporation.................... 600 8,568
Shimadzo Corporation............... 18,000 99,995
----------
108,563 1.0%
----------
INDUSTRIAL
New World Infrastructure, Ltd. *... 80 141
Tung Ho Steel 144A, GDR *.......... 4,924 52,933
----------
53,074 0.5%
----------
INSURANCE
First Capital Corporation.......... 40,000 108,139
Malaysia Assurance Alliance........ 44,000 178,355
----------
286,494 2.6%
----------
LODGING & RESTAURANTS
AAPC, Ltd. ........................ 200,000 115,786
Faber Group Bhd *.................. 130,000 110,508
Shangri-La Asia, Ltd. ............. 119,000 131,595
----------
357,889 3.3%
----------
MANUFACTURING
CESC Limited, GDR *................ 18,000 54,900
Kahma Company, Ltd. ............... 2,860 48,112
----------
103,012 0.9%
----------
METALS & MINING
Odin Mining Investment Company *... 300,000 72,187
Pt Supreme Cable Manufacturing..... 18,000 44,386
Sammi Steel Corporation *.......... 10,450 103,933
Sumitomo Metal Industries *........ 34,000 92,112
UMW Holdings Berhad................ 12,533 29,840
----------
342,458 3.1%
----------
MISCELLANEOUS
Kemayan Corporation *.............. 10,000 13,381
MC Packaging, Ltd. ................ 103,000 43,962
----------
57,343 0.5%
----------
NATURAL RESOURCES
Kamei.............................. 8,000 89,198 0.8%
----------
OFFICE EQUIPMENT & SUPPLIES
Acma, Ltd. ........................ 28,800 93,758 0.9%
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
LINCOLN NEW PACIFIC PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------------------
<S> <C> <C> <C>
PHOTOGRAPHY
China-Hong Kong Photo Products.......... 472,000 $ 216,718
Olympus Optical......................... 14,000 130,764
----------
347,482 3.2%
----------
PLASTICS
Thai Modern Plastic Industry............ 91,900 96,319 0.9%
----------
PRINTING & PAPER
Asia Securities Printing Company........ 100 3,717
Picop Resources......................... 125,000 40,850
Sumitomo Forestry *..................... 8,000 112,671
----------
157,238 1.4%
----------
REAL ESTATE
Fil--Estate Land *...................... 132,000 100,318
Henderson Land Development.............. 12,000 71,860
Mitsubishi Estate Company, Ltd. ........ 9,000 95,946
New World Development................... 28,000 109,006
Singapore Land.......................... 15,000 83,864
----------
460,994 4.2%
----------
RETAIL
Itochu Corporation...................... 20,000 118,539
Shinsegae Department Store.............. 400 36,594
----------
155,133 1.4%
----------
SERVICES
L.G. Information & Communication *...... 1,500 118,212 1.1%
----------
TELECOMMUNICATIONS
Nippon Telegraph and Telephone
Corporation............................ 14 114,881
Pakistan Telecommunications, GDR *...... 231 22,061
----------
136,942 1.2%
----------
TEXTILES
Onward Kashiyama Co., Ltd. ............. 8,000 110,323
Saha Union Corporation, Ltd. ........... 120,000 132,327
Yizheng Chemical Fibre Company.......... 432,000 125,716
----------
368,366 3.3%
----------
TRANSPORTATION
Continental Mariner Investment.......... 350,000 36,215
Keppel Corporation, Ltd. ............... 21,000 172,399
----------
208,614 1.9%
----------
UTILITIES
Korea Electric Power Corporation........ 2,200 90,570 0.8%
-------------------
TOTAL EQUITIES (Cost $10,095,495) 9,190,229 83.5%
-------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
LINCOLN NEW PACIFIC PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONVERTIBLE BONDS
ELECTRONICS
United Micro Electronics
(convertible to 547.3469
shrs common stk).......... 1.25% 06/08/04 $ 38,000 $ 51,680 0.5%
----------
FINANCE
MBL International Finance
(convertible to 45.4546
shrs common stk).......... 3.00% 11/30/02 100,000 103,630 0.9%
----------
FOOD & BEVERAGE
President Enterprises
(convertible to 9482.1492
shrs common stk).......... 0.00% 07/22/01 80,000 98,400 0.9%
----------
MISCELLANEOUS
Acer, Inc. (convertible to
13,597.25 shrs common
stk)...................... 4.00% 06/10/01 10,000 30,500
Essar Gujarat, Ltd.
(convertible to 2615.5564
shrs common stk).......... 5.50% 08/05/98 50,000 49,500
----------
80,000 0.7%
----------
TRANSPORTATION
Yang Ming Marine
(convertible to 865.3276
shrs common stk).......... 2.00% 10/06/01 49,000 52,371 0.5%
-------------------
TOTAL CONVERTIBLE BONDS
(Cost $373,789) 386,081 3.5%
-------------------
WARRANTS
WARRANTS
Daewoo Corporation, Warrants, 01/08/96... 11 3,300
Jardine Strategic Holdings, Ltd.,
Warrants, 05/02/98...................... 6,375 1,689
Keihin Electric Express Railway,
Warrants, 09/11/99...................... 20 11,500
Salomon Brothers, Warrants, 01/18/96..... 26,000 1,313
UMW Holdings Berhad, Warrants 01/26/00... 6,533 4,461
Worldwide Holdings Berhad, Warrants,
09/22/99................................ 21,000 9,174
----------
TOTAL WARRANTS (Cost
$112,256) 31,437 0.3%
-------------------
INVESTMENT COMPANIES
China North Industries Investment, Ltd.
*....................................... 125,000 109,375
R.O.C. Taiwan Fund *..................... 19,000 182,875
Taipei Fund-UTS, Class B *............... 20 144,000
Taiwan Fund Inc. *....................... 6,000 131,250
----------
TOTAL INVESTMENT COMPANIES (Cost
$633,000) 567,500 5.2%
-------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
LINCOLN NEW PACIFIC PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT
REPURCHASE AGREEMENT
Prudential-Bache Repurchase Agreement,
dated 10/31/95, due 11/01/95, with a maturity
value of $553,258 and an effective yield of
5.42%, collateralized by U.S. Government and
Agency Obligation Securities with rates
ranging from 5.67% to 8.625% and maturity
dates ranging from 04/11/96 to 11/15/29,
with an aggregate market value of $564,254.... $553,176 $ 553,176 5.0%
---------------------
TOTAL INVESTMENTS (Cost $11,767,716 **) 10,728,423 97.5%
Excess of Other Assets over Liabilities 277,993 2.5%
---------------------
NET ASSETS $11,006,416 100.0%
=====================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
* Non-income producing security.
** Aggregate cost for Federal tax purposes (Note D).
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.
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
LINCOLN NEW PACIFIC PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
At October 31, 1995, geographic concentration of the Fund's investments was as
follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY SECTOR NET ASSETS
--------------- -------------
<S> <C>
Japan 19.7%
Hong Kong 14.6
Thailand 10.5
South Korea 9.2
Singapore 8.9
United States 8.8
Malaysia 8.1
Taiwan 4.5
China 4.2
Australia 2.7
Philippines 2.3
Indonesia 2.2
India 1.6
Pakistan 0.2
----
TOTAL 97.5%
====
</TABLE>
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
LINCOLN GOVERNMENT INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENTS--NOTES A AND B
GOVERNMENT AND AGENCY OBLIGATIONS
U.S. TREASURY
U.S. Treasury Note.......... 7.500% 05/15/02 $2,200,000 $ 2,390,102
U.S. Treasury Note.......... 5.125% 11/30/98 750,000 737,580
U.S. Treasury Note.......... 7.875% 11/15/04 1,450,000 1,634,194
U.S. Treasury Note.......... 6.875% 08/31/99 250,000 259,180
U.S. Treasury Note.......... 6.500% 04/30/99 1,000,000 1,023,279
U.S. Treasury Principal
Strip...................... 0.000% 05/15/19 3,000,000 638,880
-----------
6,683,215 54.1%
-----------
OTHER
Tennessee Valley Authority
Principal Strips........... 0.000% 11/01/00 1,000,000 741,350 6.0%
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION
Federal National Mortgage
Association................ 6.000% 03/01/09 906,806 884,979
Federal National Mortgage
Association................ 7.000% 10/01/25 500,000 495,625
FNMA Multi-family Mortgage.. 7.150% 10/01/15 250,000 250,010
-----------
1,630,614 13.2%
-----------
FEDERAL HOME LOAN
Federal Home Loan Mortgage
Corporation................ 7.300% 12/01/12 298,323 308,205
Federal Home Loan Mortgage
Corporation................ 7.500% 11/15/23 500,000 528,125
--------------------
836,330 6.8%
--------------------
TOTAL GOVERNMENT AND AGENCY OBLIGATIONS (Cost
$9,757,316) 9,891,509 80.1%
--------------------
CORPORATE BONDS
FINANCE
Associates Corp. of North
America.................... 9.125% 04/01/00 400,000 442,072 3.5%
-----------
CONSUMER PRODUCTS & SERVICES
Wal-Mart Stores, Inc........ 7.500% 05/15/04 400,000 426,636 3.5%
--------------------
TOTAL CORPORATE BONDS (Cost $852,548) 868,708 7.0%
--------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
LINCOLN GOVERNMENT INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION AMOUNT FAIR VALUE NET ASSETS
- ------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT
REPURCHASE AGREEMENT
Prudential-Bache Repurchase
Agreement, dated 10/31/95, due
11/01/95, with a maturity value
of $1,298,815 and an effective
yield of 5.42%, collateralized
by U.S. Government and Agency
Obligation Securities with
rates ranging from 5.57% to
11.63% and maturity dates
ranging from 11/15/95 to
02/01/96, with an aggregate
market value of $1,323,811...... $1,297,822 $ 1,297,822 10.5%
---------------------
TOTAL INVESTMENTS (Cost
$11,907,686**) 12,058,039 97.6%
Excess of Other Assets over
Liabilities 296,938 2.4%
---------------------
NET ASSETS $12,354,977 100.0%
=====================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
**Aggregate cost for Federal tax purposes (Note D).
The accompanying notes are an integral part of the financial statements.
41
<PAGE>
LINCOLN CORPORATE INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENTS--NOTES A AND B
CORPORATE BONDS
AIRLINES
Delta Airlines............. 8.250% 12/27/07 $ 250,000 $ 275,630
United Air Lines, Inc. .... 9.210% 01/21/17 450,000 481,842
-----------
757,472 4.9%
-----------
AUTOMOTIVE
Chrysler Finance
Corporation............... 9.500% 12/15/99 400,000 443,572
Ford Motor Credit
Corporation............... 7.250% 05/15/99 340,000 350,472
-----------
794,044 5.1%
-----------
BANKING
Chase Manhattan
Corporation............... 6.500% 01/15/09 250,000 239,688
First Bank Systems, Inc. .. 6.875% 09/15/07 250,000 251,857
NationsBank Corporation.... 6.625% 01/15/98 220,000 222,547
-----------
714,092 4.6%
-----------
BUILDING SUPPLIES
Georgia Pacific............ 9.125% 07/01/22 400,000 441,236
John Deere Credit
Corporation............... 8.625% 08/01/19 100,000 115,576
-----------
556,812 3.6%
-----------
CHEMICALS
Dow Capital................ 9.000% 05/15/10 155,000 184,884 1.2%
-----------
CONGLOMERATES
General Electric Capital
Corporation............... 8.750% 05/21/07 400,000 470,863 3.0%
-----------
CONSUMER PRODUCTS &
SERVICES
Nabisco, Inc. ............. 7.550% 06/15/15 250,000 251,569
Service Corporation
International............. 8.375% 12/15/04 250,000 279,926
-----------
531,495 3.4%
-----------
ENERGY
Pennzoil Company........... 10.125% 11/15/09 290,000 360,817
Phillips Petroleum......... 9.180% 09/15/21 250,000 283,465
Tenneco Credit............. 9.625% 08/15/01 250,000 285,655
-----------
929,937 6.0%
-----------
FINANCE
American Express Company... 8.500% 08/15/01 200,000 221,026
CIT Group Holdings......... 5.650% 11/15/95 200,000 199,986
First Security
Corporation............... 7.000% 07/15/05 250,000 252,818
Heller Financial
Corporation............... 5.625% 03/15/00 100,000 96,924
International Lease
Finance................... 8.250% 01/15/00 250,000 267,513
Lehman Brothers Holding
Company................... 8.875% 03/02/02 300,000 330,623
Smith Barney Holdings...... 7.875% 10/01/99 100,000 105,169
-----------
1,474,059 9.4%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
LINCOLN CORPORATE INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOOD & BEVERAGE
Coca Cola Enterprises,
Inc. ..................... 8.000% 01/04/05 $ 200,000 $ 223,234
Conagra, Inc. ............. 9.875% 11/15/05 250,000 307,150
PepsiCo, Inc. ............. 7.875% 08/15/96 360,000 365,780
-----------
896,164 5.7%
-----------
INDUSTRIAL
Archer Daniels............. 8.875% 04/15/11 250,000 300,737
Inco, Ltd. ................ 9.600% 06/15/22 100,000 111,058
Viacom International....... 8.750% 05/15/01 100,000 104,125
-----------
515,920 3.3%
-----------
INSURANCE
Transamerica Finance
Corporation............... 0.000% 03/15/99 150,000 152,866
Travelers, Inc. ........... 8.625% 02/01/07 120,000 137,234
-----------
290,100 1.9%
-----------
LODGING & RESTAURANTS
Hilton Hotels.............. 7.700% 07/15/02 250,000 257,015 1.6%
-----------
MANUFACTURING
Cyprus Amax Minerals
Company................... 7.375% 05/15/07 250,000 258,183 1.7%
-----------
METALS & MINING
Newmont Gold Company....... 8.910% 01/05/09 100,000 108,214 0.7%
-----------
NATURAL RESOURCES
Noranda, Inc. ............. 8.125% 06/15/04 200,000 217,690 1.4%
-----------
RETAIL
Federated Department
Stores.................... 10.000% 02/15/01 100,000 107,250
Sears Roebuck & Company.... 9.050% 02/06/12 500,000 587,133
-----------
694,383 4.5%
-----------
TELECOMMUNICATIONS
AT&T Capital Corporation... 7.470% 05/11/05 250,000 262,972
GTE Corporation............ 9.375% 12/01/00 100,000 112,830
GTE Hawaii................. 7.000% 02/01/06 400,000 406,990
-----------
782,792 5.0%
-----------
TRANSPORTATION
Burlington Northern
Railroad Company.......... 6.940% 01/02/14 250,000 249,115
Federal Express
Corporation............... 9.650% 06/15/12 250,000 300,347
-----------
549,462 3.5%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
43
<PAGE>
LINCOLN CORPORATE INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
UTILITIES
Carolina Power & Light..... 9.000% 04/01/22 $ 250,000 $ 266,094
Great Lakes Power, Inc. ... 9.000% 08/01/04 100,000 109,499
Long Island Lighting
Company................... 9.625% 07/01/24 200,000 204,122
Old Dominion Electric
Corporation............... 8.760% 12/01/22 400,000 451,698
Pennsylvania Power &
Light..................... 7.700% 10/01/09 200,000 219,041
Texas Gas Transmission..... 8.625% 04/01/04 100,000 112,133
Texas Utilities............ 7.375% 11/01/99 450,000 465,041
Utilicorp United, Inc. .... 8.450% 11/15/99 100,000 106,447
Virginia Electric & Power
Company................... 6.000% 08/01/02 200,000 195,636
-----------
2,129,711 13.6%
---------------------
TOTAL CORPORATE BONDS (Cost $12,568,713) 13,113,292 84.1%
---------------------
GOVERNMENT AND AGENCY OBLI-
GATIONS
FEDERAL NATIONAL MORTGAGE
ASSOCIATION
Federal National Mortgage
Association............... 7.000% 10/16/25 500,000 495,625
FNMA Multi-family
Mortgage.................. 7.150% 10/01/15 250,000 250,007
-----------
745,632 4.8%
-----------
U.S. TREASURY
U.S. Treasury Strip........ 0.000% 05/15/19 2,000,000 425,918 2.7%
---------------------
TOTAL GOVERNMENT AND AGENCY OBLIGATIONS (Cost $1,158,792) 1,171,550 7.5%
---------------------
SHORT-TERM INVESTMENT
REPURCHASE AGREEMENT
Prudential-Bache Repurchase Agreement, dated 10/31/95, due
11/01/95, with a maturity value of $1,006,494 and an
effective yield of 5.42%, collateralized by U.S. Government
and Agency Obligation Securities with rates ranging from
8.625% to 11.625% and maturity dates ranging from 11/15/95
to 11/15/29, with an aggregate market value of
$1,026,497..................................................... 1,006,345 1,006,345 6.5%
---------------------
TOTAL INVESTMENTS (Cost
$14,733,850**) 15,291,187 98.1%
Excess of Other Assets over
Liabilities 296,671 1.9%
---------------------
NET ASSETS $15,587,858 100.0%
=====================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
**Aggregate cost for Federal tax purposes (Note D).
The accompanying notes are an integral part of the financial statements.
44
<PAGE>
LINCOLN TAX-FREE INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENTS--NOTES A AND B
MUNICIPAL BONDS
ALABAMA
Alabama State Public School &
College Authority........... 4.500% 08/01/06 $400,000 $ 385,000 3.5%
-----------
CALIFORNIA
San Diego County, California
Water Authority (FGIC)...... 5.300% 05/01/02 400,000 416,500 3.7%
-----------
CONNECTICUT
Connecticut State, Series A,
G.O......................... 5.400% 03/15/08 100,000 101,500
Connecticut State, Series B,
G.O......................... 5.100% 10/01/07 100,000 99,250
-----------
200,750 1.8%
-----------
DISTRICT OF COLUMBIA
District of Columbia, G.O.
Refunding, Bonds Series A-1,
(MBIA)...................... 6.000% 06/01/11 400,000 406,000 3.6%
-----------
FLORIDA
Florida State Municipal Power
Authority (AMBAC)........... 5.100% 10/01/14 300,000 280,875
Jacksonville, Florida
Electrical Authority........ 5.200% 10/01/12 300,000 285,750
-----------
566,625 5.2%
-----------
GEORGIA
De Kalb County, Georgia,
Water and Sewer, (AMBAC).... 5.125% 10/01/14 250,000 239,688
Georgia Municipal Electric
Power Authority............. 6.000% 01/01/06 400,000 430,500
-----------
670,188 6.0%
-----------
HAWAII
Honolulu, Hawaii City &
County (PRE-RE)............. 6.700% 08/01/08 400,000 448,000 4.0%
-----------
ILLINOIS
Alton, Illinois Health
Facilities.................. 7.200% 02/15/21 400,000 455,500
Chicago, Illinois, Park
District G.O................ 6.100% 11/15/05 100,000 108,625
Illinois Health Facilities
Authority (MBIA)............ 6.250% 08/15/13 100,000 106,500
-----------
670,625 6.0%
-----------
INDIANA
Indianapolis, Indiana
Utilities District (FGIC)... 5.000% 06/01/06 400,000 400,000
Lawrence, Indiana Central
High School Building
(MBIA)...................... 5.200% 07/01/08 400,000 389,498
Perry, Indiana, Multi-School
Building.................... 4.600% 07/15/02 400,000 395,000
-----------
1,184,498 10.6%
-----------
MAINE
Cumberland County, Maine G.O.
(PRE-RE).................... 6.400% 02/01/02 250,000 274,688 2.5%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
LINCOLN TAX-FREE INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MASSACHUSETTS
Chelsea, Massachusetts,
School Improvement (AMBAC).. 5.600% 06/15/05 $100,000 $105,000
Massachusetts Water Resource
Authority................... 5.500% 11/01/15 400,000 388,000
State of Massachusetts, G.O.,
Series C (PRE-RE)........... 7.000% 12/01/10 300,000 335,250
-----------
828,250 7.4%
-----------
MICHIGAN
Michigan Municipal Bond
Authority................... 5.400% 10/01/14 400,000 389,500
Michigan Public Power
Agency...................... 5.500% 01/01/13 400,000 392,500
-----------
782,000 7.0%
-----------
MINNESOTA
Minneapolis, MN General
Obligation Note............. 3.900% 12/01/97 100,000 99,875 0.9%
-----------
NEVADA
Clark County, Nevada, School
District (FGIC)............. 6.375% 06/15/05 100,000 110,375
Nevada Municipal Bonds....... 5.000% 07/01/98 100,000 101,875
-----------
212,250 1.9%
-----------
NEW HAMPSHIRE
New Hampshire State Turnpike
Systems (PRE-RE)............ 7.400% 04/01/20 230,000 260,763 2.3%
-----------
NEW YORK
New York State Local
Assistance Corporation...... 6.000% 04/01/14 400,000 416,500
New York State Urban
Development (AMBAC)......... 5.100% 01/01/08 400,000 394,500
-----------
811,000 7.3%
-----------
OHIO
Columbus, Ohio General
Obligation Bond............. 4.200% 09/15/97 100,000 100,250 0.9%
-----------
SOUTH CAROLINA
Charleston, South Carolina,
Certificates of
Participation, (AMBAC)...... 5.000% 09/01/15 300,000 273,000 2.5%
-----------
TEXAS
Austin, Texas Hotel Occupancy
Tax (AMBAC)................. 5.125% 11/15/14 400,000 374,500
Bexar, Texas Metropolitan
Waterworks.................. 5.100% 05/01/05 100,000 101,250
Harris County, Texas, Toll
Road Revenue Bonds (FGIC)... 5.000% 08/15/16 300,000 277,125
-----------
752,875 6.8%
-----------
VIRGINIA
Fairfax County, Virginia,
Water Authority............. 5.750% 04/01/14 400,000 400,500 3.6%
-----------
WASHINGTON
Washington State Motor
Vehicle Fuel................ 5.450% 09/01/07 100,000 102,000
Washington State Public Power
Supply...................... 5.375% 07/01/15 300,000 275,250
-----------
377,250 3.4%
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
46
<PAGE>
LINCOLN TAX-FREE INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WISCONSIN
Wisconsin Clean Water......... 5.300% 06/01/12 $400,000 $ 388,500 3.5%
---------------------
TOTAL MUNICIPAL BONDS (Cost
$10,642,590) 10,509,387 94.4%
---------------------
SHORT-TERM INVESTMENT
REPURCHASE AGREEMENT
Prudential-Bache Repurchase Agreement, dated
10/31/95, due 11/01/95, with a maturity value
of $425,694 and an effective yield of 5.42%,
collateralized by a U.S. Government Agency
Obligation Security with a rate of 5.67% and
a maturity date of 04/11/96 with a market
value of $434,154............................. 425,631 425,631 3.8%
---------------------
TOTAL INVESTMENTS (Cost $11,068,221**) 10,935,018 98.2%
Excess of Other Assets over Liabilities 195,072 1.8%
---------------------
NET ASSETS $11,130,090 100.0%
=====================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
** Aggregate cost for Federal Tax Purposes (Note D).
AMBAC American Municipal Bond Assurance Corporation
FGIC Financial Guaranty Insurance Corporation
G.O. General Obligations
MBIA Municipal Bond Insurance Association
PRE-RE Pre-refunded with U.S. Treasuries
The accompanying notes are an integral part of the financial statements.
47
<PAGE>
LINCOLN CASHFUND PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
MATURITY PAR/SHARE MARKET OR PERCENT OF
DESCRIPTION RATE DATE AMOUNT FAIR VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENTS--NOTES A AND B
COMMERCIAL PAPER
AT & T....................... 5.650% 11/14/95 $ 565,000 $ 563,847
Daimler Benz, N.A............ 5.690% 12/20/95 572,000 567,570
Donnelly RR & Sons........... 5.700% 12/07/95 400,000 397,720
Merrill Lynch & Company...... 5.870% 11/01/95 1,586,000 1,586,000
Merrill Lynch & Company...... 5.600% 11/07/95 525,000 524,510
Metropolitan Life Funding.... 5.710% 11/13/95 570,000 568,915
Southwestern Bell Capital
Corporation................. 5.640% 03/25/96 570,000 557,052
Weyerhauser Company.......... 5.800% 11/02/95 570,000 569,908
-----------
TOTAL COMMERCIAL PAPER (Cost $5,335,522) 5,335,522 46.6%
---------------------
CORPORATE BONDS
Harris Trust & Savings....... 6.120% 08/29/96 500,000 500,000
Morgan Guaranty Trust of New
York........................ 6.000% 10/11/96 570,000 570,000
-----------
TOTAL CORPORATE BONDS (Cost $1,070,000) 1,070,000 9.3%
---------------------
FLOATING RATE NOTES
Boatmens Bank of South
Missouri.................... 5.875% 02/14/96 558,000 557,973
Caterpiller Financial
Services.................... 5.810% 07/25/96 565,000 565,000
Comerica Bank................ 5.560% 11/22/95 545,000 544,973
First Bank of South Dakota... 5.855% 05/06/96 565,000 564,944
PHH Corporation.............. 5.840% 08/21/96 565,000 564,824
Toyota Motor Credit.......... 5.600% 01/12/96 545,000 545,000
-----------
TOTAL FLOATING RATE NOTES (Cost $3,342,714) 3,342,714 29.2%
---------------------
GOVERNMENT AND AGENCY
OBLIGATIONS
Federal Home Loan Bank....... 5.610% 09/20/96 1,000,000 998,987
U. S. Treasury Bill.......... 6.610% 02/08/96 700,000 687,276
-----------
TOTAL GOVERNMENT AND AGENCY OBLIGATIONS (Cost
$1,686,263) 1,686,263 14.7%
---------------------
TOTAL INVESTMENTS (Cost $11,434,499**) 11,434,499 99.8%
Excess of Other Assets over
Liabilities 17,524 0.2%
---------------------
NET ASSETS $11,452,023 100.0%
=====================
</TABLE>
NOTES TO THE PORTFOLIO OF INVESTMENTS:
**Aggregate cost for Federal tax purposes (Note D).
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
[THIS PAGE LEFT INTENTIONALLY BLANK]
49
<PAGE>
LINCOLN ADVISOR FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
LINCOLN LINCOLN LINCOLN LINCOLN
GROWTH AND INCOME ENTERPRISE U.S. GROWTH WORLD GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Notes A & B) $22,617,145 $19,969,372 $19,064,562 $14,383,500
Foreign currency, at
value -- -- -- 13,029
Cash -- -- -- --
Receivable from:
Securities sold 101,193 139,467 -- --
Open Forward Currency
Contracts (Note G) -- -- -- --
Fund shares sold 42,676 126,218 24,465 21,685
Dividends and interest 38,476 6,786 10,425 53,379
Advisor -- -- -- --
Deferred organization
expense 6,430 6,371 4,935 6,159
----------- ----------- ----------- -----------
Total assets 22,805,920 20,248,214 19,104,387 14,477,752
----------- ----------- ----------- -----------
LIABILITIES:
Payable for:
Securities purchased 1,261,464 104,111 -- --
Fund shares redeemed 18,726 3,334 497 1,504
Distributions declared 342 -- -- --
Directors' fees and
expenses 2,054 2,054 2,054 2,054
Affiliates:
Advisor 86,560 40,625 63,298 5,772
Service and
distribution fees 14,928 17,056 13,224 14,430
Accrued expenses and
other liabilities 38,108 37,829 38,026 49,843
----------- ----------- ----------- -----------
Total Liabilities 1,422,182 205,009 117,099 73,603
----------- ----------- ----------- -----------
NET ASSETS: $21,383,738 $20,043,205 $18,987,288 $14,404,149
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Paid-in capital $19,095,891 $17,573,452 $15,192,613 $12,819,006
Undistributed net
investment income
(loss) or
distributions in
excess of net
investment income 20,387 -- -- 28,952
Accumulated net
realized gain (loss)
on investments and
foreign currency
transactions 411,734 (663,946) (1,242,395) (226,230)
Net unrealized
appreciation
(depreciation) on
investments, forward
currency contracts,
foreign currency and
other assets 1,855,726 3,133,699 5,037,070 1,782,421
----------- ----------- ----------- -----------
NET ASSETS: $21,383,738 $20,043,205 $18,987,288 $14,404,149
=========== =========== =========== ===========
CLASS A $13,297,253 $14,507,841 $13,573,827 $13,017,521
=========== =========== =========== ===========
CLASS B $ 1,307,566 $ 1,811,208 $ 566,975 $ 1,182,741
=========== =========== =========== ===========
CLASS C $ 73,181 $ 58,186 $ 27,138 $ 42,905
=========== =========== =========== ===========
CLASS D $ 6,705,738 $ 3,665,970 $ 4,819,348 $ 160,982
=========== =========== =========== ===========
SHARES OUTSTANDING:
CLASS A 1,185,195 1,285,890 1,092,021 1,141,508
=========== =========== =========== ===========
CLASS B 120,358 151,465 45,992 110,409
=========== =========== =========== ===========
CLASS C 6,406 4,767 2,113 3,999
=========== =========== =========== ===========
CLASS D 597,948 324,385 385,639 14,072
=========== =========== =========== ===========
CLASS A SHARES
Net asset value and
redemption price per
share $ 11.22 $ 11.28 $ 12.43 $ 11.40
=========== =========== =========== ===========
Maximum sales charge 5.50% 5.50% 5.50% 5.50%
Maximum offering price
per share $ 11.87 $ 11.94 $ 13.15 $ 12.06
=========== =========== =========== ===========
CLASS B SHARES
Net asset value and
offering price* $ 10.86 $ 11.96 $ 12.33 $ 10.71
=========== =========== =========== ===========
CLASS C SHARES
Net asset value and
offering price* $ 11.42 $ 12.21 $ 12.85 $ 10.73
=========== =========== =========== ===========
CLASS D SHARES
Net asset value,
offering price and
redemption price per
share $ 11.21 $ 11.30 $ 12.50 $ 11.44
=========== =========== =========== ===========
Cost of investments $20,761,419 $16,835,673 $14,027,492 $12,601,602
Cost of foreign currency -- -- -- $ 12,505
</TABLE>
*Redemption price per
share is equal to net
asset value less any
applicable contingent
deferred sales
charge.
The accompanying notes are an
50
<PAGE>
<TABLE>
<CAPTION>
LINCOLN LINCOLN LINCOLN LINCOLN LINCOLN
NEW PACIFIC GOVERNMENT INCOME CORPORATE INCOME TAX-FREE INCOME CASHFUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------------- ---------------- --------------- -----------
<S> <C> <C> <C> <C>
$10,728,423 $12,058,039 $15,291,187 $10,935,018 $11,434,499
346,436 -- -- -- --
-- 32,500 -- -- --
54,415 816,440 -- -- --
13,060 -- -- -- --
2,136 1,992 9,509 1,251 1,280
24,554 179,202 299,076 160,202 32,590
77,923 50,866 35,974 77,759 11,147
5,833 6,550 6,278 6,460 6,087
- ----------- ----------- ----------- ----------- -----------
11,252,780 13,145,589 15,642,024 11,180,690 11,485,603
- ----------- ----------- ----------- ----------- -----------
180,125 741,350 -- -- --
-- 3,026 4,582 -- 1,363
-- 412 842 456 711
2,054 2,054 2,054 2,137 2,301
-- -- -- -- --
10,974 10,253 10,651 9,801 --
53,211 33,517 36,037 38,206 29,205
- ----------- ----------- ----------- ----------- -----------
246,364 790,612 54,166 50,600 33,580
- ----------- ----------- ----------- ----------- -----------
$11,006,416 $12,354,977 $15,587,858 $11,130,090 $11,452,023
=========== =========== =========== =========== ===========
$12,546,983 $12,486,146 $15,567,374 $11,264,858 $11,452,023
(9,219) 5,468 2,057 (1,565) --
(507,330) (286,990) (538,910) -- --
(1,024,018) 150,353 557,337 (133,203) --
- ----------- ----------- ----------- ----------- -----------
$11,006,416 $12,354,977 $15,587,858 $11,130,090 $11,452,023
=========== =========== =========== =========== ===========
$10,353,101 $11,061,948 $11,517,879 $10,949,759 $11,452,023
=========== =========== =========== =========== ===========
$ 573,331 $ 299,270 $ 361,777 $ 169,947 --
=========== =========== =========== =========== ===========
$ 17,490 $ 14,696 $ 4,677 $ 10,384
=========== =========== =========== ===========
$ 62,494 $ 979,063 $ 3,703,525 --
=========== =========== =========== ===========
1,188,455 1,128,893 1,180,087 1,115,574 11,452,023
=========== =========== =========== =========== ===========
63,648 29,209 34,619 16,308 --
=========== =========== =========== =========== ===========
1,980 1,416 448 1,017
=========== =========== =========== ===========
7,126 101,971 390,199 --
=========== =========== =========== ===========
$ 8.71 $ 9.80 $ 9.76 $ 9.82 $ 1.00
=========== =========== =========== =========== ===========
5.50% 4.50% 4.50% 4.50%
$ 9.22 $ 10.26 $ 10.22 $ 10.28
=========== =========== =========== ===========
$ 9.01 $ 10.25 $ 10.45 $ 10.42
=========== =========== =========== ===========
$ 8.83 $ 10.38 $ 10.44 $ 10.21
=========== =========== =========== ===========
$ 8.77 $ 9.60 $ 9.49 --
=========== =========== =========== ===========
$11,767,716 $11,907,686 $14,733,850 $11,068,221 $11,434,499
$ 331,161 -- -- -- --
</TABLE>
integral part of the financial statements.
51
<PAGE>
LINCOLN ADVISOR FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
LINCOLN LINCOLN LINCOLN LINCOLN
GROWTH AND INCOME ENTERPRISE U.S. GROWTH WORLD GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 118,967 $ 61,213 $ 38,522 $ 31,824
Dividends (Note 1) 340,478 85,318 105,990 208,492
---------- ---------- ---------- ---------
Total investment in-
come 459,445 146,531 144,512 240,316
---------- ---------- ---------- ---------
EXPENSES (NOTE A):
Investment Advisory
fees (Note C) 139,813 116,353 105,965 142,529
Custody and adminis-
tration fees 72,494 92,461 76,881 97,930
Audit fees 14,400 14,400 16,400 20,600
Registration and fil-
ing fees 38,486 37,948 37,760 37,326
Transfer agency fees 17,398 17,398 17,398 17,398
Directors' fees and
expenses 8,233 8,232 8,232 8,232
Amortization of organ-
ization costs (Note
F) 5,386 5,446 5,446 5,446
Other 1,379 1,652 1,653 1,655
Fees waived and
expenses reimbursed
by the Advisor
(Note C) (53,253) (75,728) (42,667) (136,758)
---------- ---------- ---------- ---------
244,336 218,162 227,068 194,358
Distribution and serv-
ice fees (Note C):
Class A Shares 41,382 42,883 40,509 41,866
Class B Shares 9,710 12,474 3,983 8,469
Class C Shares 426 486 127 408
---------- ---------- ---------- ---------
Net expenses 295,854 274,005 271,687 245,101
---------- ---------- ---------- ---------
NET INVESTMENT INCOME
(LOSS) 163,591 (127,474) (127,175) (4,785)
---------- ---------- ---------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain
(loss) on:
Investment transac-
tions 425,374 952,012 (476,502) (109,077)
Foreign currency
transactions -- -- -- 53,067
---------- ---------- ---------- ---------
Net realized gain
(loss) 425,374 952,012 (476,502) (56,010)
---------- ---------- ---------- ---------
Net change in
unrealized apprecia-
tion (depreciation)
on:
Investments 2,538,893 2,165,537 3,893,441 651,911
Foreign currency and
other assets -- -- -- (20,353)
---------- ---------- ---------- ---------
NET UNREALIZED APPRECI-
ATION (DEPRECIATION)
DURING THE PERIOD 2,538,893 2,165,537 3,893,441 631,558
---------- ---------- ---------- ---------
NET REALIZED AND
UNREALIZED GAIN (LOSS) 2,964,267 3,117,549 3,416,939 575,548
---------- ---------- ---------- ---------
NET INCREASE (DECREASE)
IN NET ASSETS RESULT-
ING FROM OPERATIONS $3,127,858 $2,990,075 $3,289,764 $ 570,763
========== ========== ========== =========
NOTE 1: NET OF FOREIGN
TAXES WITHHELD OF: -- -- -- $ 27,176
</TABLE>
The accompanying notes are an
52
<PAGE>
<TABLE>
<CAPTION>
LINCOLN
LINCOLN LINCOLN LINCOLN TAX- LINCOLN
NEW PACIFIC GOVERNMENT INCOME CORPORATE INCOME FREE INCOME CASHFUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
$ 25,014 $ 823,203 $1,056,815 $ 557,939 $665,485
111,412 -- -- -- --
- ----------- ---------- ---------- ---------- --------
136,426 823,203 1,056,815 557,939 665,485
- ----------- ---------- ---------- ---------- --------
119,820 33,749 40,247 31,052 27,946
150,831 68,583 71,679 69,228 66,697
20,600 13,400 14,400 16,500 11,300
37,156 37,395 37,892 36,931 23,375
17,398 17,398 17,398 17,398 17,398
8,232 8,232 8,232 8,232 8,232
5,446 5,446 5,446 5,446 5,446
1,653 1,658 1,658 1,657 1,663
(197,745) (84,614) (76,211) (108,813) (39,094)
- ----------- ---------- ---------- ---------- --------
163,391 101,247 120,741 77,631 122,963
35,982 36,161 36,880 35,745 --
5,374 2,650 2,991 1,255 --
159 74 53 123 --
- ----------- ---------- ---------- ---------- --------
204,906 140,132 160,665 114,754 122,963
- ----------- ---------- ---------- ---------- --------
(68,480) 683,071 896,150 443,185 542,522
- ----------- ---------- ---------- ---------- --------
(470,965) 315,265 104,351 -- --
82,356 -- -- -- --
- ----------- ---------- ---------- ---------- --------
(388,609) 315,265 104,351 -- --
- ----------- ---------- ---------- ---------- --------
(1,244,822) 453,575 1,219,589 977,524 --
12,967 -- -- -- --
- ----------- ---------- ---------- ---------- --------
(1,231,855) 453,575 1,219,589 977,524 --
- ----------- ---------- ---------- ---------- --------
(1,620,464) 768,840 1,323,940 977,524 --
- ----------- ---------- ---------- ---------- --------
$(1,688,944) $1,451,911 $2,220,090 $1,420,709 $542,522
=========== ========== ========== ========== ========
$ 80,877 -- -- -- --
</TABLE>
integral part of the financial statements.
53
<PAGE>
LINCOLN ADVISOR FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
LINCOLN LINCOLN LINCOLN LINCOLN
GROWTH AND INCOME ENTERPRISE U.S. GROWTH WORLD GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss) $ 163,591 $ (127,474) $ (127,175) $ (4,785)
Net realized gain (loss) on
investments and foreign currency
transactions 425,374 952,012 (476,502) (56,010)
Net change in unrealized appreciation
(depreciation) on investments,
foreign currency and other assets 2,538,893 2,165,537 3,893,441 631,558
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 3,127,858 2,990,075 3,289,764 570,763
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE A):
From net investment income*:
CLASS A (82,711) -- -- (9,506)
CLASS B (4,970) -- -- (1,209)
CLASS C (191) -- -- (104)
CLASS D (55,332) -- -- (263)
From short-term capital gains:
CLASS A (267,001) -- -- --
CLASS B (19,100) -- -- --
CLASS C (653) -- -- --
CLASS D (81,783) -- -- --
NET FUND SHARE TRANSACTIONS (NOTE E):
CLASS A 1,108,608 1,331,853 488,757 799,587
CLASS B 600,728 780,768 268,431 605,810
CLASS C 43,004 10,081 18,772 2,337
CLASS D 3,371,526 3,318,688 2,411,031 89,271
----------- ----------- ----------- -----------
TOTAL CHANGE IN NET ASSETS 7,739,983 8,431,465 6,476,755 2,056,686
NET ASSETS:
Beginning of period 13,643,755 11,611,740 12,510,533 12,347,463
----------- ----------- ----------- -----------
End of period (including
undistributed net investment income
disclosed below **) $21,383,738 $20,043,205 $18,987,288 $14,404,149
=========== =========== =========== ===========
*Including distributions in excess of
net investment income of: -- -- -- --
**Undistributed net investment income
(loss): 20,387 -- -- 28,952
</TABLE>
The accompanying notes are an
54
<PAGE>
<TABLE>
<CAPTION>
LINCOLN
LINCOLN LINCOLN LINCOLN TAX- LINCOLN
NEW PACIFIC GOVERNMENT INCOME CORPORATE INCOME FREE INCOME CASHFUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
$ (68,480) $ 683,071 $ 896,150 $ 443,185 $ 542,522
(388,609) 315,265 104,351 -- --
(1,231,855) 453,575 1,219,589 977,524 --
- ----------- ----------- ----------- ----------- -----------
(1,688,944) 1,451,911 2,220,090 1,420,709 542,522
- ----------- ----------- ----------- ----------- -----------
-- (620,799) (633,907) (437,188) (542,522)
-- (19,661) (24,234) (6,574) --
-- (224) (604) (988) --
-- (51,430) (236,120) -- --
(316,289) -- -- -- --
(15,095) -- -- -- --
(342) -- -- -- --
(1,631) -- -- -- --
941,615 689,590 802,327 545,752 555,106
231,878 46,580 115,759 64,485 --
6,813 (35,204) (5,334) 2,272 --
23,103 593,422 2,194,396 -- --
- ----------- ----------- ----------- ----------- -----------
(818,892) 2,054,185 4,432,373 1,588,468 555,106
11,825,308 10,300,792 11,155,485 9,541,622 10,896,917
- ----------- ----------- ----------- ----------- -----------
$11,006,416 $12,354,977 $15,587,858 $11,130,090 $11,452,023
=========== =========== =========== =========== ===========
-- -- -- (1,565) --
(9,219) 5,468 2,057 -- --
</TABLE>
integral part of the financial statements.
55
<PAGE>
LINCOLN ADVISOR FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD DECEMBER 3, 1993 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1994
<TABLE>
<CAPTION>
LINCOLN LINCOLN LINCOLN LINCOLN
GROWTH AND INCOME ENTERPRISE U.S. GROWTH WORLD GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income (loss) $55,239 ($96,231) ($48,908) $24,104
Net realized gain (loss) on
investment transactions and foreign
currency transactions 366,879 (1,615,958) (765,893) (117,654)
Net change in unrealized appreciation
(depreciation) on investments,
foreign currency and other assets (683,167) 968,162 1,143,629 1,150,863
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations (261,049) (744,027) 328,828 1,057,313
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE A):
From net investment income*:
CLASS A (52,553) (5,017) (10,026) (31,036)
CLASS B (901) -- -- (644)
CLASS C (44) -- -- (16)
CLASS D (13,722) -- -- (154)
NET FUND SHARE TRANSACTIONS (NOTE E):
CLASS A 10,707,842 11,364,722 10,432,432 10,690,388
CLASS B 567,722 714,807 193,916 518,236
CLASS C 24,220 36,372 4,860 38,387
CLASS D 2,659,240 231,883 1,547,523 61,989
----------- ----------- ----------- -----------
TOTAL CHANGE IN NET ASSETS 13,630,755 11,598,740 12,497,533 12,334,463
NET ASSETS:
Beginning of period 13,000 13,000 13,000 13,000
----------- ----------- ----------- -----------
End of period (including
undistributed net investment
income disclosed below**) $13,643,755 $11,611,740 $12,510,533 $12,347,463
=========== =========== =========== ===========
*Including distributions in excess of
net investment income of: ($11,981) ($5,017) ($10,026) ($7,747)
**Undistributed net investment income: -- -- -- --
</TABLE>
The accompanying notes are an
56
<PAGE>
<TABLE>
<CAPTION>
LINCOLN LINCOLN LINCOLN LINCOLN LINCOLN
NEW PACIFIC GOVERNMENT INCOME CORPORATE INCOME TAX-FREE INCOME CASHFUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------------- ---------------- --------------- -----------
<S> <C> <C> <C> <C>
($21,131) $401,834 $569,199 $354,978 $271,189
305,061 (602,768) (643,261) -- --
207,837 (303,222) (662,252) (1,110,727) --
- ----------- ----------- ----------- ---------- -----------
491,767 (504,156) (736,314) (755,749) 271,189
- ----------- ----------- ----------- ---------- -----------
(10,033) (376,003) (531,367) (355,455) (271,189)
-- (2,509) (3,088) (1,109) --
-- (709) (92) (45) --
-- (7,589) (33,880) -- --
10,855,398 10,518,370 10,853,543 10,532,695 10,883,917
416,363 246,538 230,877 100,785 --
12,436 50,709 10,006 7,500 --
46,377 363,141 1,352,800 -- --
- ----------- ----------- ----------- ---------- -----------
11,812,308 10,287,792 11,142,485 9,528,622 10,883,917
13,000 13,000 13,000 13,000 13,000
- ----------- ----------- ----------- ---------- -----------
$11,825,308 $10,300,792 $11,155,485 $9,541,622 $10,896,917
=========== =========== =========== ========== ===========
($10,033) -- -- ($1,630) --
-- $15,024 $772 -- --
</TABLE>
integral part of the financial statements.
57
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
LINCOLN GROWTH AND INCOME PORTFOLIO
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------- ---------------------------------
FOR THE YEAR FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.74 $ 10.00 $ 9.49 $ 10.00
------- -------- ------ --------
Income from investment
operations:
Net investment income
(loss) 0.09 0.05 0.04 0.01
Net realized and
unrealized gain (loss)
on investments 1.71 (0.26) 1.64 (0.49)
------- -------- ------ --------
Total from investment
operations 1.80 (0.21) 1.68 (0.48)
------- -------- ------ --------
Less distributions to
shareholders:
From net investment
income (0.07) (0.05) (0.06) (0.03)
From net realized gains (0.25) -- (0.25) --
------- -------- ------ --------
Total distributions (0.32) (0.05) (0.31) (0.03)
------- -------- ------ --------
Net asset value, end of
period $ 11.22 $ 9.74 $10.86 $ 9.49
======= ======== ====== ========
Total Return** 19.13% (2.15%) 18.36% (4.83%)
Ratios/Supplemental
Data:
Net assets, end of
period (000's) $13,297 $10,437 $1,308 $563
Net expenses to average
daily net assets 1.75% 1.75%* 2.40% 2.40%*
Net investment income
(loss) to average
daily net assets 0.88% 0.49%* 0.23% (.14%)*
Portfolio turnover rate 49% 39% 49% 39%
Commencement of
operations 12/03/93 03/29/94
Without the waiver of
fees and reimbursement
of expenses by the
advisor, the ratio of
net expenses to
average net assets
would have been: 2.09% 2.87%* 2.74% 3.53%*
</TABLE>
LINCOLN ENTERPRISE PORTFOLIO
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------- ---------------------------------
FOR THE YEAR FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994 OCTOBER 31, 1995 OCTOBER 31, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.20 $ 10.00 $ 9.81 $ 10.00
------- -------- ------ --------
Income from investment
operations:
Net investment income
(loss) (0.08) (0.08) (0.12) (0.04)
Net realized and
unrealized gain (loss)
on investments 2.16 (0.71) 2.27 (0.15)
------- -------- ------ --------
Total from investment
operations 2.08 (0.79) 2.15 (0.19)
------- -------- ------ --------
Less distributions to
shareholders:
From net investment
income -- (0.01) -- --
From net realized gains -- -- -- --
------- -------- ------ --------
Total distributions 0.00 (0.01) 0.00 0.00
------- -------- ------ --------
Net asset value, end of
period $ 11.28 $ 9.20 $11.96 $ 9.81
======= ======== ====== ========
Total Return** 22.72% (7.91%) 21.92% (1.91%)
Ratios/Supplemental
Data:
Net assets, end of
period (000's) $14,508 $10,579 $1,811 $761
Net expenses to average
daily net assets 1.85% 1.85%* 2.50% 2.50%*
Net investment income
(loss) to average
daily net assets (0.83%) (1.01%)* (1.50%) (1.53%)*
Portfolio turnover rate 106% 120% 106% 120%
Commencement of
operations 12/03/93 04/14/94
Without the waiver of
fees and reimbursement
of expenses by the
advisor, the ratio of
net expenses to
average net assets
would have been: 2.42% 3.10%* 3.07% 3.76%*
</TABLE>
- -------
* Annualized.
** Total return calculations exclude front end sales load.
The accompanying notes are an
58
<PAGE>
<TABLE>
<CAPTION>
CLASS C CLASS D
- ---------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
- ---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C>
$ 9.96 $ 10.00 $ 9.74 $ 10.42
------ -------- ------ --------
0.04 0.00 0.12 0.05
1.72 (0.02) 1.71 (0.66)
------ -------- ------ --------
1.76 (0.02) 1.83 (0.61)
------ -------- ------ --------
(0.05) (0.02) (0.11) (0.07)
(0.25) -- (0.25) --
------ -------- ------ --------
(0.30) (0.02) (0.36) (0.07)
------ -------- ------ --------
$11.42 $ 9.96 $11.21 $ 9.74
====== ======== ====== ========
18.37% (0.22%) 19.52% (5.93%)
$73 $24 $6,706 $2,620
2.40% 2.40%* 1.40% 1.40%*
0.23% (.08%)* 1.23% 0.91%*
49% 39% 49% 39%
05/11/94 02/03/94
2.74% 3.52%* 1.74% 2.52%*
<CAPTION>
CLASS C CLASS D
- ---------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
- ---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C>
$10.02 $ 10.00 $ 9.23 $ 10.44
------ -------- ------ --------
(0.15) (0.05) (0.02) (0.02)
2.34 0.07 2.09 (1.19)
------ -------- ------ --------
2.19 0.02 2.07 (1.21)
------ -------- ------ --------
-- -- -- --
-- -- -- --
------ -------- ------ --------
0.00 0.00 0.00 0.00
------ -------- ------ --------
$12.21 $ 10.02 $11.30 $ 9.23
====== ======== ====== ========
21.86% 0.23% 22.43% (11.61%)
$ 58 $ 37 $3,666 $ 234
2.50% 2.50%* 1.53% 1.50%*
(1.49%) (1.53%)* (0.60%) (.63%)*
106% 120% 106% 120%
05/10/94 02/03/94
3.07% 3.75%* 2.07% 2.75%*
</TABLE>
integral part of the financial statements.
59
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
LINCOLN U.S. GROWTH PORTFOLIO
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $10.21 $10.00 $10.19 $10.00
------- -------- ------- --------
Income from investment
operations:
Net investment income
(loss) (0.09) (0.04) (0.14) (0.03)
Net realized and
unrealized gain (loss)
on investments 2.31 0.26 2.28 0.22
------- -------- ------- --------
Total from investment
operations 2.22 0.22 2.14 0.19
------- -------- ------- --------
Less distributions to
shareholders:
From net investment
income -- (0.01) -- --
From net realized gains -- -- -- --
------- -------- ------- --------
Total distributions 0.00 (0.01) 0.00 0.00
------- -------- ------- --------
Net asset value, end of
period $12.43 $10.21 $12.33 $10.19
======= ======== ======= ========
Total Return** 21.74% 2.18% 21.00% 1.90%
Ratios / Supplemental
Data:
Net assets, end of
period (000's) $13,574 $10,669 $567 $204
Net expenses to average
daily net assets 1.85% 1.85%* 2.50% 2.50%*
Net investment income
(loss) to average
daily net assets (0.88%) (0.51%)* (1.57%) (1.26%)*
Portfolio turnover rate 58% 66% 58% 66%
Commencement of
operations 12/03/93 03/29/94
Without the waiver of
fees and reimbursement
of expenses by the
advisor, the ratio of
net expenses to
average net assets
would have been: 2.18% 2.94%* 2.83% 3.60%*
</TABLE>
LINCOLN WORLD GROWTH PORTFOLIO
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $11.00 $10.00 $10.40 $10.00
------- -------- ------- --------
Income from investment
operations:
Net investment income
(loss) 0.01 0.02 (0.02) --
Net realized and
unrealized gain (loss)
on investments 0.40 1.01 0.35 0.43
------- -------- ------- --------
Total from investment
operations 0.41 1.03 0.33 0.43
------- -------- ------- --------
Less distributions to
shareholders:
From net investment
income (0.01) (0.03) (0.02) (0.03)
From net realized gains -- -- -- --
------- -------- ------- --------
Total distributions (0.01) (0.03) (0.02) (0.03)
------- -------- ------- --------
Net asset value, end of
period $11.40 $11.00 $10.71 $10.40
======= ======== ======= ========
Total Return** 3.81% 10.25% 3.19% 4.28%
Ratios / Supplemental
Data:
Net assets, end of
period (000's) $13,018 $11,721 $1,183 $523
Net expenses to average
daily net assets 1.85% 1.85%* 2.50% 2.50%*
Net investment income
(loss) to average
daily net assets 0.00% 0.25%* (0.57%) (0.37%)*
Portfolio turnover rate 9% 6% 9% 6%
Commencement of
operations 12/03/93 03/29/94
Without the waiver of
fees and reimbursement
of expenses by the
advisor, the ratio of
net expenses to
average net assets
would have been: 2.96% 3.56%* 3.61% 4.22%*
</TABLE>
* Annualized
** Total return calculations exclude front end sales load.
The accompanying notes are an
60
<PAGE>
<TABLE>
<CAPTION>
CLASS C CLASS D
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C>
$10.62 $10.00 $10.23 $10.52
------- -------- ------- --------
(0.10) (0.03) (0.05) (0.01)
2.33 0.65 2.32 (0.28)
------- -------- ------- --------
2.23 0.62 2.27 (0.29)
------- -------- ------- --------
-- -- -- --
-- -- -- --
------- -------- ------- --------
0.00 0.00 0.00 0.00
------- -------- ------- --------
$12.85 $10.62 $12.50 $10.23
======= ======== ======= ========
21.00% 6.17% 22.19% (2.78%)
$27 $5 $4,819 $1,630
2.50% 2.50%* 1.50% 1.50%*
(1.61%) (1.09%)* (0.59%) (0.27%)*
58% 66% 58% 66%
05/23/94 02/03/94
2.82% 3.54%* 1.83% 2.60%*
<CAPTION>
CLASS C CLASS D
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C>
$10.43 $10.00 $11.02 $10.50
------- -------- ------- --------
(0.06) 0.01 0.04 0.04
0.39 0.44 0.41 0.52
------- -------- ------- --------
0.33 0.45 0.45 0.56
------- -------- ------- --------
(0.03) (0.02) (0.03) (0.04)
-- -- -- --
------- -------- ------- --------
(0.03) (0.02) (0.03) (0.04)
------- -------- ------- --------
$10.73 $10.43 $11.44 $11.02
======= ======== ======= ========
3.16% 4.45% 4.22% 5.26%
$43 $38 $161 $63
2.50% 2.50%* 1.50% 1.50%*
(0.62%) 0.16%* 0.40% 0.76%*
9% 6% 9% 6%
05/10/94 02/03/94
3.61% 4.23%* 2.61% 3.21% *
</TABLE>
integral part of the financial statements.
61
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
LINCOLN NEW PACIFIC PORTFOLIO
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $10.44 $10.00 $10.86 $10.00
-------- -------- -------- --------
Income from investment
operations:
Net investment income
(loss) (0.05) (0.02) (0.10) (0.03)
Net realized and
unrealized gain (loss)
on investments (1.39) 0.47 (1.46) 0.89
-------- -------- -------- --------
Total from investment
operations (1.44) 0.45 (1.56) 0.86
-------- -------- -------- --------
Less distributions to
shareholders:
From net investment
income -- (0.01) -- --
From net realized gains (0.29) -- (0.29) --
-------- -------- -------- --------
Total distributions (0.29) (0.01) (0.29) 0.00
-------- -------- -------- --------
Net asset value, end of
period $8.71 $10.44 $9.01 $10.86
======== ======== ======== ========
Total Return** (13.99%) 4.53% (14.56%) 8.58%
Ratios / Supplemental
Data:
Net assets, end of
period (000's) $10,353 $11,333 $573 $431
Net expenses to average
daily net assets 1.85% 1.85%* 2.50% 2.50%*
Net investment income
(loss) to average
daily net assets (0.60%) (0.21%)* (1.20%) (0.88%)*
Portfolio turnover rate 163% 104% 163% 104%
Commencement of
operations 12/03/93 03/29/94
Without the waiver of
fees and reimbursement
of expenses by the
advisor, the ratio of
net expenses to
average net assets
would have been: 3.73% 3.66%* 4.38% 4.32%*
</TABLE>
LINCOLN GOVERNMENT INCOME PORTFOLIO
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $9.15 $10.00 $9.78 $10.00
-------- -------- -------- --------
Income from investment
operations:
Net investment income
(loss) 0.57 0.38 0.57 0.12
Net realized and
unrealized gain (loss)
on investments 0.65 (0.86) 0.65 (0.23)
-------- -------- -------- --------
Total from investment
operations 1.22 (0.48) 1.22 (0.11)
-------- -------- -------- --------
Less distributions to
shareholders:
From net investment
income (0.57) (0.37) (0.75) (0.11)
From net realized gains -- -- -- --
-------- -------- -------- --------
Total distributions (0.57) (0.37) (0.75) (0.11)
-------- -------- -------- --------
Net asset value, end of
period $9.80 $9.15 $10.25 $9.78
======== ======== ======== ========
Total Return** 13.72% (4.93%) 13.09% (1.11%)
Ratios / Supplemental
Data:
Net assets, end of
period (000's) $11,062 $9,658 $299 $239
Net expenses to average
daily net assets 1.25% 1.25%* 1.90% 1.90%*
Net investment income
(loss) to average
daily net assets 6.07% 4.38%* 5.43% 4.87%*
Portfolio turnover rate 227% 366% 227% 366%
Commencement of
operations 12/03/93 07/27/94
Without the waiver of
fees and reimbursement
of expenses by the
advisor, the ratio of
net expenses to
average net assets
would have been: 2.06% 2.58%* 2.71% 3.22%*
</TABLE>
* Annualized
** Total return calculations exclude front end sales load.
The accompanying notes are an
62
<PAGE>
<TABLE>
<CAPTION>
CLASS C CLASS D
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C>
$10.66 $10.00 $10.48 $11.14
-------- -------- -------- --------
(0.08) (0.02) (0.01) 0.01
(1.46) 0.68 (1.41) (0.67)
-------- -------- -------- --------
(1.54) 0.66 (1.42) (0.66)
-------- -------- -------- --------
-- -- -- --
(0.29) -- (0.29) --
-------- -------- -------- --------
(0.29) 0.00 (0.29) 0.00
-------- -------- -------- --------
$8.83 $10.66 $8.77 $10.48
======== ======== ======== ========
(14.57%) 6.55% (13.65%) (5.98%)
$17 $12 $62 $47
2.50% 2.50%* 1.50% 1.50%*
(1.02%) (0.83%)* (0.16%) 0.23%*
163% 104% 163% 104%
07/07/94 02/03/94
4.38% 4.31%* 3.38% 3.31%*
<CAPTION>
CLASS C CLASS D
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C>
$9.79 $10.00 $9.15 $10.00
-------- -------- -------- --------
0.63 0.15 0.69 0.33
0.47 (0.22) 0.54 (0.85)
-------- -------- -------- --------
1.10 (0.07) 1.23 (0.52)
-------- -------- -------- --------
(0.51) (0.14) (0.78) (0.33)
-- -- -- --
-------- -------- -------- --------
(0.51) (0.14) (0.78) (0.33)
-------- -------- -------- --------
$10.38 $9.79 $9.60 $9.15
======== ======== ======== ========
11.59% (0.72%) 14.15% (5.17%)
$15 $49 $979 $353
1.85% 1.90%* 0.90% 0.90%*
4.73% 4.71%* 6.39% 5.57%*
227% 366% 227% 366%
07/07/94 02/03/94
2.70% 3.22%* 1.71% 2.23%*
</TABLE>
integral part of the financial statements.
63
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
LINCOLN CORPORATE INCOME PORTFOLIO
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $8.80 $10.00 $9.73 $10.00
------- -------- ------ --------
Income from investment
operations:
Net investment income
(loss) 0.61 0.51 0.66 0.29
Net realized and
unrealized gain (loss)
on investments 0.91 (1.20) 0.91 (0.28)
------- -------- ------ --------
Total from investment
operations 1.52 (0.69) 1.57 0.01
------- -------- ------ --------
Less distributions to
shareholders:
From net investment
income (0.56) (0.51) (0.85) (0.28)
From net realized gains -- -- -- --
------- -------- ------ --------
Total distributions (0.56) (0.51) (0.85) (0.28)
------- -------- ------ --------
Net asset value, end of
period $9.76 $8.80 $10.45 $9.73
======= ======== ====== ========
Total Return** 17.71% (7.06%) 17.05% 0.11%
Ratios/Supplemental
Data:
Net assets, end of
period (000's) $11,518 $9,620 $362 $222
Net expenses to average
daily net assets 1.25% 1.25%* 1.90% 1.90%*
Net investment income
(loss) to average
daily net assets 6.64% 6.04%* 5.97% 5.94%*
Portfolio turnover rate 119% 185% 119% 185%
Commencement of
operations 12/03/93 05/11/94
Without the waiver of
fees and reimbursement
of expenses by the
advisor, the ratio of
net expenses to
average net assets
would have been: 1.87% 2.55%* 2.52% 3.21%*
</TABLE>
LINCOLN TAX-FREE INCOME PORTFOLIO
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $8.93 $10.00 $9.67 $10.00
------- -------- ------ --------
Income from investment
operations:
Net investment income
(loss) 0.40 0.34 0.43 0.16
Net realized and
unrealized gain (loss)
on investments 0.89 (1.06) 0.88 (0.33)
------- -------- ------ --------
Total from investment
operations 1.29 (0.72) 1.31 (0.17)
------- -------- ------ --------
Less distributions to
shareholders:
From net investment
income (0.40) (0.35) (0.56) (0.16)
From net realized gains -- -- -- --
------- -------- ------ --------
Total distributions (0.40) (0.35) (0.56) (0.16)
------- -------- ------ --------
Net asset value, end of
period $9.82 $8.93 $10.42 $9.67
======= ======== ====== ========
Total Return** 14.76% (7.40%) 14.04% (1.73%)
Ratios/Supplemental
Data:
Net assets, end of
period (000's) $10,950 $9,438 $170 $95
Net expenses to average
daily net assets 1.10% 1.10%* 1.75% 1.75%*
Net investment income
(loss) to average
daily net assets 4.29% 3.98%* 3.63% 3.52%*
Portfolio turnover rate 3% 25% 3% 25%
Commencement of
operations 12/03/93 05/04/94
Without the waiver of
fees and reimbursement
of expenses by the
advisor, the ratio of
net expenses to
average net assets
would have been: 2.22% 2.66%* 2.87% 3.31%*
</TABLE>
* Annualized
** Total return calculations exclude front end sales load.
The accompanying notes are an
64
<PAGE>
<TABLE>
<CAPTION>
CLASS C CLASS D
--------------------------------------- ---------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994 OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ---------------------- ---------------- ----------------------
<S> <C> <C> <C>
$9.80 $10.00 $8.84 $9.98
------ -------- ------ --------
0.18 0.08 0.73 0.41
1.33 (0.19) 0.78 (1.12)
------ -------- ------ --------
1.51 (0.11) 1.51 (0.71)
------ -------- ------ --------
(0.87) (0.09) (0.86) (0.43)
-- -- -- --
------ -------- ------ --------
(0.87) (0.09) (0.86) (0.43)
------ -------- ------ --------
$10.44 $9.80 $9.49 $8.84
====== ======== ====== ========
16.23% (1.00%) 18.27% (7.21%)
$5 $9 $3,704 $1,302
1.90% 1.85%* 0.90% 0.90%*
5.75% 5.91%* 6.95% 6.88%*
119% 185% 119% 185%
09/14/94 02/03/94
2.52% 3.17%* 1.52% 2.20%*
<CAPTION>
CLASS C
---------------------------------------
FOR THE YEAR
ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ----------------------
<S> <C>
$9.64 $10.00
------ --------
0.13 0.05
1.10 (0.35)
------ --------
1.23 (0.30)
------ --------
(0.66) (0.06)
-- --
------ --------
(0.66) (0.06)
------ --------
$10.21 $9.64
====== ========
13.40% (3.04%)
$10 $7
1.75% 1.75%*
3.68% 3.50%*
3% 25%
09/14/94
2.87% 3.27%*
</TABLE>
integral part of the financial statements.
65
<PAGE>
FINANCIAL HIGHLIGHTS
LINCOLN CASHFUND PORTFOLIO
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
REGULAR SHARES
---------------------------------------
FOR THE YEAR
ENDED FOR THE PERIOD
OCTOBER 31, 1995 ENDED OCTOBER 31, 1994
---------------- ----------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.05 0.03
Net realized and unrealized gain
(loss) on investments 0.00 0.00
------- --------
Total from investment operations 0.05 0.03
------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (0.05) (0.03)
From net realized gains -- --
------- --------
Total distributions (0.05) (0.03)
------- --------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
======= ========
TOTAL RETURN 4.94% 2.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) $11,452 $10,897
Net expenses to average daily net
assets 1.10% 1.10%*
Net investment income (loss) to
average daily net assets 4.85% 2.90%*
Commencement of operations 12/03/93
Without the waiver of fees and
reimbursement of expenses by the
advisor, the ratio of net
expenses to average net assets
would have been: 1.51% 2.11%*
</TABLE>
* Annualized
The accompanying notes are an integral part of the financial statements.
66
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
LINCOLN ADVISOR FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
NOTE A - SUMMARY OF ACCOUNTING POLICIES
The Lincoln Advisor Funds, Inc. (the "Fund"), is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company. The Fund currently issues
nine separate series of shares (each referred to as a Portfolio or collectively
as the Portfolios) each representing a separate, diversified portfolio of
securities. The Portfolios are Lincoln Growth and Income Portfolio ("Lincoln
Growth and Income"), Lincoln Enterprise Portfolio ("Lincoln Enterprise"),
Lincoln U. S. Growth Portfolio ("Lincoln U. S. Growth"), Lincoln World Growth
Portfolio ("Lincoln World Growth"), Lincoln New Pacific Portfolio ("Lincoln New
Pacific"), Lincoln Government Income Portfolio ("Lincoln Government"), Lincoln
Corporate Income Portfolio ("Lincoln Corporate"), Lincoln Tax-Free Income
Portfolio ("Lincoln Tax-Free"), and Lincoln Cashfund Portfolio ("Lincoln
Cashfund"). Each of the Portfolios, except Lincoln Cashfund, currently offers
four classes of shares: Class A, Class B, Class C and Class D. Lincoln Cashfund
currently offers two classes of shares: Regular and Class B Exchange shares.
For ease of presentation within the financial statements, Lincoln Cashfund
Regular shares appear under the heading as Class A shares. As of the date of
this report, all classes of the Fund with the exception of Lincoln Tax-Free
Class D and Lincoln Cashfund Class B Exchange had commenced operations. The
following is a summary of the significant accounting policies followed by the
Portfolios in the preparation of their financial statements.
SECURITIES VALUATIONS
A security listed or traded on an exchange (including the NASDAQ National
Market System) is valued at its last sale price on the exchange where the
security is principally traded or, if lacking any sales on a particular day,
the security is valued at the mean between the closing bid and asked prices on
that day. Each security traded in the over-the-counter market is valued at the
mean between the last available bid and asked prices based upon quotes
furnished by market makers for such securities. 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. Prices provided by the pricing services may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate, maturity and general market
conditions. Securities for which market quotations are not readily available
are valued at fair market value as determined in good faith by or under the
supervision of the Fund's officers in a manner specifically authorized by the
Board of Directors of the Fund. The securities of Lincoln Cashfund are valued
at amortized cost. For all other funds, short-term obligations having 60 days
or less to maturity are valued at amortized cost. Amortized cost valuation
involves assuming a constant amortization of any discount or premium from
maturity, regardless of the effect of fluctuating interest rates on the market
value of the instrument.
REPURCHASE AGREEMENTS
Each Portfolio may engage in repurchase agreement transactions. Under the terms
of a typical repurchase agreement, the Portfolio takes possession of an
underlying debt obligation subject to an obligation of the seller to
repurchase, and the Portfolio to resell, the obligation at an agreed-upon price
and time, thereby determining the yield during the Portfolio's holding period.
This arrangement results in a fixed rate of return that is not subject to
market fluctuations during the Portfolio's holding period. The value of the
collateral is at least equal at all times to the total amount of the repurchase
obligation, including interest. In the event of counterparty default, the
Portfolio has the right to use the collateral to offset losses incurred. There
is potential loss to the Portfolio in the event the Portfolio is delayed or
prevented from exercising its rights to dispose of the collateral securities,
including the risk
68
<PAGE>
of a possible decline in the value of the underlying securities during the
period while the Portfolio seeks to assert its rights. The Portfolios'
investment advisor, acting under the supervision of the Board of Directors of
the Fund, reviews the value of the collateral and the creditworthiness of those
banks and dealers with which the Portfolio enters into repurchase agreements to
evaluate potential risks.
FORWARD FOREIGN CURRENCY CONTRACTS
The Portfolios (other than Lincoln Tax-Free and Lincoln Cashfund) may enter
into forward foreign currency exchange contracts. Forward foreign currency
contracts are valued at the forward rate and are marked-to-market daily. The
change in market value is recorded by the Portfolio as an unrealized gain or
loss. When the contract is closed, the Portfolio records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of the Portfolio's investment securities, but it does
establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Portfolio
could be exposed to risks if the counterparties to the contracts are unable to
meet the terms of their contracts.
FOREIGN CURRENCY
The books and records of the Portfolios are maintained in United States (U.S.)
dollars. Foreign currencies, investments and other assets and liabilities are
translated into U.S. dollars at the exchange rates prevailing at the end of the
period. Purchases and sales of investment securities, income and expense items
are translated on the respective dates of such transactions. Unrealized gains
and losses which result from changes in foreign currency exchange rates have
been included in the unrealized appreciation/(depreciation) of investments. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Portfolio and the amount actually received. The
portion of foreign currency gains and losses related to fluctuation in exchange
rates between the initial purchase trade date and subsequent sale trade date is
included in realized gains and losses on investment securities sold.
OPTION TRANSACTIONS
The Portfolios may purchase and write (i.e., sell) put and call options on
securities and currencies. A call option gives the purchaser, in exchange for a
premium paid, the right for a specified period of time to purchase securities
or currencies subject to the option at a specified price (the exercise price or
strike price). When a Portfolio writes a call option, the Portfolio gives up
the potential for gain on the underlying securities in excess of the exercise
price of the option. A put option gives the purchaser, in return for a premium,
the right for a specified period of time to sell the securities or currencies
to the writer of the put at the specified exercise price. The writer of the put
option, in return for the premium, has the obligation, upon exercise of the
option, to acquire the securities underlying the option at the exercise price.
A Portfolio might, therefore, be obligated to purchase the underlying
securities for more than their current market price.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are accounted for on a trade date basis. Realized gains
and losses on sales are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of discounts and
premiums on investments, is earned from settlement date and is recorded on the
accrual basis. Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
69
<PAGE>
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, for Lincoln Growth and Income,
Lincoln Enterprise, Lincoln U.S. Growth, Lincoln World Growth, and Lincoln New
Pacific Portfolios are declared and paid at least annually. Dividends from net
investment income for Lincoln Government, Lincoln Corporate, and Lincoln Tax-
Free Portfolios are declared and paid monthly. Dividends from net investment
income for the Lincoln Cashfund are declared daily and paid monthly. Net
realized capital gains, if any, for the Portfolios are declared and paid at
least annually. Additional distributions may be made at the discretion of the
Board of Directors in order to avoid the application of a 4% non-deductible
excise tax on certain amounts of undistributed ordinary income and capital
gains.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid-in capital. Undistributed net
investment income and accumulated net realized gain may include temporary book
and tax differences which will reverse in a subsequent period. For the year
ended December 31, 1994, the Funds reclassified the following amounts:
<TABLE>
<CAPTION>
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN
INCOME (LOSS) GAIN (LOSS) CAPITAL
-------------- ------------ ---------
<S> <C> <C> <C>
Lincoln Enterprise....................... $127,474 $ -- ($127,474)
Lincoln U.S. Growth...................... 127,175 -- (127,175)
Lincoln World Growth..................... 52,566 (52,566) --
Lincoln New Pacific...................... 59,261 (80,392) 21,131
Lincoln Government....................... (513) 513 --
</TABLE>
Distributions in excess of tax basis earnings and profits will be reported in
the Fund's financial statements as a return of capital. Furthermore,
differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. Per share net investment income or loss does not reflect current period
reclassification of permanent differences between book and tax basis net
investment income or loss.
FEDERAL INCOME TAXES
Each Portfolio intends to qualify as a regulated investment company, by
complying with the requirements of the Internal Revenue Code applicable to
regulated investment companies and by distributing substantially all of its
earnings to shareholders. Therefore, no Federal income tax provision is
required. Distributions in excess of tax basis earnings and profits will be
reported in the Fund's financial statements as a return of capital.
Furthermore, differences in the recognition or classification of income between
the financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
EXPENSES
Operating expenses directly attributable to a class of shares are charged to
that class' operations. Expenses of the Fund not directly attributable to the
operations of any class of shares or Portfolio are prorated among the classes
and Portfolios, respectively, to which the expense relates based on the
relative net assets of such class or Portfolio.
70
<PAGE>
NOTE B - INVESTMENTS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) for the period from November 1, 1994 to October 31, 1995
were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Lincoln Growth and Income.................... $13,387,883 $ 7,793,015
Lincoln Enterprise........................... 20,427,323 14,543,631
Lincoln U.S. Growth.......................... 12,384,988 8,544,836
Lincoln World Growth......................... 3,129,483 1,051,295
Lincoln New Pacific.......................... 17,889,177 16,654,473
Lincoln Government........................... 24,464,198* 23,661,659*
Lincoln Corporate............................ 18,131,686** 14,586,905**
Lincoln Tax-Free............................. 897,847 300,000
</TABLE>
*U.S. Government Securities
**Includes $7,580,856 in purchases, and $9,158,861 in sales of U.S. Government
Securities
NOTE C - MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under an agreement between the Fund and Lincoln Investment Management, Inc.
("LIM" or the "Advisor") (formerly Lincoln National Investment Management
Company), the Advisor is responsible for the investment of each Portfolio's
assets, bearing the cost of research and statistical analysis as well as
ordinary office costs and salaries of officers and employees who provide
services to the Fund. In return for these services, LIM receives advisory fees
monthly based upon each Portfolio's average daily net assets at the following
annual rates:
<TABLE>
<S> <C>
Lincoln Growth and Income .80%
Lincoln Enterprise .80%
Lincoln U.S. Growth .70%
Lincoln World Growth 1.10%
Lincoln New Pacific 1.10%
Lincoln Government .30%
Lincoln Corporate .30%
Lincoln Tax-Free .30%
Lincoln Cashfund .25%
</TABLE>
Pursuant to separate agreements with LIM, Lincoln Growth and Income, Lincoln
Enterprise, Lincoln U.S. Growth, Lincoln World Growth and Lincoln New Pacific
Portfolios have sub-advisors who participate in the management of its
respective Portfolio's assets. The sub-advisors are each responsible for the
day-to-day investment management of the Portfolio under the direct supervision
of LIM. Lynch & Mayer, Inc., an affiliate of LIM, serves as the sub-advisor to
the Lincoln Enterprise Portfolio and earned sub-advisory fees of $72,723 for
the period ended October 31, 1995. None of the other current sub-advisors are
affiliated with the Advisor. The sub-advisors' fees are paid by the advisor;
the Portfolios do not pay any fees directly to the sub-advisors.
Securities regulations of various states in which the Portfolios have
shareholders provide that, if expenses borne by the Portfolio in any year
(including the advisory fee but excluding interest, taxes, brokerage fees and
where permitted, extraordinary expenses) exceed certain limitations, the
Advisor must reimburse the Portfolio for any such excess at least annually.
These expense limitations may be raised or lowered from time to time. The Fund
71
<PAGE>
believes the most restrictive expense limitation of state securities
commissioners is 2.5% of each Portfolio's average daily net assets up to
$30,000,000; 2% of the next $70,000,000 and 1.5% of average daily net assets in
excess of $100,000,000 during the applicable year. During any year, the Advisor
will be bound by the most stringent applicable requirements of any state.
Delaware Distributors L.P., ("Delaware"), an affiliate of LIM, has served as
the Fund's distributor of Portfolio shares since September 22, 1995. Prior to
September 22, 1995 LNC Equity Sales Corporation, an affiliate of LIM, served as
the Fund's distributor. The distributor is paid an annual service fee with
respect to Class A (excluding Lincoln Cashfund "Regular" shares), Class B
(including Lincoln Cashfund "Class B Exchange" shares) and Class C shares of
the Portfolios at the rate of .25% of the value of the average daily net assets
of the respective class of each Portfolio. Delaware is also paid an annual
distribution fee by Class A (excluding Lincoln Cashfund "Regular" shares),
Class B (including Lincoln Cashfund "Class B Exchange" shares) and Class C
shares at the rate of .10%, .75% and .75%, respectively, of the value of
average daily net assets attributable to those classes of shares. The fees are
authorized pursuant to separate service and distribution plans for each of the
classes of shares (the "Plans") adopted by the Portfolios pursuant to Rule 12b-
1 under the Investment Company Act and are used by Delaware to cover expenses
primarily intended to result in the sale of those shares of the Portfolios.
Delaware Service Company, Inc. has also served as the Fund's transfer and
shareholder services agent since September 22, 1995. For the year ended October
31, 1995 Delaware received $24,222 in fees for transfer and shareholder
services provided. Prior to September 22, 1995 Fundamental Shareholder Services
Inc. served as the Fund's transfer and shareholder services agent.
Certain officers and directors of the Fund are also officers or directors of
the Advisor. The compensation of unaffiliated directors of the Fund is borne by
the Fund.
Initial investments into the Fund were made by American States Insurance
Company ("ASI") and Lincoln National Life Insurance Company ("LNLIC"), both
affiliates of the Advisor. As of October 31, 1995, ASI held approximately 57%,
66%, and 96% of the outstanding shares of Lincoln Enterprise, Lincoln U.S.
Growth, and Lincoln Tax-Free, respectively. LNLIC held approximately 54%, 79%,
82%, 88%, 70%, and 94% of the outstanding shares of Lincoln Growth and Income,
Lincoln World Growth, Lincoln New Pacific, Lincoln Government, Lincoln
Corporate, and Lincoln Cashfund, respectively.
NOTE D - INCOME TAXES
At October 31, 1995, aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an excess of tax
cost over value were as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
------------ ------------
<S> <C> <C>
Lincoln Growth and Income $2,530,884 $ 675,158
Lincoln Enterprise 3,621,020 487,321
Lincoln U.S. Growth 5,183,478 146,408
Lincoln World Growth 2,945,463 1,163,565
Lincoln New Pacific 487,688 1,526,981
Lincoln Government 177,602 27,249
Lincoln Corporate 625,956 68,619
Lincoln Tax-Free 43,944 177,147
</TABLE>
72
<PAGE>
At October 31, 1995, the following funds have available, for Federal income tax
purposes, unused capital losses:
<TABLE>
<CAPTION>
AMOUNT EXPIRATION DATE
-------- ----------------
<S> <C> <C>
Lincoln Enterprise............................. $663,935 October 31, 2002
--------------------------------------------------------------------------
Lincoln U.S. Growth............................ 762,603 October 31, 2002
479,792 October 31, 2003
--------------------------------------------------------------------------
Lincoln World Growth........................... 117,153 October 31, 2002
109,076 October 31, 2003
--------------------------------------------------------------------------
Lincoln New Pacific............................ 432,949 October 31, 2003
Lincoln Government............................. 286,991 October 31, 2002
Lincoln Corporate.............................. 538,910 October 31, 2002
</TABLE>
NOTE E - CAPITAL STOCK
The Portfolios (other than the Lincoln Cashfund) issue the following classes of
shares: Class A shares are sold to investors choosing the initial sales charge
alternative, Class B shares are sold to investors choosing the contingent
deferred sales charge ("CDSC") alternative, Class C shares are sold to
investors choosing the annual distribution fee alternative and Class D shares
are sold to investors choosing the no sales charge alternative and are
available to insurance companies (including both general and separate
accounts), affiliates of insurance companies and investment companies
registered under the Investment Company Act only. The Lincoln Cashfund offers
two classes of shares: Regular Shares and Class B Exchange Shares. The Regular
Shares are offered and sold at the net asset value ($1.00) without a sales
charge and without any service or distribution fees. The Class B Exchange
Shares, which are issued only upon the exchange of shares of Class B of any
other Portfolio, are subject to the applicable CDSC, if any, upon redemption
and are charged distribution and service fees totaling 1% of the net asset
value of the shares. As of October 31, 1995, 810,000,000 shares of $.01 par
value Common Stock, issued in separate series, were authorized. Because the
Lincoln Cashfund has sold shares, issued shares as reinvestment of dividends
and redeemed shares at a constant net asset value of $1.00 per share, the
number of shares represented by such sales, reinvestments and redemptions is
the same as the amounts shown below for such transactions. Changes in shares
outstanding for each Portfolio for the periods indicated are presented on the
following pages:
73
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31, 1995
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS D
------------------- ----------------- --------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------- ---------- ------- -------- ------ ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LINCOLN GROWTH AND
INCOME PORTFOLIO
Sold................... 86,373 $870,351 65,262 $643,559 4,279 $46,101 404,257 $4,170,140
Issued as reinvestment
of dividends.......... 37,192 348,324 2,566 22,782 90 843 14,252 137,112
Redeemed............... (10,399) (110,067) (6,830) (65,613) (379) (3,940) (89,601) (935,726)
------- ---------- ------- -------- ------ ------- ------- ----------
Net increase........... 113,166 1,108,608 60,998 600,728 3,990 43,004 328,908 3,371,526
======= ========== ======= ======== ====== ======= ======= ==========
LINCOLN ENTERPRISE
PORTFOLIO
Sold................... 165,155 $1,624,685 81,179 $854,499 1,660 $17,046 308,608 $3,416,787
Issued as reinvestment
of dividends.......... -- -- -- -- -- -- -- --
Redeemed............... (28,541) (292,832) (7,295) (73,731) (637) (6,965) (9,614) (98,099)
------- ---------- ------- -------- ------ ------- ------- ----------
Net increase........... 136,614 1,331,853 73,884 780,768 1,023 10,081 298,994 3,318,688
======= ========== ======= ======== ====== ======= ======= ==========
LINCOLN U.S. GROWTH
PORTFOLIO
Sold................... 52,639 $551,988 26,729 $276,925 1,865 $21,207 307,706 $3,303,266
Issued as reinvestment
of dividends.......... -- -- -- -- -- -- -- --
Redeemed............... (5,890) (63,231) (829) (8,494) (232) (2,435) (81,517) (892,235)
------- ---------- ------- -------- ------ ------- ------- ----------
Net increase........... 46,749 488,757 25,900 268,431 1,633 18,772 226,189 2,411,031
======= ========== ======= ======== ====== ======= ======= ==========
LINCOLN WORLD GROWTH
PORTFOLIO
Sold................... 87,908 $933,753 66,883 $672,282 1,735 $17,206 10,800 $ 116,640
Issued as reinvestment
of dividends.......... 895 9,471 123 1,192 11 104 25 262
Redeemed............... (13,283) (143,637) (6,937) (67,664) (1,466) (14,973) (2,532) (27,631)
------- ---------- ------- -------- ------ ------- ------- ----------
Net increase........... 75,520 799,587 60,069 605,810 280 2,337 8,293 89,271
======= ========== ======= ======== ====== ======= ======= ==========
LINCOLN NEW PACIFIC
PORTFOLIO
Sold................... 88,098 $793,387 36,512 $345,285 1,031 $ 8,907 2,883 $ 25,647
Issued as reinvestment
of dividends.......... 33,992 315,456 1,505 14,514 37 342 176 1,631
Redeemed............... (18,925) (167,228) (14,072) (127,921) (271) (2,436) (494) (4,175)
------- ---------- ------- -------- ------ ------- ------- ----------
Net increase........... 103,165 941,615 23,945 231,878 797 6,813 2,565 23,103
======= ========== ======= ======== ====== ======= ======= ==========
LINCOLN GOVERNMENT
INCOME PORTFOLIO
Sold................... 13,148 $124,019 3,642 $36,391 1,394 $14,219 75,898 $ 711,902
Issued as reinvestment
of dividends.......... 65,220 617,698 1,698 16,613 22 223 5,547 51,430
Redeemed............... (5,486) (52,127) (634) (6,424) (5,071) (49,646) (18,066) (169,910)
------- ---------- ------- -------- ------ ------- ------- ----------
Net increase/decrease.. 72,882 689,590 4,706 46,580 (3,655) (35,204) 63,379 593,422
======= ========== ======= ======== ====== ======= ======= ==========
LINCOLN CORPORATE INCOME
PORTFOLIO
Sold................... 25,773 $236,627 10,034 $99,507 445 $ 4,556 307,225 $2,785,489
Issued as reinvestment
of dividends.......... 67,335 628,474 2,352 22,994 6 61 26,256 236,120
Redeemed............... (6,735) (62,774) (677) (6,742) (1,004) (9,951) (90,608) (827,213)
------- ---------- ------- -------- ------ ------- ------- ----------
Net increase/decrease.. 86,373 802,327 11,709 115,759 (553) (5,334) 242,873 2,194,396
======= ========== ======= ======== ====== ======= ======= ==========
LINCOLN TAX-FREE INCOME
PORTFOLIO
Sold................... 15,484 $145,064 6,324 $63,931 2,070 $20,000
Issued as reinvestment
of dividends.......... 46,039 433,850 522 5,140 70 671
Redeemed............... (3,463) (33,162) (438) (4,586) (1,873) (18,399)
------- ---------- ------- -------- ------ -------
Net increase........... 58,060 545,752 6,408 64,485 267 2,272
======= ========== ======= ======== ====== =======
LINCOLN CASHFUND
PORTFOLIO
Sold................... $883,280
Issued as reinvestment
of dividends.......... 540,832
Redeemed............... (869,006)
----------
Net increase........... 555,106
==========
</TABLE>
74
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31, 1994
- ----------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS D
- ---------------------- ---------------- -------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- --------- ----------- ------ -------- ------ ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1,068,102 $10,669,420 59,266 $566,826 2,412 $24,176 270,752 $2,676,462
5,349 52,433 94 896 4 44 1,407 13,721
(1,422) (14,011) -- -- -- -- (3,119) (30,943)
- --------- ----------- ------ -------- ----- ------- ------- ----------
1,072,029 $10,707,842 59,360 $567,722 2,416 $24,220 269,040 $2,659,240
========= =========== ====== ======== ===== ======= ======= ==========
1,158,125 $11,443,035 77,581 $714,807 3,744 $36,372 25,578 $ 233,559
499 5,017 -- -- -- -- -- --
(9,348) (83,330) -- -- -- -- (187) (1,676)
- --------- ----------- ------ -------- ----- ------- ------- ----------
1,149,276 $11,364,722 77,581 $714,807 3,744 $36,372 25,391 $ 231,883
========= =========== ====== ======== ===== ======= ======= ==========
1,047,871 $10,458,026 20,092 $193,916 480 $ 4,860 162,440 $1,577,056
1,000 10,026 -- -- -- -- -- --
(3,599) (35,620) -- -- -- -- (2,990) (29,533)
- --------- ----------- ------ -------- ----- ------- ------- ----------
1,045,272 $10,432,432 20,092 $193,916 480 $ 4,860 159,450 $1,547,523
========= =========== ====== ======== ===== ======= ======= ==========
1,065,506 $10,685,448 50,281 $517,626 3,717 $38,371 5,805 $ 62,275
2,895 31,015 62 644 2 16 14 154
(2,413) (26,075) (3) (34) -- -- (40) (440)
- --------- ----------- ------ -------- ----- ------- ------- ----------
1,065,988 $10,690,388 50,340 $518,236 3,719 $38,387 5,779 $ 61,989
========= =========== ====== ======== ===== ======= ======= ==========
1,088,400 $10,888,194 39,703 $416,363 1,183 $12,436 4,593 $ 46,707
928 10,031 -- -- -- -- -- --
(4,038) (42,827) -- -- -- -- (32) (330)
- --------- ----------- ------ -------- ----- ------- ------- ----------
1,085,290 $10,855,398 39,703 $416,363 1,183 $12,436 4,561 $ 46,377
========= =========== ====== ======== ===== ======= ======= ==========
1,016,509 $10,145,150 24,286 $244,391 5,000 $50,000 38,052 $ 358,123
39,719 375,220 217 2,147 71 709 815 7,589
(217) (2,000) -- -- -- -- (275) (2,571)
- --------- ----------- ------ -------- ----- ------- ------- ----------
1,056,011 $10,518,370 24,503 $246,538 5,071 $50,709 38,592 $ 363,141
========= =========== ====== ======== ===== ======= ======= ==========
1,037,779 $10,337,282 22,598 $227,797 1,001 $10,006 144,764 $1,328,878
57,416 529,917 312 3,080 -- -- 3,662 33,880
(1,481) (13,656) -- -- -- -- (1,100) (9,958)
- --------- ----------- ------ -------- ----- ------- ------- ----------
1,093,714 $10,853,543 22,910 $230,877 1,001 $10,006 147,326 $1,352,800
========= =========== ====== ======== ===== ======= ======= ==========
1,020,228 $10,183,405 9,799 $ 99,784 750 $ 7,500
37,748 353,653 101 1,001 -- --
(462) (4,363) -- -- -- --
- --------- ----------- ------ -------- ----- -------
1,057,514 $10,532,695 9,900 $100,785 750 $ 7,500
========= =========== ====== ======== ===== =======
$10,732,901
272,486
(108,470)
-----------
$10,896,917
===========
</TABLE>
75
<PAGE>
NOTE F - ORGANIZATION COSTS
Each Portfolio bore the costs incurred in connection with its organization. All
such costs are being amortized on the straight-line method over a period of
five years from the commencement of operations of each Portfolio. In the event
that any of the initial shares of the Portfolio are redeemed during such
amortization period, the Portfolio will be reimbursed for any unamortized costs
in the same proportion as the number of shares redeemed bears to the number of
initial shares outstanding at the time of the redemption.
NOTE G - FINANCIAL INSTRUMENTS
The Funds regularly trade financial instruments with off-balance sheet risk in
the normal course of their investing activities to assist in managing exposure
to market risks, such as interest rates and foreign currency exchange rates.
These financial instruments include forward currency contracts and futures
contracts.
The notional or contractual amounts of these instruments represent the
investments the Funds have in particular classes of financial instruments and
do not necessarily represent the amounts potentially subject to risk. The
measurement of the risk associated with these instruments is meaningful only
when all related and offsetting transactions are considered. A summary of
obligations under these financial instruments at October 31, 1995 is as
follows:
Forward Currency Contracts:
Lincoln New Pacific
Sells
<TABLE>
<CAPTION>
Net Unrealized
Settlement Date Contracts to Deliver Currency In Exchange For Appreciation
- --------------- -------------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
11/06/95 111,100,000 Japanese Yen $1,100,000 $12,348
01/12/96 609,096 Malaysian Ringgit $ 240,000 712
-------
$13,060
=======
</TABLE>
NOTE H - FOREIGN SECURITIES
The Lincoln World Growth and Lincoln New Pacific Portfolios may invest
substantially all of their assets in foreign securities. Investing in
securities of foreign companies and foreign governments involves special risks
and considerations not typically associated with investing in U.S. companies
and the U.S. Government. These risks include revaluation of currencies and
future adverse political and economic developments. Moreover, securities of
many foreign companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies and the U.S. Government.
NOTE I - FEDERAL TAX INFORMATION (UNAUDITED)
The Lincoln Tax-Free Fund has designated 95.4% of dividends paid from net
investment income during the fiscal year as tax exempt for Federal income tax
purposes.
The Form 1099 you receive in January 1996 will show the tax status of all
distributions paid to your account in calendar 1995.
Foreign taxes paid by Lincoln New Pacific Fund to foreign countries amounted to
$68,091.
76
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
Lincoln Advisor Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of the
Lincoln Advisor Funds, Inc. (the Fund), consisting of Lincoln Growth and Income
Portfolio, Lincoln Enterprise Portfolio, Lincoln U.S. Growth Portfolio, Lincoln
World Growth Portfolio, Lincoln New Pacific Portfolio, Lincoln Government
Income Portfolio, Lincoln Corporate Income Portfolio, Lincoln Tax-Free Income
Portfolio, and Lincoln Cashfund Portfolio (the "Portfolios"), including the
schedules of portfolio of investments, as of October 31, 1995, and the related
statement of operations, the statement of changes in net assets and the
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit 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, 1995 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Portfolios of the Fund as of October 31, 1995, the results of their operations,
the changes in their net assets and the financial highlights for the periods
indicated therein, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
December 12, 1995
77
<PAGE>
LINCOLN ADVISOR FUNDS
C/O DELAWARE SERVICES COMPANY, INC., TRANSFER AGENT
1818 MARKET STREET
PHILADELPHIA, PA 19103
FORM 27955A 12/94
